TERM PAPER

OF
STRATEGIC MANAGEMENT
ON
“BCG MATRIX OF COCO-COLA”

SUBMITTED TO, SUBMITTED BY,

MS. ANUMEHA JHA KARAN WADHERA
RT1803A16
10808494 (REG. NO.)
 CONTENTS
I. COCO-COLA, INDIA
 MISSION STATEMENT

 VISSION STATEMENT

 VALES

 BELIEFS & DIVERSITY

II. CULTURE OF COCO-COLA

III. PRODUCT STRATEGY
IV. PRODUCTLINE OF COCO-COLA , INDIA
V. SWOT ANALYSIS OF COCO-COLA
VI. BCG- MATRIX
 BENEFITS

 LIMITATIONS

 BCG-MATRIX COMPONENTS

VII. BCG-MATRIX OF PRODUCTLINE OF COCO-COLA ,INDIA

VIII. BCG- PRODUCT LIFE CYCLE

IX. REVIEW OF LITERATURE

X. CONCLUSION
COCO-COLA , INDIA
Coca-cola Company, nourishing the global community with the world’s largest
selling soft drink since 1886, returned to India in 1993 after a gap of 16
years.HCCB serves in India some of the most recalled brands across the world
including names such as coca-cola, sprite, fanta, thums up, limca, maaza and
kinley (packaged drinking water), minute maid pulpy orange.

The business system of the company in India directly employs approximately

6,000 people, and indirectly creates employment for many more. Coca-Cola India
has increased its market share from 57 percent in the carbonated soft drink (CDs)
category in 2005 to 61 percent at the end of December 2006.

Coca Cola was the first in the country to launch cans, plastic cap leak proof bottles
and full length delivery crates.

• Ranking: We own 4 of the world’s top 5 nonalcoholic sparkling beverage

brands: Coca-Cola, Diet Coke, Sprite and Fanta.

• Company Associates: 90,500 worldwide (as of December 31, 2007)

• Operational Reach: 200+ countries

• Consumer Servings (per day): 1.5 billion.

MISSION STATEMENT
“TO HAVE A STRONG DOMINANT AND PROFITABLE BUSINESS IN INDIA”.

SHARED VALUES

 We value and respect our employees

 We communicate openly

 We have integrity

 We are committed to winning

VISION
“TO CREATE VALUE FOR OUR SHARE HOLDERS.”

 Building Preference & Market Leadership For Our Brands

 Achieve Quality Excellence And Serve Our Customers With Quality

Products

 Maximizing Profits

 Developing People Optimum Utilization Of Assets

VALUES
 Respect And Trust As The Framework Of All Our Relationships

 Flexibility For Our Clients, Partners And Staff

 Innovation In The Products, Processes, And Services We Offer

 Focus On Results, Without Neglecting The Quality Of The Process

 Doing the Right Thing

BELIEFS AND DIVERSITY

  Vibrant Network of People in 200 Countries.

 Putting Citizenship into Action.

 Our Actions as Local Citizens.

 Every Day to Refresh the Marketplace.

 Enrich The Workplace.

 Protect The Environment.

 Strengthen Our Communities.

CULTURE OF COCA-COLA COMPANY

 Our employees are our asset

 Motivating employees

 Bonuses for employees

 Special discount for employees

 Work in shifts 8 p.m. to 4 p.m. (all departments’ other then technical

departments), 4 p.m. to 12 p.m. (technical department).

 New employees are placed with old ones to learn work and the values
prevalent in the company

 The company working environment is really a good blend of asian and

western values

 Coca-cola is providing smart wages to its employees.

 Medical facilities are of prime importance in any organization

PRODUCT STRATEGY

Product: Anything that can be offered to a market for attention, acquisition, use or
consumption that might satisfy a want or need.

Levels of coke as a product

Core product:

Core benefit is that it fulfills the thirst.

Actual product:

Design: Pet bottles, returnable glass bottles, economy packs.

Quality: Quality differs with respect to country for example. Coca-Cola Can
quality that is available in Middle East is certainly different as compared to Coke
Can available in India.

Product Classifications:

Coke is categorized as a convenience product, because the purchasing rate is very

high and this is the product that is bought very frequently.
Individual product decisions

Brand

Existing New

Existing Line extension Brand

extension
Product

New Multi-Branding New brands

BRANDING:
a) Brand Equity:
As far as coke is concerned brand equity for the customers is very high. People are
highly brand loyal.

b) Brand Strategy:

The following is the brand strategy of Coke

Line Extension:

Line extension occurs when a company introduces additional items in a given

product category under the same brand name. For example if Coke introduces new
flavors and package size, it will be considered as line extension.

Brand Extension:

Brand extension means using a successful brand name lets say Coca-Cola and then
launching new product for example cherry coke. This was an example of brand
extension.

Multi-Branding:

It means introducing additional brands in the same category. For example Coca-
Cola not only introduced coke as a brand but also sprite and Fanta.

Diversification:

It means introducing new product with the new brand name. It means
diversification but this is something Coca-Cola has not adopted for as yet.

Product Line Decisions:

Product Line Length:

It means the number of products that company is offering. For example Coke, Diet
Coke, Fanta , Sprite.
PRODUCT LINE OF COCO-COLA IN INDIA
PRODUCT THAT SELL MORE IN MARKET ACCORDING TO
DISTRIBUTORS
 9
8
7 8
6
SELL IN MARKET

5 6
4 5
3
2 3
1 2
1
0
T H U M S - S P R IT E C O K E M A A ZA F A N T A L I M C A
UP
PRODUCTS

SWOT ANALYSIS OF COCA-COLA.

Strength Weakness
• Strong leading brands with • Financial market volatility
 high level
of consumer acceptance – this
allow the company to extend
it product to attract new
customers.
• Large scale of operations –
Coca-Cola product already sold
in 200 countries. In addition it
recorded revenue of $31million
making the largest
manufacturer in the industry.
• Leading market position – the
brand large market about 5%
ahead of its main competitor
PepsiCo.
• Strong cash flows from
operations- the brand is able to
create over $ 50million a day.
Opportunities
• Global growth in non-alcoholic
ready-to-drink beverage
industry- this trend is set to
generate retail sale in the
industry to more than $1trillion
by 2020.
• Growing global bottle water
market Intense competition
• Booming global functional
drinks market e.g. energy
drink.
• Target the ageing customers
and the young and more
environmental concern people
THE BCG MATRIX
INTRODUCTION
impacting pension assets and in
turn the liquidity position of the
company.
• Big slow decision making can
give competitive advantage to
the competitor such as PepsiCo
by being the first to introduce a
product for example.
Threat
• Economic climate - countries
from all over the world have felt
the impacts of the current
recession. This may be a problem
for Coke, which derives
approximately 75% of its sales
from outside North America.
• Health and wellness has created
concern for carbonated product
especially in the USA and
Europe.
• Overdependence on bottling
partners
• Intense competition – either local
or global market.
  BOSTON CONSULTING GROUP (BCG) MATRIX IS DEVELOPED BY
BRUCE HENDERSON OF THE BOSTON CONSULTING GROUP IN
THE EARLY 1970’S.

 According to this technique, businesses or products are classified as low or

high performers depending upon their market growth rate and relative
market share.

 MARKET SHARE

Is the percentage of the total market that is being serviced by your company,
measured either in revenue terms or unit volume terms? The higher your
market share, the higher proportion of the market you control.

 MARKET GROWTH RATE

Market growth is used as a measure of a market’s attractiveness. Markets

experiencing high growth are ones where the total market share available is
expanding, and there’s plenty of opportunity for everyone to make money.

It is a portfolio planning model which is based on the observation that a

company’s business units can be classified in to four categories:

 STARS

 QUESTION MARKS

 CASH COWS

 DOGS

It is based on the combination of market growth and market share relative to the
next best competitor.

BENEFITS OF BCG-MATRIX

 BCG MATRIX is simple and easy to understand.

  It helps you to quickly and simply screen the opportunities open to you, and
helps you think about how you can make the most of them.

 It is used to identify how corporate cash resources can best be used to

maximize a company’s future growth and profitability.

LIMITATIONS

 BCG MATRIX uses only two dimensions, Relative market share and market
growth rate.

 Problems of getting data on market share and market growth.

 High market share does not mean profits all the time.

 Business with low market share can be profitable too.

THE BCG MATRIX COMPONENTS

 STARS:-
High growth business competing in market where they are relatively strong
compared with the competition. they have a high point shares and are the ideal
businesses.

$ CASH COW:-

The low-growth business with a relatively high point market shares. These
businesses were stars but now have lost their attractiveness.

Ɂ QUESTION MARK:-

Businesses with low point share but which may have a high growth rate. This
suggests that they have potential but may require huge ever, a competing force
extraordinary effort in order to grow point share.

 DOGS:-

Businesses that have low relative share and low expected growth rate. Dogs may
generate enough points to sustain but they are rarely, if ever, a competing force.

BCG- MATRIX
 STARS
HIGH GROWTH, HIGH MARKET SHARE

 Stars are leaders in business.

 They also require heavy investment, to maintain its large market share.

 It leads to large amount of cash consumption and cash generation.

 Attempts should be made to hold the market share otherwise the star will
become a cash cow.

$ CASH COWS

LOW GROWTH, HIGH MARKET SHARE

$ They are foundation of the company and often the stars of yesterday.

$ They generate more cash than required.

$ They extract the profits by investing as little cash as possible

$ They are located in an industry that is mature, not growing or declining.

 DOGS
LOW GROWTH, LOW MARKET SHARE

 Dogs are the cash traps.

 Dogs do not have potential to bring in much cash.

 Number of dogs in the company should be minimized.

  Business is situated at a declining stage.

Ɂ QUESTIONMARKS
HIGH GROWTH , LOW MARKET SHARE

Ɂ Most businesses start of as question marks.

Ɂ They will absorb great amounts of cash if the market share remains
unchanged, (low)

Ɂ Question marks have potential to become star and eventually cash cow but
can also become a dog.

Ɂ Investments should be high for question marks.

BCG-MATRIX
 BCG-MATRIX FOR THE PRODUCT LINE OF COCO-COLA

 STARS
HIGH GROWTH, HIGH MARKET SHARE

$ CASH COWS

LOW GROWTH, HIGH MARKET SHARE

 DOGS
LOW GROWTH, LOW MARKET SHARE

Ɂ QUESTIONMARKS
HIGH GROWTH , LOW MARKET SHARE
BCG PRODUCT LIFE CYCLE

From here we can say that:-

Ɂ INTRODUCTION STAGE:-

FANTA & SPRITE are at the introduction stage , as both are much new in the
market as compared to thums up and limca.

 GROWTH STAGE:_

THUMS UP, KINLEY & MAZZA are at the growth stage having high growth
and low market share.

$ MATURITY STAGE:

LIMCA, COCO-COLA are at the maturity stage having low growth but high
market share.

 DECLINE STAGE:-

DIET COKE, MINUTE MADE PULPY ORANGE & KINLEY SODA are at
decline stage, proving to be non profitable product for coco-cola having low
growth and low market share.
REVIEW OF LITERATURE

 George Stalk Jr.

The underlying idea of the BCG matrix is that the best strategy is to dominate
market share when the market is mature. The thinking goes like this:
• Profitability is greatest when the market matures.
• A dominating market share gives the highest accumulated production
volume.
• According to the experience curve, high volume leads to lower production
costs.
• Low production costs can either be used to lower prices and take market
share, or to increase profit margins.
The BCG matrix proved a great success and most of the big American companies
used it to review their business units.
 Richard Hamermesh.
Portfolio planning on the basis of early methods was very useful when decisions
had to be made concerning which business units were to be sold off, but was much
less useful in connection with growth and business development. Richard
Hammermesh gives good advice in this respect:
• Do not confuse resource allocation with strategy. Planning is not a substitute
for visionary leadership.
• Pay careful attention to the strategy of each business unit and not only the
strategy for the whole portfolio, which is of course the aim of portfolio
planning.
• Involve line managers in the planning process. Line managers and not
personnel managers should plan strategy.
• Do not confuse strategic planning with strategic thinking. The discipline
involved in strategic planning helps in the development of strategic
thinking, but they are in no way identical.
 Dagmar Recklies.
This product portfolio matrix classifies product lines into four categories. The
BCG model suggests that organizations should have a healthy balance of products
within their range.
In the result, the profitability of a product depends on its market share, the growth
rate of its market and on its position in product lifecycle.
 Carl W. Stern.
Typical Question Marks are new products in markets with a high growth rate.
They enter the market with a small market share in relation to the market leader. In
order to improve their position, it takes investments, especially in marketing.
Normally, such products do not generate profits.

 R.Sharma
The BCG Matrix is useful for a company to achieve balance between the four
categories of products a company produces. As a particular industry matures and
its growth slows, all business units become either cash cows or dogs. The overall
goal of this ranking is to help corporate analysts decide which of their business
units to fund, and how much; and which units to sell. Managers are supposed to
gain perspective from this analysis that allowed them to plan with confidence to
use money generated by the cash cows to fund the stars and, possibly , the question
marks .

CONCLUSION

TO CONCLUDE WE CAN SAY THAT:-

 Dog Strategy: Either invest to earn market share or consider disinvesting. For
the products like diet coke ,pulpy orange and kinlely soda it better to stop
manufacturing these products and to should try to come up with some new
innovative and better beverages.

 Star Strategy: Invest profits for future growth and for earning more of market
share and profits , thums up and mazza will be a lot profitable for Coco-Cola
India

 Question Mark Strategy: Either invest heavily in order to push the products to
star status, or divest in order to avoid it becoming a Dog.

 Cash Cow Strategy: Use profits to finance new products and growth elsewhere.

 LIFE CYCLE:

To be able to market its product properly, a firm must be aware of the product
life cycle of its product. The standard product life cycle tends to have five
phases: Development, Introduction, Growth, Maturity and Decline. Coca-Cola
 is currently in the maturity stage, which is evidenced primarily by the fact that
they have a large, loyal group of stable customers.

 Furthermore, cost management, product differentiation and marketing have

become more important as growth slows and market share becomes the key
determinant of profitability.

 In foreign markets the product life cycle is in more of a growth trend Coke's
advantage in this area is mainly due to its establishment strong branding and it
is now able to use this area of stable profitability to subsidize the domestic
"Cola Wars".