International Business Strategy: Coca Cola - Research Paper Example

International Business Strategy Introduction With the globalization of the business, the organizations all around the world are faced with great opportunity. The business organizations of the world can set up the business in any other countries. The concept of the internationalization of business has come to the forefront. The growth of the technology and manufacturing has been immense and a country is too small to support it. In other words, the companies have to move outside the countries in order to take the benefits of the globalization process. The trade and commerce of the world helps in supporting the growth of the business. The modern environment of the business world differentiates the business organizations of the world into the globetrotters and the globe watchers. The globetrotters are the most successful of the organizations where the essence is to target the different markets of the world. The globe watchers on the other hand look to take the advantages of the multinational companies in the production and the marketing process. The development of the globetrotters or the multinational companies depends on the efficiency of the marketing department of the organization to a large extent. The marketing in the other countries depend on the evaluation of the country. The market of the country and its customers are to be analyzed. The analysis of the economic conditions of the country will help in the growth of the company. The marketing department of the globetrotting companies has to evaluate the conditions to be able to exert them in these countries. (Cavusgil, December, 1991). The successful multinational companies of the world have followed this model in its growth path. The paper will look into the marketing strategies of a well known international company to understand the situation. Coca Cola will be good example in the case of the study. Coca Cola-A brief Summary Coca Cola was born in 1886 in Georgia. Dr. John Pemberton is credited with the invention of the drink. However, he was not aware of the potential of the drink and eventually sold it off to Asa Candler. It was under the reign of Candler that Coca Cola achieved iconic status. He was instrumental in the marketing and the advertising of the product. This was done with the help of merchandising of various products. Another important development during his reign was the bottling of the drink. The international expansion of the drink started under Ernest Woodruff and the bottling of the drink soon began in the other parts of the world. In Europe the drink was first bottled in France. Coca Cola became even more popular with its association with the Olympic Games in 1928. The association has continued and the company has grown with time. The drink attained mass support during the World Wars when the US army associated with the drink. Over the years, the drink has expanded to all corners of the world. It has been the largest selling drink in the world today. It has attained the position due to the innovative marketing and the advertising campaigns. It is available in all parts of the world today and the company has added different products in its repertoire. This has helped in catering to a greater number of customers. (The Chronicle of Coca Cola, n.d.) Marketing Strategies Coca Cola has been successful in moving to the various portions of the world. The marketing strategies of the Coke can be discussed with the help of the diagram:  Source: Young, 2006: 177 The first part of the marketing in the case of the internationalization of the business is the screening process. The screening process of the company consists of the evaluation of the nature of the company, the home country and that of the host country. Screening process In the case of the screening process, the first part is the evaluation of the company as a whole. The company in this case is one of the well known in the world. In this case, the mission statement of Coca Cola is worth mentioning. The mission statement of Coca Cola depicts the aims of the company. They are as follows: To cater to the needs of the people of the world. To create an environment of happiness. To offer value with the products. (Mission, vision and values, n.d.) The mission statement of Coca Cola underlines the requirement of the company to go to the foreign shores. The performance of Coca Cola has been drawn from the mission statement of the drink. The company is the largest selling drink in the world. At the present count, the company sells 1.6 billion bottles per day over the world. The company has 92,800 employees all over the world and a overwhelming 3,300 brands. There is a separate department in the company for the innovation of the products. The department has been active in the development of a large variety of the products. The company has a huge reputation of 124 years in the business. (Growth, leadership, sustainability, n.d.). The evaluation of the company puts it in the prime positions. In the analysis of the home country, USA will be taken. This is because the company is based in USA. The political and the economic condition of the USA has been one of the strongest in the world. The recent case of recession, however, has been detrimental to the condition of the country. The recession originated in the country and it has severely affected the progress of the country. However, prior to the recession, USA was the strongest and the largest economy of the world. The market of the US was huge. The political conditions of the country were stable. In the evaluation of the host country also, the analysis will be undertaken in the political and economic conditions. The political and the economic conditions of the country may not be suitable for the growth of the business. These factors are essential in the development of the business. The legal and the cultural conditions are also essential for the development of the company in the foreign shores. Marketing Mix The most important evaluation in the case of the internationalization of the business is the evaluation of the marketing mix. The marketing mix of Coca Cola can be evaluated as follows: Product: The product of the company is popular the world over. The Coke is the most favored brand of the company. However, over the years the company has added different other products. The total number of products now stands on an impressive 3,300. The company has diversified into soft drinks, energy drinks, juices, tea, sports drinks, water etc. The wide range of products enables the company to cater to the needs of all types of customers. The success of Coca Cola can be attributed to the fact that the management selected drinks according to the regions. The Barq’s Red Cream Soda is not available in the Asian regions. This is because the tastes of the people in Asia do not match to that of USA. (Product Descriptions, n.d.) Place: In the case of the place of marketing of the product, careful considerations are to be taken according to the culture and tastes of the region. In the case of the hotter regions of the world the consumption of the drink would be more. In the case of the Middle East and African countries the consumption of the soft drinks increases to 70% during the summer times. In the winter it decreases to 30%. In the case of Europe the consumption remains uniform. Therefore, the company has to set the strategies according to the region. (Mittal et al, 2010) Price: The price of Coke will depend on the country at which it will be marketed. The climate of the country, the economic conditions etc. will determine the price of the drink. Coca Cola in general follows a strategy of price discrimination over the world. The price discrimination in economic terms means that the same product will be available to different customers at different prices. This is inevitable given the different economic conditions of the countries in the world. Promotion: The industry of the soft drinks is a highly competitive market. The principal competitor of Coke is Pepsi all over the world. Therefore, the company had to engage in the different promotional activities to attract the customers. The promotional activities of Coke started during the 1920s. In the 1970s the company introduced a series of advertisement campaigns that associated the drink with the good times. From the early days of Coke, the company has been associated with the sporting events like the Olympics and the World Cup Football. In 1993, the “Always Coca Cola” campaign was popular all over the world. The Polar Bear campaigns were also one of the most popular ones. (Heritage Timeline, n.d.). In addition to the advertisements, Coca Cola has been successful because the management has placed great importance to the detail of the domestic markets of each country. The brand signs brand ambassadors depending on the regions of the country. The personality must be a popular face in the region. In the case of the Middle East, the Egyptian singer Tamer Hosny is the brand ambassador. (Coca-Cola announces Tamer Hosny as new brand ambassador for Middle East, 9th February, 2008) In the case of the sports drink Powerade, Jessica Enis has been signed as an ambassador. The marketing strategies of Coke have been instrumental in the development of the brand all over the world. The sponsorship of sporting events and the brand ambassadors have played their part in popularizing the brand. Marketing Plan The marketing plan of the company is drawn out from the evaluation of the preceding two steps in the process. The two stages in the business development process have analyzed the situation of the country and the features of the company. The objectives and the goals of the company have been to cater to the largest number of customers and spread happiness. The mission of the drink underlines the fact. The situational analysis will evaluate the current condition of the country. This has already been done in the previous steps. The budget of the company in the case of expansion is always good given the missions and visions of the company. The action programs of the company involve taking a good look at the situation and then deciding on the strategy. In the case of the expansion of the business, the company has always decided on the aggressive advertisement strategies. The brand ambassadors are taken into the team which helps in the expansion of the customer base. The main aim of the company in the case of expansion is to increase the visibility of the company. In addition to this, the company has the added advantage of big brand name. Control After the marketing plan of the company is implemented the management looks into the pros and cons of the effect. This is done with the help of standards followed in the other country. The control system of Coke is based in the various countries of operation. The head office oversees the functions in the various countries of the world. There are other aspects in the case of the internationalization of business which will be discussed in the following paragraphs: Market Concentration Vs Spreading The debate in this case is whether the companies should adapt policies catering to a large number of markets or the concentrate on a few. The exporting firms underline the fact that there are five to ten good markets in the world. However, firms with a huge international presence have employed their efforts in products. The case is the same for Coca Cola where the emphasis has been laid on the products. The quality and the diversity of the products have made Coke successful all over the world. (Young, 2006: 181) In the case of the spreading of the company, the location of the centers around the world is an important decision to make. The location of the business in the case of the internationalization process underlines different situation like the availability of the labor, cost of the resources, transfer of know how etc. A company on the verge of setting up centers in the various regions of the world has to look into the various matters. Setting up of business in the different centers of the world has many advantages like the easy availability of the products, lessening of the costs due to supply constraints etc. In some cases, the countries where the business centers are set up allow a reduced cost of production. The companies can take the advantages of the lower costs of production. In the case of Coca Cola, the company has centers all around the world, which helps the company in the supply of the products and maintaining the costs of the products. (Young, 2006: 284-288) Integration of Strategies worldwide The integration of the strategies has been a problem for the companies. More and more companies have been moving to standardizing the products. According to Levitt, “The modern global corporation contrasts powerfully with the ageing multinational corporation. Instead of adapting to superficial and even entrenched differences within and between nations, it will seek sensibly to force suitably standardized products and practices on the entire globe. They are exactly what the world will take, if they also come with low prices, high quality, and blessed reliability.” The statement made by Levitt may be true in some cases. However, to be successful worldwide, needs to cater to different groups of customers. The tastes and preferences of the customers are different according to the conditions of the country. In the case of Coca Cola, the company caters to over 200 countries worldwide and the company invariably offers different types of products to different people. In the case of some of the drinks like the Coca Cola itself, the product is standardized. In this case, the company follows the principal of Levitt. But in the case of the availability of the products, there is a subtle difference. There are differences in the buying pattern, customer behavior and the economic conditions of the people. The competition in the environment may also force the company to innovate. The standardization may reduce the costs of the company but to remain in the market the company must be able to cater to the needs of the different customers. (Young, 2006: 182-185) Segmentation Segmentation has been one of the most important aspects in marketing. In the case of international marketing also, segmentation has to be done. In the case of segmentation in the international marketing the countries are to be segmented. The countries can be segmented as follows: Countries demanding similar products: There may be a product that is demanded by a group of countries. The product has to be identified by the company. In the case of Coca Cola, the Middle East countries demand soft drinks, as there is low consumption of hard drinks. This type of demand benefits the company as it helps in reduction of the costs. Countries demanding Universal products: There may be a product that is demanded by all countries worldwide. The product has to be identified by the company. In the case of Coca Cola, the Coke is one such product that is demanded worldwide. This has been possible because of the brand name of the product. This type of demand benefits the company as it helps in reduction of the costs. Diverse products: In the case of some countries a diverse group of products is demanded. In this case, the company has to maintain a high stock of goods and the advertising costs also increase. The advertising is needed because the customers must know about the products and given the amount of competition, the company may lose ground if it is not visible. (Young, 2006: 186-190) International Advertising The advertising is an integral part of the marketing process. In the case of the internalization of the business, the international advertising is an essential component. The rules and regulations of the countries where the advertising are to take place are to be followed. In the case of the Middle East countries the advertising guidelines are strict and the companies should maintain the guidelines to succeed. The companies must implement newer strategies in the case of the advertisement of the products. In the case of the Coca Cola, the company promotes ethical advertising with emphasis being led on the happy times. In the case of different regions of the world, the company employs brand ambassadors to promote the products. (Young, 2006: 191-196) Uses of Internet The Internet has become one of the strongest mediums in the advertisement of the products. With the growth of the information technology more and more people have become glued to the Internet and advertisement through the Internet is a good way to promote the products. Coca Cola has a profile in Face book, which helps in connecting with people worldwide. This is an effective way of marketing the products and to attract the customers. The customer interaction is a big plus point in the case of the social networking site like the Face book and Coca Cola has been able to take full advantage of it. (Young, 2006: 197-199) Conclusions Coca Cola has been one of the most successful companies in the world in the case of international business. The company has been catering to the customers of over 200 countries for over 100 years. The company is the highest selling beverages company in the world. The success of the company has been based on the solid marketing strategies of the company that has enabled it to enter the markets of these countries. The company has maintained the quality of the products during these years and this has been an integral part of the success. The promotional strategies of the drink are unique. The main essence in the case of the marketing strategy of the company has been the visibility of the product and the management has been successfully doing this over the years. References: 1. Cavusgil, S. (December, 1991). Internationalization of business and economic programs: issues and perspectives. Find Articles. Available at: http://findarticles.com/p/articles/mi_m1038/is_n6_v34/ai_11610803/ (Accessed on 22nd June, 2010) 2. The Chronicle of Coca Cola. (n.d.). The Coca Cola Company. Available at: http://www.thecoca-colacompany.com/heritage/chronicle_birth_refreshing_idea.html (Accessed on 22nd June, 2010) 3. Mission, vision and values. (n.d.). The Coca Cola Company. Available at: http://www.thecoca-colacompany.com/ourcompany/mission_vision_values.html (Accessed on 12th June, 2010) 4. Growth, leadership, sustainability. (n.d.). The Coca Cola Company. Available at: http://www.thecoca-colacompany.com/ourcompany/index.html (Accessed on 22nd June, 2010) 5. Product Descriptions. (n.d.). The Coca Cola Company. Available at: http://www.virtualvender.coca-cola.com/ft/index.jsp (Accessed on 22nd June, 2010) 6. Mittal et al. (2010). Analysis of marketing strategy of Coca Cola and Pepsico. Scribd. Available at: http://www.scribd.com/doc/20596818/analysis-of-marketing-strategy-of-coca-cola-and-pepsi (Accessed on 22nd June, 2010) 7. Heritage timeline. (n.d.). The Coca Cola Company. Available at: http://heritage.coca-cola.com/ (Accessed on 22nd June, 2010) 8. Coca-Cola announces Tamer Hosny as new brand ambassador for Middle East. (9th February, 2008). Arabian Business.Com. Available at: http://www.arabianbusiness.com/index.php?option=com_pressreleases&view=detail&pr_id=12041&Itemid=77&ln=en (Accessed on 22nd June, 2010) 9. Young, S. (2006). International Business Volume 1. University of Strathclyde Graduate School of Business. 10. Young, S. (2006). International Business Volume 2. University of Strathclyde Graduate School of Business. Read More