Power of Marketing: Practitioner Perspectives in Asia of Coca-Cola - Research Paper Example

? Coca-Cola The goal of any commercial entity is to make profits. A publicly listed company has the duty to make sure thatthe shareholders get a return on their investments. With this in mind, therefore, there is a need, for a company like Coca Cola to ensure that it mounts an aggressive campaign to ensure that it makes the most sales. It is an aggressive market thus the company has to always be on its toes. Introduction The giant; Coca Cola Company was not always a huge as it is currently. It traces its origins back to the year 1886. This was when a pharmacist, John Stith Pemberton was attempting to make a tonic for headaches. Instead of this, he ended up with sticky brown Syrup, which he later took to Jacobs’ Pharmacy. At the time, Jacobs’ Pharmacy was the biggest drug store in Atlanta. Pemberton wanted the pharmacist to sell the syrup at his soda fountain for five cents a glass. At this point, there arose a need for a name for this product, and hence Pemberton’s business partner, Frank Robinson suggested “Coca-Cola” a name he thought would be attractive in an advertisement (Bodden 2009). In 1889, Pemberton’s Coca-Cola brand, as well as, the formula was brought up by Asa Candler in 1889. Candler went on to incorporate the company in 1892. Other than its main flagship beverage product which is the Coca-Cola beverage, the company has grown on to offer more than 500 different beverage brands in over 200 territories or countries globally. The company serves 1.6 billion servings each day. Mission and Vision Statements According to the company’s website, the company’s Mission statement is divided into three points that is: to refresh the world, to inspire moments of optimism and happiness and to create value and make a difference. Coca Cola’s vision can be summarized as: the company exists to benefit and refresh everyone it touches (Bogardus 2004). The vision is split into a number of goals that the company seeks to achieve. These are: to be a grand place where populace are enthused to be the best they can be, supply the world with quality brands that satisfy their desires and needs, to nurture a successful network of both customers and suppliers, globally to be a responsible citizen by helping create sustainable communities, maximize long-term returns while being mindful of overall responsibilities and the final one being a highly effective lean and fast moving organization. The company has stated that it has a winning culture to ensure that its vision 2020, which encompasses its mission and vision as well as values, is a success. Currently, the company employs 55,000 people 44,000 of those outside the United States. (Ma’arif 2007) this is in keeping with one of its visions. The company does not directly hire all its employees as some are indirectly employed. The depot operators in many countries, the suppliers, the transporters among others are, but examples of indirectly employed people. The company has also created an environment that encourages employees to develop and perform to their fullest potential. Simultaneously, the corporation has won a number of awards for its products. Some of these awards are product of the year award, Non-Alcoholic Beverages Category, in Germany, in 2006. It also won the Brand of the Year Award in Poland 2006. Another award is the Most Trusted Brand award in India in 2006, as well as, Ireland’s No.1 Brand 2006 (Ma’arif 2007). This is an affirmation that this company is committed to attaining and maintaining its vision. Link between Coca-Cola’s Mission and Vision and her strategic goals Coca-Cola Company has a vision 2020 which seeks to double its revenue to $200 billion. It also seeks to increase the sales level to 3 billion servings daily (Pride and Ferrell 2012). The company plans to ensure that this is a reality through achieving one of its visions. This is strengthening the relations with its associates to ensure that the corporation has a competitive edge both locally as well as globally. The company also has set to make its products more visible to customers who are seeking to purchase them. More than 75% of Coca-Cola’s revenue comes from outside the United States (Pride and Ferrell 2012). In India, a fast growing market and in keeping with its vision of reaching as many people globally, Coca Cola has made a number of strategies. One of these is that of arranging for cooling units to be placed prominently where clients can see them. The company also seeks to supply attractive signs that drive the temptation for their customers to want to consume any of Coke’s products. In China, another potentially large market, the company has organized to have its bright red machines in urban centers (Pride and Ferrell 2012). The above statistics indicates the role that the company’s mission joins the company’s strategic goals. This is because the company plans to strengthen its existing network so that the local distributors can get a competitive edge. The company has a plan that sees to it that it supplies the vendors with necessary facilities like cold storage machines as well attractive displays. This is triggered to maximize sales in order to increase returns to the shareholders (Pride and Ferrell 2012). Financial Performance of the Company In the year ended 31st December 2011, the company stated that it had four strategic priorities to ensure long-term sustainable growth. These strategies are driving global beverage leadership, accelerating innovation, leveraging its balanced geographic portfolio and leading the Coca-Cola system for growth. This would be driven by the company’s core capabilities of consumer marketing, commercial leadership, franchise leadership and bottling and distribution operations. Consumer marketing generally means that the company will strive to drive consumer awareness and preference of its products. This is expected to increase the long term gross unit case volume, per capita consumption and global share in the non-alcoholic beverage sales. Commercial leadership, on the other hand, focuses on helping the millions of customers who sell or serve their commodities directly to consumers. This means that the company aims to strengthen its existing client base. According to the company’s 2005Annual Report, there are about 50 billion beverage servings consumed by people all over the world daily. Out of these servings, about 1.5 billion are of beverages that bear the company’s trademarks. Its flagship product “Coca-Cola” or “Coke” generally accounts for close to about 78% of the company’s annual gallon sales. The Coca-Cola Company’s sales released in 2007 indicate that the United States market is its biggest market comprising of about 37% of its total annual sales. This is closely followed by India, Japan, Mexico, China and Brazil which together make up about 43% of the company’s sales. The remaining 20% of its sales is spread through out the world. The company made a pre-tax profit of 28,326,000,000 dollars, which was represented a 33` change from the previous year. The fact that the company is still profitable indicates that the company can indeed attain the goal; set in its vision 2020. The company must, however, address some challenges that it has identified such as obesity and inactive lifestyles as well as availability of good quality water. Judging by the fact that the company is a voracious consumer of water, it must seek to ensure that this is in plenty of supply. Analysis of the Company’s Organizational Structure The company has an established franchise system that it set up back in 1889. Using that franchise system, the Coca-Cola Company is only responsible for the production of syrup concentrates which are then sold out to various bottlers distributed all over the world each of them holding exclusive territories. The Company maintains its very own anchor bottler situated in North America, the bottler’s name being Coca-Cola Refreshments. The Coca-Cola Company has its headquarters located in Atlanta, Georgia and its stock is currently listed on the (NYSE). The company is part of the Russell 1000 Growth Stock Index, the S&P 500 Index and the Russell 1000 Index. The company’s current chairman is Mr. Muhtar kent. The Coca-Cola Company has a divisional, organizational structure. This means that the company has a number of autonomous branches that specialize in selling the various products separately (Gasper 2006). This means that there is a CEO at the top followed by the heads of the different departments just below him/her. The benefit of this is that it leads to the company having a specialized form that allows the company lee way to independently market the various products separately. This avoids having, for example, the foreign market branches affecting the home section. It also saves the company’s management from having to strain themselves and, therefore, enhance their productivity. The company has also the ability, as well as, flexibility to promote itself to the specific country. It would be difficult to consolidate the product promotion of the company into one marketing strategy. The trouble with such a deliberation is that it will lead to conflicting messages being sent as there are different interpretations of terms in different cultures (Gaspar 2006). Divisional placement of the different sections of the company will, therefore, be beneficial to the company’s profitability. Divisionalization also has the benefit of encouraging innovation (Sadler 2001). It is through the independence that comes from divisionalization that the different entities can concentrate their energies on a specific production thus producing a high quality product. Fanta, for example, is a separate entity from Coca-Cola. This means that the distinct taste and quality has been achieved mainly because these products are produced separately. As seen by Gaspar (2006), there is the benefit of the concentration of skill. At the same time, the fact that the countries have different resources means that there are products that are specially produced for those markets. Inca Kola, for example, has been developed for the Latin American market. This allows its acceptability in this market as it is specific and unique to that market. Strategies to maximize the returns to shareholders When it comes to a company with the complexity of Coca-Cola, the need to increase the returns to the shareholders has been addressed in the financial report, for example. The report has listed a number of issues that must be tackled. These are driving global beverage leadership, accelerating innovation, leveraging its balanced geographic portfolio and leading the Coca-Cola system for growth. The marketing strategy of product differentiation and positioning would be beneficial to the company. Differentiation is the process of concentrating on the qualities that set a commodity apart from others. Positioning, on the other hand, is the concentrating on the customer’s perception real or imagined benefits about the product. This will help increase the returns of the company’s products due to their uniqueness and allure. Due to the age of the company as well as myths that surround the production of the various products, the company can ensure that it takes advantage of this to boost sales. For example, the advert for Sprite on “obey your thirst” is one of the positioning strategies. This means that the company has ensured that consumers are able to consume the product and end up feeling that the stated effects apply to them. This will result in more sales thus an increase in the revenue of the company thus more returns to shareholders. Scenario and in which a Merger and Acquisition would be Viable What are Mergers and Acquisitions? A business acquisition can be defined as the purchasing of one business or company by another separate business entity or company. Acquisitions normally result in the purchasing company obtaining more about 100% or nearly 100% of the total share assets of the acquired entity company. Normally, acquisitions are done by larger firms taking control of smaller firms, but in some instances, smaller firms will buy and acquire management control of an organization that has been set for a long duration or is larger than it. This is with the main intention of using the larger company’s more established name to conduct its business. This type of a take – over is commonly referred to as a reverse takeover. Mergers, also referred to as consolidations, are seen to occur when two business entities or companies join hands to form a new venture with the consequence that neither of the two parent companies survive independently after the merger (Coyle B. 2000). The Scenario and Market Conditions making a Merger and Acquisition a Good Choice In an ideal case scenario, several factors need to be considered before any merger and acquisition can be implemented by the company. Some of the major factors to be considered are: Increased Revenue In a scenario where Coca-Company stands to benefit by increasing its total annual revenue collection in the event that it merges or acquires another business entity, it would be highly advisable for the company to go ahead with the merger or acquisition. Cross Selling Another ideal scenario would be if the company is proposing to acquire another business entity that is also in the same industry but offering a different product that Coca-Cola does not have in the current market. For instance in the event of a scenario where a market is more receptive to a product like fruit juices of which Coca-Cola as a company does not seem to have any existing fruit juice distribution network in the market, it would be economically viable for Coca-Cola to acquire a business entity with an established brand and adequate distribution channels in that market. Taxation Benefits In a scenario where the laws in a country allow for it, a profitable company like Coca – Cola can buy out an existing company in the local market that is making considerable losses in its business. This would allow for Coca-Cola to enjoy benefits accrued from using the loss maker’s loss to their advantage by enabling Coca-Cola to enjoy greatly reduced tax liabilities. Entities that would be Involved in the Merger or Acquisition Some of the key persons that would be involved in the merger or acquisition would be the board of directors in both Coca- Cola and the firm that is being brought. The two boards play a crucial role in voting and approving the merger or acquisition and also in determining funds that is to be paid by the buying firm. In some instances, the Coca-Cola share holders and the company that is being acquired might have to be consulted before the final approval of the merger or acquisition can be made. In the event that Coca-Cola is not funding the take – over by its self, a representative from the financial institution funding the takeover might have to be present to represent the institution. In recent times, there has been the advent of specialist merging and acquisition firms that help companies conduct successful takeovers. Specialists from such companies might have to be present during the merger and acquisition, primarily to ensure the success of the merger or acquisition bid. Types of Strategies that would make the Merger a Success Some of the strategies that would ensure the success of the merger and acquisition include aligning the company’s corporate strategy, performing due diligence, evaluating possible alternatives, to mergers and acquisitions to help in achieving corporate objectives, evaluating the targets the merger and acquisition hopes to attain and using them to structure and negotiate the transaction. Another strategy that can be of use would be “to integrate the companies and measure the level of success of the transaction post merger” (Hunt, P., 2009, 726). Motivating Employees towards achieving the Company’s Strategy Over the years, the company’s strategy has been characterized by local manufacturing and global marketing although recently the global marketing aspect has been changed to local marketing mainly due to the differences in consumer experiences and demands. This is in line with their “think local, act local” philosophy. In order to motivate their employees, several measures can be taken including increasing their wages and salaries and providing extra benefits like providing company funded education and training opportunities. This will increase the productivity due to the motivation and the added training will provide them with extra skills that will be of great advantage to the business. According to the company’s annual report, the company has been experiencing increasing profitability since 2009 with the latest results indicating that the company’s flagship brand Coca-Cola growing by 3% and Minute Maid Pulpy growing by 20 percent, the company has sufficient revenue to help in funding the extra staff training and increased salaries and wages (Coca cola Company, 2011). Coca-Cola Company’s Current Business Strategy’s Support of Ethical Business Behaviour It can be seen that Coca-Cola Company’s current business strategy is supports ethical business strategies from the fact that, on 21st May 2012, the company was the recipient of the annual Pollard Award for Innovation in Business Ethics. The award is given by the Chicago based executive’s breakfast club. The club is comprised of more than 100 members drawn from a large mix of both local and international companies which are all wholly dedicated towards the advancement of ethical business practices. The Coca-Cola Company was recognized due to its efforts in water conservation efforts in partnership with the World Wildlife Federation, its efforts in reducing its carbon emissions and energy use (Noria Corporation, 2011). References: Bodden, V. (2009). The Story of Coca-Cola. Minnesota: Creative Education. Bogardus, A. M. (2004). Human Resources JumpStart. Alameda: Sybex Inc. Gaspar, J. E. (2006). Introduction to Business. Boston: Cengage Learning. Inc. Ma’arif, N. N. (2007). Power of Marketing: Practitioner Perspectives in Asia. Riau: Penerbit Salemba Empat. Pride, W. M. and Ferrell, O. C. (2012).Marketing. Mason: South-Western Cengage Learning. Sadler, P (2001). The Seamless Organization: Building the Company of Tomorrow. London: Kogan Page Limited. 2011 annual report on Form 10-K. Available [Online]. http://www.thecoca-colacompany.com/investors/pdfs/form_10K_2011.pdf Coyle B., 2000. Mergers and acquisitions Chicago: Glenlake Pub. Co.: Fitzroy Dearborn. Hunt, P., 2009. Structuring mergers & acquisitions: a guide to creating shareholder value Austin: Wolters Kluwer. The Coca cola Company, 2011. The Coca-Cola Company 2011 Annual Review Retrieved on 27th August, 2012, from www.thecocacolacompany.com/ourcompany/ar. Noria Corporation, 2011. Coca-Cola recognized for innovation in business ethics. 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