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Global Strategic Management - Coca Cola

Global Strategic Management - Coca Cola

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Published by: leadwiartanti on Oct 06, 2009
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Global Strategic Management (10756524)
1.Executive Summary
The purpose of this report is to construct strategies by analysing the general beverageindustry– in particular, carbonated drinks – and the competitive environment. Coca-Cola Amatil (CCA) is one of the most popular and recognizable brands in the worldof business (Heller et al 2006, p.1). Thus, from this analysis, CCA’s potential growthand strategic management to maximize profitability will be examined. Eventually,these crucial factors in business management are affecting CCA’s performance in themarket, including expanding into larger market and launch takeovers of other companies that CCA believe will create value for the company.This report will also discuss and outline each aspect in the general environment thatCCA is operating in, Australia, and also the strength of each aspect in regards toPorter’s five forces. Along with the analysis, the effect that each aspect brings tostrategic management will also be discussed, focusing mainly towards several aspectsto CCA’s strategic management.
2.About CCA
CCA’s main drive to success was their overall strategy to produce and promote their  products, which is geared towards the continued success of this famous brand,including advertising to build and maintain brand awareness (Khan 2005, pp.16).However, despite a strong brand, management of change has been necessary at Coca-Cola. The corporate culture involving a super-brand like Coke can result in managers becoming overconfident in the product as well as the processes and procedures thathave built up throughout the company over time. The threat is that the public willsimply get bored with the brand (Amer 2002, pp.12). Therefore, CCA has undergoneradical changes over the years by expanding more into the markets and launchingtakeovers. The process involves a potentially large proportion of risk and may provedto be calamitous. This paper will refer to how Coca-Cola has taken advantage of strategic management to undermine the risk and be profitable.
3.Strategic Management
Strategic management, in contrast with business policy is a technical approach and asWheelen and Hunger (2002, p.2) wrote, “strategic management is that set of managerial decisions and actions that determine the long run performance of a1
Global Strategic Management (10756524)company”. Strategic management involves strategic process, which is when CCAdefines business objectives and assesses both the internal and external situation toformulate and implement the strategy, evaluate the process, and make adjustments asnecessary to stay on track. It involves environmental scanning, strategy formulation,strategy implementation and evaluation and control (Azam 2009, pp.1).In order to construct strategies for CCA, the major objective to be focused upon is tomaximize profitability, thus increase value of the firm. First and foremost, accessingthe internal strength and weaknesses of CCA is very crucial. Relative superiority anddeficiency is important information (Khan 2008, pp.8). For instance, knowing thatCCA’s business in South Korea was not benefiting and causing problems regardinghuman labor and too much expense, CCA made a crucial decision to close down thefacility. This act shows how CCA has minimized its weakness and liability (Fin.Report 2008).While internal strength and weakness can be accessed through CCA’s managers,external components involving the industry are more complicated. The threats andopportunities that lies in the surroundings of CCA refers to the general environment,that will be discussed later on in this paper.
3.1.Expanding into markets
Currently, CCA controls about 59% of the world market, greater than any other carbonated drink company. Expanding into market can be done by acquiring other companies that operate in the same industry for the reason that CCA have larger sharein the beverage industry, such as mineral waters, alcoholic drinks or juice. However,expansion is better if its within the soft drink segment, because it is one of the largestgrowing segment in the nonalcoholic ready-to-drink beverage category. CCA can alsoincrease its market share independently, through strategic management that caterstowards maximizing the potential of the company, but compact the weaknesses, sothat it will not cost a liability to the firm. The firm’s definite strength is the fact that ithas a larger market share, its historic reputation and brand familiarity. Strategies usedto capitalize this strength include: increasing people’s awareness towards the productthrough effective marketing, advertising and promotions; also invest in innovative projects to further develop existing products. Such innovations may include2
Global Strategic Management (10756524)improvisation of the products’ packaging design, to attract a larger target marketgroup and also researching on how to improve the substances used to produce the product, for instance, including vitamins or more healthy ingredients in the drink. Inturn, this will change people’s mindset about CCA product regarding health issues.By doing this, CCA stands a chance to eliminate the threat of substitute for the reasonthat drinking coke is not healthy or for a reason that it is a “boring” drink.
CCA received a merger proposal from Lion Nathan Limited, however due to manyconditions that need to be satisfied and would be hassle for CCA to do so and the factthat CCA thinks the proposal was not attractive, Lion Nathan withdrawn its proposalto merge with CCA. Through mergers and takeover, the merged companies canconduct surveys to discover customer preference concentrate upon maximizing the potential of that particular product. Improving on the moral and working environmentof managers and employees may result in internal changes. This is important because positive minds and comfortable environment may affect the working attitude of managers, as the main driver of success. Incentives can also be given to motivateemployees, such as giving bonuses and benefiting schemes for making the efforts tomake CCA a better company.Furthermore, synergies for production and distribution efficiency can be created.Looking at CCA’s financial statement, the firm has been facing difficulty in managingcost, especially fuel cost. This is because its production facility is not widelydispersed, therefore distribution are costly. The merged companies will be able tohave use each other’s resources and thus, creating a more dispersed production plant,which will save cost in transporting the goods and also keeping it at warehouses.Consequently, saving a large amount of revenue earned. Furthermore, effectiveness of advertising (commercialization) may also aids in increasing awareness of product,thus increase in demand and consumption. It is also important that the companiesmaintain customer satisfaction, thus guaranteeing their loyalty to the product. Thiscan be done through serving customers with creativity and consistency and generategrowth across all channels.One of the most straightforward business management strategies known for CCA is to3

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