Coca-Cola and Innovation - Essay Example

Coca-Cola and Innovation Operating in more than 200 countries worldwide, Coca cola is the largest soft drink manufacturer in the world. Even though, PepsiCo is raising stiff challenges to Coke in many regions, still Coke was able to maintain its top spot because of the innovative business strategies implemented by them time to time. Coke never tried to stick with same marketing strategies for a longer period. They are always on the lookout for new things and their diverse product folios, innovative supply chain activities, creative advertising and marketing campaign etc helped them immensely to maintain their top spot for the past few decades. Coke is giving more emphasize to sustainable development and they are doing everything possible to preserve the environment in which it operates. According to Jeff Seabright, The Coca-Cola Company's vice president of environment and water resources, “sustainability begins with the simple act of paying attention. You can't manage what you can't measure"(Making Sustainability the Real Thing). This paper briefly analyses the innovation at Coca Cola which helped them to maintain their top spot unchallenged for a longer period. In May, 1886, Coca Cola was invented by Doctor John Pemberton a pharmacist from Atlanta, Georgia. John Pemberton concocted the Coca Cola formula in a three legged brass kettle in his backyard. The name was a suggestion given by John Pemberton's bookkeeper Frank Robinson”. On April 23, 1985, the trade secret "New Coke" formula was released. Today, products of the Coca Cola Company are consumed at the rate of more than one billion drinks per day (Bellis) Today, Coca Cola is the largest non-alcoholic beverage company in the world. It has more than 300 worldwide bottling partners at present which are working together with Coca-Cola to ensure success. Coke’s trademark is recognized by more than 94% of the world’s population at present. Innovative business strategies keeping in pace with the needs of the changing world made Coca Cola one of the all time great companies in the world at present. Coca cola grew constantly and continuously under the leader ship of many visionary leaders since its evolution in 1886. The president of coke in the 1990’s, Mr. Ivestor asked its employees “to think about what kind of growth would be possible in a market, and to figure out how to knock down the barriers to attain that growth instead of setting goals in the traditional style” (Strategic Leadership at Coca Cola: The Real Thing, p.6). “Ivester was known to be a CEO who communicated with people at all levels and ignored hierarchy” (Strategic Leadership at Coca Cola: The Real Thing, p.7). Ivestor tried to reduce the gap between top management and ordinary workers. He has realized that keeping normal workers away from decision making process may adversely affect the interests of the company and he started to accept suggestions and opinions from the employees even at the lower levels. This innovative strategy in management brought dividends to the organization. Coca Cola employees started to feel more sincerity towards their company and they started to witness Coke as their own company. The increased loyalty of the workers towards the company resulted in increased productivity. Daft, the successor of Ivestor also contributed heavily to the development of Coke company. “Whereas Ivester’s mantra had been Think global - act local, Daft’s vision leaned more toward Think local - act local” (Strategic Leadership at Coca Cola: The Real Thing, p.10). Daft realized the importance of localization of business more than Ivestor. Ivestor has tried to implement unique business strategies all over the world since he thought that same product needs same marketing strategies everywhere. However, Daft recognized the necessities of different marketing strategies across different cultures or countries. He tried to implement different business strategies for each market, rather than trying to implement a unique business strategy all over the world. He has realized the fact that even for the same product different business or marketing strategies are necessary in each market. This is because of the huge differences in markets with respect to culture, economy, politics, social set ups etc. Water is the most important raw material as far as soft drink industry is concerned. However, the fresh water resources in the world are exhausting day by day. Coke has suffered many criticisms from countries like India for the exploitation of ground water resources. Sustainable development is the corporate mantra at present, which is proposed and implemented by major companies as part of their social responsibility. Coke is also currently trying to uphold their social responsibility and the words of their present vice president Jeff Seabright are relevant here. As a matter of managing our business, we recognize the importance of having a global water strategy. We have a choice. We can either be reactive or we can really tackle this and understand the full range of issues and challenges around water and turn a risk into an opportunity because we do have deep expertise in water. We believe we can manage water well and contribute to better management of it in the communities where we operate too (Making Sustainability the Real Thing) Moreover Coke focuses more on helping the environment to sustain its natural look. Fires in Spain are a big problem (over 21,000 fires every year) and “coke recently helped restore some of the forests around Madrid that have suffered badly from forest fires, planting indigenous species and building dams” (The Coca Cola Company: Spain). “In 2007, the Company and Foundation spent $6 million to support active, healthy lifestyle programs” (The Coca Cola Company). Coca Cola is currently spending millions of dollars for educating the public to lead healthy a life. In European countries, they have raised the standards of their products based on the changing needs of the consumers. They have given more importance to the health of people which is evident from their effort to include the percentage of different ingredients in their soft drink at the bottle labels itself. This type of labeling helps the consumers to purchase Coke products suitable to them based on their health conditions. For example, diabetes patients can make use of the sugar free coke or Coke zero after reading the descriptions about the ingredients in the label. “Coke’s new Bevariety beverage dispenser allows consumers to choose from 12 brands and multiple flavor shot options, totaling more than 50 different drink combinations, in the same footprint as the existing legacy dispenser” (The Coca Cola Company). It should be remembered that the history of Coke began with an innovation in which they converted a mixture of syrup and water into a soft drink which became one of the worlds’ leading soft drink at present. Still such innovative activities can be visible in all the operations of Coke. For example, even in supply chain management, Coke has developed many innovative strategies. Route optimization, route planning and load building are some of the strategies adopted by Coke to improve their delivery system. Because of the developments in the infrastructure facilities, new and easy routes might be developed at different areas. Coke explores all such possibilities periodically so that they select the cheapest routes for distributing their products. “Recently, they combined their logistics and retail expertise with SAP's software-development talent to create applications to improve delivery to stores” (Foley & Kontzer). The arrival of SAP software enhanced the capabilities of the account managers, delivery drivers, and in-store merchandisers so that the complaints about the Coke distribution channels were reduced a lot. The incorporation of computer and internet related technologies helped Coke distributions channels to forecast the demand of coke products well in advance. Even in the design of bottles, Coke is making constant changes. For example, because of the complaints received from Wal-Mart, Coke made lot of changes in their bottle design and manufacturing operations in 2006. Coca-Cola’s bottling system is one of their greatest strengths. It is difficult for them to manufacture the bottles in America and export it to different countries. So they established local collaboration in bottle manufacturing. From 1996 onwards Coke has implemented another innovative business tool called value-based management (VBM) to improve their performances. It helped Coke in the efficient management of economic profit. Innovative marketing strategies are the core of Coca Cola’s success factor in their worldwide business. They have researched thoroughly before formulating their marketing strategies for different countries. Advertising is the major marketing function most of the organizations undertake for increasing the sales and that also with the help of customized advertising. For the sports and film loving Eastern countries, they used the services of sports and film celebrities for spreading their brand. For western countries Coca Cola has formulated another marketing strategy with the help of music companies since they have realized that music has wide influence in such countries. The Coca-Cola Company and Warner Music Group's Atlantic Records have come together to record and release a new song featuring some of the hottest acts from the worlds of rock, pop and hip hop. The track accompanies the third in the Coca-Cola "Happiness Factory" series of commercials, and uses the 5-note melody made famous by the ads. Titled "Open Happiness," the single features the combined talents of Cee-Lo Green, Fall Out Boy's Patrick Stump, Brendon Urie from Panic at the Disco, Travis McCoy from Gym Class Heroes and acclaimed, Grammy nominated songstress Janelle Monae. The song reflects the spirit of positivity, optimism and fun expressed in "Open Happiness," the new global integrated marketing campaign for brand Coca-Cola. (The Coca Cola Company) To conclude, Coca Cola Company is able to maintain its top spot in the global soft drink business because of their innovative business strategies. They succeeded in changing their business strategies based on the changes happening in the business world. They have developed innovative business strategies like value based management, creative advertising, sustainable business practices etc which helped them to remain as the topmost soft drink manufacturer in the world. Works Cited 1. Bellis Mary, “The History of Coca Cola”. 2009. Web. 15 March 2011. 2. Foley J & Kontzer T (2004). Coca-Cola Plans To Refresh Supply Chain. Web. 15 March 2011. http://www.informationweek.com/news/global- cio/showArticle.jhtml?articleID=17700199 3. “Making Sustainability the Real Thing”. 2009. An Interview with Jeff Seabright. Web. 15 March 2011. 4. “Strategic Leadership at Coca Cola: The Real Thing”. 2008. Richard Ivey School of Business. 5. “The Coca Cola Company”. 2009. Web. 15 March 2011. 6. The Coca Cola Company: Spain, (2009), Web. 15 March 2011. Read More