Strategic Management Issues of Multinational Companies (MNCs): A Case Study on Coca-Cola Company

Strategic Management Issues of Coca-

INTRODUCTION A global global perspecti perspective ve is a matter matter of survival survival for business businesses. es. Strategi Strategic c management is the process of specifying an organization's organization 's objectives, deve develo lopi ping ng poli polici cies es and and plan plans s to achi achiev eve e thes these e obje object ctiv ives es,, and and alloca allocati ting ng reso resour urces ces so as to implem implemen entt the plans plans.. The The Coca-C Coca-Cola ola Comp Compan any y (Coc (Cocaa-Co Cola la)) is a lead leadin ing g manu manufa fact ctur urer er,, dist distri ribu buto torr and and marketer of Non-alcoholic beverage concentrates and syrups, in the world. The company owns or licenses more than 400 brands, including diet and light beverages, waters, juice and juice drinks, teas, coffees, and energy and sports drinks. The company operates in more than 200 coun countr trie ies. s. Coca Coca-C -Col ola a En Ente terp rpri rise ses s is the the worl world' d's s larg larges estt mark market eter er,, producer and distributor of Coca-Cola products. It operates in 46 U.S. states and Canada, and is the exclusive Coca-Cola bottler for all of Belgium, continental France, Great Britain, Luxembourg, Monaco and the Netherlands. Coca-Cola is the non alcoholic bottled beverages.

ORIGIN OF THE REPORT We are lucky to say that our honorable course teacher Md. Muzahidul Islam Lecturer, Depa Depart rtme ment nt of Mana Manage geme ment nt Stud Studie ies, s, Facul aculty ty of Busine Business ss Admin Administ istrat ratio ion n and and Mana Managem gement ent,, assi assigne gned d us a repor reportt on “Stra Strate tegi gic c Mana Manage geme ment nt Issu Issues es of Mult Multin inat atio iona nall Comp Compan anie ies s (MNC (MNCs) s):: A Case Case Stud Study y on Coca Coca-C -Col ola a Comp Compan any y ”. ”. Thi This s repor eportt is prepared on the basis of secondary data.

OBJECTIVES OF THE STUDY Every Ever y succ succes essf sful ul stud study y shou should ld have have spec specif ifie ied d and and well well-d -def efin ined ed objectives. A careful statement of the objective helps in preparing a well-d well-deco ecorat rated ed repo report rt facili facilitat tatin ing g other others s to take take decis decision ion on it. The specific objectives of the study are to have knowledge about-

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Strategic Management Issues of Coca

To know about the strategic management issues of multinational companies

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To know about the strategies of the multinational companies To ch char arac acte teri rize ze the the ch chal alle leng nges es of inte intern rnat atio iona nall stra strate tegi gic c management

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To know about the international strategic management process To iden identi tify fy and and ch char arac acte teri rize ze the the leve levels ls the the inte intern rnat atio iona nall management strategies

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To To know about the Coca-Cola Company’s strategies management process.

SCOPE OF THE STUDY Thi This s stud study y has has focu focuse sed d up upon on the the Mana Manage geme ment nt Issu Issues es thos those e are are followed by the Coca-Cola Company for capturing the global market. Thr Throu ough gh our our repor eportt we try try to find find out out the the glob global al ch chal alle leng nges es of Internati International onal Strategi Strategic c Managemen Managementt to assess assess the basic basic strategi strategies, es, describe the international strategic management process of Coca-Cola Company. We hope this study will help to whom, who want to know more clearly about strategic management, its issues as well as the key factors which affect the process of Internationalization for a company.

Data and Methodology We examin amine e seco second ndar ary y data data of whic which h relat elated ed to the the Stra Strate tegi gic c Management Issues at the global based Market. Data are collected on various issues from annual report of Coca-Cola Company (2005-2009). In our report eport we analys analysis is the monthl monthly, y, qu quart arterl erly, y, half half-y -yea early rly news news Review of this company. Based upon this data we like to analysis the Econom Economic ic Review, eview, Statis Statistic tical al Strate Strategic gic condit conditio ion n of the CocaCoca-Col Cola a Company. Both the official and regional website helps us to find out more more related related to the issues with with the global marke market. t. Form Form those those huge data data we tak take the the nece necess ssar ary y and and used used them them for for the the anal analys ysis is.. Our Our analysis data are clearly represented in our main part of the report through relevant chart, graph with proper description. Page

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LIMITA IMITATIONS OF THE REPORT As a student of faculty of Business Administration and Management, 7th semester, this is our first initiative for making a report on “Strategic Management Issues of Multinational Companies (MNCs): A Case Study on Coca-Col Coca-Cola”. a”. We were were really really unable unable to collect collect enough enough informat information ion from due to their official restrictions. Many things were so confidential that we were not entitled to access there. Beside this we have faced the following hindrances in preparing this report:

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Lack of knowledge and experience

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Short of time

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Lack of computer facilities

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Lack of sufficient privileges

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Lack of communication facilities

Definition of Strategic Management

Strategic management is the process of specifying an organization's organization 's

objectives, developing policies and plans to achieve these objectives, and allocating resou resources rces so as to implement the plans. It is the highest level of managerial activity, usually performed by the company's Chief Executi Ex ecutive ve Officer Officer (CEO) (CEO) and execu executiv tive e team. team. It pr prov ovid ides es over overal alll direction to the whole enterprise.

International strategic management is a comprehensive and ongoing

management planning process aimed at formulating and implem implement enting ing strate strategi gies es that that enable enable a firm firm to compl complete ete effect effective ively ly interna internation tionally ally.. The pr process ocess of developi developing ng a particula particularr interna internatio tional nal Page

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strategy is often referred to as strategic planning. Strategic Manag Manageme ement nt is the study study of functi function on and respo respons nsibi ibili litie ties s of senior senior management.

Five Essential Parts of Strategic Management

Goal-setting

Goal-setting enables a firm to articulate its vision: identify what needs to be accomplished, define short-and long-term objectives, and relate them to what the organization needs to do.

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Analysis

Analys Analysis is guides guides to collec collectt and and consi consider der infor informat mation ion so that that a firm firm understands the situation. Assess external environments and internal situations to identify the strengths and weakness of the organization and the opportunities and threats face to reach the goals.

Strategy Formulation

To determine a strategy, the firm reflects prioritize, develop options, and make decisions. Review the results of the analysis, identify the issu issues es that that a fir firm impl implem emen enti ting ng part partne ners rs need need to addr addres ess, s, and and prioritize them in terms of their urgency and magnitude. Use these results to design alternative strategies and plans that address the key strategic issues.

Strategy Implementation

To To implement implement the strategy strategy,, assemble assemble the necessary necessary resour resources ces and apply them. Put the chosen plans into practice, marshal the resources and commitments necessary for moving ahead, tap existing capacity and/or build new capacity, and seek to achieve results.

Strategy Monitoring

Monitoring allows checking the progress toward achieving the firm’s goal goals s and and asse assess ssin ing g whet whethe herr any any ch chan ange ges s in the the envi envirronme onment nt nece necess ssit itat ate e alte altern rnat ativ ives es to the the firm firm’s ’s stra strate tegy gy.. Modi Modify fy plan plans s and and actions to adjust to the impact of changing in the operating environment.

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SIGNIFICANCE OF STRATEGIC MANAGEMENT

Strate Strategic gic manage managemen mentt integr integrate ates s the knowle knowledg dge e and exper experie ience nce gained in various functional areas.

It help helps s to un unde ders rsta tand nd and and mak make sens sense e of comp comple lex x inte intera ract ctio ion n in various areas of management.

It helps in understanding how policies are formulated and in creating app pprreci eciati ation of comp compllexities ties of env nvir iro onmen ment that that the seni enior management faces in policy formulation.

Managers need to begin by gaining an understanding of the business environment and to in control.

They should know to manage and understand information technology, c which is changing the face of business. i g e t a r t As public and common investors own Sand more companies managers f need to acquire skills to maximize shareholder value. o e c n a To To have/tak have/take e a strategi strategic c perspecti perspective, ve, managers managers should should foresee foresee the c i futur future e and track track change changes s in custom cus f i tomer er expec expectat tatio ion. n. Intuit Intuitiv ive, e, logic logic n To the shape the Future Its helps to increase the reasoning is required for proper decision-making. g i of business productivity S As corp corpor orat ate e are are beco becomi ming ng more more inte integr grat ated ed with with the the pu publ blic ic life life,, corpo corporat rate e gover governan nance ce is becomi becoming ng import importan antt which which manage managerr may may Effective strategic idea have to practice. To Makes discipline

Mangers and employer are innovative and

It’s decentralized the Management

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To

makes

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Issues in Strategic Management Decision Making •

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Whil While e maki making ng a deci decisi sion on the the comp compan any y migh mightt have have diff differ eren entt people at different periods of time.

Deci Decisi sion on requi equirres judg judgme ment nts; s; pers person onal al relat elated ed fact factor ors s are are impor importan tantt in decis decision ion-ma -makin king. g. Hence Hence decis decision ion ma y differ differs s as person change.

Decisions are not taken individually, but often there is a task in decisions which could be Individual Vs Group decision making. Ther There e will will be a diffe differe rence nce betwee between n the indiv individu idual al and gr group oup decision-making.

On what what Crit Criter eria ia a comp compan any y shou should ld mak make its its deci decisi sion on,, for for eval evalua uati tion on of the the effi effici cien ency cy & effe effect ctiv iven enes ess s of the the deci decisi sion on making process, a company has to set its objectives which serves as main bench mark.

3 Major Criteria in decision Making are--a. The concept concept of of Maximi Maximizati zation. on. Page

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b. The concept concept of of satisf satisfying ying.. c. The concept of instrumentalism. Based on the concept chosen the strategic decisions will differ. •

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Generall Generally y decision decision-mak -making ing pr process ocess is logical logical and there there will be rationality rationality in decision-making. decision-making.

When it comes to Strategic decision making point of view there woul would d be pr prop oper er eval evalua uati tion on & then then exer exerci cisi sing ng a ch choi oice ce from from various available alternative resources, which leads to attain the objectives in a best possible way.

Crea Creati tivi vity ty in deci decisi sion on-m -mak akin ing g is requi equirred when when ther there e is a comp comple lete te situ situat atio ion n & the the Deci Decisi sion on tak taken mu must st be orig origin inal al & different.

The Therre coul could d be vari variab abil ilit ity y in deci decisi sion on-m -mak akin ing g base based d on the the situation & Circumstances.

Internati International onal strategi strategic c manageme management nt resul results ts in the develo developme pment nt of

various international strategies, which are comprehensive frameworks for achiev achieving ing a firm’s firm’s fundam fundament ental als s goals goals.. Concep Conceptua tually lly,, there there are are many similarities between developing a strategy for competing in a single country and developing one for competing in multiple counties. In both cases, the firm’s strategic planners must answer the same fundamental questions— •

What products and/or services does the firm intend to sell?

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Where and how will to make those products or services?

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Where and how will it sell them?

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Where and how will it acquire the necessary resources?

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How does it expect to outperform its competitors?

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But develo developin ping g an inter interna natio tional nal strate strategy gy is far more more comple complex x than than developing a domestic one. Because managers developing a strategy for a domes domestic tic firm firm must must deal deal with with one nation national al govern governmen ment, t, one currency, one accounting system, one political and legal system and usually a single language and a comparatively homogeneous culture. But managers responsible for developing a strategy for an international firm must understand and deal with multiple governments, multiple currencies, multiple political and legal system, and variety of language and cultures.

Various Various Roles of Strategic Management

Senior management plays n important role in Strategic Management.

Role Role of Board Board of Direc Director tors: s: Boar Board d of Direct Director ors s is the supre supreme me Authority in a company. They are the owners/ shareholders/ lenders. They are the ones who direct and responsible for the governance of the company. company. The Company act and and other laws blind blind them and their acti action ons s & they they some someti time mes s do get get invo involv lved ed in oper operat atio iona nall issu issues es.. Professionals on the B.O.D help to get new ideas, perspectives and Page

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provide guidance. They are the link between the company and the environment.

Role of C.E. Role C.E.O: O: Chie Chieff Ex Exec ecut utiv ive e Offi Office cerr is the the most most impo import rtan antt Strategist and responsible for all aspects from formulations/Implementa formulations/Implementation tion to review review of Strategic Management. He is the leader, motivator & Builder who forms a link between company and the board of directors and responsible for managing the external environment and its relationship.

Role of Entrepreneur: They are independent in thought and action and they set / start up a new business. A Company can promote the entr entrep eprreneu neuria rial spiri irit and thi this can can be inte interrnal atti ttitud ude e of an orga organi niza zati tion on.. They They pr prov ovid ide e a sens sense e of dir directi ection on and and are are acti active ve in implementation.

Role of Senior Management: They are answerable to B.O. Directors and and The The C.E. C.E.O O as they they woul would d look look afte afterr Stra Strate tegi gic c Mana Manage geme ment nt a responsible of certain areas / parts of terms.

Role of SBU – Level Executives: They Co-ordinate with other SBU’s & with Senior Management. They are more focused on their product / burners line.

They are more on the implementation role.

Role of Corp Role Corpor orat ate e Plan Planni ning ng Staf Staff: f: It pr prov ovide ides s admin administ istrat rativ ive e support tools and techniques and is a Co-ordinate function.

Role of Consultant: Often Consultants may be hired for a specified new business or Expertise even to get an unbiased opinion on the business & the Strategy.

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Role of Middle Level Managers: They form an important link in stra strate tegi gizi zing ng & Im Impl plem emen enta tati tion on.. They They are are not not acti active vely ly invo involv lved ed in formul formulati ation on of Strate Strategie gies s and and they they are are develo developed ped to be the futur future e management.

COMPANY COMPANY OVERVIEW The The Coca Coca-C -Col ola a Comp Compan any y (Coc (Cocaa-Co Cola la)) is a lead leadin ing g manu manufa fact ctur urer er,, distributor and marketer of Non-alcoholic beverage concentrates and syrups, in the world. The company owns or licenses more than 400 brands brands,, includ including ing diet diet and light light bevera beverages ges,, water waters, s, juice juice and juice juice drinks drinks,, teas, teas, coffee coffees, s, and energ energy y and and sport sports s drinks drinks.. The The compan company y oper operat ates es in mor more than than 20 200 0 coun countr trie ies. s. Appr Appro oxima ximate tely ly 74 74% % of its its products are sold outside of the US. The company is headquartered in Atlan tlanta ta,, Geor Georgi gia a and and empl employ oys s 71 71,0 ,000 00 peop people le as of Sept Septem embe berr 2006.The company recorded revenues of $24,088 million during the fiscal year ended December 2006, an increase of 4.3% over 2005. The increase in revenue was primarily due to increase in sales of Unit cases cases of compan company’s y’s pr prod oduct ucts s from from appr appro oximat ximately ely 20.6 20.6 billi billion on un unit it cases of the company’s Products in 2005 to approximately 21.4 billion unit cases in 2006, the increase in the Price and Product/geographic mix also boosted the revenue growth. The company-wide gallon sales and unit case volume both grew 4% in 2006 when compared to 2005. The operating profit of the company was $6,308 million during fiscal year 2006, an increase of 3.7% over 2005. The net profit was $5,080 million in fiscal year 2006, an increase of 4.3% over 2005.

HISTORY OF COCA-COLA

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Coca-Cola was first introduced by John Smyth Pemberton, a pharmacist, in the year 1886 in Atlanta, Georgia when he invented caramel-colored syrup in a three-legged brass kettle in his backyard. He first “distributed” the product by carrying it in a jug down the street to Jacob’s Pharmacy and customers bought the drink for five cents at the soda fountain. Carbonated water was teamed with the new syrup, whet whethe herr by acci accide dent nt or othe otherw rwis ise, e, pr prod oduc ucin ing g a dr drin ink k that that was was proclaimed “delicious and refreshing”, a theme that continues to echo today wherever Coca-Cola is enjoyed.

Dr. Dr. Pembe embert rton on’s ’s part partne nerr and and book book-k -kee eepe per, r, Frank rank M. Robin obinso son, n, suggested the name and penned “Coca-Cola” in the unique flowing script that is famous worldwide even today. He suggested that “the two Cs would look well in advertising.” The first newspaper ad for The At Atla lant nta a Jour Journa nall , invi Coca Coca-C -Col ola a soon soon appe appear ared ed in The inviti ting ng thir thirst sty y citi citize zens ns to try try “the “the new new and and popu popula larr soda soda foun founta tain in dr drin ink. k.” ” Hand Hand-painted oil cloth signs reading “Coca-Cola” appeared on store awnings, with the suggestions “Drink” added to inform passersby that the new beverage was for soda fountain refreshment.

By the year 1886, sales of Coca-Cola averaged nine drinks per day. The The first first year, year, Dr. Dr. Pembert emberton on sold sold 25 gallo gallons ns of syrup syrup,, shipp shipped ed in bright red wooden kegs. Red has been a distinctive color associated with the soft drink ever since. For his efforts, Dr. Pemberton grossed $50 and spent $73.96 on advertising. Dr. Pemberton never realized the potential of the beverage he created. He gradually sold portions of his business to various partners and, just prior to his death in 1888, sold his remaining interest in Coca-Cola to Asa G. Candler, an entrepreneur from Atlanta.

By the year 1891, Mr. Candler proceeded to buy additional rights and acquire complete ownership and control of the Coca-Cola business. Withi ithin n four four year years, s, his his mer merch chan andi disi sing ng flai flairr had had help helped ed exp xpan and d consumption of Coca-Cola to every state and territory after which he liquidated his pharmaceutical business and focused his full attention Page

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on the soft drink. With his brother, John S. Candler, John Pemberton’s former partner Frank Robinson and two other associates, Mr. Candler formed formed a Geor Georgia gia corpor corporati ation on named named the CocaCoca-Col Cola a Compan Company y. The The tradem trademar ark k “Coca-C Coca-Col ola,” a,” used used in the mark marketplac etplace e since since 188 1886, 6, was registered in the United States Patent Office on January 31, 1893.

Th The busi usines ness cont contin inu ued to gr gro ow, and and in 189 894 4, the the firs firstt syru rup p manufa manufactu cturin ring g plant plant outsid outside e Atlan Atlanta ta was opened opened in Dalla Dallas, s, Texas exas.. Others were opened in Chicago, Illinois, and Los Angeles, California, the the fol followin wing yea year. In 189 895 5, thr hree ee years ears after The Coca Coca--Col Cola Company’s incorporation, Mr. Candler announced in his annual report to shar share e owne owners rs that that “Coca Coca-C -Col ola a is now now dr drun unk k in ever every y stat state e and and territory in the United States.”

As demand for Coca-Cola increased, the Company quickly outgrew its facilities. A new building erected in 1898 was the first headquarters buil bu ildi ding ng devo devote ted d exc xclu lusi sive vely ly to the the pr prod oduc ucti tion on of syru syrup p and and the the mana manage geme ment nt of the the bu busi sine ness ss.. In the the year year 19 1919 19,, the the Coca Coca-C -Col ola a Company was sold to a group of investors for $25 million. Robert W. Woodruff became the President of the Company in the year 1923 and his mor more than han sixt ixty years ars of lead eadersh ershiip took ook the the bu busi sin ness ess to unsurpassed heights of commercial success, making Coca-Cola one of the most recognized and valued brands around the world.

HISTORY OF BOTTLING

Coca-Cola originated as a soda fountain beverage in 1886 selling for five cents a glass. Early growth was impressive, but it was only when a strong bottling system developed that Coca-Cola became the worldfamous brand it is today.

Year 1894: A modest start for a bold idea

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In 18 1894 94 the the Coca Coca-C -Col ola a Comp Compan any y is in a cand candy y stor store e in Vicks icksbu burg rg,, Mississippi, brisk sales of the new fountain beverage called Coca-Cola impressed the store's owner, Joseph A. Biedenharn. He began bottling Coca-Cola to sell, using a common glass bottle called a Hutchinson. Bied Bieden enha harrn sent sent a case case to Asa Asa Gri Grigg ggs s Cand Candle ler, r, who who owne owned d the the Company. Candler thanked him but took no action. One of his nephews already had urged that Coca-Cola be bottled, but Candler focused on fountain sales.

In 21st centur century y the CocaCoca-Col Cola a bottli bottling ng syste system m gr grew ew up with with roots roots deep deeply ly plan plante ted d in loca locall comm commun unit itie ies. s. This This heri herita tage ge serv serves es the the Comp Compan any y well well toda today y as cons consum umer ers s seek seek br bran ands ds that that hono honorr loca locall identity and the distinctiveness of local markets. markets. As was true a century ago, strong strong locally locally based based relatio relationshi nships ps between between Coca-Cola Coca-Cola bottlers bottlers,, customers and communities are the foundation on which the entire business grows.

1916 …

1920s and 30s … International expansion

1950s … Packaging innovations

Birth of the

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VISION OF COCA-COLA COMPANY Our Our miss missio ion n decl declar ares es our our pu purp rpos ose e as a comp compan any y. It serv serves es as the the standard against which we weigh our actions and decisions. It is the foundation of our Manifesto. •

To refresh the world in body, mind and spirit

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To To inspir inspire e moment moments s of optimi optimism sm throu through gh our brands brands and and our our actions

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To create value and make a difference everywhere we engage.

MISSION OF COCA-COLA COMPANY

To create consumer products, services and communications, customer service and bottling system strategies, processes and tools in order to create competitive advantage and deliver superior value to;

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Strategic Management Issues of Coca•

Consumers as a superior beverage experience

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Consumers as an opportunity to grow profits through the use of finished drinks

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Bottlers as an opportunity to grow profits in volumes

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Bottlers as a trademark enhancement and positive economic value added

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Supp Su ppli lier ers s as an oppo opport rtun unit ity y to mak make reaso easona nabl ble e pr prof ofit its s when when creating real value-added in an environment of system-wide team work, flexible business system and continuous improvement

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Indian society in the form of a contribution to economic and social development.

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Refresh the World... In body, mind, and spirit

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Inspire Moments of Optimism... Through our brands and our actions

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Create Value and Make a Difference... Everywhere we engage.

VISION FOR SUSTAINABLE GROWTH

Our vision guides every aspect of our business by describing what we need to accomplish in order to continue achieving sustainable growth.

People: Being a great place to work where people are inspired to be the best they can be.

Portfolio: Bringing to the world a portfolio of quality beverage brands that anticipate and satisfy people's desires and needs.

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Partners: Nurturing a winning network of customers and suppliers, together we create mutual, enduring value.

Planet : Being a responsible citizen that makes a difference by helping build and support sustainable communities.

Profit: Maxi Maximi mizi zing ng long long-t -ter erm m retur eturn n to shar shareo eown wner ers s whil while e bein being g mindful of our overall responsibilities.

QUALITY POLICY Coca-C Coca-Col ola a Compan Company y follo follows ws differ different ent qualit quality y stand standar ard d for for diffe differe rent nt countries across the globe. Coca-Cola Company has a long-standing commitment to protecting the consumers whose trust and confidence in its products is the bedrock of its success. In order to ensure that consu consumer mers s stay stay infor informed med about about the global global qualit quality y of all all CocaCoca-Col Cola a products sold in World, Coca-Cola products carry a quality assurance seal on them. The ‘One Quality Worldwide’ assurance seal appears on the entire range of Coca-Cola Company’s beverages.

CURRENT ORGANIZATIONAL ORGANOGRAM

CEO EVP/ President Bottling Invest/ Supply

CFO and EVP

President of Eurasia Group

EVP/ Presiden t MKT Strategy

President European Union

Presiden t

President Page 17 of African Group

SVP & General Counsel

SVP & Director Human Resource s

President Latin America

SVP & Director Public Affairs/ Communicati on

President of Pacific Group


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BRANDS OF COCA-COLA Coca Coca-C -Col ola a Zer Zero® has has been been one one of the the most most succ succes essf sful ul product launch hes in Coca-Cola’s history. In 2007, Coca Cola Cola’s ’s sold sold near nearly ly 45 450 0 mill millio ion n case cases s glob global ally ly.. Put Put into into perspective, that's roughly the same size as Coca Cola’s total business in the Philippines, one of our top 15 markets. markets. As of September 2008, Coca-Cola Zero is available in more than 100 countries.

Energy Drinks

For those with a high-intensity approach to life, Coca Cola’s brands of Energy Drinks contain ingredients such such as gins ginsen eng g extra xtract ct,, gu guar aran ana a extract, and caffeine and B vitamins.

Juices/Juice Drinks

We bring innovation to the goodness of juice in Coca Cola’s more than 20 juice and juice drink brands, offering both both adult adults s and and child childre ren n nu nutri tritio tious, us, refreshing and flavorful beverages

Soft Drinks

Coca Coca Cola’s la’s doze dozens ns of soft dr driink brands provide flavor and refr refresh eshmen mentt in a varie variety ty of choice choices. s. From the original Coca-Cola to most

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recent introductions, soft drinks from The Coca-Cola Company are both icons and innovators in the beverage industry.

Sports Drinks

Carbohydrates, fluids, and electrolytes team team toge togeth ther er in Coca Coca Cola Cola’s ’s Sp Spor orts ts Drinks, Drinks, providi providing ng rapid rapid hydratio hydration n and terrific taste for fitness-seekers at any level Tea and Coffee

Bottled and canned teas and coffees provide consumers' favorite drinks in convenient take-anywhere packaging, satisfying both traditional tea drinkers and today's growing coffee culture.

Water

Smooth and essential, our Waters and Water Beverages offer hydration in its purest form.

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Other Drinks

So much more than soft drinks, Coca Cola’s brands also include milk products, soup, and more so you can choose a Coca Cola Company product anytime, anywhere for nutrition, refreshment or other needs .

CONSUMER CHOICE AT A GLANCE

Limca Common drink.

Fanta Basically Preferred by Ladies and Kids.

Sprite not clearly defines.

Maaza also Ladies and Kids

Kinley Soda Mostly those who consume liquor

Factors affecting the strategic management issues

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Factors affecting the strategic management issues of domestic and international operations of Coca-Cola Company.

Table 1: Factors affecting the strategic management issues

Lang Langua uage ge

English Engli sh used used as a Use Use the the loca locall lang langua uage ge requ requir ired ed in second language many situations

Culture

Relatively homogenous

Quite diverse, both between countries and within countries

Polit olitic ics s

Unst Unstab able le

Economy

Underdeveloped

Often ten vola volattile ile and of deci decisi sive ve importance Wide variations among countries and among regions within countries

Governmental interference

Reasonably predictable

Labo Laborr

Skille Skil led d labo labors rs not available

Financing Market research Advertising

Often extensive and subject to rapid change

are are Skilled labors often scarce, requiring trai traini ning ng or rede redesig sign n of pr prod oduc uctio tion n methods Moderately Ofte Often n poor poorly ly deve develo lope ped d fina financ ncia iall developed developed financial financial mark market ets; s; capi capita tall flow flows s subj subjec ectt to markets government control Data Data coll collec ectt is not not Sometimes data difficult and very easy expensive to collect Media are available Media limited; many restrictions; low with some literacy rates rule out print media in restrictions some countries

Money Money Transportation s Control Labor relations

It is not developed

Must Must change change from from one curre currency ncy to another Often adequate

Always a problem

A worse problem

Collective Layoff of workers often not possible; bargaining, layoff of may have mandatory worker workers participation in management; workers may may seek seek ch chan ange ge thro throug ugh h polit politic ical al process rather than collective bargaining Page

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Strategic Management Issues of CocaFactors Affecting International Strategic Management

Langua

Culture

Politics

Econom

Governme

Labor

Financin

Market

Money

Control

Advertising

Contrac

Transportation Transportation and

Labor Relations

Figure: Factors affecting the strategic management issues

There are some factors which affect strategic of Coca-Cola Company in case case of inter ternati ational nal oper operat atio ion n. Lan Langu gua age is one of the main ain consi consider derati ations ons when when it does does busine business ss domest domestica icall lly, y, they they genera generally lly domestic language. But when it does business outside the country it follows Polycentric policy that is it used different language in different countries. Side by side culture is relatively homogeneous in domestic oper operat atio ion n and and qu quit ite e dive divers rse, e, both both betw betwee een n coun countr trie ies s and and with within in countries. Political stability and policy also be considered by the CocaCola Cola Comp Compan any y. Cont Contrrol func functi tion on is done done by cent centra rall lly y in case case of domestically but when it goes beyond outside, it must work a tightrope between over centralizing and losing control to much decentralizing. Labor Labor is anoth another er consid considera eratio tion n becaus because e their their skill skills s and and collec collectiv tive e bar bargain gainin ing g that that is labo laborr relat elatio ion n diff differ er from from coun countr try y to coun countr try y. Adve Advert rtis isin ing g in dome domest stic ic coun countr try y is very very easy easy beca becaus use e dome domest stic ic cultures are known to them. But in case of international operation it faces many problems for advertising such as shortage of media, huge advertising cost and so forth. However economy is relatively uniform in domes domestic tic’s ’s countr country y bu butt outsi outsides des,, it faces faces wide wide varia variatio tion n among among countries countries and among among region region within within country country.. In case of Coco-Cola Coco-Cola Company the market research data is easy to collect but when it goes Page

23


to foreign sometimes face difficult and expensive to collect data. At last we see that government interference in case of domestically, it is minimal and reasonably predictable but in international operation it is often expensive and subject to rapid change. Strategic Alternatives of Multinational Companies

Mult Multin inat atio iona nals ls corp corpor orat atio ions ns typi typica call lly y adop adoptt one one of four four stra strate tegi gic c alte altern rnat ativ ives es in thei theirr atte attemp mptt to bala balanc nce e the the thr three goal goals s of glob global al efficienc efficiencies, ies, multinati multinational onal flexibi flexibility lity,, and worldwid worldwide e learning learning.. There There four strategies are as follows—

Home Replication Strategy

In this strategy, a firm utilizes the core competency or firm-specific advantage it developed at home as its main competitive weapon in the for foreign eign mark arkets tha that it enter nters s. That That is, it takes akes wha what it does exceptionally well in its home market and attempts to duplicate it in foreign markets.

Multi-domestic Strategy

It is the secon second d alter alterna nativ tive e avail availabl able e to inter internat natio ional nal firm. firm. A multi multi-dome domest stic ic corp corpor orat atio ion n view views s itse itself lf as a coll collec ecti tion on of relat elativ ivel ely y inde indepe pend nden entt oper operat atin ing g subs subsid idia iari ries es,, each each of whic which h focu focuse ses s on a specific domestic market.

Global Strategy

It is the third third alter alternat nativ ive e avai availab lable le for for inter internat natio ional nal firm firms. s. A global global corporations views the world as a single marketplace and has as its primary goal the creation of standardized goods and services that will address the needs of customers worldwide.

Transnational Strategy

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The The trans transnat natio ional nal corpo corporat ration ion attemp attempts ts to combin combine e the benefi benefits ts of global scale efficiencies with the benefits of local responsiveness.

Strategies for Coca Cola Company

These

four strategy are shown in the following figure—

Home Replication Strate

Multi-domestic Strategy

Global Strategy

Transnational Strategy

From thes these e four four stra strate tegi gies es Coca Coca-C -Col ola a Comp Compan any y foll follow ow the the Mult Multiidomest domestic ic strate strategi gies. es. They They pr prod oduce uce their their pr prod oduct ucts s indepe independe ndentl ntly y in different countries. All countries product are not same. They produce their products by following different strategy for different countries, based on the internal internal and external external environment environment of the country. country. CocaCola Company developed their strategy by considering the nature of the people of different different county’s county’s people, culture, status and so many other related factors. Behind the reasons of following of this strategy may be that, different countries economies of scale for production, distribution, and marketing are low, side by side cost of coordination between the parent corporation and its various foreign subsidiaries is high. Because each subsidiary subsidiary in a multi-domestic corporation must be responsive to the local market, the parent company usually delegates considerable power and authority to managers of its subsidiaries in various host countries.

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Levels of Strategies followed by Coca-Cola Company

There are three levels of strategies followed by Coca-Cola Company. This may be stated as the following—

Figure: Levels of Strategies

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Corporate Level Strategy

Corporate level strategy attempts to define the domain of business the firm firm intend intends s to opera operate. te. Corpor Corporate ate level level strate strategy gy fundam fundament ental ally ly is concer concerned ned with with the selec selectio tion n of bu busin siness esses es in which which the compa company ny should compete and with the development and coordination of that port portfo foli lio o of bu busi sine ness sses es.. A fir firm migh mightt adop adoptt any any of thr three for forms of corporate strategy:

•

• •

A single business strategy Related diversification strategy and Unrelated diversification strategy.

Coca-Cola Company follows related diversification diversification strategy that is calls for the firm to operate in several different but fundamentally related busi bu sine ness sses es.. Each Each of its its oper operat atio ions ns link linked ed to the the othe others rs Coca Coca-C -Col ola a characters, the Coca-Cola logo, and a theme of wholesomeness and a reput eputat atio ion n for for pr prov ovid idin ing g high high qu qual alit ity y fami family ly pr prod oduc ucts ts.. Coca Coca-C -Col ola a Company follows this strategy because it has several advantages. At first, the firm depends less on a single products so it is less vulnerable to competitive or economic threats. Secondly , related diversification may produce economies of scale for a firm. Thirdly, related dive divers rsif ific icat atio ion n may may allo allow w a fir firm to use use tech techno nolo logy gy or exp xper erti tise se developed in one market to enter a second market more cheaply and easily. easily. Corporate level strategies of Coca-Cola Company is following—

Corporate Level Strategy Page of Coca-Cola Company 27


Marketin g Strate ie

System Strategi s

Reward System Strate ies

Financial Strategies

R&D Strategies

Figure: Corporate Strategy of Coca-Cola Company

Business Unit Level Strategy

A strategic business unit may be a division, product line, or other profit center that can be planned independently from the other business units of the firm. Corporate strategy deals with the overall where as busi bu sine ness ss stra strate tegy gy focu focuse ses s on spec specif ific ic bu busi sine ness ss,, subs subsid idia iari ries es or operating units within the firm. Business seeks to answer the question “how should we compete in each market we have chosen to enter?” The firms develop unique business strategy for each of its strategic business units, or it may pursue the same business strategy for all of them. The three three basic basic business business strategy strategy are differentia differentiation tion,, overall overall cost leadership and focus. Coca-Cola Company uses the differentiation strategy effectively effective ly..

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Functional Level Strategy

The The functi function onal al strate strategi gies es attemp attempts ts to answer answer to questi question on “How we manage the function?” The functional level of the organization is the level of the operating divisions and departments. The strategic issues at the functional level are related to business processes and the value chain. chain. Functiona unctionall level level strategi strategies es in marketing marketing,, finance, finance, operatio operations, ns, human resources, and R&D involve the development and coordination of resou esourrces ces thr through ough whic which h bu busi sine ness ss un unit it leve levell stra strate tegi gies es can can be executed efficiently and effectively.

Fun unct ctio iona nall un unit its s of an orga organi niza zati tion on are are invo involv lved ed in high higher er leve levell strategies by providing input into the business unit level and corporate leve levell stra strate tegy gy,, such such as pr prov ovid idin ing g info inform rmat atio ion n on resou esourc rces es and and capabilities on which the higher level strategies can be based. Once the higher-level strategy is developed, the functional units translate it into into disc discrrete ete acti action on-p -pla lans ns that that each each depa depart rtme ment nt or divi divisi sion on mu must st accomplish for the strategy to succeed.

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E-COMMERCE OF COCA-COLA COMPANY

Good points of Coca-Cola Company •

Brand Promotion

•

Attractive products selection

•

Look and feel 8

•

Provision of multimedia product, catalogue pages

•

Personal attention

•

Community relationships

Weak points of Coca-Cola Company •

Performance and service: that is not easy navigation, shopping and purchasing, and prompt shipping and delivery.

•

Discount pricing is not being offered.

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Developing International Strategies

Developing international strategies is not a one-dimensional process.. Simply put, put strategy formulations formulations deciding what to do and strategy impl implem emen enta tati tion on is actu actual ally ly doin doing g it. it. Firms irms gene genera rall lly y carr carry y out out international strategic management in two broad strategiesStrategy Formulation

In strategies formulation, a firm establishes its goals and strategic plan that will lead to the achievement of their mission goals. In inter internat nation ional al strate strategy gy form formula ulatio tion, n, manage managers rs devel develop, op, refin refine, e, and and agree on which markets of enter (or exit) and how best to compete in each. Strategy Implementation

A firm develops the tactics for achieving the formulated international strategies is known as strategy implementation. Strategy implementation is usually achieved via the organization’s design, the work of its employees, and its control systems and processes. Every Multi Every Multinat natio ional nal Compa Companie nies s are are develo developin ping g their their inter internat nation ional al strategies so that they can survive in the complex business situation. Now the modern market is fully globalized and as a result it’s really difficult for every multinational organization in the right track. In such aspect pect the the imp mpor orta tan nce of stra trateg tegy for formu mula lattion and stra strate teg gy implementation played an important role. Side by side there is some important process which helps in international strategy formulation. Developing International International Strategies in Aspects of Coca-Cola Company

TCC TCCQS QS is the the Coca Coca-C -Col ola a syst system em’s ’s br bran ande ded d qu qual alit ity y mana manage geme ment nt system. It helps coordinate and guide our activities to ensure quality in everything they do. For entering in to a new market and be survive in Page

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the market it always ready to cope with change. Different government policy policy,, econo economic mic condit conditio ion, n, polit politica icall situa situatio tion, n, barrie barrierr and and ban are are associated with different market. Coca Coca-C -Col ola a Comp Compan any’ y’s s basi basic c stra strate tegi gies es are are to deve develo lop p a miss missio ion n statement for entering a new market depending on a fully fledged market survey. Identifying external and internal environment strength, wea weakn kne ess, ss, oppor portuni tunity ty,, and and thr threats eats is the the next mana anageme gemen nt strategies. Depending on the scope and opportunity the company will go forward as well as try to resolve the weakness and threats. After ente enteri ring ng into into a new new mark market et Coca Coca-C -Col ola a Comp Compan any y try try to achi achiev eve e strategic goals and guide its daily activities with proper observation. Lastly this company establishes a control framework for controlling the manag manageri erial al and and organ organiz izati ation onal al system systems s and and pr proce ocess ss as well. well. This This company believes that, for taking a position in a new country is fully depend depends s on the good good form formula ulatio tion n strate strategi gies es and and keepin eeping g it. To do business outside the local market is depending on the quality control of the product and quality ensures the customer perception and the choice for consuming this products.

Figure: Quality Management System of Coca-Cola Company

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Through this model, we see that the company is first take the response of cu cust stom omer ers s and and cons consum umer ers s thr through ough mark market et surv survey ey.. Then Then the the management accumulates the best quality resources for making their products. This process includes•

Skilled employee involvement for production and quality control

•

High quality materials for production

•

Up to date technology for quality control

•

Effective methods and newly developed strategies

They will follow some sequential steps in developing the international strate strategy gy formul formulati ation. on. Thos Those e steps steps help help the CocaCoca-Col Cola a Compa Company ny to enter enter and and establ establis ish h their their busine business ss in multin multinati ationa onall base. base. They They are are following multi-domestic strategies for their produced product as well as their marketing system. The analysis of different levels of strategic formulating of Coca-Cola Company is given below. Developing the Mission Statement

Coca Coca-C -Col ola a Comp Compan any y begi begins ns the the inte intern rnat atio iona nall stra strate tegi gic c plan planni ning ng proces cess by cr cre eati ating a mis mission state tateme men nt, whic which h clar clariifies fies the the organization’s organization’s purpose, value, and directions. directions. The mission statement is often often used used as a way way of commu communic nicati ating ng with with inter internal nal and exter external nal constituents and stakeholders about the firm’s strategic direction.

Mission statement of Coca-Cola Company

Thi This s comp compan any y focu focuse sed d on dr driv ivin ing g gr grow owth th in of thei theirr bu busi sine ness ss in selected profitable and emerging categories. To develop, implement and continuously improve the integrated management systems in a culture of continuous improvement which:

•

•

Directs the continual up-gradation for efficient and environment friendly manufacturing technology. Moni Monito torr and and impr improv ove e the the effi effici cien ency cy and and effe effect ctiv iven enes ess s of all all business processes.

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Promotes professional and flexible work environment, teamwork and innova innovatio tion n throug through h employ employee ee partic participa ipatio tion n and pr proce ocess ss ownership.

•

Drives customer orientation at all levels within the organization.

•

Monitor and economize the Cost of Quality.

Comments on mission Statements (In terms of how they support the strategies)

The vision statement of this company supports the existing strategies that are (generic strategy) that Coca Cola needs to pursue is that of differe differentia ntiation tion.. In their curre current nt vision vision and mission mission statements statements,, the comp compan any y says says it aims aims to be a low low cost cost lead leader er,, yet yet thr through ough thei theirr analys analysis is of the strat strategi egic c directi direction on,, the compan company y needs needs to adopt adopt a generic strategy strategy of differentiation. differentiation. This will allow allow Coca cola to do do two things;

1. Increase unit sales 2. Gain buyer loyalty

However, at the expense of sounding simplistic, it is necessary that the the comp compan any y comm commun unic icat ate e its its diff differ eren enti tiat atio ion n to its its cu cust stom omer ers, s, otherw otherwise ise these these two two advant advantage ages s will will not avail avail themse themselv lves. es. Initia Initiall lly y Coca cola will need to adopt a focused differentiation approach, which means that they should selectively choose which markets will profit them them the the mos most and then then targ arget only those hose mark market ets s unti ntil suc uch h provisions are in place from where the company is able to expand its target target base. base. After After which they they should opt for a broad differen differentiat tiation ion generic strategy. strategy. COCA-COLA COMPANY, THE SWOT ANALYSIS

SWOT ANALYSIS Page

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The The Coca Coca-C -Col ola a Comp Compan any y (Coc (Cocaa-Co Cola la)) is a lead leadin ing g manu manufa fact ctur urer er,, distributor and marketer of Non-alcoholic beverage concentrates and syrups, in the world. Coca-Cola has a strong brand name and brand portfo portfoli lio. o. Busine Businessss-W Week and and Inter Inter brand brand,, a brandi branding ng consul consultan tancy, cy, recognize Coca-Cola as one of the leading brands in their top 100 global brands ranking in 2008. The Business Week-Interbred valued Coca-Cola at $67,000 million in 2008. Coca-Cola ranks well ahead of its close competitor Pepsi which has a ranking of 22 having a brand value of $12,690 million The Company’s strong brand value facilitates customer recall and allows Coca-Cola to penetrate markets. However, the company is threatened by intense competition which could have an adverse impact on the company’s market share.

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Analyz Analyzing ing the primar primary y compet competito itorr and and identi identify fying ing their their Streng Strengths ths,, Weakn eaknes esse ses, s, Oppo Opport rtun unit itie ies, s, and and Thr Threats eats (SWO (SWOT T Anal Analys ysis is)) help help determine target markets, marketing plan, and customer service, sales forecasting forecasting and sales sales planning. Examining the the following following will assist assist in the competitive analysis:

    

Iden Identi tify fy the the leve levell of riva rivalr lry y amon among g comp compet etin ing g sell seller ers s in the the industry Revie eview w stra strate tegi gies es of comp compan anie ies s to enco encour urag age e cu cust stom omer ers s to switch from a competitor Analyze ease of entry for new competitors Determine bargaining power for suppliers of key materials and components Determine bargaining power for buyers of the product

SWOT Analysis represents the analysis of the following four things—

STRENGTHS

Distribu Distribution tion network network:: The The Comp Compan any y has has a str strong ong and and relia eliabl ble e distribution network. The network is formed on the basis of the time of consumption and the amount of sales yielded by a particular customer in one transaction. It has a distribution network consisting consisting of a number of efficient salesmen, 700,000 retail outlets and 8000 distributors. The distri distribut butio ion n fleet fleet includ includes es diffe differe rent nt modes modes of distr distribu ibutio tion, n, from from 10tonne trucks to open-bay three wheelers that can navigate through narr narrow ow alle alleyw yway ays s of Indi Indian an citi cities es and and trad tradem emar ark ked tric tricyc ycle les s and and pushcarts. Stron Strong g Brand Brands: s: The The pr pro odu duct cts s pr prod oduc uced ed and and mark market eted ed by the the Compan Company y have have a strong strong brand brand image. image. People eople all aroun around d the world world recognize the brands marketed by the Company. Strong brand names like Coca-Cola, Fanta, Limca, and Maaza add up to the brand name of the Coca-Cola Company as a whole. The red and white Coca-Cola is one of the very few things that are recognized by people all over the Page

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world. world. Coca-Cola Coca-Cola has been named the world's top brand for a fourth fourth cons consec ecut utiv ive e year year in a surv survey ey by cons consul ulta tanc ncy y Inte Interr br bran and. d. It was was estimated that the Coca-Cola brand was worth $70.45billion. $70.45billion.

Low Cost of Operations: The production, marketing and distribution systems are very efficient due to forward planning and maintenance of consistency of operations which minimizes wastage of both time and resources leads to lowering of costs.

WEAKNESSES

Low Export Levels: The brands produced by the company are brands prod pr oduce uced d world worldwi wide de there thereby by making making the expo export rt levels levels very very low low. In India, there exists a major controversy concerning pesticides and other harmful chemicals in bottled products including Coca-Cola.

Small Small Scale Scale Secto Sector r Reserv Reservati ations ons Limit Limit Abili Ability ty To Invest Invest And And Achieve Economies Of Scale: The Company’s operations are carried out on a small scale and due to Government restrictions and ‘redtapism’, the Company finds it very difficult to invest in technological advancements and achieve economies of scale.

OPPORTUNITIES Large Domestic Markets: The domestic market for the products of the the Comp Compan any y is very very high high as comp compar ared ed to any any othe otherr sof soft dr drin ink k manufacturer. Coca-Cola India claims a 58 per cent share of the soft drinks market; this includes a 42 per cent share of the cola market. Other products account for 16 per cent market share, chiefly led by Page

37


Limca. The company appointed 50,000 new outlets in the first two months of this year, as part of its plans to cover one lakh outlets for the coming summer season and this also covered 3,500 new villages. In Bangalore, Coca-Cola amounts for 74% of the beverage market.

Export Potential: Potential: The The Comp Compan any y can can come come up with with new new pr prod oduc ucts ts which are not manufactured abroad, like Maaza etc and export them to for foreign eign natio ation ns. It can can come come up with with stra strate tegi gies es to elimi iminate ate apprehension from the minds of the people towards the Coke products prod pr oduce uced d in Indi India a so that that ther there e will will be a cons consid ider erab able le amou amount nt of exports and it is yet another opportunity to broaden future prospects and cater to the global markets rather than just domestic market.

Higher Income among People: Development of India as a whole has lead to an increase in the per capita income thereby causing an increase in disposable income. Unlike olden times, people now have the power of buying goods of their choice without having to worry much about the flow of their income. The beverage industry can take advantage of such a situation and enhance their sales.

THREATS Imports: For example: As India is developing at a fast pace, the per capita capita income income has has incre increase ased d over over the years and a majori majority ty of the peop eople is edu educat cated, ed, the the export lev levels els have ave gone high igh. People ple understand trade to a large extent and the demand for foreign goods has has incr increa ease sed d over over the the year years. s. If cons consum umer ers s shif shiftt onto onto imp mpor orte ted d beve bevera rage ges s rath rather er than than have have beve bevera rage ges s manu manufa fact ctur ured ed with within in the the country, it could pose a threat to the Indian beverage industry as a whole in turn affecting the sales of the Company.

Tax and Regulatory Sector: The tax system in India is accompanied by a variety of regulations at each stage on the consequence from production to consumption. When a license is issued, the production capacity is mentioned on the license and every time the production Page

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capa capaci citty need eeds to be inc ncrrease eased, d, the licen icens se pos poses a pr pro oblem. lem. Renew enewin ing g or up upda dati ting ng a lice licens nse e ever every y now now and and then then is diff diffic icul ult. t. The Therrefor efore, e, this this can can limi limitt the the gr grow owth th of the the Comp Compan any y and and pose pose problems.

Slowdown In Rural Demand: The rural market may be alluring but it is not without its problems: Low per capita disposable incomes that is half the urban disposable income; large number of daily wage earners, acu cutte depe depend nden ence ce on the the vagari garie es of the mon monsoon; seaso asonal consumption linked to harvests and festivals and special occasions; poor poor roads oads;; powe powerr pr prob oble lems ms;; and and inac inacce cess ssib ibil ilit ity y to conv conven enti tion onal al advertising media. All these problems might lead to a slowdown in the demand for the company’s products.

COCA-COLA COMPANY, THE

PEST ANALYSIS

A scan of the external macro-environment in which the firm operates can be expressed in terms of the following factors: •

•

•

•

Political Economic Social Technological

The acronym PEST (or sometimes rearranged as "STEP") is used to describe a framework for the analysis of these macro environmental factors. A PEST analysis fits into an overall environmental scan, which consists of significant political, economic, social and technological analysis for a firm to reach their desirable position or to attain the goals and objectives. For operating a business worldwide it is too much important, because its analysis represent the overall environmental scanning as shown in the following diagram:

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Environmental Scan

/ \

External Analysis Internal Analysis

/

\

Macro environment Microenvironment

| P.E.S.T.

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Coca-Cola Company’s perform/ operate their business unit in different country based on the developing of the PEST analysis. The PEST analysis of Coca-Cola Company is as following— Political Factors

It is one of the significant parts of a company where, in which country they operate their business unit. Political factors include government regulations and legal issues and define both formal formal and informal informal rules under which the firm must operate. Some examples include: •

tax policy

•

employment laws

•

environmental regulations

•

trade restrictions and tariffs

•

political stability

Economic Factors

Anot Anothe herr most most impe impera rati tive ve elem elemen entt for for PEST PEST anal analys ysis is is econ econom omic ic fact factor ors. s. Economic factor affects the purchasing power of o f potential customers and the firm's cost of capital. The following are examples of factors in the macro-economy: •

•

•

•

economic growth interest rates exchange rates inflation rate

Social Factors

Social Social factors factors include include the demographic demographic and cultural cultural aspects of the external macro envi enviro ronme nment nt.. These These fact factors ors affe affect ct cust custom omer er needs needs and and the the size size of pote potent ntia iall markets. Some social factors include: •

•

•

•

•

health consciousness population growth rate age distribution career attitudes emphasis on safety Page

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Technological Factors

Technol echnologi ogical cal factor factorss can lower lower barrie barriers rs to entry entry,, reduce reduce minim minimum um effic efficien ientt production levels, and influence outsourcing decisions. Some technological factors include: •

•

•

•

R&D activity automation technology incentives rate of technological change

Develop Strategic and tactical goals and plans of CocaCola Company

After completion of SWOT and PEST analysis as context, international strategic planning is largely framed by the setting of strategic goals. Based on different market situation as well as customers response this company will set up their tactical goals for being a strong position in the global market place. Strategic goals are the major objectives that the the Comp Compan any y want wants s to acco accomp mpli lish sh thr through ough pu purs rsui uing ng a part partic icul ular ar course of action.

The basic objective of set up this strategic and tactical plan and goals is to explo exploit it the firm’s firm’s streng strengths ths and and envir environ onmen mental tal opport opportuni unitie ties, s, neut neutra rali lize ze exte extern rnal al thr threats eats and and over overco come me the the fir firm’s m’s weak weakne ness ss.. Depending on those vital factors this Coca-Cola Company is develop a Cont Contrrol Frame ramewo work rk for for thei theirr over overal alll cont contrrolli olling ng of mana manage geme ment nt.. Through this framework managerial and organizational systems are observed, monitor, and processed.

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Findings By preparing this report about the strategic management issues of multinat multinationa ionall companies companies (MNCS), the the case case stud study y on the the Coca Coca-C -Col ola a Company, we get some important things. These findings are as follows — •

•

•

•

•

•

•

•

•

Coca-Cola Enterprises is the world's largest marketer, producer and distributor of Coca-Cola products. Coca Coca-C -Col ola a was was firs firstt intr introd oduc uced ed by John John Sm Smyt yth h Pembe embert rton on,, a phar ph arma maci cist st,, in the the year year 18 1886 86 in Atlan tlanta ta,, Geor Georgi gia a when when he invented caramel-colored syrup in a three-legged brass kettle in his backyard. It operates in 46 U.S. states and Canada, and is the exclusive Coca-Col Coca-Cola a bottler bottler for all of Belgium, Belgium, continental continental France, rance, Great Great Britain, Luxembourg, Monaco and the Netherlands. Coca-Cola is the non alcoholic bottled beverages. The company owns or licenses more than 400 brands, including diet and light beverages, waters, juice and juice drinks, teas, coffees, and energy and sports drinks. The company operates in more than 200 countries Strategic management integrates the knowledge and experience gained in various functional areas. 3 Majo ajor Cri Criteri eria in deci decis sion Makin king are are---t ---the he conc conce ept of Maximi imizat zation, ion, the conc conce ept of satis tisfying ng,, the conc conce ept of instrumentalism. The vision of Coca-Cola Company is to refresh the world in body, mind and spirit Bringing to the world a portfolio of quality beverage brands that anticipate and satisfy people's desires and needs. Page

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•

•

•

•

Coca-Cola Zero® has been one of the most successful product launch hes in Coca-Cola’s history It has soft drinks, energy drinks, juice drinks, sports drinks, tea and coffee, water and other drinks. Coca Coca-C -Col ola a Comp Compan any y foll follow ows s the the mu mult ltii-do dome mest stic ic stra strate tegy gy for for operating their business. After fter ente enteri ring ng into into a new new mark market et Coca Coca-C -Col ola a Comp Compan any y try try to achieve strategic goals and guide its daily activities with proper observation. Good Good poin points ts of Coca Coca-C -Col ola a Comp Compan any y are are br bran and d pr prom omot otio ion, n, alternative products selections, Provision of multimedia product, catalogue pages and so on.

CONCLUSION Being Being in such such a tense tense compet competiti ition on (just (just like like the brand brand Coca-C Coca-Col ola), a), Coca-Cola should not take the direct and tough attack upon it. There is no good to either side. The best way is to keep a peaceful relationship with with it and and alwa lways comp compa are with with othe others rs;; we shoul ould fin find thei theirr disadvantages and show our advantages on this aspect. Then by and by, the people would think ours is betted Of course the most important rule is to improve ourselves to meet the consumers. An organization’s strategic thinking is governed by the situation prevalent in its external envir environm onment ent.. The The exter externa nall envir environm onment ent compr comprise ises s of the strat strategi egic c moves adopted by the organization’s competitors. The organization has to carefully study these moves and accordingly devise strategies to gain competitive advantage. For the same, the organization needs to conduct an industry and competitive analysis. The paper discusses the steps and processes involved in the same. In formulating business stra strate tegy gy,, mana manage gers rs mu must st cons consid ider er the the stra strate tegi gies es of the the fir firm's m's compet competito itors. rs. While While in highl highly y fragme fragmente nted d commod commodity ity indus industri tries es the moves of any single competitor may be less important, in concentra concentrated ted industri industries es competito competitorr analysis analysis becomes becomes a vital vital part of strategic planning.

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REFERENCES

Cooper, R. D., Schindler, S. P. (2001), “International Business Research Research Method” Seventh Edition, New York: McGraw-Hill Irwin

Gerard Prendergast and Leyland Pitt (2007) “International Journal of Strategic Management: a World Issue”, Vol. 26 No.6, 1996, pp. 60-72. © MCB University Press.

James James Prend Prender ergas gastt and and Eammon Eammon Murphy Murphy and and Malco Malcom m Stephe Stephenso nson n (1996) “International Journal of Quality & Reliability Management”, Vol. 13 No. 5, 1996, pp. 77-90, © MCB University Press.

Rose Sebastia Sebastianell nellii and Nabil Nabil Tamimi amimi “How Manageme Management nt Strategi Strategies es Defining Quality”, Vol. 19 No. 4, 2002, pp. 442-453. MCB UP Limited.

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Annual Report of Coca-Cola Company (2005-2009)

www.coke/homeContent.asp.htm

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Strategic Management Issues of Multinational Companies (MNCs): A Case Study on Coca-Cola Company

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