Coca Cola Company - Traits of Doing Business, Leadership and Globalization Advancements - Assignment Example

Name: Institution of affiliation: Professors Name: Course: Date: THE COCA COLA COMPANY EXECUTIVE SUMMARY The Coca-Cola Company is a high ranking company in the world dealing in the manufacture, production and sales of non-alcoholic beverages. It is a publicly owned company and is listed on various stock exchange beginning with the New York Stock Exchange. It has headquarters in Atlanta Georgia. It is currently head by Mr. Muhtar who is its President and CEO heading workforce of more than 7000. The company has done a number of acquisitions in the U.S. and also around the globe beginning with India. The company has a good financial base in its mother operations, in the U.S. that has seen it remain stable in most, if not all of its operations around the world. The company’s revenue stands at U.S. $ 48.1 billion as per the 2012 December. The company is well known for its Coca-Cola brand but has other brands such as Fanta and sprite that are doing well on various markets within and without the United States. Despite the global standing, the company has been criticized on various fronts including the overuse of water in India, Health concerns of the products, and the violation of human rights among others. The company has been able to counter most of the allegations by using all the absolving measures possible, such as doing research on their products and getting the approval of various bodies such as the European Union. The company has also been involved in various lobbying campaigns and sponsorship programs that have helped the company connect with some of its stakeholders, besides gaining popularity. Hence, the company is an outstanding example on various concepts of doing business, leadership theory and globalization advancements. Contents THE COCA COLA COMPANY 2 EXECUTIVE SUMMARY 2 Contents 3 Introduction 4 Ownership 4 People 5 Acquisitions 5 Revenue of the company 6 Stock 7 Lobbying 7 Bottlers 8 Civil rights 9 Criticism 10 Products and brands 13 Sponsorship 16 Conclusion 16 Reference list 17 Appendix 20 Appendix 1 20 Appendix 2 22 Appendix 3 22 Appendix 4 23 Appendix 5 23 Introduction It is an American multinational company dealing in beverages. It manufactures markets as well as re tails non-alcoholic beverage syrups and concentrates, and it has its headquarters in Atlanta Georgia. It is well known for its popular brand Coca-Cola that was invented by pharmacist John Stith Pemberton way back in 1886 in Columbus Georgia.1 The brand formula coca cola was bought by Asa Candler in 1889, and he went ahead to incorporate the company in 1892. Today Coca cola offers greater than 500 brands on top of the popular Coca cola beverage in over 200 nations or territories. In doing, so it serves above 1.7 billion servings daily. Coca Cola Company has in place a franchised system of distribution that is traced to 1889 where it only produces syrup concentrate that is then sold to several bottlers in different parts of the world who enjoy an exclusive territory. The anchor bottler of Coca cola is situated in North America, by the name Coca-Cola refreshments.2 Ownership Coca Cola Company is a publicly listed company appearing on among others the following listings: NYSE and is a portion of S & P 500 index, DJIA, the Russell 1000 as well as the Russell 1000 stock index of growth.3 People The company has around 146,500 employees. All these people are under the able leadership of its chairman & CEO Mr. Muhtar Kent.4 Acquisitions As a multinational company the company holds a rich history of acquisitions. The company acquired Thums UP-an Indian cola brand in 1993, Minute Maid in 1960, and in 1995 Barq’s. For a price of $ 181 million, it acquired the brand of Odwalla that deals in smoothies, bars and fruit juices. During 2007, it went ahead to acquire Fuze Beverage founded by Castanea Partners and Lance Collins for a circa $ 250 million.5 However, the company’s quest for acquisition hit a hurdle in 2009. Its bid to purchase the Chinese juice maker hit a dead end when china turned down its $ 2.4 billion offer to buy Hui yuan Juice Group citing that it would become a virtual monopoly. In addition, nationalism contributed to aborting the negotiated deal. In rather unique diversification move, Coca-Cola hit the headlines when it acquired none-beverage Company, Columbia pictures in 1982 for $693 million. It later disposed the movie studio for $ 1.5 billion to Sony in 1989.6 Revenue of the company As per the 2005 annual report, Coca-Cola sells products of beverages in above 200 nations. The report goes ahead to say that of the above 50 billion beverage servings consumed in the world daily, beverages having the trademarks belonging to or licensed to the company account for a circa 1.5 billion (most recent figures realized in 2010 indicate that they currently serve 1.6 billion drinks daily). Out of these, beverages carrying the trademark Coke of Coca-Cola accounted for circa 78 percent of the corporation’s total gallon sales.7 Moreover, as per the yearly report realized in 2007, Coca-Cola held gallon sales that were distributed in the following order: 42 percent in the United States, 20 percent across the world and 37 percent in India, Mexico, japan, Brazil and china In the year 2010, an announcement ran that Coca-Cola had come out as the first brand ever standing first at £1 billion in yearly sales of UK grocery.8 Stock Coca-Cola has been listed as a public company since 1919. A single share of stock bought in 1919 for $40, having all dividends ploughed back, would be valued at $9.8 in 2012, which is 10.8 percent yearly increase, inflation adjusted. In 1987, the company once more emerged as one of the 30 stock that comprise the Dow, (the industrial average of the Dow Jones) that is usually looked at as the stock marked performance. It had formerly been a Dow stock since 1932 to around 1935. Coca Cola Company has been paying dividends on a growing s scale year by year for 49 years. One can get the stock on a direct purchase program, via comprehensive trust company, however, dissimilar to many programs, it bears investment fees.9 Lobbying Currently Coca-Cola is a main lobbying force in the U.S striving hard to get in place a favorable legislation as far as the beverage industry is concerned. It used about $1 million to lobby in both 2006 and 2005. It consistently went on with the work spending $1.7 in 2007 and about $2.5 million in 2008. In the same spirit, the entire lobbying expenses went up by about double the previous year’s expenses to $4.5 million. A greater portion of the more lobbying expenses were directed towards fighting against heightened taxes that were imposed on the industry’s products-soft drinks as well as other sweetened beverages. This saw the company has 38 lobbyists at dissimilar firms lobbying for it for 2009.10 Consumer relations During the entire 2012, the company contributed to the tune of $1,700,500 to about $46 million political campaign called the coalition not for the costly proposition n for labeling food that was sponsored by food producers and farmers. This organization emerged out the need to oppose an initiative of citizens called proposition 37, wanting mandatory food labeling for foods having genetically modified contents. Consequently after the defeat of the proposition at the polls, backers came out strongly calling for a boycott of corporations that contributed to campaign of opposition.11 Bottlers Generally, the company together with its subsidiaries exclusively produces syrup concentrates that are then sold to several bottlers all over the world who possess a franchise of coca cola. Those bottlers of coca cola that have territorially exclusive contracts entered with the corporation produce en products in bottles and cans from the concentrated in the mixture with sweeteners and filtered water. The bottlers then distribute, sell as well as merchandise the end products of Coca-Cola to wholesalers, retail store, restaurants, bars vending machines and distributors of food service.12 One unique exception to this formula of a business involves the fountain syrups found in United States, whereby Coca Cola bypasses bottlers and takes the responsibility of manufacturing and selling fountain syrups without an intermediary to the authorized fountain retailers and fountain wholesalers. Civil rights Following the winning of the Nobel peace prize in 1964 by Dr. Martin Luther king Junior, plans to carry out interracial celebration could not originally begin in still-segregated Atlanta, until an intervention was done by coca cola since the business elite of the city, could not buy into the idea from the outset.13 The chairman then, as well as CEO of coca cola Company J. Paul Austin, together with the mayor Ivan Allen called important Atlanta business leaders, to the eighteenth floor dining room of the commerce club, where he explained plainly, it is awkward for Coca-Cola to be situated in a city that fails to honor its winner of the Nobel Prize coca cola carryout business activities internationally. The company does not depend on Atlanta. One is to make a decision on whether Atlanta still has a place for coca cola company or not. Just in two hours after meeting all tickets to the dinner had been bought.14 Nevertheless, cocoa-cola has also been accused of racial discrimination in its practices of employment and was subjected to a class-action racial discrimination concerning this during the early 2000s. Criticism Like other companies, the Coca-Cola Company is not an exception with regard to business ethics. It has been marred with controversies and lawsuits bordering on violations of human rights as well as other unethical issues. Several lawsuits have been instituted to the company’s allegedly discriminatory and monopolistic practices, part of which have not passed the test, part of which have forced the Coca-Cola company to shift its business practices, and other of which have been brought to rest outside court proceedings. Persistent criticisms concerning the relation of Coca-Cola Company to the Middle East, as well as the U.S. foreign policy, have been raised.15 The company has been under criticism on several environmental related issues. A matter relating to pesticides found in ground water, in 2003, caused difficulties for the corporation when a NGO of India, Center for Science & environment said that it had discovered cancer triggering chemicals in Coca-Cola and other soft drinks that the company produced, at degrees 30 times that regarded safe by the EEC (European Economic commission). As a result, the Indian Coca-Cola sales dropped by 11 percent. The health minister of India came out to clarify that the tests by CSE were not precise and that the tests by the government discovered pesticides levels acceptable by the standards of India but beyond the EU standards. The central science laboratory based in the UK and commission by coke discovered that coke products met the standards of the EU in 2006. The University of Michigan together with coke commissioned an independent study involving coke bottling plants by TERI (the energy & resources institute) that found the water supply free of unsafe chemicals in 2008; however, it condemned coke for the effect of its water practice on local supply.16 It is in the view of critics that Coca-Cola‘s overuse of local supplies of water in some places has caused seve4re shortages for farmers in those3 regions and even forced closure of part of the plants. What Coca-Cola uses to pack its products pose a significant effect on the environment? Nevertheless the company is strongly against attempts to bring up mechanisms like container deposit legislation. Coca-Cola was under attack for allegedly involving in violent suppression of a union at a number of its bottling plants located in Columbia South America. On August 2005, a story was run on the PBS”s Frontline on the controversy, where Coca-Cola through hardship denied entire allegations of union-busting as well as union leaders’ murder. A few stockholders together with a few colleges in the U.S have tried a boycott of Coca-Cola to force the company to accept what they refer to as a full scale investigation of the said charges.17 US FDA (food and drug administration) on December 10, 2008, wrote to the CEO and President of Coca-Cola Mr. Muhtar Kent warning him that it had been arrived at by the FDA that the label on the product of Coca-Cola-Diet Coke plus 20 FL OZ was violated the federal drug, cosmetic and food Act labeling requirements. As the interview went on with Reuters, the spokesman of Coca-Cola Company Mr. Scot Williams said that this did not comprise of any safety or health concerns, and they believe the label on the product is in compliance with regulations and policies of FDA.18 Moreover, when it dawned January 2009, a consume group of US know better as the center for science operating in the public interest instituted a lawsuit (class-action) against the company. The lawsuit concerned the allegations leveled in line with the flavors of the company of vitamin water. The allegations had it that the 33 grams of sugar are far much harmful as compared to how the vitamins, as well as other additives, were useful. The company on its part finds the suit to be ludicrous. Products and brands A part from its popular brand Coca-Cola beverage, the Coca-Cola Company, provides above 500 brands in more than 200 nations across the world. Some of the brands are fully owned, whereas others are partially owned. Tab represents the first trial of Coca-Cola to come up with a diet soft drink, with saccharin as a substitute for sugar. It was invented in 1963 and is still sold today, however, with the introduction of diet coke its sales have since gone down. Other popular brands produced by Coca-Cola Company include sprite and Fanta that was introduced in 1941. Fanta can be traced back to the World War II when the manager of the operations of Coca-Cola in Germany Mr. Max Keith, wanted to create money from Nazi Germany however, did not want to be painted negatively in the public. He decided to produce a dissimilar soft drink altogether, Fanta which hit the market and was adopted by Coca-Cola when it took again after the war. This brand became sprite which countered the 7 up.19 Coca-Cola south Africa was not left behind it introduced Valpre bottled sparkling and still water. The 1990s saw the company respond to the growing consumer needs for healthy beverages via introducing a number of new no-carbonated beverage brands. Some of these are minute maid, PowerAde, flavored tea Nestea, Fruitopia and Dasani water. During 2001, the minute maid brand section introduced simply orange juices brand comprising orange juice. As per of the development intrigues Coca-Cola responded to the increasing popularity of low-carbohydrate diets like Atkins diet, in 2004 by developing a low-carbohydrate alternative to Coke classic in the name C2 Cola. This contains a combination of a large fructose corn syrup, sucralose, aspartame and Acesulfame potassium. The product is made to emulate the Coca-Cola classic taste. Even with below half of the food energy as well as carbohydrates of soft drinks standard, C2 is not a substitute for zero calorie soft drinks like diet coke. C2 started selling in the U.S. on June 11, 2004, and August 2004 in Canada. The future of C2 is uncertain because of its unpromising sales. Coca-Cola stands out as the number one selling soft-drink in many nations and was voted as the best global brand in 2010. Whereas the Middle East is one of the exclusive locations in the world where the brand is not the leading soft drink, Coca-Cola, however, enjoys only 25% market share (to 75% enjoyed by Pepsi) and did also enjoy double-digit growth in year 2003. In the same way, statistics show that diet Coke and Coca-Cola now outshine Irn Bru in Scotland where it was renowned in 2005. Where Coca-Cola has not been performing exceptionally well such as Peru, it has been forced to buy a 50% stake in the local brand Inca Kola. 20 In 2006 July, two other people conspiring with a Coca-Cola employee were arrested and subsequently charged with attempting to sell trade secret data to the competitor of the soft drink, PepsiCo for $1.5 million. Coca-Cola’s recipe, maybe the company’ most safeguarded secrete, was not in any way in danger. Instead, the data was connected to a new beverage that was under development. Executives of Coca-Cola confirmed that the documents were valid as well as branded. The court documents revealed more than one glass vial having a sample of a new drink was provided for sale. The conspiracy came out via PepsiCo that brought to the knowledge of the authorities why they were advanced to by the conspirators. Coca-Cola announced a development of negative calorie ENviga-green tea drink in 2006, together with attempting coffee retail concepts Chaqwa and Far coast. 2007, May 25, the company announced it would buy Glaceau that dealt in flavored vitamin-enhanced drinks, commonly called vitamin water, burn energy drinks and flavored waters, for cash $4.1 billion.21 2008, September 3, the company announced its interest to create cash offers to buy China hui yuan Juice Group Ltd (that owns 42% of the fruit juice market of China) for about $ 2.4 Billion that translates to HK $ 12.20/share. However, the ministry of commerce of china intervened stopping the deal citing that the deal could harm small local juice firms, by pushing up juice market prices as well as providing limited choices to consumers. 2009 October, the company announced its development of a 90-calorie min can which carries 7.5 fluid ounces. Initial shipments arrived in the New York City as well as Washington D.C. markets by 2009 December and March 2010 nationwide. Generally Coca-Cola is a rich brand company with a rich history in soft drinks that has moved to a level of attracting tourists to Atlanta. Here, the company runs a soft drink that carries the theme tourist attraction within Downtown Atlanta, better known as Ga; the “Coca-Cola World” which is a multi-storied exhibition, exhibiting several flavors sold by Coca-Cola and a museum preserving the company history.22 Sponsorship The company as per 2011, its advertising expenses stood at $ 3.256 billion. The company sponsors various sports and games events within the U.S. and around the world. These include football leagues, basketball, Rugby, handball, tennis, Golf among others. Coca-Cola also supports the music and video games within and without the United States. It is one of the leading corporations involved in many activities that support talent, economic and social welfare at large.23 Conclusion The Coca-Cola Company is one of the leading multinational non-alcoholic beverage manufacturer and distributor in the world. It is headquartered in Atlanta in the United States. The company has a rich history of growth and expansion, having acquired operations in many parts of the world. Together with its subsidiaries it employees about 1.5 million people and has high potential of influence on the social, political and economic direction of the united states as well as other countries, it has a high stake of operation. The company has a good revenue record coupled with dividend and share value that have stood for decades and has a promising future. The company has also a good financial base and has always been able to make acquisition. Hence, the company is a stable company that has the potential to survive in competition, improve on production, and increase profitability. Reference list 1. "Coca-Cola Company, Form 8-K, Current Report, Filing Date Feb 12, 2013". The Secdatabase .com. Retrieved Feb 13, 2013. 2. "Coca-Cola Company, Form 10-K, Annual Report, Filing Date Feb 23, 2012". The Secdatabase .com. Retrieved Feb 9, 2013. 3. "The Coca-Cola Brands". Coca-cola company.com. Retrieved 2013-3-13. 4. Barq's Root Beer: History, Coca-Cola, retrieved January 2, 2013. 5. "Coke Buys Odwalla". (Oct. 30, 2001). CNN Money.http://money.cnn.com/2001/10/30/deals/coke_odwalla/ 6. "Coke's China juice move collapses". BBC News. March 18, 2009. Retrieved May 25, 2010. 7. One Share of Stock Now Worth $9.8 Million -- Is It Really Possible? 8. Decades of Great Performance From 9 Dow Stocks 9. The Coca-Cola Company Dividends 10. Coca-Cola shareholders OK 2-for-1 stock split 11. "Center for Responsive Politics, Coca-Cola". Opensecrets.org. Nov 20, 2009. Retrieved 2012-07-29. 12. "NOBEL PEACE PRIZE: In 1964, award to King stirred a storm". Atlanta Journal-Constitution. December 10, 2002. 13. Andrew Young (1996). An Easy Burden. HarperCollins. ISBN 978-0-06-092890-2. OCLC 34782719. 14. "Coca-Cola Company, Form 10-K, Annual Report, Filing Date Feb 23, 2012". The Secdatabase .com. Retrieved Feb 9, 2013. 15. "Coke's China juice move collapses". BBC News. March 18, 2009. Retrieved May 25, 2010. 16. "Center for Responsive Politics, Coca-Cola". Opensecrets.org. Nov 20, 2009. Retrieved 2012-07-29. 17. "UK experts say Indian Coke 'safe'". BBC News. August 14, 2006. Retrieved May 25, 2010. 18. Sharma, Ashok (January 15, 2008). "Water in Coca-Cola in India pesticide free". USA Today. Retrieved May 25, 2010. 19. "India Resource Center - How a Global Web of Activists Gives Coke Problems in India". Indiaresource.org. 2005-06-07. Retrieved 2012-07-29. 20. "Coca-Cola: Shareholder Resolution". Proxyinformation.com. Retrieved 2012-07-29. 21. "The Coca-Cola Case". 22. "Diet Coke plus: "Healthy" Soft Drink?" Diet-blog.com. Retrieved 2012-07-29. 23. "Best Global Brands Ranking for 2010". Interbrand.com. Retrieved 2012-07-29. 24. Coca-Cola West Japan IR report (in Japanese), 2008. 25. Tucker, Sun deep (March 18, 2009). "China blocks Coca-Cola bid for hui yuan". Financial Times (Hong Kong). Retrieved March 18, 2009. 26. (PDF) 2011 Annual Report, retrieved 2013-01-04 27. "History of Bottling". The Coca-Cola Company. 28. August W. Giebelhaus (May 13, 2008). "Coca-Cola Company". The New Georgia Encyclopedia. Georgia Humanities Council. 29. "Coca-Cola Company". Source Watch. Center for Media and Democracy. 30. "Coca-Cola Co". Lobbying Database. The Center for Responsive Politics. . Appendix Appendix 1 The Coca-Cola Company Type Public Traded as NYSE: KO Dow Jones Industrial Average Component S&P 500 Component Industry Beverage Founded 1892 Founder(s) Asa Griggs Candler Headquarters Coca-Cola headquarters, Atlanta, Georgia, U.S. Area served Worldwide Key people Muhtar Kent (Chairman & CEO) Products List of The Coca-Cola Company products Revenue US$ 48.01 billion (2012) [1] Operating income US$ 10.84 billion (2012) [1] Net income US$ 9.01 billion (2012) [1] Total assets US$ 86.17 billion (2012) [1] Total equity US$ 32.79 billion (2012) [1] Employees 146,200 (Dec 2011) [2] Subsidiaries List of The Coca-Cola Company subsidiaries Website Coca-ColaCompany.com Appendix 2 One of The Coca-Cola Company's headquarters buildings in Atlanta Appendix 3 The Coca-Cola Company's Minute Maid group North America offices in Sugar Land Town Square, Sugar Land, Texas, United States Appendix 4 Houston Coca-Cola Bottling Company Appendix 5 Coca-Cola Company's office building in Madrid Spain). 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