University of Dhaka

Course Title: Theory and practice of international Business

Course ID: 510, Spring 2021
Group Name: Kite

Subject: Coca cola international business study for globalization.

Submitted To:
Md Rakib Uddin Buiyan
Associate Professor
Department Of international Business
Faculty of Business Studies

Submitted By:
Name ID
Md Sarwar Jahan 802031027
Saima Tasnim Pinky 802031021
Fahema Khan 802031025
Md Rakibul Hasan Rubbi 802031033
Md Mehedi Hasan 802031051

Date of Submission: 01st , May 2021

 LETTER OF TRANSMITTAL
25th April, 2021
Md Rakib Uddin Buiyan
Associate Professor
Department Of international Business
Faculty of Business Studies

Dear Sir,

We are very pleased to submit this Report on Coca Cola, which has been prepared for the requirement of
510-Theory and practice in international business course. We have tried our level best to complete this
Report properly and to write an efficient Report within all the constraints.

We appreciate that the approach really contributes in giving our course learning a lasting shape on us. We
have a great hope that the Report will meet your expectation and aid you in getting a clearer idea about our
works. We have tried our level best to follow the guidelines of yours. We are very much glad that you have
given us the opportunity to prepare this Report for you and hope that this will meet the standards of your
judgment. Sincerest gratitude for your illuminating guidance.

Sincerely yours,
All the members of ‘Kite’
EXECUTIVE SUMMARY
This report has been prepared with a specific purpose in mind. It outlines the
history and current scenario of the Coca-Cola Company globally and locally. The
first part of the study takes us through the present state of affairs of the beverage
industry and Coca-Cola Company globally.

The report contains a brief introduction of Coca Cola Company and Coca-Cola
India and a detailed view of the tasks, which have been undertaken to analyze the
market of Coca-Cola i.e. we have performed Competitive, PESTLE and SWOT
analysis of Coca-Cola Company and PESTLE and SWOT analysis of Coca-Cola
India in order to identify areas of potential growth for Coca-Cola. We have also
given a brief description of Trends and Forces that are affecting Coca-Cola
Company globally.

The main objective of this project report is to analyze and study in efficient way
the current position of Coca- Cola Company. The study also aims to perform
Market Analysis of Coca-Cola Company & find out different factors effecting the
growth of Coca-Cola. Another objective of the study was to perform Competitive
analysis between Coca-Cola and its competitors. Apart from these objectives this
study is also conducted to understand the Customer preferences towards various
Coca-Cola products.
INTRODUCTON
The Coca-Cola group is an American international business, producer, seller, and marketer of non-
alcoholic soda drinks and syrups. The organization sells Coca-Cola, founded in Atlanta Georgia in 1886 by
John Stith Pemberton. Since 1889, the firm is owned and operated in Atlanta, Georgia, but was founded in
Delaware, has run an independently owned and operated supply system.

The Coca-Cola Company and its network of bottlers comprise the most sophisticated and pervasive
production and distribution system in the world. More than anything, that system is dedicated to people
working long and hard to sell the products manufactured by the Company. This unique worldwide system
has made The Coca-Cola Company the world’s premier soft-drink enterprise. From Boston to Beijing, from
Montreal to Moscow, Coca-Cola, more than any other consumer product, has brought pleasure to thirsty
consumers around the globe. For more than 115 years, Coca-Cola has created a special moment of
pleasure for hundreds of millions of people every day.
The business manufactures primarily syrup extract, which is then distributed to several bottlers globally that
operate licensed franchises. The group owns Coca-Cola Refreshments, their central bottler in North
America. Abdul Monem Ltd. (AML) is the bottler of the official CocaCola, Sprite and Fanta in Bangladesh
licensed by the Coca-Cola International head office in Atlanta, USA. With three processing plants
established in Dhaka, Comilla and Chittagong and with a strong supply system extended across the nation,
AML has founded its solid and successful presence in Bangladesh. Coca-Cola, which has over 500 brands
and operates in more than 200 countries, has invested $74 million to establish the plant in Bhaluka,
Mymensingh and developed other infrastructure. IBPL's plant runs two lines producing 600 bottles of
Kinley, a drinking water brand of Coca-Cola, and 720 bottles of Coke brands per minute. Coca-Cola, the
second-largest player in the carbonated beverage market in Bangladesh after PepsiCo, is a very
established company in the country. It employs more than 500 people, while 5,000 more are working with it
indirectly.

COMPANY PROFILE

MISSION:

Our Roadmap starts with our mission, which is enduring. It declares our purpose as a
company and serves as the standard against which we weigh our actions and decisions.

 To refresh the world...

 To inspire moments of optimism and happiness...
 To create value and make a difference.
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 by 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.
FOCUS ON THE MARKET:
 Focus on needs of our consumers, customers and franchise partners.
 Get out into the market and listen, observe and learn.
 Possess a world view.
 Focus on execution in the marketplace every day.
 Be insatiably curious.
WORK SMART:
 Act with urgency.
 Remain responsive to change.
 Have the courage to change course when needed.
 Remain constructively discontent.
 Work efficiently.

International Marketing Strategy

This section concentrates on marketing strategies in international business and ways Coca-Cola has
established these strategies around the world. First, one must understand that globalization has become
a trend in response to nontariff trades and the growth of elimination of barriers, which has helped
International Trade & Academic Research Conference (ITARC ), 7 – 8th November, 2012, London.UK. The
Business & Management Review, Vol.3 Number 1, November 2012 158 the marketing of international
brands. Second, due to globalization, competition has increased internationally and to remain
competitive firms are expanding geographically by joining ventures with other companies or through
acquisitions in foreign markets. Therefore an emphasis on marketing must be present (Douglas, Craig,
&Nijssen, 2001). International marketing strategy can be defined in many ways. International marketing
strategy is the manner in which an organization performs based on a predetermined set of activities in
order to plan, promote, price and distribute a good or service for a profit to consumers in various
locations (Cateora & Graham, 2007, p.9). Van Mesdag also describes international marketing as a
company having a marketing strategy in different markets depending on the market characteristics (Van
Mesdag, 2000, p.75). International marketing strategy is an important part strategic planning and
consequently should be an area of study according to The Journal of International Marketing. This
strategy is a significant factor in the performance of a global company because an effective marketing
strategy for international companies can represent a competitive advantage and therefore global
executives need to recognize the importance level regardless if a global or customized marketing
strategy is practiced. Furthermore, the marketing mix affecting markets abroad the most should be
studied to comprehend how foreign markets function with different marketing strategies (Albaum &
Tse, 2001).

Global vs. International Marketing Strategy

When discussing international marketing it is important to point out the difference that may exist
between international and global marketing. Global marketing can be characterized by an overall
outlook of the market as a whole where there is a standardized manner to sell a product or service in all
places (Bennett & Blythe, 2002, p.6). According to Chung, standardization as a form of marketing
strategy refers to the similarity of a set of practices implemented in the home and other foreign
markets. Standardization strategy’s main elements are political-legal, economic, competitive, cultural,
and consumer, environments. Also, the same research states that this strategy is most likely to be
implemented if there are similarities in the elements of the home and foreign country (Chung, 2003).
Another concept Chung provides explains that a firm with a strong level of standardization enjoys a high
level of control within the organization. This control is the level of decision making executed by the
home office. At the same time, when standardization applies, global image and product offering are two
strong factors a firm seems to rely on. Conversely, international marketing relates more to different
target markets and their differences rather than looking at it as one single market and foresees the
possibility to implement a localization strategy rather than standardization, as the global marketing
would pursue. The findings of Van Heerden & Barter suggest that “marketers cannot assume
homogeneity of cultures across the globe and it is surmised that there are not similarities and
congruencies among the cultures within and between countries” (2008). Therefore, the importance of
establishing localization and adaptation is relevant to the marketing strategy of any international
company. In China for example, Coca-Cola has taken up the “think local, act local” approach and it
seems to be pretty effective since Coca-Cola has gained eight percent increase in Asia-Pacific in 2000.In
addition, Coca-Cola has given local managers control over advertising operations, which is pretty
impressive. Coca-Cola has included everything from Chinese zodiac animals to Spring Festival couplets in
its television commercials (Weisert, D., 2001). Another example is Peru, Coca-Cola’s ability to succeed is
due to their marketing strategy to not try to present itself as “an American company that happens to be
in Peru, but as a company of Peruvians that has its headquarters in the United States." This strategy
allows Coca-Cola to attain the trust of the Peruvian Population as a global company (Salas). Another
marketing strategy for Coca-Cola in Peru is their decision to increase the penetration of their marketing
efforts to everywhere they can, from corner stores to major sporting events. Coca-Cola also knew that
the way to compete was to attach the soft drink to all types of meals and even participate in co-branding
by promoting itself with other brands (Salas). One more marketing strategy Coca-Cola employs in Peru
involves their social responsibility. Not onlyInternational Trade & Academic Research Conference
(ITARC ), 7 – 8th November, 2012, London.UK. The Business & Management Review, Vol.3 Number 1,
November 2012 159 does Coca-Cola create employment but it also raises funds for relief programs for
the less fortunate and for those individuals with financial challenges (Historia, n.d.). A social
responsibility strategy as part of marketing is also utilized in Belarus. Coca-Cola was a pioneer foreign
investor in Belarus, first licensing a local manufacturer in 1994 and then setting up its own production
facilities in 1997. Its original US $42 million investment was the first green-field development in Belarus
by a foreign investor (Food and Drink, n.d.). Also, as a part of its marketing strategy, the CocaCola
Company focuses its attention on soft drink market development throughout the Republic. The
Company provides its partners and trade enterprises with free promotional materials, booths,
refrigerators, other trade equipment, products supply services, as well as overall marketing and
advertising support (Food and Drink, n.d.). It is essential to mention that cost advantage can be obtained
if a standardized marketing strategy is created together with a cross-cultural strategy that can be
adopted by the majority of cultures (Van Heerden & Barter, 2008). Another finding from the same study
explains that regardless of the value of localization in the marketing strategy, localization should be
focused on when it is imperative to consumers and for that reason organizations should focus on
standardization as much as possible. Further research demonstrates that in order to conclude if a
localized or standardized strategy should be followed, political, economic and cultural aspects must be
analyzed (Van Heerden & Barter, 2008). In the United States, the company quickly realized that the key
to Coca-Cola's success was to market it with food (Taylor, 2005, p.81). Today, Coca-Cola can be found in
restaurants everywhere. It is consumed like any other beverage and because of this Coca-Cola has
initiated many other products into the American markets. Coca-Cola often determines where there are
gaps in its market and tries to satisfy the consumers in those gaps by marketing new products to them.
For example, because Diet Coke is popular among middle-aged women, Coke Zero is being targeted to
teens and young adults who do not already drink diet soft drinks (MarketWatch, 2005, p. 44). Coca-Cola
also uses innovative ideas to help market its products that have been around for a long time. One way it
does this is by focusing heavily on consumer demands and conveniences for Americans. An example of
this is the Coca-Cola Fridge Pack. It is a space saving, selfdispensing 12

COCA-COLA’S DIFFERENTIATION STRATEGY

Differentiation is basically how people can differentiate a product from other. Coca cola follows
following differentiation strategy
SYMBOL OF JOY AND FUN

It has created itself as a brand which is there whenever we want to share our joy and happiness. In
every occasion it’s a must for us to drink with our loved ones and friends. That psychological approach
made them different from other.

PRODUCT LINE A large variety of product line serves every types of people. Coke took this approach very
seriously and they manufacture huge ranges of product with different size and different flavor that
serves every person’s choice.

CULTURALLY SHAPED PRODUCTS

Coke follows a tagline “ Think globally and act locally” and by following this strategy they have to satisfy
different region and culture. And for that reason they offer different product which catches attention of
those cluture. And that makes them different from other cola brand

WATER PURITY STANDARD

Soft drinks contain 90-95% water so water need to be very hygienic and coke takes this very seriously.as
it must contain consumer trust. they follow a technology named HYDROGGUARD HG-702 technology
which ensures 5 step water purity assurance.

ORGANIC SODA AND BEVERAGE LINE

When differentiation comes there is nothing better than coca cola . this company has set a benchmark
by bringing out pure organic beverage under its product line. This made them stand out from others.
This again proves there’s no one better than them in differentiation and thus they concurred the market
through their differentiation once again.
CUSTOMIZING VENDING MACHINE Coca-cola’s vending machine are different from other vending
machine . the main point of differentiation here is , you can customize your own drink. For example you
can mix coke life with a diet coke. Whatever combo you want you can get it from here. And it accepts
mobile cash so that’s an additional benefit.

PORTER’S FIVE FORCES ANALYSIS OF COKE

COMPETITION

All the big companies has bigger competition. Coca cola is no different . as a rival it has another
beverage giant Pepsi. According to most people this is the biggest competition in the corporate world.
There are many soda drinks that can give competition to coke but Pepsi huts coke the most. Although
coke has better sale than Pepsi worldwide but Pepsi has more control on us market and Pepsi has non
beverage item that make them more strong.

THREAT OF NEW ENTRANTS: Company like coca cola is so popular over the world that, threat of new
entrance is very low here. There are some major thing that make threat of new entrance nil for coca-
cola

Brand Name: The brand cola is very big that’s why if people get an option of a new cola and among coke,
in almost all the case people would go for coke

Distribution channel: coca-cola has a worldwide distribution channel. It has many plant around the
world. its very difficult to match up that for new companies.
Huge initial investment: for matching up to the level of coke, you need huge initial budget for plant and
others and that seems impossible for anyone

Economic of sale: all the established company enjoy an economic of sale due to its operation expertise.
And its seems difficult for new companies

Loyal fanbase : coke’s biggest strength is their loyal fan base . for new companies it will take hundred of
years for this kind of fanbase.

 RIVALRY AMONG EXISTING FIRMS:

The greatest competition that Coca-cola faces is from the rival sellers within the industry. Coca-
Cola, Pepsi Co, and Cadbury Schweppes are among the largest competitors in this industry, and
they are all globally established which creates a great amount of competition. Aside from these
major players, smaller companies such as Cott Corporation and National Beverage Company
make up the remaining market share. All five of these companies make a portion of their profits
outside of the United States.

Though Coca-Cola owns four of the top five soft drink brands (Coca-Cola, Diet Coke, Fanta, and
Sprite), it had lower sales in 2005 than did PepsiCo (Murray, 2006c). However, Coca-Cola has
higher sales in the global market than PepsiCo, PepsiCo is the main competitor for Coca-Cola
and these two brands have been in a power struggle for years (Murray, 2006c). Coke has been
more dominant with a 53% of market share as in 1999 compared to Pepsi with a market share of
21%.
According to Beverage Digest's 2008 report on carbonated soft drinks, PepsiCo's U.S. market
share has increased to 30.8%, while the Coca-Cola Company's has decreased to 42.7% due to
Pepsi marketing schemes still the higher large gap between the market share can be attributed to
the fact that Coca-Cola took advantage of Pepsi entering the market late and has set up its
bottler's and distribution network especially in developed markets.

"The Coca-Cola Company" is the largest soft drink company in the world. Every year
800,000,000 servings of just "Coca-Cola" are sold in the United States alone. Bottling plants
with some exceptions are locally owned and operated by independent business people who are
native to the nations in which they are located. Coca-Cola manufactures, distributes and markets
non-alcoholic beverage concentrates and syrups, including fountain syrups.

 POTENTIAL ENTRANTS:

New entrants are not a strong competitive pressure for the soft drink industry. Coca-Cola and
Pepsi Co dominate the industry with their strong brand name and great distribution channels. In
addition, the soft-drink industry is fully saturated and growth is small. This makes it very
difficult for new, unknown entrants to start competing against the existing firms.

Another barrier to entry is the high fixed costs for warehouses, trucks, and labour, and
economies of scale. New entrants cannot compete in price without economies of scale. These
high capital requirements and market saturation make it extremely difficult for companies to
enter the soft drink industry therefore new entrants are not a strong competitive force.

Capital requirements for producing, promoting, and establishing a new soft drink traditionally
have been viewed as extremely high. According to industry experts, this makes the likelihood of
potential entry by new players quite low, except perhaps in much localized situations that matter
little to Coke or Pepsi. Yet, while this view may reflect conventional wisdom, some industry
observers question whether a new time is coming, with 'new age' beverages selling to well-
informed and health-informed and health-conscious consumers. This issue was beginning to
grab the attention of both Coke and Pepsi in the summer of 1992, when they both were not able
to explain a drop in their June 1992 sales.

SWOT ANALYSIS OF COCA-COLA

WEAKNESS
STRENGTHES
Negative Publicity.
World's leading brand.
Decline in cash from Operating
Large scale of operations. Activities.
Robust revenue growth in 3 Sluggish Performance in North
SWOT
segments. America.
ANALYS THREATS
OPPORTUNITIES IS
Acquisitions. Intense Competition.
Growing bottled water market. Dependence on bottling Patners.
Growing Hispanic Population Sluggish growth of Carbonated
in U.S. beverages.

Fig 2.1 SWOT ANALYSIS OF COCA-COLA

STRENGTHES:

 WORLD’S LEADING BRAND

Coca-Cola has strong brand recognition across the globe. The company has a leading brand
value and a strong brand portfolio. Business-Week and Inter-brand, a branding consultancy,
recognize. Coca-Cola as one of the leading brands in their top 100 global brands ranking in
2006.The Business Week-Inter-brand valued Coca-Cola at $67,000 million in 2006. Coca-Cola
ranks well ahead of its close competitor Pepsi which has a ranking of 22 having a brand value of
$12,690 million Furthermore; Coca-Cola owns a large portfolio of product brands. The company
owns four of the top five soft drink brands in the world: Coca-Cola, Diet Coke, Sprite and Fanta.

Strong brands allow the company to introduce brand extensions such as Vanilla Coke, Cherry
Coke and Coke with Lemon. Over the years, the company has made large investments in brand
promotions. Consequently, Coca-cola is one of the best recognized global brands. The
company’s strong brand value facilitates customer recall and allows Coca-Cola to penetrate new
markets and consolidate existing ones.

 LARGE SCALE OF OPERATIONS

With revenues in excess of $24 billion Coca-Cola has a large scale of operation. Coca-Cola is the
largest manufacturer, distributor and marketer of non-alcoholic beverage concentrates and syrups
in the world. Coco-Cola is selling trademarked beverage products since the year 1886 in the US.
The company currently sells its products in more than 200 countries. Of the approximately 52
billion beverage servings of all types consumed worldwide every day, beverages bearing
trademarks owned by or licensed to Coca-Cola account for more than 1.4 billion.

The company’s operations are supported by a strong infrastructure across the world. Coca-Cola
owns and operates 32 principal beverage concentrates and/or syrup manufacturing plants located
throughout the world.

In addition, it owns or has interest in 37 operations with 95 principal beverage bottling and
canning plants located outside the US. The company also owns bottled water production and still
beverage facilities as well as a facility that manufactures juice concentrates. The company’s large
scale of operation allows it to feed upcoming markets with relative ease and enhances its revenue
generation capacity.

 ROBUST REVENUE GROWTH IN 3 SEGMENTS

Coca-Cola’s revenues recorded a double digit growth, in three operating segments. These three
segments are Latin America, ‘East, South Asia, and Pacific Rim’ and Bottling investments.
Revenues from Latin America grew by 20.4% during fiscal 2006, over 2005. During the same
period, revenues from ‘East, South Asia, and Pacific Rim’ grew by 10.6% while revenues from
the bottling investments segment by 19.9%.

Together, the three segments of “Latin America”, “East, South Asia” and “Pacific Rim” bottling
investments, accounted for 34.8% of total revenues during fiscal 2006. Robust revenues growth
rates in these segments contributed to top-line growth for Coca-Cola during 2006.

WEAKNESS:

 NEGATIVE PUBLICITY

The Coca-Cola Company has been involved in a number of controversies and lawsuits related to
its relationship with human rights violations and other perceived unethical practices. There have
been continuing criticisms regarding the Coca-Cola Company's relation to the Middle East and
U.S. foreign policy. The company received negative publicity in India during September
2006.The company was accused by the Centre for Science and Environment (CSE) of selling
products containing pesticide residues. Coca-Cola products sold in and around the Indian
national capital region contained a hazardous pesticide residue.

On 10 December 2008, the US Food and Drug Administration (FDA) wrote to Mr. Muhtar Kent,
President and Chief Executive Officer, to warn him that the FDA had concluded that Coca-Cola's
product Diet Coke Plus 20 FL OZ was is in violation of the Federal Food, Drug, and Cosmetic
Act.

In January 2009, the US consumer group the Centre for Science in the Public Interest filed a
class-action lawsuit against Coca-Cola. The lawsuit was in regards to claims made, along with
the company's flavours, of Vitamin Water. Claims say that the 33 grams of sugar are more
harmful than the vitamins and other additives are helpful.

 SLUGGISH PERFORMANCE IN NORTH AMERICA

Coca-Cola’s performance in North America was far from robust. North America is Coca-Cola’s
core market generating about 30% of total revenues during fiscal 2006. Therefore, a strong
performance in North America is important for the company.

In
North America the sale of unit cases did not record any growth. Unit case retail volume in North
America decreased 1% primarily due to weak sparkling beverage trends in the second half of
2006 and decline in the warehouse-delivered water and juice businesses. Moreover, the company
also expects performance in North America to be weak during 2007. Sluggish performance in
North America could impact the company’s future growth prospects and prevent Coca-Cola from
recording a more robust top-line growth.

 DECLINE IN CASH FROM OPERATING ACTIVITIES

The company’s cash flow from operating activities declined during fiscal 2006. Cash flows from
operating activities decreased 7% in 2006 compared to 2005. Net cash provided by operating
activities reached $5,957 million in 2006, from $6,423 million in 2005. Coca-Cola’s cash flows
from operating activities in 2006 also decreased compared with 2005 as a result of a contribution
of approximately $216 million to a tax-qualified trust to fund retiree medical benefits.

The decrease was also the result of certain marketing accruals recorded in 2005.Decline in cash
from operating activities reduces availability of funds for the company’s investing and financing
activities, which, in turn, increases the company’s exposure to debt markets and fluctuating
interest rates.

OPPORTUNITIES:

 ACQUISITIONS

During 2006, its acquisitions included Kerry Beverages, (KBL), which was subsequently,
reappointed Coca-Cola China Industries (CCCIL). Coca-Cola acquired a controlling
shareholding in KBL, its bottling joint venture with the Kerry Group, in Hong Kong.
The acquisition extended Coca-Cola’s control over manufacturing and distribution joint
ventures in nine Chinese provinces.

In Germany the company acquired Apollinaris which sells sparkling and still mineral water.
Coca-Cola has also acquired a 100% interest in TJC Holdings, a bottling company in South

Africa. Coca-Cola also made acquisitions in Australia and New Zealand during 2006. These
acquisitions strengthened Coca-Cola’s international operations.

These also give Coca- Cola an opportunity for growth, through new product launch or greater
penetration of existing markets. Stronger international operations increase the company’s
capacity to penetrate international markets and also gives it an opportunity to diversity its
revenue stream. On 25 February 2010, Coco cola confirms to acquire the Coca cola enterprises
(CCE) one the biggest bottler in North America. This strategy of coca cola strengthens its
operations internationally.

 GROWING BOTTLED WATER MARKET

Bottled water is one of the fastest-growing segments in the world’s food and beverage market
owing to increasing health concerns. The market for bottled water in the US generated revenues
of about $15.6 billion in 2006.
Market consumption volumes were estimated to be 30 billion litres in 2006. The market's
consumption volume is expected to rise to 38.6 billion units by the end of 2010. This represents a
CAGR of 6.9% during 2005-2010.

In terms of value, the bottled water market is forecast to reach $19.3 billion by the end of 2010.
In the bottled water market, the revenue of flavoured water (water-based, slightly sweetened
refreshment drink) segment is growing by about $10 billion annually. The company’s Dasani
brand water is the third best-selling bottled water in the US. Coca-Cola could leverage its strong
position in the bottled water segment to take advantage of growing demand for flavoured water.

 GROWING HISPANIC POPULATION IN U.S

Hispanics are growing rapidly both in number and economic power. As a result, they have
become more important to marketers than ever before. In 2006, about 11.6 million US
households were estimated to be Hispanic. This translates into a Hispanic population of about 42
million.

The US Census estimates that by 2020, the Hispanic population will reach 60 million or almost
18% of the total US population. The economic influence of Hispanics is growing even faster than
their population. Nielsen Media Research estimates that the buying power of Hispanics will
exceed $1 trillion by 2008- a 55% increase over 2003 levels.

Coca-Cola has extensive operations and an extensive product portfolio in the US. The company
can benefit from an expanding Hispanic population in the US, which would translate into higher
consumption of Coca-Cola products and higher revenues for the company.

THREATS:

 INTENSE COMPETITION

Coca-Cola competes in the non-alcoholic beverages segment of the commercial beverages

industry. The company faces intense competition in various markets from regional as well as
global players. Also, the company faces competition from various non-alcoholic sparkling
beverages including juices and nectars and fruit drinks. In many of the countries in which Coca-
Cola operates, including the US, PepsiCo is one of the company’s primary competitors. Other
significant competitors include Nestle, Cadbury Schweppes, Groupe DANONE and Kraft Foods.

Competitive factors impacting the company’s business include pricing, advertising, sales
promotion programs, product innovation, and brand and trademark development and protection.
Intense competition could impact Coca-Cola’s market share and revenue growth rates.

 DEPENDENCE ON BOTTLING PARTNERS

Coca-Cola generates most of its revenues by selling concentrates and syrups to bottlers in whom
it doesn’t have any ownership interest or in which it has no controlling ownership interest. In
2006, approximately 83% of its worldwide unit case volumes were produced and distributed by
bottling partners in which the company did not have any controlling interests. As independent
companies, its bottling partners, some of whom are publicly traded companies, make their own
business decisions that may not always be in line with the company’s interests. In addition, many
of its bottling partners have the right to manufacture or distribute their own products or certain
products of other beverage companies.

If Coca-Cola is unable to provide an appropriate mix of incentives to its bottling partners, then
the partners may take actions that, while maximizing their own short-term profits, may be
detrimental to Coca-Cola. These bottlers may devote more resources to business opportunities or
products other than those beneficial for Coca-Cola. Such actions could, in the long run, have an
adverse effect on Coca-Cola’s profitability. In addition, loss of one or more of its major
customers by any one of its major bottling partners could indirectly affect Coca-Cola’s business
results. Such dependence on third parties is a weak link in Coca-Cola’s operations and increases
the company’s business risks.
 MARKETING MIX OF COCA-COLA INDIA

Product: Coca-Cola has around 500 brands that comprise of many product ranges that provide an
approximate of 3900 choices of drinks to its customers. Their brand holds a financial value of 5 almost
21 billion dollars. Some of the most known products are namely, Fanta, Powerade, Fresca, Coca-Cola
Zero, Simply Orange, Del Valle, Coca-Cola, Minute Maid, Diet Coke, Sprite, Coca-Cola Life, Powerade
Zero, Ciel and Glaceau Vitaminwater. Other than these soft drinks it also offers other ranges of product
lines such as juice drinks, sports drinks, energy drinks and tea and coffee. Most of its products are
available at both ranges of high and low-calorie composition. Coca-Cola sells its products in various sizes
of milliliters and liters in both plastic and glass bottles and cans as well

. Their technical capability of providing unique shapes and packaging to its products has helped it in
standing out and dominating the market by differentiating itself from the rivals. Since the launch of the
bottling plant, the US soft-drink maker has introduced four brands, including Coke Zero and Sprite Zero,
and recently launched a spice flavored drink, locally known as jeera pani.

Price: Coca-Cola maintains a head to head competition with its competitor in terms of pricing. It follows
a nonlinear pricing strategy or indirect price discrimination and strongly leverages on its benefits as the
market in which they operate in is perceived as an oligopoly. Moreover, it routinely offers discounts in
huge quantity purchases, allowances on bundle purchases and maintains pricing similarities in line with
its main rival, Pepsi; so it does not lose out on customers in the particular sectors where they operate
together. A close inspection into the history of the pricing strategies followed by Coca-Cola so far
indicates that they are relentlessly aimed at nurturing customer or brand loyalty. The prices of few of
the products are as follows: Coca-Cola Zero Coke Can 320 ml – BDT 130; Coca-Cola Can 250 ml – BDT 40;
Coca-Cola bottle 2.25 liters – BDT 110; Coca-Cola bottle 1.25 liters – BDT 70; Diet Coca-Cola cans 250 ml
– BDT 40; Coca-Cola no sugar 320 ml – BDT 150.
Place: The biggest factor that helps Coca-Cola operate globally over 200 different nations is its powerful
and efficient distribution capability and network. Coca-Cola is completely dependent on its bottler
partners for the distribution of its products. It operates in six various areas namely, South America,
Eurasia, North America, Europe, Africa, and the Pacific. According to the statistics, the giant company
hits a sale of approximately 2 billion drinks in a single day. The bottling associates’ bottle, seal, market
and supply the finished packaged drinks to our buyers and retail affiliates, while they market it to
customers. The forwarding agents work using localized strategies and function in an extensive
distribution network thus providing 2.5 million spokes with their products.

Promotion: Coca-Cola has always been ahead of its rival companies due to its very creative and effective
advertising strategies. Coca-Cola adopts and implements aggressive marketing tactics and releases
advertising campaigns both in offline and online media, print Ads, and exclusively engage in many
sponsorship opportunities and programs such as Fifa world cup, American Idol, Olympics games, etc.
The giant company not only addresses its advertising campaigns on its customers but also on its
distributors, bottlers and retailers by assisting with hoardings and fridges for advertising and branding
purposes. Apart from these, it has hired many famous personalities and celebrities as its brand
ambassadors and also captures the emotional insights of its customers by engaging and showcasing
many activities related to CSR. Few of its famous campaigns include, “Share a Coke”, “Always Coca-
Cola”, “The World's Cup” and exclusively in Bangladesh, “Nikhoj Shobder Khoje”. The market leader
currently streamed approximately 2500 promotional videos on the YouTube platform and its latest
advertising expenditures rose upto 2.6 billion dollars.

PESTEL ANALYSIS OF COCA-COLA INDIA

PESTLE stands for Political, Economic, Social, Technological, Legal and Environmental. It is a
tool that helps the organisations for making strategies and to know the EXTERNAL environment
in which the organisation is working and is going to work in the future.

Political Factors:
  Historical

Coca Cola India was the leading soft drink brand in India till 1977 when it left rather than
revealing its formula to the government. They re-entered the country in 1993. However, the
primary barrier for Coca-Cola’s entry into the Indian market was its political environment.
Despite the liberalization of the Indian economy in 1991 and introduction of the New Industrial
Policy to eliminate barriers such as bureaucracy and regulation, there was still a lot of
protectionism. India’s past promotion of “Indigenous availability” or “Swadeshi movement”
depicted its affinity for local products. Due to India’s suspicion of foreign business entering
Indian markets, Coca Cola received alien status its re-entry. This and some of the policies
imposed on foreign enterprises proved as a hindrance to the growth of the company in the
country. To make things worse, the policies were neither clear nor unchanging.

For example, foreign businesses were not allowed to market their products under the same name
if selling within the Indian market. Thus, Coca Cola had to be changed to Coca Cola India (and
Pepsi had to be renamed to Lehar Pepsi). However, the most controversial, and by far, the most
damaging was when Coca-Cola was forced to sign an agreement to sell 49% of its equity in
order to buy out Indian bottlers. Due to the lack of consistency in the legal aspects, more
importance was being given to lobbying the politicians.

 Recent Scenario

During recent times, Coca Cola India has faced its fair share of problems. On August 5 th 2003,
The Centre for Science and Environment (CSE), an activist group in India focused on
environmental sustainability issues (specifically the effects of industrialization and economic
growth) issued a press release stating: "12 major cold drink brands sold in and around Delhi
contain a deadly cocktail of pesticide residues". According to tests conducted by the Pollution
Monitoring Laboratory (PML) of the CSE from April to August, three samples of twelve
PepsiCo and Coca-Cola brands from across the city were found to contain pesticide residues
surpassing global standards by 30-36 times.

This had an adverse impact on the sales of Coca Cola, with a drop of almost 30-40%1 in only
two weeks on the heels of a 75% five-year growth trajectory. Many leading clubs, retailers,
restaurants, and college campuses across the country had stopped selling Coca-Cola. This
threatened the newly achieved leadership attained over Pepsi due to a successful marketing
campaign.

But this was not the end of Coca Cola’s troubles. There was widespread discontent around many
of their plants. For example, in Plachimada, Kerala, the communities in and around the Coca
Cola plant blamed the factory for their water problems. Due to this, the local Panchayat decided
not to renew the license issued to Coca Cola to “protect public interest". The company has also
been accused of illegally occupying a portion of the village property resources in Mehdiganj,
near Varanasi. However, there are certain positives as well, with a 22 percent increase in its unit
case volume last quarter.
Economic Analysis:

The Indian economy sustained the global economic slowdown in the previous year and has
shown a tremendous economic growth. It showed 8.6% of growth in the last quarter of 2009-10
as compared to 5.8% same time in the previous year. It has emerged as an attractive economy to
invest in as many opportunities has been recognized.

 Economic growth
India is ranked second in economic growth, just behind China. Analysts have said that India will
be the third biggest economy of the world in the coming year behind China and USA. With
economic growth many opportunities have been seen, which have attracted many foreign
investor to the company.

Coca cola India returned to the country in 1993, despite few problems in the start they have
emerged as the king of soft drink industry in India. The strong economic growth of India has
resulted in coca cola to invest heavily in sales and distributive channels. It has introduced two
new products, Nimbu Fresh and an energy drink ‘Burn’.
Coca cola registered 22% growth in their unit case volume in the second quarter (April-June). It
is the 16th consecutive quarter of such growth out of which 13 are double digit. Coca cola India’s
growth is in contrast to its overall performance, the beverage king reported a growth of just 5%
(worldwide) in the same quarter.

 Inflationary effects
Inflation is one of the main problems that Indian economy has been facing for a year now. Rising
prices in the food and other products doesn’t only effect the consumers it also has an adverse
effect on a company. The inflation rate for the year 2009 was recorded to be 11.49%. As prices
have gone up in India for various products, especially oil, there has been uncertainty in decision
making of almost every company. Coca cola India has also been affected by the same; it has
been forced to think about their input costs, as they have been rising due to inflation. Their
expenditure has been rising, with more costs in salaries, distribution channels and other operating
costs. Beverage industry being price competitive market, they have not revised their product
prices.

Exchange rate
The exchange rate of rupee to US Dollar has been stable but in the previous months the rate has
had a tumultuous period. Exchange rate determines at what price will the company export its
products and import whatever is required by it. The previous year, the rate of rupee to USD
touched 44, on an average it has been around 47, so the exports earned less and the imports cost
more. Therefore, coca cola India had to bear some low profitable times. However, in the present
scenario rates have reached a stable level and exports are on an increasing trend.

Social Analysis:
Coca- Cola returned to India in 1993 after a 16 year hiatus, amidst competition from Leher Pepsi
which had the advantage of entering the country 7 years earlier. Initially, it struggled to find
acceptance as there were already other brands such as Parle’s Thums Up which existed in the
market. Coca-Cola had earlier focussed more on the American way of life in their advertising
campaigns, which the Indian consumers could not identify with. Also, they did not focus on
competition from other alternatives such as lemonade, Lassi etc.
These products had been around for centuries, and were also cheaper alternatives to Coca-Cola.
However, things were brought under control when Thums Up was bought over by Coca Cola,
and more attention was paid by the company on their marketing mix.
With the lowering of their prices by almost 15-20%, introduction of newer products which
appealed to the Indian tastes, more investment in market research and focussing on the target
group of 18-24 year olds, they were able to increase their market share and build brand loyalty.

Coca Cola today, has made significant investments to build its business in India. It has also
generated employment for almost 1,25,000 people in related industry through its procurement,
supply and distribution cycles.

The soft drink industry today is growing steadily due to the booming economy, strengthened
middle class and low per capita consumption. With the increase in health consciousness among
the urban consumers, the company has introduced newer products such as Diet Coke, which
contain lesser calories than ordinary Coca Cola. This is also responsible for the company shifting
focus from carbonated drinks to Fruit Drinks / Juices and bottled water.
The rural market had also been identified by Coca-Cola India as an attractive target, with almost
70% of the country’s population. The company has recorded significant growth in recent years

Coca Cola India has also taken many initiatives as a responsible corporate citizen, by tying up
with many NGOs such as BAIF (or Bharatiya Agro Industries Foundation), SOS Children’s
Villages and Save the Children. It has also taken initiatives to promote education in rural areas.
Technological Analysis:
Coca-Cola has started operations of its R&D facility in India, with the view of localizing its
product portfolio. The major focus would be on non-carbonated drinks and flavours. The
company’s R&D team has already rolled out drinks such as Maaza aam panna and also a Maaza
mango milk drink, and is exploring options to enter new categories in India such as juices in
localised flavours, energy drinks, sports drinks and flavoured water. These initiatives are being
taken by the company to further expand their product portfolio.
With the increasing importance of 360 degree media tools and overall ad spend on social media
sets likely to grow by almost 44%, Coca-Cola has increased ad spend on the internet. Case in
point is the recent 2009 Sprite campaign, which was first launched on the internet.

Environmental Analysis:

Coca Cola has earned a title of environment friendly company and Coca Cola India too has
followed in the footsteps. Coca Cola India’s Corporate Social Responsibility (CSR), is an
initiative that prioritizes many social and environmental issues; one of them being ‘water
conservation’. They support many community based rainwater harvesting projects and help
lending conservation education.

The company has made sure that the following ideas are considered during their operations:

1. Environmental due diligence before acquiring land

2. Environmental impact assessment before commencing project

3. Ground water and environment survey before selecting the site

4. Ban on purchasing CFC emitting refrigerating equipment

5. Waste water treatment facilities

6. Compliance with all regulatory environmental requirements

7. Energy conservation programs

By following these guidelines Coca-Cola India has helped the environment with consistent
profits and success. They seek to provide leadership in three different areas, these are as follows:

1. Water efficiency and water quality

2. Energy efficiency

3. Eliminating or minimizing solid waste.

Though
being an environmental friendly company, Coca Cola India had to face its share of controversies.
On 4th February, 2003, Centre of Science and Environment in India, released a report based on
experiment done by Pollution Monitoring Laboratory. In the experiment, they tested 17 packaged
drinking water brands and found that, Coca Cola’s Kinley has 15 times more pesticide residual
levels than the stipulated norms, Bisleri had 59 times and Aquaplus had 109 times.

The main law governing the food safety is the 1954 Prevention of food alteration act, which
stated that pesticides should not be present in any food item but did not have law against
pesticides being present in soft drinks. However, the Food Processing Order 1955 stated that the
main ingredient used in soft drinks must be ‘potable water’ but the Bureau of Indian Standards
had no prescribed standards for pesticides in water.

But later it was found that BIS had stated that pesticides should not be present or it should not
exceed 0.001 part per million. Further, the health ministry of India admitted that ‘there were
lapses in PFA regarding carbonated drinks’.

Fig 2.2 GRAPH OF PESTICIDES IN SOFT DRINKS IN INDIA

Legal Analysis:
As the Indian consumer is getting more educated, the government is also paying special attention
to consumer laws. In the past, there were not so many laws protecting the benefits to the
consumer but now every business has to go by the law and fix their operations, strategies so as to
satisfy their consumers, and employees. Keeping in mind the consumer laws, employment laws,
antitrust law, discrimination laws etc. a business should plan out everything.

 Consumer Laws
In the present scenario, consumer is the king, if a product is defective, not meeting the stated
standards a consumer can complain against the manufacturer. Complaining and getting the
verdict the court has made very fast and efficient as government of India has installed new
consumers courts. Their main job is to see that the consumer benefits are being met or not. When
producing their beverages, Coca Cola India has to make sure that they have written price,
manufacturing date, expiry date, batch no, nutritional facts are written on the packed product.

 Employment Laws

Ministry of Labour makes the laws for proper employment in the country. They have stipulated
norms on employing people from the country and getting expatriates in the company as well.
India has strict laws against employing child labour. Being a male dominated society, the
ministry has made sure that female employees are treated with respect and given equal
importance at the work place. Every field of work has got its own wage, these are to meet the
norms and laws set by the labour ministry. When employing anyone, coca cola India cannot
discriminate on social, regional or any racists’ basis. If it is found that the company has been
violating the law, it has to face strict action and fines.

 Health and safety laws

As coca cola produces a product that is consumed by the consumer as a food item, there are laws
that the company must abide by when producing it. Ministry of Food Processing Industries
makes and oversees the laws and norms for the food processing industries.

The Indian Parliament has recently passed the Food Safety and Standards Act, 2006 that
overrides all other food related laws.

It will specifically repeal eight laws:

  The Prevention of Food Adulteration Act, 1954.
 The Fruit Products Order, 1955.
 The Meat Food Products Order, 1973.
 The Vegetable Oil Products (Control) Order, 1947.
 The Edible Oils Packaging (Regulation) Order, 1998.
 The Solvent Extracted Oil, De oiled Meal, and Edible Flour (Control) Order, 1967.
 The Milk and Milk Products Order, 1992.
 Essential Commodities Act, 1955 relating to food.
From now on, the act establishes a regulatory body, the Food Safety and Standards Authority of
India. Anything that coca cola makes, have to make accordingly to the laws. They have to check
the weight, volume and ingredients of the product. The export or the import of the products by
the company has to meet the quality standards stipulated by the law.

 Anti-trust law
The Competition Commission of India was made under the Indian Competition Act 2002,
Monopolies Restrictive and Trade Practices Act 1969 was replaced by it. This committee looks
after all the issues regarding unethical means of doing business, competition issues and any
dispute between two different business entities. CLG competition and anti trust practices are as
follows:

 Representing clients before the MRTP Commission in ‘monopolistic and restrictive trade
practices’ and ‘unfair trade practices’ matters.
 Legal Advice and sophisticated insight into the international best practices on
competition law.
 Consultancy services on specific issues - supply and distribution, pricing and marketing,
‘promotional materials’, mergers, acquisitions, amalgamation, licensing, joint operation
and research, joint buying, ‘dominant-firm’ status etc.
 Competition Audit and Due Diligence for developing appropriate guidelines for
employees, distributors, agents, franchisees etc.
 Legal Due Diligence on anti-competition, unfair and restrictive   market practices.
  Drafting claims, counter-claims, replies, rejoinders, representations etc. on Competition
Law and related legal issues.
 Strategic policing on anti-competition market practices and trends.
 Policy due diligence for mergers, acquisitions, joint ventures with appropriate anti-trust
safeguard measures and policy.  

All these laws help Coca Cola India to maintain its own brand and values. Any other business
trying to copy the brand of coca cola will face the strict action against itself. These laws help
every business to compete in a fair environment. As it is known that the coca cola and Pepsi are
the fiercest rivals in the beverage industry, the CCI makes sure that either of them does not
indulge in unfair means to make profits and hurt each other’s business.

SUGGESTIONS
The suggestions made in this section are based on the market study conducted as part of “Coca-
Cola India”. The suggestions are arranged in order of priority, highest first.

 Perform a detail demand survey at regular interval to know about the unique needs and
requirements of the customer.

 The company should make hindrance free arrangement for its customers/retailers to
make any feedback or suggestions as and when they feel.

 The company should focus to bring some more flavours like health drinks and other
low-calorie offerings. Coca-Cola India can also introduce some fruit based drinks, as it
has already entered the energy drink arena with “Burn”.

 Coca-Cola’s distribution channel is mostly through retail. Whereas the competitors also
concentrates more on the multiplexes, pubs and restaurants. Coca-Cola should try to
increase their distribution in these areas.
  The company must keep a watch on its primary competitors in market in order to be
able to compete with them.

 The company should use new attractive system of word of mouth advertisement to keep
alive the general awareness in the whole market as a whole.

 The company should be always in a position to receive continuous feedback and

suggestions from its customers/ consumers as well as from the market and try to solve it
without any delay to establish its own good credibility.

 A strong watch should be kept on distributors so that the goodwill of the BRAND
doesn’t get affected.

CONCLUSION

Coca- cola is a global brand. People are having this product for more than 125 years. The success they
have now is because of the establishment that has created from hard work of more than hundred years.
And they success is the result of continuous effort on marketing activities, economics of sale and
successful supply chain operation. But they main key point of their product is their marketing strategy.
From the time of Candler & Robert to till now they have adopted some of the finest marketing tool that
set example of how market works they shown a different direction in marketing and promotion and
successfully set a standard which is barely be touched. This excellence on marketing pushed here Coca-
Cola today