TERM PAPER OF STRATEGIC MANAGEMENT ON “BCG MATRIX OF COCO-COLA”

SUBMITTED TO, MS. ANUMEHA JHA

SUBMITTED BY, KARAN WADHERA RT1803A16 10808494 (REG. NO.)

CONTENTS
I. COCO-COLA, INDIA
 MISSION STATEMENT  VISSION STATEMENT  VALES  BELIEFS & DIVERSITY

II. III. IV. V. VI.

CULTURE OF COCO-COLA PRODUCT STRATEGY PRODUCTLINE OF COCO-COLA , INDIA SWOT ANALYSIS OF COCO-COLA BCG- MATRIX
 BENEFITS  LIMITATIONS  BCG-MATRIX COMPONENTS

VII. VIII. IX. X.

BCG-MATRIX OF PRODUCTLINE OF COCO-COLA ,INDIA BCG- PRODUCT LIFE CYCLE REVIEW OF LITERATURE CONCLUSION

• Company Associates: 90. INDIA Coca-cola Company. The business system of the company in India directly employs approximately 6. Sprite and Fanta. limca. returned to India in 1993 after a gap of 16 years.HCCB serves in India some of the most recalled brands across the world including names such as coca-cola. and indirectly creates employment for many more. minute maid pulpy orange. sprite. fanta. Coca Cola was the first in the country to launch cans. nourishing the global community with the world’s largest selling soft drink since 1886. 2007) • Operational Reach: 200+ countries • Consumer Servings (per day): 1.COCO-COLA . plastic cap leak proof bottles and full length delivery crates. MISSION STATEMENT . • Ranking: We own 4 of the world’s top 5 nonalcoholic sparkling beverage brands: Coca-Cola. maaza and kinley (packaged drinking water). thums up.500 worldwide (as of December 31. Coca-Cola India has increased its market share from 57 percent in the carbonated soft drink (CDs) category in 2005 to 61 percent at the end of December 2006.5 billion. Diet Coke.000 people.

Without Neglecting The Quality Of The Process Doing the Right Thing BELIEFS AND DIVERSITY . And Services We Offer Focus On Results.”  Building Preference & Market Leadership For Our Brands  Achieve Quality Excellence And Serve Our Customers With Quality Products Maximizing Profits Developing People Optimum Utilization Of Assets   VALUES  Respect And Trust As The Framework Of All Our Relationships     Flexibility For Our Clients.“TO HAVE A STRONG DOMINANT AND PROFITABLE BUSINESS IN INDIA”. Processes. SHARED VALUES  We value and respect our employees  We communicate openly  We have integrity  We are committed to winning VISION “TO CREATE VALUE FOR OUR SHARE HOLDERS. Partners And Staff Innovation In The Products.

Protect The Environment. Every Day to Refresh the Marketplace.m. (all departments’ other then technical departments). Strengthen Our Communities.  New employees are placed with old ones to learn work and the values prevalent in the company  The company working environment is really a good blend of asian and western values Coca-cola is providing smart wages to its employees. Medical facilities are of prime importance in any organization   . Vibrant Network of People in 200 Countries.       CULTURE OF COCA-COLA COMPANY    Our employees are our asset Motivating employees Bonuses for employees  Special discount for employees  Work in shifts 8 p. (technical department). 4 p.m. Our Actions as Local Citizens.m. to 12 p. to 4 p. Enrich The Workplace.m. Putting Citizenship into Action.

returnable glass bottles. use or consumption that might satisfy a want or need. . Actual product: Design: Pet bottles. Coca-Cola Can quality that is available in Middle East is certainly different as compared to Coke Can available in India. because the purchasing rate is very high and this is the product that is bought very frequently. acquisition.PRODUCT STRATEGY Product: Anything that can be offered to a market for attention. Product Classifications: Coke is categorized as a convenience product. Levels of coke as a product Core product: Core benefit is that it fulfills the thirst. economy packs. Quality: Quality differs with respect to country for example.

Individual product decisions Brand Existing New Existing Product Line extension Brand extension New Multi-Branding New brands BRANDING: a) Brand Equity: .

Sprite. This was an example of brand extension. Product Line Decisions: Product Line Length: It means the number of products that company is offering. Diversification: It means introducing new product with the new brand name. Multi-Branding: It means introducing additional brands in the same category. . Fanta . People are highly brand loyal. For example if Coke introduces new flavors and package size. it will be considered as line extension.As far as coke is concerned brand equity for the customers is very high. Brand Extension: Brand extension means using a successful brand name lets say Coca-Cola and then launching new product for example cherry coke. For example Coke. Diet Coke. For example CocaCola not only introduced coke as a brand but also sprite and Fanta. It means diversification but this is something Coca-Cola has not adopted for as yet. b) Brand Strategy: The following is the brand strategy of Coke Line Extension: Line extension occurs when a company introduces additional items in a given product category under the same brand name.

PRODUCT LINE OF COCO-COLA IN INDIA .

PRODUCT THAT SELL MORE IN MARKET ACCORDING TO DISTRIBUTORS .

Strength • Strong leading brands with Weakness • Financial market volatility .S P R IT E C O K E UP 2 M A A ZA F A N T A L I M C A 6 5 8 PRODUCTS SWOT ANALYSIS OF COCA-COLA.9 8 7 SELL IN MARKET 6 5 4 3 2 1 0 3 1 T H U M S .

the brand is able to create over $ 50million a day. Opportunities • Global growth in non-alcoholic ready-to-drink beverage industry. • Health and wellness has created concern for carbonated product especially in the USA and Europe. energy drink. impacting pension assets and in turn the liquidity position of the company.g.this trend is set to generate retail sale in the industry to more than $1trillion by 2020.high level of consumer acceptance – this allow the company to extend it product to attract new customers. • Large scale of operations – Coca-Cola product already sold in 200 countries. In addition it recorded revenue of $31million making the largest manufacturer in the industry. • Growing global bottle water market Intense competition • Booming global functional drinks market e. • Overdependence on bottling partners • Intense competition – either local or global market. • Strong cash flows from operations.countries from all over the world have felt the impacts of the current recession. THE BCG MATRIX INTRODUCTION . • Target the ageing customers and the young and more environmental concern people Threat • Economic climate . • Big slow decision making can give competitive advantage to the competitor such as PepsiCo by being the first to introduce a product for example. • Leading market position – the brand large market about 5% ahead of its main competitor PepsiCo. This may be a problem for Coke. which derives approximately 75% of its sales from outside North America.

Markets experiencing high growth are ones where the total market share available is expanding. BENEFITS OF BCG-MATRIX  BCG MATRIX is simple and easy to understand. According to this technique. and there’s plenty of opportunity for everyone to make money. measured either in revenue terms or unit volume terms? The higher your market share. BOSTON CONSULTING GROUP (BCG) MATRIX IS DEVELOPED BY BRUCE HENDERSON OF THE BOSTON CONSULTING GROUP IN THE EARLY 1970’S.  MARKET SHARE Is the percentage of the total market that is being serviced by your company.  MARKET GROWTH RATE Market growth is used as a measure of a market’s attractiveness. the higher proportion of the market you control.  It is a portfolio planning model which is based on the observation that a company’s business units can be classified in to four categories:  STARS  QUESTION MARKS  CASH COWS  DOGS It is based on the combination of market growth and market share relative to the next best competitor. businesses or products are classified as low or high performers depending upon their market growth rate and relative market share. .

 It helps you to quickly and simply screen the opportunities open to you. Relative market share and market growth rate. THE BCG MATRIX COMPONENTS .  Problems of getting data on market share and market growth. and helps you think about how you can make the most of them.  High market share does not mean profits all the time.  Business with low market share can be profitable too. LIMITATIONS  BCG MATRIX uses only two dimensions.  It is used to identify how corporate cash resources can best be used to maximize a company’s future growth and profitability.

if ever. STARS:High growth business competing in market where they are relatively strong compared with the competition. Dogs may generate enough points to sustain but they are rarely. $ CASH COW:- The low-growth business with a relatively high point market shares.  DOGS:- Businesses that have low relative share and low expected growth rate.MATRIX . This suggests that they have potential but may require huge ever. a competing force. a competing force extraordinary effort in order to grow point share. BCG. they have a high point shares and are the ideal businesses. Ɂ QUESTION MARK:- Businesses with low point share but which may have a high growth rate. These businesses were stars but now have lost their attractiveness.

. $ CASH COWS LOW GROWTH.  They also require heavy investment. to maintain its large market share.  Attempts should be made to hold the market share otherwise the star will become a cash cow. not growing or declining. LOW MARKET SHARE  Dogs are the cash traps. $ They extract the profits by investing as little cash as possible $ They are located in an industry that is mature. STARS HIGH GROWTH. HIGH MARKET SHARE $ They are foundation of the company and often the stars of yesterday.  Dogs do not have potential to bring in much cash.  Number of dogs in the company should be minimized.  It leads to large amount of cash consumption and cash generation.  DOGS LOW GROWTH. HIGH MARKET SHARE  Stars are leaders in business. $ They generate more cash than required.

(low) Ɂ Question marks have potential to become star and eventually cash cow but can also become a dog. LOW MARKET SHARE Ɂ Most businesses start of as question marks. Business is situated at a declining stage. BCG-MATRIX . Ɂ They will absorb great amounts of cash if the market share remains unchanged. Ɂ Investments should be high for question marks. Ɂ QUESTIONMARKS HIGH GROWTH .

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LOW MARKET SHARE . LOW MARKET SHARE Ɂ QUESTIONMARKS HIGH GROWTH . HIGH MARKET SHARE $ CASH COWS LOW GROWTH. HIGH MARKET SHARE  DOGS LOW GROWTH.BCG-MATRIX FOR THE PRODUCT LINE OF COCO-COLA  STARS HIGH GROWTH.

BCG PRODUCT LIFE CYCLE From here we can say that:- .

as both are much new in the market as compared to thums up and limca.  GROWTH STAGE:_ THUMS UP.  DECLINE STAGE:DIET COKE.Ɂ INTRODUCTION STAGE:FANTA & SPRITE are at the introduction stage . KINLEY & MAZZA are at the growth stage having high growth and low market share. MINUTE MADE PULPY ORANGE & KINLEY SODA are at decline stage. proving to be non profitable product for coco-cola having low growth and low market share. . $ MATURITY STAGE: LIMCA. COCO-COLA are at the maturity stage having low growth but high market share.

REVIEW OF LITERATURE  George Stalk Jr. . high volume leads to lower production costs. The BCG matrix proved a great success and most of the big American companies used it to review their business units. • According to the experience curve. or to increase profit margins.  Richard Hamermesh. The thinking goes like this: • Profitability is greatest when the market matures. • Low production costs can either be used to lower prices and take market share. The underlying idea of the BCG matrix is that the best strategy is to dominate market share when the market is mature. • A dominating market share gives the highest accumulated production volume.

but they are in no way identical. This product portfolio matrix classifies product lines into four categories.Sharma . • Do not confuse strategic planning with strategic thinking. Stern. it takes investments. which is of course the aim of portfolio planning. Line managers and not personnel managers should plan strategy. Normally. The discipline involved in strategic planning helps in the development of strategic thinking. such products do not generate profits.Portfolio planning on the basis of early methods was very useful when decisions had to be made concerning which business units were to be sold off. Typical Question Marks are new products in markets with a high growth rate.  Dagmar Recklies. Planning is not a substitute for visionary leadership. the growth rate of its market and on its position in product lifecycle.  Carl W. • Pay careful attention to the strategy of each business unit and not only the strategy for the whole portfolio. They enter the market with a small market share in relation to the market leader. In order to improve their position. but was much less useful in connection with growth and business development.  R. • Involve line managers in the planning process. Richard Hammermesh gives good advice in this respect: • Do not confuse resource allocation with strategy. especially in marketing. In the result. The BCG model suggests that organizations should have a healthy balance of products within their range. the profitability of a product depends on its market share.

Star Strategy: Invest profits for future growth and for earning more of market share and profits . Coca-Cola . The standard product life cycle tends to have five phases: Development. For the products like diet coke . Introduction. Cash Cow Strategy: Use profits to finance new products and growth elsewhere.The BCG Matrix is useful for a company to achieve balance between the four categories of products a company produces. As a particular industry matures and its growth slows.     LIFE CYCLE: To be able to market its product properly. a firm must be aware of the product life cycle of its product. CONCLUSION TO CONCLUDE WE CAN SAY THAT: Dog Strategy: Either invest to earn market share or consider disinvesting.pulpy orange and kinlely soda it better to stop manufacturing these products and to should try to come up with some new innovative and better beverages. Growth. thums up and mazza will be a lot profitable for Coco-Cola India Question Mark Strategy: Either invest heavily in order to push the products to star status. Managers are supposed to gain perspective from this analysis that allowed them to plan with confidence to use money generated by the cash cows to fund the stars and. possibly . the question marks . and which units to sell. and how much. Maturity and Decline. The overall goal of this ranking is to help corporate analysts decide which of their business units to fund. or divest in order to avoid it becoming a Dog. all business units become either cash cows or dogs.

which is evidenced primarily by the fact that they have a large.is currently in the maturity stage.  Furthermore. .  In foreign markets the product life cycle is in more of a growth trend Coke's advantage in this area is mainly due to its establishment strong branding and it is now able to use this area of stable profitability to subsidize the domestic "Cola Wars". product differentiation and marketing have become more important as growth slows and market share becomes the key determinant of profitability. loyal group of stable customers. cost management.

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