THE COCA-COLA COMPANY ANALYSIS

1. COMPANY OVERVIEW

1.1 Executive Summary

The Coca-Cola Company is currently the world’s largest beverage company. Coca-Cola

owns or licenses more than 400 brands, including diet and light beverages, waters, juice and

juice drinks, teas, coffees, sports and energy drinks. It has ownership interests in numerous

bottling and canning operations. Coca-Cola sells finished beverage products bearing the Coca-

Cola trademarks in more than 200 countries. Examples of well-known brands they own include

Coke, Sprite, Fanta, Vitamin Water, Minute Maid, Bonaqua and Powerade. As December 31,

2006, Coca-Cola operated through eight segments: Africa; East, South Asia and Pacific Rim;

European Union’ Latin America; North America; North Asia, Eurasia and Middle East.

1.2 History and Growth

Coca-Cola® originated as a soda fountain beverage in 1886 selling for five cents a glass.

Early growth was impressive, but it was only when a strong bottling system developed that

Coca-Cola became the world-famous brand it is today.

1894 – A modest start for a Bold Idea

In a candy store in Vicksburg, Mississippi, brisk sales of the new fountain beverage called Coca-

Cola impressed the store's owner, Joseph A. Biedenharn. He began bottling Coca-Cola to sell,

using a common glass bottle called a Hutchinson.

Biedenharn sent a case to Asa Griggs Candler, who owned the Company. Candler thanked him

but took no action. One of his nephews already had urged that Coca-Cola be bottled, but Candler

focused on fountain sales.

1899 The first bottling agreement

Two young attorneys from Chattanooga, Tennessee believed they could

build a business around bottling Coca-Cola. In a meeting with Candler,

Benjamin F. Thomas and Joseph B. Whitehead obtained exclusive rights to bottle Coca-Cola

across most of the United States (specifically excluding Vicksburg) -- for the sum of one dollar.

A third Chattanooga lawyer, John T. Lupton, soon joined their venture.

1900-1909 … Rapid growth

The three pioneer bottlers divided the country into territories and sold bottling rights to local

entrepreneurs. Their efforts were boosted by major progress in bottling technology, which

improved efficiency and product quality. By 1909, nearly 400 Coca-Cola bottling plants were

operating, most of them family-owned businesses. Some were open only during hot-weather

months when demand was high.

1916 … Birth of the contour bottle

Bottlers worried that the straight-sided bottle for Coca-Cola

was easily confused with imitators. A group representing the

Company and bottlers asked glass manufacturers to offer ideas

for a distinctive bottle. A design from the Root Glass Company

of Terre Haute, Indiana won enthusiastic approval in 1915 and

was introduced in 1916. The contour bottle became one of the few packages ever granted

trademark status by the U.S. Patent Office. Today, it's one of the most recognized icons in the

world - even in the dark!

1920s … Bottling overtakes fountain sales

As the 1920s dawned, more than 1,000 Coca-Cola bottlers were operating in the U.S. Their ideas

and zeal fueled steady growth. Six-bottle cartons were a huge hit after their 1923 introduction. A

few years later, open-top metal coolers became the forerunners of automated vending machines.

By the end of the 1920s, bottle sales of Coca-Cola exceeded fountain sales.
1920s and 30s … International expansion

Led by longtime Company leader Robert W. Woodruff, chief

executive officer and chairman of the Board, the Company began a major push to establish

bottling operations outside the U.S. Plants were opened in France, Guatemala, Honduras,

Mexico, Belgium, Italy, Peru, Spain, Australia and South Africa. By the time World War II

began, Coca-Cola was being bottled in 44 countries.

1940s … Post-war growth

During the war, 64 bottling plants were set up around the world to supply

the troops. This followed an urgent request for bottling equipment and

materials from General Eisenhower's base in North Africa. Many of these

war-time plants were later converted to civilian use, permanently enlarging the bottling system

and accelerating the growth of the Company's worldwide business.

1950s … Packaging innovations

For the first time, consumers had choices of Coca-Cola package size and

type -- the traditional 6.5-ounce contour bottle, or larger servings including 10-, 12- and 26-

ounce versions. Cans were also introduced, becoming generally available in 1960.

1960s … New brands introduced

Following Fanta® in the 1950s, Sprite®, Minute Maid®, Fresca® and TaB® joined brand Coca-

Cola in the 1960s. Mr. Pibb® and Mello Yello® were added in the 1970s. The 1980s brought

diet Coke® and Cherry Coke®, followed by POWERADE® and DASANI® in the 1990s.

Today hundreds of other brands are offered to meet consumer preferences in local markets

around the world.

1970s and 80s … Consolidation to serve customers

As technology led to a global economy, the retailers who sold Coca-Cola merged and evolved

into international mega-chains. Such customers required a new approach. In response, many

small and medium-size bottlers consolidated to better serve giant international customers. The

Company encouraged and invested in a number of bottler consolidations to assure that its largest

bottling partners would have capacity to lead the system in working with global retailers.

1990s … New and growing markets

Political and economic changes opened vast markets that were closed or underdeveloped for

decades. After the fall of the Berlin Wall, the Company invested heavily to build plants in

Eastern Europe. And as the century closed, more than $1.5 billion was committed to new bottling

facilities in Africa.

21st Century

The Coca-Cola bottling system grew up with roots deeply planted in local communities. This

heritage serves the Company well today as people seek brands that honor local identity and the

distinctiveness of local markets. As was true a century ago, strong locally based relationships

between Coca-Cola bottlers, customers and communities are the foundation on which the entire

business grows.

2. MISSION AND VISION STATEMENT

2.1 Current Mission

“The world is changing all around us. To continue to thrive as a business over the next

ten years and beyond, we must look ahead, understand the trends and forces that will shape our

business in the future and move swiftly to prepare for what's to come. We must get ready for

tomorrow today. That's what our 2020 Vision is all about. It creates a long-term destination for
our business and provides us with a "Roadmap" for winning together with our bottling partners.”

(The Coca-Cola Company, 2013).

Coca-Cola’s Roadmap starts with their mission, which is enduring. It declares their purpose as a

Company and serves as the standard against which they weigh their actions and decisions.

1. “To refresh the world in body, mind and spirit”

2. “To inspire moments of optimism through our brands and our actions”

3. “To create value and make a difference everywhere we engage”

2.2 Current Vision

Coca-Cola’s vision serves as the framework for their Roadmap and guides every aspect

of their business by describing what they need to accomplish in order to continue achieving

sustainable, quality growth.

 People: Be a great place to work where people are inspired to be the best they can be.

 Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and

satisfy people's desires and needs.

 Partners: Nurture a winning network of customers and suppliers, together we create

mutual, enduring value.

 Planet: Be a responsible citizen that makes a difference by helping build and support

sustainable communities.

 Profit: Maximize long-term return to shareowners while being mindful of our overall

responsibilities.

 Productivity: Be a highly effective, lean and fast-moving organization.

2.3 Current Objectives

 The main objectives for the Coca-Cola Company are to be globally known as a business

that conducts business responsibility and ethically and to accelerate sustainable growth to operate

in tomorrow’s world. By having these objectives, it forms the foundation for companies in the

decision making process.

2.4 Current Strategies

The Coca-Cola Company aims to be globally known, they do this by targeting different

areas across the globe with different products, gaining their brand name and popularity. All the

bottling partners work closely with their customers such as convenience stores, grocery stores,

movie theaters and street vendors to create and use localized strategies developed in partnership

with the Company. Their competition with other beverage companies are also narrowed down as

they own various brands that could be possible competition. For example, the Company sells

Coke without the competition of other popular soft drink brands like Sprite and Fanta because

the Company owns those brands as well. The Company often reviews and evaluates their

business plans and performance to improve their earnings and analyze their competitive position

in the market. They make decisions in realigning their business models to match the objectives of

the Company by using strategies and tactics in the analysis of their performance.

2.5 Improved Mission statements

(a) At Coca-Cola we're committed to achieving business and financial success while leaving

a positive imprint on society – delivering what we call Performance with Purpose.

(b) Our mission is to be the world's premier consumer Products Company focused on

convenient foods and beverages. We seek to produce financial rewards to in8vestors as

we provide opportunities for growth and enrichment to our employees, our business

partners and the communities in which we operate. And in everything we do, we strive

for honesty, fairness and integrity.

2.6 Improved Vision statements

 (a) The Coca-Cola Company responsibility is to continually improve all aspects of the world
in which we operate – environment, social, economic – creating a better tomorrow than
today."
(b) Our vision is put into action through programs and a focus on environmental stewardship,
activities to benefit society, and a commitment to build shareholder value by making
Coca-Cola Company a truly sustainable company.

Why it is improved:

It is our vision to be the best and leading provider of food and beverage (F&B) products

in the world, to facilitate the people and we emphasis on consumer rather more than competitors.

We are among the top ten food and beverage companies in the world by continually challenging

present conventions and always staying a step ahead of the competition.

It is our mission to be the number one F&B company in the world by providing our

customers with the highest product quality in terms of taste, experience, and satisfaction. We will

ensure this through an unwavering dedication to the continuous development of our products and

processes ensuring that we remain best in class. We will strive to hire the most competent and

dedicated employees whose work ethic will set the standard in the industry. We will be

paymasters, as we strongly believe that human resource is the only asset that truly appreciates

over time. We will also be a responsible social corporate citizen, and strive to enhance the

quality of life in the markets we serve.

3. SITUATION ANALYSIS

3.1 External assessment

3.1.1 Opportunities

It is highly difficult for the new entrants to enter in the soft drink industry because of

some factors such as brand image and loyalty, bottling network, advertising expense, retail

distribution and fear of retaliation. Coke has significant opportunities within global supply

chain to encourage and develop more sustainable practices to benefit consumers, customers and
suppliers. While, it is still in the premature stages of exploring these opportunities and dedicated

to the economic vitality and health of the farming communities our supply chain engages.

Coke can diminish the fear of substitute by diversifying (related or unrelated) by offering

substitute products. Focusing on its advertising and differentiation can increase its profits. Coke

promotes and support sustainable agriculture not only because it makes good business sense.

World population is expected to grow at 8 billion 2025, and 9.2 billion by 2050. Nearly

99% growth will take place in developing countries. Changing consumer lifestyle; by becoming

health conscious and preferring substitute products. Coke can relatively diversify and offering

health conscious products.   

Bottled water consumption in increasing day by day, 11 percent growth is reported.

3.1.2 Threats

Pepsi is the major and primary rival of the Coca-Cola in the soft drink industry, Pepsi is

2nd in revenue behind the Coca-Cola, and also hit Coca-Cola in some markets. Its primary

competitor PepsiCo is highly diversified by providing big range of food products. 

Coca-Cola also faces the tough competition from local brands in all over world such as

in Central and South America Kola Real also known as Big Cola in Mexico is giving tough

competition to Coca-Cola etc.   

Large numbers of substitutes are available in the market such as water, tea, juices coffee

etc.

Coca-Cola is facing different regulations and policies set by government in different

countries.

Low growth rate in carbonated drinks, which is recorded less than one percent in primary

market of Coca-Cola.
 Changing consumer lifestyle; by becoming health conscious and preferring substitute

products. Different studies has been conducted and found other drinks and Coke harmful if

consumed excessively.    

3.1.3 Competitive Profile Matrix (CPM)

A competitive profile matrix (CPM) categorizes a firm’s main rivals and its particular

strengths and weaknesses in relation to a design firm’s strategic position. In CPM, an

organization assess itself as well its rivals by giving rating and weights to the critical/key success

factors. It then recognizes its strategic competitive place with its major rivals. A firm which

obtains superior weighted points would have the stronger competitive place than its rivals. We

will be using weighted rating system for the construction of CPM. Some of the important steps

involved in the construction of CPM are given below:

1. In the first column, list down all the key success factors of Coca-Cola (usually from 6

to 10).

2. In the second column, assign weights to each factor ranging from 0.0 (not important) to

1 (most important). Greater weights should be given to those factors which have greater

influence on the organizational performance. The sum of all weights must equal 1.

3. Now rate each factor ranging from 1 to 4 for all the firms in analysis. Here, rating 1

represents major weakness, rating 2 shows minor weakness. Similarly, rating 3 indicates

minor strength whereas rating 4 shows major strength. It means that weakness must

receive 1 or 2 rating while strength must get 3 or 4 rating.

4. Calculate weighted score by multiplying each factor’s score by its rating.

5. Find the total weighted score of all the firms by adding the weighted scores for each

variable.
 Competitive Profile Matrix of Coca-Cola Company

The competitiveness of a Company can be assessed on the basis of its general strength rating. If

the dissimilarity among firm’s overall rating and the points of lower-rated rivals is greater than

the firm has greater net competitive advantage. Alternatively, if the dissimilarity among a firm’s

overall rating and the points of higher-rated rivals is larger than the Company has net

competitive advantage.

Conclusion: In the above matrix, it demonstrates that Coca-Cola is the market leader and

dominates its rivals with highest points of 3.74. Pepsi is the runner up with 3.42 points and

Cadbury Schweppes is the weakest rival among these three with the score of 2.80. This Matrix

also shows that Coca-Cola is strong in all the aspects of rivalry and has strong position in the

market place.

3.1.4 External Factor Evaluation (EFE) Matrix

External Factor Evaluation (EFE) Matrix is a strategic-management device which is

frequently use for evaluation of current business environment. The EFE Matrix is a superior

instrument to prioritize and visualize the opportunities and threats that a Company is facing. An
external factor in the EFE Matrix comes from social, political, legal, economic and other external

forces.

The EFE Matrix can be developed in five steps:

1. In the first column, lists down all the opportunities and threats. EFE matrix should

include 10 to 20 key external factors as identified in the external-audit process.

2. In the second column assign weights to each factor that ranges from 0.0 (not important)

to 1 (most important). The total weights must sum up to 1.00 (It should be noted that the

importance of weights depend upon the probable impact of factors on the strategic

position of the Company).

3. In the column three, rate each factor (ranging from 1 to 4) on the basis of Company’s

response to that factor. (Here, 1 shows poor response, 2 shows average response, 3 shows

above average response and 4 shows superior response).

4. In the column four, calculate the weighted score by multiplying the each factor’s weight

by its rating.

5. Sum the weighted scores for each variable to determine the total weighted score.
 External Factor Evaluation Matrix of Coca-Cola Company

By adding the weighted score of various opportunities and threats of Coca-Cola Company, we

get the total weighted score of 3.05. Here it should be noted that the highest possible total

weighted score of a firm is 4 whereas the lowest possible total weighted score is 1. The total

weighted score remains in the limit of 1 to 4 regardless of the total number of opportunities and

threats. Similarly, the average total weighted score is 2.5. If the total weighted score of a

Company is 4, it means that the Company is effectively taking advantage of existing

opportunities and is also able to minimize the risk. On the other hand, the total weighted score of

1 show that firm is not able to take advantage of current opportunities or avoid external threats.
Conclusion: In the case of Coca-Cola Company, the total weighted score is above average, which

means that the Coca-Cola Company strategies are effective and the Company is taking advantage

of existing opportunities along with minimizing the potential adverse effects of external threats.

3.2 Internal assessment

3.2.1 Strengths

World’s leading brand Coca-Cola has strong brand recognition across the globe. The

company has a leading brand value and a strong brand portfolio. Coca-Cola is one of the leading

brands in their top 100 global brands ranking in 2006. The value of the Coca-Cola was $67,000

million in 2006. Coca-Cola ranks well ahead of its close competitor Pepsi which has a ranking of

22 having a brand value of $12,690 million. Furthermore, Coca-Cola owns a large portfolio of

product brands. 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. Over the years, the

company has made large investments in brand promotions. Consequently, Coca-Cola is one of

the best recognized global brands. The company’s strong brand value facilitates customer recall

and allows Coca-Cola to penetrate new markets and consolidate existing ones. Coca-Cola

Company 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. Coco-Cola is selling trademarked beverage products since the year 1886 in the US.

The company currently sells its products in more than 200 countries. Of the approximately 52

billion beverage servings of all types consumed worldwide every day, beverages bearing

trademarks owned by or licensed to Coca-Cola account for more than 1.4 billion. The company’s

operations are supported by a strong infrastructure across the world. Coca-Cola owns and

operates 32 principal beverage concentrates and/or syrup manufacturing plants located

throughout the world. In addition, it owns or has interest in 37 operations with 95 principal
beverage bottling and canning plants located outside the US. The company also owns bottled

water production and still beverage facilities as well as a facility that manufactures juice

concentrates. The company’s large scale of operation allows it to feed upcoming markets with

relative ease and enhances its revenue generation capacity. Robust 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. Robust revenues growth rates in these segments contributed to

top-line growth for Coca-Cola during 2006.

3.2.2 Weaknesses

Company received negative publicity 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. This could also have an adverse impact on the company’s growth prospects in the

international markets. Sluggish performance in North America Coca-Cola’s performance in

North America was far from robust. North America is Coca-Cola’s core market generating about

30% of total revenues during fiscal 2006. Therefore, a strong performance in North America is

important for the company.

Summary in points:

Strengths:

1. The Coca-Cola Company operates in over 200 countries and product line has over 400 brands

– is the world’s largest beverage Company.

2. Long history has built excellent brand recognition.

3. Partnership longevity with established sporting events including the Olympics.

4. Industry leader in market capitalization with $112 billion.

5. Return on Equity yielded 30 percent in 2006.

6. Leader of dividend yields of 2.6 percent. The Company has had 43 consecutive years of an

annual dividend increase.

7. Joint venture between The Coca-Cola Company and Nestle has resulted in the establishment

of Beverage Partners Worldwide (BPW).

8. Coca-Cola has formed a strong partnership with McDonalds, with McDonalds becoming their

largest customer.

Weaknesses:

1. Product line is limited to beverages.

2. A failed $16 billion acquisition of Quaker Oats hinders long-term growth.

3. Negative publicity in India because of water issues has led to poor brand image and hindered

growth there.
4. Lack of management willingness to place foreign products into American markets.

5. Marketing deficiencies due to turnover in leadership and a 16 percent decrease in advertising

spending.

6. Coca-Cola’s inventory turnover is only 5.4 compared to PepsiCo’s 8.0.

3.2.3 Internal Factor Evaluation (IFE) Matrix

Internal Factor Evaluation (IFE) Matrix is a strategic management instrument for

assessing main strengths and weaknesses in useful areas of a Company. IFE matrix also gives a

foundation for recognizing and assessing associations among those parts. The IFE matrix is

utilized in strategy formulation. Steps in the construction of IFE Matrix are given below:

1. In the first column, lists down all the strengths and weaknesses. IFE matrix should

include 10 to 20 key internal factors.

2. In the second column, assign weights to each factor ranging from 0.0 (not important) to 1

(most important). Greater weights should be given to those internal factors which gave

greater influence on the organizational performance. The sum of all weights must equal 1

3. In the third column, rate each factor ranging from 1 to 4. Here, rating 1 represents major

weakness, rating 2 shows minor weakness. Similarly, rating 3 indicates minor strength

whereas rating 4 shows major strength. It means that weakness must receive 1 or 2 rating

while strength must get 3 or 4 rating.

4. In the fourth column, calculate weighted score by multiplying each factor’s score by its

rating.

5. Find the total weighted score by adding the weighted scores for each variable.
 Internal Factor Evaluation Matrix of Coca-Cola Company

The total weighted score ranges from 1 to 4 (where 1 is low, 4 is high and 2.5 is average)

regardless of the total number of internal factors used in the analysis. If the total weighted score

is less than 2.5 it indicates that the organization is weak internally. On the other hand, the scores

above 2.5 show strong internal position. An internal factor could be included twice in the IFE

matrix if the factor is both strength and weakness.

Conclusion: In case of Coca-Cola Company, the total weighted score is above than average, it

means that the Company is strong internally.

 4. STRATEGY DEVELOPMENT

4.1 Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix

Business owner's challenge is to create products and services the customer values and the

means to produce and deliver those products and services in ways that are exceptional compared

to the competition. To address these challenges, a company must define business objectives and

address operational issues based on its current situation and the factors that impact its financial

and operational goals. Such decision-making processes are frequently supported by structured

brainstorming, which, in turn, can be supported by a SWOT Matrix.

Advantages

The advantages of the SWOT methodology, such as its appropriateness to address a variety of

business issues, make it a desirable tool to support some brainstorming sessions.

Disadvantages

However, to significantly impact company performance, business decisions must be based on

reliable, relevant and comparable data. SWOT data collection and analysis entail a subjective

process that reflects the bias of the individuals who collect the data and participate in the

brainstorming session. In addition, the data input to the SWOT analysis can become outdated

fairly quickly.

SWOT Matrix of Coca-Cola

  Strengths Weaknesses
- Popularity - Word of mouth

- Well known - Lack of popularity of many Coca-

- Branding obvious and easily Cola’s brands

Internal recognized - Most unknown and rarely seen

- A lot of finance - Result of low profile or non-existent

- Customer loyalty advertising

- International Trade - Health issues

  Threats Opportunities
 - Changing health-consciousness - Many successful brands to pursue

attitude - Advertise its less popular products

Externa - Legal issues - Buy-out competition.

l - Health ministers - More Brand recognition

- Competition (Pepsi)
 

Strengths: Coca-Cola is an extremely recognizable Company. Popularity is one of its superior

strengths that is virtually incomparable. Coca-Cola is known very well worldwide. It's branding

is obvious and easily recognized. Things like, logos and promos shown on t-shirts, hats, and

collectible memorabilia. Without a doubt, no beverage Company compares to Coca-Cola's social

popularity status. Some people buy coke, not only because of its taste, but because it is widely

accepted and they feel like they are part of something so big and unifying. At the other end of the

spectrum, certain individuals choose not to drink coke, based solely on rebelling from the

world's idea that coke is something of such great power. Overwhelming is the best word to

describe Coca-Cola's popularity. It is scary to think that its popularity has been constantly

growing over the years and the possibility that there is still room to grow. If you speak the words

“Coca-Cola”, it would definitely be recognized all around the world. Money is another thing that

is a strength of the Company. Coca-Cola deals with massive amounts of money all year. Like all

businesses, they have had their ups and downs financially, but they have done well in this

compartment and will continue to do well and improve. The money they are earning is

substantially better than most beverage companies, and with that money, they put back into their

own Company so that they can improve. Another strength that is very important to Coca-Cola is

customer loyalty. The 80/20 rule comes into effect in this situation. Eighty percent of their profit

comes from 20% of their loyal customers. Many people/families are extremely loyal to Coca-

Cola. It would not be rare to constantly find bottles and cases of a product such as coke in a

house. It seems that some people would drink coke religiously like some people would drink
water and milk. This is an improbable feat. Customers will continually purchase these products,

and will probably do so for a very long time. If two parents were avid Coca-Cola drinkers, this

will be passed down do their children as they grow loyal to the Company. With Coca-Cola’s

ability to sell their product all over the world, customers will continue to buy what they know

and what they like…Coca-Cola products.

Weaknesses: Coca-Cola is a very successful Company, with limited weaknesses. However they

do have a variety of weaknesses that need to be addressed if they want to rise to the next level.

Word of mouth is probably a strength and weakness of every Company. While many people

have good things to say, there are many individuals who are against Coca-Cola as a Company,

and the products in which they produce. Word of mouth unfortunately is something that is very

hard to control. While people will have their opinions, you have to try to sway their negative

views. If bad comments and views are put out to people who have yet to try Coca-Cola products,

then that could produce a lost customer which shows why word of mouth is a weakness. Another

aspect that could be viewed as a weakness is the lack of popularity of many of Coca-Cola’s

drinks. Many drinks that they produce are extremely popular such as Coke and Sprite but this

Company has approximately 400 different drink types. Most are unknown and rarely seen for

available purchase. These drinks do not probably taste bad, but are rather a result of low profile

or non-existent advertising. This is a weakness that needs to be looked at when analyzing their

Company. Another weakness that has been greatly publicized is the health issues that surround

some of their products. It is known that a popular product like coke is not very beneficial to your

body and your health. With today’s constant shift to health products, some products could

possibly loose customers. This new focus on weight and health could be a problem for the

product that are labeled detrimental to your health.

Opportunities: Coca-Cola has a few opportunities in its business. It has many successful brands

that it should continue to exploit and pursue. Coca-Cola also has the opportunity to advertise its
less popular products. With a large income it has the available money to put some of these other

beverages on the market. This could be very beneficial to the Company if they could start selling

these other products to the same extent that they do with their main products. Another

opportunity that we have seen being put to use before is the ability for Coca-Cola to buy out their

competition. This opportunity rarely presents itself in the world of business. However, with

Coca-Cola’s power and success, such a task is not impossible. Coca-Cola has bought out a

countless number of drink brands. An easy way to turn their profit into your profit is too buy out

their Company. Even though this may cost a vast amount of money initially, in the long run, if

all goes to plan, it results in a large profit. Also, the Company will no longer need to worry about

this product being part of the competition. Brand recognition is the significant factor affecting

Cokes competitive position. Coca-Cola is known well throughout 90% of the world population

today. Now Coca-Cola wants to get there brand name known even better and possibly get closer

and closer to 100%. It is an opportunity that most companies will ever dream of, and would be a

supreme accomplishment. Coca-Cola has an opportunity to continue to widen the gap between

them and their competitors.

Threats: Despite the fact that Coca-Cola dominates its market, it still has to deal with many

threats. Even though Coca-Cola and Pepsi control nearly 40% of the entire beverage market, the

changing health-consciousness attitude of the market could have a serious effect on Coca-Cola.

This definitely needs to be viewed as a dominant threat. In today’s world, people are constantly

trying to change their eating and drinking habits. This could directly affect the sale of Coca-

Cola’s products. Another possible issue is the legal side of things. There are always issues with a

Company of such supreme wealth and popularity. Somebody is always trying to find fault with

the best and take them down. Coca-Cola has to be careful with lawsuits. Health minister could

also be looked at as a threat. Again, some people may try to exploit the unhealthy side of Coca-

Cola’s products and could threaten the status and success of sales. Other threats are of course the
competition. Coca-Cola’s main competition being Pepsi, sells a very similar drink. Coca-Cola

needs to be careful that Pepsi does not grow to be a more successful drink. Other product such as

juices, coffee, and milk are threats. These other beverage options could take precedent in some

people’s minds over Coca-Cola’s beverages and this could threaten the potential success it

presents again.

4.2  Strategic Position and Action Evaluation (SPACE) Matrix

The Strategic Position and Action Evaluation (SPACE) Matrix is one of the important

tools to assess the company and its environment.

Advantages

It is relatively easy to understand and use method as a decision aid. It has four quadrants and

each quadrant indicates which strategy a firm should adopt i.e. competitive, aggressive,

conservative, or defensive in a current position. These four dimensions are the most important

determinants of a firm’s overall strategic position. Each dimension holds many factors from

EFE, IFE, and SWOT Analysis etc.

Disadvantages

However, as pointed out by Radder and Loew, there are some drawbacks in the method. For

example: While the method is applied, the factors included in each dimension are considered of

equal importance. Whilst the factors may be considered of equal importance (as a hypothesis)

one has to take into consideration the fact that most of the time, the factors under each dimension

does not have equal weights. Hence, the final result may show some differences and this will

affect the outcome of the method, i.e. the appropriate strategy of the company under evaluation.

Strategic Position and Action Evaluation Matrix of Coca-Cola

SPACE Matrix calculations

ES Average Score = -1.83 + Average FS Score (+5.00) = +3.17

CA Average Score = -1.50 + Average IS Score (+5.00) = +3.50

According to the graph above, we noticed that the Coca-Cola Company falls into the aggressive

quadrant of the SPACE matrix. It is located at the coordinates of +3.50 for x-component and a y-

component of +3.17. It shows that the company has an admirable position to use its IS in order

to take advantage of external opportunities, overcome weaknesses, and avoid threats.

Conclusion: In this position Coca-Cola has set of possible strategies such as market

development, product development, market penetration, forward integration, backward

integration, horizontal integration, horizontal diversification, concentric diversification and

conglomerate diversification depending on detailed conditions that face the company.

4.3  Grand Strategy Matrix (GSM)

Grand Strategy Matrix is famous tool for alternative strategies in addition to SPACE

Matrix, and SWOT Matrix. All the firms can fall one of the GSM’s four strategy quadrants.

GSM evaluation is based on two dimensions i.e. market growth and competitive position. Each

quadrant provides the set of possible strategies in which company falls such as quadrant 2

contains market development, market penetration, horizontal integration, divestiture, and

liquidation strategies. Quadrant 3 contains the set of retrenchment, related diversification,

divestiture, unrelated diversification and liquidation strategies. Quadrant 4 contains the set of

diversification, joint ventures and unrelated diversification strategies.

Advantages

The model allows better implementation of strategy because of the intensified focus and

objectivity. It conveys a lot of information about corporate plans in a simplified format. 

Disadvantages

However, it may not be as simple as it seems, upon application to real life due to the unforeseen

factors and also complications in the business world. In addition, the relationship between

market share and profitability differs in different industries.

Another issue about this model is that, the grand strategy options are mostly concern on cash

related issues but not values of the firm.

Grand Strategy Matrix of Coca-Cola

Conclusion: As figure identify that Coca-Cola comes in the 1st quadrant. The company

management must focus on current market and achieve growth by adopting product

development, market development and market penetration strategies. The company has abundant

resources and competitive advantage through which it can achieve growth by adopting the

backward and forward integration strategies. Coca-Cola can also adopt the related diversification

strategy to reduce its risk with broad portfolio or product line. Coca-Cola can afford to take

benefit of external opportunities in many areas. It can also take risks being aggressive when

necessary.

5. LONG-TERM OBJECTIVES

Willing continue to intensify and expand it Research and Development (R&D) capacity to

further enhance its competitive edge in the industry.

To ensure profitability and benefits of its shareholders and consumers.

To gain customer loyalty by fulfilling consumer preferences.

6. RECOMMENDATIONS

6.1 Good quality and price

Quality is always an important factor. Coca-Cola should concentrate on

receiving the product with less cost so that it can calculate in the purchasing

pattern if it requires. The suppliers should have strong connection with the

production process so that no mistake can take place or the late delivery can

avoid. COCA COLA should maintain the chain of quality with the

comprehensive price system so that customer feel attached. There should

have an especial focus on quality ensuring as well lowering the price for

capturing the market.

6.2 Relationship between Coca-Cola and its environment

Due to the growing voice for the environmental consciousness, Coca-Cola should

concentrate on this closely. It should assure the people about the environment friendly

production. Company factory should erase the carbon emission and should focus on using the

green energy in transportation and other means. There should have strong rule to demotivate the

child labor and this should incorporate in the marketing strategy of Coca-Cola.

Everyone should get concern over the limited resources in the earth. Coca-Cola is

strongly inspiring people in this regard through using the plastic bag so that it can use repeatedly.

7. PROPOSED STRATEGIES

7.1 Consumer Engagement

What differentiates Coke from its competitors is the level at which is performs consumer

engagement. Notice the word used here is ‘consumer’ rather than ‘customer’ because

Coke’s direct customers are actually the distributers; however they are wise enough to know that

it is the end customer’s demand and level of satisfaction that truly matters. Due to this they

have formulated many different marketing strategies that help them engage customers, and

that is what customers truly admire and enjoy about Coke. For example, The latest Coke

marketing campaign attempts to unite the people of Pakistan and India by installing a Coke

machine which allows you to make a friend across the border and you can also play an

interactive game with them on the spot.

Consumers believe Coke to be a full of life and fun brand which has then intrigued and loyal at

all times. This technique gives Coke its competitive edge and it something we propose

they should continue to do in the future too.

7.2 Use of Bottlers

Coke should keep on manufacturing and bottling its own products as it is doing in most places.

This ensures good quality and timely delivery. They should definitely follow this whilst

in a country where they face strong competition. Initially upon entering Pakistan they used a

local bottler and many a time a complaint was recorded about insects being found in the bottles.

This deteriorated the image of the brand in the mind of the Pakistani’s and had a role to play in

the dominance of Pepsi over Coke in the country.

7.3 Licensing

Coke should refrain from using Licensors in countries with strong competition prevailing

in them. This is because Coke mainly beats its competitors over two things: Taste and

Marketing. The marketing budget of a Licensee can never match that of a Licensor;

hence the marketing campaign created there will not be of the value that Coke is known for.

This is why they should keep the marketing in their own hands.
 7.4 Africa

Although Coke is present in Africa the research showed that in 2010 the Annual Per

capita consumption of Coke in Kenya was only 39 servings. This was due to the trade

barriers and unfavorable environment present in the area. However, today the wars in Africa are

ending and they are making a conscious effort to reduce trade barriers. Coke should take

a quick step forward and step into the market fully before its competitors have a chance to,

because it has reached maturity or near maturity in many countries, and many growth

opportunities are present in Africa that will increase its global market share.

Contingency plan: Penetrating the impoverish market can be a difficult task. Therefore, Coke

shall use Bottom of the Pyramid strategy when going into the impoverished areas. Coke can

come up with buddy packs and introduce them for the people who cannot afford the big packs.

They will also have to lower their prices in such area. Frequent sales on bulks can also be a good

tact to market product.

7.5 Packaging

Packaging plays a large role in the image that is created in the minds of consumers

about a brand. Coke has previously launched limited edition packaged products which has

different names written on the bottles and the slogan was for example: “Share a Coke

with Sarah”. Limited edition packaging makes Coke stand out from its competitors and portrays

the image of it being an exciting product rather than a mundane one. It should continue

to launch similar marketing strategies.

Contingency Plan: People can become reluctant to new packaging style. Therefore heavy

advertising of the new packaging can be done to attract customers.

7.6 Pricing

Coke should price its products in such a manner that it is cheaper than water, especially in places
where water itself is a rare commodity. They should create strategies that create the image of

Coke as being a substitute of water in the minds of consumers and thereby increase the intake of

coke, making it higher than the intake of water. For example, till recently Coke was

actually cheaper than water in Saudi Arabia which is why it became the most popular beverage

in the area.

Contingency Plan: Coke has its side effects on health. Day by day, we can see that the

benefits of drinking water are being highlighted on TV and internet. The trend of healthy

drinks are increasing therefore this strategy can backfire. In such a case Coke can introduce

their other brands like Kinley and Minute Maid.

7.7 Target Market

Coke should focus their efforts on countries with a growing population thereby increasing the

total beverage consumption of their product. Here the focus is not on per-head consumption but

on total beverage consumption. This is a strategy that can be focused upon in countries

like India.

8. PROJECTED RATIOS AND FINANCIAL STATEMENTS

PROJECTED INCOME STATEMENT

  2013 2012
  $ Percent $ Percent
(in
Income Statement (in millions)   millions)  
Revenue 46,573 100.0% 38,810 100.0%
Cost of Goods Sold 18,693 40.1% 13,156 33.9%
Interest Expense 421 0.9% 381 1.0%
Tax Expense 3,027 6.5% 2,834 7.3%
Income from Cont Operations 9,827 21.1% 8,189 21.1%
Net Income 9,827 21.1% 8,189 21.1%
   
PROJECTED BALANCE SHEET      
  2013 2012
Balance Sheet      
Cash 3,984 12.7% 3,306 10.8%
Short Term Investments 324 1.0% 66 0.2%
Accounts Receivable 2,704 8.6% 2,281 7.4%
Inventory 1,641 5.2% 1,424 4.6%
Current Assets 8,441 26.9% 10,250 33.5%
Long Term Investments 6,783 21.6% 6,922 22.6%
Net Fixed Assets 6,903 22.0% 5,786 18.9%
Other Assets 7,843 25.0% 6,652 21.7%
Total Assets 31,374 100.0% 30,638 100.0%
Current Liabilities 8,942 28.5% 8,272 27.0%
Total Liabilities 13,178 42.0% 12,968 42.3%
Stockholders' Equity 17,256 55.0% 16,843 55.0%
         
Cash Flow        
Cash Flow from Operations 11,644   9,703  
Dividends Paid 4,489   3,982  
Interest Paid 421   381  
         
Per Share        
Market Price at Year End 92.00   77.00  
Earnings Per Share - Basic 4.20   3.51  
         

25- PROJECTED RATIO ANALYSIS        

Growth Ratios        
Sales Growth 20.0%   #DIV/0!  
Income Growth 20.0%   #DIV/0!  
Asset Growth 2.4%   #DIV/0!  
Activity Ratios        
Receivable Turnover 18.7   34.0  
Inventory Turnover 12.2   18.5  
Fixed Asset Turnover 6.7   6.7  
Profit Ratios        
Profit Margin 21.1%   21.1%  
Return on Assets 31.7%   53.5%  
Return on Equity 57.6%   97.2%  
Dividend Payout Ratio 45.7%   48.6%  
Price Earnings Ratio 21.9   21.9  
Liquidity Ratios        
Current Ratio 0.94   1.24  
Quick Ratio 0.78   0.68  
Solvency Ratios        
Debt to Total Assets 0.42   0.42  
Times Interest Earned (Accrual) 31.53   29.93  
Times Interest Earned (Cash) 28.66   26.47  
         
         

9. STRATEGY EVALUATION AND CONTROL

9.1 Procedures

Performance measurement is the process whereby an organization establishes the

parameters within which programs, investments and acquisitions are reaching the desired

results.

Coca Cola links the mission and vision to its operations and functions in a very good

way. The whole performance is managed in a very well manner in order to get best out of it.

Managers and employees are highly involved in the system to take decisions which results in

employee loyalty.

Goals of the company are formulated at the higher level, than head of the departments

make their own goals accordingly, and then comes the unit office, then functional heads which

generate reports, in the end supervisors and employees also set their goals. All these

incomparable policies lead to the success of Coca cola globally.

After the goals and strategy has been formulated, performance is measured in

order to check the implementation of strategy and goals. Monthly review is done to check

the implementation results. During review periods no changes in the goals can be changed.

During the mid-year stage goals can be further refined or altered and new policies can be

designed to achieve the organizational level goals. At the final stage the performance is matched

with the standards and goals of the organization. If there are positive results with increase in

overall productivity, the individual performance of the employees is evaluated and the

rewards are then given on the basis of performance.

 9.2 Critical Success Factors

 Product quality and taste is a key success factor for Coca-Cola. These both attributes

are very important to get high customer base.

 Product diversity and innovation is one of the most important critical success factors

for Coca-Cola. Changing customer’s needs with time should be recognized by the

company in order to keep its customers satisfies.

 Market share and size of the firm is also a critical success factor. Due to the high

market share, Coca-Cola has been able to negotiate with large distributers and thus

making the product available in most of the regions. In order to remain competitive it’s

highly important for the company to maintain effective distribution channel.

 Company image leads to the brand loyalty which is very important for the success.

Brand loyalty in return increases the market share.

 Global expansion plays a very vital role in the company’s success. Brands that are

globally present are usually preferred by the customers.

9.3 Balanced Scorecard

For performance measurement at smaller units, balanced scorecard should be used:

Perspective Goal Measurement

Financial Firm financial growth in Annual sales growth

terms of profitability Net profitability

Reduce cost of production improvement

Customer Value creation, satisfaction, High market share, leading

support position globally

Consistent decrease in cost of

 sales
Internal Business Efficient production with Consistent decrease in cost of

waste production production, increased

Brand expansion productivity

Number of new markets

entered
Learning and growth Innovation New products and processes

Employee training and added in the company

satisfaction Reduced rate of employee

turnover

10. CONCLUSION

The Coca-Cola Company has a very rich history and spread over the world, the study in

this analysis especially the particular SPACE matrix tells us that Coca Cola Company should

pursue an aggressive strategy. 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. This includes focus on Water and Juices products, and

catering to health consciousness of people through introduction of different coke flavor and

maintaining basic coke flavor. 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

Fred R. David (2011). Strategic Management: Concepts and Cases. 13th edition. Francis Marion

University. Florence, South Carolina. Prentice Hall.

Gerry Johnson, Kevan Scholes (2011). Exploring Corporate Strategy: Text and Cases. 9th edition

Harlow. Prentice Hall.

Bazil, M. (2013). The Motley Fool. Coca-Cola Has a Prosperous 2013 Ahead of It. Available at

http://beta.fool.com/muhammadbazil/2013/01/04/coca-cola-has-prosperous-2013-ahead-

it/20272/?ticker=KO&source=eogyholnk0000001

The Coca-Cola Company (2013). Coca-Cola Journey. Available at http://www.coca-

colacompany.com
Valuation Academy. Porter’s Five Forces in Action: Sample Analysis of Coca-Cola. Accessed

on 02 October 2013. Available from http://valuationacademy.com/porters-five-forces-in-

action-sample-analysis-of-coca-cola/