Contents

EXECUTIVE SUMMARY:................................................................................................................................2
GLOBAL BUSINESS CHALLENGES:.................................................................................................................2
The Coca-cola company:..........................................................................................................................2
Coca cola international Strategy..................................................................................................................3
POLITICAL:...................................................................................................................................................3
ECONOMICAL:.............................................................................................................................................4
SOCIAL:........................................................................................................................................................4
TECHNOLOGICAL:........................................................................................................................................5
OTHER:........................................................................................................................................................5
ENVIRONMENTAL IMPACTS:.......................................................................................................................7
PER CAPITA INCOME................................................................................................................................7
COMPETITORS.........................................................................................................................................7
WEATHER................................................................................................................................................7
IMPACT OF FUTURE CHALLENGES ON COCA COLA INTERNATIONAL:.........................................................8
COMPETITION:.........................................................................................................................................8
SECURITY ISSUES:....................................................................................................................................8
CHALLENGES AND RISKS..........................................................................................................................8
OBESITY AND INACTIVE LIFESTYLES.........................................................................................................8
WATER QUALITY AND QUANTITY............................................................................................................9
EVOLVING CONSUMER PREFERENCES.....................................................................................................9
INCREASED COMPETITION AND CAPABILITIES IN THE MARKETPLACE....................................................9
SCARCE NATURAL RESOURCES:.............................................................................................................10
Future challenges are affecting the strategies of coca cola international:................................................10
WATER:..................................................................................................................................................10
PROTECTION OF CLIMATE:....................................................................................................................10
ENTREPRENEURSHIP:................................................................................................................................. 10
ENTREPRENEURSHIP IN ORGANIZATIONS:................................................................................10
INNOVATION:............................................................................................................................................11
Why Innovation in organizations:..............................................................................................................12
 GLOBAL BUSINESS CHALLENGES
EXECUTIVE SUMMARY:
This whole debate is all bout the challenges and problems faced by the today’s organizations. Different
organizations are using numerous methods to counter these problems. Challenges in global business are
generally political, social, environmental and technological. Before making policies organizations have to
work thoroughly on these challenges before altering and tailoring their global policies to make their
organization run smoothly and efficiently. To prosper in the future organizations have learned the
importance of enterprenuseurship and innovation. They are doing their key part in the progress of
company. Innovation is brining the organization beyond the limits and makes the organization that
competent that it should meet the challenges of the global business.

GLOBAL BUSINESS:
Global business consists of transactions that are devised and carried out across national borders
to satisfy the objectives of individuals, companies, and organizations. These transactions take on
various forms, which are often interrelated. Primary types of international business are import
export trade and foreign direct investment (FDI). The latter is carried out in varied forms,
including wholly owned subsidiaries and joint ventures. Additional types of international
business are licensing, franchising, and management contracts.

As the definition indicates, and as for any kind of domestic business, “satisfaction” remains a
key tenet of global business. Beyond this, because transaction environmental factors, to different
constraints, and to quite frequent conflicts resulting from different laws, cultures, and societies.
The basic principles of business still apply, but their application, complexity, and intensity vary
substantially. To operate outside national borders, firms must be ready to incorporate
international considerations into their thinking and planning.

GLOBAL BUSINESS CHALLENGES:

Case with reference to Coca-Cola International

The Coca-cola company:

Established in 1886, The Coca--Cola Company operates in more than 200 countries and markets
more than 450 brands and 2,800 beverage products. These products include sparkling and still
beverages, such as waters, juices and juice drinks, teas, coffees, sports drinks and energy drinks.
We have four of the world’s top five nonalcoholic sparkling beverage brands: Coca--Cola, Diet
Coke, Sprite and Fanta. The Coca--Cola Company is headquartered in Atlanta, Georgia. As of
June 2008, our operating structure consisted of Africa, Eurasia, European Union, Latin America,
North Pacific and Bottling Investments, in addition to Corporate.

The very first challenge for a global enterprise is to formulate an international approach and then
execute it. The administrators and those at decision-making positions often find it hard to alter
their thought pattern, which is not good to work in international paradigm. There are numerous
worldwide businesses but only a few of them have really accepted a good international approach.
Though the situation is improving with more and more professionals and trained graduates
taking on the management positions. Nevertheless, global business management needs additional
ordinary management, foreseeing and control talents.

Coca cola international Strategy according to the following business challenges:

Key factors influencing global business strategy can be summarised under the PEST heading:
• Political
• Economic
• Social
• Technological

POLITICAL:

• Political Change – regime change through coup, violence, etc. Change in

government through democratic election can influence future business
strategy.
– e.g. the opportunities that are now available in Russia and Eastern
Europe following the collapse of communism
• Political Uncertainty – in countries like Zimbabwe, Sudan, Venezuela.
Political uncertainty can lead to a fall in investment by businesses and
influence decisions on expansion and business ventures
• War/Terrorism – create uncertainty
• Political Doctrine – can affect the ease with which business is conducted

FOREIGN POLITICS:
Coke international also faces the foreign politics and take it as a challenge. Political expertise is a
must for everyone but it becomes all so vital when working at global stage. If some plans were
appropriate for your trade, a change in ruling government can bring strong changes in those
plans. Political disarray will bring down the financial system and that can affect your business.
To avoid safeguard business from such unhelpful bangs, you need to make sound political
decisions.

ECONOMICAL:

• All these factors need to be considered in any global business venture:

– Tax Systems
– Investment Considerations and Allowances
– Sophistication of Financial Markets – ease with which capital can be moved and
raised
– Commodity Prices – oil, energy, metals
– Monetary and Fiscal Policies – interest rates, tax regimes, government aid
– Internal Regulation and Bureaucracy – can be stifling!
– Exchange Rates

Business globally is highly influenced by the economy of the world and financial situations.
Coke international is putting its utmost efforts to synchronize is with the market trends so that It
can survive in the market. It begins from organizing the resources to initiate global trade and
consist of everything like variation in exchange rate, international financial crisis (or some
financial crises in the host nation), change in oil rates, international price rises or tariff barriers
imposed by the host ruling party, also the export related rules of your own government. 

SOCIAL:
• Religious Considerations – appropriateness of some business ventures – e.g. selling
condoms in staunchly Catholic countries
• Impact on local communities of business development – availability of jobs, training,
environmental impact for these communities
• Impact on the environment – can impact on the businesses image
• Ethical considerations
• Cultural issues

CULTURAL DIFFERENCES:

Every business has its difficulties and presents is own challenges in when it comes to
operating it successfully. For example, the nature of business may not be accepted openly in
the targeted country because of cultural differences. So coca cola international also faces
such problems that different countries have different cultures and they react to things in a
different manner. So marketing, production and selling vary from country to country.
VARIABLE LANUGUAGES:

Even though English is a very popular language it is in the end spoken only in a few
countries as a primary language. Some of the people in other countries have never uttered a
single word in English their entire lives. So the company which is starting a business in such
a place should have a contingency plan where they can provide service in their language for
example if coca cola international launches a product in Pakistan so they have to take care of
the fact that not every one can understand English so they have to do their advertisement
accordingly. If a company can cross over the language and cultural barriers, then most of
their blocks have been cleared.

BUSINESS ETHICAL CHALLENGES:

Also the business ethics matter and the any international organization cannot have standard
ethics that apply globally. They have to be changed and altered. So coca cola has also altered
its strategies according to the ethics of the relevant country.

TECHNOLOGICAL:

• Availability and developments in technology can have a powerful influence on global

business strategy:
• e.g.
– Access to bandwidth
– PC ownership
– Technology and sales – processing payments and sales
– Compatibility of technologies in Business Management – accounting systems,
language differences, etc.

Technology is the key to provide businesses with the competitive edge that can lead to greater
profitability and growth. Indeed, technological factors can lower the barrier to entry and reduce
the minimum efficient production levels, reduce capital costs and labor costs, and influence
outsourcing decisions. So the under developed country has lesser technology then a developed
and advances country so coke international moulds its strategies and business plans according to
the technology available in that country.

OTHER:

NATURAL CATASTROPHE, ENVIRONMENT AND WAR OR TERRORISM:

Various multinational businesses have to countenance severe opposition by some environment
friendly organizations. Citizens are more worried about water and air pollution these days as it is
becoming a severe danger to their health. Some natural calamity such as earthquake and floods
or some kind of civil war breaking out in the host nation is also in the catalog of potential
challenges. A fresh challenge that a global trade business has to bear these days in some specific
nation is the danger of bombing, violence or terror campaigns. Coke international took it as a
challenge and huge research is going to reduce the environmental problems.

DEFICIENT INFRASTRUCTURE
Inadequacy in infrastructure can be another factor that deters global business. According to a
survey by MIGA 2002, the reliability and quality of infrastructure and utilities was the fourth
most important factor in choosing a country location to invest. In general, poor infrastructure will
increase overall capital and operating costs for firms for the reason that poor infrastructure
increases the uncertainty risk and requires firms to hold higher levels of inventory in order to
reduce the risks of production being interrupted.

In some cases, a company has to incorporate its own electricity generators, water filtration units
and communication facilities to reimburse the deficiencies of local infrastructure. The access to
roads and utility also further increases the company investment cost. Coca cola international

POLICY-BARRIERS:

Macroeconomic policies are another problem that deter Coca Cola international from entering a
market, increase cost and increase the business risks that foreign firm have to deal. The major
macroeconomic policies that could deter a business expansion are: (a) Fiscal policies: the
stability of fiscal policy can influence the level and growth of tax revenues which directly
influence the trade taxes and corporate revenue tax. (b)Monetary policies: the control
of money supply by central bank can influence domestic interest and inflation rates, and
indirectly on the stability of domestic currency values. (c) Debt management policies: the
government internal and external debt and comfort levels for repaying loans. High debt country
tends to repay public debt by printing domestic currency and caused inflation and deprecation of
currency.

ENTRY-STRATEGIES:

When entering a foreign market, Coke international decide on the appropriate entry strategy and
ownership forms; while at the same time considering the legal structure, the amount of capital,
resources invested, and managerial involvement required in the host country. The management
of joint ventures, for instance, is one of the key entry strategies a company can consider when
expanding business overseas.
ENVIRONMENTAL IMPACTS:
There are so many factors, which affects the sale of coke. Here we are discussing three
major factors which effects coke.

PER CAPITA INCOME

First we will discuss about “ Per capita income”. This is major factor that affects the sale of this
soft drink. Because which every passing year budgets are becoming very strict and tight in order
to purchase things. So the disposable incomes of the people are coming down. They spend
heavily on rents, utilities, and education and basic necessities and after that when they get extra
money they think about this soft drink .So the decreasing per capita income effects badly in
selling and production of this soft drink. And to get through with this difficulty there is need to
increase the level of per capita income of Pakistan because it is much lesser than the rest of the
countries.

COMPETITORS

Coke’s major competitor is “PEPSI” and there is no hesitation to say this because every one
knows that and all the other cold drinks and water, coffee, tea are the competitors. So the coca
cola international give supreme importance to beat its rival PEPSI and compete in the market
with more energy and efficiency.

WEATHER

Weather is the third major factor in effecting the Coke’s selling. This is underdeveloped market
so the coke’s consumption in summers is 60% and in winters is 40%. So as compared to the
country having 80% winter will not have that much consumption so strategies will be tailored
accordingly.
 IMPACT OF FUTURE CHALLENGES ON COCA COLA
INTERNATIONAL:

COMPETITION:

With the entry of new competitors in the market day by day. It’s a big challenge for the coca cola
international to make business plans and strategies according to the market conditions of future.
PEPSI international which is the major competitor is the biggest threat for coca cola international
so coca cola international is making its policies accordingly.

SECURITY ISSUES:

Security is the biggest threat for the world now a days so security of its multi national company
will be the biggest challenge for coca cola international. It has to make it policies in the way so
that it can survive in the market where there are big security threats.

CHALLENGES AND RISKS

Being a global company provides unique opportunities for their Company. Challenges and risks
accompany those opportunities. Their management has identified certain challenges and risks
that demand the attention of the nonalcoholic Beverages segment of the commercial beverages
industry and their Company. Of these, their key challenges and Risks are discussed below.

OBESITY AND INACTIVE LIFESTYLES

Increasing concern among consumers, public health professionals and Government agencies of
the potential health problems associated with obesity and inactive lifestyles represents significant
challenge to their industry. They recognize that obesity is a complex public health problem.
Their Commitment to consumers begins with their broad product line, which includes a wide
selection of diet and light Beverages, juices and juice drinks, sports drinks and water products.
Their commitment also includes adhering to Responsible policies in schools and in the
marketplace; supporting programs to encourage physical activity and Promote nutrition
education; and continuously meeting changing consumer needs through beverage innovation,
Choice and variety. They are committed to playing an appropriate role in helping address this
issue in cooperation with governments, educators and consumers through science-based
solutions and programs.
WATER QUALITY AND QUANTITY

Water quality and quantity is an issue that increasingly requires their Company’s attention and
collaboration with the nonalcoholic beverage essegment of the commercial beverages Industry,
governments, nongovernmental organizations and communities where they operate. Water is the
main Ingredient in substantially all of their products. It is also a limited natural resource facing
unprecedented Challenges from overexploitation, increasing pollution and poor management.
Their Company is in an excellent Position to share the water-related knowledge they have
developed in the communities they serve—water-resource Management, water treatment,
wastewater treatment systems, and models for working with communities and Partners in
addressing water and sanitation needs. They are actively engaged in assessing the specific water-
related Risks that they and

many of their bottling partners face and have implemented a formal water risk management
Program. They are working with their global partners to develop water sustainability projects.
They are actively Encouraging improved water efficiency and conservation efforts throughout
their system. As demand for water continues to increase around the world, they expect
commitment and continued action on their part will be crucial in the successful long-term
stewardship of this critical natural resource.

EVOLVING CONSUMER PREFERENCES

Consumers want more choices. They are impacted by shifting consumer Demographics and
needs, on-the-go lifestyles, aging populations in developed markets and consumers who are
empowered with more information than ever. They are committed to generating new avenues for
growth through their core brands with a focus on diet and light products. They are also
committed to continuing to expand the Variety of choices they provide to consumers to meet
their needs, desires and lifestyle choices.

INCREASED COMPETITION AND CAPABILITIES IN THE MARKETPLACE

Their Company is facing strong competition from some well-established global companies and
many local participants. They must continue to selectively expand into other profitable segments
of the non alcoholic beverages segment of the commercial beverages industry and strengthen
their capabilities in marketing and innovation in order to maintain their brand loyalty and market
share. All these challenges and risks—obesity and inactive lifestyles, water quality and quantity,
evolving Consumer preferences, and increased competition and capabilities in the marketplace—
have the potential to Have a material adverse effect on the non alcoholic beverages segment of
the commercial beverages industry anon their Company; however, they believe their Company is
well positioned to appropriately address these challenges And risks
SCARCE NATURAL RESOURCES:
Natural resources are reducing day by day in the world. Water is getting scarce and polluted and
fossil fuels are also sinking so coca cola international has to change its policies on a very large
scale to cater energy crisis of the future.

Future challenges are affecting the strategies of coca cola international:

WATER:
Our goal is to safely return to communities and nature an amount of water equivalent to what
we use in all of our beverages and their production.

Water is the foundation of life and of every beverage we make. But within 20 years, two-thirds
of the world’s population may face severe water stress. Improving water quality and availability
is vital to our business and the communities we serve. It’s what drives our water stewardship
commitment -- and our focus on reducing, recycling and replenishing
 Reduce
 Recycle
 Replenish

PROTECTION OF CLIMATE:
Climate change is linked to extreme weather that can mean droughts in one region and flooding
in another. It can have a profound effect on water resources and agriculture, potentially
devastating our communities. We must act now to reduce our impact on the climate and focus on
areas where we have the greatest opportunity to make a difference.

ENTREPRENEURSHIP:
ENTREPRENEURSHIP IN ORGANIZATIONS:
It is abundantly clear that entrepreneurship is important for economic growth, productivity,
innovation and employment, and many OECD countries have made entrepreneurship an explicit
policy priority. As globalization reshapes the international economic landscape and technological
change creates greater uncertainty in the world economy, entrepreneurship is believed to offer
ways to help to meet new economic, social and environmental challenges. Entrepreneurship has
gained additional attention in the current economic crisis, as it is widely viewed as a key aspect
of economic dynamism. Economic crises are historically times of industrial renewal, or creative
destruction, as less efficient firms fail while more efficient ones emerge and expand. New
business models and new technologies, particularly those leading to cost reductions, often
emerge in downturns.

Hence, policy makers look at entrepreneurship in combination with innovation to return to a

period of sustained economic growth. Both entrepreneurship and innovation are associated with
“doing something new” and policies, if designed appropriately, can be mutually reinforcing in
(re-)creating economic dynamism. The dynamic process of new firm creation introduces and
disperses innovative products, processes and organizational structures throughout the economy.
Policy makers need to understand the determinants of and obstacles to entrepreneurship because
they must analyze the effectiveness of different policy approaches. Ultimately, policy making
must be guided, as far as possible, by evidence and facts. The lack of internationally comparable
empirical evidence has constrained the understanding of entrepreneurship and many questions
remain unanswered.

Entrepreneurs make things happen.

 They are individuals who take a concept and convert it into a reality. A product,
policy or institution.
 They become the champions of a new process, and they are engines of change.
 Entrepreneurship occurs in all areas of life. In business, academy, government and
NGOS.
 Entrepreneurs are everywhere, in Wall Street and the Sahel.
 Entrepreneurship can be used for good and evil. The Godfather was an entrepreneur
that misused his talent.

INNOVATION:

ABS, the Australia‘s most comprehensive Innovation Survey (1996) defines,

―An innovation is any new or substantially improved goods or services which has been
commercialised or any new or substantially improved process used for the commercial
production of goods and services.

First at the level of an individual firm, Innovation is defined as the ―application of ideas that
are new to the firm, whether the new ideas are embodied in products, processes, services or in
work organization, management or marketing systems.
Why Innovation in organizations:

Innovation can be applied to products, services, design, invention, development,

process, and systems.

To make a product! service compete with the new economy. This is essentially to
educate organizations to move out of their traditional old habits1 to the new innovation
culture.

To avoid high risks— Avoiding high risks involving money, staying ahead competition and
high pay off opportunities are the essence of the innovation.

To gain long term market focus, as a result the company can save money

Innovations are new ways to achieve tasks.

An innovation starts as a concept that is refined and developed before application.
Innovations may be inspired by reality. The innovation process, which leads to useful
technology, requires:
 Research
 Development (up-scaling, testing)
 Production
 Marketing
 Use
 Experience with a product results in feedback and leads to improved innovations.
 Innovations respond to need and economic conditions. Inventors, investors, and
researchers put effort into solving burning problems, and that leads to innovations.