Strategic Audit

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icDr. Sean D. Jasso

TA: Dandi Gong
BUS 109 – Competitive and Strategic Analysis
June 11, 2014

Strategic Audit Created by:

Created By: Francisco Rojas, Cesar Guzman, Carmen Martinez,

Brenda Arroyo, Emily Bromann, Olivia Snider, Michael Yuen,
Alejandra Nunez, Ali Raza, Yekta Pishnamaz, Marissa Tenorio,
JingJing Wang

 
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Table of Contents
CURRENT SITUATION…………………………………………………………………..5
HISTORY……………………………………………………………………………5
FIVE-YEAR FINANCIAL OVERVIEW……………………………………7
CURRENT PERFORMANCE………………………………………………………8
RATIO ANALYSIS…………………………………………………………..9
COMPETITOR COMPARISON………………………………………...….12
INDUSTRY COMPARISON………………...…………………………......13
MISSION………………………………………………….………………………..14
VISION……………………………………………………………..………………14
VALUES……………………………………………………..……………………..15
OBJECTIVES………………………………………………..……………………..15
STRATEGIC POSTURE……………………………………..…………………….18
CORPORATE STRATEGY…………………………..…………………….19
DIRECTIONAL………………………………………………………19
PORTFOLIO ANALYSIS……………………………………………21
PARENTING STRATEGY…………………………………………..24
COMPETITIVE STRATEGY……………………………………………….25
BUSINESS STRATEGY…………………………………………………….26
FUNCTIONAL STRATEGY………………………………………………..27
MARKETING STRATEGY…………………………………………27
OPERATIONS AND LOGISTICS STRATEGY……………………28
CORPORATE SUSTAINABILITY STRATEGY…………………...30
POLICIES……………………………………………………………………………30
WORKPLACE RIGHTS POLICY…………………………………………..31
SUPPLIER GUIDING PRINCIPLES………………………………………..31
GLOBAL MUTUAL RESPECT POLICY…………………………………..31
ALIGNMENT……………………………………………………………………….31

CORPORATE GOVERNANCE…………………………………………………………..33
BOARD OF DIRECTORS…………………………………………………………..33
TOP MANAGEMENT………………………………………………………………44

EXTERNAL ENVIRONMENT: OPPORTUNITIES AND THREATS (SWOT)……..55

NATURAL PHYSICAL ENVIRONMENT: SUSTAINABILITY ISSUES………..55
SOCIETAL ENVIRONMENT……………………………………………………..55
ECONOMIC………………………………………………………………..55
TECHNOLOGICAL……………………………….……………………….56
POLITICAL-LEGAL………………………………………………………57
SOCIO-CULTURE…………………………………………………………59
TASK ENVIRONMENT…………………………………………………………..60
THREAT OF NEW ENTRANTS………………………………………….60
BARGAINING POWER OF SUPPLIERS………………….……………..60
THREAT OF SUBSTITUTE PRODUCTS OR SERVICES………………61

 
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BARGAINING POWER OF BUYERS……………………………………61

RIVALRY AMONG EXISTING FIRMS………………...………………..61
THE 6TH FORCE………………………………………………………….62
EFAS TABLE………………………………………………………………………64

INTERNAL ENVIRONMENT: STRENGTHS AND WEAKNESSES (SWOT)……67

CORE COMPETENCIES………….……………………………………………….67
VIRO ANALYSIS………………….………………………………………………72
BUSINESS MODEL……………………………………………………………….73
VALUE CHAIN…………………………………………………………………....74
CORPORATE STRUCTURE………………...……………………………………79
CORPORATE CULTURE……………………..…………………………………..81
EMPLOYEE DIVERSITY…………….………………………………….82
COCA-COLA AND OTHER NATIONS…………………………………82
CORPORATE RESOURCE……………………..…………………………………83
MARKETING………………………….………………………………….83
MARKETING MIX……………………………………………….85
COMPANY TRENDS…………………………………………….87
ENVIRONMENTAL SUSTAINABILITY……………………….88
FINANCE…………………………………………………………………89
FINANCIAL TRENDS……………………………………………90
FINANCIAL STRATEGIC DECISIONS………....………………91
FINANCIAL COMPETITIVE ADVANTAGE…...………………92
GLOBAL FINANCIAL ISSUES………………….……………….94
THE STRATEGIC MANAGEMENT PROCESS…………………95
RESEARCH & DEVELOPMENT………………………………………..95
OPERATIONS AND LOGISTICS………………………....……………..97
HUMAN RESOURCE……………………………………...……………101
INFORMATION TECHNOLOGY ………………………..……………104
IFAS TABLE……………………………………………………....……………..108

ANALYSIS OF STRATEGIC FACTORS (SWOT)…………………………………...111

SITUATIONAL ANALYSIS (SFAS TABLE)……………………………………111
REVIEW OF MISSION AND OBJECTIVES…………………………………….113

STRATEGIC ALTERNATIVES AND RECOMMENDED STRATEGY…………..114

TOWS MATRIX……………………….…………………………………………114
STRATEGIC ALTERNATIVES…………………………………………………115
STABILITY STRATEGY…………………………………………....115
GROWTH STRATEGY…………………………………………...…117
RETRENCHMENT STRATEGY………………………………........119
RECOMMENDED STRATEGY…………………………………………………121
CORPORATE STRATEGY……………………………………………….121
BUSINESS STRATEGY…………………………………………………..122
FUNCTIONAL STRATEGY...……………………………………………122

 
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POLICIES………………………………………………………………….123

IMPLEMENTATION……………………………………………………………………125
IMPLEMENTATION PROGRAM………………………………………………..125
WHAT MUST BE DONE…………………………………………………………125
PROGRAMS ACTIVITIES……………………………………………125
ACTION STEPS……………………………………………………......125
WHO IMPLEMENTS STRATEGY………….………………...........…125
MATRIX OF CHANGE……………………..…………………………129
STRATEGY/FRAMEWORK MAP………………………………….......……......130

EVALUATION AND CONTROL………………………………………………………131

BALANCED SCORECARD……....……….………………………………………131
FINANCIAL………………………………………………………………..131
OBJECTIVES………………………………………….......……131
MEASURES…………………………………………….………131
TARGETS………....……………………………………………131
INITIATIVES……...……………………………………………131
CUSTOMER………………………………………………………………..134
OBJECTIVES…………………………………………………....134
MEASURES………….………………………………….........…134
TARGETS…………….……………………………………........134
INITIATIVES……………………………………………...........134
INTERNAL BUSINESS PROCESS……………………………………….138
OBJECTIVES…………..……………………………………......138
MEASURES……………..……………………………………....138
TARGETS………………..…………………………………...…138
INITIATIVES……………..………………………….................138
LEARNING AND GROWTH…………………………………………….141
OBJECTIVES………….……………………………………….141
MEASURES…………….……………………………………....141
TARGETS……………….…………………………………........141
INITIATIVES………….………………………………………..141

APPENDICES……………………………………………………………………………145
Appendix I…………………………………………………………………………145
Appendix II……………………………………………………..…………………147

REFERENCES…………………………………………………………………………..152
 
 

 
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CURRENT SITUATION

“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

History
Atlanta pharmacist John Pemberton invented Coca-Cola (also known as Coke) in 1886. (Biesada,

2014) The beverage was named after its two main ingredients coca leaves and kola nuts. By

1891 the Coca-Cola Company (Coca-Cola or The Company) was purchased by Asa Candler and

by 1895 the beverage was able all throughout the United States. Three years after it was

available in both Mexico and Canada. In 1960 Coca-Cola bought Minute Maid. (Biesada, 2014)

Additionally, Coca-Cola began launching its new drinks including Fanta, Sprite, TAB, and Diet

Coke.

In 1986 the Coca-Cola Company “consolidated the US bottling operations it owned into Coca-

Cola Enterprises and sold 51% of the new company to the public.” (Biesada, 2014) By 1995 the

value of the company had reached to $145 billion. In 2000 president and COO Douglas Daft was

named the new chairman and CEO of the company. At the same time the Company participated

in its largest cutbacks it has ever done. They eliminated five thousand jobs and paid one hundred

ninety three million dollars in a settlement for a race-discrimination suit that was filed by

 
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African-American workers. (Biesada, 2014) As of 2001, Coca-Cola’s brand portfolio had been

expanded upon to include teas, juices, and smoothies in addition to carbonated beverages.

In 2003 Coca-Cola experienced trouble in its overseas operations. There were accusations in

Indian that the bottles used by Coca-Cola contained “traces of DDT, malathion, and other

pesticides that exceeded government limits.” (Biesada, 2014) Even though they were cleared of

charges they still suffered a huge loss in profit. In the same year, in an attempt to relate to a

younger consumer audience Coca-Cola launched new marketing and ad campaigns. The

following year Coca-Cola introduced a lime diet coke.

Because of the growing trend to be healthier, fight obesity and have an active lifestyle Coca-Cola

created The Beverage Institute for Health & Wellness. (Biesada, 2014) The institutes served as a

beverage and research operation in order to create healthier alternatives. In addition to this

initiative Coca-Cola along with some of its competitors agreed to sell only water, unsweetened

juices, and low-fat milks to both public elementary and middle schools in the United States.

Furthermore, within high schools they were to sell “no sugary sodas and one-half of the offered

drinks to be water, diet sodas, lemonade and/or iced tea.” (Biesada, 2014)

Within February of 2008 Coca-Cola “acquired a 40% stake in the tea and organic beverage

company Honest Tea.” (Biesada, 2014) The following year Coca-Cola began to move the

“Classic” word on its products. They had added the classic term to their products after a new

coke formula had been used that did not do well. Instead they chose to put the phrase “Coke

classic original formula” on the product packing but it was no longer in a dominant location.

 
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“In 2010 it bought out the North American bottling and distribution business of Coca-Cola

Enterprises (CCE). The deal was valued at $12 billion (including nearly $9 billion in debt).”

(Biesada, 2014)

Five-Year Financial Overview

Five-Year Financial Overview of The Coca-Cola Co. (Biesada, 2014)

DEC. 2013 DEC. 2012 Dec. 2011 Dec. 2010 Dec. 2009

Revenue 46,854 48,017 46,542 35,119 30,990

Net Income 8,584 9,019 8,572 11,809 6,824

Net Profit Margin 18.32% 18.78% 18.42% 33.63% 22.02%

Stock Price 41.31 36.25 34.99 32.89 28.50
(FY Close)
Total Equity 33,440 33,168 31,921 31,317 25,346

Gross Profit 28,433 28,964 28,326 22,426 19,902

Advertising 3,266 3,342 3,256 2,917 2,791

Expenses

*Monetary values in millions

Every business no matter what their objective, mission or values are they have one thing in

common that being the desire to produce profits. After all the goal to produce profits is why a

business comes into existence. The Coca-Cola Company has been a growth company since it

became a public company in 1919. There is no doubt that the Coca-Cola Company is a powerful

Corporation. Even with the Financial Crisis of 2008 Coca-Cola has continued to grow. With the

exception of a 1 million drop in revenues from 2008 to 2009 the company has continued to grow,

even reaching $48 million in revenue in 2012 after 3 consecutive years of growth in sales (See

 
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Table). In addition the Company’s stock price has continued to grow reaching 41.31 by the end

of 2013. Of course not everything has remained a steady growth, if we look at table 1 we can see

that there has been a fluctuation in the Net Income. Within the last five years the highest net

income of $11, 809.00M was reached in 2010.

Current Performance
Coca-Cola Co. from a financial standpoint had a slight down year. Its Return on Investment went

from 17.12% in 2012 to 15.08% in 2013. Similarly, Its Net Profit went from $9,086,000,00 in

2012 to $8,626,000,000 in 2013. Nevertheless, even though it did not do as well as the previous

year it still had a relatively solid promising year, especially when you consider the 8.262 billion

dollars earned in net profit.

The Coca-Cola Company (NYSE: KO) is the world’s largest beverage company, refreshing

consumers with more than 500 sparkling and still brands. Our Company and bottling partners are

dedicated to our 2020 Vision, a roadmap for doubling system revenues this decade, focused on

five key areas—profit, people, portfolio, partners and planet.

Coca-Cola history began in 1886 when the curiosity of an Atlanta pharmacist, Dr. John S.

Pemberton, led him to create a distinctive tasting soft drink that could be sold at soda fountains.

He created a flavored syrup, took it to his neighborhood pharmacy, where it was mixed with

carbonated water and deemed “excellent” by those who sampled it. Dr. Pemberton’s partner and

bookkeeper, Frank M. Robinson, is credited with naming the beverage “Coca-Cola” as well as

designing the trademarked, distinct script, still used today. During the first year, sales averaged a

modest nine servings per day in Atlanta. Today, daily servings of Coca-Cola beverages are

 
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estimated at 1.9 billion globally. Coca-Cola products are sold in 200+ countries with 3,500+

products worldwide. (Coca-Cola Company)

Ratio Analysis

Ratio Analysis (As of 2013)

Coca-Cola PepsiCo Nestle Dr. Pepper

Snapple Group
Current Ratio 113% 124% 91% 109%

Gross Profit Margin 61% 53% 48% 58%

Return on Assets 9.53% 8.86% 8.12% 7.63%

Inventory Turnover 5.35 9.16 5.5 12.59

Debt To Equity (Leverage) 117% 140% 109% 113%

Price to Earnings Ratio 19.56 19.06 18.98 17.39

Coca Cola has recently split its stock in August of 2012, into two sections, one for The Coca

Cola Company and one for The Coca Cola Bottling Company. This split of stock obviously

brought the prices down, however over the last few years and financial quarters, Coca Cola has

experiences growth in it’s stock price. When the stock was split in August of 2012, the stock

price was $37.52, and now it has climbed up to about $41. The stock for The Coca Cola Bottling

company has also reached $76.30. Together, both of these stocks are worth over $110. Which is

more powerful and greater in monetary value of that of Coca Cola’s competitors. Investors can

expect growth in the share price of Coca Cola’s stock.

 
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Coca-Cola Profitability Ratios (Mergent Online, 2014)

Dec. 2013 Dec. 2012 Dec. 2011 Dec. 2010 Dec. 2009
ROA % (Net) 9.7 10.83 11.21 19.42 15.3

ROE % (Net) 26.03 27.92 27.37 42.32 30.15

ROI% (Operating) 15.08 17.12 17.72 18.55 24.78

EBITDA Margin % 26.78 26.32 26.55 42.25 29.99

Revenue per Employee 358,760 317,355 318,345 251,569 333,944

Calculated Tax Rate % 26.22 24.78 26.10 18.04 24.98

Coca-Cola Liquidity Ratios (Mergent Online, 2014)

Dec. 2013 Dec. 2012 Dec. 2011 Dec. 2010 Dec. 2009
Quick Ratio 0.9 0.77 0.78 0.85 0.95

Current Ratio 1.13 1.09 1.05 1.17 1.28

Net Current Assets % TA 3.88 2.91 1.52 4.21 7.87

Coca-Cola Debt Management (Mergent Online, 2014)

Dec. 2013 Dec. 2012 Dec. 2011 Dec. 2010 Dec. 2009
LT Debt to Equity 0.58 0.45 0.43 0.45 0.20

Total Debt to Equity 1.12 0.99 0.90 .76 0.48

Interest Coverage - - - 20.31 77.65

 
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Coca-Cola Asset Management (Mergent Online, 2014)

Dec. 2013 Dec. 2012 Dec. 2011 Dec. 2010 Dec. 2009
Total Asset Turnover 0.53 0.58 0.61 0.58 0.69

Receivables Turnover 9.73 9.89 9.96 8.58 9.05

Inventory Turnover 5.63 6 6.34 5.07 4.88

Accounts Payable Turnover 20.48 19.85 19.63 17.62 18.01

Accrued Expenses Turnover 6.48 6.99 6.76 5.82 6.24

Property Plant & Equip 3.18 3.26 3.14 2.89 3.47

Turnover

Cash & Equivalents Turnover 4.97 4.51 4.37 4.52 5.29

Within all of Coca-Cola’s financials we are able to see the steady increase or betterment. In other

words year after year they have continued to become more efficient as a result they produce

higher profits, while reducing cost and waste.

 
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Competitor Comparison

The table below allows us to see the Coca-Cola Company financial comparison with its top

competitors that include PepsiCo, Nestle, and Dr. Pepper Snapple Group. In annual sales it is

evident that both PepsiCo and Nestle have surpassed Coca-Cola. However the Gross Profit

Margin in Comparison to them far exceeds it. It is evident with comparison to its competitors

that the company still has the potential to grow and expand itself to produce more profits than the

rest.

Competitors’ Financial Comparison - As of 2013 (Biesada, 2014)

Coca- PepsiCo. Nestle Dr. Pepper Industry Market

Cola Snapple Median Median
Group

Annual Sales $46.85B $66.42B $103.73B $6.00B N/A N/A

Employees 130,600 274,000 333,000 19,000 N/A N/A

Market $181.85B $126.82B $233.90B $9.65 N/A N/A

Capitalization

Gross Profit 60.68% 52.96% 47.92% 58.33% 52.41% 33.48%

Margin

Return on 12.14% 11.53% 13.71% 10.46% 11.48% 7.33%

Invested Cap

The market segment that Coca-Cola operates within is highly competitive. There are numerous

companies all different sizes that have been established within various years. Additionally, many

of these companies including our main competitors operate within various geographic locations.

Products include soft drinks, juices, and waters and enhanced waters that are ready to drink.

Furthermore there are various products that contributed to how competitive they actually are.

These competitive factors consist of “pricing, advertising, sales promotion programs, product

 
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innovation, increased efficiency in production techniques, the introduction of new packaging,

new vending and dispensing equipment, and brand and trademark development and protection.”

(Annual Report, 2014)

Industry Comparison
Industry Comparison

Coca-Cola Industry Average

Return on equity 25.90% 24.00%

Dividend yield 3.20% 2.8%

Profit margin 18.32% 11.80%

The industry average of the Beverage-Soft Drink industry provides us with a benchmark to

further analyze how Coca-Cola is performing. Looking at Coca-Cola's key statistics and the Soft

Drink Beverage industry average values, we can see that Coca-Cola is slightly outperforming the

industry average in different areas. Coca-Cola's return on equity is almost 2% greater than the

industry average meaning more of its profit is derived from shareholder investments than that of

the industry average. Coca-Cola’s dividend yield is 0.40% higher than the industry average

meaning it pays out more in dividends than other soft drink companies which is attractive to

potential shareholders. Most importantly, Coca-Cola’s profit margin is greater than the average

by 6.52% meaning Coca-Cola keeps about $0.06 more than the average soft drink company for

every dollar of its sales.

 
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Mission
As stated within our company corporate website our mission is to:

To refresh the world...

To inspire moments of optimism and happiness...

To create value and make a difference.

Coca Cola is in the carbonated beverage industry through refreshing the world by “bringing a

portfolio of beverages that anticipate and satisfy people’s desires and needs.” Coca Colas

mission is to refresh the world in mind body and spirit, to inspire moments of optimism through

their brands and actions and to create value and make a difference everywhere they engage.

Through their seven core values: leadership, passion, integrity, accountability, collaboration,

innovation and quality they have served their customers for over one hundred years which in turn

has greatly contributed to customer loyalty to the Coca Cola brand.

Vision

The vision of the company defines the pillars that allow Coca-Cola to reach their 2020 Vision.

They include:

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 and 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.

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

responsibilities.

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

Values
Coca-Cola’s values serve as the guidelines to their actions and how they behave in the world.

They include seven different values.

Leadership: The courage to shape a better future

Collaboration: Leverage collective genius

Integrity: Be real

Accountability: If it is to be, it’s up to me

Passion: Committed in heart and mind

Diversity: As inclusive as our brands

Quality: What we do, we do well

Objectives

Corporate Objectives

In the statement from the company’s annual review, CEO, Muhtar Kent, addressed the 6 P's in

order for Coca Cola to complete their 2020 vision. 1. Profit. Mr. Kent discussed how the

company increased volume by four percent with their sparkling beverages growing three percent

and their still portfolio going up ten percent. Coca Cola also generated record net operating

revenues of more than $48 billion and operating income of nearly $11 billion. Over the first three

years of the 2020 vision, Coca Cola has increased daily servings by more than 200 million, lifted

their global volume and value share to the highest level since 2003 and added more than $30

billion to The Coca Cola Company’s market capitalization. 2. People. Coca Cola wants to

 
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continue making a difference in our communities by volunteering to support worthy causes. In

the past, they reached out to help people in the wake of devastating natural disasters, such as the

flood that occurred in Pakistan and Hurricane Sandy destroying the Eastern Coast of the United

States. 3. Portfolio. To continue studying all opportunities - country by country and category by

category - so that Coca Cola can continue to introduce new products and brands in the following

years. 4. Partners. Coca Cola aims to continue helping the 23 million retail customers sell more

beverages, generate more traffic and revenue and provide for their employees and communities

each week. The company also continues to roll out revolutionary Coca Cola Freestyle fountain

dispensers that have over a hundred beverage options. 5. Planet. Their 2020 goal for the planet is

to bring water neutrality with their community water projects by 2020. The company has

partnered with Dean Kamen, who invented a purification system for communities in need of safe

drinking water, and after successful tests in 2012, they are planning on bringing the technology

to communities in South Africa and two Latin American Countries. The company wants to

continue in reducing their petroleum usage with recyclable plastic bottles that are 30% made up

of plants. Coca Cola also aims to continue improving the distribution of critical medicines in

impoverished countries of Africa, such as Ghana and Mozambique. 6. Productivity. Coca Cola

announced a new organizational structure of three operating businesses: Coca Cola Americas,

Coca Cola International and Bottling Investments Groups in 2012. The Company has also

launched a productivity and reinvestment program to create $550 million to $650 million in

annual savings by the year 2015. By freeing up resources through supply chain optimization,

improved marketing effectiveness, operational excellence and systems standardization, Coca

Cola can invest more in innovation, marketing and additional “feet on the street” to drive their

growth. (MarketLine, 2014)

 
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Business Objectives

Coca Cola’s business has four main business objectives that include keeping their focus on the

market, working smart, acting like owners and being the brand. In order to keep focus on the

market, they look towards the needs of the consumers, customers and the franchise partners.

They do this by going out into the markets to observe and learn the different behaviors and

feelings towards the products that the people have. For this they possess a world view of the

market. They also keep their focus towards execution in the marketplace on a daily basis. In

order to work smart, Coca Cola directs its employees to act with urgency, remain responsive to

change, have the courage to change course when needed, remain constructively discontent and

work efficiently. The company influences its employees to act like owners by making them

accountable for their actions and inactions, stewarding the assets of the system and focusing on

building value, rewarding their people for taking risks and finding better ways to solve problems

and by learning from their outcomes in the sense of what worked for them and what didn’t.

Lastly, Coca Cola asks its employees to be the brand by inspiring creativity, passion, optimism

and fun. (The Coca Cola Company: Mission, Vision, & Values.)

Functional Objectives

Over the last few years, the demand for more functionality from their food and beverage

products by the consumers has been on a very high rise. The new health-conscious consumers

increasingly favor foods that claim to reduce cholesterol or drinks that claim to boost more

energy or rejuvenate. Health has become a major issue and subject that concerns many

consumers in today’s world. There is a very high influence of “working out” and getting fit and

in shape. People are starting to become more aware of what they consume and the way that their

bodies look. like. While some products, like juices and water are perceived to be naturally

 
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healthier choices than sparkling beverages, beverage manufacturers are also offering newer

beverages formulated for specific benefits beyond hydration, such as sports and energy drinks.

Coca Cola is making their presence felt in the newly emerging functional beverage market space

by catering to the energy drink consumers. They offer an energy drink that is sold in Vietnam,

which is fortified with six essential B vitamins named Samurai. For drinkers that are involved in

physical activities, Coca Cola offers Aquana, which helps drinkers regain normal hydration

levels after they have gotten active. The more popular energy and sports drink of Coca-Cola in

the United States is PowerAde, and it is scientifically formulated with ION4 Advanced

Electrolyte System, which helps replenish sodium, potassium, calcium and magnesium. The

company believes that increasing the demand for functional beverages is bound to help the

company to boost the sales of its energy and sports drinks categories. (MarketLine Company

Profile, 2014).

The Corporate, Business and Functional Objectives are indeed consistent with one and another.

This is because they build off of each other as well as the mission. They address each part of the

mission of the Company. These objectives are focused towards the Company and its benefits as

well as the community and the customers’ benefits.

Strategic Posture

Our product portfolio strategy has three priorities:

1. Developing our portfolio - introducing new products to offer greater choice, ensuring products

of the highest quality, accelerating the growth of no- and low- calorie products, using more

natural ingredients where possible and providing package sizes to suit every occasion.

 
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2. Providing clear, informative nutritional labeling to educate consumers about the ingredients

and calories in our products.

3. Ensuring that our products are sold and marketed in a responsible way - engaging with parents,

nutritionists and educators to ensure the right portfolio of school beverages. We will provide a

wide variety of quality, refreshing beverages with nutritional and ingredient information so

consumers can make informed beverage choices.

The mission, objectives, strategies and policies are all clearly stated on the Coca-Cola Website.

This is important for consumer-corporation relationship because everything the company strives

for is explicitly stated, making it easier for the consumers to see what they stand for.

Corporate Strategy

Ø Directional

Coca-Cola employs a growth corporate strategy. Because Coca-Cola is a multi-national company,

Coke, as a brand, has multiple corporate strategies. The blanketing corporate strategy is that of

“The Coca-Cola Company” which entails the brands current global directional strategy. Beneath

that are its national and regional strategies, such as that of Coca-Cola Refreshments (formerly

Coca-Cola Enterprises), which charts the brand’s North American strategy. At this time, Coca-

Cola’s global corporate strategy revolves around its “2020 Vision” which set goals that Coca-

Cola wishes to meet or exceed by the year 2020. At this time, Coca-Cola is focusing on 6 P’s:

Profit, People, Portfolio, Partners, Planet, and Productivity. In addition “Coca-Cola’s Strategy is

to utilize its brands, distribution system, and financial strength to achieve long-term sustainable

growth.” (Kwon, 2008, pg. 29)

 
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Profit: Coca-Cola wishes to double its revenue by 2020 by creating economies of scale,

increasing investments, and cutting production costs without sacrificing product quality.

People: Coca-Cola seeks to create a better, improved workplace. By 2020, they want to employ

a significantly larger amount of women and increase diversity. Coke also wants to make its

workers more knowledgeable about the brand and become ambassadors for Coke. In addition,

Coke wants to ramp up its marketing efforts and perpetuate Coca-Cola’s dominance in the

beverage market by attracting the next generation of consumers.

Portfolio: Coke aims to increase the value of their portfolio by acquiring brands, catering to the

tastes of customers, pushing innovation, continuing to ensure the upstanding quality of Coke

products, and working closely with Coke’s bottlers.

Partners: Ensure that both The Coca-Cola Company and its individual bottlers are on the same

page regarding corporate goals and strategies. Cater to differences in regional and cultural tastes

and satisfy those demands.

Planet: Coke seeks to give itself a competitive edge through environmental responsibility by

using only sustainable water sources and by reducing climate change by changing packaging

operations.

 
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Productivity: Coca-Cola wants to increase productivity by increasing efficiency and decreasing

waste. To do this, Coke wants to streamline production and support processes. Coke also wants

to decrease its production costs to create a competitive cost advantage. (The Coca-Cola

Company)

Ø Portfolio Analysis

Coca-Cola is a privately owned company and uses three categories to define their product

portfolio (The Coca-Cola Company Reports, 2014). The three categories of Coca-Cola is the

concentrate, sparkling beverages, and still beverages (The Coca-Cola Company Reports, 2014).

Coca-Cola does not release sales or profits for each category or even each beverage. Coca-Cola

beverage was introduced in 1885, and the company did not expand into other products until the

1960’s (The Chronicle of Coca-Cola, 2013). In 1960 Fanta was introduced in Germany, Sprite

in 1961, and TAB in 1963 (The Chronicle of Coca-Cola, 2013). In 1960 Coca-Cola merged with

Minute Maid (The Chronicle of Coca-Cola, 2013). Coca-Cola sells hundred of different

beverages around the world, and even change the recipe to taste preferences of different regions

it is selling in.

Concentrate is made and sent to all the bottling companies for soda formulas. Coca-Cola does

not report sales of the soda concentrate, nor any information on them. Coca-Cola defines

 
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sparkling beverages as beverages with carbonation, energy drinks, carbonated water, as well as

flavored waters. Coca-Cola’s biggest seller is Coca-Cola itself and is ranked as the highest

selling sparkling beverage worldwide (Coca-Cola product description, 2013). Some other of

Coca-Cola’s sparkling beverages include: Fanta, Sprite, Diet and Light versions of Coca-Cola,

and vitamin water. Sparkling beverages fell by 1% this last quarter (Forbes, 2014). Coca-Cola

is the number one provider in the world of sparkling beverages. The public’s trend away from

sparkling beverages has hurt all companies who sell the beverages.

Coca-Cola still beverages are defined as nonalcoholic without carbonation including

noncarbonated water, flavor/enhanced water, juice and juice drinks, teas, coffees, sports drinks,

and noncarbonated energy drinks. Still beverages include Dasani, Minute Maid, PowerAde,

Honest Tea, and Fuse Tea. Healthier beverages are on the rise for Coca-Cola including their

Tea’s by 4%. Minute Maid just recently rose to the top selling juice drink in America (Forbes,

2014). Still beverages rose 8% this last year helping to offset the loss for sparkling beverages

(Forbes, 2014).

 
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Coca-Cola sells thousands of different drinks around the globe. The BCG Growth-Share Matrix

provided is based upon American products and preferences.

Question Marks are defined as new products with the potential for success, but they need a lot

of cash for development (Wheelen, 2012). Coca-Cola’s question marks would be energy drinks

such as NOS and Burn to outrank popular Monster and Red bull drinks that take up the brand

market.

Stars are market leaders that are typically at the peak of their product life cycle and are able to

generate enough cash to maintain their high share of the market and usually contribute to the

company’s profits (Wheelen and Hunger, 2012). Coca-Cola’s top ranking drinks despite the

growing change in consumer preference is Coca-Cola, Sprite, Diet Coke, and Fanta. Due to

 
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consumer preferences changing, Coca-Cola tea brands, waters, and fruit juices have been getting

larger volume sales.

Cash Cows bring in far more money than is needed to maintain their market share (Wheelen and

Hunger, 2012). Coca-Cola’s cash cows are its water brands due to the acceptable high markup

price.

Dogs have low market share and do not have the potential to bring in much cash (Wheelen and

Hunger, 2012). Dogs are Tab, Hi-C, and copycat sodas from other companies. These copycat

sodas include Pibb Xtra, Mellow Yellow, and Fresca.

Ø Parenting Strategy

The core operation of the Coca-Cola consists of the secret concentrate and syrup production.

Since the Coca-Cola is well known as the world’s most recognizable and iconic brand of

carbonated beverage, the Coca-Cola implements the corporate parent as its business strategy due

to the large demand around the globe. The Coca-Cola FEMSA is the biggest franchise bottler of

the Coca-Cola beverages, which has major operations in the South America Continent. (Coca-

Cola FEMSA, 2014) Though Coca-Cola owns the biggest market share of beverage drinks, the

invasion of Pepsi-Cola has been battling with Coca-Cola to compete with the gain of market

share. Thus, The relationship is critical for the Coca-Cola and its bottler company Coca-Cola

FEMSA. The Coca-Cola FEMSA joints with Coca-Cola to develop more sophisticated business

models and has consistent with the company’s competitive strategy in order to making effective

advertising and marketing plan to extend product line. Moreover, as a parenting company, the

 
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Coca-Cola FEMSA has a shared value with the Coca-Cola, that is, seeking for growth

opportunities especially in the South America Continent. As a result, the major objective of a

corporate parenting of Coca-Cola is to expand the beverage portfolio by product innovation and

business acquisition overall. (Coca-Cola FEMSA, 2014)

Competitive Strategy

The Coca-Cola Company (Coca-Cola or the Company) implements differentiation competitive

strategy company in reference to its brand strategy. It is seen through the corporation’s

competitive advantage being our strong brand portfolio. Coca-Cola has done one thing and done

it well. It has produced a classic carbonated beverage that has allowed it to obtain loyal

consumers due to the heritage the company represents. Coca-Cola has combined its marketing

and manufacturing efforts in order for it to have the ability to modify any of its products due to

changes in the markets or volume demand. In order to maintain distinguishable with the identity

of their brand products Coca-Cola has invested into their packaging, distribution and advertising

sectors. Coca-Cola does indeed provide the same product to in all the world markets, and even

though top management doesn't allow consumer’s taste and preferences alter the taste of the

product they do let local market forced influence not only credit terms but also distribution and

promotional policies. In addition we have stated that Coca-Cola has a strong brand strategy.

Coca-Cola is a prime example of a successful company that possesses a strong manufacturer

brand. Coca-Cola has time over time demonstrated its ability within the global markets. It has

been successful by being able to think globally and act locally. It has been able to implement

sales promotion, distribution and customer service at a local level. In addition it has become a

billion dollar brand within six markets outside of the United States including Brazil, Germany,

Great Britain, Japan, Mexico, and Spain allowing the Company to enjoy a strong brand equity

 
 Page | 26
   

over many decades. (Fu-Ling, 2009, Pg. 131) Because of Coca-Cola’s strong brand equity it is

able to enjoy a high level of consumer brand awareness and loyalty. Which gives Coca-Cola the

opportunity to extend its existing product lines.

Cooperative Business Strategy

During its lifetime, The Coca-Cola Company has made many different partnerships with

different companies. All collaborations have been done with different intentions: to benefit the

community, to help another company, or simply for greater good of Coca-Cola. Recently, Coca-

Cola joined alliance with InterContinental Hotels Group. They are known as the world’s leading

hotel company who is currently looking to better their customers stay. The ultimate goal for

InterContinental Hotels Group is to make their hotel brands customers preferred choice for guest

and hotel owners. Both companies, Coca-Cola and InterContinental Hotels Group, have a strong

portfolio “of favorite consumer brands that are instantly recognized and preferred around the

world”. The agreement between these two companies provides consistent beverage brand

experience to all of 3,200 hotels across the country.

Bruce McDonald, Vice President of Coca-Cola, comments on this agreement by stating, “this

enhanced relationship shows the strength of two Atlanta-based companies coming together to

create an experience that brings the enjoyment of the Coca-Cola brands to IHG’s guests at more

than 3,200 hotels across the country … We look forward to leveraging our join sustainability

activities and marketing programs to inspire and refresh our guests through unique, value-added

programs”.

 
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Functional Strategy

Ø Marketing Strategy

Coca-Cola has an integrating marketing communication strategy. It integrates and coordinates

many of its communication channels. For example its mass media advertising, personal selling,

sales promotion, public relations and direct marketing strategy are all integrated in order to

deliver “a clear, consistent and compelling message about their brands and its products.” (Fu-

Ling, 2009, Pg. 131) In addition thanks to the integrated strategy they use they are able to

“produce better communications consistency and greater sales impact.” (Fu-Ling, 2009, Pg. 131)

Coca-Cola’s marketing techniques have been very effective in attracting and engaging current

and new consumers. Some of their marketing techniques have come through innovative vending

machines. The company has called their objectives to be dispensing both their products and

dispensing happiness. The company has used technology and out of the box creativity to allow

their consumers to interact with their consumers. The following are examples of how they have

dispensed happiness.

In 2010 within a New York college campus a Coca-Cola vending machine gave out “doses” of

happiness. It dispensed a several products from fresh flowers to pizza. Within South Korea a

Coca-Cola vending machine required individuals to copy dance moves from the band 2PM, the

more moves they got correct the more beverages they dispensed. At the National University of

Singapore a vending machine was programmed to dispense a Coke when someone gave the

actual vending machine a hug. On Valentines Day in 2012 a vending machine in Istanbul,

Turkey gave couples that kissed or hugged free Coca-Cola drinks. Furthermore, within another

 
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college campus a vending machine forced students to have to work with someone else in order to

take the lids of their bottle drinks.

Ø Operations and Logistics Strategy

Instead of owning its operations in terms of bottling, Coca-Cola has chosen to form

arrangements or acquiring stakes in bottler companies around the world in order to deliver the

mass volume of products that is demanded of them. Because of its global brand and its secret

formula for its carbonated beverages it has been able to establish “profit power, and points of

leverage.” (De Kuijper, 2010, Pg. 2) Coca-Cola and its bottler’s partnership result in mutual

benefits. Coca-Cola supplies its bottlers with its syrup and gives them rights to their world-

famous name in exchange for it “the bottlers buy the filling equipment and enormous quantities

of glass and plastic bottles, manage workers ranging from plant employees to truck drivers,

negotiate with unions, develop relationships with retailers, and handle local government.” (De

Kuijper, 2010, Pg. 2) As a result the bottlers take on the largest percentage of risk and capital

expenditure but with Coca-Cola’s returns on invested capital they produce a multiple of the

bottlers’ returns.

Coca-Cola has continued to increase in its variety of products. Because of the different selling

methods of Coca-Cola products such as stores and vending machines, Coca-Cola has segmented

their consumers to better cater to consumer preferences. They have been able to determine what

product sells more and during what time does the next shipment needs to be delivered. In

addition the drivers of certain countries go beyond their traditional roles. Take for example in

Japan many of the drivers help supermarkets by stocking Coca-Cola products on the shelves,

 
 Page | 29
   

setting them up in an attractive fashion and even setting up displays to advertise the products.

(Fuller, 1993, Pg. 87)

Coca-Cola sells its concentrates and syrups to their bottling partners. They then are responsible

for manufacture and packaging the finished products, which are then sold to distributors and

other customers. Within foreign markets Coca-Cola sells its concentrates for its fountain

beverages to bottling partners who are authorized to manufacture their products. (Annual Report,

2014, Pg. 5)

The five largest independent bottling partners that Coca-Cola works in conjunction with includes:

(Annual Report, 2014, Pg. 5)

• Coca-Cola FEMSA: which has bottling and distribution operations in a substantial part of

central Mexico, Brazil, Guatemala, most of Colombia; all of Costa Rica, Nicaragua, Panama and

Venezuela, Argentina and all of the Philippines.

• Coca-Cola HBC AG: which has bottling and distribution operations in Armenia, Austria,

Belarus, Bosnia-Herzegovina, Bulgaria, Croatia, Cyprus, the Czech Republic, Estonia, the

Former Yugoslav Republic of Macedonia, Greece, Hungary, Italy, Latvia, Lithuania, Moldova,

Montenegro, Nigeria, Northern Ireland, Poland, Republic of Ireland, Romania, Russia, Serbia,

Slovakia, Slovenia, Switzerland and Ukraine

• Arca Continental, S.A.B. de C.V.: which has bottling and distribution operations in northern

and western Mexico, Ecuador and northern Argentina.

• New CCE: which has bottling and distribution operations in Belgium, continental France,

Great Britain, Luxembourg, Monaco, the Netherlands, Norway and Sweden; and

 
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• Swire Beverages: which has bottling and distribution operations in Hong Kong, Taiwan, seven

provinces in mainland China and territories in 11 states in the western United States.

Ø Corporate Sustainability Strategy

“Coca-Cola sees its sustainability efforts first and foremost as the right thing to do, a

continuation of responsible corporate citizenship that began 125 years ago.” (Madhavan, 2012,

Pg. 94) Coca-Cola is present in more than 200 countries and in thousand of communities which

gives them the opportunity to make a real difference in communities. Corporate Social

Responsibility (CSR) as a result is embedded within the pillars needed to reach Coca-Cola’s

2020 Vision. The pillars being the 6 P’s, CSR being seen through Planet component. Coca-

Cola’s corporate sustainability strategy as a result includes various elements including: Beverage

Benefits, Active healthy living programs, Energy efficiency and climate protection, sustainability

packaging, water stewardship, and workplace rights. Water Stewardship is one of the biggest

focuses. Coca-Cola wants to be able to safely return to nature and equivalent volume of Water

that has been used in their beverages.

Policies

Workplace Rights Policy

This policy closely parallels the International Human Rights Standards. It includes the following

components: freedom of unionization, prohibition of forced labor, prohibition of child labor,

prohibition of discrimination, establishment of safe working conditions, workplace security

(intolerance of violence and harassment), "fostering of goodwill in communities" through

recognition of environmental impact.

 
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Supplier Guiding Principles

Similar to the Workplace Rights Policy but tailored to suppliers through addition of components.

Coca-Cola wants to extend its values onto its suppliers as they explicitly address to them their

belief that “shared values must serve as the foundation for relationships between the Coca-Cola

Company and its suppliers.” The added components specific to suppliers are business integrity

and management systems. Business integrity details how suppliers must uphold the highest

integrity through avoidance of fraudulent activities and any other unethical behavior.

Additionally, management systems state how suppliers must implement systems to ensure lawful

compliance within their employees.

Global Mutual Respect Policy

The global mutual respect policy lays out employee guidelines for communications in work

operations. It explicitly states the values of "diversity and inclusion" as core factors within the

business. It notifies employees of their responsibility to maintain a safe environment while

reporting any witnessed deviance to the policy with the statement that “It is every employee’s

responsibility to maintain a work environment that reflects mutual respect and is free from all

discrimination and harassment.”

Alignment

Coca-Cola’s current outreach of its distribution network and brand image into international

markets has been for the most part a successful and triumphant venture of marketing,

philanthropy, and distribution sustainability. The Coca-Cola brand sets its mission and goals with

everyone individual in the world, the company’s transparency and values clearly reflect a

company that has the potential to sustain a successful worldwide brand for years to come. A

 
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clear representation of Coca-Cola’s traditional values was in their 2014 Super Bowl commercial,

which included individuals of nations all around the world singing the “America The Beautiful”

song. Although, this commercial is a clear indicator of Coca-Cola’s mission and values, the

question is to what extent do international consumers feel that they have a passion for the brand

and its values.

This is where Coca-Cola’s objectives and goals toward attracting new market segments comes

into play. Coca-Cola has a 2020 vision which includes profit, people, portfolio, partners, planet,

and productivity. This is an overall strive to perform and grow at a greater level than ever before

for each of these segments.

The Spanish carbonated market has experienced overall decline, in both value and volume in

2012. This however, is expected to recover and grow at a slow rate over the forecast period to

2016. Coca-Cola is the leading player in the Spanish and European soft drinks market.

Consumers in this market are likely to be strongly influenced by the Coca-Cola brand because it

is mainly a tourist market, and this weakens buyer power, as retailers are forced to stock popular

brands with consumers.

One of Coca-Cola’s strategies is to sustain a tourist market in popular international markets by

distributing its products to retailers. Coca-Cola has successfully been able to align this strategy in

international markets because competitors do not have as much investment in tourist markets and

Coca-Cola is able to increase revenues simply by distributing in popular markets.

 
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CORPORATE GOVERNANCE

Board of Directors

Muhtar Kent
Chairman of the Board and CEO of The Coca-Cola Company |
B.S. from University of Hull | M.S. from City University,
London | Joined Coca-Cola in 1978
In 1985, Kent was made General Manager of Coca-Cola Turkey

and Central Asia. Additionally he served as President of the East

Central Europe Division and Senior Vice President of Coca-Cola

International. He was the President and Chief Operating Officer at

from 2006 to 2008. In 2009 he became the Chairman of the Board Chief Executive officer since

2008. Furthermore Kent is active in the global community. He is also a co-chair of the Consumer

Goods Forum, a fellow of the Foreign Policy Association, and a member of the Business

 
 Page | 34
   

Roundtable. Mr. Kent also serves on the boards of Special Olympics International, Ronald

McDonalds House Charities, Catalyst and Emory University.

Herbert A Allen
Director of Coca Cola Company/ President and Chief
Executive Officer of Allen & Company Incorporated
External Member
Mr. Allen graduated from Williams College in 1962 and

immediately joined Allen and Company. He has been a Director at

Coca-Cola since 1982. He serves as the President, Chief Executive

Officer and a Director at Allen & Company, a privately held investment firm. He was a Director

at Convera Corporation from 2000 to 2010.

Ronald W. Allen
Director of the Coca Cola Company | Chairmen of the Board |
President Chief Executive Officer of Aarons Inc. |
External Member
Ronald W. Allen earned his bachelor’s degree in 1964 at the

Georgia Institute of Technology. Mr. Allen has been a Director of

The Coca-Cola Company since 1991. He retired as the Chairman

of the Board, President and Chief Executive Officer of Delta Air Lines in July 1997. From July

1997 through July 2005, Mr. Allen was a consultant to and Advisory Director of Delta. In

November 2012, Mr. Allen was appointed Chairman of the Board of Aaron’s, Inc., where he has

served as a Director since 1997. Mr. Allen served as President and Chief Executive Officer of

Aaron’s, Inc. since February 2012 and as interim President and Chief Executive Officer of

Aaron’s, Inc. from November 2011 until February 2012. He previously served as a Director of

 
 Page | 35
   

Interstate Hotels & Resorts, Inc. from 2006 to 2010, Forward Air Corporation from 2011 to 2013

and Guided Therapeutics Inc. from 2008 to January 31, 2014. He is also a Director of Aircastle

Limited.

Ana Botin
Director of the Coca Cola Company | Chief Executive Officer
and Director of Santander UK PLC | External Member
Ms. Botín has been a director of The Coca-Cola Company since

July 18, 2013. She received her bachelors degree from Bryn

Mawr College in 1981 and continued her education at Harvard

Business School focusing on banking and finance. She started her

career with JP Morgan in New York in 1981 and continuously

moved up. In 1988 she joined Banco Santander, S.A., a global, multinational bank, where she

established and led its international corporate banking business in Latin America in the 1990’s

where she is now a leading financial services provider and Chief Executive Officer and Director

of Santander UK since 2010. Ms. Botín served as Executive Chairman of Banco Español de

Crédito, S.A., also a subsidiary of Banco Santander, S.A., from 2002 to 2010. She previously

served as a director of Assicurazioni Generali S.p.A., a global insurance company based in Italy,

from 2004 to 2011. She is a Director of Banco Santander, S.A.

Howard G. Buffett
Director of Coca Cola Company | President of Buffett
Farms and Howard G. Buffett Foundation | External
Howard G. Buffett has been a Director of The Coca-Cola

Company since 2010. Along with working with Coca-Cola, Mr.

Buffett is President of Buffett Farms where he has held this

 
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position since 1986 Corporations well as serving on the Corporate Boards of Berkshire

Hathaway, Inc., working with Lindsay Corporation, and Sloan Implement. Mr. Buffett is

Chairman and Chief Executive Officer of the Howard G. Buffett Foundation, a charitable

foundation that supports initiatives focused on food and water security, conservation and conflict

management, and has held these positions since December 2013. He previously served as

President of the Howard G. Buffett Foundation from 1999 to December 2013. Mr. Buffett travels

different countries in hopes of overcoming the challenges to preserve our biodiversity and meet

the needs of our growing global population. Howard G. Buffett bring a lot to the table and has

served on numerous boards as well as numerous non-profit boards.

Richard M. Daley
Director of The Coca Cola Company | Managing Principal of
Turk Partners LLC | External Member
Richard M. Daley has been a Director of The Coca-Cola Company

since 2011. Mr. Daley served as Mayor of Chicago for six terms

from 1989 to 2011. Daley received his bachelors degree from

Providence College in Rhode Island and earned a Juris Doctors

degree from DePaul University. Along with being a Director of Coca-Cola, Daley is the Mr.

Daley is the Executive Chairman of Tur Partners LLC since 2011. This position helps him bring

background knowledge in an investment and advisory firm focusing on sustainable solutions

within the urban environment. He is also an Of Counsel at Katten Muchin Rosenman LLP since

June 2011. In October 2011, he was appointed a senior advisor to JPMorgan Chase & Co., where

he chairs the “Global Cities Initiative,” a joint project of JPMorgan Chase & Co. and the

Brookings Institution to help cities identify and leverage their greatest economic development

 
 Page | 37
   

resources. Mr. Daley also has been a distinguished senior fellow at the University of Chicago

Harris School of Public Policy since May 2011. He is also a Director of Diamond Resorts

International, Inc. Mr. Daley’s background, skills, and connections make him an important

member of the board.

Barry Diller
Director of The Coca Cola Company | Chairmen of the
Board and Senior Executive IAC/Inter Active Corp
Expedia, Inc. | External Member
Barry Diller has been a Director of The Coca-Cola

Company since 2002. Although one may not think from

dropping out of UCLA after one semester that Mr. Diller

would become such a successful man, he is also Chairman of the Board and Senior Executive of

IAC/InterActiveCorp. Mr. Diller held the positions of Chairman of the Board and Chief

Executive Officer of IAC/InterActiveCorp and its predecessors since August 1995 and ceased

serving as Chief Executive Officer in December 2010. Mr. Diller is also Chairman of the Board

and Senior Executive of Expedia, Inc. Mr. Diller has served as Special Advisor to TripAdvisor,

Inc., an online travel company, since April 2013 and served as its Chairman of the Board and

Senior Executive from December 2011, when it was spun off from Expedia, Inc., until December

2012, and was a member of its Board until April 2013. Mr. Diller served as the non-executive

Chairman of the Board of Ticketmaster Entertainment, Inc. from 2008 to 2010, when it merged

with Live Nation, Inc. to form Live Nation Entertainment, Inc. Mr. Diller served as the non-

executive Chairman of the Board of Live Nation Entertainment, Inc. from January 2010 to

October 2010 and was a member of its Board until January 2011. Mr. Diller also is a Director of

Graham Holdings Company (formerly The Washington Post Company). MR. Diller is a media

 
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executive and helps the Coca-Cola Company with search, applications, media, ecommerce, and

more.

Helene D. Gayle
Chairman on The Coca Cola Company | President and Chief
Executive Officer CARE USA | External Member
Dr. Gayle has been a director of The Coca-Cola Company since

April 24, 2013. Dr. Gayle, M.D. and M.P.H., has been President

and Chief Executive Officer of CARE USA since 2006. CARE is

a humanitarian aid organization that helps fight global poverty.

Before CARE Gayle served as program director in the Global

Health Program at the Bill & Melinda Gates Foundation and the Center for Disease Control and

Prevention focusing on HIV/AIDS where she was for 20 years. She is also a Director of Colgate-

Palmolive Company. She received her B.A. from Barnard College, M.D. from the University of

Pennsylvania, and her M.P.H. from John Hopkins University.

Evan G. Greenberg
Director of The Coca Cola Company | Chairman and
President and Chief Executive Officer ACE Limited |
External Member
Evan G. Greenberg has been a Director of The Coca-Cola

Company since 2011. Mr. Greenberg is the Chairman and Chief

Executive Officer of ACE Limited, and served as President and

Chief Operating Officer of ACE Limited from June 2003 to May

2004, when he was elected to the position of President and Chief Executive Officer Prior to

 
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joining the ACE Group in 2001, Mr. Greenberg held a number of senior management positions

at American International Group, Inc., most recently serving as President and Chief Operating

Officer from 1997 until 2000. Over the years, Mr. Greenberg has worked in the insurance

industry and has had numerous amounts of underwriting and management positions, gaining him

significant insight in the global property, casualty and life insurance sectors.

Alexis M. Herman
Director of The Coca Cola Company | Chair and Chief
Executive Officer New Ventures, LLC | External Member
Alexis Herman has been a Director of The Coca-Cola

Company since 2007. She received her education from Xavier

University of Louisiana, Spring Hill College, and Edgewood

College. She has been secretary of labor and has served under President Bill Clinton. Ms.

Herman is the Chair and Chief Executive Officer of New Ventures LLC, a corporate consulting

company, and has held these positions since 2001. She served as Chair of the Business Advisory

Board of Sodexo, Inc., an integrated food and facilities management services company, through

2013 and serves as a member of Toyota Motor Corporation's Global Advisory Board. As chair of

the Company's Human Resources Task Force from 2001 to 2006, Ms. Herman worked with the

Company to identify ways to improve its human resources policies and practices following the

November 2000 settlement of an employment lawsuit. She is also a Director of Cummins Inc.,

Entergy Corporation and MGM Resorts International. From working with the White house as

Director of Labor Department’s Women's Bureau, to Secretary of Labor between the years of

1997-2001, she now also serves on the Board of Coca-Cola as the Human Resources task force.

 
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Robert A. Kotick
Director of The Coca-Cola Company | President, Chief
Executive Officer and Director of Activision Blizzard, Inc. |
External Member
Robert A. Kotick has been a Director of The Coca-Cola Company

since 2012. Mr. Kotick is President, Chief Executive Officer and a

Director of Activision Blizzard, Inc., an interactive entertainment

software company, and has held these positions since 2008. He attended the University of

Michigan and began his entrepreneurial career there working on software for Apple II. Mr.

Kotick served as Chairman and Chief Executive Officer of the predecessor to Activision

Blizzard, Inc. but later ended up having controversy. As of 2008, he is no longer Chief Executive

Officer.

Maria Elena Lagomasino

Director of The Coca-Cola Company | Chief Executive
Officer and Managing Partner of WE Family Offices |
External Member
In 2008 The Coca-Cola Company welcomed Maria Elena

Lagomasino to be a Director on their board. She received her

M.B.A. from Fordham University. She began her career with

Citibank as vice president then moved to Chase in 1993. Ms.

Lagomasino has also been the Chief Executive Officer and Managing Partner of WE Family

Offices since March 2013. Ms. Lagomasino served as Chief Executive Officer of GenSpring

Family Offices, LLC, an affiliate of SunTrust Banks, Inc., from November 2005 through October

2012. From 2001 to 2005, Ms. Lagomasino has been Chairman, CEO, and Director of multiple

 
 Page | 41
   

companies, including JPMorgan Private bank, a part of JPMorgan Chase&Co, the Chase

Manhattan Bank and Avon Products, Inc. She has held positions and worked with global

financial services, management, and other various positions in private banks. Her skills and

various positions help her serve as an effective member on the Coca-Cola board.

Sam Nunn
Director of The Coca Cola Company | Co-Chairman and
Chief Executive Officer of Nuclear Threat Initiative (NTI) |
External Member
In 1997 Sam Nunn became a Director of the Coca Cola

Company. He received his law degree from Emory University

School of Law. In 1972 Mr. Nunn started serving as a member

of the United States Senate and was a part of the senate through 1996. In 1999 he began serving

as Chairman of the Board of the Center for Strategic & International Studies. Along with being a

lawyer and a politician, Mr. Nunn has been Co-Chairman and Chief Executive Officer of the

Nuclear Threat Initiative since 2001. His global concern shows in that The Nuclear Threat

Initiative is a nonprofit organization working to reduce the global threats from nuclear, biological

and chemical weapons. Mr. Nunn also has credentials on national defense. He previously served

as a Director of Chevron Corporation from 1997 to 2011, Dell Inc. from 1999 to 2011 where he

served as Lead Director, General Electric Company from 1997 to April 2013 and Hess

Corporation from 2012 to May 2013.

 
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James D. Robinson III

Director of The Coca Cola Company | Co-Founder and
General Partner of RRE Ventures | President of JD Robinson,
Inc. | External Member
James D. Robinson III has been a Director of The Coca-Cola

Company since 1975. In 1957 he graduated from Georgia Tech’s

School of Industrial Management. He has been Co-Founder and

General Partner of RRE Ventures since 1994. He is also President of J.D. Robinson, Inc., a

strategic advisory firm. He served as non-executive Chairman of the Board of Bristol-Myers

Squibb Company from 2005 to 2008 and as Chairman and Chief Executive Officer of American

Express Company from 1977 to 1993. He previously served as a Director of Novell, Inc. from

2001 to 2009. He has background knowledge in advisory and investment firms that have helped

him benefit the Coca-Cola Company.

Peter V. Ueberroth
Director of The Coca Cola Company | Investor and
Chairman of Contrarian Group Inc. | Non Executive Co-
Chairman of Pebble Beach Company | External Member
Peter V. Ueberroth has been a Director of The Coca-Cola

Company since 1986. Along with being an investor of the

Contrarian Group, Mr. Ueberroth is also the chairman. He has

been the chairman of the Contrarian Group since 1989. This company is in the business of

managing other businesses Mr. Ueberroth also serves as the chairman of the board of Aircastle

Limited and he is also the none-executive co-chairman of Pebble Beach Company. He is also a

Director of Aircastle Limited.

 
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*See Appendix 1; Table 1 For Stock owned by each Director

The Coca-Cola Company has an elite staff that is highly skilled, has a lot of background

knowledge and their connections internationally and domestically help the company succeed.

Coca-Cola as a whole, as well as their board members individually are concerned with

environmental sustainability as discussed in depth throughout the report.

The Coca-Cola Company has a commitment to good corporate governance that “promotes the

long-term interests of shareowners, strengthens Board and management accountability and helps

build public trust in the Company.” (Coca-Cola Company, 2014) Coca-Cola’s Board of Directors

(BOD) are directly elected by the company’s shareowners in order to protect their interests as

well as the long term health and financial success of the company. Coca-Cola’s BOD serves as

the ultimate decision making body of the Company. (Investors, 2014) The Board of Directors are

actively involved within the Company including strategic management decisions, including top

management proposals. They not only monitor what is going on within the company, but they

also evaluate any proposal made and place influence on beneficial proposals. In addition they

initiate and suggest proposals that would allow the company and those impacted by its decisions

to benefit from. They additional determine the final approval of decisions. Coca-Cola’s BOD

provide advice and counsel to the CEO as well as other senior officers. They additional monitor

decisions to ensure that they do not harm the assets of the company and comply with the

financial and internal controls of the company. (Investors, 2014) Because one of their pillars to

achieve their 2020 Vision involves environmental sustainability all their actions and approvals

 
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are fueled with either supporting environmental sustainability or at least not negatively impact

upon the environment.

_____________________________________________________________

Top Management - Senior Functional Leadership

The following members of Coca-Cola’s senior management team are responsible for the

company's high performance in areas such as sustainability, global branding, and award-winning

marketing campaigns. All members of top management have held their current positions for

three or more years. Most managers were promoted internally after several years experience with

the Coca-Cola Company.

Alexander B. Cummings
Executive Vice President and Chief Administrative Officer |
Joined the company in 1997 managing Coca-Cola's North &
West Africa Division | Previous Vice President of Finance for
The Pillsbury Company
Alexander B. Cummings was born in Liberia, West Africa and

joined Coca Cola in 1997 as Region Manager, Nigeria. In 2000,

he was named President of the Company’s North and West Africa

Division, In March 2001, he became President and Chief Operating Officer of the Africa Group.

Prior to joining the Company, Mr. Cummings held several positions with The Pillsbury

Company in the U.S. Cummings has a B.S> degree in Finance and Economics from Northern

Illinois University and an MBA in Finance from Atlanta University.

 
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J. Alexander (Sandy) M. Douglas, Jr.

Senior Vice President, Global Chief Customer Officer |
President, Coca-Cola North America | Joined company in
1988 as a District Sales Manager this will be his 14th year
serving as President of North America Retail Division
(promoted internally)
J. Alexander M. Douglas Jr. (Sandy) is Senior Vice President and

Global Chief Customer Officer of The Coca-Cola Company, as

well as President of Coca-Cola North America. Sandy joined The

Coca-Cola Company in January 1988 as a District Sales Manager for the Foodservice Division

of Coca-Cola USA. He also held a variety of positions with increasing responsibility in Coca-

Cola USA. He was named Vice President of Coca-Cola USA in 1994, assuming leadership of the

CCE Sales & Marketing Group. In 1998, his responsibilities were increased to include the entire

North American Field Sales & Marketing Groups. He was appointed President of the North

America Retail Division in 2000. After graduating from the University of Virginia in 1983,

Sandy began his career at The Procter & Gamble Company working in a variety of sales and

sales management positions

Bernhard Goepelt
Senior Vice President and General Counsel | Joined company
in 1992 as Legal Counsel for the German Division| Promoted
internally to current position in 2011
Bernard Goepelt is Senior Vice President, General Counsel and

Chief Legal Counsel of The Coca-Cola Company. Mr. Goepelt

 
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joined The Coca-Cola Company in March 1992 as Legal Counsel for the German Division,

based in Essen, Germany and was promoted to Deputy Division Counsel in 1995.In January

1997, Mr. Goepelt was appointed Legal Counsel for the Middle and Far East Group. He moved

to Thailand in November 1998 and was promoted to Division Counsel, Southeast and West Asia

Division in 1999. In January 2003, Mr. Goepelt was appointed Group Counsel for the Central

Europe, Eurasia and Middle East Group, based in Vienna. In October 2004, Mr. Goepelt was

appointed Group Counsel for Japan, South Pacific and Korea, based in Tokyo. In June 2005, he

assumed the position of General Counsel, Japan and China. Mr. Goepelt moved to Hong Kong in

March 2007 to assume the role of General Counsel, Pacific Group. In April 2010, Mr. Goepelt

moved to Atlanta to become Associate General Counsel, Global Marketing, and Commercial

Leadership & Strategy. In September 2010, he took on the additional responsibility of General

Counsel for the Pacific Group. In addition to his functional responsibilities, Mr. Goepelt

managed the administration of the Legal Division. He was named to his current position in

December 2011. Following his legal studies and his clerkship at the civil court in Essen,

Germany, Mr. Goepelt received his German local bar admission in 1992. He finished his

doctoral programmer in 1994 with a thesis on freedom of speech and unfair competition.

Ceree Eberly
Chief People Officer | Senior Vice President | Joined company in
1990 | Promoted internally to current position in 2009 responsible
for employee development while creating great quality in the
workplace
Ceree Eberly was appointed to the role of Chief People Officer and

Senior Vice President for The Coca-Cola Company in 2009. She

joined the Company in 1990 and has since served in a variety of

 
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leadership roles. In 1998, Ceree became the Human Resources Director, Central America &

Caribbean Division in San José, Costa Rica, where she oversaw both Company and bottling

operations’ human resources strategies. In 2003, she was appointed Vice President, Corporate

Business Unit, where she led the support of the worldwide McDonald's business in technical

operations, quality assurance, social responsibility, communications, global juice portfolio, IT

and human resources. Ceree filled this role until 2007, when she became the Group Human

Resources Director for Europe.She has a Bachelor of Arts degree from the University of

Tennessee, graduating with high honors.

Clyde C. Tuggle
Senior Vice President, Chief Public Affairs and
Communications Officer | Joined the company in 1989 as
part of the Corporate Issues Communications department |
Promoted internally to his current position in 2009
Clyde C. Tuggle is Senior Vice President, Chief Public Affairs

and Communications Officer, The Coca-Cola Company.

Mr.Tuggle joined the Company in January 1989 in the Corporate

Issues Communications department. In June 1992, he was named Executive Assistant to Roberto

C. Goizueta, then Chairman and CEO of the Company, where he managed external affairs and

communications for the Office of the Chairman. In September 2008, Mr. Tuggle was named

Senior Vice President, Corporate Affairs and Productivity. In May 2009, he was named Senior

Vice President, Global Public Affairs and Communications, a position reporting directly to the

Chairman and CEO of The Coca-Cola Company. Mr. Tuggle holds a bachelor's degree in

German Studies and Economics from Hamilton College in New York and a Master of Divinity

 
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from Yale University. He studied at the Ludwig-Maximillian Universität in Munich, Germany,

and completed The Executive Program at the University of Virginia's Darden Business School.

Ed Steinike
Senior Vice President | Chief Information Officer | Joined the
company in 2002 as Chief Technology Officer | Steinike returned to
Coca-Cola in 2010 to serve in current position
Steinike “is responsible for the leadership of the Company’s

information technology strategy, services and operations.” (Coca-Cola

Company, 2014) Prior to working within Coca-Cola he worked at

General Electric where he was responsible for “manufacturing, service, engineering and IT.”

(Coca-Cola Company, 2014) He received his B.S. degree in Electrical Engineering from

Marquette University.

Kathy N. Waller
Executive Vice President; Chief Financial Officer | Joined
company in 1987 serving in the Accounting Research
Department
Waller is responsible for leading Coca-Cola’s global finance

organization as well as representing the company to investors,

lenders and rating agencies. “She oversees M&A, Investor

Relations, Tax, Treasury, Audit, Accounting and Controls,

Financial Reporting and Analysis, Real Estate and Risk Management.” (Coca-Cola Company,

2014) Additionally, Waller is involved within various women initiatives including the Women’s

 
 Page | 49
   

Leadership Council and the Women in Leadership Global Program. She received her Bachelor’s

and MBA degrees from the University of Rochester.

Guy Wollaert
Senior Vice President; Chief Technical and Innovation Officer
Guy Wollaert | Joined Coca-Cola in 1992
Wollaert has “held various positions of increasing responsibility in

the technical and supply chain fields.” (Annual Report, 2014) Fron

2003 to 2006 he was the President of Coca-Cola national Beverage

LTD. It serves as the national supply management company for

Japan’s supply business. After that he was made Vice President of Global Supply Chain

Development, and until December 2010, he served as General Manager, Global Juice Center. He

was then appointed Chief Technical Officer from January 2011 and was then elected Senior

Vice President of the Company as of February of 2011. (Annual Report, 2011)

Irial Finan
President, Bottling Investments Group | Joined company in 2004
appointed to his current position | Externally
Finan joined the Coca-Cola system in 1981 within Coca-Cola

Bottlers Ireland, Ltd. Within the company he has served various

accounting positions. Up until 1990, Finan served as the Finance

Director of Coca-Cola Bottlers Ireland, Ltd. Additionally, he was

Managing Director of Coca-Cola bottler in Romania and Bulgaria until late 1994. Finan also

served as the Managing Director of Molino Beverages. Within this position he had the

“responsibility for expanding markets, including the Republic of Ireland, Northern Ireland,

 
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Romania, Moldova, Russia and Nigeria.” (Annual Report, 2014) Furthermore, he was elected

Executive Vice President of Coca-Cola Hellenic in October of 2004 and is currently within this

position.

Javier C. Goizueta
President, McDonald’s Division, Vice President | Joined
company in 2001 | Internally Promoted
Goizueta is responsible for building the strategic alliance with

McDonald’s in over 31,000 restaurants and in over 100 countries.

(Coca-Cola Company, 2014) Prior to joining the Coca-Cola

Company “Mr. Goizueta spent 20 years with Procter & Gamble, 10

years in their U.S. Operations and 10 years in Latin America. He is Trilingual in Spanish,

English and Portuguese and received his Bachelor of Arts degree from Auburn University.”

(Coca-Cola Company, 2014)

Joseph V. Tripodi
Executive Vice President | Chief Marketing and Commercial
Officer
Mr. Tripodi joined the Company as the Chief Marketing and

Commercial Officer in September of 2007. He was then elected

Senior Vice President of the Company and served until July 2009.

Before he joined Coca-Cola Tripodi served as the Senior Vice

President and Chief Marketing Officer of Allstate Insurance Co. where he worked for four years.

 
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Lisa M. Borders
Vice President of Global Community Connections | Chair of The
Coca-Cola Foundation
Borders is responsible for the integration of the Company’s global

community outreach and philanthropic efforts within the company’s

sustainability agenda. Lisa has worked in her community primarily

focusing on family issues in the areas of education, healthcare and

housing. Borders holds a Bachelor’s Degree from Duke University (Durham, NC) and a Masters

of Science in Health Administration from the University of Colorado (Denver, CO). (Coca-Cola

Company, 2014)

Top management has indeed established a systematic approach to strategic management. This is

because in order to be a strategic management firm, the top management of a company must

form groups of managers and key employees at many levels, from various departments and work

groups and planning is typically interactive across levels and is no longer only top down. Most of

the managers from top management are actually employees of lower management that have been

promoted to higher positions over the time. This concept of promoting from within concept

where companies show support to their own employees instead of reaching out to hire someone

from the outside, which keeps their employees loyal and productive. Different managers of top

management are responsible for different sectors and tasks of the company. Under them, they

have their respective teams that help them complete the tasks that they have on hand.

 
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For The Coca Cola Company, top management, is very involved in the strategic management

process. Top management has focused on management quality as a key element of their growth

strategy and it remains committed to fostering the development of quality management at all

levels from top to bottom. Coca Cola has an increasing number of multinational executives from

their new and existing territories. This shows how the company is increasing diversity and trying

to involve every kind of people within it. Coca Cola is also transforming their commercial

models to focus on their customer’s value potential and using a value based segmentation

approach to capture the industry’s value potential. (Coca Cola Femsa, 2014)

Coca-Cola’s top management interacts quite well with both the boards of directors and lower-

level management. At the Coca-Cola there is an interactive structure in place that promotes

transparency and communication from within the firm. In fact, at any given point if a top

management member wants to discuss something with the board that can be easily and quickly

established. In addition, since Coca-Cola promotes from within most top management members

were at one point a lower-level manager. As a result, they understand its implications and how

important it is to incorporate their input.

Coca-Cola enforces a clear code of business conduct to clearly identify the ethics and

compliance program. The code of business conduct, also known as a code of ethics, is a

management tool for setting out an organization’s values, responsibilities, and ethical obligations.

The code of ethics is helpful provides guidance to employees when they are handling ethical

situations in business. Coca-Cola makes it a requirement for all employees to read and

understand their code of ethics and follow its rules in the workplace. This code of ethics is

 
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administered by Coca-Cola’s Ethics & Compliance Committee, which is responsible for

executing and overseeing ethics and compliance programs and determines code violations and

discipline. Coca-Cola ensures that their code of ethics is in a socially responsible manner by

regularly monitoring and auditing the business to ensure compliance with the code. Coca-Cola

also offers online training to its associates so that they can further understand and be more aware

of their code of ethics policy.

Coca-Cola’s strategic decisions are all made on top of social responsibility and sustainability of

the environment impact. Environmental sustainable manner enhances Coca-Cola’s goals and

vision. In the past few decades, Cola-Cola understands that the decisions on bottling operations

and distribution management are critical to maintaining the sustainability issue. Thus, Coca-

Cola’s value chain analysis clearly emphasizes the reduction of the environmental effect over

manufacturing production from suppliers, ingredients procurement, distribution management,

sales, and most importantly, recycling program. Coca-Cola developed its strategy decision

interlink with its procurement sustainability issues in order to provide a sustainability value over

its manufacturing process. Coca-Cola’s sustainability strategy decision had made a

comprehension of the environmental impact on its products and also had developed a

comprehensive sustainability trends for its future business.

Top executives at Coca Cola do own significant amounts of stock from the company. The Coca

Cola Company at its most recent board meeting voted on a new executive compensation plan and

passed. This new plan boosted the number of stock options for executive management by 20%.

Many shareholders for the company were against the plan but because less than 50% of them

 
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voted, including Warren Buffett, it passed. One third of the shareholders were worried about this

plan taking place for it takes away from the rest of the company’s shares.

Top management is sufficiently skilled to cope with likely future challenges. Every single one of

their top management personnel have years of experience. Alexander B. Cummings, who has

worked for The Coca-Cola Company for the past 13 years and is the Chief Administrative

Officer and Executive Vice President of the Coca-Cola Company, has served on various boards

and in various bottling partner companies. In fact, Cummings has a background in finance and

previously ran all of Coke’s operations in Africa, leading to major growth in Coke’s Africa

operations. Carla Olton, the Chief Quality and Product Integrity Officer, is another example of a

strong leader, having a background in hard science and experience working in retail companies

and Coke suppliers. The years of collective experience among Coke’s executive team afford top

management the ability to handle future challenges of the corporation. In addition, each of the

top management’s focus is on a different area that helps benefit the company’s 2020 Vision.

EXTERNAL ENVIRONMENT: OPPORTUNITIES AND TRHEATS (SWOT)

 
Natural Physical Environment: Sustainability Issues

The biggest threat Coca-Cola is currently dealing with is water shortages around the world. Since,

Water is the main ingredient in all of their products this is a massive problem. Rapid population

growth and continual pollution of accessible freshwater sources have created water scarcities

around the world. “As a result, Coca-Cola may incur increasing production costs or face capacity

constraints, which could affect its profitability in the long run.” (Market index, 31) (T)

 
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In order to remedy this situation Coca-Cola can look into expanding its product portfolio into

other products that don’t require huge amounts of fresh water and turn this threat into a

promising opportunity. Its basic finance, one should never put all our eggs into one basket. That

way one can diversify risk, especially when it is uncontrollable. This way if this water scarcity

problem continues Coca-Cola has a way to support itself in the meantime. (O)

Societal Environment

Economic

An economic force that is affecting the food and beverage industry is the cost per unit. There has

been a spike in the trend for healthy living, however many complain that the cost is unaffordable.

Therefore, although there has been a dramatic increase in the trend of living a healthy lifestyle,

there has also been a spike in obesity. “Consumers with limited resources may select energy-

dense diets high in refined grains, added sugars and fats as an effective way to save money”. In

general, a bottle of water cost approximately two dollars and a Coca-Cola beverage cost 99 cents.

In the case of being cost efficient, a consumer will choose a Coca-Cola beverage knowing that it

is the unhealthier choice. Moreover, obesity is not a problem just for Coca-Cola, for it is a

problem for all firms in this industry. (T)

The food and beverage industry deals with common economic issues. For instance, one that

affects companies worldwide is the water drought. It is evident that the beverage industry would

take a large toll when the water drought began. Water is a key ingredient to their recipe.

However, the water drought does not just affect carbonated beverages for it takes 28 gallons of

water to make a cheeseburger. Many do not recognize the importance of the water shortage

because it is an inexpensive good. Many countries are being affected by it but not a lot of people

 
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have taken action towards it. Companies, however, have seen the effects of the water drought on

their quarterly income statements. Company goals are not being met and this has caused

companies to find other sources of water or develop other ecofriendly methods to find a solution.

Whatever choice a company makes it will certainly take a large amount of money to shift the

company to a different approach. (T)

Technological

There has been an increase in environmental awareness. Because of the importance of the

environment, activists have attacked companies such as coca- cola for using poor chemicals in

their plastic bottles. However to fight claims by activists and to support the community, Coca-

Cola has found a way to create their bottles off polyethylene terephthalate (PET). PET is 100%

more reliable when recycling bottles. Once Coca-Cola presented this method to the Food and

Drug administration (FDA) the FDA had dropped their case with them and allowed Coca-Cola to

proceed with their new bottling method. Due to the values of the company, Coca-Cola did not

have a problem with the change. They partnered with Hoechst-Cleanse Corp to become more

ecofriendly with their bottles. Fortunately, because Coca-Cola and other beverage companies

received the message loud and clear that they should support the environment it has decreased

future threats. However a present threat that they face with the environment is finding a balance

between production and water shortage. Companies have had to reduce their production and find

other methods to create their bottles by reducing the usage of water. Some companies were hurt

more than others and therefore they have lost an unfortunate amount of revenue. The

opportunities that this creates for the beverage industry is the respect they gain from their

consumers. Their brand is therefore becoming more powerful than before. By being eco friendly

the companies are making a statement to the world. (O)

 
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The food and beverage industry deal with the similar forces worldwide. For instance, adding

onto creating more eco friendly bottles, this industry has merging technological competition.

Considering that Soda Stream and Keurig are partnering to create self-serve carbonated

beverages. This merge causes problems for the food and beverage industry because it will allows

for consumers to create beverages at a lower cost per unit over time. In general this is something

that will affect the profit margin for all companies within the food and beverage industry. What

these companies should look more into is their research and development department in order to

create flavors that that customers would not be able to create at home. (O)

Political–Legal

Child obesity has been a great concern throughout the United States. The Child Nutrition Act

from 1970 allowed educational institutions to provide students with sugar-sweetened beverages.

It was something that highly benefited the firms because they would increase in revenue. By

2006, the largest sellers of sugar-sweetened beverages in the United States had agreed to follow

the guidelines of the Act and provide malnutrition items for students. However, that same year

“the Alliance for a Healthier Generation, A partnership between the William J. Clinton

Foundation and the American Heart Association, announced that they had reached an agreement

with Cadbury-Schweppes, Coca-Cola, and PepsiCo to cut sales of sugar-sweetened beverages in

schools”. The objective of their agreement was to take out sugar-sweetened beverages and limit

the portion size of drinks that were provided to students. As results of the policies and

agreements, 34 states created a state policy that would adopt healthier beverage options and

limitations. In conclusion, offering healthy beverages in schools has been a constant struggle

within the United States. (T)

 
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Child obesity has been a worldwide concern. Problems continue to arise in this because there is

also a growing concern in children not getting enough exercise. This is also because of the rise in

technology and how much more technologically advanced the younger generation is. Therefore

due to the easily accessibility and high levels of sugar this makes the younger generation a target

in their health. Not all countries provide sugar drinks in their institutions, but there are many

countries who have not regulated the school systems. In other words, although it is a concern

worldwide it is strong is some countries in comparison to others. Child obesity will be an

occurring problem as time goes on, but the countries who later decide to adopt the same policies

to become healthier countries will have examples of what works and what doesn’t. The first step

for countries when fighting child obesity is eliminating sugar sweetened drinks from educational

institutions. (T)

Sociocultural

In this day and age social media has become one of the most traditional things among Americans.

However, for the food and beverage industry to hop on board with such tradition is a difficult

task. What Coca-Cola and other companies are attempting to do is create apps and programs that

allow their consumers to follow their brand while social networking. Social media creates few

opportunities for the beverage industry. It hurts the industry more than creating benefits. That is

because there isn’t much a beverage industry can do in order to stay connected with their

customers. However, a benefit may be that they the beverage industry can follow their

consumers in order to get statistics and use it for their research and development department.

This will allow the firms to get more insight on what their customers want, allowing the firms to

know what to provide and present to the world. (O)

 
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All industries are constantly trying to get in touch with their customers. In relation to companies

in the United States, companies in the food and beverage industry have learned that social media

is the way to reach their customers. Moreover, companies in this industry have noticed that

another way to reach their customers is through social sporting events. For example the way that

Coca-Cola Co. has applied this concept is by becoming a large sponsor in the Olympics and the

World Cup. Since Coca-Cola many companies have applied the same concept. Many other

companies have also joined the same sporting events as Coca-Cola but they are not limited to

those events. There are still other sporting occasions such as NASCAR, NBA Playoffs, and the

Super Bowl. When companies partner with such events it is a huge investment for the company

but fortunately it is a great turn over because of the marketing that gets done across to customers.

The importance is that such events are tradition to many people around the world – most

importantly the Olympics. More companies should move forward and partner with like sporting

events. (O)

Task Environment

Threat of New Entrants: Low

With the brand strength that Coca-Cola has established it would be difficult for a new entrant to

compete and reach a mass consumer pool. However, it may be possible for new entrants to

succeed in small-scale production that only focuses on a certain market or geographical location.

New entrants would also need an extensive marketing campaign to begin attracting their

consumers. The effect of economies of scale typically benefit mass manufacturers like Coca-

Cola, which makes it more difficult for new entrants to stay in business because they have to

invest a lot more in manufacturing. In addition, new entrants will face strict regulation from EU

 
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directives concerning the ingredients, labeling, marketing, and safety. It is just part of the process

new entrants must go through in order to be a legitimate competitor. (O)

Bargaining Power of Suppliers: Low

Coca-Cola manufacturers in this market look to suppliers for a range of ingredients such as

sweeteners, sugar, aspartame, and water. The bargaining power of suppliers would not be

effective because they mainly handle commodities and only when commodities become scarce or

have severe market fluctuations do the become a factor for bargaining. Suppliers won’t have

much say in their selling power to bottlers and manufacturers. Currently, water is the most

concerning commodity for Coca-Cola because it operates in a global scale. There are locations

where water is becoming scarce or not meeting manufacturing standards and this directly affects

Coca-Cola sales. (O)

Threat of Substitute Products or Services: Low

There are plenty of substitutes in the beverage industry such as tea, coffee, energy drinks, and

juices. Coca-Cola has a wide range of beverage products including teas and energy drinks. What

may affect the market that Coca-Cola has is consumer health concerns towards soft drinks.

However, Coca-Cola has plenty of low or no calorie drinks, so if new substitute products come

into play it won’t have much of an impact. (O)

Bargaining Power of Buyers: Medium

The distribution of Coca-Cola is achieved in many ways in their global market scale, resulting in

a large amount of buyers. It is common for Coca-Cola to manufacture soft drinks that are ready

for consumption and provide it directly to retailers, which may lower buyer power. Food &

beverage retailers are arguably the most significant buyers and they have some say with either

 
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bottlers or manufacturers as to how the pricing will be set up because they do not want to lose

business with these retailers. However, what makes the buyer power not as strong is that Coca-

Cola has a strong brand consciousness in consumers and these position influences retailers to buy

the product because it will sell fairly easy and bring in more customers to these retailers. (T)

Rivalry Among Existing Firms: High

With only a limited number of competitors, the degree of rivalry becomes concentrated in the top

beverage companies. Strong branding and product differentiation is what secures these

competitors in the market place. Coca-Cola’s main competitor is Pepsi and with its powerful

marketing campaigns it has the power to influence many young beverage drinkers. Pepsi utilizes

celebrity endorsements to reach out to certain market segments, specifically young adults, and it

has an indirect effect in Coca-Cola’s future sales. Since Coca-Cola operates on a global scale

PepsiCo. in certain markets like the United States only affects it. Overall, there is a fairly high

degree of rivalry between beverage competitors. (T)

The 6th Force - Relative power of unions, governments, special

interest groups, etc.: Medium

Stakeholders have a moderate degree of power over Coca-Cola. The government has certain

regulations and criteria that beverage companies must maintain in order to have a secure business

operations. If any of the bottlers or manufacturers that Coca-Cola maintains internationally, have

not met these regulations or have failed to do so then the distribution and operation network will

not be able to operate to its potential and it will suffer financial repercussions. Unions can have

an effect on Coca-Cola’s publicity or public relations if it cuts employees. Coca-Cola runs on the

efficiency model, meaning it must always stay at a low price and must look for ways to cut costs.

If Coca-Cola finds ways that make its business operations more efficient it may have to cut

 
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employees and although it is not in their favor, it is just part of doing business. If Coca-Cola cuts

too many employees it will in fact hurt traditional image and people will have negative views on

their mission statement. (T)

Key Factors Affecting the Corporation

The immediate factors that are affecting Coca-Cola are its customers and competitors. From the

six forces on the industry, it is clear that bargaining power of buyers and the degree of rivalry are

what effects Coca-Cola the most. One of the most concerning threats that is impacting Coca-

Cola is the health consciousness that consumers have towards soft drinks. Soft drinks contain

high amounts of sugars and artificial sweeteners, which are not healthy for children. The United

States is has had an increase in overweight children and this has fostered backlash and hate

towards companies like Coca-Cola who are suppliers to this cause. Coca-Cola has a variety of

beverage substitutes that have low or no calories, however, the problem is that Coca-Cola is

losing some of its strength in its branding. Coca-Cola has a blockbuster business model and its

main soft drink is Coca-Cola classic, so if consumers continue to perceive this product as bad it

will have a declining effect on sales and will detriment if brand image. A future threat that Coca-

Cola has is water scarcity. The company is substantially growing all over the world and it has a

real potential to lose out on geographical markets that do not have a lot of water or that have

water that do not meet certain regulations. Water shortage can also have a future effect on sales

and the company will be hurting the environment if it uses up a lot of water in its manufacturing

or bottling plants. (T)

One of the opportunities that Coca-Cola has is its influence on the environment and how well it

positions itself for consumers to notice that it cares about the environment. Coca-Cola has had a

 
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prominent impact in recycling and making sure that its manufacturers and bottlers are cutting

waste. The challenge and opportunity that Coca-Cola has is using that methodology in markets

where recycling is not seen as important or needs improvement in the daily lifestyle of recycling.

This opportunity can be beneficial in the future because consumers will understand the

importance of being environmentally friendly and it will strengthen Coca-Cola’s brand. (T)

 
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EFAS Table - Summary of External Factors

EFAS Table for The Coca Cola Company

External Factors Weight Rating Weighted Comments

Score

Opportunities

• Enter the snack market- don't have to deal with water .1 1 .1 Comment A.
scarcity as much.

• Growing demand for functional, healthy beverages .2 4 .8 Comment B.

• Increase brand value through improvement of bottle .05 4 .2 Comment C.

production

• Increase marketing research through social media .075 4 .3 Comment D.

• Initiate programs in new markets that reveal Coke’s .1 3 .3 Comment E.

value

Threats

• Water Scarcity threatening efficient production of .1 2 .2 Comment A.

beverages.

• The trend for healthy living has threatened the .1 4 .4 Comment B.

product demand.

• Removing sweet drinks and snack in the institution .075 2 .15 Comment C.
limits Coca-Cola.

• Degree of competitive rivalry .15 4 .6 Comment D.

• Threat of substitute products .05 4 .2 Comment E.

Total Scores 1.00 3.25

 
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External Opportunities Comments

A. As noted above, water scarcity around the world is threatening Coca-Cola’s future profit

margins especially since they are so dependent on water-based products. Fortunately, entering

other markets that are not as water dependent can diversify this risk. One suitable market would

be entering the snack food industry, just like Coca-Cola’s main competitor Pepsi C0. has already

done.

B. More and more healthy alternative beverages are being favored over sugary drinks. As a result,

Coca-Cola has a huge opportunity at hand to cater to these new trends by creating a healthier

version of their current products or simply develop new healthier drinks.

C. The Coca-Cola Company has the opportunity to add value to their brand by producing

environment friendly bottles. Moreover, it also reduces negative political and social attention. By

having created environment friendly bottles Coca-Cola also has the opportunity to prove that

their actions are in line with their values.

D. In consideration to which social media has become a norm in society it give The Coca-Cola

Company an opportunity to strengthen their marketing research. This is so because Coca-Cola is

able to get feedback through customer followers on social media such as twitter. Furthermore,

The Coca-Cola Company has opportunities to use social media to strongly target customers.

E. Coca-Cola has an immense distribution and manufacturing network in markets all around the

world. However, what is the point of reaching new markets if customers aren’t passionate or find

 
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some sort of meaning or value behind the products they purchase. That is why Coca-Cola must

adhere to its mission statement and initiate programs in new markets that will help bring in

publicity through public relations. These programs can spark interest and moments of optimism

towards Coca-Cola and the programs can include incentives to recycle Coke products or free

donations of their products or monetary donations to communities.

External Threats Comments

A. Water scarcity around the world is increasingly becoming a massive problem. Since Coca-

Cola’s main ingredient is water this quickly becoming concern. Increasing water prices and

constraints can definitely affect long-term profitability.

B. The Coca-Cola Company sells their product at low cost to their consumers making it easier

for those with lower standards of living to purchase their product. However due to the spike in

the trend of healthy living many consumers are disregarding to be cost efficient and choosing to

purchase healthier beverages that cost more. Although Coca-Cola has produced zero calorie

drinks, they are still known to be unhealthy beverages because they are high in Fructose. This

threatens the company because it is another way of losing customers.

C. On behalf of the concern for child obesity, in the past there has been a concern on what

educational institutions feed children. Therefore concerned parents and other active groups in the

community have managed to pass laws that force sweetened food and beverages to not be sold in

educational institutions. This is a threat to The Coca Cola Company because they are losing a

large market. Since students have to pay for the beverages, taking them away causes The Coca-

Cola Company to lose money.

 
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D. The degree of rivalry affects Coca-Cola’s strategy so much that it causes them to alter their

marketing tactics and production limits. Pepsi has been Coca-Cola’s long standing competitor

and a couple decades ago Pepsi affected Coca-Cola’s sales so much that it caused them to

completely change the name of their main Coke product just to win the favor of the youth. Coca-

Cola’s strategy was seen as a failure, although, they fixed the problem. This demonstrates how

much of a threat the degree of rivalry can have on a dominant company like Coca-Cola.

E. Coca-Cola Classic is such a famous soft drink beverage in almost any household around the

world. However, since Coca-Cola has such a dependence in the performance of this product. The

threat of a new substitute product can potentially deter the positioning of the brand. New

substitute products, if marketed powerfully, can change consumer perspective on what they drink

and can attract a new market segment of soft drink beverage consumers.

INTERNAL ENVIRONMENT: STRENGTHS AND WEAKNESSES (SWOT)

Core Competencies
Consumer Marketing: Coca-Cola invests its marketing efforts in order to enhance consumer

awareness and preference of the Coca-Cola brand. Coca-Cola in turns measures successful

marketing efforts as producing “long-term growth in unit case volume and per capita

consumption.” (Annual Report, 2014, Pg. 32) As a result Coca-Cola implements an integrated

marketing programs on both a local and global level. These integrated marketing programs

include the combining of “advertising, point-of-scale merchandising and sales promotions.”

(Annual Report, 2014, Pg. 32) Additionally, Coca-Cola employs marketing strategies that focus

 
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on driving volume in emerging markets, increasing the brand value and growing profit within

developing markets. (S)

The Company implements an integrated marketing communication strategy, which allows for

coordination within its various communication channels. This allows for its mass media

advertising, personal selling, sales promotion, public relations and direct marketing strategy are

all integrated in order to deliver “a clear, consistent and compelling message about their brands

and its products.” (Fu-Ling, 2009, Pg. 131) Because of this Coca-Cola has been able to market

its brand and make it a worldwide recognizable and unmistakable brand. The ability to produce a

brand that cannot be confused with another is one of the strongest competitive advantages that

the corporation has. Additionally, it has been able to create nostalgia, heritage and memories

within its brand name. Coca-Cola is “one of the world’s most recognizable and valuable brands.”

(Biesada, 2014) (S)

Bottling and Distribution Operations: A big part of Coca-Cola’s success is its “strong customer

and bottling partnerships” that contribute to the company’s growth. (Market Line, 2014) Coca-

Cola manufactures and sells its concentrates, beverage bases and syrups to its bottling partners

who then are responsible for manufacturing, packaging, and distributing the final branded

beverages to Coca-Cola consumers. (Market Line, 2014) This partnership that Coca-Cola has

created allows it to not only produce differentiated beverages and packaging that are perfect for

each market and channel that the company operates in. (Market Line, 2014) These partnerships

that are formed allow Coca-Cola to have the opportunity to utilize their “internal resources and

expertise to improve overall performance.” (Market Line, 2014) Strategically these partnerships

 
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allow Coca-Cola to “compensate for limited local resources” by controlling interest in bottler

companies. (Market Line, 2014) Additionally, “the strong bottling network allows the company

to gauge supply and demand requirements with ease and further enables it to achieve scale and

efficiencies in a quicker manner.” (S) (Market Line, 2014)

Additionally, most of Coca-Cola’s beverage products are manufactured, sold and distributed by

the independent bottling partners that Coca-Cola works with. Nevertheless, Coca-Cola purchases

bottlers that underperform in specific markets that Coca-Cola feels they can use their resources

and expertise to improve Coca-Cola’s production and sale performance. Owning or having

interest within the bottling companies allows Coca-Cola to compensated for limited local

resources as well as help bottlers develop their business and information systems and sales

performance. (S) (Annual Report, 2014, Pg. 32)

Its Availability to its consumers: Coca-Cola’s ability to place its products within consumer reach

are one of the biggest advantages they have. Consumers are able to obtain Coca-Cola products

from a variety of locations including grocery stores and vending machines and even small

storefronts in the most remote of places. Additionally their vending machines that are the easiest

and most frequent ways of obtaining their coke products have come to be more than just a way to

obtain their favorite drinks. Additionally, they have been used as a way to inspire moments of

happiness, a direct desire from Coca-Cola’s mission statement. As of 2013, there were 12 Coca-

Cola vending machines that not only dispensed their soft drinks but brought people together with

moments of happiness. Coca-Cola’s ability to bring consumers their favorite drinks and make a

connection with them allows them in the long run to build a lasting relationship. (S)

 
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Brand Building: There is no doubt about it that the Coca-Cola brand is one of the world’s most

preferred beverage makers. Coca-Cola has been able to make a lasting bond with their

consumers. The Coca-Cola name and brand is not just a company that sells soft drinks but its a

company that brings individuals from all over the world together. As of 2013 there are “12

innovative Coca-Cola vending machines” that are dispensing happiness and soft drinks around

the world. (Moye, 2013) In 2010 in a college campus in New York a Coca-Cola vending

machine was dispensing “doses of happiness” by producing everything from fresh flowers to

pizza. (Moye, 2013) The video that showed this brought anticipation to consumers on what

Coca-Cola would do next. A machine in South Korea made it so consumers had to repeat dance

moves correctly, the more they got right the more drinks it would dispense. (Moye, 2013)

Machines in Lahore, Pakistan and New Delhi, India who experienced political tension were

asked to “set aside their differences and share a simple moment over a coke.” (Moye, 2013)

Additionally, a vending machine at the National University of Singapore was programmed to

give cokes out when someone gave the machine itself a hug. (Moye, 2013) In 2012 and 2013

during the summer a Limon and Nada vending machine in water and amusement parks in Spain

decreased their price when the temperature rose and when the temperature went down prices

would return to normal. (Moye, 2013) (S)

Commercial Leadership: Coca-Cola has millions of loyal costumers and an equal amount of

customers that sell or serve Coca-Cola products directly to consumers. As a company, Coca-Cola

aims to enhance the value that customers receive by providing opportunities to grow their

individual businesses. (Annual Report, 2014, Pg. 32) In order to do this Coca-Cola takes the

time to understand a businesses purpose and needs and the market that they operate within. The

 
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Coca-Cola makes sure that they receive the right product, packaging and promotional tools that

meet the market needs. Furthermore Coca-Cola participates in joint brand-building initiatives

with the bottling partners in order to produce customer preference of Coca-Cola brands in order

to develop strategies “for better execution at the point of scale.” (S) (Annual Report, 2014, Pg.

32)

Franchise Leadership: Coca-Cola’s constant improvement of their franchise leadership

capabilities allows their company and their bottling partners the opportunity to grow together.

They align their partnerships through shared values, aligned incentives, and a sense of urgency

and flexibility that are based upon consumer needs and tastes. In order to be able to do this Coca-

Cola must ensure that the bottler partners are financially healthy and successful in order to be

able to “quickly achieve scale and efficiencies.” (Annual Report, 2014, Pg. 32) Additionally,

along with the bottler partnerships Coca-Cola attempts to produce differentiated beverages and

packages in order to meet specific markets. Moreover, Coca-Coal designs business models for

sparkling and still beverages within specific markets that add value to both parties, ultimately

allowing the Coca-Cola system to gain a competitive advantage. (S) (Annual Report, 2014, Pg.

32)

 
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V.I.R.O. Analysis
V.I.R.O. Analysis for The Coca-Cola Company

Valuable Difficult Rare Supported by Competitive Performance

Competency to Imitate Organization Implications

1 - Availability to NO Competitive Normal

Consumers Disadvantage

2 - Bottling and YES YES NO Competitive Advantage Above normal

Distribution
Operations

3 – Consumer YES YES NO Partial Competitive Normal

Marketing Advantage

4 – Commercial YES YES YES NO Competitive Advantage Normal

Leadership

5 – Franchise YES YES YES NO Competitive Advantage Normal

Leadership

6 - Brand Building YES YES YES YES Sustainable Excellent,

Competitive Advantage above normal

Comments For V.I.R.O Analysis

Competency 1: Coca-Cola’s ability to make its products available to its consumers isn't

something special. Other beverage companies such as PepsiCo. distribute their products to

grocery stores, convenience stores and through vending machines. Therefore it isn't a valuable

asset specific to Coca-Cola.

Competency 2: The bottling and distribution operations while extensive are similar to competing

companies. Therefore they can easily be replicated if enough resources are placed into

development of them.

 
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Competency 3: Consumer marketing is a big part of every company, no matter what industry you

are operating in. Even though it is something that Coca-Cola puts a big emphasis on it is still

present within every company and industry.

Competency 4: Coca-Cola has the capabilities of developing an exploiting this capability

however it is still in a developing stage.

Competency 5: Coca-Cola has the capabilities of developing an exploiting this capability

however it is still in a developing stage.

Competency 6: Coca-Cola’s brand building capability is ultimately their core competency

because they have been able to continuously do this better than any other company and as a

result created a long lasting legacy.

Business Model

The Coca-Cola Company actions and decisions are framed around reaching the company’s 2020

Vision. A company’s business model as a result is the “company’s method for making money in

the current business environment.” (Wheelen, 2012, Pg. 142) Additionally, it is how a company

will “differentiate and sustain a competitive advantage” with regards to its top competitors.

(Wheelen, 2012, Pg. 142) In April of 2013 Coca-Cola announced its implementation of a “21st

Century beverage partnership model.” (Kent, 2013) This would allow them to fulfill their 2020

Vision that aims to “more than double their systems revenue while increasing their systems

margin.” (Coca-Cola Company, 2014) (S)

 
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Additionally, “a strong franchise system has always been the competitive advantage” of Coca-

Cola both globally and locally. (Kent, 2013) Therefore implementing this new business model

would allow the Coca-Cola Company to establish a clear and efficient path to achieve their 2020

Vision. This new business model will create a “more agile, modern, customer focused franchise

business partnership model.” (Kent, 2013) Within this new business model Coca-Cola along with

some of its bottling partners have came to an agreement to create a stronger united business

model “through the granting of new, expanded territories.” (Kent, 2013) This would allow all

parties to benefit and be more profitable. (S)

Additionally, as the business model continues to evolve Coca-Cola will see to expand upon it in

order to be even more efficient, reduce waste, expand upon its profit and be as sustainable as

possible. Within the new granted territories that the business model would produce it would

allow for “ a finished goods model that would facilitate future implementation of a product

supply system, an improved, more integrated information technology platform and support of an

evolving operating model.” (Kent, 2013) It is believed that a unique competitive advantage lies

in a system that can “act with speed of an integrated lower cost national business enabled by

deep local knowledge, community connections and the outstanding commercial capabilities of a

strong local bottling system,” that will ultimately ensure “a meaningful role for current and

future aligned bottling partners” within the U.S. and across the globe. (Kent, 2013) (S)

Value Chain

The Coca-Cola Company as a whole determines its actions to be congruent with its 2020 Vision

that encompasses its six P’s: people, portfolio, partners, planet, profit, and productivity. Which

as a result allows them to implement their winning culture within their company.

 
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Products: Coca-Cola (Classic, light, zero, diet), Sprite, Fanta, Dasnia, Minute Maid, Ciel,

Powerade (Original, Zero), Simply, Fresca, Vitaminwater, Del Valle, SmartWater, Mello Yello,

Fuze (Juice, Tea), Burn, Honest Tea, NOS, Odwalla

Product Lines: Soft Drinks, Energy Drinks, Water, Juices, Sport Drinks, Tea and Coffee

Firm Infrastructure: financial and accounting services, legal

services, quality management controls

Human Resource Development: employee education and

training, employee compensation, employee issues, Coca-Cola
University

Technology Development: Product and process development Profit Margin/Goal: To

increase systems
revenue while
Procurement: Purchasing of Raw materials, machines and increasing our systems
supplies margin.
Inbound Operations: Outbound Marketing Service:
Logistics: Logistics: and Sales:
Production, Installation,
Pre-Bottler assembly Bottler Advertising, repair
phase: and testing manufacturing, promotion,
syrups and and pricing
concentrates distribution

Support Activities

Firm infrastructure: In regards to strategic planning, Coca-Cola has instilled a winning culture

that is based on everyone within the company knowing their mission, values, 2020 vision, goals

and objectives. As a result everyone is able to provide ideas and comments on what would work

better then existing practices. (S)

 
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Human Resource Management: Not only does HR within Coca-Cola deal with employee

compensations but they also participating in diversity programs, as well as recommendations for

high performance employees to participate in Coca-Cola University that allows them to expand

upon existing skills. They are also responsible for ensuring that the company and those working

within it comply with the equal opportunity standards. (S)

Technology Development: Coca-Cola has various patents, copyrights and trade secrets as well

as substantial know-how and technology. The technology used within the Coca-Cola system

relates to the Company’s “products, the processes for their production, the packages used, the

design and operation of various process and equipment used.” (S) (Annual Report, 2014, Pg. 9)

Procurement: As a beverage company water is the main ingredient in all of Coca-Cola’s

products. Since water is a limited natural resource in many parts of the world this can be a big

challenge for Coca-Cola. (W) (Annual Report, 2014, Pg. 9)

In addition to water, Coca-Cola’s main raw materials include “nutritive and non-nutritive

sweeteners.” (Annual Report, 2014, Pg. 9) Within the United States the nutritive sweetener is

high fructose corn syrup, outside of the United States sucrose is used and both can be found from

various sources. In addition non-nutritive sweeteners include “aspartame, acesulfame potassium,

saccharin, cyclamate and sucralose” that are available from numerous sources as well. (Annual

Report, 2014, Pg. 9) (S)

 
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Primary Activities

Inbound Logistics: All of Coca-Colas resources are held within Coca-Cola’s warehouses

including the syrups and concentrates until they are ready to be shipped out to bottler facilities.

In addition they are checked to make sure that they hold up to the KORE standards. (S)

Operations: Even though most of Coca-Cola’s branded beverages outside of the United States

are manufactured, sold and distributed by independent bottling partners Coca-Cola does own or

acquire interest within independent bottlers. This allows them to reduce their risk that they hold

while allowing bottlers the right to produce their products. However, in order to create a long-

term bottling strategy Coca-Cola may reduce their ownership interest within their bottler

partnerships. (Annual Report, 2014, Pg. 7) (S)

Outbound Logistics: Coca-Cola has separate contracts with each of the bottling partners it deals

with in order to manufacture and sell their Coca-Cola products. These agreements allow “bottlers

to prepare specified Company Trademark Beverages, to package the same in authorized

containers, and to distribute and sell them in an identified territory.” (Annual Report, 2014, Pg. 6)

As a result the bottlers are required to purchase the entire requirement of concentrates or syrups

from Coca-Cola. (S)

Marketing and Sales: Coca-Cola has no obligation to provide marketing support to its bottlers.

However if Coca-Cola wishes to they have the option to contribute to bottler expenditures for

advertising and marketing. (Annual Report, 2014, Pg. 6) In addition to Coca-Cola producing

 
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their own independent advertising and marketing activities, they also “may provide promotional

and marketing services and funds” to their bottling partners. (Annual Report, 2014, Pg. 7) (S)

Service: In addition to providing dispensing equipment to their customers, Coca-Cola offers

repair services to fountain and bottling retailers. (S)

 
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Corporate Structure

 
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This past year, in January of 2013, Coca-Cola restructured their operations to three core groups:

Coca-Cola International, Coca-Cola Americas, and Bottling Investments Group. Along with the

restructuring of operations, two new presidents were appointed for the International and

Americas groups while a third president was re-appointed to manage the Bottling Investments

Group. The company's operations are structured on the basis of geography as President Ahmet

Bozer oversees Europe, Pacific and Eurasia & Africa operations, President Steve Cahillane

directs North America and Latin America operations, while President Irial Finan administers

bottling operations that Coca-Cola owns outside of North America. With this new structure in

place, the company will continue to perpetuate their centralized decision-making. The company's

decision-making for operations and defining moves ultimately rests with top management.

Although the three Presidents administer their individual groups, they must still refer to Muhtar

Kent, the company's CEO. In turn, the lower-level managers of each of the three core operating

groups must refer to the President before making key central decisions. This new structure is also

deeply aligned with Coca-Cola's 2020 Vision. When talking about the reorganized structure,

CEO Kent states "This is the right structure for the next phase of our journey toward achieving

our 2020 vision." This vision sets out six clearly defined goals for each of the firm's visionary

areas including profit, people, portfolio, partners, planet, and productivity. In turn, this overall

vision for each of these six separate divisions is aligned with corporate objectives and policies as

each area's performance is measured by set metrics that correspond to policies including

diversity and workplace rights. Coca-Cola's three-unit structure is very similar to that of their

competitor, Pepsi Co., who restructured their company five years prior to Coca-Cola, in 2007,

from a two-unit structure to a three-unit structure. These three units include PepsiCo Americas

Foods, PepsiCo Americas Beverages, and PepsiCo International. PepsiCo Americas Foods is

 
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comprised of Frito-Lay North America, Quaker, and all other Latin America snack brands like

Sabritas. PepsiCo Americas Beverages includes PepsiCo North America, Gatorade, Tropicana,

and other Latin America businesses. Thirdly, PepsiCo International consists of operations in UK,

Europe, Asia, Middle East, and Africa. As evident, PepsiCo's three groups are based off

geography just like Coca-Cola but differ in that it’s also separated by brand. (S)

Corporate Culture

Coca Cola in the 125 years it has been running has become one of the world largest and well

known brands worldwide. With their presence in over 200 countries Coke’s main belief and

expectation from their employees would be to embrace and exceed in diversity. Diversity is a

key component to how Coca Cola functions as a company, it is embedded in their strategies to

attract retain and develop diverse talent and provide multiple support systems with employees of

diverse backgrounds. Coca Cola’s values of leadership, passion, integrity, accountability,

collaboration, innovation and quality has defined them and their company culture for over one

hundred years. All employees from delivery drivers to top management are expected to possess

and advance in diversity not only within the company but in the communities in which their

products are sold. (W)

Coca Cola’s current objectives, strategies and policies are working towards the goal of

sustainability. As Coca Cola is expanding and since it has already reached over two hundred

countries diversity through all spectrums of business is the key factor to their ability to remain

the number one brand in the carbonated beverage industry. (S)

 
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Coca Cola is one of the worlds largest companies, because of this they use a lot of the worlds

most valuable resources, water. Over the past decade, especially because of the societal shift

towards “going green” the company has felt a lot of pressure to make an effort to join the cause.

Coca Cola not only see’s this as important to the sustainability for the earth but for the

sustainability of the company as well with efforts such as Project Catalyst and the RAIN Project

Coca Cola. (W)

Employee Diversity

The Coca Cola Company throughout its years in business has had its problems with lawsuits, for

in the year 2000 there was still wage inequality within the workplace. African American workers

were being paid an average of forty four percent less salary than employees of white background..

As this issue arose Coca Cola took proactive measures to make sure that this no longer continued.

To compensate the workers who received substandard salaries the company made up through a

one billion dollar settlement. This action made public the mistakes of the firm and could have

ruined Coca Cola as a world renowned company, yet instead they took this moment of bad

publicity to create strategic framework for the future and sustainability of the company. Their

Global Diversity Strategic Framework embeds the concept of diversity into corporate strategy

creating a winning culture that not only promotes diversity but thrives on it. Coca Cola’s winning

culture consists attributes such as enhancing the lives of the communities they serve, maximizing

opportunities with women and minority owned businesses, appealing to the diverse consumer

base through their brands and hiring and encouraging as much diversity as the countries they

serve through people and ideas. (W)

 
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Coca-Cola and Other Nations

As Coca Cola has grown into one of the worlds largest most renowned companies in the world

they have taken the appropriate measures to assimilate properly into any community or country

they are in. Africa has been one of the largest consumers for Coca Cola since 1929. After eighty

five years Coca Cola is now sold in every single African country not only creating jobs but

helping improve the quality of life. For every employee Coca Cola hires there are five employees

hired from that same region. Coca Cola even implemented a whole new hiring strategy in Europe

to properly assimilate all the new employees and properly informs and places them within the

company culture. (S)

Corporate Resources

Marketing

One of Coca Cola’s manufacturing objectives would be in its field of productions of its products.

The company has recently faced some embarrassing incidents of having their products recalled

due to contamination of chemicals that could lead to serious health problems. Just in the most

recent fiscal year (2013), Coca Cola was forced to recall about 19,000 cases of Minute Maid

dairy drink in the Chinese market place when they had learned that their products might be

contaminated with bacteria that can cause botulism. A few months prior to this incident, in

March, Coca Cola had to recall their Minute Maid orange juice products because they were

spoiling prior to the date that was written on the cartons. A year before this incident, in 2012,

Coca Cola’s Chinese subsidiary, Shanxi Beverages, admitted that during a routine maintenance

procedure, they had found some of their products to be contaminated by the chemical chlorine. A

more local incident that occurred in 2011, in the city of Saint Louis, Missouri, was that the

 
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people of the area were complaining about a taste that resembled metal in the products of Coca

Cola, which led to a large recall as well. (MarketLine 28). (W)

These recalls are very unacceptable for such a large and established company like Coca Cola.

They don’t only cost the company money, but they affect the way people look and feel about the

brand. Recalls like these can cause many consumers to lose confidence in the products and

delivery of Coca Cola. This is because they would feel that it has provided them with something

unsafe, and their health is more valuable to them in comparison to their loyalty to the brand.

Coca Cola handled these problems very quickly as they arose and made sure that the matter did

not go so far as to where there was much damage done. They did this by quickly removing the

contaminated and defective products from the market and issuing public apologies in the regions

that these products were sold. However, if matters like these are not controlled, there can be a

continuous form of discontent towards a brand, which could cost a company a great deal of

money. (W)

The objectives and strategies of Coca-Cola are clearly stated on their website. Since its

beginning, Coca-Cola has built its business using a universal strategy based on three principles:

Acceptability: through effective marketing, ensuring Coca-Cola brands are an integral part of

consumers’ daily lives, making Coca-Cola the preferred beverage everywhere (S). Affordability:

Coca-Cola guarantees it offers the best price in terms of value for money. (S) Availability:

making sure that Coca-Cola brands are available anywhere people want refreshment, a pervasive

penetration of the marketplace.(S) Their objective is to quench the thirst of everyone in the world.

 
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The objectives and strategies are consistent with the mission of the company in the way the

objectives create a path that leads to the mission. The mission is to refresh the world, to inspire

moments of optimism and happiness, and to create value and make a difference. Coca-Cola

intends to do this with their strategy of acceptability, affordability, and availability. (S)

Ø Marketing Mix

Position: Coca-Cola has positioned itself a number one in the soft drinks market. (S)

Product: Coca-Cola has a wide portfolio of beverages comprising of 3300 products. They are

comprised of over 300 brands of beverages around the world, the main ones being: Fanta, Lift,

Sprite and PowerAde. (S)

Price: The Coca-Cola products are often priced according to the price of their competitor’s

products in order to be more competitive; they do not want to have a much higher price. (S)

Place: The Coca-Cola Company distributes to many different channels. Some of their channels

include, supermarkets, gas stations, convenience stores, vending machines, and soft drink

fountains in restaurants. (S)

Promotion: Coca-Cola uses tv commercials and billboards to do most of the promotion. (S)

Coca-Cola has managed to maintain the number one spot in the soft drink industry. They have

done so by having a wide portfolio of beverages, comprised with 3300 products. They are

comprised of over 300 brands of beverages around the world, the main ones being Fanta, Lift,

Sprite, and PowerAde. They have also managed to keep that number one spot by fairly pricing

their products according to the price of their competitors’ products. Coca-Cola is a well-known

brand around the world thanks to their promotion. They have many TV commercials, and

billboards as well as sponsoring events. They are also well known because the Coca-Cola

 
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Company distributes to many different channels around the world. Some of their channels

include, supermarkets, gas stations, convenience stores, vending machines, and soft drink

fountains in the restaurants. (S)

The Coca-Cola Company (NYSE: KO) is the world's largest beverage company with a market

capitalization of $176.20 billion. (S) The company has customers in 200 countries and serves

more than 1.8 billion people per day. Coca-Cola is a market leader with a 34% market share, by

sales volume, in the industry and its competitor PepsiCo Inc. (PEP) holds 26.3% of the market

sales volume-wise. Coca-Cola has an extensive distribution network in 200 countries and its

infrastructure is very difficult and expensive to compete with. This is why Coca-Cola's

competitive advantage will be sustained. (S)

Since this is such a big market, Coca Cola is less dependent on a few customers and is more

dependent on a large volume of customers, such as companies and retailers for its marketing

campaigns and success. (S)

Worldwide Unit Case Volume Geographic Mix:

North America: 21%

Latin America: 29%
Europe: 14%
Eurasia & Africa: 18%
Pacific: 18%

Coca-Cola’s products are in a different stage in the product cycle according to where they are

geographically. In places such as the United States, the Coca-Cola products are in the maturity

 
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stage where it can expand its market more, but in places such as Asia and India it is still in the

growth phase because it is fairly new to those areas. (S)

Ø Company Trends

From this analysis, the trends that can emerge are: winning, more diverse and cultural focused

marketing campaigns, seeing the wants and needs of different regions and using that data to

target each regions market respectively to those wants and needs. They would be creating

marketing strategies based on the locations and areas they want to target. (S)

In the past these trends have been successful since Coca-Cola has been able to keep expanding

their products to places all around the world. They have been able to focus on a new country, or

region, and decide which of their products would be successful there. These trends might affect

future performance in a positive way since they have been so successful with it before. (S)

This analysis does support the corporations past and pending strategic decisions, because it wants

to keep expanding globally and continue to offer their products to everyone around the world.

The Coca-Cola marketing does provide the company with a competitive advantage because it is

the marketing that raises awareness about the brand and when the consumers come across the

marketing it brings back the nostalgia of the brand. (S)

When comparing Coca-Cola to Pepsi’s marketing, we notice that Pepsi tends to use many

different celebrities, while Coca-Cola does not have the need for celebrities because the brand

alone gives the consumers and prospective consumers the need to want to try their products.

Coca-Cola is about creating happiness within, as well as more of a family company, it is about

 
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togetherness, family, and heritage, and that’s what the marketing is based on. Coca-Cola is such

an established company that it does not have the need to reach out to celebrities to gain customer

attention. (S)

Market Segmentation: Coca-Cola considers targets every thirsty customer, since they have such

a wide variety of products to quench their thirst. (S)

Market Research: The best way Coca-Cola could gather the most feedback would be to track

market performance, as well as by taking surveys of the consumers.

The Coca-Cola marketing managers are marketing to every person in the world. They plan to do

this by gathering the most feedback on their products to see how else they could appeal to more

people. (S)

Coca-Cola adjusts different marketing campaigns to the different regions of the world. Business

decisions are made on a domestic basis to fit in with the culture and needs of the domestic

community. (S)

Ø Environmental sustainability

Coca-Cola marketing does consider environmental sustainability. Coca-Cola promotes

sustainable packaging, which is resource efficient packaging, eliminating landfill waste, and

using recycled and/or renewable materials. Our product packages help ensure the quality of our

products and safe delivery of refreshment for billions of people around the world every single

day. (S)

 
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The marketing manager is a company’s primary ling to the customer and the competition. The

manager, therefore, must be especially concerned with the market position and marketing mix of

the firm as well as with the overall reputation of the company and its brands. (Wheelen, 2013, Pg.

151)

Finance

The current financial objective for Coca Cola would be in it’s 2020 vision. There are four out of

six visions that would apply towards being financial objectives from the 2020 vision of Coca

Cola. The first one is to double the company’s system revenue while increasing system margins.

To do this Coca Cola would have to boost system investment in sales and market execution,

operate the lowest cost manufacturing and logistics in every market, while maintaining their

standards of quality. They would also have to use their larger than life size and expertise to

create economies of scale. This would help in providing a total shareowner return, economic

profit growth and system cash flow. The second one is to go further than doubling their servings

of soft drinks to over three billion a day by developing and using the world’s most innovative

and effective marketing that would kick start the growth of Trademark Coca Cola, which is in

the main part of their business. What this would provide is a great increase in volume and value

share with the growth of servings and also a number of new billion dollar brands. The third one

is to be the most preferred and trusted beverage partner in the industry by thinking and acting

like an integrated global enterprise while intensifying their local focus. When doing this, the

company would have to align their franchise’s structure to make a value that has not able to be

passed for their customers by focusing on selling and merchandising. What this would do in

return, is build a stronger customer relationship and also create growth in retail sales and

consumption. The fourth one is to manage people, time and money for the greatest effectiveness

 
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by designing and implementing the most effective and efficient business system. In order to do

this, the company would have to redirect resources to drive profitable growth, standardize and

make their business processes easier along with their data and information technologies, create a

competitive cost advantage across the entire supply chain, build a continuous improvement and

cost management culture and minimize their energy use. What this will do in return for Coca

Cola is create market-driven spending levels, help in supply chain and overhead per unit costs,

and also help in lowering the total energy use. (S)

The 2020 vision is clearly stated by the coca cola company on their website. However, if you do

look at their performance, you can see how they are geared towards growth in revenue and sales

and on the path of doubling it. The 2020 vision is consistent with the corporation’s mission

because they are creating value for the company, brand and even the customer. The 2020 vision

is actually a part of the vision for Coca Cola, therefore it has to be consistent with the vision of

the company. The 2020 vision is consistent with the values of Coca Cola because it keeps focus

on the consumers, customers and the market and it promotes working smartly and efficiently. (S)

Ø Financial Trends

The financial trends that we can see emerge from the ratio analysis of Coca Cola include

promoting continuous growth in their business and creating lifetime connections with people

around the world. This is because Coca Cola has the highest gross profit margin in comparison to

the competition, and it also has the highest return on assets. However, Coca Cola’s debt to equity

ratio is in between that of Pepsi and Nestle. Therefore it needs to work on gaining a higher

leverage through its debt to equity ratio. Therefore, Coca Cola would be in the pursuit of

financial growth so that it could have more leverage over Pepsi in that area. One thing to

 
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consider is that Pepsi is not only in the soft drink business, but it is also in the snack business.

Therefore, Pepsi may have some leverage over Coca Cola through that. Creating lifetime

connections with people around the world would be another trend that would be influenced to

Coca Cola because, in order to promote growth, they would need this very vital and important

aspect. This is because the more Coca Cola grows its reach in the way of creating these lifetime

connections; the more its customer base will grow with loyal customers. Which in turn would

bring in great revenues and profits for the company, and further increase its leverage over the

competition. Additionally, there are not any significant differences when statements are

calculated in constant versus reported dollars for Coca Cola. (S)

The impacts that these trends have on past and future performance are quite similar. This is

because, as a large and historically successful company that bases itself off of its values of

customer relationships and its heritage, Coca Cola has continued to always pursue the trend of

growth. With the implementation of the new 2020 vision, Coca Cola has really stepped up their

pursuit of financial growth because they want to double their already outstandingly high

revenues. This task may seem impossible to some corporations but through strategic planning

and forecasting, Coca Cola believes that they can truly accomplish this task successfully. The

growth trend will have an impact on all of the employees at the company because they will all

have a much higher level of motivation for completing this high-leveled task. (S)

Ø Financial Strategic Decisions

This ratio analysis supports Coca Cola’s past and pending strategic decisions because it helps

promote the notion of growth within the financial department of the company. This can be shown

through the implementation of the 2020 vision. In the past Coca Cola has always promoted

 
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growth in all departments. The implementation of this new vision will help give goals and

direction to all levels of management in the company and help them set guidelines to complete

each of these goals through strategic planning. (S)

Ø Financial Competitive Advantage

Coca Cola has a financial competitive advantage by its financial performance that we can see in

the ratio analysis. Although there are some areas in which competition has a higher ratio or level,

we have to keep in mind that Coca Cola has recently split its stock. Even with the stock split into

Coca Cola and the Bottling Company, the ratio analysis shows that Coca Cola is ahead in three

categories, and it is very close in the other categories as well. We also have to keep in mind that

Pepsi is a much more expanded company, having ventures in the snack business, where it also

gains some what of an edge over Coca Cola. However, the values, heritage and relationship that

Coca Cola has over its competition, both Pepsi and Nestle, are much more important to be

considered because they provide Coca Cola with a very strong competitive advantage. This in

turn helps result in a financial competitive advantage because it helps in generating more sales,

which bring in a larger amount of revenue and also loyal customers that become a part of not

only the soft drink of Coca Cola, but also the brand and company. (S)

As a part of its leverage ratio, Coca Cola is ahead of the competition, having a debt to equity

ratio of 61%. Pepsi has a debt to equity ratio of 53% and Nestle has a debt to equity ratio of 48%.

Coca Cola is currently in second place when it comes to the current ratio of itself and its

competition. Pepsi is in the number one spot with a current ratio of 124%, Coca Cola in second

with a current ratio of 113% and Nestle in third with a current ratio of 92%. When it comes to

the profitability ratios of gross profit margin, Coca Cola is in the number one spot in comparison

 
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with the competition. Coca Cola has a gross profit margin of 61%, while Pepsi has a gross profit

margin ratio of 53% and Nestle has a 48% gross profit margin ratio. Another ratio that Coca Cola

is ahead of in between its competition is the return on its assets. Coca Cola has the highest

amongst three competitors in the terms of a return on assets, with a ratio of 9.53%, Pepsi is next

with a ratio of 8.86% and Nestle is in close running with Pepsi with a ratio of 8.12%. For

inventory turnover, Coca Cola has a score of 5.35, while Pepsi has a 9.16 and Nestle has a 5.5.

The reason for Pepsi having such a higher score in comparison with the competition is because it

is also heavily involved in the snack business. Since this is the case, Pepsi has much more

inventory that it can turnover in the each respective market in comparison with Coca Cola and

Nestle. (S)

*Financial managers use financial leverage and ratio analysis to evaluate and improve current

corporate and divisional performance.

Financial operations for Coca Cola adjust to the conditions in each country in which it operates

by the standards and lifestyles of each respective country. This is because there is a budget that

Coca Cola has for each of its business ventures that it pursues throughout the world and that

budget is determined on the costs of introducing its brand and products in new markets and

ultimately selling them to create a profit. Coca Cola has to allocate a budget that is respective to

each country’s standards because each country has a different level at which they operate at.

Some countries have higher wages, while some countries have a very low wages that need to be

paid to workers. Also, there are some countries or parts of the world that have some knowledge

about Coca Cola, so that it is easier to market their business and brand, but there are other

 
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countries or parts of the world that do not have any idea of what Coca Cola is, such as small

villages in Africa. This would make it more costly for Coca Cola to market their products and

brand because it would take more time to get the people aware of the brand and trust it. This can

be shown by how Coca Cola goes to villages and starts distribution of its drinks to the younger

children for free out of their red Coca Cola Company vehicles. This helps create a lasting brand

image in the minds of the village people because it helped them through tough times. However,

this can also be time consuming because it is a process that involves many steps to get to the

final or end result, which is to implement Coca Cola products in the market to create growth and

increase profitability. (S)

Ø Global Financial Issues

Coca Cola’s finance deals with global financial issues. One of the largest and most relevant

financial issue for Coca Cola is the economic turmoil that the entire world has faced since 2008..

In a speech, CEO Muhtar Kent said, “Throughout this global economic crisis, I've been very

bullish on the United States - and remain so tonight. The current recovery, while anemic in terms

of job creation, has been broad-based. United States business investment is up 18 percent since

year end 2009. United States manufacturing, a sector many had written off, has rebounded

quickly, adding over 300,000 jobs in the past two years. United States exports, meanwhile, are

growing at an annualized rate of 16 percent. Labor productivity in the United States is now the

highest among G-20 countries. As a result, U.S. unit labor costs have dropped more than in any

G-20 country except Taiwan.”(Coca Cola Company). This shows that even though there is this

global “economic crisis” as Mr. Kent says, Coca Cola has managed to rebound and has still

managed to create not only revenue, but also value in its company, by adding over 300,000 jobs.

(S)

 
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Ø Financial Manager and the Strategic Management Process

In the job description for a senior financial manager at The Coca Cola Company, it states that he

or she must: Partner with the Marketing and Franchise and Commercial Leadership teams for

their financial analysis requirements to enable them to identify opportunities that create

significant brand value and drive long term sustainable profitable volume growth. Provide

financial analysis support to Region, Bottler, Business Unit, Group and Corporate management

for decision-making. (S)

With this description of the job of a senior financial manager at Coca Cola, we can see that

strategic management plays a vital role in the job. This is because top management is actually

working and collaborating in teams within smaller groups and teams to get the jobs done and

help drive long term sustainable profitable volume growth. (S)

Research and Development (R&D)

Coca-Cola is currently rethinking its research and delivery in looking at the global scale to make

innovations further and faster. Coca-Cola is leveraging its unparalleled reach to develop, acquire

and scale sustainable innovations. (S) Coke has six research and development centers around the

world linked to external technology assessment and acquisitions hubs, which connect the

company with partners, entrepreneurs, tech startups and university researchers.(S) Not only is it

stated on Coca-Cola’s website but it is implied in their performance across the 200 countries

they serve. Part of their mission says that they want to create value and make a difference

everywhere they engage which is consistent with their research and delivery. (S)

 
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The role of technology in corporate performance is very critical to its progress and ultimately

success. Technology is becoming more and more integrated into our lives including businesses

as well. With a constant flow of new tech upgrades, it only makes sense for Coca Cola to not

only keep up with the flow but to get ahead of the game. (S)

Research and development is constantly providing Coca-Cola with a competitive advantage

society is constantly looking for change and new products. Producing new consumer products is

necessary for Coca-Cola to stay ahead of its competitors. Although Coca-Cola follows the

blockbuster model in that it makes it’s revenue mostly from one product, their soft-drinks,

development in new countries and areas is always beneficial. They have been doing things like

milk products in Brazil. Each research and development center works closely with regional Coke

marketing teams to address locally relevant needs and focuses on certain areas for innovation. (S)

Although Coca-Cola does not reveal their research and development expenses, they are the

number one leading beverage sellers and it shows that their corporation is receiving a return on

their investments. (S)

Considering that Coke is the oldest and most traditional beverage company with a strong heritage,

technological discontinuity does not play a role in the company’s products. There are only four

main ingredients in their most famous beverage, soft drink Coca-Cola. (S)

 
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Research teams are spread out across 6 countries and accommodate different markets and

segments in different countries differently. Each research and development is region specific and

over time moves to more and more markets. (S)

Coca-Cola being world renowned brand will do everything in it’s power to avoid jeopardizing its

brand. Therefore their research and development does consider environmental sustainability in

product development and packaging. With a majority of their packaging being fully recyclable

they continue to grow that number. A majority of all of their products that are packaged is fully

recyclable. (S) This is not only better for the environment it also saves money and represents the

company well. Coca-Cola has released a campaign to collect 75% from several countries.

They’ve partnered up with several organizations which not only creates jobs but also spreads

awareness of their environmental efforts. The research and development goes through vast

extents to create new products from renewable resources in a cost effective and efficient manner

that benefits them and their consumers. (S)

Operations and Logistics

Coca-Cola operations and logistics start with the 6 P’s of vision:

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.

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

responsibilities.

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

These 6 P’s provide the framework for the company of the objectives the company wishes to

excel at. Coca-Cola is a global operating company manufacturing with local communities with

their 250 bottle partners. Coca-Cola current program includes selling beverage concentrates,

bases, and syrups to their bottle partners. Coca-Cola owns North American bottling company,

but doesn’t release information about how many or which bottling companies they own

exclusively. To ensure quality of product Coca-Cola is governed by operating requirements

(KORE) in which all partners must abide by. KORE is an integrated quality management

program insuring the same standards for production and distribution of Coca-Cola beverages. (S)

KORE Policies include:

• Quality- confirming the Coca-Cola systems strong commitment to quality in all that we do

• Food Safety- stating our adherence to proven food safety systems, processes and control

• Environmental- strengthening our position as environmental leaders

• Occupational Safety and Health- reaffirming that people are our most valuable resources

KORE outlines not only the policies, but the standards, specifications, requirements, and

references for each bottling company. KORE’s requirements include the minimum company

requirements for the protection of Coca-Cola’s trademark and product integrity. These limited

requirements keep high standards of quality, while allowing each countries bottling company to

have freedom in production choices. Having a partnership with these bottling companies insure

 
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clearly stated standards in order to continue to do business with Coca-Cola. By Coca-Cola not

owning all of their bottling companies this help create incentive for each bottling plant to be

efficient and innovative for higher profits. (S)

Coca-Cola’s KORE policies are consistent with the corporation’s mission, objectives, strategies,

and policies with not only internal but also external environments as well. Coca-Cola is flexible

with standards are requirements which allows for plants all over the world that have different

government restrictions, to be still be able to bottle Coca-Cola. (S)

Coca-Cola currently sells product in every country in the world except for North Korea and Cuba,

due to trade limitations. Even though Coca-Cola does not condone sales of their beverages in

these countries, third parties still import the beverages to be sold. Coca-Cola’s operating

distribution is divided in seven segments: Africa, Eurasia, European Union, Latin America,

North America, Pacific, Bottling Investments, and Corporate. Coca-Cola’s domestic duties

include making the beverage concentrations to ship all over the world, and brand management

and marketing. These beverage concentrations are sent to bottling companies all over the

world. By the bottling company being outsourced it makes the company much more

competitive. Coca-Cola is able to focus upon the beverage concentrate and marketing, while

their bottling partners can focus on distribution. (S)

Coca-Cola is not in charge of all bottling facilities and do not release their manufacturing process

for concentrate syrup. As noted in the 2013 annual report Coca-Cola produced 28.2 billion cases

of beverages and 19% went to the US. Coca-Cola is distributed all over the world and has

 
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different trademarks for their bottling companies to use. Between Coca-Cola and the bottling

companies there is an agreement to use specific packaging, distribute beverages wherever needed,

and for the bottling companies to handle key accounts for Coca-Cola. (S)

As with any company, Coca-Cola is prone to being vulnerable in natural disasters. Water,

sweeteners, juice produce, and packaging material are the most vulnerable to the

company. Sweeteners are bought and produced by third party companies, leaving Coca-Cola

dependent to these companies. “Today, water is a limited natural resource facing unprecedented

challenges from overexploitation, flourishing food demand, increasing pollution, poor

management and the effects of climate change.” Water is the main ingredient for many

beverages and manufacturing processes. Consumers also have changed preferences for natural

sweeteners, leaving Coca-Cola to work with these third party companies. The world’s climate

has been increasing sporadic affecting agriculture. Coca-Cola uses oranges from Florida in their

juice products, if the weather continues to be sporadic oranges may become scarce and the price

may increase. Packaging materials all over the world is a scarce resource and Coca-Cola must

insure their stake in these materials for bottling. Coca-Cola does not have to worry about

nationalization by governments because most of their bottling companies are independent to

Coca-Cola and works in accordance to the government within their area. (W)

“Competitive factors impacting our business include, but are not limited to, pricing, advertising,

sales promotion programs, product innovation, increased efficiency in production techniques, the

introduction of new packaging, new vending and dispensing equipment, and brand and

trademark development and protection.” Coca-Cola does not release their manufacturing

 
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process, but one can assume that they competitive as Coca-Cola is the number 1 beverage seller

globally. Coca-Cola is strategically placed with a good marketing division and is synonymous

with happy times. Coca-Cola had a bad quarter for the first time in years. Coca-Cola is

counteracting this bad quarter with new innovative ideas that directly affect the consumer. (S)

Coca-Cola outlines all of the risk factors for the company the next couple of years within their

annual review of the company. Coca-Cola does a very thorough job assessing product scarcity,

evolving consumer preferences, climate change, competition, safety concerns, and many

more. Coca-Cola takes into order different things they can improve on, and watch out for. (S)

Coca-Cola is a much more efficient company due to their third party partnerships with their

bottling companies. This allows for independent bottling companies to focus upon operations

and conditions of their own country, instead of Coca-Cola having to learn and adapt to these new

countries with their own bottling companies. (S)

Human Resources Management (HRM)

As one of the largest beverage manufacturers in the world, the Coca-Cola Company strives to

provide safe and hospitable working environments for their employees. According to their

corporate website, Coke takes pro-active measures to protect the rights of workers as described

in the UN “Universal Declaration of Human Rights,” as well as those prescribed in the

International Labor Organization’s “Fundamental Principles and Rights at Work.” Coca-Cola

represents itself as a staunch advocate against child labor, prohibiting the use of such labor in

company owned operations and attempting to halt the use of any form of child labor in its

suppliers’ operations. (S)

 
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Coca-Cola has also enacted policies, in association with Oxfam, to prohibit land grabs by its

affiliates and suppliers, requiring that they conduct third-party oversight. Rather than attempting

to force farmers off their own land, Coca-Cola seeks to partner with the local community to

ensure a healthy and ethical supply chain. (S)

Coca-Cola seeks to improve the quality of work and employee morale by minimizing the need

for use of overtime hours. In addition with requiring bottlers and suppliers to comply with all

local laws regarding work hours, Coca-Cola requires bottlers to determine and assess root causes

for overtime in order to reduce the need for overtime and improve employee morale. Coca-Cola

also seeks to ensure that third-party contractors are employed and treated in an ethical manner, in

accordance with Coke’s “supplier guiding principles.” (S)

Coca-Cola also has workplace safety initiatives in place to mitigate risks and to provide a safe

environment for employees. Through a program called “KORE,” Coke attempts to set

operational controls to appropriately address possible risks and to keep the workplace accident

free. Additionally, Coke provides safety training to its employees and employees independent

auditors to ensure compliance with safety standards. (S)

Coke also is one of the founding members of the “Global Business Coalition Against Human

Trafficking” and takes measures to ensure that the Coca-Cola supply chain does not use slave

labor. Coke ensures this by employing independent oversight of their suppliers and company-

owned operations. (S)

 
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Coca-Cola’s HRM initiatives and policies are clearly enumerated on their corporate website.

They are consistent with Coca-Cola’s mission, objectives, strategies, and policies. One of Coke’s

three mission statements is “to create value and make a difference.” By ensuring a safe and

healthy work environment for workers across nations, they set an admirable precedence for other

large corporations. Its current HRM is also compatible with the goals in its 2020 vision strategies.

(S)

Although Coca-Cola seems to be making strides to improve workplace satisfaction, it has a long

history of employee strikes. A quick search reveals that Coca-Cola suppliers experience a

multitude of strikes and have recently experienced strikes in places like Madrid, Ontario, and

Connecticut. However, it did not appear that these strikes had anything to do with negligence

regarding worker safety or rights; rather, they had to do with disagreements regarding union

contracts. (S)

In the United States, Coca-Cola employees receive comprehensive benefits including medical,

dental, life, and disability insurance. Some of this coverage also extends to dependents of Coca-

Cola employees. Coca-Cola also offers a mentoring program, tuition assistance and

reimbursement, competitive compensation and promotions, and a 401k-retirement plan. (S)

However, upon researching Coke’s HRM policies, a couple of damning anti-Coke websites also

spring up. These include “killercoke.org” and “stopcokediscrimination.org.” Killercoke.org

accuses Coca-Cola of various abuses ranging from lacking proper PPE (personal protective

 
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equipment) in China to the cold-blooded murder of Coke employees and union leaders by Coke-

affiliated paramilitaries in Colombia.. Meanwhile, Stopcokediscrimination.org accuses Coca-

Cola of widespread discrimination against employees of Black and Hispanic descent. (W)

Coca-Cola employs third-party, independent, auditors to evaluate workplace performance in an

effort to create a more efficient and worker-friendly work environment. As for union relations,

Coca-Cola, like many other large corporations, has strained, yet steady, relations with unions. (W)

Although the company has many human rights and non-discrimination initiatives, according to

many third-party sources, Coca-Cola appears to have a spotty record on both human rights and

discriminatory practices. Coca-Cola attempts to regulate the human rights practices of both

suppliers and bottlers through its “Supplier Guiding Principles.” (W)

Although Coca-Cola’s HRM should be similar across countries, it appears that in reality this is

not the case. Coca-Cola does have a stringent code 0f conduct for both the corporation itself

(NYSE: KO) as well as for its bottlers such as Coca-Cola Enterprises, Coca-Cola FEMSA, etc.

According to third-party anti-Coke websites, it appears that many of the most heinous human

rights and labor violations occur within Coke’s Latin America operations under Coca-Cola

FEMSA. (W)

Information Technology (IT)

Due to the rise of social media, Coca-Cola has implemented the latest information technology to

further its brand in many ways. Thus, the objectives of Coca-Cola’s implementation on IT are to

advertise its products in order to achieve greater brand image and high volume of sales. The

 
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strategy Coca-Cola has for IT is maintaining active appearance on social networking such as

Facebook, Twitter, Instagram, and etc. By doing so, Coca-Cola created a digital marketing by

introducing a Mobile APP such as My Coke Rewards. (Levin, 2013) (W)

After the introducing of mobile application and utilizing social media, Coca Cola has obtained

over 86 million fans on its Facebook page and has established a Coca Cola lives in social website

which has listed all social networking channels. Thus, its current IT objectives have a close

relationship with its consumers and digital marketing purpose, which provide greater impact on

the company’s performance. (W)

Coca Cola believes the relationship between IT and marketing is critical in future business.

Therefore, Coca Cola has utilized the digital marketing and social media advertising channel in

order to provide financial database, content, and reports to assist managers’ strategic decision

making. During the 2012 Summer Olympics Game, Coca Cola had introduced Mobile App for

many smartphone users and the application is managed by external agencies. All the content

collected by consumers will automatically translate to the digital access system for Coca Cola.

(Levin, 2013) (S)

Moreover, Coca Cola had lost lots of sale on the poorly managed distribution system in the past

because the company experienced difficulties on monitoring the process of products moving

from supply chain to various distribution channels. As a result, Coca Cola has then implemented

the demand-supply-chain system for packaging products and logistic issue. Overall, the

 
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competitive advantage, which IT has brought to Coca Cola, is an efficient blend of new

technology systems and operational procedure. (W)

Coca Cola has heavily implemented IT program to achieve better performance for the company.

Coca Cola’s major rival, PepsiCo, has also enjoyed the competitive advantage, which IT has

brought to the company. PepsiCo offers the latest IT system and program to provide expanded

networks allowing employees to work remotely, flexibly and efficiently. In addition, many

beverage drinks company have utilized Internet, intranet, and extranet web-based system in order

to obtain more public attention. For instance, PepsiCo used their corporate intranet blog for

encouraging employee to upload videos and comments.

The IT manager at Coca Cola has been using appropriate knowledge and the latest techniques to

improve corporate performance. All of the Coca Cola IT talents have an entrepreneurial and

strategic thinking when designing the IT program in order to get better connection with

marketing purpose. For Coca Cola, IT is relevant to marketing which is driving the brand’s

marketing strategy through advertising and other digital market. Therefore, Coca Cola has

established customer loyalty program, My Coke Rewards, for the purpose of collecting consumer

information. And those more than 600 consumers sites are protected by firewalls and data

protection for security issue. (S)

Coca Cola does have a global IT and extranet web-based presence. Coca Cola does not have any

difficulty with getting data access around the globe due to the implementation on IT program

 
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such as My Coke Rewards to collect consumer’s data and content with the mobile application

available around the globe. Coca Cola has been utilizing the IT efficiently and thoroughly. (S)

The role of IT manager at Coca Cola is to change the company’s management process. At Coca

Cola, the strategic management process is solely based on the role of their IT managers. The IT

manager at Coca Cola helps the company to form a digital marketing by developing various

mobile applications especially targeting on social networking sites. More importantly, after the

implementation on the latest IT system, it helps the company cutting out spending on looking for

appropriate distribution channel and brings connection with direct consumer relationships. (S)

 
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IFAS Table - Summary of Internal Factors

Exhibit 2: IFAS table for The Coca Cola Company

Internal Factors Weight Rating Weighted Comments

Score

Strengths
• Positioned as number one in the market .15 4 .6 Comment A.

• 20/20 Vision .05 4 .2 Comment B.

• Wide product portfolio .15 3 .45 Comment C.

• Brand awareness .25 4 1 Comment D.

• Social Responsibility .05 3 .15 Comment E.

Weaknesses
• Dependence on external bottling .025 2 .05 Comment A.
companies

• Dependence on natural resources. .10 3 .3 Comment B.

• Employee Dissatisfaction .05 2 .1 Comment C.

• Lack of Competitive advantage in IT. .025 2 .05 Comment D.

• Product Recalls .15 3 .45 Comment E.

Total Scores 1.00 3.35

 
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Internal Strengths Comments

A. Positioned as number one because wide product portfolio and competitive pricing.

B. The 20/20 vision is based on their winning culture. It ensures that Coca-Cola is on top with

their leadership and marketing, delivering a relevant, viable, and interesting brand. Their

innovation, creativity, and focus help them gain great opportunities and conquer obstacles along

the way.

C. Coca-Cola has an extremely large brand portfolio with 300 brands and 3300 products, the

main ones being: Fanta, Lift, Sprite and PowerAde.

D. Coca-Cola is known worldwide. Their brand awareness and heritage gives them a competitive

advantage. They are globally known and have been around for 127 years. Coca-Cola has a strong

and impressive presence globally.

E. The Coca-Cola Foundation along with its philanthropic partnerships strategically benefits the

Coca-Cola Company because as it not only allows it be a responsible corporate citizen but also a

community partner. As a result it increases consumers trust in their products that allows them to

develop a strong brand and product loyalty. It allows its consumers to see that Coca-Cola isn't

just in it for the revenue, but aims to give back to its consumers on a global scale. These actions

in addition allow the company to create relationship marketing.

 
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Internal Weaknesses Comments

A. Because of the dependence on bottling companies, even though they reduce Coca-Cola’s risk,

they end up handing over power to them.

B. Coca-Cola uses natural resources like sweeteners, juice blends, and bottling material that can

be ruined in natural disasters. This can affect costs and production processes.

C. Although the company has many human rights and non-discrimination initiatives, according

to many third-party sources, Coca-Cola appears to have a spotty record on both human rights and

discriminatory practices.

D. Pepsi Co. has a competitive advantage in the IT department. We need to be number one

against our biggest competitor. PepsiCo offers the latest IT system and program to provide

expanded networks allowing employees to work remotely, flexibly and efficiently.

E. There were 19,000 Minute Maid Dairy cases of recalled products in China because of bacteria

contamination in 2013. There was also cases of Coca Cola products being contaminated by

chlorine. In Saint Louis, there were many complaints of the Coca Cola products tasting as if they

had metal inside of them, which led to many recalls in that region as well. This hurts the brand

image and personality and can cause a loss of customer confidence in Coca Cola’s products.

 
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ANALYSIS OF STRATEGIC FACTORS (SWOT)

Situational Analysis (SFAS Matrix)

SFAS Matrix for The Coca-Cola Company
Strategic Factors Weight Rating Weighted Duration Comments
Score
S I L
H N O
O T N
R E G
T R
M
E
D
I
A
T
E
Ø S4 – Brand Awareness .225 4 .9 X Comment A.
Ø S1 – Positioned as .125 3 .375 X X Comment B.
number 1 in market
Ø W1 – Dependence on .075 3 .225 X Comment C.
Natural Resources
Ø W5 – Product Recalls .125 3 .375 X Comment D.
Ø O2 – Growing demand .175 4 .7 X Comment E.
for functional, healthy
beverages
Ø O5 – Initiate Programs .075 3 .225 X Comment F.
in new markets that
reveal cokes value
Ø T4 – Degree .125 4 .5 X Comment G.
Competitive Rivalry
Ø T1 – Water scarcity .075 2 .15 X Comment H.
threatening efficient
production of products

Total Scores 1.00 3.45

 
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Comments for SFAS Table

A. Coca-Cola has been able to successfully create an unmistakable brand that is known and

recognized worldwide. As a result it has created a lasting legacy that will ensure its future. It has

created a brand that recognized and inspires moments of optimism and happiness.

B. As of 2013 within the soft drink industry Coca-Cola was ranked number one in regards to its

brand. As within all the brands in the world it is considered number 6 on the most valuable brand

list.

C. Coca-Cola’s dependence on natural resources is a huge weakness for the company.

Especially with water scarcity problems around the world, and considering that water is the main

ingredient in all their beverages. If they do not figure out a way to limit the impact of the limited

raw resources Coca-Cola could face challenges.

D. Coca-Cola has had a huge problem with product recalls. In one instance it had to recall

19,000 cases of minute maid. Coca-Cola needs to ensure that the quality measures of their

products are being overseen at all times. Huge financial losses have and can continue to occur if

they don’t proceed with caution.

E. Because of the trend to be healthy and fight obesity there has been a huge change in

preferences from consumers. Instead of going towards soft drinks consumers have gravitated

towards juices and water.

F. Because of Coca-Cola’s desire for continued growth they have the opportunity to initiate

programs within new markets in order to emphasize Coca-Colas value.

 
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G. Competition within the carbonated beverage industry is very high, because of this Coca-Cola

needs to ensure that their competitive advantage is sustained in order to remain number 1.

H. Water scarcity, as its primary ingredient can cause production of product to be limit as a

result they need to make sure they are using water at the most effective level.

Review of Mission and Objectives

Coca-Cola’s current mission, vision, values, and objectives are perfectly aligned with their

winning culture. As a result they are perfectly formulated to allow Coca-Cola to not only growth

but be financially successful in a long-term manner.

 
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STRATEGIC ALTERNATIVES AND RECOMMENDED STRATEGY

TOWS Matrix

Internal Factors 2 Strengths (S) 2 Weaknesses (W)

(Row) - External S1: Brand Awareness W1: Dependence on Natural
Factors (Column) S2: Positioned as number 1 in Resources
market W2: Product Recalls

2 Opportunities (O) SO Strategies WO Strategies

O1: Growing demand
for functional, healthy Use current brand awareness Using new programs would allow
beverages in order to introduce existing the company to limit and eliminate
O2: Initiate Programs consumers to healthier the amount of product recalls.
in new markets that alternatives.
reveal cokes value
Use our position as a favorite
and trusted company in order
to implement programs that
add value to our future
products.

2 Threats (T) ST Strategies WT Strategies

T1: Degree Due to our position within the Limiting our dependence on
Competitive Rivalry market we can limit the resources in order to avoid water
influence our competitors have scarcity problems allows
T2: Water scarcity on the Coca-Cola Company. diversifying our risks by entering
threatening efficient non-dependent water markets.
production of products

 
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Strategic Alternatives

Goal: Maximize systems revenue while increasing systems margin.

Stability Strategy

Due to our position within the market we can limit the influence our competitors have on the

Coca-Cola Company.

Within our balanced scorecard's customer perspective, our second customer objective is "to be

known as the highest quality soft drink." More specifically, our strategy's target is to be

"positioned as #1 in the industry." With such a superior ranking, our planned strategy

implementation will generate numerous potential benefits. Essentially, Coca-Cola will acquire a

larger part of market share over its competitors, attract a larger pool of talented employees,

establish an elevated brand reputation, and increase sales revenue, thus increasing the value for

its shareholders. Although these benefits are impressive, we recognize that critical disadvantages

may also result from such a top-tier ranking. Such cons of being number one in the industry are

the added pressures of expectations to always top last year's results, increased competition of

firms attempting to obtain Coca-Cola's spot, greater expectations from employees regarding

benefits and pay, and increased surveillance from the media and envious competitors.

Summarized in the subsequent paragraphs are the cons and prevailing pros of implementing our

number one positioned strategy.

The fundamental advantage of being positioned as #1 is the acquisition of a larger part of market

share over competitors. To reach our target ranking, Coca-Cola must be positioned as superior in

the minds of consumers since customer ranking solely determines our overall target. Alongside

dominant positioning comes brand favorability and loyalty. Once Coca-Cola is strategically

 
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positioned to consumers as higher-ranking, consumers are more likely to show favoritism to the

company and build loyalty to the brand, detracting them from competitors. A second advantage

of holding the number one position is an elevated brand reputation. With this reputation comes

trustworthiness of successful performance and respect from foreign markets. This

trustworthiness initially helps when expanding operations or sales globally. Elevated reputation

also attracts a larger pool of talented employees hoping to contribute and be a part of an

excelling firm. Altogether, Coca-Cola's revenues will increase as a result of their large hold on

the market, which makes them more attractive to existing and potential shareholders willing to

invest capital in the firm.

Closely following Coca-Cola's advantages are the costly disadvantages that may be unavoidable.

First, Coca-Cola will inherit the added pressures of expectations to always top the previous year's

results. Consumers and competitors will raise expectations each year for Coca-Cola, making it

difficult for the company to fabricate increasingly better marketing campaigns. Moreover, Coca-

Cola will be the target of competition. Numerous firms will be after Coca-Cola's top spot in

attempts to knock them off their ranking. This is another added pressure to performance for

Coca-Cola. As mentioned above, Coca-Cola will attract and employ only the most talented

employees. Because of employee performance pressures, employees will demand higher pay and

benefits for exceptional delivery. Furthermore, loyal consumers will also expect more from the

company like added rewards and incentives in exchange for their favorable consumption patterns.

The company will also be under constant surveillance from the media observing and critiquing

their campaigns and reporting any negative news that may arise. Holding the number one spot,

the company will be under the market's spotlight, leaving no room for mistakes. Although these

 
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disadvantages exist, they will trigger the firm to stay innovative and perform to its fullest

potential.

Growth Strategy
Use current brand awareness in order to introduce existing consumers to healthier

alternatives.

Coca Cola is number eight on the world’s most well known brands list. The influence they have

on the people, their consumer is very profound. Being number one in the carbonated beverage

industry is a difficult position to be in, especially with the growing issue of obesity and health

issues in America and across the world. If Coca Cola used their current brand awareness to

introduce existing consumers to healthier alternatives, there will be some advantages and

disadvantages.

Advantages of Coca Cola introducing healthier alternatives though their products is that their

reputation and dedication to social responsibility will continue to increase their customer loyalty

as well as engage a new audience. As they have shown with programs such as Get the Ball

Rolling, and Troops for Fitness Coca Cola has dedicated a lot of money time and resources to the

growth of physical activities across America. Another advantage of Coca Cola introducing their

consumers to healthier alternatives is the education they will be providing the general population

as well as the youth. With the marketing exposure Coca Cola will be able to better inform that

there are healthier choices, through commercials, social media and news articles. One other

advantage of Coca Cola introducing consumers to healthier alternatives is the ability to expand

their product line. Adding healthier alternatives will expand their market segment to other

audiences doing what most health companies can’t producing mass amount for a cheaper price.

 
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Disadvantages of Coca Cola introducing a healthier alternative to their customers would be the

rejection of the products. Coca Cola in the past has messed with the formula of many of it’s

beverages to make them healthier and has introduced many new products that have failed in the

market. It is almost like the been there done that thing, and it is a possibility that they are going

to have to except. Over expansion is another con of Coca Cola initiate a healthier product. With

over expansion in their product lines, Coca Cola makes for more complications in manufacturing

and distribution taking a lot of the companies time resources and money. Another large

disadvantage would be the barrier to entry. Many people who are health conscious are already set

in their brands, Coca Cola over the years has been known for its unhealthy soft drinks, it is very

difficult to change the perspective they have. The price of marketing and awareness for these

new products will be very large and has the risk to greatly outweigh the benefits.

Use our position as a favorite and trusted company in order to implement programs that add

value to our future products.

Coca-Cola currently is one if not the most favored and trusted companies in the world. However

in order to remain the number one ranked brand within the beverage industry they must integrate

programs within their business and towards their consumers. In order for a company to produce

high quality products the employees operating within them must be aiming to do so. In order for

that to occur employees must feel happy and cared for within their work environment. Coca-Cola

has had a lot of issues with this problem especially when it comes to minority employees. Not to

long ago, Coca-Cola was forced to pay a billion dollar settlement in order to settle a dispute for

underpaying African American employees less then their white American employees. Even

though the company strives to advocate diversity that essentially means nothing. Yes, diversity

 
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and making employees feel confortable within their work place is important to the overall

effectiveness of the company. However instead Coca-Cola needs to focus on a Tolerance

Training Program. Allowing employees to understand that while diversity exists and even though

they may not like it they have to be able to work past it. It’s a bold statement but it makes it so

that the issue is directly dealt with in order to increase productivity.

Additionally, Coca-Cola needs to implement programs in order to attract, engage and retain new

consumers. They could do so by implementing new marketing programs that aim to bring

happiness and optimism to everyone of their consumers. Currently they use innovative vending

machines in order to bring together different people together, in addition because of current

health trends they employ the concept of “something for everyone” demonstrating their diverse

beverage lines.

Retrenchment Strategy
Use new and existing programs that will allow the company to limit and eliminate the amount

of product recalls.

One of the most important things that Coca-Cola must work on is improving product consistency.

In order to keep and increase their loyal consumer base they must instill trust within them. When

consumers can trust a company they continue to remain loyal and faithful to it. Recently Coca-

Cola has suffered from a large amount of product recalls. Including re-calls of nineteen thousand

cases of minute maid due to contamination within the bottling processes. If Coca-Cola wishes to

maintain its loyal consumers in order to continue to grow it needs to fix these problems within

the efficiency and consistency of their operations.

 
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Even though Coca-Cola should focus on increasing product consistency and eliminating

unwanted surprises and mistakes it will suffer huge costs in order to do so. Using its KORE

management system, which is a six-sigma based approach it can achieve its goal to increase

efficiency and consistency. However, it should be noted that at the beginning of implantation the

costs of the improved program will outweigh the savings. However in the long run it will

financially benefit the company. Coca-Cola must also ensure that they implement the KORE

system where it is truly needed, because not every sector of the company needs regulated

‘perfection.’

Limiting our dependence on resources in order to avoid water scarcity problems allows

diversifying our risks by entering non-dependent water markets.

One of the biggest problems that Coca-Cola has had to deal with around the world is scarcity

within the natural resources they require, more specifically with water shortages. Water is their

main ingredient within all their beverages. Because they do have bottler and manufacturing

plants all over the world and they are dependent on local resources if any water shortages occur

it can cause decrease in supply and decrease in profits. In order to avoid this Coca-Cola has two

options. First, is to decrease its production capabilities resulting in temporary decrease in profits

or secondly attempt to diversify their product lines by entering non-dependent water markets. If

they choose to decrease their supply they would reduce their profits temporary while not adding

additional costs to their company’s operations. In addition, it will continue to do something they

know how to do and do it well.

 
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However if Coca-Cola does attempt to diversify its products in order to reduce the impact that

water shortages have on their income it can cause various problems. They can either be

extremely successful do to their existing consumer base or they can fail by trying to operate in a

market they know nothing about. With the idea of diversifying themselves they will incur

operational, research and development, and marketing costs. Ultimately this might be more

negative then positive.

Recommended Strategy

Use our position as a favorite and trusted company in order to implement

programs that add value to our future products.

Corporate Strategy

As a whole Coca-Cola aims to continually and competitively grow. Currently Coca-Cola

employs a blanketing corporate strategy that describes the company’s global directional strategy..

In addition “Coca-Cola’s Strategy is to utilize its brands, distribution system, and financial

strength to achieve long-term sustainable growth.” (Kwon, 2008, pg. 29) As a result Coca-Cola’s

actions reflect the six P’s: profit, people, portfolio, partners, planet and productivity. Along with

the company’s extensive brand portfolio Coca-Cola has been able to dominate markets and

become the number one most valuable brand within the beverage industry.

With regards to its products Coca-Cola implements a differentiation competitive strategy

company in reference to its brand strategy. Coca-Cola has been able to do one thing and do it

extremely well. Coca-Cola has combined both its marketing and manufacturing efforts in order

to have the ability to modify any of its products due to changes in the markets or volume demand.

 
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Coca-Cola is a prime example of a successful company that possesses a strong manufacturer

brand. Coca-Cola has time over time demonstrated its ability within the global markets. It has

been successful by being able to think globally and act locally. It has been able to implement

sales promotion, distribution and customer service at a local level. In addition it has become a

billion dollar brand within six markets outside of the United States.

Business Strategy

In order to increase its revenues over time Coca-Cola has partaken in various partnerships with

independent bottling companies. This has allowed them to not only reach a larger consumer base

but also limit the risk they have. As a result both parties have benefited as both continue to

reactive increased profits because of these alliances. Due to the company’s global brand and its

secret formula for its carbonated beverages it has been able to establish “profit power, and points

of leverage.” (De Kuijper, 2010, Pg. 2). Because of this Coca-Cola exclusively supplies its

bottlers with its syrup and gives them rights to their world-famous name in exchange for it “the

bottlers buy the filling equipment and enormous quantities of glass and plastic bottles, manage

workers ranging from plant employees to truck drivers, negotiate with unions, develop

relationships with retailers, and handle local government.” (De Kuijper, 2010, Pg. 2) As a result

the bottlers take on the largest percentage of risk and capital expenditure but with Coca-Cola’s

returns on invested capital they produce a multiple of the bottlers’ returns.

Functional Strategy

Ø Marketing

Coca-Cola has an integrating marketing communication strategy where its mass media

advertising, personal selling, sales promotion, public relations and direct marketing strategy are

all integrated in order to deliver “a clear, consistent and compelling message about their brands

 
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and its products.” (Fu-Ling, 2009, Pg. 131) The marketing tools that Coca-Cola employs have

allowed the company to effectively attract and engage current and new consumers.

Ø Operations

Within the company’s operations they need to seriously consider improving upon their existing

quality control management system KORE. It currently does an average job in establishing

quality control measures however the company needs to improve upon it. It needs to create

incentives such as benefits or rewards in order to ensure that at every level someone is ensuring

that the standards are being met. In addition the company needs to make sure that their company

and their bottler partners are on the same page and understand that with each others help and by

fulfilling high quality measure that they can both financial benefit.

Policies

Workplace Rights Policy

It includes the following components: freedom of unionization, prohibition of forced labor,

prohibition of child labor, prohibition of discrimination, establishment of safe working

conditions, workplace security (intolerance of violence and harassment), "fostering of goodwill

in communities" through recognition of environmental impact.

Supplier Guiding Principles

Similar to the Workplace Rights Policy however there is an added component specific to

suppliers. Business integrity states how suppliers must uphold the highest integrity through

avoidance of fraudulent activities and any other unethical behavior. Furthermore, management

systems state how suppliers must implement systems to ensure lawful compliance within their

employees.

Global Mutual Respect Policy

 
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The global mutual respect policy lays out employee guidelines for communications in work

operations. It includes the promotion of diversity as well as the responsibility of every employee

to maintain a work environment of mutual respect and free from discrimination and harassment.

 
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IMPLEMENTATION

Action Plans

Action Plan for Alexander B. Cummings, Chief Administrative Officer; Ed Steinike, Chief
Information Officer; Kathy N. Waller, Chief Financial Officer; Guy Wollaert; Chief Technical and
Innovation Officer

Financial Program Objective: maximize company and bottler long-term

cash flow.

Program Activities:
1. Identify the best way to boost system investment in sales and market execution.
2. Determine manner in which we can operate at the lowest cost for manufacturing and logistics.
3. Create standards in order to ensure quality remains at a top priority.
4. Produce and economies of scale system based on the company’s size and expertise.

Action Steps Responsibility Start-End

1. A. Review past trends Cummings, Waller, & Steinike 1/1 - 2/1
B. Discuss with other top management Cummings, Waller, & Steinike 2/1 – 2/3
C. Decide on 2 alternatives Cummings &Waller 2/4 – 2/30
D. Make a decision Waller 3/1

2. A. Look at past manufacturing costs Waller & Wollaert 3/1 – 4/1

B. Look for unnecessary expenses Waller & Wollaert 4/2 – 5/2
C. Reduce or remove unnecessary equipment Waller & Wollaert 5/2 – 5/30

3. A. Review current quality standards

B. See if any need to be changed due to updates Waller & Cummings 1/1 - 1/30
is resource, machinery etc. Waller & Cummings 2/1 – 2/15
C. Write specifications needed for new
standards Cummings 2/16 – 2/30

4. A. Determine current cost advantages Waller & Wollaert 5/2 – 5/30

B. Determine current cost per unit of output Waller 6/1 – 6/3
C. Determine necessary fixed costs
Waller   6/3 – 6/15

 
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Action Plan for  Ed Steinike, Chief Information Officer; Guy Wollaert; Chief Technical and
Innovation Officer
 

Internal Business Program Objective: improve manufacturing

efficiencies

Program Activities:
1. Redirect Resources to drive profitable growth.
2. Standardize and simplify our business processes, data, and IT systems.
3. Create a competitive cost advantage across entire supply chain.
4. Create, maintain, and continuously improve a cost management culture while minimizing
energy use.

Action Steps Responsibility Start-End

1. A. Determine current cost Steinike & Wollaert 1/1 - 2/1
B. Determine unused, wasted resources Steinike 2/1 – 2/3
C. Find ways to share resources or Wollaert 2/4 – 2/30
redistribute unused ones.

2. A. Review Current. Steinike 3/1 – 4/1

B. Determine any correction, Steinike 4/2 – 5/2
improvements, or updates needed
C. Discuss with IT Steinike 5/2 – 5/15

3. A. Review Current Steinike & Wollaert 1/1 - 1/15

B. Determine supply chain cost Steinike & Wollaert 1/16 – 1/30
C. Determine linkages possible to reduce Steinike & Wollaert 1/30 – 2/30
cost

4. A. Determine ways to make operations eco- Steinike & Wollaert 4/15 – 5/1
friendly.
B. Reward incentives Wollaert 5/1 – 5/20
C. Emphasize reduce cost Wollaert 5/20 – 5/25

 
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Action Plan for Joseph V. Tripodi, Chief Marketing and Commercial Officer; Lisa M. Borders,
Vice President of Global Community Connections

Customer Program Objective: attract, engage and retain more customers

Program Activities:
1. Increase knowledge of our customers
2. Get the ball-rolling program
3. Further my coke rewards
4. Further customer excitement about programs

Action Steps Responsibility Start-End

1. A. Determine existing knowledge. Tripodi & Borders 1/1 - 1/15
B. Formulate three alternatives that appeal to Tripodi 2/15 – 3/15
consumers
C. Choose one to implement Borders 3/15 – 3/30

2. A. Create outline of existing goal. Borders 3/1 – 4/1

B. Find most accessible form to deliver Borders 4/2 – 5/2
C. Create incentive for them to join Borders 5/2 – 5/15

3. A. Determine existing knowledge of program Tripodi & Borders 1/1 - 1/15

B. Discuss ways to improve weaknesses Tripodi 1/16 – 1/30
C. Implement new modifications Tripodi 1/30 – 2/30

4. A. Find new promotional means Tripodi 4/15 – 5/15

B. Determine where they are bet suited for Borders 5/15 – 5/30
C. Add to existing innovative ideas Tripodi 5/30 – 1/15

 
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Action Plan for Clyde C. Tuggle, Chief Public Affairs and Communications Officer; Ceree
Eberly, Chief People Officer

Learning and Growth Program Objective: increase and sustain

employee satisfaction

Program Activities:
1. Performance Compensation
2. Employee Reward Systems
3. Tolerance Training
4. Coca-Cola University

Action Steps Responsibility Start-End

1. A. Write out guidelines for eligibility Tuggle and Eberly 1/1 - 1/15
B. Determine amounts to be given Tuggle 2/15 – 3/15
C. Make them known to all employees Tuggle 3/15 – 3/30

2. A. Determine guidelines for eligibility Tuggle and Eberly 3/1 – 4/1

B. Determine what rewards would be given Eberly 4/2 – 5/2
C. Make employees aware of them Eberly 5/2 – 5/15

3. A. Review Current Topic solution Eberly 1/1 - 1/15

B. Access needs to be addressed Eberly 1/16 – 1/30
C. Discuss way to best integrate within Eberly 1/30 – 2/30
system

4. A. Review current themes addressed Tuggle and Eberly 4/15 – 5/15

B. Modify topics if needed Tuggle and Eberly 5/15 – 5/30
C. Determine guidelines for eligibility Tuggle 5/30 – 1/15

 
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Matrix of Change

*Explanation of matrix of Change in Appendix 2

With the Matrix of Change, it is visible that the new and recommended programs/activities will

not interfere drastically with Coca-Cola’s existing programs. As a result they will benefit Coca-

Cola in order for them to be able to continuously and competitively grow while remaining

 
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number one in their industry. They will allow Coca-Cola’s company value to increase while

adding consumer reliability.

Strategy Framework/Map

 
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EVALUATION AND CONTROL

Balanced Scorecard

Financial
Objectives Measures Target Initiative

1) Increase Value for Increasing stock price. To increase the price of Maximize ROI too add
Shareholders their stock by 7%. value for shareholders.

2) Maximize company Return for stockholders, To increase revenue vs Use size & expertise to
& bottler long term economic profit growth, cash flow from create economies of
cash flow and system cash flow. operations by at least 5%. scale.
3) To increase Net operating Revenue in To increase net operating To better understand
profitability in foreign Africa. revenue from 5.9% to 8% trends of structural
marketing segments. changes.

Financial Programs

Ø Objective 1 | Increase Value of Shareholders

It would be in Coca Cola’s best interest to increase the value of their stock for their shake holders

for future profitability. This is because the increase in the value of their stock would also

increase the brand’s image and power in the market. A higher stock price would give Coca Cola

a greater brand presence. Although the company already has a well maintained and position

presence in the market, there is nothing wrong with further strengthening it. The measures that

Coca Cola would have to partake in so that they can increase the value of their company’s stock

would be increasing the price of their stock. This is because when the company would increase

their stock’s price, they would bring not only value to the pockets of their shareholders, but they

would also bring profits towards the company and its image and position. Although Coca Cola

has the most profitable stock in comparison with its competitors, its price is the lowest. This is

because Coca Cola split its stock with its bottling company bringing its monetary value down to

 
 Page | 132
   

only forty dollars per share, while the bottling company has a monetary value of about seventy-

six dollars per share. The forty may seem like a very low number in comparison to Pepsi, which

has its stock worth almost eighty eight dollars per share and Nestle, which has its stock worth

seventy eight dollars per share. However, when the stock of both Coca Cola and the Coca Cola

Bottling Company are added together, it gives a grand total of about $116 per share, which is far

greater than the stocks of both Nestle and Pepsi. The target for the growth in Coca Cola’s stock

price would be to increase it by a total of approximately 7%. This would result in an increase in

the price of the company’s stock by just about $2.80. The initiatives that Coca Cola would utilize

to complete this financial objective would be stock dividend distribution and a Share

repurchasing plan. If a company is to repurchase or buy back its shares, it initially increases the

price of its stock.

Ø Objective 2 | Maximize company & Bottler Long-term Cash Flow

The Coca-Cola Company has implemented what they refer to as the 20/20 vision. The 20/20

vision is where the company visions themselves to be by the year 2020. One of their visions is to

maximize the long-term cash flow of the company and the bottler company. The 2020 vision

originated with the goal to double their revenue. Since the 2020 vision has been in motion, Coca-

Cola has generated $65 Million in operating cash flow per day in 2010. Although Coca-Cola is

increasing their cash flow yearly, as well as their revenue, they will not meet their purpose of

creating the 2020 vision. In order for Coca-Cola to double their revenue they would have to

increase their revenue by 5% each year.

The steps that Coca-Cola will take in accomplishing to increase revenue by 5% is to increase

higher economies of scale. Such measures include investing globally for the long term. This way

 
 Page | 133
   

Coca-Cola will see a high turnover by the end of their 20/20 vision. Coca-Cola is investing

money in nations such as Africa, China, México, Russia, and Brazil. Coca-Cola is investing $2

Billion in china, $5 billion in the bottling operations in Mexico, and within the next five years

Coca-Cola is investing $1 Billion in Russia and $6 billion in Brazil.

Overall, since the start of the 20/20 vision Coca-Cola has built 60 new bottling plants over the

past five years. With the investments made by Coca-Cola it should increase their economies of

scale to gain 5% revenue each year.

Ø Objective 3 | To Increase Profitability in Foreign Marketing Segments

Coca-Cola needs to increase profitability in foreign marketing segments and specifically,

revenue within Africa. Coca-Cola’s goal is to increase the revenue from 5.9% up to 8%. Africa

was chosen because of the promising growth rate of the economy. One program that has already

been started is their micro distribution systems. This micro distribution system is a win-win

strategy enacted by Coca-Cola. When looking to expand within Africa in 1999, Coca-Cola ran

into a problem with the narrow roads and distribution. Coca-Cola’s solution to the roads was to

start up this micro distribution strategy. This micro distribution system is one in which

entrepreneurs within Africa can are in total control of franchise and distribution.

Coca-Cola lowest profit margin segment is within Africa even with the micro distribution

center. In order for Coca-Cola to increase the revenue from 5.9% to 8% the company needs to

take a more active role in Africa’s distribution system and government. Currently Africa is in a

period of growth and expansion especially within Nigeria. Nigeria recently surpassed South

 
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Africa’s GDP and is worth $510 billion dollars (Economist, 2014). Coca-Cola can utilize this

and get a better footing within the country to increase revenue.

Customer
Objectives Measures Target Initiative

1) Attract, retain, and engage Repeat customers and Increase customer My Coke Rewards.
more customers. number of new customers. base by 10%

2) To be known as highest Customer ranking Positioned as #1 in KORE Quality

quality soft drink. industry management.

3) Inspire healthy lifestyles Number of participants. Increase “Get the ball-rolling”

participating location program.
by 20 cities.

Customer Programs

Ø Objective 1 | Attract, Retain, and Engage More Customers

In order to attract, retain and engage customers Coca-Cola must stay relevant in an evolving

market, Coca-Cola must adapt to consumer’s changing perspectives by delivering authentic

Coca-Cola taste in lower-sugar, health-conscious formats rather than creating new, unfamiliar

product lines and flavors. In the past decade, there has been a booming health and fitness trend

fueled by an increased consciousness of the consumption of unhealthy foods and sugary drinks.

In fact, sugary juices and soft drinks are believed to be one of the primary drivers of obesity

among kids. This is partly due to the fact that sugar, in liquid form, can be ingested in much

larger amounts in a much shorter period of time than sugar in solid form. Some jurisdictions,

such as New York City, in a move to combat obesity, have actually attempted to limit the sale of

sugary soft drinks at restaurants, theatres, and other venues.

 
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It is clear then that views have been changing on America’s soft drink, Coca-Cola, which has

been on the forefront of the onslaught against heavily sugared beverages. In the past, Coca-

Cola’s response to health concerns has been through their diet brand, Diet Coke. However,

because Diet Coke had a different taste than original Coca-Cola, the Coca-Cola Company

decided to create their new line of Coke Zero, which is advertised as tasting exactly like original

Coca-Cola, sans sugar. However, Coke Zero, like Diet Coke, retains the use of artificial

sweeteners including aspartame and acesulfame potassium or “Ace-K.” There are two major

problems with the use of these two artificial sweeteners: 1) Recent health and fitness trends

(think Whole Foods, Cross fit) have made the average consumer more aware of food ingredients

and additives especially those that do not occur naturally 2) Both aspartame and Ace-K are

controversial sweeteners as both are linked to long-term health issues, thought to increase the

odds of the occurrence of cancer, and some research has even concluded that regular

consumption of these compounds can increase, ironically, the chances of obesity and diabetes.

Meanwhile, the original Coca-Cola formula that is sold in the United States continues to use

high-fructose corn syrup as the primary sweetening agent. It can be said that high-fructose corn

syrup is the main cause for obesity in those consuming large amounts of processed foods and soft

drinks. This is because fructose, unlike glucose, is metabolized into fat. Whereas in the

consumption of glucose, most sugars pass through, or are used, by the body, fructose is largely

stored as fat and has a higher chance of leading those diabetes.

With this knowledge in mind, in order to stay socially relevant, promote a better brand image,

and spur sales, Coca-Cola should reduce the amount of sugar content in its formula as much as

 
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possible to retain original taste. This can be done without the use of controversial artificial

sweeteners, which a large portion of Americans is beginning to avoid. Rather than sweetening

Coca-Cola with high-fructose corn syrup, it could be plausible to use dextrose (which is derived

from glucose) or the natural sweetener Stevia to sweeten Coca-Cola beverages. By doing so,

Coca-Cola can retain the original formula that generations have grown to enjoy while providing

a more healthy beverage that the customer can consume on a more regular basis.

In addition to making Coke beverages healthier, Coca-Cola can also increase its customer base

through its promotion strategy via “My Coke Rewards.” The program is a rewards system that

gives Coca-Cola customer’s codes under the cap or on the packaging of various Coca-Cola

products. These points can then be used on the My Coke Rewards website to redeem for various

items. However, one would be hard pressed to find someone who actually knew that the program

existed, much less someone who actually participates in it.

Ø Objective 2 | To be Known as Highest Quality Soft Drink

A primary customer objective that we have included in our strategy is to be known as the highest

quality soft drink. As of this year, Coca-Cola has moved one ranking up from last year and now

holds the number one spot on Forbes' beverage industry ranking list. The metric of performance

we're most concerned with is customer ranking. To maintain the number one spot in the industry,

our plans for the company include strong implementation and execution of quality management.

Quality management is an essential determining factor as to how our beverages are produced,

with what ingredients, and to what standards, all at a price reflecting value. The current quality

management program the firm has in place takes into account major customer health concerns

like packaging, dye coloring, governmental laws, and even external suppliers' manufacturing

 
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processes. In addition to strict abidance to health regulations, the firm must not only focus on

operations but also on public relations. In 2012, it was reported that Coca-Cola had traces of

alcohol in its beverages. To properly control publicly exposed information like this that can be

potentially damaging to the corporation, Coca-Cola must respond with accurate information and

update its consumers as part of quality management. In this particular alcohol scenario, Coca-

Cola admitted to small traces of alcohol less than one kilogram per serving. They compared this

amount with bread, which generally has four times this amount of alcohol. Coca-Cola assured

that although their beverages did have traces of alcohol, the actual amount was acceptable to

health regulations. They confirmed that "governments and religious organizations have

recognized that trace levels of alcohol, which exist as a result of natural processes, are

completely normal and are acceptable in nonalcoholic foods and beverages." As evident, Coca-

Cola's priorities for maintaining their current position include quality management of ingredients,

operations, and public relations.

Ø Objective 3 | Inspire Healthy Lifestyles

As a beverage company that serves one of the world’s most favorite soft drink, Coca-Cola

beverage, we may be looked down upon for having an unhealthy soda. However, that is not our

intention. Our objective is to inspire a healthy lifestyle for our consumers through our “Get The

Ball Rolling” program. For us, it starts with our youth generation. In today’s society, only 25

percent of American youth plays outside, as opposed to the 75 percent from one generation ago.

We realize that the obesity levels in society are continuously rising and need to be fixed. There

may not be a set solution to obesity but there is always a start somewhere, and at Coca-Cola we

believe that we can work together with our youth to fight against obesity and get the youth more

active. The measures we will use to determine our effects and change on society will be the

 
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number of participants. When we first started the “Get the Ball Rolling” program we hoped to

inspire 3 million people. Now that we have reached and exceeded our goal, our new target is to

expand to 20 new cities and take it to a global level as well. Working together and exceeding our

goals go back to our mission as a company “to refresh the world, to inspire moments of optimism

and happiness, to create value and make a difference.” We are taking initiative with this program

in hopes of once again exceeding our expectations. Coca-Cola is committed to move forward

together towards a healthier future. As part of our heritage and morals, we strive to get a

healthier youth to create a healthier future. A healthy lifestyle is a happy lifestyle.

Internal Business Process

Objectives Measures Target Initiative
1) Six Sigma- Product Consistency Product Recalls (19,000 Reduce recalls to KORE
minute made) 0%
2) Improve distribution system Expand local supply Increase micro Growing geographical
chains distribution reach
centers by 500
3) Improve manufacturing Reduce, reuse, recycle. Reduce KORE Quality control
efficiencies. production by
40% in inefficient
plants.

Internal Business Programs

Ø Objective 1 | Six Sigma Product Consistency

Coca-Cola’s strongest asset is its Brand image and positioning. But that Brand Image,

unfortunately, can be easily tarnished with constant product recalls. These product recalls effects

consumers confidence and trust in the not only in the firm but in the firms products. Consumers

expect superior consistent products from Coca-Cola so it’s vital that Coca-Cola produces

consistently superior quality products. Yet unfortunately, there have been multiple product

 
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recalls in Coca-Cola’s short-term history. For example, just in late 2013 Coca-Cola had to recall

almost twenty thousand cases of minute maid due to some type of bacteria contamination that

can lead to botulism.

Fortunately for Coca-Cola, the introduction of certain attributes of Six-Sigma if implemented

correctly will effectively lessen the amount of product recalls. The objective would simply be

quality control of production systems in order to wash away any potential product imperfections

and/or contamination. Six Sigma in this case would be used to, “ … make sure large, complex

projects go right the first time” in order to eliminate the possibility of product recalls (Welch,

248). Doing things right the first time will result in consistently high quality products and

reductions in product recalls because with six-sigma, Coca-Cola will have a better system in

place to find inconsistencies within their production systems. Which essentially leads to critical

thinking and discipline. Critical thinking and discipline that, “… improves design, processes, get

products to market faster with fewer defects, and builds customer loyalty.” (Welch, 245)

Ø Objective 2 | Improve Distribution System

In order for the Coca Cola Company to reach appropriate growth in both the United States and

all over the world, the distribution system of the firm will need adjustment. Coca Cola has taken

an adaptive approach in each of the countries in which their products are sold, cutting adding and

adapting the of distribution processes and centers. Through creating efficiency within

distribution there will be much more time, people and resources to increase the company’s

geographical outreach to some of their less profitable regions. Africa is responsible for about 5%

of the total revenue in the Coca Cola Company through the expansion in supply chain in areas

such as Africa it will greatly increase the profitability of the company. The company will profit

not only from sales but through their Micro Distribution Center business model that generates

 
 Page | 140
   

over 950 million a year in revenue but also creates jobs and strengthens local communities. Not

only is this model successful but it improves the quality of life for the people around it, making it

socially responsible creating customer loyalty.

There is great potential in Africa mainly because there is a lot of room for growth, there are only

around 3,200 Micro Distribution Centers for about 11.6 million square acres of land, much of

which is inaccessible by truck. The Micro Distribution centers are an easier more efficient way

for Coca Cola to get their product out to their most vital consumers, small markets mom and

pops that serve local communities. With a normal distribution system the Coca Cola Company

would not be able to reach certain geographical locations in Africa, yet with the Micro

Distribution Center model it can reach hard to reach markets. By increasing the number of these

Micro Distribution Centers by about 500 in the region of Africa is the key to growth and global

outreach for the Coca-Cola Company.

Ø Objective 3 | Improve Manufacturing Efficiencies

Coca-Cola holds the largest distribution and manufacturing system for soft beverages. If it plans

to cut costs and keep its large customer base, then it must focus on improving manufacturing

efficiencies. The task is to attract superior and tactical recruits for operations supervisor and

manager positions who are well trained and value the importance of efficiency and teamwork.

One thing that these recruits must understand is to realize the myth of the super-manager and that

not all their problems can be readily solved. To improve manufacturing efficiencies we need to

analyze the bargaining forces of the supplier and the buyer. The circumstances that these external

factors are in will determine certain pressures that a manufacturing plant or bottling plant will go

through. Upper management must understand these external pressures and have a strategic plan

 
 Page | 141
   

set up just in case there is an unforeseen issue with the manufacturing process. Management is

mainly in charge of running efficient internal production and it must take into account the best

ways in which it can make its inputs into outputs and allow for suggestions from line level

workers to inform staff level employees.

Learning and Growth Programs

Learning and Growth

Objectives Measures Target Initiative

1) Employee satisfaction Job Satisfaction and 100% of happy Performance

Fulfillment employees Compensation Plan and
Employee Rewards
System
2) Employee awareness of Strategic Awareness 100% Communications and
company strategy training program

3) Diversity Management Employee Retention 100% retention Tolerance Training

Ø Objective 1 | Employee Satisfaction

In order for the Coca=Cola Company to keep growing, they must encourage their employee’s

satisfaction. Employee satisfaction is essential for any business to be successful. Happiness in

the work please will lead to higher levels of productivity, they are more willing to work hard and

improve the company. If an employee enjoys his job, then it will not seem like a job at all, and

they would actually want to be there rather than taking multiple days off.

Coca-Cola needs to strive for 100% employee satisfaction. The company intends to do this by

offering employee rewards and benefits. The employees will work harder if there is a reward at

the end. For example, who ever increases their sales the most could be rewarded with a monetary

 
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bonus. This would encourage the employees to increase their sales, and they will be happy to do

it since they will receive something as a reward in the end.

Ø Objective 2 | Employee Awareness of Company Strategy

Coca-Cola understands that in order to reach their 2020 Vision everyone must be on board and

know what the company is aiming to achieve. There are more than 700,000 associates that create

the Coca-Cola system. In order to achieve the goals outlined within their 202 Vision Coca-Cola

understands that each of their employees must bring “his or hers unique talents and ideas to work

every day.” (The Coca-Cola Company, 2014) In order to do so Coca-Cola ensures that their

associates are happy, healthy and treated fairly at all times. They also aim to “create

environments where people are fully engaged and where the company is viewed both internally

and externally as an employer choice.” (The Coca-Cola Company, 2014)

Additionally, Coca-Cola supports and encouraging open communication, which allows them to

obtain valuable information, increase awareness, promote business strategies, share successes

and opportunities, and asks for employee opinions. (The Coca-Cola Company, 2014) In order to

encourage this behavior they offer “compensation and benefit packages that are among the best

in the world.” (The Coca-Cola Company, 2014) Furthermore they offer developmental

opportunities including Coca-Cola University that allows high performers to advance their

learning and position within the company. Coca-Cola University’s learning portfolio includes

leadership, marketing, human rights, compliance and ethics, diversity, sustainability, and finance.

(The Coca-Cola Company, 2014) In order to achieve employee engagement and awareness with

their strategic plans they employ the Peak Performance System. This is Coca-Cola’s

performance management and development system.

 
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Ø Objective 3 | Further Advocate Employee Diversity

In the early 2000s, a racial bias federal lawsuit accused Coca Cola having a unequal pay which

brought by African American employees who worked at Coca Cola. These African American

workers at Coca Cola claimed that they had received bottom pay scale compared with white

workers. In the end, Coca Cola agreed to pay up to $156 million in order to settle the case.

(Winter, 2000)

The racial bias case occurred during the early 2000s, so that it is still relevant to the development

of promoting rich workplace diversity at Coca Cola in the past decade. As a result, the Coca-

Cola had noticed that workplace diversity is the core of its global business. Therefore, the Coca-

Cola Company strives to advocate the global diversity mission to have more people with diverse

ethnicity and talents work in the company. Coca Cola should view diversity as the company’s

asset instead of policies and regulation. In addition, Coca Cola should utilize the advantage of

diversity to maintain its sustainability issue and advance its future corporate performance and

ethnicity diverse journey.

 
 Page | 145
   

APPENDICES
Appendix 1
Table 1: Board Of Directors Stock Ownership

Director Stock Owned

MuhtarKent Public Shares Owned as of 2014: 8,657,069
13,000 Shares are in Kent’s Family Foundation.
129,000 shares are in a trust that is owned by his wife and
children
134,000 shares are held by a trust in which Mr. Kent and
his children are beneficiaries
72,498 shares are in 401(k) plan
9,285,123 shares are exercisable
Owns an extra 50,741 that are in 401(k) plan
Does not include 10,500 shares purchased on February
25th

Herbert A. Allen Public Shares Owned as of 2014: 18,062,700

6,000,000 shares held by ACI
32,700 shares held by 12 trusts of Mr. Allen
30,000 shares held by a foundation in which he owns ⅙ of
Does not included 58,922 share units deferred in retirement

Ronald W. Allen Public Shares Owned as of 2014: 24,000

4,000 Shares held by wife, in which Mr. Allen is the
disclaimed beneficial ownership of these shares.
56,203 share units are deferred for retirement.

Ana Botin Public Shares Owned as of 2014: 2,500

All shares owned by a Spanish limited company in which
Ms. Botin and her husband are indirect beneficial owners.
Does not include 56,203 share units deferred for retirement

Howard G. Buffet Public Shares Owned as of 2014: 48,592

Does not include 13,033 shares for deferred retirement

Richard M. Daley Public Shares Owned as of 2014: 4,000

Shares are in trust in which Mr. Daley is the trustee and
beneficiary.
Does not include 11,577 shares for referred retirement.

Bary Diller Public Shares Owned as of 2014: 4,000,000

 
 Page | 146
   

Does not include 84,527 share units deferred for retirement.

Helene D. Gayle Public Shares Owned as of 2014: 1,000

Does not include 4,052 share units deferred for retirement

Evan G. Greenberg Public Shares Owned as of 2014: 28,058

Does not include 15,8511 shares deferred for retirement.

Alexis M Herman Public Shares Owned as of 2014:

-2,000
-Does not include 24,341 deferred shares for retirement.

Robert A Koyick Public Shares Owned as of 2014: 70,018

Includes 18 shares owned by his daughter.
Does not include 9,959 share units deferred for retirement.

Maria Elena Lagomasino Public Shares Owned as of 2014: 23,631

-Does not include the 24,341 share units deferred for
retirement

Sam Nunn Public Shares Owned as of 2014: 2,000

Does not include 108,718 share units deferred for
retirement.
Public

James D. Robinson III Public Shares Owned as of 2014: 117,650

Includes 53,196 shares held by a trust in which Mr
Robinson is a co-trustee
Does not include 2,350,000 shares of which Mr. Robinson
is a beneficiary with no voting or investment power.
Does not include 102,364 share units deferred for
retirement.

Peter E. Ueberroth Public Shares Owned as of 2014: 122,000

Includes 44,000 shares held by a trust of which Mr.
Ueberroth is one of two trustees and beneficiary.
20,000 shares held by his wife
16,000 shares held by a foundation in which he is ⅙ owner

 
 Page | 147
   

Appendix 2

Matrix Of Change Explanation

--- Current Practices ---

Existing Practices
Practice Group 1:

Customer Development
Practice 1:
My Coke Rewards
Practice 2:
Get the Ball Rolling
Practice Group 2:

CSR
Practice 1:
Water Stewardship
Practice Group 3:

EmpDev
Practice 1:
Coca-Cola University
--- Current Practice Interactions ---

Existing Practices
Practice Group 1:

Customer Development
Practice 1:
My Coke Rewards
- Interaction with: Get the Ball Rolling
+ Interaction with: Tolerance Training
+ Interaction with: Water Stewardship
+ Interaction with: Six Sigma Program
Practice 2:
Get the Ball Rolling
- Interaction with: My Coke Rewards
- Interaction with: Performance Compensation Plan
- Interaction with: Share Repurchasing Plan
+ Interaction with: Coca-Cola University
Practice Group 2:

CSR

 
 Page | 148
   

Practice 1:
Water Stewardship
+ Interaction with: My Coke Rewards
+ Interaction with: Coca-Cola University
+ Interaction with: Tolerance Training
- Interaction with: Performance Compensation Plan
+ Interaction with: Six Sigma Program
Practice Group 3:

Employee Development
Practice 1:
Coca-Cola University
+ Interaction with: Get the Ball Rolling
+ Interaction with: Tolerance Training
- Interaction with: Perfomance Compensation Plan
- Interaction with: Share Repurchasing Plan
+ Interaction with: Water Stewardship
+ Interaction with: Six Sigma Program
--- Current Practice Interactions Highlighted ---

Existing Practices
Practice Group 1:

Customer Development
Practice Group 2:

CSR
Practice Group 3:

EmpDev
--- Target Practices --- 2 Alternatives ---

Alternative 1 of 2

Target Practices: Alternative 1

Description:
Matrix Interaction:
"+" = Complementary Practices
" " = Weak/No Interaction
"-" = Interfering Practices

Importance to Job:
+2 Very Important
+1 Somewhat Important
0 Irrelevant

 
 Page | 149
   

-1 Somewhat Interfering
-2 Significantly Interfering
Practice Group 1:

Employee Productivity
Practice 1:
Tolerance Training
Practice 2:
Perfomance Compensation Plan
Practice Group 2:

Economies of Scale
Practice 1:
Six Sigma Program
Practice Group 3:

Value Added to Shareholders

Practice 1:
Share Repurchasing Plan
--- Target Practice Interactions: 2 Alternatives ---

Alternative Interactions 1 of 2

Target Practices: Alternative 1

Practice Group 1:

Customer Development
Practice 1:
My Coke Rewards
- Interaction with: Get the Ball Rolling
+ Interaction with: Tolerance Training
+ Interaction with: Water Stewardship
+ Interaction with: Six Sigma Program
Practice 2:
Get the Ball Rolling
- Interaction with: My Coke Rewards
- Interaction with: Perfomance Compensation Plan
- Interaction with: Share Repurchasing Plan
+ Interaction with: Coca-Cola University
Practice Group 2:

CSR
Practice 1:
Water Stewardship
+ Interaction with: My Coke Rewards

 
 Page | 150
   

+ Interaction with: Coca-Cola University

+ Interaction with: Tolerance Training
- Interaction with: Perfomance Compensation Plan
+ Interaction with: Six Sigma Program
Practice Group 3:

Employee Development
Practice 1:
Coca-Cola University
+ Interaction with: Get the Ball Rolling
+ Interaction with: Tolerance Training
- Interaction with: Perfomance Compensation Plan
- Interaction with: Share Repurchasing Plan
+ Interaction with: Water Stewardship
+ Interaction with: Six Sigma Program

 
 Page | 151
   

Team Photograph

 
 Page | 152
   

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