Aira May P.

Adriaga
BSTM 3-A
› Company Background

Coca Cola Amatil is one of Australia’s leading and oldest business corporations, which was established in 1989
as a result of a grand re-organization of Amatil Limited. The multinational business is mainly based on
manufacturing and distributing alcohol-free beverages and snack foods. With its headquarters in Australia, the
company also operates in New Zealand, Indonesia, South Korea, Papua New Guinea, Fiji and is the largest producer
of Coca Cola trademarked products with primary focus on Asia-Pacific region (About Coca Cola, n.d.). The
company besides producing its own products, manufacture, market and sell the trademarked products of Coca Cola
Company across its targeted region.

Vision

Our vision serves as the framework for our roadmap and guides every aspect of our business by describing
what we need to accomplish in order to continue achieving sustainable, quality growth.

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

Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and satisfy people's desires
and needs.

Partners: Nurture a winning network of customers and suppliers, together we create mutual, enduring value.

Planet: Be a responsible citizen that makes a difference be helping build and support sustainable communities.

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

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

Mission

• To refresh and revitalize the world in mind, body and spirit.

• To inspire through our activities and brands, moments of Positivity and hopefulness.

• To build value and make a difference wherever we participate

Objectives

Coca Cola Company seeks to introduce quality in every aspect of the business. The firm aims to:

• Serve as a workplace where individuals are inspired to give in their best.

• Create and introduce a range of beverage brands that satisfies customers’ wishes and needs.

• Develop a strong and efficient network of customers and suppliers to enhance value.
 • Optimize enduring returns to shareowners while being attentive of our overall responsibilities as a corporate
citizen.

• Be a highly operative, efficient and fast-growing organization

Market Background
According to the council of Australian Food Technology association and Institute of Food Science and
Technology (1988, p. 333), the Australian non-alcoholic beverages industry has been growing steadily, with 2.3
percent increase in overall production in the year 2000 which amounts to 2.25 billion liters. However, in the recent
years, sales of customary carbonated soft drinks have dropped as more and more customers become health
conscious and move away from high-calorie sugary drinks. Soft Carbonated drinks and other alcohol free beverages
manufacturers have also sensed the effects of intensifying competition from private-label soft drink makers.
Nevertheless, sales of greater value energy and sports drinks have driven profit generation in the industry.
The Soft Drink and Beverage manufacturing industry is primarily concentrated in the eastern Australian states,
close to the foremost population centres, according to Soft Drink market research report published in IBIS World
(2012). New South Wales alone has 34.6% of such establishments, while Victoria is home to 11.5% and
Queensland to 20.5%. The report shows that Victoria’s share of total beverage producing firms has declined over
the past few years because of enhanced investment in facilities in other regions of the country. Meanwhile, South
Australia’s market share has been growing, as has N.S.W’s share.

Market Size
Coca Cola Amatil is the leading and largest provider of alcohol-free beverages and Coca Cola trademark
products as it covers a huge market segment. The annual revenue at present is $3 Billion and according to the
estimates, the yearly profit is expected to increase by 1.8 percent. (See Appendix 1).The market conditions for soft
drink companies in Australia are encouraging and it still has a huge potential to grow more. The market if
considered in the realm of retail sales industry, has reached an estimated value of $239.5 billion in 2011,
representing a rise of 1.3 percent from 2010 (IBIS World, 2011).

Market Growth
Today, Australia is commercially assisted by both outsized multi-plant companies and by persistent dynamic
and robust regional bottlers that are innovative and manufacturing products for both the domestic and foreign
markets. A forceful and ever changing alcohol-free beverages industry is crucial for both our economic and social
well-being as it provides the extensive range of liquid refreshment that meet people’s nutritive needs and social
occasion. At present, the beverage industry produces a remarkable wide collection of beverages, from the
traditional carbonated soft drinks and fruit juices to sports, energy and other formulated beverages, and a booming
bottled water market (Australian beverages, 2004).
On the other hand, the rapid and stable growth of the retail trade is because of the strong position of the
Australian dollar and encouraging employment conditions. This economic stability has reduced the cost of retail
 goods that are imported. Hence improved employment and economic conditions has led to better purchasing power
and positive consumer behavior (IBIS World, 2011).

Key Competitors
Since now Coca Cola Amatil manufactures a number of beverages other than cola such as lemon drinks
(sprite), bottled water (Mount Franklin) and Orange drinks (Fanta). The company faces competition from tea and
coffee offerings by Nestea and from smoothies and juices produced by companies like Boost. Other key
competitors include Monster Beverage Corp, Goodman Fielder Ltd and Metcash Ltd.

› External Environment
Porter’s Five forces
In his revolutionary article - "Five Forces that Shape Strategy", Michael Porter observed five forces that have
significant impact on a firm's profitability in its industry. These five forces analysis today in business world is also
known as -Porter Five Forces Analysis. The Porter Five (5) Forces are:

• Threat of New Entrants

• Bargaining Power of Suppliers
• Bargaining Power of Buyers
• Threat from Substitute Products
• Rivalry among the existing players
Porter Five Forces is a holistic strategy framework that took strategic decision away from just analyzing the present
competition. Porter Five Forces focuses on - how The Coca-Cola Company can build a sustainable competitive
advantage in Beverages - Soft Drinks industry. Managers at The Coca-Cola Company can not only use Porter Five
Forces to develop a strategic position with in Beverages - Soft Drinks industry but also can explore profitable
opportunities in whole Consumer Goods sector.

The Coca-Cola Company Porter Five (5) Forces Analysis for Consumer Goods Industry
1.Threats of New Entrants
New entrants in Beverages - Soft Drinks brings innovation, new ways of doing things and put pressure on The Coca-
Cola Company through lower pricing strategy, reducing costs, and providing new value propositions to the
customers. The Coca-Cola Company has to manage all these challenges and build effective barriers to safeguard its
competitive edge.
How The Coca-Cola Company can tackle the Threats of New Entrants
• By innovating new products and services. New products not only brings new customers to the fold but also give
old customer a reason to buy The Coca-Cola Company ‘s products.
• By building economies of scale so that it can lower the fixed cost per unit.
• Building capacities and spending money on research and development. New entrants are less likely to enter a
dynamic industry where the established players such as The Coca-Cola Company keep defining the standards
regularly. It significantly reduces the window of extraordinary profits for the new firms thus discourage new players
in the industry.

2.Bargaining Power of Suppliers

All most all the companies in the Beverages - Soft Drinks industry buy their raw material from numerous suppliers.
Suppliers in dominant position can decrease the margins The Coca-Cola Company can earn in the market. Powerful
suppliers in Consumer Goods sector use their negotiating power to extract higher prices from the firms in Beverages
- Soft Drinks field. The overall impact of higher supplier bargaining power is that it lowers the overall profitability
of Beverages - Soft Drinks.
How The Coca-Cola Company can tackle Bargaining Power of the Suppliers
• By building efficient supply chain with multiple suppliers.
• By experimenting with product designs using different materials so that if the prices go up of one raw material then
company can shift to another.
• Developing dedicated suppliers whose business depends upon the firm. One of the lessons The Coca-Cola
Company can learn from Wal-Mart and Nike is how these companies developed third party manufacturers whose
business solely depends on them thus creating a scenario where these third party manufacturers have significantly
less bargaining power compare to Wal-Mart and Nike.

3.Bargaining Power of Buyers

Buyers are often a demanding lot. They want to buy the best offerings available by paying the minimum price as
possible. This put pressure on The Coca-Cola Company profitability in the long run. The smaller and more powerful
the customer base is of The Coca-Cola Company the higher the bargaining power of the customers and higher their
ability to seek increasing discounts and offers.
How The Coca-Cola Company can tackle the Bargaining Power of Buyers
• By building a large base of customers. This will be helpful in two ways. It will reduce the bargaining power of the
buyers plus it will provide an opportunity to the firm to streamline its sales and production process.
• By rapidly innovating new products. Customers often seek discounts and offerings on established products so if
The Coca-Cola • Company keep on coming up with new products then it can limit the bargaining power of buyers.
• New products will also reduce the defection of existing customers of The Coca-Cola Company to its competitors.

4.Threats of Substitute Products or Services

When a new product or service meets a similar customer needs in different ways, industry profitability suffers. For
example services like Dropbox and Google Drive are substitute to storage hardware drives. The threat of a substitute
product or service is high if it offers a value proposition that is uniquely different from present offerings of the
industry.
How The Coca-Cola Company can tackle the Treat of Substitute Products / Services
• By being service oriented rather than just product oriented.
• By understanding the core need of the customer rather than what the customer is buying.
• By increasing the switching cost for the customers.

5.Rivalry among the Existing Competitors

If the rivalry among the existing players in an industry is intense then it will drive down prices and decrease the
overall profitability of the industry. The Coca-Cola Company operates in a very competitive Beverages - Soft Drinks
industry. This competition does take toll on the overall long term profitability of the organization.
How The Coca-Cola Company can tackle Intense Rivalry among the Existing Competitors in Beverages - Soft
Drinks industry
• By building a sustainable differentiation
• By building scale so that it can compete better
• Collaborating with competitors to increase the market size rather than just competing for small market.

Implications of Porter Five Forces on The Coca-Cola Company

By analyzing all the five competitive forces The Coca-Cola Company strategists can gain a complete picture of
what impacts the profitability of the organization in Beverages - Soft Drinks industry. They can identify game
changing trends early on and can swiftly respond to exploit the emerging opportunity. By understanding the Porter
Five Forces in great detail The Coca-Cola Company 's managers can shape those forces in their favor.

› Internal Environment
Coca cola’s Core Competencies
Coca-Cola is truly a worldwide company, the company’s products are consumed and recognized globally. The coke
company structures and organizes itself in the way that reflects the fact. At the same time, the Company aims at
satisfying particular regional market needs in a sensitive manner and the company’s structure is supposed to reflect it
too. Hence, the Coke Company has to build an organizational structure that will be flexible enough to meet all these
requirements.

The world’s top four soft drinks are marketed by the Coca-Cola Company, since it is the world’s largest company
that produces beverages thus it is the leading producer and markets of the soft drinks. The organizational success of
the Coke Company is based on the following factors:

The company produces a unique and recognized brand: When considering the world’s recognized trademarks around
the globe, Coca-Cola is among the one which are most recognized.

Quality: Coca-Cola consistently offers their customers with the products of high quality.

Marketing: Creative and innovative marketing programs are always delivered worldwide by the Coca-Cola company
(Bruce, 2006).

Availability Globally: All the Coca-Cola products are bottled and distributed globally.

Ongoing innovation: Coca-Cola Company has provided their customers continually with the new product for
example, Coca-Cola vanilla that was launched in 2002.

Coca-Cola has an organizational structure that is designed to meet the aims, they make use if the combining the
decision making flexibility, and the best ideas are shared across the coke organization, they experience a control
from the center with all the appropriate level of management. The company enhance the employees’ development by
building flexible structures which greatly encourages the employees to work in teamwork. Example is the invention
and development of new product such as Coca-Cola vanilla which brought together the different of teams of
employees with various specialism.

The Coca-Cola Company has also set an organizational strategy that ensures better utilization of the resources
available within the organization. The Coke Company also aim at becoming the world’s largest world’s provider of
the branded beverages products thud delivering a profitable and consistent growth in order to have the product of the
highest quality and processes.

Being among the major and popular global beverage companies with a lot of brands available in the stores and
having more than 200 markets worldwide (Capon, 2004). Coca cola offers a range of products which ranges from
water, juices among many other brands. The success of any business depends on both the internal and external
environment of the firm. Internal environment are the composition of every elements within the organization. These
elements may include the management, current employees, and the corporate culture which defines the behaviors of
the staffs. Some elements may affect only the management while others may affect the entire organization. Some
factors such as the leadership style adopted and the mission statements are also examples of the organizational
internal environment.

Competitive Advantage
Coca-Cola have a secret recipe which is arguably much better tasting than its competitors. They are constantly
developing new products and improving current ones, they also offer vast number of brands, over 400, in over 200
markets worldwide. There distribution system is one of the most advance and efficient which allows Coca-Cola to be
accessible to billions of people worldwide. They manage to offer products in locations other companies wouldn’t
even consider selling. An example would be Africa, its common to see a shop selling Coca-Cola which would
appear to be in the middle of nowhere. Their production technique is extremely efficient, the cost of making is a
fraction of the cost of selling, and this leaves a high profit margin. Cola-Cola lead the market by a massive majority,
this allows Coca-Cola to control the cost of their products, and they can therefore alter the price for maximum
revenue.

Distinctive Capabilities
Distinctive capabilities are the processes and or operations that a company bears that help it produce at better levels
than the competitors thus enabling it to come up with superior products (Edvinsson & Malone, 1997). Coca-Cola
Company has various distinctive capabilities.
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These include innovation and economies of scale. The company carries out regular research and development which
enables it to come up with new products that highly appeal to the consumers.
Its recent introduction of three new Fanta flavors; pineapple, black currant and passion have enabled it to remain a
favorable producer of soft drinks among many consumers.
The company has also been able to gain economies of scale through its extensive presence in the global market and
this has ensured that it produces at low unit costs. This has enabled to have its products retailing at relatively lower
prices than the competitors thus ensuring that it is preferred by the low and middle class consumers who form
majority of its target market.

Company’s Resources
A company’s resources are of great important as it employs these resources as inputs so as to deliver the required
output. Resources do not necessarily give a company a competitive advantage but if they are optimally used they
result in products that are superior to the competitors’ or low costs of production which subsequently result in higher
profit margins (Edvinsson & Malone, 1997).
Coca-cola Company has employed various resources both tangible and intangible. These resources enable it to
produce superior goods in terms of quality, reduce its cost of production and have strong brands which are preferred
by many consumers across the globe.

Tangible resources
The company has various tangible resources that it employs in its pre production and post-production processes.
These resources include self owned plants and buildings, adequate financial resources and motivated and highly
qualified human resource personnel.
The buildings are an important part of the company’s physical resources since they allow the company to produce
within their own property thus reducing the cost of production. This results in higher profits margin when compared
to the competitors and lower prices for the same goods that competitors supply.
The financial resources of Coca-Cola Company help it to avoid debt financing thus keeping its equity portion of
capital structure high. This helps foster internal management since the firm does not have a lot of external influence
on its resources. The human resource personnel at Coca-Cola Company are kept at high motivational level.
This is due to the realization that the workforce act as a driving force towards achieving the organizational goals and
objectives. The company has therefore invested in human capital and ensures constant training of its personnel to
keep it abreast with the prevailing market conditions. This ensures that employees work at the optimal levels
resulting in the desired output by the company.

Intangible Resources
The main intangible resources of any company are goodwill, intellectual resources and Technical expertise. The
Coca-Cola Company has for a long time enjoyed these resources since they form the basis of its superiority to the
competitors’.
The company’s goodwill has been a long valued asset over the years. Goodwill is an intangible asset that a company
has that helps it to produce at better levels than the competitors and or have its products preferred by majority of
consumers.
The company’s goodwill helps it to deliver superior products which are preferred by most of the soft drinks
consumers. This is because it has for a long time managed to remain as a number one company in the beverages
industry and has therefore built a strong reputation in the same market.
The company’s intellectual resources surpass those of the competitors. This is because it has been able to produce
many brands within its product which appeal to the consumers. These products have remained intellectual properties
of the company and the competitors have been unable to copy them. The company has also high levels of technical
expertise.
This is an advantage since the company is able to deliver products which are unmatchable. This has come due to the
extensive research that the company has carried over a long time and resulting in the products that are unique and
superior. These factors have ensured that the company remains top of the list of best company and always ahead of
the competitors.

› Corporate Level Strategies

The corporate strategy of the company is aligned at managing and countering risks both at domestic and global
markets. This includes dealing with the issue of shortage of the quality adequate water in its regions. Therefore,
among strategic plan is to establish sustainable supply of water in order to prevent increased costs of the production.

So far, the corporate strategies have partially succeeded as the company and the brand remains strong and stable in
the market. Production of the Dasani, the second best selling bottled water shows the willingness of the company to
diversify its products and keeping note of changing consumer trends, tastes and preference. Investment in product
testing and fair treatment of workforces has ensured production of the quality products that meets international
standards. However, the rate of growth between the Coca-Cola and its competitors is almost equal, as the company
has not fully implemented non-carbonated product innovation. Moreover, it has not been able to make use of its
international customer base to establish its global presence and create its own bottling plant, which would reduce
costs.

The company has been keen on developing new products every time it enters a new market. At one point Coca-Cola
was known to be a company operating in a market dominated by carbonated soft drinks. However, over time, the
company began producing new products such as Sprite, Fanta and Diet Coke, which are non-carbonated, and that
have eventually become the key products of the company. Besides, in order to further penetrate the market, the
company has widened its business definition into what is called ‘ready packaged liquid refreshments’. Through
embracing this consideration, the company has grown beyond the usual carbonated soft drink (CSD) market and
joined markets such as fruits juices, ready to drink tea and bottled water.

› Analysis of Strategic Factors — SWOT Analysis

STRENGTHS:
1. Brand equity/image & recognition
2. Product distribution and worldwide network
3. Solid financial performance
4. One of the world's most recognized brand
5. Product diversification (water, juices, soft drinks, sport drinks, etc)q
6. Co-operate identity
7. Innovation
WEAKNESSES:
1. Credit rating
2. Customer concentration, particularly in the US (Wal-Mart accounts for more than 10% of Coca-
Cola's business in the US)
3. A lot of loyal Pepsi customers are not enough loyal Coca-Cola customers
4. Does not enjoy the number one position in India, Pakistan
OPPORTUNITIES:
1. Possible growing demand
2. Expansion — Reaching all segments
3. Globalization
4. Catering to Health Consciousness of People
5. Bottled water growth
6. Acquisitions of smaller players
THREATS:
1. Health Drinks — Fruit Juice Companies
2. Key Competitors (Pepsi, etc)
3. Commodity prices growth
4. Image perception in certain parts of the world
5. Smaller, more nimble operators/players
› Strategic Alternatives & Recommended Strategy

Provide more technology to improve drink experience

Coca Cola should continuously use profits to help create and use better technology for the company. Currently, Coca
Cola has tried to go “green” by creating environmentally friendly bottles. “This new technology had eliminated
30,000 metric tons of carbon dioxide, or the equivalent of approximately 60,000 barrels of petroleum.” (Marketline)
Other companies such as Heinz have seen the success from the going green campaign that they decided to create the
technology for their bottles.

Firing/ Laying off workers due to the economy.

Based on the economy in the United States and world wide, Coca Cola continues to fire and lay off workers. This
seems to be an on going problem worldwide. Coca Cola is one of the world’s most recognizable brands. Coca Cola
continues to outsource labor from America to other countries and condensing labor therefore eliminating jobs. In
today’s economy, people need jobs in order to help support their family and themselves. Coca Cola continues to
expand on international soil, and should therefore continue creating jobs, not take them away.
› Management Lessons Learned

In general, Coca-Cola Company remains the dominant business entity that provides refreshing soft drinks.
Though it has a lot of competitors in the field of soft drinks, fruit-flavored drinks and other non-carbonated drinks, it
uses innovative techniques such as economy packs, intensified marketing and informed marketing segmentation to
remain competitive.
Since the products are luxury drinks, their users are drawn majorly from the high and middle classes. This
means, competition is very high and the best company can only survive in this market through innovation and
diversification, being affordable and manufacturing products, which guarantees the consumer of healthy life. Indeed,
Coca-Cola Company has succeeded in its diversification strategies and in the quality of its products.
The company is massive, and owns many other major companies along with it, they vary from soft drinks to
water itself. Coca-Cola for a long time has been the world’s leading manufacturer, marketer and distributer of non-
alcoholic beverages. The company sells four of the five top selling drinks including Diet Coke, Fanta and Sprite. It is
the most recognisable brand throughout the World. It operates in more than 200 different countries, and has a
workforce from over 200 different nationalities, who communicate in over 100 languages. They operate as local
business partner, providing quality in the marketplace, enhancing the workplace, preserving the environment and
strengthening the community. All these factors contribute massively to their success. From its birth in 1886 by Dr.
John S. Pemberton sales averaged 9 drinks a day in its first year to now over 1 billion a day.
Coca-Cola are one of the most popular companies around, they have massive customer loyalty but also strong
brand awareness. It doesn’t matter what country you live in, it’s almost guaranteed that someone nearby would know
what Coca-Cola is. It’s believed that almost 1.9 drinks are sold every day, a staggering 2/7th of the World’s
population.
Throughout the years Coca-Cola have had to adapt many times to match the constantly changing expectations
of their customers. Social change in recent years has meant the company has had to take a more healthy approach,
healthier alternatives include: coke zero, and diet which both are much healthier than Coca-Cola. Coca-Cola life is
supposedly made from all natural resources. Coca-Cola are also tackling global warming by introducing electrical
transportation, rather than using fossil fuels.
Coca-Cola are extremely successful within the soft drink market, they have been dominating it since the 1940s,
however the market is saturated and so the room for improvement is very small. However to further their revenue the
company could diversify their products, for example: healthy drinks, sports drinks, bars, etc.
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