What Competitive Strategy Coca Cola Should Adopt to Develop Business Expansions in China - Dissertation Example

? Dissertation Proposal: What Competitive Strategy Coca Cola Should Adopt to Develop Business Expansion in China? Contents Serial No. Topic Page No. 1. Research Aims & Objectives 3 1.1. Research Aims 3 1.2. Research Objectives 4 2. Rationale of the Study 4 3. Literature Review 5 4. Research Methodology 9 5. Findings & Analysis 13 6. Timetable 14 7. Resources 14 8. Ethical Considerations 15 References 17 1. Research Aims & Objectives: The Coca Cola Company has been marketing with its range of products in China to increase its sales. The company along with its bottling partner, COFCO Coca-Cola Beverages Ltd. has released new bottling operations in China with plans of expanding its business. The company has commitments towards the country for investing in further growth in “one of the world’s largest and fastest growing beverage markets” (Guinness, 2011, p.166). The beverage market in China is known to be one of the most vibrant markets in the country. Monnikhof and Kranenberg (2000) had presented facts that around 48 percent of the populations are regular consumers of beverages in China (Alon, 2003, p.151). However, the country has other popular beverage companies as well like the Wahaha Future Cola or Wahaha Extreme Cola that pose competition for the Coca-Cola Company (Zhang & Alon, 2011, p.287). 1.1. Research Aims: The primary aim of the research study is to obtain the competitive strategies that Coca-Cola should adopt to develop its business expansion in China. With a secondary research conducted on the company and its strategies as well the beverage market in China, the study aims to recommend suggestions on the competitive strategies that the company may follow to expand its business in China. 1.2. Research Objectives: The research study focuses on the following research objectives: To determine the current scenario of the Coca-Cola Company’s business in China’s beverage market and the strategies that the company is following for its business outcomes To understand the strengths, weaknesses, opportunities and threats of the company in its conducting and expanding business in China, thereby finding the factors as well as the competitors that may internally or externally affect the success of the company To recommend a competitive business strategy for the company that may help the company in developing its business expansion in China and maintain its position above and over its competitors 2. Rationale of the Study: Globalization and the increasing competition in the current business world reflect the growth and development of different businesses and their expansion across different countries. The beverage industry is one of the largest industries in the world. The Coca-Cola Company being one of the leading companies in the world’s beverage industry, a research on their business strategies would help in an understanding of how leading companies create and maintain their position in their own countries as well as in other countries through expansions. China’s beverage industry reflects a huge market, particularly for large companies like the Coca-Cola Company. The company has its operations in China but the growing competitions and other internal and external factors may affect the successful expansion plans of the company. The rationale of the study is in the learning and understanding of the competitive business strategies of a leading beverage company that may benefit the expansion of the company in the China market. In the modern world of increased globalization, there is a need to learn the theories and concepts followed by large companies to have a view on the strategies necessary to keep up a position of a company in the industry among its competitor companies. This study would be focused on the Coca-Cola Company that already has its operations in the China market and would look for further expansions to which the company has the requirement of innovative and competitive strategies that would keep its position above its competitors. Hence, this study is rational in the context that the competitive business strategies of one of the leading companies could be learn and the research would also enable other companies to use such strategies in creating their competitive advantages while expanding their businesses. 3. Literature Review: Conducting businesses in foreign countries involve large amounts of investments. The internalization theory as suggested by Buckley and Casson states that when the costs of business transactions are too high in other countries, the company may reduce its costs by using its “internal corporate structure” instead of being dependent on the market (Mok, Dai & Yeung, 2002, pp.2-5). The opportunities available in China for a business’ growth and development can be realized from the investments made by the Coca-Cola Company. Study on China presents a huge population and higher rates of gross domestic product, thus suggesting a huge potential for foreign companies to conduct and expand their businesses in the China market (Mok, Dai & Yeung, 2002, pp.2-5). Business Scenario of the Coca-Cola Company in the China Market: Reports suggest that the company has “invested more than $1.1 billion” in the past two decades and the annual sales of the company now has a record of crossing the amount of $1.2 billion (Tian, 2007, p.184). A combination product strategy has facilitated the company to increase its sales in the market of China. Coca-Cola, Diet Coke, Sprite and Fanta which are the core products of the company are made available to the consumers. At the same time the company has its focus on local soft drinks for its consumers and tries to follow the strategy of “think local, act local” that proved to be successful in marketing in Japan (Tian, 2007, p.184). Coca-Cola has also launched several new products in China. However, the company’s success has been found to be restricted to the urban population of China. The company is now also focusing on new products to attract the rural customers (Tian, 2007, p.184). SWOT Analysis of Coca-Cola Company: As different studies have reflected, the Coca-Cola Company has certain internal strengths and weaknesses and certain external opportunities and threats. The company’s strengths lay in its being the world’s leading company in the beverage industry. The revenue of the company represents high growth in sales. A weakness of the company is that its business is not rapid in the North America amongst all the countries where the company operates. The company has huge opportunities as its bottling of water is gradually increasing its operations and developing. The increasing number of mergers, acquisitions and joint venture are also improving the levels of business for the company and hence are good opportunities for the company. However, there are certain threats as well that the company face while conducting its business. The most important of these is the increasing rates of competition from the global competitors as well as several local beverage companies. Also, the company has an immense dependence on its partner companies who are partnering with Coca-Cola Company in bottling. The development of carbonate beverages of the company has also been found to be slow reflecting another threat for the company (Coca-Cola SWOT Analysis, n.d., p.2). Coca-Cola Company: The PEST factors affecting the business operations: Researchers have also studied the different political, economical, socio-cultural and technical factors that may affect the business operations of the company and its expansion plans. Considering the political issues, it has been observed that an instable political atmosphere can have negative impacts on the implementation of strategies of the company. Economical changes are also rapidly occurring affecting the business world. Thus, the Coca-Cola Company also has the threats of being affected by the economical changes. Socio-culturally, the company encounters the problem with the consumers who are patients of obesity and are directed by doctors to avoid consumption of soft drinks. Technically studying the company, the company seems to be in an advantageous position with its increasing use of the internet technology and developing several programs particularly addressing the young generation to attract more and more customers (Neuez, 2003, p.3). Porter’s Five Forces Analysis: As researchers have presented their studies with, the long-established competition for the company arises from the prices of the Pepsi Company, the local beverage companies, the share in the market, the sales and promotion activities as well as competitions in regard to the different range of products made available by the company to its consumers. Threats for the company may also arise from the entry of new companies that may try to bring in products similar to Coca-Cola’s to attract consumers. Also, there are substitute products available in the market like coffee, beer, and so on, that may pose competitions for the company as well. The supply chain system of the company has quality, speed, security, and flexibility. The purchase power of the customers is combined among the shops, bars and supermarkets (Akkermans, n.d.). Coca-Cola and the Strategic Position of the Company: Several researchers have reflected that the company is effective and efficient in its business strategies and operations. The company does the things rightly and generates the desired outcomes. It also intends to do the right things being able to give the required effort and utilizing all the available resources optimally. The organization tries to keep its focus on the structure of the industry in different countries in order to position its products in the foreign markets. The positioning of the company determines the competitive advantage of the company over its competitors. Studies reflect that the Coca-Cola Company has adopted strategies of differentiation and cost leadership. The differentiation strategy enables the company to be different from its competitors by modifying its products to some extents, also by increasing the quality of the products, and improving the promotion and packaging policies that in general attracts the consumers. The company also follows the cost leadership strategy that which the company achieves through economies of scale in research, expansion and advertising, as well as through knowledge, gaining awareness and skill in operational activities. The sales and distribution channels and the processes of manufacturing with efficient use of advanced technology also enhance the leadership position of the company. The company is also known for its global presence, at the same time launching new products at new locations and developing the existing ones (Vrontis & Sharp, 2003, pp.298-301). 4. Research Methodology: Research methodology is the process that is used in a research process to work out the objectives of the research. In other words, a research methodology explains how the procedure has been undertaken to reach to an ultimate conclusion of the study. It is necessary for any researcher to have a detailed knowledge on the different research techniques and methods that can be used. This is important to understand which method would be applicable to which study (Kothari, 2008, p.8). Research Philosophy: A combination of positivism and interpretivism has been found to be applicable for this particular research study. According to positivism theory, all observable facts are required to be understood through the use of a scientific method and intend to create a hypothetical unbiased study of the examinations by exploiting the hypotheses and theories relevant to the matter of study. This approach does not believe in objective supports for values; rather it accepts the fact that values can be justified only on subjective, practical or functional views. Interpretivism combines diverse approaches together and tries to understand “the world as it is experienced” and made significant by the experiences of human beings. This approach takes into account the human experiences and their beliefs and opinions to form an authenticated outcome that presents a study that lay hidden in such human experiences. In short, this approach takes the individual understanding to reflect the outcomes of the study (Collins, 2010, pp.38-39). This has helped the study to focus on an understanding of the strategic position of the Coca-Cola Company in the Chinese beverage market and determine the factors that may affect the successful implementation of the competitive strategies of the company and hence allow recommending an effective strategy that would help the company to make plans for its expansion in the China market. Research Approach and Technique: The research has been based on a secondary study involving qualitative techniques of study. Qualitative methods require the research study to describe the types and qualities of “people or events” without expressing them in the form of numerical figures. On the other hand, quantitative methods involve expressing the data and information collected in the form of numbers or amounts (Thomas, 2003, pp.1-2). This report primarily deals with a qualitative analysis of the data collected for the study. Particularly the research being focused on an understanding of the competitive strategies relevant for the Coca-Cola Company in its expansion plans in the beverage market in China, a qualitative analysis would help to go through the strategies of the company that are currently followed, the market scenario in China, and hence try to determine the competitive strategies that would best aid the company in its expansion policies. Qualitative studies have been dealt with gaining information on the Coca-Cola Company and its strategies that are available through the literature reviews as well as the internet based studies based on books, academic journals and articles that give insights of the previous researches conducted on the competitive strategies of the company in the context expansion of business in other countries. Sources and Collection of Data: A research method may be on the basis of either primary data or secondary data or may be a combination of both. Primary data are those that a researcher obtains himself after making a detailed research work. On the other hand, secondary data refer to those that are not new but have already been obtained by some other researchers at some point of time. These sources can in present be used to analyze a particular study. Secondary sources can be obtained with ease and are less expensive than the primary data. Moreover primary data is more time consuming in comparison to secondary data (Malhotra, 2008, p.106). For this research, secondary data would be collected for the qualitative analysis. The first group of secondary data is about the situation of macro environment (including political environment, economic environment, social environment and technological environment) and industrial environment. Corresponding data usually are issued in printed publications or on the internet. Therefore, to save time, it would firstly try to search for corresponding information from the official websites of governmental organizations and industrial associations, for instance National Bureau of Statistics of China, Ministry of Commerce of the People’s Republic of China and China Beverage Industry Association and Chinese Institute of Food Science and Technology, and thereafter go to library to find relative printed publications. The second group of secondary data would be related to Coca Cola’ internal business operation in China. When corresponding data are collected back, they may be directly adopted when developing internal environment analysis or indirectly used to design semi-structure interview questionnaire for market survey. The secondary data about Coca Cola China will be mainly collected from its websites. Also, the literature review would play a key role in the study and analysis of information gathered on the concerned subject. Research Limitations: Since the research study is only secondary sources based, the main limitations of the research have been obtained in the availability of data. The credibility and authenticity of the data had to be kept in note. Not all websites provide with authentic information. Hence limited sources were available. Moreover secondary sources reflect the studies and information that have already been in existence for a while. The analysis is thus based on already worked out theories and results. New and fresh research is not done and hence there is a greater dependency on the information provided by others. Credibility and Verification: The verification of qualitative data is very important. Hence the research has based its judgment on the accuracy, reliability, and precision of the data collected. Credibility and verification of data are required to be taken utmost care of, so that there would not arise any grounds of mistrust on the research (Denscombe, 2007, pp.295-296). Utmost care has been taken to ensure that the websites used from the internet are not unauthentic and they contain proper articles and information provided by different theorists or authors. Books and journals have been considered as they are authentic in nature and provide with useful information on the concerned topic. 5. Findings and Analysis: Once the data are collected they would be studied and analyzed in details to find a conclusion and recommend suitable competitive strategies for the development of business expansion of the Coca-Cola Company in other countries. 6. Timetable: The research may be followed maintaining the following timetable. The research proposal would be first prepared that is expected to take a time period of 3 weeks. During the preparation of the dissertation the researcher would constantly keep in touch with the supervisor in every month. The collection of secondary data is expected to take around 2 months. Once the data is collected, the analysis and discussion parts would be conducted that would take another 1 month. Finally the report would be completed adding on the conclusion and recommendations that is expected to take around 2 weeks time and reference and present the file accordingly. 7. Resources: To accomplish the research, it needs the supports of human, physical and financial resources as follows: Human resources: A series of work in relation to dissertation accomplishment, for instance data collection, data analysis, proposal writing and dissertation writing, need the researcher to devote not only time but also energy. In addition, the successful accomplishment may also demand the help of peer groups as well as the supervisor. Thus apart from the researcher himself, the study would require other human resources in its assistance. Physical resources: It is indispensible for the research to use computer, paper and pen during the process of dissertation writing. Moreover, the research would require drafts to be prepared before the final dissertation is ready. Accordingly, the draft files may be required to save the project. Once the project is ready, the printouts need to be taken out as well. Financial resources: The research would try to avoid unnecessary expenditures during the process of research. However, depending on the secondary data collection, some expenditure may occur on the use of internet since long periods of time would be required for searching and collection of the data. 8. Ethical Considerations: The different codes of ethics needed to be followed include integrity, objectivity, professional competence and due care, confidentiality and professional behavior. To maintain integrity, “fair dealing and truthfulness” should exist in the research work. Each and every matter should be addressed individually and with utmost care. Personal influence should not have an effect on the outcomes of the research objectives. Professional standards in regard to knowledge and care need to be utterly maintained. Disclosure of information should have proper backup supports such that illegal measures are not taken in addressing different data and disclosing them to the public. Moreover, professional behavior needs to be highly maintained in any research work so as not to affect the professional relationships with respect to any step taken in the process. Transparency should be maintained while doing the research work and each and every procedure followed for the research work require to be clearly mentioned in the report (Ethical Dilemmas: What would you do?, n.d.). Ethical factors have been duly kept in focus while conducting the research work. The collection and analysis of data have been done with due care to ensure that professional ethics is not harmed by any wrongdoings. References 1) Alon, I. (2003), Chinese economic transition and international marketing strategy, Connecticut: Greenwood Publishing Group 2) Coca-Cola SWOT Analysis. (n.d.), Yousigma, available at: http://www.yousigma.com/comparativeanalysis/cocacolaswot.pdf (accessed on September 20, 2011) 3) Collins, H. (2010), Creative Research: The Theory and Practice of Research for the Creative Industries, West Sussex: AVA Publishing 4) Denscombe, M. (2007). The good research guide: for small-scale social research projects. New York: McGraw-Hill International 5) Ethical Dilemmas: What would you do? (n.d.), CIMA, available at: http://www.cimaglobal.com/Documents/Professional%20ethics%20docs/dilemmas%20FINAL.pdf (accessed on September 20, 2011) 6) Guinness, P. (2011), Geography for the IB Diploma Global Interactions, Cambridge: Cambridge University Press 7) Kothari, C.R. (2008), Research methodology: methods and techniques, India: New Age International 8) Malhotra, N.K. (2008), Marketing Research: An Applied Orientation, 5/E, India: Pearson Education India 9) Mok, V. Dai, X & G. Yeung. (2002), An Internalization Approach to Joint Ventures: The Case of Coca-Cola in China, Asia Pacific Business Review, Vol.9, No.1, pp. 39-58, available at: http://eprints.sussex.ac.uk/124/01/Coca_Cola.pdf (accessed on September 20, 2011) 10) Neuez, S. (2003), Communication Strategy Coca-Cola Communication Plan in UK, Neuez, available at: http://sophie.neuez.free.fr/Rapports/Rapport_comm.pdf (accessed on September 20, 2011) 11) Thomas, R.M. (2003), Blending qualitative & quantitative research methods in theses and dissertations, London: Corwin Press 12) Tian, X. (2007), Managing international business in China, Cambridge: Cambridge University Press 13) Vrontis, D & I. Sharp. (2003), The Strategic Position of Coca-Cola in their Global Marketing Operation, The Marketing Review, Vol.3, pp.289-309, available at: http://80.251.40.59/politics.ankara.edu.tr/ozer/Dersler/Introduction_to_marketing/Articles/The_Strategic_Positioning_of_Coca_Cola_in_Their_Marketing_Operation.pdf (accessed on September 20, 2011) 14) Zhang, W & I. Alon. (2011), A guide to the top 100 companies in China, Singapore: World Scientific Read More