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1. Provide an overview of the corporation to include but not limited to, when and how it

was incorporated, by who, the board of directors, specific interest of the corporation, its

headquarters, size, regions of operation and strength in the market.

The Coca-Cola Company is an American-based company headquartered in Atlanta, Georgia

which was founded by a pharmacist named John S. Pemberton in 1886. Pemberton created a

flavoured syrup, Coca-Cola, stating that it works as a nerve tonic [ CITATION Bri20 \l 16393 ].

Frank Robinson, who was working with Pemberton, gave Coca-Cola its name and designed

the flowing script of Coca-Cola, which became its logo [ CITATION Bri20 \l 16393 ]. During the

first year of existence, Coca Cola was not successful as they could not earn any profits even

after Pemberton and his partners spent so much on its advertisement. As the company was not

doing good, Pemberton sold the two-thirds of his business and the syrup formula for $2,300

to an excellent businessman, Asa G. Candler, who incorporated The Coca-Cola Company in

1892 [ CITATION Ref \l 16393 ].

Under the leadership of Candler, the company was growing rapidly due to its

advertising strategies, and when Asa G. Candler retired from the company in 1916, Coke was

sold in many countries other than the U.S., Canada, and Mexico, such as Jamaica, Germany,

Puerto, England, France, etc[ CITATION Ref \l 16393 ]. Currently, Coca-Cola is one of the

world-famous brands in the beverage industry, selling over 500 brands in more than 200

countries and regions. The company is mainly involved in the manufacturing and retailing of

non-alcoholic beverages that are sold around the world. Coca-Cola’s beverage brands include

the following segments: sparkling beverages, sports drinks, plant-based beverages, tea &

coffee, and energy drinks and sell the world’s top five soft-drink brands; Coca-Cola, Sprite,

Fanta, and Diet Coke[ CITATION The2 \l 16393 ].

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Coca-Cola’s vision has been to create brands and drink options that people enjoy and

that can refresh their body and soul. It is also building a business that will sustain for a long

time, which will have a significance impact on people’s lives, communities, and our planet.

Their success depends on how they connect with their consumers’ needs and desires by

providing them with a wide range of beverage options[ CITATION The2 \l 16393 ].

Coca-Cola’s products are available to consumers worldwide via the network of its

bottling partners, distributors, wholesalers, and retailers. Coca-Cola operates in many regions,

including Europe, Middle East and Africa, Latin America, North America, and the Asia

Pacific. Its operating structure also includes various operating segments, such as Global

Ventures and Bottling Investment Groups. The company had approximately 86,200

employees in 2019, which was more than the year 2018[ CITATION The2 \l 16393 ]. 

As per The Coca-Cola Company (2020), the board of directors of the company include:

Name Committee
Herbert A. Allen  Management Development Committee (Chair)
 Executive Committee
 Finance Committee

Ronald W.  Audit Committee (Chair)

Allen
Marc Bolland  Audit Committee

Ana Botín  Committee on Directors and Corporate Governance

 Finance Committee

Christopher C.  Human Capital Management and Compensation

Davis  Finance Committee

Barry Diller  Finance Committee (Chair)

 Executive Committee
 Committee on Directors and Corporate Governance
 Management Development Committee
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Helene D. Gayle  Human Capital Management and Compensation Committee

(Chair)
 Public Issues and Sustainability Committee

Alexis Herman  Public Policy and Sustainability Committee (Chair)

 Human Capital Management and Compensation Committee

Bobby Kotick  Finance Committee

 Management Development Committee

Maria E.  Committee on Directors and Corporate Governance (Chair)

Lagomasino  Management Development Committee
 Human Capital Management and Compensation Committee

James Quincey  Chairman and Chief Executive Committee

Caroline J. Tsay  Public Issues and Diversity Review Committee

 Audit Committee

David B.  Management Development Committee

Weinberg  Audit Committee

Coca-Cola is a very well-known brand and has a unique brand identity as its soft

drinks have been sold for over 125 years. It certainly is the most valued brand in the world as

it ranks sixth in “The World’s Most Valuable Brands” (Forbes, n.d.). Additionally, the

primary strength of Coca-Cola’s success is its most efficient and comprehensive distribution

system and its 225 bottling partners worldwide as because of them, Coca-Cola is able to sell

its products with 1.9 billion serving each day (The Coca-Cola Company, 2020).

2. Examine the corporation’s financials for the last two years. Calculate the earnings per

share and discuss the corporation’s profitability.

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Earnings per share is one of the most significant variables for determining a company’s share

prices as it describes how much money a company is making for each share of its stock. It

can be calculated by dividing the net profit by the number of common shares

outstanding[ CITATION Sto \l 16393 ].

Table 1: Calculation of earnings per share for The Coca-Cola Company for 2018 and 2019. 

2019 2018
Financials (In millions except (In millions except
(Year ended December 31) per share data) per share data)

Net Income Attributable to Shareowners $8,920 $6,434

of The Coca-Cola Company

Average Shares Outstanding — Basic $4,276 $4,259

Average Shares Outstanding — Diluted $4,314 $4,299

Basic Earnings per share  $2.09 $1.51

Diluted Earnings per share $2.07 $1.50

Note: Calculated earnings per share based on the data obtained from K-10 form of The Coca-

Cola Company.

Earnings per share = Net Income/ Weighted Average Shares outstanding

a. Basic Earnings per share of 2019 = 8,920/4,276 

  = $2.086 or $2.09

b. Diluted Earnings per share of 2019 = 8,920/4,314

 = $2.067 or $2.07

c. Basic Earnings per share of 2018 = 6,434/4,259

      = $1.51

d. Diluted Earnings per share of 2018 = 6,434/4,299

 = $1.496 or $1.50
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As per the Macro Trends (2020), it was found that the annual revenue of 2019 increased by

about 8.65 percent from the annual revenue of 2018, whereas the annual revenue of the year

2018 declined by 5.28 percent from 2017.

Additionally, after calculating and comparing the basic and diluted earnings per share of 2019

with 2018, it can be interpreted that there has been an increase in earnings per share of the

company, which means the company earned more profit relative to its share price (The Coca-

Cola Company, 2020). 

3. Estimate what percentage of the corporation’s revenue comes from domestic and

international sales and discuss why revenue is strong in the specific region? Discuss if

the corporation has a competitive advantage.

Figure 1: Revenue distribution share of the Coca-Cola Company worldwide in 2019, by

operating segment [ CITATION Emm20 \l 16393 ].

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As per the above figure, it can be seen that Coca-Cola has four geographic operating

segments such as North America, Europe, Middle East & Africa, Asia Pacific and Latin

America, and three are the non-geographic operating segments such as Bottling Investments,

Corporate and Global Ventures[ CITATION The2 \l 16393 ]. From the above figure, it is also

evident that in 2019, nearly 32 percent of Coca-Cola’s operating revenue was produced

explicitly in North American countries, which include America, Canada and Mexico, due to

the American culture of liking carbonated drinks (Bedford, 2020). On the other hand, 19.9%

of Coca-Cola’s revenue comes from its bottling investments group, a group established to

support the struggling bottling franchisees by providing them with resources. Bottling

Investment Group is responsible for managing approximately 25% of the bottling volume in

many countries. On the other hand, Europe, Middle East & Africa generated about 17% of

Coca-Cola’s revenue, and Asia Pacific countries generated 12.7% of its revenues (Bedford,

2020). 

According to Forbes (2019), revenue has been increasing in North America and is

expected to grow due to Coca-Cola’s initiatives to improve its packaging, pricing strategies,

and taste of its products. In 2019, Coca-Cola grew its retail value by 6% due to innovating

and enhancing its pricing and packaging strategies, and the major contributor to retail value

growth was the U.S. market (The Coca Cola Company, 2020). Competitive Advantage:

Coca-Cola’s competitive advantage is the significant number of people that consume its

products each day.

According to The Coca-Cola Company (2020), its products are enjoyed by more than

1.9 billion people every day as compared to its competitor PepsiCo, whose products are

consumed by more than 1 billion people (PepsiCo, 2020). Coca-Cola enjoys superior

customer loyalty as several of its beverage brands have acquired market-leading positions

based on their popularity. Moreover, a massive product range and different flavours have
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helped Coca-Cola develop a large customer base and retain its popularity. Coca-Cola is a

global brand with a large and international sales and distribution network. It has been almost

120 years since Coca-Cola was established, and it has still been going strong, which has

proved its sustainability over those years. Such growth of Coca-Cola can also be attributed to

its distribution system that makes its products accessible to billions of people globally. Its

production practices are also very well developed as it costs them a small percentage of the

selling price to produce their product, which results in high-profit margins.

4. Discuss the impact the fluctuating dollar has on its profits for the last twelve months.

Use a graph to illustrate the fluctuations against the foreign currency.

Fluctuations in foreign currency exchange rates to the U.S. dollar adversely affect Coca-

Cola’s financial results and international trade. Coca-Cola uses several other currencies in

other countries other than the U.S. dollar through which they earn revenues, pay expenses,

and incur liabilities[ CITATION The2 \l 16393 ].

During the year 2019, Coca-Cola obtained around $25.6 billion of revenue from other

countries and used 70 currencies besides the U.S. dollars. Coca-Cola conducted its operation

by using the weighted-average exchange rates for foreign currencies in 2019 and 2018, but

certain currencies strengthened and weakened against the U.S dollar[ CITATION The2 \l 16393 ].
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Table 2: Currencies weakened and strengthened against the U.S. dollar for 2019 & 2018.

Source: The Coca-Cola Company (2020).

Figure 2: U.S. dollar to Euro currency rate from 1st January 2018 to 31st December

2019[ CITATION XEC20 \l 16393 ].

As the exchange rate of Coca-Cola is fixed for a specific period, the foreign currency

exchange profits and losses are mainly due to remeasuring of the financial resources from

some currencies into functional currencies[ CITATION The2 \l 16393 ].

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Taking consideration of the Euro currency from table 2 and figure 2, it can be seen

that in 2019, the Euro currency weakened due to the strong U.S. dollar by 5 percent, whereas

it strengthened by the same rate in 2018.

According to The Coca-Cola Company (2020), fluxes in the foreign currency to the

U.S. dollar decreased its consolidated net operating revenue by 4% and 1% in 2019 and 2018,

respectively. This happened due to the strong U.S. dollar compared to the specific foreign

currencies, which were the Australian dollar, British pound sterling, the euro, Mexican pesos,

Brazilian real and South African rand except for the North America operating segments, such

fluctuations had a negative effect on other operating segments.

However, the negative influence of a stronger U.S. dollar was somewhat balanced by

the influence of a weak U.S. dollar related to certain other foreign currencies, including the

Japanese yen, which positively impacted the Asia Pacific operating segment (The Coca-Cola

Company, 2020).

5. With information taken from the corporation’s financial report (last 2 years), discuss

how the corporation manage its exposure to foreign exchange rate risk? Discuss the

types of exposures?

As the Coca-Cola Company operates in many different countries, it is exposed to foreign

currency risks due to the adverse changes in exchange rates between different countries’

currencies and the U.S. dollar. Coca-Cola faces transactional exposures because the company

has to buy raw materials in other countries’ currency other than the company’s functional

currency, which leads to a higher cost of sales as it sometimes takes a lot of time for the

contract to settle between the countries (Coca-Cola HBC, 2020). Additionally, Coca-Cola

also faces translation exposures due to changes in the functional currency, impacting the
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company’s consolidated financial statement and balance sheets when results are translated

into some other currency, such as Euro (Coca-Cola HBC, 2020). 

However, the company manages its foreign currency exposure to alleviate the

negative impact of foreign exchange rates by using derivatives, such as forward contracts,

commodity futures contracts, option contracts, collars and swaps to evaluate and survive the

risk of exchange rate fluctuations (The Coca-Cola Company, 2020).  In order to hedge

specific parts of anticipated cash flows designated in foreign currencies, Coca-Cola enters

into foreign exchange contracts and buys foreign currency collars, mainly in euro, British

pound sterling or Japanese yen. They also enter into forward exchange agreements to balance

the impact of its earnings related to the foreign currency variations on monetary assets and

liabilities (The Coca-Cola Company, 2020). 

During the year 2019 and 2018, the underlying amount to derivative trade was

$14,276 million and $17,142 million. However,  the fair value of the contracts that qualified

for hedge accounting generated a net unrealized gain of $6 million at the end of the year

2019, and it was estimated that a 10 percent weakening of the U.S. dollar had eliminated the

net unrealized gain, which resulted in a net unrealized loss of $84 million (The Coca-Cola

Company, 2020).
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by operating segment 2019. Retrieved from Statista:
https://www.statista.com/statistics/271136/coca-colas-revenue-distribution-
worldwide-by-operating-segment/
Britannica. (2020). The Coca-Cola Company. Retrieved from Britannica.com:
https://www.britannica.com/topic/The-Coca-Cola-Company
Coca-Cola HBC. (2020). DEBT INVESTORS. Retrieved from coca-colahellenic.com:
https://www.coca-colahellenic.com/en/investors-and-financial/debt-investors
Forbes. (2019, August 02). Understanding Coca-Cola's Business Model And Performance
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