Business Strategy of

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Introduction
Coca-Cola is a very popular cola (a carbonated soft drink) sold in stores,
restaurants and vending machines in more than 200 countries. It is also
known as Coke. Coke is one of the world’s most recognizable and widely sold
commercial brands and. The major rival of coke is major rival is Pepsi.

Coca-Cola was invented on May 1886 by Dr. John Stith Pemberton in Jacob's
Pharmacy in Atlanta, Georgia. The first sales of coke were made from that
pharmacy. For the first eight months only nine drinks were sold each day.
The name Coca-Cola was suggested by Pemberton's book-keeper, Frank
Robinson. He penned the name Coca-Cola that is famous today. Coca-Cola
was sold in bottles for the first time on March 12, 1894, and cans of Coke
first appeared in 1955.

The

Coca-Cola

Company

merged

some

of

its

company-owned

operations with two large ownership groups that were for sale, the
John T. Lupton franchises and BCI Holding Corporation's bottling
holdings, to form Coca-Cola Enterprises Inc. The Company off ered its
stock to the public on November 21, 1986. The adjusted price per
share is $5.50. The company became stronger when after merger
with the Johnston Coca-Cola Bottling Group, Inc. (Johnston) in
December 1991. Presently The Coca-Cola Company is the largest soft
drink company in the world. Every year 800,000,000 servings of just "Coke"
are sold in the U.S alone.

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Vision
To achieve sustainable growth, the company has established a vision with
clear goals.
Profit: Maximizing return to shareowners while being mindful of our overall
responsibilities.
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 beverage brands that anticipate
and satisfy peoples; desires and needs.
Partners: Nurturing a winning network of partners and building mutual
loyalty.
Planet: Being a responsible global citizen that makes a difference.

Mission
It declares the purpose as a company and serves as the standard against
which the company weighs the actions and decisions. It is the foundation of
company manifesto.
To refresh the world in body, mind and spirit. (Market, Customer, Philosophy)
To inspire moments of optimism through the brands and actions. (Products)
To create value and make a difference. (Self concept)
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The Corporate Objective
Strategic Goals
These strategic goals are decide by the top management with consultation
by the parent company head quartered at Singapore. They are:
• To continue to be an organization providing the quality products to the
valuable customers.
• To select and retain the professional people for the organization.
• To project an outstanding corporate image.
• To satisfy the customer through extra ordinary service and an excellent
service along with the complete tactical and operational support.

Tactical Goals
The top management of the company on an annual basis devises these goals
together with the consultation of the lower level employees.

Operational Goals
Operational goals are decided by the top management in consultation with
the lower level employees. They are following the concept of management
by objectives (MBO). Each employee is assigned its goals and is told what is

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expected of him and then he is evaluated on the basis of certain rules and
regulations followed evenly by the company.

Major Competitors
Pepsi Co
PepsiCo is a world leader in convenient foods and beverages. The revenue of
the company is about $27 billion and the number of employees is 143000.
PepsiCo brands are available in nearly 200 countries and territories.
PepsiCo was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay.
Tropicana was acquired in 1998 and PepsiCo merged with The Quaker Oats
Company, including Gatorade, in 2001. The new name, “Pepsi Cola”, is
derived from the two of the principle ingredients, Pepsin and Kola Nuts. It
was first used on the August 28. At that time, Bradham’s advertising praises
his drink as “Exhilarating, invigorating, aids digestion”.

Nestlé
Nestle does not give that tough a competition to Coca-Cola as it mainly deals
with milk products, Baby foods and Chocolates. But the iced tea that is
Nestea which has been introduced into the market by Nestle provides a
considerable amount of competition to the products of the Company. Iced tea
is one of the closest substitutes to the Colas. The flavored milk products also
have become substitutes to the products of the company due to growing
health awareness among people.

In Bangladesh there are some others competitors, these are
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Pran
PRAN keeps its presence in carbonated soft drink producing cola, Lime and
lemon. Its refreshing products are widely accepted in Bangladesh and
international market.

RC Cola
Consumers enjoy RC in more than 60 countries worldwide. Royal Crown Cola
International products are sold through a global network of more than 100
franchised bottling plants and distributors. It has become one of the big
competitors of coca-cola in Bangladesh. In rural areas RC cola is a very
popular.

Product Line
The Coca-Cola Company has on occasion introduced other cola drinks under
the Coke brand name. The most famous of these is Diet Coke, which has
become a major diet cola. The other cola drinks are also exists such as
Cherry Coke, Coke Zero, and Vanilla Coke. The Coca-Cola Company owns and
markets other soft drinks that do not carry the Coca-Cola branding, such as
Sprite, Fanta, and others.

Coca Cola Company deals mainly in soft drink industry and these are some of
its major brand. It also deals in soda and mineral water through the brand
name Kinley.

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Diet coke: Diet coke was born in 1982 and became the no. 1 sugar free soft
drink in diet conscious America. It is also known as coca cola light drink in
some countries. Now, Diet coke is the no. 3 soft drink in the world.
Thums up: Thums up is known as strong fizzy taste. Thums up was
introduced in 1977 and it was acquired by coca cola company in 1993.

Sprite: Sprite is sold more than 190 countrues and it is the no. 4 soft drink in
the world. Today. Sprite is one of the fastest growth soft drink in the world.

Limca: the soft drink first launched in 1971 and from then it is one of the
thirst choice of millions of customer.

Fanta: over the year fanta has occupied a strong marketplace. Fanta stands
for its vibrant colour, tempting taste and tingling bubles. This drink is very
favourite to the female consumers.

Maaza: Maaza launched in 1976 and in 1993 coca cola aquire maaza. It is
dominates in fruite drink category.

Strategies
Positioning Strategy
It means that a company tries to give image to its product in the mind of the
customers. To give a true and positive picture of the product is the best

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positioning. The company should promote its good points or comparative
advantage which it has over its competitor.
Differentiation Strategy
There are many bases on which a product can be differentiated but Coke has
differentiated its product on the following base:
Product Differentiation: Coke differentiates its product from its competitors
on the basis of brand, quality and taste.
Image Differentiation: Logo is used for image differentiation. Logo is what
establishes a brand name in the consumer mind. It is the brands
identification, signature and image.

Promotional Strategies
Price Strategy Trade Promotion:
Coca Cola Company gives incentives to middle men or retailers in way a that
they offer them free samples and free empty bottles. By this these retailers
and middle man push their product in the market. That's why coca cola seen
more in the market. They have a good sale in the market because according
to the expert which product seen more in the market that sells more."Seen
as sold".

Sale Promotion
Coca Cola Company also does sponsorships with different college and
school's cafes and sponsors their sports events and other extra curriculum
activities for getting market share. Normally they keep their freezers near
the entrance of the stores. Sale Promotion Company also does sponsorships
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with different college and school's cafes and sponsors their sports events
and other extra curriculum activities for getting market share.

Getting shelves
Coca Cola gets or purchase shelves in big departmental stores and display
their products in those shelves in that style which show their product clearer
and more attractive for the consumer.

Distribution Channels
Coca Cola Company makes two types of selling
o Direct selling
o Indirect selling

1. Direct Selling: In direct selling they supply their products in shops by
using their own transports. In this type of selling company have more
profit margin.
2. Indirect Selling : They have their whole sellers and agencies to cover
all area. For providing their product in good manner company has
provided infrastructure these includes, Vizi cooler, Freezers, Display
racks etc.

Advertisement Strategies
Coca Cola Company use different mediums for advertisement.
• Print media
• Pas material

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• TV commercial
• Billboards and holding

Competitive strategies
Coca-Cola is a dominating force in the beverage industry and sets a very
high standard of competition. Research shows that its trademark is
recognized by over 94% of the world’s population. There are many factors
contributing to Coca-Cola’s success:
Marketing:
Coca-Cola was among the pioneers of advertising techniques and styles used
to capture an audience. It was around 1900 when Coca-Cola began
presenting their signature drink as a delicious and refreshing formula. This
slogan has been repeated for over the last 100 years for selling Coke all over
the world. The image has been subconsciously installed in our brain by the
advertising campaigns.
Innovation:
Coca-Cola has been able to survive in the ever changing market because of
its ability to systematically innovate and deliver new products. It was
apparent that the market was changing and in order to keep up with these
changes, Coca-Cola had to move from a single core product to a total
beverage company. The company began operating in a decentralized
environment that was unfeasible in previous years. Now Coca- Cola offers
nearly 400 different products in and is still dominating the beverage industry.
This is made possible by the company’s ability to innovate and adapt to
changing markets.

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Globalization:
Technology is continually changing business, and these constant changes
have been making it more feasible and profitable for businesses to expand
their operations globally. Now, Coca-Cola is taking advantage of the large
revenue opportunities made possible by participating in a global market and
now offers products in 200 countries around the world.

Financial analysis of Coca Cola Company
Latest 12 Months Data Items (Latest Full Context Quarter Ending Date
(2010/03)
Gross

Pre-Tax

Profit

Margin

Profit Interest

Current Ratio

Coverage

Margin
1.3
29.7%

27.0

Quick

Receivables

Asset Turnover

Ratio

Turnover

68.8%

Return

on

Invested Capital
0.7

0.9

9.2

Most

24.2%

Recent

Data
Return
Total Debt/

Assets

on 5-Year Averages
Return

on

Return

on

Invested Capital
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Equity

Equity
14.9%

28.5%

25.1%

0.47

Gross

Net

Profit Current

Profit

Margin

(Total Ratio

Margin

Operations)

68.5%

20.6%

5-Year Avg. 12
P/E Ratio
20.7

16.9

P/E 5-Year High P/E
Ratio
26.3

Month

Normalized

P/E

Ratio
16.6

Source: scribd.com
Factors Affecting Sales
There are so many factors, which affect the sale of coke. Here we are
discussing two major factors which effects coke.

Per capita income

Weather

Per Capita Income
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This is major factor that affects the sale of this soft drink. Because, every
passing year the 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.

Weather
Weather is also the 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%.
Threats from Competitors
Price is the major threat. Though the price goes certain beyond the exact
price whether come down or go higher its effects the consumption of soft
drink. Because when the prices go higher people go for the substitute of
“coke” i.e. Pepsi and when price goes down the people think that there is
must be some thing wrong in it. It all depends on customer’s perception. So,
price is an important factor for the success of the company.

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

Political
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Economic

Educational

Social

Technological

Political Analysis for Coca-Cola
The following are some of the factors that could cause Coca-Cola company's
actual results to differ from the expected results,
 Changes in laws and regulations, including changes in accounting
standards, taxation requirements, (including tax rate changes, new tax
laws and revised tax law interpretations) and environmental laws in
domestic or foreign jurisdictions.
 Changes in the non-alcoholic business environment. These include,
without limitation, competitive product and pricing pressures and their
ability to gain or maintain share of sales in the global market as a
result of action by competitors.
 Political conditions, especially in international markets, including civil
unrest, government changes and restrictions on the ability to transfer
capital across borders.

Economic Analysis for Coca-Cola
Economic factor can affect the consumption of soft drinks. When there is
economic crisis all over the world people buy their basic need products such
as food, cloths etc. As a result of this the sales of coke goes down. But as the
economy recover slightly consumers are now resuming their normal habits,
going to the malls, car shopping, and eating out at restaurants, it create
positive impact on the sales of coca cola. Again, If the economic conditions of
the country is not that strong and Coke increases its Price in this situation.
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Then it would impact highly negative. And inflation is also not a good
position for any country’s production point of view. It also impacts highly
negative in the Coke’s production.

Educational
The Coca-Cola Company has always believed that education is a powerful
force in improving the quality of life and creating opportunity for people and
their families around the world. All over the world, the coca cola company is
involved in innovative programs that give hard-working, Knowledge-hungry
students books, supplies, places to study and scholarships.

Social Analysis for Coca-Cola
As people are more health conscious day by day, many of them are switching
to bottled water and diet colas instead of other alcoholic beverages.
Consumers from the ages of 37 to 55 are also increasingly concerned with
nutrition. Since many are reaching an older age in life they are becoming
more concerned with increasing their longevity. This will continue to affect
the non-alcoholic beverage industry by increasing the demand.

Technological Analysis for Coca-Cola
Technological change creates opportunities for new products and product
improvements and of course new marketing techniques. Some factors that
cause company's actual results to differ materially from the expected results
are as follows:

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 The new technology of internet and television which use special effects
for advertising through media. They make some products look
attractive. This helps in selling of the products.
 Introduction of cans and plastic bottles have increased sales for CocaCola as these are easier to carry and one can bin them once they are
used.
 Due to introduction of this machineries the production of the Coca-Cola
company has increased vastly then it was few years ago.

SWOT Analysis
Strength
World’s leading brand
The company has a leading brand value and a strong brand portfolio. .
Business-Week and Interbrand, a branding consultancy, valued Coca-Cola at
$67,000 million in 2006. The company owns four of the top five soft drink
brands in the world: Coca-Cola, Diet Coke, Sprite and Fanta. Strong brands
allow the company to introduce brand extensions such as Vanilla Coke,
Cherry Coke and Coke with Lemon. Coca cola has made huge amount of
investment in promotional activities all over the world. Consequently, CocaCola is one of the best recognized global brands.

Large scale of operations
Coca-Cola has a large scale of operation with revenues in excess of $24
billion. Coca-Cola is the largest manufacturer, distributor and marketer of
nonalcoholic beverage concentrates and syrups in the world. Coca-Cola owns
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and

operates

32

principal

beverage

concentrates

and/or

syrup

manufacturing plants located throughout the world. The company’s large
scale of operation allows enhancing its revenue.

Strong revenue growth in three segments:
Coca-Cola’s revenues recorded a double digit growth, in three operating
segments. These three segments are Latin America, ‘East, South Asia, and
Pacific Rim’ and Bottling investments. Revenues from Latin America grew by
20.4% during fiscal 2006, over 2005. During the same period, revenues from
‘East, South Asia, and Pacific Rim’ grew by 10.6% while revenues from the
bottling investments segment by 19.9%. Together, the three segments of
Latin America, ‘East, South Asia, and Pacific Rim’ and bottling investments,
accounted for 34.8% of total revenues during fiscal 2006. Healthy revenues
growth rates in these segments contributed to top-line growth for Coca-Cola.

Global Distribution
Coca cola is available in each and every part of the world as it is operating
globally in more than 200 countries.
Innovation
It always launches innovative products like diet coke, vanilla coke and many
others.

Research and development:
Coca cola has strong research and development department.

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Brand loyalty
Coca cola enjoys the brand loyalty from the customers
Weakness
Negative publicity
The company received some sort of negative publicity. For example, In India
during September 2006 The Company was accused by the Center for Science
and Environment (CSE) of selling products containing pesticide residues.
Coca-Cola products sold in and around the Indian national capital region
contained

a

hazardous

pesticide

residue.

These

pesticides

included

chemicals which could cause cancers, damage the nervous and reproductive
systems and reduce bone mineral density. Such negative publicity could
adversely impact the company’s brand image and the demand for Coca-Cola
products.

Decline in cash from operating activities:
The company’s cash flow from operating activities declined during fiscal
2006. Cash flows from operating activities decreased 7% in 2006 compared
to 2005. Net cash provided by operating activities reached $5,957 million in
2006, from $6,423 million in 2005. Coca-Cola’s cash flows from operating
activities in 2006 also decreased compared with 2005. Declining cash from
operating activities reduced availability of funds for the company’s investing
and financing activities.

Opportunities
Possible growing opportunities
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In a country like India the per capita consumption of coca cola per year is the
lowest in the world that is only 6 per person. So, there are a opportunity of
enhance market share.

Coca Cola Bottling System
It also allows the company to take advantage. Most of the bottling
companies are under the control of coke which gives that much of flexibility
in the pricing strategy where the rival cola giant pepsico does not have its
own bottling companies. So, they can not enjoy that much of flexibility the
pricing strategy of PepsiCo.

Expansion into new market
Coke is enjoying so good brand name. So if they enter in any other industry
with same brand name it can also succeed in that industry.

Merge
Merge with other global business is another option in front of them to expand
their business.

Threats
The company faces intense competition in various markets from regional as
well as global players. The company also faces competition from various
nonalcoholic beverages including juices and nectars and fruit drinks.

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Dependence on bottling partners
In 2006, approximately 83% of its worldwide unit case volumes were
produced and distributed by bottling partners in which the company did not
have any controlling interests. Many of its bottling partners have the right to
manufacture or distribute their own products or certain products of other
beverage companies. These bottlers may give more resources to business
opportunities or products other than those beneficial for Coca-Cola.

Competition
Its competition from Pepsi is a big threat to the company as the market share
of Pepsi is more than coke in a country like India.

Conclusion
The Coca Cola Company has a very rich history and spread over the world.
Coca Cola Company has a strong competitive position in the market with
rapid growth. It needs to use its internal strengths to develop a market
penetration and market development strategy. Further company should
integrate

with

other

companies,

acquisition

of

potential

competitor

businesses, innovation in branding and aggressive marketing strategy can
bring long term profitability.

References
 www.coca-colaindia.com
 www.cocacola.com
 www. world.book.com

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 http://www.thefinancialexpressbd.com/more.php?
page=detail_news&news_id=11615&date=2007-09-19 Date- 02-122011
 http://www.scribd.com/doc/9995196/Swot-Analysis-of-Coca-Cola
Date- 02-12-2011 date 02-12-2011
 http://www.scribd.com/doc/60374643/Business-Development-by-

right-execution date- 02-12-2011

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