INTERNATIONAL

TRADE DEVELOPMENT

Coca Cola
Universal Appeal
(Case Study Report)

National College of Business Administration and Economics

Submitted in the support of the degree of
BBA (Hons)

Contents of Presentation:
Introduction of the Company
Case Study Questions:
International Strategies
Competitive advantage over Pepsi
Pros and Cons of Investment in India
Pros and Cons of Investment in China
Recommendation for investment on India or China

Introduction:

Coca Cola is the leading beverage company in the world with almost 500 brands. It is the
largest and most profitable beverage company. The product was originally born in
Atlanta, Georgia, in 1886 by a local pharmacist, Dr. John Smith Pemberton. He decided
to sell the mixture for 5 cents a glass and named it Coca-Cola. The pharmacy sold 9
glasses in that first year.
Pemberton sold the Coca-Cola Company in 1888 to a businessman who started to
promote the drink by giving pharmacists clocks, calendars and other products with the
Coca-Cola brand on it so visitors got familiar with the drink and the company. In 1895
the drink was put into bottles so customers could enjoy Coca-Cola everywhere. Because
of many imitations, Coca-Cola was put into special bottles in 1916, the same bottles we
still use nowadays. Coca-Cola was first exported to Cuba, Puerto Rico, France and other
countries around 1917. The Coca-Cola Company started big promotional campaigns in
the 1920s: the Olympic Games in Amsterdam in 1928, bullfighting games in Spain and
so on. By the end of the World war II, company as operating in more than 100 countries
of the world.
As for today, Coca Cola has grown to be the world's most pervasive brand; the Coca-Cola
Company has been in business for 127 years, employs 139,600 people, and sells 1.6
billion beverages each day in more than 200 countries. He Coca-Cola Company sells half
of all soft drinks consumed throughout the world.

Current Situation:
Today, the Coca-Cola Company has been serving for more than 127 years and is one of
the largest beverage companies headquartered in Atlanta, United States. The company is
engaged in the production, distribution, and marketing of nonalcoholic beverages and
syrups. It is listed on the New York Stock Exchange (NYSE) and the Dow Jones
Industrial Average (DJIA). On March 16, 2014, the share price of the Coca-Cola
Company is recorded at $38.17 under NYSE.
The Coca-Cola Company has over 500 products and serves over 200 countries. Some of
its brands include Coca-Cola, Sprite, Fanta, Diet Coke, Dasani, Minute Maid, Power
Ride, Simply Orange, Fresca, and Vitamin Water. Moreover, it has partnered with
approximately 250 bottling companies worldwide. The companys segments include
Eurasia and Africa, Europe, Latin America, North America, Pacific, Bottling Investments
and Corporate.

Questions:
What is the Coca Colas international strategy?

Coca Cola is the largest and leading beverage company not only its domestic market USA
but in the whole world. It is the most profitable soft-drink company in the world. All
these achievements have been possible due to its various international strategies.
Since its beginnings, Coca-Cola has built its business using a universal strategy based on
three timeless principles:

Acceptability(preferred) - through effective marketing, ensuring Coca-Cola

brands are an integral part of consumers's daily lives, making Coca-Cola the
preferred beverage everywhere

Affordability (Price) - Coca-Cola guarantees it offers the best price in terms of

value for money.

Availability (Penetration) - making sure that Coca-Cola brands are available

anywhere. People want refreshment, a pervasive penetration of the marketplace.
Coca-Cola has created an extensive and well-organized global distribution
network guaranteeing the ubiquity of its products. (Ubiquity is the ability to
appear to be present everywhere at once.)

It adopted a franchise model. Company hires local bottler companies around the world in
order to increase the efficiency of its operations such as production, distribution
marketing and also improving the strength of the company. This is done in order to
perform the operations effectively and implement their strategies worldwide.
The Company operates a worldwide franchise in the 200 countries in which Coca-Cola is
sold. Coca colas strategy had always been to take risks in the emerging market and
company also understands the first to be in the new market to gain the competitive
advantage. This is due to of this strategy that today Coca Cola leads the African market.
The availability of the company is so good that one can find a bottle of coke in middle of
Africas desert where there is small shop.

What competitive advantages does coca cola have over its major rival,
PepsiCo?

The major rival of Coca Cola in beverage industry is PepsiCo. PepsiCo is the second
largest beverage company in the world, despite of different strategies; Pepsi has failed
several times in beating the Coca Cola Company in international and in domestic market.
1. Market Share:
USA, which is the domestic market for both of the companies. Coca Cola has
market share of 41 percent and its rival, Pepsi has market share of 31 percent. And
in International market, Coke outsells Pepsi by 3 to 1.
2. Market share in populous countries:
Coca Cola has the largest market share in top most populous countries in the
world.
3. Product mix:
Broad product mix Product portfolio of Coca Cola is far wider than PepsiCo.
Coca Cola has total product portfolio of more than 500 brands, while PepsiCo has
product portfolio of 22 brands.
4. Vast global presence
Coca cola is present in more than 200 countries across the world. Chances are,
any country that you go to, you will find coca cola present in that market.
5. Distribution network
Coca-Cola's bottling system is the largest and most widespread production and
distribution network in the world.
6. Forbes List
From many years, Coca Cola is Worlds one of the most valuable brands
according to the Forbes list.

What are the pros and cons of coca cola investment in India?
Coca-Cola India is one of the countrys leading beverage companies, offering a range of
healthy, safe, high quality, refreshing beverage options to consumers. Over the last 23
years, ever since its re-entry in 1993, the company has gone on to establish an unmatched
portfolio of beverages, refreshing consumers with its leading beverage brands. The

Company along with its bottling partners, through a strong network of over 2.6 million
retail outlets, touches the lives of millions of consumers. Its brands are some of the most
preferred and most sold beverages in the country.

Pros of investment in India:

Market Share:
In 1996, Coca Colas market share in India was 48%. Indian market is a highly
potential market with the total population of more than 936 million. Company has the
potential to achieve more than 60% of the market share.

Large number of consumer:

Coca Cola is one of the largest consumers of the soft drink and it stands on number 2
in populous countries of the world. It has the potential to move up the ladder of
largest consumers.

Per Capita Consumption:

Despite of the consumption ranking, Per Capita consumption of Coca Cola in India is
among the lowest in the world. It has the potential to increase the consumption.

Potential in rural market:

Rural areas account 68% of Indias population. But, in more than 50% of the rural
areas, no company has tried to make their product stand. Coca cola can improve flat
sales in urban markets by intractring with the huge size of untapped rural market by
developing better physical distribution channel.

Cons of investment in India:

Poor Infrastructure in India:
India is the country where 26% of the population lived under the poverty line in 1996.
Rural areas of India have poor infrastructure. In many areas, there is no concept of
electricity even today and most of these people are homeless. Due to which many FMCG
companies have not bothered to tap these markets.

Anti-Multinationals:

Some political parties are against American Multinational companies like Coca Cola,
PepsiCo and McDonalds etc. Its because Indian worries about cultural imperialism.
Political parties and citizens are protesting against multinational companies and have
briefly closed some companys offices.

Scarcity of resources:
Coca Cola has the largest soft drink bottling facilities in India. Water is the primary
component of the products manufactured by the company. Company consumes millions
of tons of water daily. There is scarcity of several natural resources in India; water is the
most important among them. It is possible that company will face the shortage of water
and have to relocate their company to other country.

Pros and Cons of Investment in China:

Pros of investment:
1. Population:
China is the worlds most populated country with the population of 1.2 billion. Its is
the potential market for any product in the world. Currently, Coca cola is enjoying
more than 50% of the market share; company has potential to increase their profit by
focusing on rural areas.

2. Improvement in economy:
Due to fast improvement of the economy of china, Investment in China is very
attractive to every company. Chinas economy will double in the eight years and will
become 6th largest economy in the world due to which it is attractive country for
investment. Coca Cola is already enjoying the competitive advantage of entering
early in the Chinas market. Now it just need to focus on its local marketing strategies
to increase the market share as Chinese love good brands.
3. Per Capita consumption :
Per Capita consumption of Coca Cola in China is among the lowest in the world. It
has the potential to increase the consumption.
4. Political stability:
China has political stability in the country.

Cons of investment:

Unfavorable tax laws:

They have unfavorable tax systems for foreign countries.

Poverty:
Currently, china is the country where 800 million people live in near feudal
conditions and live in flooded areas looking for work.

What should Douglas Daft recommend to the senior executive committee concerning
further investment in the emerging markets of China and India? Why?

Any market in the world is potential market for any product. It just depends upon how
well a strategy is executed and what marketing strategies are adopted. Its because of the
world class marketing strategies that today Coca Cola is serving 1.9 billion consumers
every day. Before entering into any market for the first time or making any advancement,

Coca Cola first conduct market research in order to identify the opportunities in the
market. When the question aroused whether to invest in the emerging market of china or
India, Douglas Daft, President of the Middle and Far East group, first conducted the
research and asked the concerned person about the political and Economic risks of both
the countries.
The Pest analysis for both these countries is as follows:

China:

China is the most populous country in the world with the population of 1.2 billion.

Per capita consumption of 4 8-ounce serving per day which is among the lowest
in the world. But consumption in China is growing at a fast rate of 18% yearly
Currently Coca Cola is leading the soft drink market with 50% market share..

There is abundance of resources for any company to start its operations there.

There is political stability in China.

Chinas economy is growing at high rate and its economy is set to double in the
next eight years. And will become the sixth largest economy of the world. Due to
which the every company is willing to take risk by investing in China.

Tax systems are not much favorable to foreign companies in China and they also
have to deal with local government rules unfavorable rules. But it is evident that
firms who have gone through these processes there, then their presence in China
will be rewarded.

India:

India is the second most populous country in the world with the population of 936
million.

Per capita consumption of 2 8-ounce serving per day which is among the lowest
in the world. But consumption in India is growing at a fast rate of 21% yearly
Currently Coca Cola is leading the soft drink market in India.

There is scarcity of resources for any company to start its operations there.
Especially water, which is the main ingredient of any soft drink. Company can
face problem in future for the supply of water.

Thirty percent of the Indias population lives under poverty line.

Indias state sectors are not performing well, and 200 out of 220 state owned
companies are money loser. Heavy borrowing by the government companies
driving up the interest rate.

There is political instability in India.

Many anti multinational campaigns are rising day by day, not just from the
citizens but also by some political parties. Who are using this as a tool to get
peoples vote for the elections.

On behalf of the result, we can say that so far China looks like a better investment
because there are more attractions and opportunities in China as compared to India. And
most importantly the Chinas population is much more than India.

Group Members
Hafiz Ebad-ul-Haq

2131102

Hamza Ehsan Khan

2131089

Junaid Siddique

2131098

Muhammad Umair Muneeb

2131075

(From first to last)