A Report on Strategic Management Case Of COCA COLA

(Year 2007) Subject: Managerial Policy Section: “B” [MBA – Evening Program] Faculty: Brig. (ret.) Shakeel Ahmed

Prepared & Presented by:
Faraz Ahmed Arshad Khan Mohammad Waqas Zeeshan Ul Haque Group 2 Zohaib Genda Muhammad Tabish Taha Ashok Kumar Tariq Hamidi Mehboob Hassan Sehrish Anwar Tariq Khan Babar Raza Zakia Rasheed Obaid Ullah Aleem

Managerial Policy

Table of Contents 1- EXECUTIVE SUMMARY...........................................................................................4 2- HISTORY OF COCA COLA.......................................................................................5 3- BRANDS OF COCA COLA.........................................................................................8
3.1- Energy Drinks..................................................................................... ..............8 3.2- Juices/Juice Drinks............................................................................................8 3.3- Soft Drinks................................................................................................. .......9 3.5- Tea and Coffee............................................................................................... ...9 3.6 Water....................................................................................................... ..........9 3.7- Other Drinks.................................................................................. .................10

4- CONSUMER CHOICE AT A GLANCE...................................................................11 ...........................................................................................................................................12 5- DIFFERENT PLAYERS IN THE SOFT DRINKS MARKET...............................13 Cadbury Schweppes are joined force of Cadbury found in 1824 of U.K. and Schweppes of Ireland founded in 1783. Cadbury Schweppes is unified bussing which manages the relations his with over 240 franchised bottling operation on Zambia and Zimbabwe. Cadbury Schweppes has fottlery and partnership operations in 14 countries around the world.................................................................................................................................13 6- OUR MISSION:..........................................................................................................14 7- OUR VISION:..............................................................................................................14 8- IMPROVED MISSION STATEMENT:....................................................................15 9- IMPROVED VISION STATEMENT:.......................................................................15 10- COCA COLA - RATIO ANALYSIS........................................................................19
10.1 RATIO ANALYSIS.............................................................................................20

11- FINANCIAL HIGHLIGHTS....................................................................................21 12- UNIT CASE VOLUME.............................................................................................21 13- CURRENT ORGANIZATIONAL CHART............................................................23
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14- VALUE CHAIN ANALYSIS FOR COCA COLA..................................................23 15- E-COMMERCE:.......................................................................................................27 16- VALUE OF THE FIRM............................................................................................27 17- KEY INTERNAL FACTORS Weight Rating weight Score ..................31

18- KEY EXTERNAL FACTOR....................................................................................32 19- COMPETITORS ......................................................................................................33 20- SWOT ANALYSIS..............................................................................................34 21- SPACE MATRIX STRATEGIC MANAGEMENT METHOD............................37 22- BCG MATRIX...........................................................................................................40 23- IE MATRIX...............................................................................................................42 24- QSPM OF COCA COLA..........................................................................................43 25- PROJECTED RATIO ANALYSIS..........................................................................47 S26- CONCLUSION:......................................................................................................48

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1- EXECUTIVE SUMMARY Coca-Cola, the product that has given the world its best-known taste was born in Atlanta, Georgia, on May 8, 1886. Coca-Cola Company is the world’s leading manufacturer, marketer and distributor of non-alcoholic beverage concentrates and syrups, used to produce nearly 400 beverage brands. It sells beverage concentrates and syrups to bottling and canning operators, distributors, fountain retailers and fountain wholesalers. Coca-Cola was first introduced by John Syth Pemberton, a pharmacist, in the year 1886 in Atlanta, Georgia when he concocted caramel-colored syrup in a threelegged brass kettle in his backyard. He first “distributed” the product by carrying it in a jug down the street to Jacob’s Pharmacy and customers bought the drink for five cents at the soda fountain. Carbonated water was teamed with the new syrup, whether by accident or otherwise, producing a drink that was proclaimed “delicious and refreshing”, a theme that continues to echo today wherever Coca-Cola is enjoyed. Coca-Cola originated as a soda fountain beverage in 1886 selling for five cents a glass. Early growth was impressive, but it was only when a strong bottling system developed that Coca-Cola became the world-famous brand it is today. Coca- Cola was the leading soft drink brand in India until 1977, when it left rather than reveal its formula to the Government and reduce its equity stake as required under the Foreign Regulation Act (FERA) which governed the operations of foreign companies in India. In the new liberalized and deregulated environment in 1993, Coca-Cola made its re-entry into India through its 100% owned subsidiary, HCCBPL, the Indian bottling arm of the Coca-Cola Company. The main objective of this study lies in understanding the organization and studying and understanding the consumers’ perception and opinion about the latest product, Minute Maid Pulpy Orange, introduced into India, by the Coca-Cola Company. A consumer sampling involving 5.5 lakh people was conducted in a span of 30 days across major cities in order to give the product the required marketing push and to recognize the prospective consumers and their opinion in order to develop and market the product in a better way in the near future. The methodology used in studying and understanding the perceived views of consumers towards the product was ‘SAMPLING’. The findings of the activity have been drawn out in form of graphs and suggestions have been offered there from

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even in the dark! Cola the 5 .HISTORY OF COCA COLA Coca-Cola® originated as a soda fountain beverage in 1886 selling for five cents a glass. brisk sales of the new fountain beverage called CocaCola impressed the store's owner. A design from the Root Glass Company of Terre Haute. Early growth was impressive. Indiana won enthusiastic approval in 1915 and was introduced in 1916. Biedenharn.for the sum of one dollar. 1916 … Birth of the contour bottle Bottlers worried that the straight-sided bottle for Cocawas easily confused with imitators. 1894 – A modest start for a Bold Idea In a candy store in Vicksburg. Lupton. Joseph A.S.Managerial Policy 2. In a meeting with Candler. Candler thanked him but took no action. most of them family-owned businesses. A third Chattanooga lawyer. A group representing Company and bottlers asked glass manufacturers to offer ideas for a distinctive bottle. Today. Biedenharn sent a case to Asa Griggs Candler. it's one of the most recognized icons in the world . soon joined their venture. but it was only when a strong bottling system developed that Coca-Cola became the world-famous brand it is today. using a common glass bottle called a Hutchinson. By 1909. Tennessee believed they could build a business around bottling Coca-Cola. Some were open only during hot-weather months when demand was high. Thomas and Joseph B. Mississippi. He began bottling Coca-Cola to sell. Patent Office. Whitehead obtained exclusive rights to bottle Coca-Cola across most of the United States (specifically excluding Vicksburg) -. 1900-1909 … Rapid growth The three pioneer bottlers divided the country into territories and sold bottling rights to local entrepreneurs. Benjamin F. who owned the Company. One of his nephews already had urged that Coca-Cola be bottled. nearly 400 Coca-Cola bottling plants were operating. John T. The contour bottle became one of the few packages ever granted trademark status by the U. Their efforts were boosted by major progress in bottling technology. but Candler focused on fountain sales. which improved efficiency and product quality. 1899 The first bottling agreement Two young attorneys from Chattanooga.

The 1980s brought diet Coke® and Cherry Coke®.S. 1950s … Packaging innovations For the first time. Australia and South Africa.the traditional 6. Pibb® and Mello Yello® were added in the 1970s. Honduras. A few years later. consumers had choices of Coca-Cola package and type -. many small and medium-size bottlers consolidated to better serve giant international customers. Sprite®. 1960s … New brands introduced Following Fanta® in the 1950s. Cans were also introduced. Spain.S. Woodruff. Mexico. Many of these war-time plants were later converted to civilian use. Minute Maid®. 1990s … New and growing markets size 6 . Today hundreds of other brands are offered to meet consumer preferences in local markets around the world. Fresca® and TaB® joined brand CocaCola in the 1960s. This followed an urgent request for bottling equipment and materials from General Eisenhower's base in North Africa. more than 1. the Company began a major push to establish bottling operations outside the U. Peru. the retailers who sold Coca-Cola merged and evolved into international mega-chains. Belgium.Managerial Policy 1920s … Bottling overtakes fountain sales As the 1920s dawned. or larger servings including 10-. Their ideas and zeal fueled steady growth. chief executive officer and chairman of the Board.and 26-ounce versions. becoming generally available in 1960. Plants were opened in France. followed by POWERADE® and DASANI® in the 1990s. Guatemala. Coca-Cola was being bottled in 44 countries. Italy. permanently enlarging the bottling system and accelerating the growth of the Company's worldwide business. Such customers required a new approach. By the time World War II began. 64 bottling plants were set up around the world to supply the troops. 1940s … Post-war growth During the war. Six-bottle cartons were a huge hit after their 1923 introduction. 1970s and 80s … Consolidation to serve customers As technology led to a global economy. bottle sales of Coca-Cola exceeded fountain sales. By the end of the 1920s. 12.5-ounce contour bottle. 1920s and 30s … International expansion Led by longtime Company leader Robert W. In response.000 Coca-Cola bottlers were operating in the U. open-top metal coolers became the forerunners of automated vending machines. The Company encouraged and invested in a number of bottler consolidations to assure that its largest bottling partners would have capacity to lead the system in working with global retailers. Mr.

7 . strong locally based relationships between Coca-Cola bottlers. And as the century closed.Managerial Policy Political and economic changes opened vast markets that were closed or underdeveloped for decades. customers and communities are the foundation on which the entire business grows. 21st Century The Coca-Cola bottling system grew up with roots deeply planted in local communities. This heritage serves the Company well today as people seek brands that honor local identity and the distinctiveness of local markets. more than $1. After the fall of the Berlin Wall.5 billion was committed to new bottling facilities in Africa. the Company invested heavily to build plants in Eastern Europe. As was true a century ago.

3.1. Put into perspective. in 8 .Juices/Juice Drinks We bring innovation to the goodness of juice Coca Cola’s more than 20 juice and juice drink brands. Coca-Cola Zero is available in more than 100 countries. As of September 2008. caffeine and B vitamins.BRANDS OF COCA COLA Coca-Cola Zero® has been one of the most successful product launch hes in Coca Cola’s history.2. offering both adults and children nutritious. that's roughly the same size as Coca Cola’s total business in the Philippines. 3. refreshing and flavorful beverages. one of our top 15 markets. In 2007.Managerial Policy 3. life. Coca Cola’s sold nearly 450 million cases globally.Energy Drinks For those with a high-intensity approach to Coca Cola’s brands of Energy Drinks contain ingredients such as ginseng extract. guarana extract.

providing rapid hydration and terrific taste fitness-seekers at any level for 3.Tea and Coffee Bottled and canned teas and coffees provide consumers' favorite drinks in convenient take-anywhere packaging. 3. fluids. and electrolytes team together in Coca Cola’s Sports Drinks.6 Water Smooth and essential. satisfying both traditional tea drinkers and today's growing coffee culture. soft drinks from Coca-Cola Company are both icons and innovators in the beverage industry.4. From the original Coca-Cola to most recent introductions.5. our Waters and Beverages offer hydration in its purest Water form.3. 9 .Sports Drinks of The Carbohydrates.Soft Drinks Coca Cola’s dozens of soft drink brands provide flavor and refreshment in a variety choices.Managerial Policy 3. 3.

refreshment or other needs. soup.7.Other Drinks So much more than soft drinks. Coca Cola’s brands also include milk products. 10 . anywhere for nutrition. and more so you can choose a Coca Cola Company product anytime.Managerial Policy 3.

Limca Common Drink. Fanta Basically Preferred by Ladies and Kids.CONSUMER CHOICE AT A GLANCE Coca-Cola Mainly preferred by the Youngster & Kids.Managerial Policy 4. Thums-Up Youngster. 11 .

Managerial Policy Maaza Also Ladies and Kids. Sprite Not clearly defines. Kinley Soda Mostly those who consume liquor. 12 .

CADBURY SCHWEPPES Cadbury Schweppes are joined force of Cadbury found in 1824 of U. he hired a New York advertising agency. structure Pepsi Cola In2 the 1890’s as cure of dyspepsia (indigestion). 13 . Cadbury Schweppes is unified bussing which manages the relations his with over 240 franchised bottling operation on Zambia and Zimbabwe. In his first year of business he spend $1900 on advertising a huge sum that he sold only 8000 gallons of syrup. Cadbury Schweppes has fottlery and partnership operations in 14 countries around the world. After passing through many troubles for some period now Pepsi is a market leader in international arence and is available in 187 Nations throughout the world. In 1905 Bradhum built Pepsi’s bottling plant. Bradhum applied for a trade mark. issued ninety seven share of stock and began selling Pepsi syrup in earnest.K. In 1902. a North Caroline Pharmacist.000 gallons a year. and Schweppes of Ireland founded in 1783. two years later. By 1907 he was selling 10.Managerial Policy 5.DIFFERENT PLAYERS IN THE SOFT DRINKS MARKET PEPSI Caleb Brandhum.

OUR MISSION: Our mission declares our purpose as a company. Planet: Being a responsible citizen that makes a difference by helping build and support sustainable communities.Managerial Policy 6. Partners: Nurturing a winning network of customers and suppliers. together we create mutual. 7. It is the foundation of our Manifesto. enduring value. 14 . People: Being a great place to work where people are inspired to be the best they can be. mind and spirit. It serves as the standard against which we weigh our actions and decisions.OUR VISION: Our vision guides every aspect of our business by describing what we need to accomplish in order to continue achieving sustainable growth. (3) To create value and make a difference everywhere we engage. Portfolio: Bringing to the world a portfolio of quality beverage brands that anticipate and satisfy people's desires and needs. (1) To refresh the world in body. (2) To inspire moments of optimism through our brands and our actions. Profit: Maximizing long-term return to shareowners while being mindful of our overall responsibilities.

and satisfaction. we strive for honesty. by continually challenging present conventions and always staying a step ahead of the competition. We will be paymasters. We will strive to hire the most competent and dedicated employees whose work ethic will set the standard in the industry.IMPROVED MISSION STATEMENT: (1) At Coca Cola we're committed to achieving business and financial success while leaving a positive imprint on society – delivering what we call Performance with Purpose. social. economic – creating a better tomorrow than today. Why it is improved: There is It is our vision to be the best and leading provider of food and beverage products in Pakistan. fairness and integrity. experience. activities to benefit society. It is our mission to be the number one food and Beverage Company in Pakistan by providing our customers with the highest product quality in terms of taste. We seek to produce financial rewards to in8vestors as we provide opportunities for growth and enrichment to our employees. 9. We will ensure this through an unwavering dedication to the continuous development of our products and processes ensuring that we remain best in class.IMPROVED VISION STATEMENT: (1) Coca cola Co responsibility is to continually improve all aspects of the world in which we operate – environment. our business partners and the communities in which we operate. (2) Our mission is to be the world's premier consumer Products Company focused on convenient foods and beverages. and strive to enhance the quality of life in the markets we serve. We will also be a responsible social corporate citizen. 15 . to facilitate the people of Pakistan and we emphasis on consumer more rather than competitors we among the top ten food and beverage companies in the world." (2) Our vision is put into action through programs and a focus on environmental stewardship. as we strongly believe that human resource is the only asset that truly appreciates over time.Managerial Policy 8. and a commitment to build shareholder value by making Coca cola Co a truly sustainable company. And in everything we do.

teamwork and innovation through employee participation and process ownership. (3) Promotes professional and flexible work environment.Managerial Policy Compare Vision & mission with leading competitors Pakola is firstly introducing in Pakistan in 1950 by Haji Ali Muhammad. Vision statement: To be SECOND TO NONE in exceeding customer expectations for Taste and Flavor. Mehran is the first bottling plant in South Asia. To develop. Product Safety. Which has been certified to integrated management system based on (ISO 9001:2000). Quality and Price Competitiveness. (ISO 14001:1996) Standard and (RVA HACCP) standard Pakola quality and food safety system follows the FDA GMP requirements and codex. implement and continuously improve the integrated management systems in a culture of continuous improvement which: (1) Directs the continual up-gradation for efficient and environment friendly manufacturing technology. Mission statement: We are focused on driving growth in our business in selected profitable and emerging categories. (5) Monitor and economize the Cost of Quality. it is produced by mehran bottlers (Pvt) Ltd. (4) Drives customer orientation at all levels within the organization. It is the first Nationally branded soft drink in Pakistan. Pakola products are manufactured under strict CGMP and Hygiene controls. 16 . (2) Monitor and improve the efficiency and effectiveness of all business processes.

and among the top ten food and beverage companies in the world. 1. Comments on vision and mission (in terms of how they support the strategies) The vision statement of our company supports the existing strategies that is (generic strategy) that Coca Cola needs to pursue is that of differentiation. Yet even with approximately 5% of the total market share. we believe that the current strategic objective of Coca cola should be to consolidate its existing brand. Pakola is well positioned to leverage that history so as to attain a competitive edge. the company says it aims to be a low cost leader. and 16%. Pepsi and Coke. and with Its 55 years of established presence. Coca cola through extensive strategic market research and 17 . at the expense of sounding simplistic. It is our vision to be the best and leading provider of food and beverage products in Pakistan. with market shares respectively of 77%. by continually challenging present conventions and always staying a step ahead of the competition. The players in the beverage industry have one of the moat competitive rivalries in any industry. yet through our thorough analysis of the strategic direction the company needs to adopt a generic strategy of differentiation. Charge a premium 2. leaving little room for others to grow. With the market just turning the bend to ‘saturation’. Pakola can still manage to be profitable in a cut-throat Industry. Initially Coca cola will need to adopt a focused differentiation approach. Gain buyer loyalty However. otherwise these three advantages will not avail themselves. After which they should opt for a broad differentiation generic strategy. ranges and even businesses into a versatile range of products to put in place more infantry on the battle ground to use to their advantage in this war of brands. Increase unit sales 3. it is entering a phase of intense competition with all major players diversifying their product lines. and hive plan to position it strategically in order to do so. In Pakistan the market is dominated by the two international giants. In their current vision and mission statements.Managerial Policy In comparison to coca cola the mission statement of Pakola is simple one. it is necessary that the company communicate its differentiation to its customers. which means that they should selectively choose which markets will profit them the most and then target only those markets until such provisions are in place from where the company is able to expand its target base. The beverage Industry is a reasonably attractive industry to be in. Therefore. This will allow Coca cola to do three things.

Managerial Policy consumer insights to be able to home in on the correct target market like a precision targeting missile rather than as an Anti-aircraft gun 18 .

968 48.0% 0.2% 22.872 21.963 8.1% 0.5% 19.836 13.0% 8.922 5.16 40.847 2.7% 22.441 6.6% 2.281 1.1% 4.327 5.5% 28.962 4.420 31.080 21.469 29.4% 44.25 2.920 8.9% 4.043 16.786 6.890 13.6% 100.668 29.1% 5.8% 34.1% 2005 $ Percent (in millions) 23.5% 56.1% 2004 $ (in millions) 21.679 240 5.088 100.104 100.Managerial Policy 10.195 35.7% 43.0% 29.164 33.641 8.903 7.912 220 6.080 21.0% 33.4% 55.Basic $ Percent (in millions) 24.6% 23.423 2.355 16.0% 100.2% 7.440 150 2.072 16.783 6.04 19 .701 66 2.5% 4.2% 5.RATIO ANALYSIS 2006 Income Statement Revenue Cost of Goods Sold Interest Expense Tax Expense Income from Cont Operations Net Income Balance Sheet Cash Short Term Investments Accounts Receivable Inventory Current Assets Long Term Investments Net Fixed Assets Other Assets Total Assets Current Liabilities Total Liabilities Stockholders' Equity Cash Flow Cash Flow from Operations Dividends Paid Interest Paid Per Share Market Price at Year End Earnings Per Share .31 2.427 9.872 21.250 6.818 7.0% 25.704 1.0% 8.171 1.424 10.5% 9.9% 1.498 6.5% 240 1.8% 23.0% 5.COCA COLA .0% 1.9% 220 0.8% 4.957 2.

2% 0.04 0.5% -6.1 RATIO ANALYSIS Growth Ratios Sales Growth Income Growth Asset Growth Activity Ratios Receivable Turnover Inventory Turnover Fixed Asset Turnover Profit Ratios Profit Margin Return on Assets Return on Equity Dividend Payout Ratio Price Earnings Ratio Liquidity Ratios Current Ratio Quick Ratio Solvency Ratios Debt to Total Assets Times Interest Earned (Accrual) Times Interest Earned (Cash) 4.0% 19.8% 9.72 0.3 0.1% 30.0 21.88 27.44 28.1% 16.7 5.8 1.08 5.Managerial Policy 10.4 5.6% 55.60 0.8 4.5% 57.95 0.5 21.44 30.0% 59.3 3.1% 10.1% 17.3% 4.3% 1.90 28.76 20 .3% 22.

019 Percent Change 4% 4% 4% 6% (7%) 9% 23% 12.8 21. Net operating revenues Operating income Net income Net income per share (basic and diluted) Net cash provided by operating activities Dividends paid Share repurchase activity Unit case volume (in billions) International operations North America operations Worldwide 15.8 5.6 6% 0% 4% ($) 24.UNIT CASE VOLUME 21 .678 2.088 6.474 2005 ($) 23.161 5.308 5.085 4.4 14.080 2.423 2.104 6.957 2.872 2.FINANCIAL HIGHLIGHTS 2006 Year Ended December 31.Managerial Policy 11.8 20.042 6.6 5.911 2.

Managerial Policy MAP: Showing Workforce [71.000 in 2006] 22 .

Managerial Policy 13. At the same time. but since Inventory is increased in 2006. we can infer that suppliers are effeciently providing Raw Materials. 23 . hence.641.000 2006 (in thousands) SUPPLIER COSTS Raw Materials Fuel Energy Transportation Truck Drivers Truck Maintenance Component Parts Inspection Storing Warehouse PRODUCTIONS COSTS 1.424.VALUE CHAIN ANALYSIS FOR COCA COLA 2005 (in thousands) 1.000 Sufficient date is not provided. increase will result in some incline in store/ ware house charges.CURRENT ORGANIZATIONAL CHART CEO EVP/ President Bottling Invest/ Supply Chain CFO and EVP EVP/ President MKT Strategy President & COO SVP & General Counsel SVP & Director Human Resources SVP & Director Public Affairs/ Communi-cation President of Eurasia Group President European Union Market President of African Group President Latin America Group President of Pacific Group 14.

Managerial Policy Inventory System Receiving Plant Layout Maintenance Plant Location Computer R&D Cost Accounting DISTRIBUTION COSTS Since cost of revenue in 2006 is 34% of total revenue compared to 36% cost of revenue in 2005. nil nil 24 . we can deduce that Coca Cola has improved its operating performance.

We see Net Income proportion remain same in year 2006 as it was in year 2005 i. which were 39% of total revenue in 2005 and 40% in 2006.e. there is increase in these expenses. efficiency of production. Hence.Managerial Policy Loading Shipping Budgeting Personnel Internet Trucking Railroads Fuel Maintenance SALES & MARKETING COSTS Salespersons Website Internet Publicity Promotion Advertising Transportation Food and Lodging CUSTOMER SERVICE COSTS Postage Phone Internet Warranty MANAGEMENT COSTS Human Resources Administration Employee Benefits Labor Relations Managers Employees Finance and Legal Analysis: Income statements shows just one head and that is Selling. Which would be because of. Therefore. 25 . and Admin. Expenses. 21% of total revenue. Coca Cola still enjoy same percentage of Net Income. Gen. management or distribution departments. despite of the fact that some expenses were increased.

26 . still enjoys a competitive market position. we can easily infer that Coca Cola. effectively and profitably. which would show that Coca Cola does not assign sufficient amount to its R&D department which is key to excel in the market.Managerial Policy We do not see R&D head of expenses. If we see the proportion of Income generated by different regions. We can still suggest them to make an efficient R&D head/ department which will surely make them compete in market. because of innovative advertisements or because of intelligent decision making.

shopping and purchasing.Managerial Policy 15. 16. Discount pricing is not being offered.VALUE OF THE FIRM Financial and Value Review Defensive: 27 . catalogue pages Personal attention Community relationships Weak points: • • Performance and service: that is not easy navigation. and prompt shipping and delivery.E-COMMERCE: Good points: • • • • • • Brand Promotion Attractive products selection Look and feel 8 Provision of multimedia product.

Opinion: Seeing that currently Coke is trading at a much higher price than our internal valuation we would be skeptical to purchase this security at this time. However. 4) Earnings growth Earnings are greater than five years ago. the company has made large investments in brand promotions.000 million in 2006.4 billion. distributor and marketer of nonalcoholic beverage concentrates and syrups in the world. 3) Earnings stability there has been positive net income for the past ten years and they 8pass this test.8The value of the Coca-Cola was $67. Strong brands allow the company to introduce brand extensions such as Vanilla Coke. Sprite and Fanta. Cherry Coke and Coke with Lemon. Coca-Cola is the largest manufacturer. Coco-Cola is selling trademarked beverage products since the year 1886 in the US. Overall we would not suggest Coke being placed in the defensive investor’s portfolio at this time.Managerial Policy 1) Size of firm Net worth of $16. Coca-Cola owns a large portfolio of product brands. This stock we would place on our review list and periodically watch the share price to see if it dips and falls more in line with what we would be comfortable paying. Coca-Cola Company. The company’s strong brand value facilitates customer recall and allows Coca-Cola to penetrate new m2arkets and consolidate existing ones. Pass. and earnings. The large scale of operations with revenues in excess of $24 billion Coca-Cola has a large scale of operation. The company’s operations are supported by a strong infrastructure across the world. be8verages bearing trademarks owned by or licensed to CocaCola account for more than 1.94 Coke falls below the required 2. Coca-Cola owns and operates 32 principal beverage 28 . Coca-cola is one of the best recognized global brands. Over the years. Of the approximately 52 billion beverage servings of all types consumed worldwide every day. Coca-Cola is one of the leading brands in their top 100 global brands ranking in 2006. Consequently. The company currently sells its products in more than 200 countries. Diet Coke. The compan8y owns four of the top five soft drink brands in the world: Coca-Cola. Coca-Cola ranks well ahead of its close competitor Pepsi which has a ranking of 22 having a brand value of $12. Strengths World’s leading brand Coca-Cola has strong brand recognition across the globe. Coke is an excellent firm with great management. dividend history.690 million Furthermore.92billion 2) Financial condition with a weighted current ratio of 0. therefore they fail this test. products. The company has a leading brand value and a strong brand portfolio.

and Pacific Rim’ grew by 10.8% of total revenues during fiscal 2006. ‘East. revenues from ‘East. Such negative publicity could adversely impact the company’s brand image and the demand for Coca-Cola products. Sluggish performance in North America Coca-Cola’s performance in North America was far from robust. the three segments of Latin America. These pesticides included chemicals which could cause cancers. and Pacific Rim’ and bottling investments. and Pacific Rim’ and Bottling investments 29 .Managerial Policy concentrates and/or syrup manufacturing plants located throughout the world. These three segments are Latin America. Sprite and Fanta Large investments in brand promotions sells its products in more than 200 countries Company also owns bottled water production and still beverage facilities as well as a facility that manufactures juice concentrates. In addition. Company received negative publicity in India during September 2006. it owns or has interest in 37 operations with 95 principal beverage bottling and canning plants located outside the US.The Company was accused by the Center for Science and Environment (CSE) of selling products containing pesticide residues. Robust revenue growth in three segments Coca-cola’s revenues recorded a double digit growth. During the same period. South Asia. damage the nervous and reproductive systems and reduce bone mineral density. Together. North America is Coca-Cola’s core market generating about 30% of total revenues during fiscal 2006.4% during fiscal 2006. a strong performance in North America is important for the company. Weaknesses Negative publicity. Revenues from Latin America grew by 20. These three segments are Latin America.9%. ‘East. Therefore. and Pacific Rim’ and Bottling investments. Summary in points: Strengths: • • • • • • Leading brand value and a strong brand portfolio Coca-Cola. accounted for 34. in three operating segments. The company also owns bottled water production and still beverage facilities as well as a facility that manufactures juice concentrates. Diet Coke. This could also have an adverse impact on the company’s growth prospects in the international markets. South Asia. ‘East. The company’s large scale of operation allows it to feed upcoming markets with relative ease and enhances its revenue generation capacity. Robust revenues growth rates in these segments contributed to top-line growth for CocaCola during 2006. over 2005. Coca-Cola products sold in and around the Indian national capital region contained a hazardous pesticide residue. South Asia. South Asia.6% while revenues from the bottling investments segment by 19.

16.50% Sluggish performance in North America Coca-Cola’s performance in North America was far from robust Collection form debtors decreased by 15.Managerial Policy • Return on total assets increases over the period consistently 2005.55%.29% Return on equity decreased by 40. 06.47%.95% respectively. Weaknesses: • • • • • Negative publicity in India Inventory turnover decreased by 13. 07 15. and 16.68% 30 .

08 0.11 0.50 Need efficiency in the Management.22 0.14 0. Low to High respectively. Marketing. MIS. R & D.KEY INTERNAL FACTORS weight Score Strengths Average customer purchases increased by 18.05 0.08 0.15 0.11 0..00 3 1 2 1 0.24 Ranked 1 to 4. and other operations.30 0.54% Employee moral Technical support and research efficiency Newspaper advertisement expenditures increased Revenues from other segments Debt to total asset ratio decline Locations in the world Weight Rating 0.Managerial Policy 17.09 0.10 0. 31 .05 0.11 0.10 80. finance.24 Less than average of 2.56 0.08 2. Current Evaluation: 2.15 2 3 1 4 4 2 4 0.20 Weaknesses Inventory turnover decreased by 13.08 1.04 0.08 0.36 0.29% Return on equity down decreased Website Supplier time delivery Total 0.

g.Total Grand Total 0.025 0.30 9 10 Opportunities .050 0.Total 11 Hurting products containing sugar & sugar-substitute based drinks (trend towards more healthy eating & drinking) 12 Increase in raw material costs 13 Government policies may hurdle in expansion 14 Government policies . coffee.26 0.00 4.50 2.075 0.86 32 .09 0.40 0.100 0.for disclosure of health warning 15 Ban in public schools due to obesity issues 16 Lack in snacks business 17 Lack of share in homeland market (refer Exhibit 8) .03 1.02 0.075 0.430 0.025 0.50 2. No.00 3.26 0.50 3.075 0.00 4.Managerial Policy 18.50 4.08 0.100 0.00 0.03 0.50 4.09 0.00 4.50 3.43 0.00 3.075 0.000 3.015 0.35 0.20 0.025 0.26 0.) Entering into or introducing new sports events (e.00 3.00 3.05 1.100 0.50 2.075 0.015 0.015 0.050 0.015 0. Formula I) to introduce energy drinks Strong financial and assets support available worldwide to take financing for expansion Introduce soft drink with focus of "healthy soft drink" .eliminate obesity concept Diversification of bottling business to other industries like pharmaceuticals Link with computer internet/network/cell gaming business to focus on youth worldwide .to take advantage of technology 0.015 0.13 0.050 0. Factor Weight Rate Score Opportunities 1 2 3 4 5 6 7 8 Entering into snacks business (Pepsi earns 60% from snacks) Expansion by taking over Cadbury division or product line Expansion by introducing new ready-to-drink products (tea.025 0.43 2.50 3.50 2.50 1.50 3.570 1.20 0. etc.room for other brands 18 Availability of purified water (being main component) in different parts of the world 19 Competitor may access unreached parts of the world prior to Coca Cola 20 Salesman not equipped with sales ordering devices Threats .06 0.KEY EXTERNAL FACTOR S.00 3.05 0.

A.COMPETITORS • • • • • • • • • • • • • • • • • • • • • • Cadbury Schweppes plc Nestle S. Quilmes Industrial S. Inc. Quinenco SA Yeo Hiap Seng Limited Wimm-Bill-Dann Foods OJSC Co-Ro Food A/S Rynkeby Foods A/S Spadel SA Delta Holding S.A. Inc.Managerial Policy 19. Spendrups Bryggeri AB Pago Hermann Pfanner Getraenke GmbH J Garcia Carrion Vitasoy International Holding Ltd 33 .A. Unilever Procter & Gamble Cott Corporation Kraft Foods. National Grape Cooperative National Beverage Corp. PepsiCo.

sport drinks. Health Drinks – Fruit Juice Companies Key competitors (Pepsi. 3. Globalization Catering to Health Consciousness of People Bottled water growth Acquisitions of smaller players. juices. Opportunities. 3. 6. soft drinks. 4. THREATS 1. 3. Possible growing demand. 5. 2. and Threats inside a company. It involves identifying the internal and external factors that are favorable/unfavorable for business to succeed SWOT ANALYSIS STRENGTHS 1. Weaknesses. Innovation FOR COCA COLA COMPANY WEAKNESSES 1. Customer concentration.Managerial Policy 20. Does not enjoy the number one position in India. or a business venture. 5. etc) Commodity prices growth Image perception in certain parts of the world. 2. 5. A lot of loyal Pepsi customers are not enough loyal Coca Cola customers 4. etc) Co-operate identity. Product diversification (water. Expansion – Reaching all segments. Pakistan. 4. OPPURTUNITIES 1. 4. 2. Smaller. Credit rating 2. Brand equity/image & recognition Product distribution and worldwide network Solid financial performance One of the world's most recognized brand. more nimble operators/players 34 . 6.SWOT ANALYSIS SWOT Analysis is a strategic planning tool used to evaluate the Strengths. project. particularly in the US (Wal-Mart accounts for more than 10% of Coca Cola's business in the US) 3. 7.

(S1.O3)   Reason of not being popular in India is the mis-utilization of rear water resources.S4. which many people will want to try.Managerial Policy Suggestion To Stay ahead Of Competition The three main ways are through innovation. This put negative effect on the brand image. (W3. taste and excitement to the market.S5.S4.S2. If Cola Company wants a number one position in India they have to follow following criteria         Environmental due diligence before acquiring land or starting projects Environmental impact assessment before commencing operations Ground water and environmental surveys before selecting sites Compliance with all regulatory environmental requirements Ban on purchasing CFC-containing refrigeration equipment Waste water treatment facilities with trained personnel at all company-owned bottling operations Energy conservation programs water  They should installed hi-tech water recycling system so that they can save 50% savings of its operations.S5.T4.S4.O1.(W2. This may certainly give coca cola competitive advantage because it introduces a new product. qualities that remain unmatched by the company's competitors. thus severely reducing any threat of being substituted.T2. W4. It may also give coca cola brand loyalty which means customers will stay loyal to them no matter what happens. People will like to purchase the commodity even though price is high because no substitutes are available. T4) 35 . relations or reputation.S2.(S1.S7. thus decreasing the threat of new entrants to the industry. This is a very important factor for coca cola.O3.O2. (T1.S2.  First of all innovation can be used.O1.T1.S6)  Coca Cola's brand represents quality.T3)  Another factor is marketing.W4. Coca Cola needs to continuously strengthen its brand to maintain brand loyalty and positive responses and differentiate itself from its competitors.W3.O4) If coca cola used strong marketing with environment friendly attitude it may raise barriers to entry. In order for the company to maintain its strong market position. because of cola plant water level in the area decreases which makes the resident life miserable.T5.O2.

W4.Managerial Policy  Many of coca cola’s plastic bottles are recycled and as a result less resources are lost and costs decrease. This will mean they will have a higher revenue increasing long term profitability and improve credit rating. Through diversification & innovation in water & juices business supported with aggressive advertising strategy Coca Cola Company can attracts a new market segment.T1.T4) 36 .(W1.T3.

IS values can take +1 to +6.By definition. 37 . industry analysis. The SPACE matrix calculates the importance of each of these dimensions and places them on a Cartesian graph with X and Y coordinates.FS values range from +1 to +6. -CA values can range from -1 to -6. the CA and IS values in the SPACE matrix are plotted on the X axis.ES values can be between -1 and -6.Managerial Policy 21. or assessing strategic alternatives (IE matrix). . The following are a few model technical assumptions:  . The SPACE matrix can be used as a basis for other analyses. The Strategic Position & ACtion Evaluation matrix or short a SPACE matrix is a strategic management tool that focuses on strategy formulation especially as related to the competitive position of an organization. BCG matrix model. . It is used to determine what type of a strategy a company should undertake.  -The FS and ES dimensions of the model are plotted on the Y axis. such as the SWOT analysis.SPACE MATRIX STRATEGIC MANAGEMENT METHOD The SPACE matrix is a management tool used to analyze a company. .

5 -1 -2.75 Environment Strength (Worst +6.Managerial Policy Internal Strength Position Competitive Advantage (Worst -6.5 Financial Strength Average Score =4.25 38 .5 Inflation Technology Demand Elasticity Taxation (Worst -6.Best -1) -2.Best +6) Barriers to entry Growth Potential Access to Financing Consolidation 5 5 4 5 Average Score =-1.Best +1) ROA Axis Y Leverage Liquidity Cash Flow 5 4.75 Average Score =-2.Best -1) Product Quality Axis x Market Share Brand & Image Product Life Cycle -1 -1 -1 -2 External Strength Position Industry Strength (Worst +1.5 -4 Average Score =4.25 Total X-Axis score: 3.5 Total Y-Axis score: 2.5 5 4.

0 0 Defensive -6.2 5 -6.00 -1.Managerial Policy Conservative +6.0 0 +3.5 +6.0 0 Aggressive +2.00 Competitive 39 .00 +1.

00% 18.198 $93 $25.75 $174.29% 27.48% 3.05% 10.37% 100.Managerial Policy 22.64% 16.00% 5.364 $2.079.44% 0.029 $4.48% 9. Eurasia & Middle East Bottling Investment Corporate -- Revenues $1.27 $1.35 $874.435 Percent Revenues 4.7 2 $823.616 $7.9 8 Percent Profits 4.66% 11.123 $5.88 $5.21% 20.85% 15.140 $872 $4.16% 10.17 $522.42 $871.BCG MATRIX Sr# 1 2 3 4 5 6 7 8 Total Division Africa East South Africa & Pacific Rim European Union Latin America North America North Asia.567.00 % Percent Market Value 5 10 45 35 60 40 20 15 - Percent Growth Rate -8 -5 +7 +3 +9 +8 -7 -3 - 40 .20% 25.42 $18.76% 100.00% Profits $227.43% 17.

Managerial Policy BCG MATRIX 41 .

0 to 3.99 Low = 1.0 to 2.99 IV VII I Average = 2.99 II V COCA COLA VIII VI IX Weak 1.0 to 3.99 III 42 .99 High = 3.99 Medium = 2.IE MATRIX Strong = 3.0 to 1.0 to 1.0 to 2.Managerial Policy 23.

sport drinks.06 2. 0.12 2.05 Total 1.78 43 . Expansion – Reaching all segments.10 0.00 1.00 2.13 1. 0. Acquisitions of smaller players.00 0.20 0.00 1.08 0. This is in line with their current 0.06 3.06 1. Weight 0.48 0.00 Opportunities 1.10 0.12 4.Managerial Policy 24.18 0.00 4.00 2.16 0.00 0.00 Threats 1. Credit rating 2.00 0.12 0.00 0.08 0. soft drinks.00 3.06 1.20 0.32 3.00 0. Smaller. One of the world's most recognized brand. Solid financial performance 4.06 3.12 0.40 0.10 0.00 4. Weakness 1.10 0.24 0.00 0.00 2. Co-operate identity. Globalization 0.10 0. Brand equity/image & recognition 2.00 0.16 Outsourcing AS TAS 4.08 0.00 0. juices.00 2. Customer concentration. Health Drinks – Fruit Juice Companies 0.00 2. 5.00 0.13 0. Pakistan. 0. Product distribution and worldwide network 3. Bottled water growth 0.11 0. etc) 6. etc) 0.00 0.24 3.24 2.08 0.QSPM OF COCA COLA Ineter External Factor Strength 1.10 0.18 3.00 3. Product diversification (water.24 0.12 2. Commodity prices growth 0.00 0. particularly in the US (Wal-Mart accounts for more than 10% of Coca Cola's business in the US) 3.00 0.30 0. Does not enjoy the number one position in India. Catering to Health Consciousness of People 0.30 0.00 0.05 5.00 4. Possible growing demand.75 From our Strategic Alternatives evaluation. more nimble operators/players 0.22 1.48 0.00 Introduce New Product AS TAS 3. Key competitors (Pepsi.11 2.00 4.00 0.00 2.30 0.00 0.08 1.00 0.00 5. we see that it is more attractive to outsource our distribution networks rather than launch a diet line of products.00 6. A lot of loyal Pepsi customers are not enough loyal Coca Cola customers 4. Image perception in certain parts of the world. 0.08 0.13 1.00 3.

44 .Managerial Policy strategic direction. and will allow Pakola to fortify their market reach before introducing new products that will be harder to push through the distribution channels.

9% 21. it will costs more.0% 8.2% 26.4% 4.638 8.0% 42.968 16.703 3.374 8.1% 0.0% 100.272 12.8% 0.162 5.3% 8.6% 18.20 77.1% 21.6% 5.6% 33.2% 7.783 6.441 6.981.1% 8.027 9.984 324 2.9% 6.6% 22.0% 25.424 10.250 6.810 100.5% 22.843 10.256 12.00 4.922 5.0% 11.00 3.7% 1.9% 21.5% 42.1% 2009 $ Percent (in millions) 38.51 45 .942 13.281 1.0% 28.0% 13.080.3% 55.Managerial Policy 2006 2.7% 100.903 7.843 31.57 5.189 21.652 30.189 21.1% 2009 3.000.178 17.306 66 2.9% 381 1.644 4.704 1.0% 55. PROJECTED INCOME STATEMENT 2010 $ Income Statement Revenue Cost of Goods Sold Interest Expense Tax Expense Income from Cont Operations Net Income PROJECTED BALANCE SHEET 2010 Balance Sheet Cash Short Term Investments Accounts Receivable Inventory Current Assets Long Term Investments Net Fixed Assets Other Assets Total Assets Current Liabilities Total Liabilities Stockholders' Equity Cash Flow Cash Flow from Operations Dividends Paid Interest Paid Per Share Market Price at Year End Earnings Per Share .834 7.489 421 9.000.0% 27.827 Percent 100.641 8.00 2007 2.573 18.156 33.827 9.5% 21.0% (in millions) 46.Basic 3.0% 2.00 EPS NET INCOME Company is performing well Company is more stable in getting loans from financial institutions because it will help in tax saving and if it will go for raising stocks.786 6.693 421 3.0% 40.982 381 92.

Managerial Policy 46 .

2% 48.0% 2.7 12.5% 97.78 0.42 31.24 0.0 18.68 0.4% 18.PROJECTED RATIO ANALYSIS Growth Ratios Sales Growth Income Growth Asset Growth Activity Ratios Receivable Turnover Inventory Turnover Fixed Asset Turnover Profit Ratios Profit Margin Return on Assets Return on Equity Dividend Payout Ratio Price Earnings Ratio Liquidity Ratios Current Ratio Quick Ratio Solvency Ratios Debt to Total Assets Times Interest Earned (Accrual) Times Interest Earned (Cash) 20.5 6.0% 20.7% 21.93 26.9 1.47 47 .66 #DIV/0! #DIV/0! #DIV/0! 34.2 6.7% 57.1% 53.42 29.6% 45.94 0.Managerial Policy 25.1% 31.9 0.6% 21.7 21.7 21.53 28.

CONCLUSION: The Coca Cola Company has a very rich history and spread over the world. This includes focus on Water and Juices products. It needs to use its internal strengths to develop a market penetration and market development strategy. and catering to health consciousness of people through introduction of different coke flavor and maintaining basic coke flavor. 48 . the study in this report specially the particular SPACE matrix tells us that Coca Cola Company should pursue an aggressive strategy.Managerial Policy S26. Further company should integrate with other companies. Coca Cola Company has a strong competitive position in the market with rapid growth. innovation in branding and aggressive marketing strategy can bring long term profitability. acquisition of potential competitor businesses.

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