Coca Cola Companie's Corporate Level Strategy - Case Study Example

Cultural Diversity-The coca- cola company (Name) (Course) (Institution) (Instructor’s name) (Date due) Introduction This report seeks to provide an analysis of the Coca Cola Company, which is rated as one of the Top 50 Best Companies. The report will offer an analysis of the company’s internal as well as external environment, which will be assessed to find out if it is in a competitive position or not. The report will also identify the company’s corporate level strategy and make recommendations on the area that have to be worked on to ensure the company remains effective and competitive. All these will be based on workplace diversity of the company. History and Growth The Coca-Cola Company, headquartered in Atlanta, Georgia is a market leader in retailing, manufacturing and marketing of non- alcoholic beverage syrups and concentrates. The company is known for its major product Coca-cola that was invented by John Stith Pemberton, a pharmacist, in 1886. In 1889, Asa Candler first bought the Coca cola brand and formula and later incorporated the company in 1892. Currently, the coca-cola company offers over 500 brands in more than 200 territories or countries and supplies 1.6 billion servings every day. The company runs a franchised system of distribution dating since 1889. It only produces syrup concentrates which it then sells to different bottlers internationally. The Coca-Cola Company owns its anchor bottler Coca-Cola Refreshments in North America (Neil, 1995). Workforce diversity The coca-cola company centers on diversity. Its leadership on gay, lesbian, transgender and bisexual equality is reflected both in its achievement of hundred percent on Corporate Equality Index (CEI) and its support for antidiscrimination legislation aimed at protecting the employees. The company strives at creating a favorable work environment that offers all staffs same access to development, opportunity, and information. Diversity is an essential part of the company. This year, the company has been ranked number twelve on the DiversityInc list, while in 2008 it was listed number two out of top fifty companies in terms of diversity. It was also named as the best company to work for in the United States. This was evaluated in terms of mentoring and training programs, employees’ benefits, educational opportunities and work policies. Additionally, coca-cola was also named in the Hispanic Business Magazine which evaluated the companies in terms of promotion and recruitment, community outreach and leadership. The table below shows percentages of workforce as at 31 December 2010. Of these 51 percent are male while 49 percent are female. Ethnicity Percentage of workforce African American 20 Asian 5 Caucasian 65 Hispanic 9 Other ethnicity 1 Total 100 Vision: The Company’s vision is to hire, expand and advance women, and attain true diversity. Mission: The Company will mirror the rich diversity of the marketplace it serves, and will be acknowledged for its leadership in Diversity, insertion and equality in all features of our business, including market place, workplace, community and supplier. Diversity plan and diversity legal issues The company has a diversity plan that focuses on diversity education. Employees are necessitated to complete a diversity training that embraces diverse diversity. Before the coca-cola initiated this plan, the company had faced difficulties particularly in 1990s. African Americans workers had filed lawsuits against the company. Coca-cola reacted to this in 2000 and announced a diversity program campaign that allocated more funds to female and minority. Structure Structure is a basic notion that refers to the recognition, stability and nature of relationships and patterns of entities. A structure can be hierarchy or a network featuring relationships. In 2010, the Coca-Cola Company made various modifications in its structure from top management to the bottom staffs in terms of power. Previously, during the reign of Doug Ivester, the coke company had a centralized organizational structure which later cramped down to a decentralized one after his resignation. By endorsing a decentralized organizational structure, the company has been capable of putting individuals in the most appropriate leadership positions all over the world and in the United States. The company elects right leaders with right capabilities and talents based on workforce diversity. This has helped the company grow and may be, happen to be more dominating even in the future. Geographically, coca- cola is split in to five strategic business units. The company has six functional departments which include marketing, finance, packaging sales, research and development, and administration. Thus, the company has a marketing, finance, human resource, and operations organizational structures. All these structures, with leaders having key responsibilities work together to assist the company meet its objectives and accelerate its success. Organizational levels Currently, the Coca-Cola company hires roughly 94, 800 employees. It is certain that, majority of the work force comprise of general staff, with one managing director and a number of managers for the different departments. Growth Since its establishment, the company has recorded a positive growth in terms of introduction of new products in the market, sales, profits and revenues. This growth was initiated by diversity plan of the company that was put in place in 2000. In the financial year 2009, Coca Cola Company registered annual revenue of 31 billion US dollars, a 3% decrease compared to the previous year, with an operating income of more than 8 billion US dollars. In the same financial year, the company had a net income of not less than five billion US dollars, which was an 18% increase compared to the previous year, total assets amounting to more than 48 billion US dollars and a sum equity of 25 billion US dollars. The table below shows the company’s growth rate between the years 2005 and 2009 Sales and income data, in millions 2005 2006 2007 2008 2009 Net sales $23,104 $24,088 $28,857 $31,944 $30,990 Net income (profits) $4,872 $5,080 $5,981 $5,807 $6,824 Units sold, in billions 20.6 21.4 22.7 23.7 24.4 Strengths One of the major strengths of the Coca Cola Company is that it has an added competitive advantage for being a leader in the soft drink industry for more than a century. Besides, the company has also accrued global acceptance by establishing its global presence in new locations and markets worldwide. The company also offers a range of products such as diet drinks, bottled water, coffee and tea, which provides consumers a variety of products to choose on, in over two hundred countries (Paul, 2004). This differentiation and diversification of products has made the company attain wider market coverage, making the company more profitable. Its other products such as Fanta, Coca Cola, Coke Diet and Sprite, are the most famous soft drinks in the market today (Paul, 2004). The additional profits the company attains from its increased sales are channeled to advertisements and massive brand campaigning, a venture that has made the Coca Cola brand and its products well known, hence sustaining existing markets and making greater entries into newer markets around the world. The company’s increased income flow enables it to heavily invest in market research and analysis of its customer base, which aid in the development and implementation of the company’s strategic plans. The strategic plans enable the company to achieve increased production capacity and higher performance (Smith & Mellisa, 2005). Furthermore, Coca Cola handles and controls over 30 beverage producing industries, enabling it to develop its sustainable infrastructure in processes, operations and work performance. Weaknesses Despite being the market leader, Coca Cola has major weaknesses. One of these weaknesses regards the current harsh criticisms and lawsuits the company has had regarding the quality of its products. India’s products were reported to contain pesticide deposits considered lethal to human health (Paul, 2004). This allegation contains negative impact on the safety, health, quality and environmental standards of the company, hence degrading its reputation across international markets. The company has also been unwilling and slow to adopt the new product innovation, unlike its competitors who have taken the risk and benefited from the innovation that meets the contemporary changing customer preferences (Smith and Mellisa, 2005). Such financial expenditures reduce the company’s ability to venture into other significant operations such as research and market analysis. This also exposes the company into financial risks, for example, debts considering the fact that global interest and exchange rates vary from country to country. Opportunities Global markets provide conducive opportunities the company can take advantage. For instance, the company can invest in alternative bottled waters and healthy drinks. Dasani waters has shown tremendous growth and attained wider market coverage, therefore, Coca Cola can take advantage of this opportunity and come up with another brand of bottled water. This is accompanied by the contemporary changing preference to healthier products (Paul, 2004). The company has greater opportunities to grow and develop in acquisitions, which will enable the company to expand and produce more innovate products fro the new international markets. There are countries that have not yet been reached. This will in turn provide more room for revenue flow. Some of the company’s previous acquisitions include Minute Maid, Barqs, Odwall, Thumbs Up and Fuze Beverage, (Paul, 2004) just to highlight a few. Threats Some of the major threats the company faces include increased competition from both local and international companies. Stiff competition leads to a reduction in the products’ prices and market share (Porter and Kramer, 1999). Besides, increased dependence on bottling partners for which the company dose not have ownership interest infers that actions and decisions settled on by the bottling partners may be unfavorable to the company. The current perception and research findings that depict soft drinks as unhealthy drinks because of the high levels of sugars, carbonated acids and other preservatives they contain have adverse outcomes to the company basing on the fact that the company relies heavily on the soft drinks business (Plasketes, 2004). The effects are already seen since many people today prefer bottled water than a bottled soda. Evaluation of the company’s strategies Despite the existing weaknesses and strengths, Coca Cola remains a strong brand and a market leader in the soft drinks industry. It is also among the top companies in terms of diversity and this ahs contributed greatly to its success. Dasani water, one of its products remains the second best selling bottled water in the global markets. The huge investments the company channels to market research and advertisements show the willingness of the company to diversify its products to meet the contemporary changing consumer, tastes, preferences and trends (Paul, 2004). The images in the marketing material which include websites, advertisements, and brochures are also reflective of the society. However, the company faces a stiff competition from other companies such as Pepsi Company since the company has not been able to fully implement non-carbonated production technologies. Even though, the company has been able to establish a remarkable international presence. Corporate Level Strategy The company has set goals and objectives which it aims to achieve through proper leadership management. These goals include: control diversity to attain superior outcomes across our business uphold a positive diversity, and equality across our international operations Build a greater cross-cultural knowledge and understanding The corporate strategy of the company is also aligned at managing and countering risks both at domestic and global markets (Barbara et al, 2001). This includes dealing with the issue of shortage of quality adequate water in its regions. Water is the major constituent of Coca Cola products and finding quality of it is proving difficult since majority of global economies have inadequate water supply owing to poor storage, insufficient rainfall, pollution and poor supervision. Therefore, among strategic plan is to establish sustainable supply of water in order prevent increased costs of production. So far, the corporate strategies have partially succeeded as the company and the brand remains strong and stable in the market. Production of Dasani the second best selling bottled water shows the willingness of the company to diversify its products and keeping note of changing consumer trends, tastes and preference (Pendergrast, 2000). Investment in product testing and fair treatment of workforces has ensured production of quality products that meets international standards. However, the rate of growth between Coca Cola and competitors is almost at per, as the company has not fully implemented non-carbonated product innovation. Moreover, it has not been able to make use of its international customer base to establish its global presence and create its own bottling plant, which would reduce costs. Legal Readiness Many people have a belief that affirmative action is a form of racism, but in actual sense, it is used to aid the minorities get employment in the racist world. In the United States for instance, equality is one of the recurring themes that has flared into fervent moral issues throughout the American history. The coca cola company has been subjected to a racial discrimination lawsuit on the basis that the company underpaid the blacks and created a hostile environment for them. It therefore had to come up with an affirmative action plan that will promote equal employment. The affirmative action plan describes its goals and how it intends to attain such goals, in order to avoid discrimination in the market. The company conducts periodical analysis of its markets in order to provide a full understanding of its customers needs across the globe. This enables the company to retain its customers and attract new ones, regardless of the stiff competition it faces from Nestle and Pepsi Inc. The company has also moved from the traditional mass marketing to the current targeting marketing strategy enabling it to produce products that meet customer needs (Porter & Kramer, 1999). Coca Cola has a strategy seeks to manage and counter risks it encounters in local and international markets. Implementation of the company’s strategy Change has become the main issue for organizational leaders. Change is happening in all places and its complexity is increasing. How well the organizational leaders manage this change will determine the organizations success (Minal, 2010). Coca- Cola Company has faced a number of changes both in the internal and external environment which has led to its success. For instance, the company established a diversity plan in 2000 which has led to its success. In the external environment, the company changed the tastes and expectations of the consumers. This included adopting coca cola zero and diet coke to deal with obese consumers as obesity was seen to increase especially in United States. The company also introduced Enviga, a soft drink meant to burn calories in order to deal with the health and fitness of its customers. This change is caused by health and fitness trends and consumer tastes which had a major impact on the company’s business (Campo, 2004). Employee motivation is vital for the success of every company. This can be achieved through rewarding the staff by increasing their salaries, increasing their rests days, recognition, career development and promotions among others. This is included in the company’s diversity plan. The coca-cola company always rewards its staff in order to increase work efficiency leading to the company’s success. The company’s culture affects the industrial relations between the employees and the managers. Poor culture results to disagreements between the top management and the staff, leading to no motivation thus inefficiencies in production. For instance, reducing employees rest days, bias in promotions, poor working environment may lead to conflicts with the management leading to work done inefficiently. Levels of hierarchy A president, who is based in the company’s headquarters at Atlanta, heads the company. The divisional manages, also known as vice president, run the company in general regions of the globe. They supervise other operations in their jurisdiction such as marketing, human resource, research and innovation, finance and public affairs. Recommendations The company should adopt the following recommendations: To invest in product differentiation to cater for the health conscious customer i.e. compete in producing and selling bottled water, teas, coffees, energy and sports drinks To encourage product innovation considerate of promoting good health and offering nutritional values To make use of modern technological solutions to enhance its competitive advantage promote effective and functional relationships with its bottling partners Conclusion This case analysis of the Coca-Cola Company has focused on the history and growth of the company, its strengths and weaknesses, its external environment, corporate strategy, legal readiness, and the recommendations that the company is using to implement its strategies. It is clear that, diversity struggles is what has led to company’s success. In order to succeed in market, the coca cola company has also encompassed all the above and with good leadership, the company has become the market leader of soft drinks globally. References Barbara, S., George, M. and Anupam, J. (2001). Marketing Images: Construct Definition, Measurement Issues, and Theory Development, Marketing Theory, 1: 201 - 224. Campo K, Gijsbrechts E, Nisol P., (2004). Dynamics in consumer response to product unavailability: do stock-out reactions signal response to permanent assortment reductions? Journal of Business Research. 57(8):834–843 Dubé, J.-P. (2005). Product Differentiation and Mergers in the Carbonated Soft Drink Industry. Journal of Economics & Management Strategy, 14: 879–904 Minal, L. (2010). Implementing Organizational Change, Journal of Organizational Change Management, 19(2), 119 Neil, H. (1995). The World of Coca-Cola, 55 Martin Luther King Jr., Dr., Atlanta, GA 30303-3505, Journal of American History, 82: 154 – 158. Paul Gootenberg. (2004). Secret Ingredients: The Politics of Coca in US–Peruvian Relations, 1915–65. Journal of Latin American Studies, 36, pp 233-265 Plasketes, G. (2004). Keeping TaB: A Diet Soft Drink Shelf Life. The Journal of American Culture, 27: 54–66 Porter M, Kramer M. (1999). Philanthropy's new agenda: creating value. Harvard Business Review. 77(6):121–130 Smith & Mellisa, D. (2005). The hard truth about soft drinks. Natural Foods Merchandiser; 26, (3), p. 76-78. Read More