Management of Global Trade Distribution- Coca Cola vs Apples Approach - Case Study Example

Analyzing and Comparing Coca Cola and Apples Approach + Company analysis The sole objective of every business is to be profitable, a goal that is normally achieved by offering services to clients in a particular region. In a bid to increase profitability, business owners often go beyond the boundaries by establishing other branches in other countries. While profitability is what every business owner focuses on, a myriad of challenges are encountered. Even though it is likelihood that different companies may have branches outside their countries, the processes vary. Marketing strategies, risks and even clientele base tend to be different. This essay intends to compare two companies- Coca-Cola and Apples to be precise- and the respective way conducting business. Market background One distinction about the two companies is that they are in different ventures with Apple being a company dealing with the designing and selling of electronics and computers while Coca-Cola specializes in soft drinks. This distinction firstly sets them apart concerning the market despite being found in same countries. In terms of market, Coca-Cola could be described as more dominant than Apple because most of its products are found worldwide, unlike Apple. Whereas it is possible to buy Apple products from anywhere in the world, it is not distributed as Coca Cola’s. Additionally, Coca-Cola seems to have the upper hand in terms of the number of clients worldwide in comparison to Apple’s. For instance, Dost (2014) noted that Coca Cola’s products being a necessity bring in massive profits. Conversely, Apple is a company whose central focus is the computers and other related products which means they are not involved in commodities termed as necessary per se. Again, Coca-Cola can reach almost everybody in the world because for ensuring the availability of its products even to the remotest places. Surprisingly, Hartogh (n.d.) reported that it is common to find coca cola products in the most unexpected areas in Africa. However, the same cannot be said of Apple products that apart from being expensive are not found everywhere. In short, it can be concluded that one key difference between Coca Cola and Apple is the market of the products; one majors in a necessity whereas the other in a secondary product. Ironically, though, as of the year 2013 Apple surpassed Coca Cola as the best brand in terms of financial performance. For the first time, the soft-drink company was ousted from the top with many people preferring Apple the uniqueness of the products (Harvey, n.d.). However, it is should be noted that these companies are not in the same field, which means the challenges faced are completely different. For instance, Coca cola’s market has other players – like Pepsi- while Samsung and others compete with Apple. Marketing The two companies engage in aggressive marketing with each focused on beating competitions and gaining an upper hand hence an increase in profitability. Coca cola’s approach to the marketing issue is the usage of the media, social media. Additionally, the company engages in the sponsoring of sport where the products are advertised simultaneously with the game. Similarly, Apple’s products are advertised through the media and online but the company has not been involved in sponsoring major events as has Coca-Cola. Coca-Cola has recently faced various challenges in marketing with the company being accused of advertising its brand to children. In response, the company denied allegations and stated that it believed only parents ought to recommend the proper drink a child ought to take. Similarly, Apple has been criticized for availing its products to a few groups of people; many have claimed that its products are meant for the elites (Harvey, n.d.). Apple has refuted the claims by stating that the products are available to anyone and that they can be purchased online. Besides the criticism encountered, both companies could be viewed as ones that value the power of marketing and tend capitalize on the mistakes by competitors. Again, both seem to enjoy buying decisions by customers with many choosing to buy Apple products due to its feeling of elitism. Coca-Cola on the other is preferred for having been in existence for a longer tie than most, if not all, of its competitors (Dost 2014). Moreover, for Coca Cola, there is a lot of advertising, which seems to boost buyers’ confidence pertaining to the stability of the company. One fact about the two firms is that the decision to avail products globally has helped in profits. For instance, Coca-Cola is available even to the Africans as well as Asians who can buy products from the nearby shops or malls. Even though, Apple does not necessarily adopt a similar approach, ensuring one can buy the products online is an advantage the company has utilized to the maximum. Therefore, both companies can be said to be aggressive markets whose efforts have paid off handsomely. Trade Distribution processes As stated earlier, Coca-Cola has a rather approach when it comes to ensuring products reach the clients. Unlike Apple, which normally relies mostly on the online platform and agents in a particular country, the soft-drink company tends employ the services of distributors and retailers (Hartogh, n.d.). Consequently, the brand has become not only popular but also dominant for several decades. In handling customer complaints, Apple has an online service where clients can forward complaints. Alternatively, the local dealer is authorized to receive the complaints and forward to the respective departments. Conversely, Coca-Cola normally has branches in various countries where complaints are handled on-site. This normally satisfies the customers who do not need to wait for feedback, as is the case with Apple. Furthermore, Coca-Cola has a rather flexible bureaucratic process whereby individuals desiring to market its products do not need to wait for long. Instead, any request for the mentioned service is normally approved within a short time and a retailer, for instance, is normally given a refrigerator for storing the products (Hartogh, n.d.). However, when it comes to the Apple’s products it is a process where the request takes time before approval, which is not guaranteed. It is imperative at this point, to understand the reason for this difference. Firstly, Coca-Cola would like to continue dominance in the market, and the only way to do that is by availing the products to almost every person. Normally, this does not pose as much threat as it would with Apple. In short, both companies usually require the services of other men in various countries in order to expand respective market share. Coca cola sells its products directly to distributors who then employ the services of retailers. Then, the retailers normally supply not just to the local customers but also to other smaller shops. Similarly, Apple licenses a broker in a country whereby every product sold sees the businessman get a commission. Whereas it could be concluded that the two companies use vehicles in the transportation of the products, it is important to remember Apple hardly transports its products beyond the capital cities in various countries. Documentation and risks Having elaborated on the differences the companies face, it is obvious that the risks involved in the business vary. While the risks are in the same categories, the exact issues faced are different whereby competition is not the same in Coca cola compared to Apple. Again, the documentation tends to vary as well due to variance in handling issues on the ground. Nonetheless, it is important to understand that all business face similar threats and risks; only dynamics are different. This section seeks to highlight the risks faced by Apple and Coca-Cola. Moreover, the documentation each company has in the respective operations. Cultural background of a particular community usually plays a role in the establishment of a business in a country. This is normal when the company is dealing with products that the community has not interacted with in the past. For Coca Cola, this is a challenge witnessed during the initial stage but it is not very common in today’s world. Nonetheless, it was reported that when Coca-Cola sought to introduce its products to Africa, some of the challenges encountered include unfounded fears by the locals. Apparently, many in the continent had not seen such a product and were skeptical. However, as time progressed, it became not only accepted but has since been embraced as the favorite drink (Hartogh, n.d.) This fact was evidenced recently when the company sponsored the continent’s football events as well as the world cup. During these events, the advert broadcasted in Africa created the impression that the company is firmly concerned and connected to the Africans. For Apple, this is not a risk encountered since many of its customers are civilized and clearly understand the importance of such products. One of the major risks encountered is the counterfeit that threatens to taint its image with many preferring to buy the substandard products due to the price (Harvey n.d.). In contrast, Coca-Cola has not witnessed this risk in the conduct of its business in many countries. Actually, the reason it is hard to imitate Coca-Cola products is because a licensed dealer supplies them. Additionally, the retailers and the distributors normally know where the products are to be bought. However, this is not the case with the Apple, who have to grapple with the ever-emerging counterfeit market. Concerning hedging, both companies have put in place measure to mitigate risks incurred in the business with each having other ventures. For instance, coca cola invests in real estate while Apple involves in various ventures, all with the aim of ensuring money is not lost. For instance, it was reported that Apple and Google entered into a deal with Disney in developing and producing movies (Schoenberger 2014). Normally, the essence of hedging is to ensure that in case of inflation money will not be lost. In other words, companies tend to insure their capital without necessarily involving the insurance companies. Nevertheless, this does not imply that companies are ignorant of the importance of insurance. On the contrary, Apple has reportedly insured itself against theft, fire and terrorism as far the premises and the products are concerned. Further, the company gives a two-year warranty to its iPhone customers in package known as Applecare plan. Similarly, Coca Cola’s threats are multiple given the method used in supplying its products. For instance, in many countries, the company has physical offices -unlike Apple- that means the risks of fire, theft, and terrorism are imminent (Baron 2006). However, it is important to note that the companies do not face the problem worldwide. This is because Apple, for instance, is not physically found everywhere in the world. Concerning the competition rules between the two companies, there is a variance with Apple having tighter rules compared to Coca-Cola somewhat. For instance, when marketing the products, Apple competes with other companies like Samsung and the issues of copyright could emerge. Secondly, the patent wars could emerge, as was the case in 2011 where Apple was accused of creating various designs that resembled those of Samsung. In the ensuing litigation process, there was mixed outcome with Apple being found culpable for patent right violation (Harvey, n.d.). Similarly, in 1998, Pepsi sought the court’s intervention in United States in stopping Coca cola’s alleged anti-competitive behaviors. Evidently, companies face a myriad of challenges when it comes to handling competition and in the process, money is lost. Nature of global trade and the global economy As earlier noted, companies intend to make profit by expanding to other countries but what many people fail to recognize is that there are some decisions a company has to make. Before a company establishes a branch in a specific country some considerations have to be made which determine if the main objective is met or not. For instance, absolute advantages, opportunity cost, as well as comparative advantage are some of the factors considered. Notwithstanding these factor-considerations, once a company decides on a venture, there are some restrictions attached. This chapter seeks to assess how Apple and Coca-Cola have applied the mentioned principles and handled trade restrictions in their businesses. In business terms, absolute advantage implies of an entity’s capability to produce a particular product in a better way than another does. In the case of Coca-Cola, it has capitalized on this strength to produce soft drinks and distribute to almost every corner of the world. While Pepsi fronts the highest form of competition to the company, its brand name gives it an upper hand. The absolute advantage is made possible in Coca Cola’s case because of the advanced technology available to it as well availability of expertise in US. Even though other companies from various countries have attempted to produce similar drinks, none has matched Coca Cola’s due to its advantages (Cadogan 2009). In comparison to Coca-Cola, Apple’s absolute advantage is not certain since other companies -like Samsung - can produce similar gadgets. In terms of expertise, the American company has staff who dedicate ample time develop unique products with an aim to withstand completion. Similarly, Samsung’s relentless efforts to ensure Apple does not outdo it in the market cause the latter not to be termed as a company able utilize absolute advantage (Mifflin 2014). Therefore, it could be argued that Apple has not taken been able to take absolute advantage because of the presence of other players in the market. Conversely, Coca cola has because the competition is minimal; also, the brand name has won people’s confidence. Perhaps the term closely associated with Apple is specialization because, since its inception, there has been a production of unique products, which have made competitors amazed. It was noted that Steve Jobs tenure at Apple transformed the company into being one of the best, if not the best (New Scientist 2011). Nowadays, competitors tend to react to every product produced at Apple meaning the company has benefitted greatly from specialization. The advantage possessed by Apple in the production of these products is mainly the expertise and the ready-market. As stated earlier, Apple products are not found as easily as one would expect. This is because they are made specifically for a particular target market. The same applies to Coca-Cola that, since its commencement, decided to major in soft drinks. Again, the expertise in US was beyond question, which made the company outstanding; the same could be said of the market. Dost (2014) asserted that the company’s products meet the need of the majority of the people thus making it realize profits. Just like Apple, Coca Cola’s advantage in the production of these products is the expertise and the ready-market. Therefore, it could be concluded that when it comes to specialization, both companies benefit more on the presence of expertise available to them. Whenever a business decides to produce a particular product, it has to forsake other products, which could be more lucrative. If a business pursues this option, it means the opportunity cost is high; a contrast approach would mean that the company has a low opportunity cost. For instance, if Apple is capable of producing similar products as Coca Cola and it happens the latter’s products are profitable, Apple’s opportunity cost would be high. How each business makes this decision is called comparative advantages (Bekaert and Hodrick 2009). In comparing the two companies, none can be said to be disadvantaged about comparative advantage. This is because each of them has specialized in respective field and witnessed massive returns. This would only be the case if either makes insurmountable losses despite having capability to produce the product manufactured by the other. In other words, if Apple were to have significant losses yet able to produce soft-drinks, it could be said that the opportunity cost is high and that it is comparatively disadvantaged. Trade restrictions are- as earlier stated- other considerations a company considers before deciding to expand to another country. It is vital to understand that international trade results, firstly, from the same reason of opportunity cost. In other words, companies evaluate what they could lose if they do not venture into a particular country. In order to ensure fair play, there are international restrictions companies encounter. For instance, Apple faces restrictions in China where the country is very strict on imports in order to ensure local company’s growth (Dellenbarger and Zhu, n.d.). Coca-Cola faces a similar scenario in China where there has uproar from various sides on the country’s need to ease the restrictions. Worth noting is the fact that these companies do not face the same restrictions in every country because some - especially in Africa- have not been able to produce similar products. In conclusion, there are similarities as well as differences between Apple and Coca-Cola not only in terms of operations but also international trade. Firstly, the challenges differ in some cases but are similar in others. Both face trade restrictions in various countries and are exposed to different threats as well. As proved, none seems to have a high opportunity cost because both have been profitable thus making comparative advantage balanced. However, they differ in terms of competitors with Apple having many more than Coca-Cola. Distribution is done differently whereby the soft-drink company prefers having local offices or branches in various countries unlike Apple, which prefers dealers. Finally, the greatest variance is that one deals specifically on a commodity that people may have to buy on a daily basis unlike the other whereby one product may take some time. Bibliography Baron, D. 2006. Business and its environment (5th ed.). Upper Saddle River, N.J.: Pearson Education. 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