Coca-Colas Global Strategies - Case Study Example

PROGRESS REPORT: COCA-COLA Name Date Course Introduction Coco-cola is undoubtedly one of the world’s most recognisable names – its recognisability knowing no political, ideological, social economic and political boundaries. This status, however, did not happen by accident \or sheer luck. The Company has always exerted formidable and sustained effort to impose its presence everywhere and all the time – even during wartime – nor it is afraid to bring back old strategies it already discarded for several times. The company, therefore, is a survivor that has withstood challenge from competitors, both international and local. Today, the Company is at the top of the beverage industry with its closest competitor miles behind it. With a presence established in almost all countries, highly developed, developing and underdeveloped, Coca-Cola earns billions of dollars in sales from its highly valued brands of beverages. Nonetheless, it has not always been a bed of roses for the Company as has faced environmental, ethical and legal issues in the past relative to its operations abroad. Background: History of Coca-Cola The history of The Coca-Cola Company began in Atlanta, Georgia in 1886 when a pharmacist by the name of John Pemberton created a drink that was a mixture of soda water, lime, coca leaves and Brazilian shrub weeds. Pemberton was heavily into research for the perfect medicine and was experimenting in the use of coca leaves to aid digestion and extend life when he happened to chance upon the mixture (Petretti 2008). He sold it at 5 cents a glass in a pharmacy in Atlanta in a soda fountain. His friend Frank Robinson, another pharmacist, suggested the name Coca-Cola because it sounded marketable and a patent for it was granted in 1887 (Petretti 2008; Ford 2007). Despite the success of the drink, Pemberton sold its recipe to Asa Chandler, another druggist, in 1891, for the price of $2300. A year later, it netted sales ten times higher than the previous year and Chandler in association with several others formed The Coca-Cola Company. Coca-cola, during this time, was advertised as a medicinal drink and advertisements for it used the slogans ‘Delicious and Refreshing’, ‘Ideal Brain Tonic’, ‘Cures Headache’ and ‘Relieves Exhaustion.’ By 1895, all states and US territories were selling the product. It was around this time that the company began to drop the medicinal claims of the product and just simply hanged on to the “Delicious and Refreshing’ slogan. In 1899, the Company entered into a contract for franchise bottling (Petretti 2008). When Chandler became the mayor of Atlanta, he gave the supervision of the business to his family who sold it in 1919 to Ernest Woodruff for a whopping price of $25 million and in 1923 his son Robert took over its helm (Ford et al 2007). Under the Woodruffs, facilities were expanded and a syrup plant was added. In addition, bottles for the drink were made uniform to differentiate it from others who tried to duplicate the product (Piretti 2008). In 1929, the product was being sold outside the US and in as many as 76 countries (Hill 2012). Global Strategies Through the years, The Coca-Cola Company’s global strategies continuously evolved dictated by the realities of the time. Its willingness to meet the challenges of the time and even drop an old strategy for a new one and back again to the old one contributed to the company’s success. The Company’s foray in the international market began in 1902 when Coca-Cola first ventured outside the US selling its product in Cuba. Its rapid growth in the international market was evidenced by its established presence in 76 countries just 27 years after that. The two world wars did not deter the company from its campaign as even during the wars it managed to become as visible as ever by integrating itself into war efforts entering into a deal to supply US soldiers with the product wherever they went. Nor did it stop expanding itself during the war as it put up more plants all over the world (Hill 2012). In the hands of various CEOs, global strategies were made and unmade. With the assumption of Roberto Guizueta as company CEO in 1981, Coca-Cola began to change course in its global strategy. Prior to Guizueta, the company gave leverage to local managers to handle their operations. The new CEO believed that the global market must be handled differently because the Company had not penetrated it as much as it did the home country. Thus, localisation was minimised and centralisation given emphasis. The Company made a renewed effort to push its top brands to the international market and control bottlers by buying into their shares. In addition, Guizueta adopted a one-size-fits-all strategy for all markets, local or international (Hill 2012). By the late 1990s, the ‘one-size-fits-all’ strategy became irrelevant and ill suited to the new realities, a fact realised by the new CEO Douglas Daft. New local competitors were beginning to sprout, which were threatening to gain into the beverage market and the company needed to respond to the challenge. Daft reversed the Company’s strategy and once again stressed localisation giving local managers leverage in decision-making and shaping operational strategies. This entailed trimming the Atlanta head office with unnecessary personnel, about 6,000 of them (Hill 2012). By 2002, the swinging pendulum of the company’s global strategy that swung between localisation and centralization was about to swing to the other side again with the failure of the Daft strategy to gather steam and realise profits for the company. Under Neville Isdell, the Company again was poised to return to the centralisation strategy, but with some variation. Although the headquarters had the prerogative to review and guide local managers, the latter retained the power to shape marketing and operational strategies. Isdell also introduced the strategy of bringing into other markets products that made a hit in one market as was in the case of Italy’s Illycafe and an orange-based drink developed by Coca-Cola China, which made a hit in that country, and was brought by the Company to other Asian countries (Hill 2012). The Coca-Cola Company Today Today, the Coca-Cola Company is considered the number 1 non-alcoholic beverage company in the world employing about 150,000 employees scattered all over hundreds of countries. It carries 500 beverage brands all valued at $16 billion four of which are at the top of the 5 most popular soft drinks: Coca-Cola, Diet Coke, Fanta and Sprite. Other products include sparkling drinks, water, juice drinks, energy and sports drinks (The Coca-Cola Company Profile 2013). Forbes ranked the company third in the World’s Most Valuable Brands, after Apple and Microsoft, which both belong to the technology industry. Its closes rival in the beverage industry, Pepsi, is ranked a far 25th, followed by Nescafe at 27th, and Red Bull at 69th (World’s Most Valuable Brands 2013). It goes without saying, therefore, that Coca-Cola is without question at the top of the beverage industry virtually unopposed. The Company’s market might is evidenced by its financial profile. With a present market capitalization of $173.05 billion and sales at $48.02 billion, Coca-Cola continues to expand its portfolio, making acquisitions here and there. In 2012, for example, it acquired 50% of the Aujan Industries’ Beverage Company, one of the largest independent beverage companies in the Middle East and a subsidiary of Aujan Group of Companies based in Saudi Arabia. Early this year, Coca-Cola likewise bought the Sacramento Coca-Cola Bottling Company and subsequently after acquired interest in Fresh Trading Ltd. (World’s Most Valuable Brands 2013). Like many big companies, Coca-Cola is not spared from issues that mar its corporate reputation. In 2003, for example, the Company faced protests from many Indian districts for causing scarcity of water, and for affecting its quality as well. The water shortage was allegedly due to its large-scale extraction for its manufacturing needs in India. In addition, the residents alleged that it was polluting water sources because the waste water from its operations finds its way to the water source. Although the High Court of India eventually sided with the Company (The Rights to Water and Sanitation 2013), this episode was a black eye to Coca-Cola’s integrity and reputation. As a leader in the beverage industry, Coca-Cola is constantly motivated to be the leader in innovated technology. It is presently being kept busy to develop the next generation PlainBottle even as the present generation PlainBottle, which is made of renewable plastic because it is made of plants, is already making waves for its recyclability (The Coca-Cola Company 2013). Conclusion The Coca-Cola Company is one of the most successful companies in the world successfully establishing a formidable presence in all four corners of the world. It is ranked with the top guns in the corporate world, such as Apple, Microsoft and IBM, which all belong to the technology industry and earns billions of dollars a year from sales of its high valued brands. A scrutiny of its history shows that the success it is enjoying today is hard-earned and a result of a sustained and earnest campaign to make itself visible and relevant all the time even during conflicts. The Company also does not have qualms about discarding and taking on new strategies as it sees fit even if it means readopting an old strategy it had already abandoned over and over in the past. References 2013, The Coca-Cola Company profile, Yahoo Finance, 2013, World’s most valuable brand, Forbes, < http://www.forbes.com/companies/coca-cola/> Ford, W, Stephens, R and Cooper, L 2007, ‘Coca-Cola case study: an ethics incident’, Archive of Marketing Education, Hill, CWL 2012, International business: competing in the global marketplace, 9th edn, McGraw-Hill/Irwin, New York, NY. Petretti, A, 2008, Petretti's Coca-Cola collectibles price guide: the encyclopedia of coca- cola collectibles, Krause Publications The Coca-Cola Company, 2013, The bottle of the future, The Rights to Water and Sanitation, 2013, Case against Coca-Cola Kerala State: India, Read More