Food & Beverage Market Place: the Coca-Cola Company's Case - Research Paper Example

Coca-Cola Company Analysis Company profile The Coca-Cola Company is the largest beverage company in the globe. The company has been in operation since 1886 and its headquarters are situated in Atlanta, Georgia. The company manufactures and markets non alcoholic beverages in more than 200 countries worldwide. The Coca-Cola Company owns or licenses over 500 non alcoholic brands especially sparkling beverages, in addition to a variety of still beverages such as waters and juices. The company is home to the top five sparkling brands namely; Fanta, Coca-Cola, Diet Coke and sprite. The company produces sparkling beverages such as carbonated energy drinks, flavored waters and carbonated waters. The still beverages comprise of non carbonated waters, non carbonated energy drinks, enhanced and flavored waters, juices, sport drinks, teas and coffees. The company also produces sweeteners, flavoring ingredients, fountain syrups and beverage ingredients. These products are offered to the consumers through a large network of bottlers and distributors which are company owned, or through independent bottlers and distributors. The company’s key competitors include PepsiCo and Nestle. Mission and vision statements The Coca-Cola Company has continued to adapt to the dynamic world around it through its mission, vision and company values. The company has adhered to such values and the result has been commendable financial performance over the years. The mission of the Coca-Cola Company declares the purpose of the company and sets the standards from which it weighs its actions and decisions. The mission of the company is to refresh the world, inspire moments of happiness and optimism and make a difference by creating value for its customers. The company’s vision serves as a guide for all the business aspects by outlining what the company needs to accomplish in order to achieve quality and sustainable growth. The vision is divided into five parts; people, portfolio, planet, profit and productivity. The company seeks to be the best workplace and an inspiration for its workers. It also works t provide its customers with a vast portfolio of quality brands in order to meet the needs and desires. The company seeks to be a responsible citizen by helping build and maintain sustainable communities. In terms of earnings, the company seeks to maximize shareholders wealth while undertaking its responsibilities. In terms of productivity, the company seeks to be an effective, fast moving and lean organization in the globe. The company has demonstrated its ability to live by its mission and vision. The financial performance has increased over the years. For instance, the revenues have increased from $ 30,990 million in 2009, to $ 35,119 million in 2010 and $ 46,542 million in 2011. This shows that the company is living its vision of maximizing the wealth of its shareholders. In its mission to refresh the world, the company has continued to the top beverage manufacturer in the globe. The company sells moments of happiness for over 1.7 billion times each day in over 200 countries. The company partners with over 20 million customers each week to deliver their leading brands. The company works closely with about 275 bottling partners to develop a global distribution system serving local markets. The company achieves this by adapting the systems to the local markets and utilizing local staff. In maintaining a sustainable environment, the company changed its bottles to 100% recyclable. The bottles are partly made from plant based materials. This indicates a move to build and support a sustainable planet for everyone. Strategic goals The company’s goals involve both non financial and financial targets. For the non financial targets, the company seeks to have better health and reduce the risks involved. Over the years, the company has received a bad reputation which has tainted its image. The company has embarked on advertising its healthy product to make them popular among the consumers. The company is aiming to replace the coffee and concentrate on its energy drinks. With the intense competition in the industry, the company plans to intensify its marketing efforts. The company has learnt that many people around the world have no idea of what goes on at Coca-Cola, and hence the need to spread the knowledge. The financial goals involve increasing annual sales by about 100 percent over the next few years for the products that consumers have little or no information. The company maintains commendable focus on the market especially the needs of the customers, consumers and franchise partners. It aims to observe, listen and learn from the market by physically participating. The climate campaign that has been going on in the world also touches on the company. The company is working with other companies to ensure a sustainable climate. Some of the actions it has taken involves production of 100 percent recyclable bottles for its products. This has won the company an award for its sustainability efforts. Working smart is yet another strategic goal that the company pursues. The management insists working with urgency on all matters, adapting to change, changing the course or strategies if need arise and working efficiently. These goals are in line with the company’s mission and vision. The sustainability efforts are among the vision statement of the company. In seeking to refresh the world, the company aims at producing brands that are focused on the needs of the consumers. The company goes into the market to get the facts about their customers. This way, the company produces products that are manufactured to fit the needs of the market thus refreshing the world. Financial performance Coca-Cola Company has maintained impressive financial results over the years. The reports show that the company is having commendable financial performance through the four quarters. In the last quarter of 2011, the company recorded revenue worth $ 11,040 million. This figure has increased through to the second quarter of 2012. In the first quarter of 2012, the company recorded revenues of $ 11,137 million and $ 13,085 million in the second quarter. However, the last two quarters of 2012 reported reduced quarterly revenues. For instance, the third quarter recorded $ 12,340 million, a decrease of $745 million from the previous quarter. The last quarter of 2012 recorded revenue worth $ 11,455 million. This shows a decrease of $ 885 million (Coca-Cola Company annual report, 2012). The drop in quarterly revenue has been attributed to increased competition in the industry. Annual financial performance shows that the net operating revenue has been increasing over the years. The 2012 annual report for the company shows that this figure has increased all the way from the year 2009. In 2009, the company recorded net operating revenue of $ 30,990 million. The figure increased in the following year to reach $ 35,119 million. The increase continued and the company recorded $ 46,542 million in 2011. In the period ended December 2012, the company reported revenues of $ 48,017 million up from $ 46,542 million the previous year (Coca-Cola Company annual report, 2012). The company’s strategic goal to increase sales is evident in the financial performance over the last four years. The revenue has continued to increase since 2009. This indicates that the company is working hard to achieve its financial goals. In promoting its products as healthy products to consumers, the company continues to make increased sales on all products. The company has invested heavily in advertising evident on the internet, Television, radio and print media adverts. The company has especially increased its marketing efforts in the African and Asian continents. The company seeks to reach all global markets including those in the third world countries. The increased financial performance indicates that the company is achieving its strategic goals through increased earnings. Competitive and marketing analysis The Coca-Cola Company operates in an industry characterized by intense competition (Gottlieb, 2009). This calls for strategies to increase competitive advantage over the key competitors. The key competitors competing against Coca-Cola are PepsiCo and Nestle among others. The company has maintained a leadership position in the industry through its innovative products. The company seeks to provide value to its customers. This way, it attracts new customers, as well as retains the existing ones. The company achieves this by intensifying its advertising efforts. The company spends millions of dollars each year in advertising. The battle between the company and its competitors is evident in the advertisements all over the media. The company uses a massive distribution channels that makes the products available almost in every corner of the world. The company has achieved its leadership position through its marketing strategies. Targeting has earned the company its success in the market. The company applies demographic factors to reach various target markets. For instance, the company may reach out to the young people to use the products through new generation advertisements. The company reaches to the market in order to observe, listen to customers and learn from their experiences. This way, the company provides value for its customers (Pride, 2008). The products of the company are meant for all classes and types of consumers. However, there are some instances where the company targets some products to specific consumers. For instance, the company produces and targets the Diet coke for the older generation aged between thirty to sixty years. The PowerAde is targeted to customers who are fit and involved in healthy sports. Similarly, Winnie the Pooh is a juice which the company produces specifically for children between the age of five and twelve. The company has various strengths such as effective and worldwide distribution channels that make the products available to consumers worldwide. The advertising system is also effective and reaches to all consumers around the world. The advertisements are tailored to fit the specific target audience. The company maintains automated production plants to enable it produce the high number of products for the global market. Despite such strengths, the company has various weaknesses. It has received negative publicity concerning the health effects if its products. This has had a slight negative effect on the sales of the company. Despite the strong distribution systems, some sales representatives do not perform according to the set standards. Mismanagement of distribution and advertisement systems has negative effects on the company. Appropriate strategy In order to maximize the wealth of shareholders, the company can adopt differentiation and diversification strategies. Differentiation involves efforts to make the products of the company to stand out from those of competitors (Pride, 2008). Such a strategy earns a company competitive advantage in a market full of competitors. Coca-Cola Company can achieve this by applying extensive scientific research, a qualified and energetic sales team, a team of qualified management personnel and continuous innovation. These will ensure that the company produces unique products, is managed through unique managerial skills and uses research in product development. Differentiation involves studying the competitors and working to use unique methods to outdo them. This does not mean that the company should charge low prices than the competitors. The company should produce high quality products that add value to consumers. This way, customers will be willing to pay a higher price for the products. The differentiation strategy will create a strong corporate identity. This will result in loyal customers and thus stable revenues despite economic downturns. Diversification strategy aims at growing a company by expanding the operations of the organization to include new products, services, markets or stages of production. The key aim of such a strategy is to allow the company to venture into new lines of operation different from the current ones. This strategy is risky and the company should only consider implementing it if all other strategies for growing the existing markets are exhausted. The strategy can be achieved through R&D, startups, acquisitions, and joint ventures and licensing. Scenario in which a merger or acquisition would be a viable strategy As stated in previous sections, Coca-Cola Company operates in an industry with intense competition (Keegan, 2005). The key competitors are PepsiCo and Nestle. The increased competition decreases the market share for all participating firms. This can get worse in times of economic downturns or financial crisis since the earnings by each company will reduce significantly. The company would have to spend a significant amount of money of advertisements and marketing but with low returns. In such a case, the revenues of the company would decrease, and so will the earnings of shareholders. Since all companies in the industry will be experiencing the negative effects, the best way out would be to merge with another firm, or acquire a smaller firm. During such a time it would be easy to get candidates for the merger or acquisition. Coca-Cola Company can either opt to merge with another firm or acquire a smaller firm. The main aim of such a strategy would be to combine resources and market share in order to increase revenue (Finkelstein, 2010). For instance, the company can merge with a competing company such as Nestle. The resulting company would have a new name, and this would mark the end of the former companies. The two companies will combine their resources and produce a vast range of products targeted to a bigger market share. If the company acquired another firm, the company would retain its name. The now expanded company would have a larger market share than before, as well as diversified range of products (Finkelstein, 2010). This way, the company can increase its market share and sales revenues despite the harsh economic situation. Appropriate rewards The best way to motivate employees is by formulating and implementing an effective employee reward system. The reward system would consist of benefits, compensation, appreciation and recognition (Hume, 2000). Most reward systems fail because they do not include all the elements. A majority of them lack mainly appreciation and/or recognition. The reward systems should address the strategies of the company in order to achieve its core objectives. The reward system would rewards the employees for performance and behavior. Employees performing well in their departments would get rewards and incentives to perform better. Top performing employees would get a bonus on top of their salary. This would serve to motivate them to perform to their best. For instance, sales persons achieving the set targets would get rewards. Rewarding the behavior of employees could be more challenging than rewarding performance. The behaviors that this system would reward include good customer relationships and helping other employees expand their capabilities. Employees having such desirable behaviors would receive a bonus in addition to their salaries. For both performance and behavior rewards, the employees would get remarkable appreciation and recognition from the management. The appreciation and recognition of outstanding employees would involve appreciating an employee directly by word of mouth or by email. Such employees would be recognized appropriately so as to motivate them to perform further. The reward system would also a list of the top performing employees of the week on the company’s notice board. This will give the employees a chance to see the best among them and encourage them to appear on top of the list (Mondy, Noe, & Gowan, 2005). The reward system would motivate employees to perform at their best in their respective department. Given the list of the top workers, all workers would strive to appear on the top of the list. According to the company’s financial performance, it can cater for the financial requirements of the reward system sufficiently. Ethical business behaviors The current strategy of Coca-Cola Company supports business ethics. The company seeks to produce healthy products while at the same time being environmental conscious. In its vision statement, the company seeks to help build and maintain sustainable communities. The company’s strategy calls for good business ethics to achieve core objectives of the strategies. In promoting good health through its products, the company promotes business ethics in all departments (Paliwal, 2006). Over the last few years, the company has received negative publicity concerning the side effects of its products. According to the company, all the products are fits for consumption and do not have any long term effects. This kind of publicity has tainted the image of the company and hurt its profits. Since then, the company has embarked on a campaign to reach to consumers and advocate for their healthy products. Such a campaign calls for good business ethics to achieve its core objectives. References Coca-Cola Company annual report 2012. (n.d.). Coca-Cola. Retrieved March 12, 2013, from assets.coca-colacompany.com/c4/28/d86e73434193975a768f3500ffae/2012-annual-report-on-form-10-k.pdf Finkelstein, S. (2010). Advances in mergers and acquisitions. United Kingdom: Emerald. Gottlieb, R. (2009). Food & beverage market place, 2009 (8th ed.). Millerton, NY: Grey House Publishers Hume, D. A. (2000). Reward management: employee performance, motivation and pay. Oxford, UK: Blackwell Publishers. KO Profile | Coca-Cola Company (The) Common Stock - Yahoo! Finance. (n.d.). Yahoo! Finance - Business Finance, Stock Market, Quotes, News. Retrieved March 12, 2013, from http://finance.yahoo.com/q/pr?s=KO Keegan, W. J. (2005). Global marketing (4th ed.). Upper Saddle River, N.J.: Pearson/Prentice Hall. Lowe, L. (2013, January 15). Coke Recyclable Plastic Bottle Wins Award (Infographic): The Coca-Cola Company. Coca-Cola Journey Homepage: The Coca-Cola Company. Retrieved March 12, 2013, from http://www.coca-colacompany.com/coca-cola-unbottled/cokes-recyclable-plastic-bottle-wins-award-infographic Mondy, R. W., Noe, R. M., & Gowan, M. (2005). Human resource management (9th ed.). Upper Saddle River, N.J.: Pearson Prentice Hall. Paliwal, M. (2006). Business ethics. New Delhi: New Age International. Pride, W. M. (2008). Marketing (14th ed.). Boston: Houghton Mifflin Read More