Business Case Analysis of Coca Cola - Essay Example

?International Business Case Analysis----Coca Cola Table of Contents Table of Contents 2 Introduction 3 Identification of Stakeholder’s Goals, Problems and Concerns 4 Identification of Problem 5 Analysis of the Alternative solution 8 Recommended Solution 9 Implementation Plan 9 Conclusion 10 References 11 Bibliography 12 Introduction In this dynamic global business environment, organizations worldwide in recent times are getting primarily dictated by the market dynamics. The profitability of the organization and acquiring market share has increasingly taken the centre stage in the organizational planning and growth endeavor. In the provided case, a scenario that concurs with this market situation has been presented. It is observed that Coca-Cola, a leading name in the global soft drinks industry is facing a challenging scenario in one of its prime operations base, i.e. Brazil. In terms of potential and growth prospect Brazil is recognized to hold innumerable prospects for future. In this growth path a main obstacle has turned out to be the Tubainas. The case has also thrown light on existing market scenario of Brazil along with consumer behavioral scenario and competition that is present for Coca-Cola in their endeavor of increasing their market share. The growth of B brand as a substitute for the global brands such as Coca-Cola and Pepsi and the reason behind such occurrence have hogged the center stage in the case discussion. The competitive endeavor of Coca-Cola has also been demonstrated in the case in which they have taken strong steps to overcome the stiff competition posed by the rivals in Brazil. The analysis of the provided case will identify major stakeholders in the case and their problems, goals and concerns. Consequently, the report will spot the problem that needs to be resolved and will also find alternative solutions to the identified problems. From the analysis of the alternative solutions a set of detailed recommendations will be presented. In the concluding part, a brief summary on the critical difficulties posed in the case will be highlighted in relation to recommended solutions. Identification of Stakeholder’s Goals, Problems and Concerns The provided case identifies number of stakeholders. The prime stakeholder that has been affected by the described events in the case is the Coca-Cola’s subsidiary situated in Brazil. Their conundrum can be observed as “for about a decade, the Coca-Cola Company’s Brazilian subsidiary tried to stop the growth of Tubainas”. The troublesome scenario of Coca-Cola in Brazil can be comprehended from the statement in the case that “rather than the cola war (the name given to Coke versus Pepsi competition in many countries), the real issue for the Brazilian subsidiary of the Coca-Cola Company has been the Tubainas war”. The multifarious assumptions that have been made here by the Coca-Cola’s Brazilian subsidiary are that they feel that they have been deeply harmed by the Tubainas’ unfair competition. It also further assumed that “price advantage held by Tubainas was only possible through tax evasion practices”. Tax evasion helped them to stay strategically ahead of its competition. This was an unethical practice by the Tubainas. The major goal of the stakeholders was to build closer ties with the Brazilian consumers in order to improve its image and garner the goodwill. Since the Coca-Cola was accused of economic abuse and unfair trade practices the objective of the company lies in “refuting the allegations, affirming that all were entirely false and was totally inconsistent with the Coca-Cola’s ethical behavior”. It also wanted to stop the Tubainas growth. For this reason it took over few competitors. In light of the declining market share in Brazil, the company’s main goal was to fight back and regain its original position. It took several actions such as reducing the overall price with the aim to hamper the Tubainas growth. The other goal as identified in the case study is “to lead the Brazilian subsidiary to the position of largest overseas operation, surpassing Mexico”. The major concern underlying the demands was that despite the unethical practices by the Tubainas, “some Tubainas manufacturers became quite successful business cases”. This had badly affected the operation of the Coca-Cola. The company was being harmed by the declining market share in Brazil as this helped its rivals such as Tubainas to grow and take away the customers of Coca-Cola. Identification of Problem The key problem upon which the overall case has been based upon is related to the growth of Tubainas. It has also been identified that despite “Brazil being a large market and Coca-Cola the third largest operation the average consumption of Coke in the country was relatively low”. The competition from Tubainas affected Coca-Cola’s growth plan in Brazilian market. Another major important factor was that Brazilian consumers were regarded as being categorized in the Social Class C group. According to the study, “brand was the least important factor in the food purchase decision of Class C”. This led them to favor lower priced products. It was because of the class C consumers’ behavior that resulted in significant market losses. The other competitors such as Ambev and Pepsi also seem to be a problem for the company. The problems that are less central but needs due attention is that “Brazil was Coca-Cola’s third market in sales and ranked worrisome 20th position in terms of profitability”. This was a disappointing rank, which resulted because of the local subsidiary decision to keep the price in Brazil low in order to prevent the growth of Tubainas. The unavailability of the soft drink vending machine also seems to be a problem that needs to be provided attention. The problem that can be ignored for foreseeable future is the slow rate of growth of the nonalcoholic beverage market. It was argued that the volume of ‘nonalcoholic drink’ sales in Brazil was “still rather small compared to the market potential”. The overall problem is related with the concepts of consumer behavior and competition. Therefore, it is important to understand the concepts. Consumer behavior is the study of individual, group and processes that are used by them to ‘select, secure, use, and dispose of products, services, experiences and ideas in order to satisfy their needs’. It further studies the impact that the processes have upon the society and the consumers (Perner, n.d.). The consumers make certain purchases in order to satisfy the problem. There are varieties of alternative solutions available to the consumers to choose from. Understanding of the consumer behavior is the vital aspect of the marketing (Oxford University Press, 2011). The concept of competition also has a major impact upon the Coca-Cola. Therefore, it is important to understand what competition is. According to the views of the economist, the term competition is not seen in terms of rivalry, but they view it in terms of market performance. It can be defined as the processes whereby the market forces operate freely in order to assure that the limited resources are employed as efficiently as possible in order to maximize the economic welfare (Kolasky, 2002). Analysis of the Alternative solution At first it is important to determine the reasons behind the low consumption of Coke in Brazil. Determining the problem of this kind helps to provide enough solution. If the reason behind the low consumption rate has been the price, then the company should make its pricing strategies in such a way that it is appealing to the consumers and stimulates their consumption rate. The other alternative solution can be the introduction of the product that would be superior to the Tubainas, but would be attracting the C class of Brazilian consumers or any other consumer groups who would prefer brands such as Tubainas. This would be based for only those consumers for whom brand doesn’t play a vital role. If the following step is taken then this will help the company to attract the consumers. This will also help to beat the competition that is being faced from the Tubainas. The recommended solution may be perceived as beneficial for the stakeholders. The company may however face certain difficulties while implementing this solution because reduction of the price may affect its other operations. If, for instance, the sales volume doesn’t increases despite the reduction in the price, then the corporate profits may be reduced. Moreover, it may be perceived by the consumers that the quality is being inferior. Hence, this perception of inferior quality may compute new problems for the company. The uncertainties that might arise in this case are that the consumer’s attitude and perception regarding the quality and brand may undergo a change. Moreover, according to the study it has been found that the Brazilian consumers are adopting various responses to cutback cost on food and beverages expenditures by preparing meal at home. Moreover, few of the private label food and the non-alcoholic beverages are almost identical to famous brands (Slideshare, n.d.). Recommended Solution It would be prudent for the company to have a thorough analysis of the consumer behavior and act accordingly. Understanding of the consumer behavior can be helpful for the company as this will assist them to tap the consumer psychology towards price, product and related organizations. The company also needs to focus on development of various strategies both for product and pricing with the aim that they can target even the untapped consumer segment and hence increase the market share and profitability. Implementation Plan At first the consumer psychology is to be understood regarding their likes and dislikes and the plan needs to be made transparent to the consumers via surveys. For this the company can go for test marketing through which the demand for the product can be anticipated. After getting better response the companies can go for implementing the plan. This might help the company to secure back its position and make the product the most preferred in Brazil. In order to evaluate the strategies performance, the companies will keep a constant watch upon the changing tastes and preferences of the consumer as well as conduct external analysis of Brazil and the other countries that it wants to target. If the demand for the product increases and the company gains market share then it depicts that the strategy is working well else the company needs to immediately follow other alternative strategy in light of the problems that it is encountering. Conclusion The overall case analysis has helped in the identification of the problem in relation to the Coca-Cola case study. However, the main difficulties as stated in this case have been the growth of the Tubainas which has been hampering the growth of Coca-Cola. Tubainas has been one of the low priced products and used by the consumers who are not brand conscious. Therefore, in light of the problem various alternative solutions have been detailed such as development of the product almost similar to Tubainas, however quite superior in quality in comparison to Tubainas. This solution might help the company to beat competition. References Kolasky, W. J., 2002. What is Competition? Protect Competition, Not Competitors. [Online] Available at: http://www.justice.gov/atr/public/speeches/200440.htm [Accessed January 12, 2011]. Oxford University Press, 2011. Consumer Behaviour. Chapter 6. [Online] Available at: http://www.oup.com/uk/orc/bin/9780198775768/freelecturer/manual/imchap06.pdf [Accessed January 12, 2011]. Perner, L., No Date. Consumer Behavior: The Psychology of Marketing. Introduction. [Online] Available at: http://www.consumerpsychologist.com/ [Accessed January 12, 2011]. Slideshare, No Date. The Global Economic Crisis: The Impact on Consumer Attitudes & Behaviors in Brazil. Reportlinker. [Online] Available at: http://www.slideshare.net/ReportLinker/the-global-economic-crisis-the-impact-on-consumer-attitudes-behaviors-in-brazil [Accessed January 12, 2011]. Bibliography Gertner, D. & Et. Al., 2005. Coca-Cola’s Marketing Challenges in Brazil. The McGraw-Hill Companies. Read More