The Management of Global Trade Distribution in Coca-Cola and Cadbury Companies - Case Study Example

THE MANAGEMENT OF GLOBAL TRADE DISTRIBUTION by In the business environment, businesses ranging from small andmedium enterprises to large companies pursue a number of strategies in their day-to-day operations. In all their spheres or divisions such as marketing, operations, and trade, businesses normally have strategies that inform their decisions and guide them towards realizing their set goals. Large organizations such as Multinational Companies (MNCs) will usually have complex strategies due to their nature of operations in various countries. This paper will critically and analytically examine how three topical issues are applied in the day-to-day operations of Coca-Cola and Cadbury companies. These three topical issues are global trade strategic issues, markets and marketing, and trade distribution processes. In order to understand these issues in the business world, we will critically discuss how they apply to the operations of two companies that conduct their trade operations globally. The world economy today is driven by global trade that involves the buying and selling of not only goods and services, but also of financial instruments such as bonds and futures. In as much as the trade in financial instruments has surpassed that of goods and services by volume, it is vital to note that the global trade in goods and services is still relevant and significant (Dine, 2012:3). In an effort to understand global trade strategic issues, it is pertinent to understand what strategy is and the various tools that are used in strategic planning. Business is informed, directed and guided by strategy. A strategy can, therefore, be defined as a plan or a blueprint that is designed to produce a desirable goal or achievement. A strategy is, therefore, a future roadmap for an organization. It can also be defined as the art of planning that pools resources together and utilizes them in an efficient and effective manner to generate the desired objective (Kluyver, 2010:4). A strategy is designed with the end in mind. A business strategy will, therefore, be concerned with resource issues such as making decisions on financing mergers and acquisitions, building new plants or what products to allocate more resources than others. For instance, Coca-Cola has pursued several of these strategies in its global operations. In all the countries that the non-alcoholic beverage giant operates, it has built plants worth millions of dollars. It also has from time to time allocated major resources in the development of certain products and campaigns. For instance, the recent Share a Coke Campaign and the launch of the Pooh Roo Juice in the United Kingdom (Anders, 2013:3). Cadbury, on the other hand, has built confectionary making plants across the globe, mostly in emerging markets. It has also allocated more resources to the production of its key brands such as Éclairs and Halls (Bradley, 2011:1). In strategy, strategic planning tools are employed to ensure the design of a solid and compact strategic plan. These tools are visioning, metrics, and a SWOT analysis. Visioning as a tool in strategic planning is used to design a long-term vision for a company. Metrics are used after a company has already undertaken a project to assess the progress of the project. A SWOT analysis is used in strategic planning to highlight the strengths, weaknesses, opportunities, and threats to an organization (Kluyver, 2010:17). Coca-Cola and Cadbury use these tools in their strategies. For instance, they both use the SWOT analysis to identify the opportunities and threats that are present in the target markets as well as in the markets they already have a presence in. For example, Coca-Cola identifies private bottling companies as an opportunity for partnership and growth. On the other hand, Cadbury uses its strength in Corporate Social Responsibility initiatives to continue to grow its market share (Richter, 2012:10). Global trade strategic issues also involve the issue of global trade and strategy. Global trade can be defined as the processes of aligning a company’s business to international trade. It specifically involves the adjustment of an organization’s business strategy so that they can adapt to the business environment of other countries (Didner, 2014:7). In global trade, strategies that are used include localization and strategic pricing. Localization as a strategy denotes the adjustment of a product or brand to fit a target customer. In localization, a product is modified based on a number of reasons such as culture. For instance, a company dealing with beef pizzas may need to modify the beef pizzas in a country like Pakistan and offer vegetable pizzas in the stead. This is because Pakistanis, like other Indians, do not consume beef. Strategic pricing strategy involves price determination for the same product but in different countries. It calls for pricing products based on such factors as the wage rate of the target market. Both Coca-Cola and Cadbury implement these global trade strategies. In Kenya, for instance, Coca-Cola used localized names in its ‘Share a Coke’ campaign as opposed to English names (Anders, 2013:5). Cadbury, on the other hand, prices the Cadbury Dairy Milk product slightly higher in Australia than in India (Bradley, 2011:6). The second topical issue is markets and marketing. Most companies today have evolved from being local, to assume global status. They, therefore, operate not only in the local markets in which they are located, but also deal with other businesses in other markets across the globe. Markets and marketing involve issues such as the positioning of businesses on the global map, buying decisions, marketing mix and the differences that businesses encounter while trading globally. Companies position themselves in their respective market to be relevant and make profits. This positioning, or acquiring a market share, is pursued through a number of methods. These include mergers, acquisitions, foreign licensing (Carter, 2012:1). While mergers and acquisitions involve the collaborating with other companies and buying the biggest stake in a company respectively, foreign licensing involves the practice of a MNC giving licenses to private companies in other countries to produce and sell its products. Coca-Cola is a good example of a multinational organization where these market strategies are applied. In the development of its share in the global market, Coca-Cola uses Foreign Direct Investment as well as Foreign Licensing (Anders, 2013:10). It licenses private bottling companies across the world to produce, distribute, and sell its products. This factor has enabled it to become the largest producer of soft drinks in the world. Cadbury has also utilized Foreign Licensing of private companies in the UK, South Africa, and Australia to grow its market share globally. Cadbury’s positioning in the global market stands at 10.5 percent market share (Bradley, 2011:15). In markets and marketing, the other important aspect is the marketing mix. The marketing mix denotes the different sets of choices that an organization has to make while undertaking the process of launching a new product into the market. The term is best described using the popular 4Ps including product, price, place, and promotion (Bowman, 2010:12). In looking at the product, the business considers the customer’s needs that the product will fulfill, the product name, its availability or what place buyers can easily find the product, its price to customers, and lastly how to communicate its availability to customers through promotions (Didner, 2014). In its market mix strategy, Coca-Cola ensures the easy availability of its products worldwide at affordable prices, while actively promoting its brands in global events such as the world cup tournaments. Cadbury also, in its marketing mix, ensures that the same quality of a Cadbury product enjoyed in the UK is comparable to that in India. It mostly carries out product promotion in seasons such as Christmas and Valentines (Bradley, 2011:20). Businesses experience a whole lot of challenges and differences while trading globally. These challenges include government regulations, taxation regimes, and competition from local companies operating in the same environment. For instance, Coca-Cola faces competition globally from its major competitor, Pepsi. However, this competition differs from one market to another, as there are areas where Coca-Cola has dominance over Pepsi and vice versa. Cadbury faces competition in its gum business segment from Trident, which is the market leader in that segment (Bowman, 2010:24). The third issue that businesses face in global trade is the distribution process, commonly referred to as trade distribution processes. These are the means or channels companies use to supply their products and services to their customers. Companies use three methods including franchise, licensee, and distributor. Coca-Cola uses the franchise method. Private bottling companies, which are under license to produce and distribute its products, are the primary link to its customers globally. In densely populated areas such as in Africa, the Manual Distribution Centre (MDC) transport model is used (Anders, 2013:43). It involves independent businesses sourcing for Coca-Cola products from local private bottlers and then selling them on their premises at recommended prices. Cadbury, other hand, pursues the distributor method and depends on a strong distribution network, which consists of supermarkets, hotels, and convenience shops located in areas such as gas stations. In conclusion, businesses confront issues in the global trade, such as market and marketing, distribution processes, and global trade issues. These businesses are mostly Multi National Companies with a presence in other countries. Global trade issues will involve business decisions such as financing the construction of new plants or acquisitions. Market and marketing usually involves the positioning of businesses and the market mix whereas distribution processes involve methods used to supply customers with goods and services. In all these issues, a strategy is required. This is because it guides businesses by a providing a blueprint of how to arrive at desired goals. Reference List Anders, J., 2013. Coca-Cola’s Marketing Strategy: An Analysis of Price, Product and Communication. Munich: GRIN Verlag. Bradley, J., 2011. Cadburys Purple Reign: The Story behind Chocolates Best-Loved Brand. New York: John Wiley & Sons. Bowman, D., 2010. Market Response and Marketing Mix Models: Trends and Research Opportunities. New York: Now Publishers Inc. Carter, S., 2012. Global Marketing Management. London: OUP Oxford Didner, P., 2014. Global Content Marketing: How to Create Great Content, Reach More Customers, and Build a Worldwide Marketing Strategy that Works. New York: McGraw Hill Professional. Dine, J., 2012. The Processes and Practices of Fair Trade: Trust, Ethics and Governance. New York: Routledge. Kluyver, C., 2010. Fundamentals of Global Strategy: A Business Model Approach. New York: Business Expert Press. Richter, T., 2012. International Marketing Mix Management: Theoretical Framework, Contingency Factors and Empirical Findings from World-Markets. Berlin: Logos Verlag Berlin GmbH. Appendices To be provided by customer (weekly exercises) Read More