ASSIGNMENT (GROUP 4)

Company: Coca Cola; Industry: Beverages

Submitted by : Group 4
ASHISH KUMAR GOUDA (8KA)

CHIMYE DIWAKAR (12KA)

DIYA DHANIK (15KA)

ENAKSHI MONDAL (16KA)

ISHPREET KAUR (18KA)

GOKUL V (79KB)
 COMPANY OVERVIEW

Purpose: Refresh the world. Make a difference.

Vision: Our vision is to craft the brands and choice of drinks that people love, to refresh them in body &
spirit. And done in ways that create a more sustainable business and better shared future that makes a
difference in people’s lives, communities and our planet.

Company History

Pharmacist Dr. John S. Pemberton originally intended to combine 2 ingredients—kola nuts (caffeine),
coca leaves (cocaine), and syrup—as a patent medicine on May 8, 1886, in Atlanta, Georgia. He prepared
the concoction, mixed the elixir with carbonated water, and offered free samples to customers at Jacobs'
Pharmacy. To the surprise of the clients, who loved the flavour, Jacobs' Pharmacy started selling the
elixir for five cents per glass. Later, both the name "Coca-Cola" and the iconic Spenserian script logo
were created by Mr. Pemberton's partner and bookkeeper Frank M. Robinson.

The Present

Coca-Cola started dominating the market in 1960 as a global icon, more than 70 years after Dr.
Pemberton first invented the elixir. The world's #1 producer of non-alcoholic beverages, Coca-Cola is
currently present in more than 200 nations and is the owner/licensee of more than 500 sparkling and
still beverage brands.

The portfolio of the company comprises about 200 brands in the following five categories:

• Trademark Coca-Cola
• Sparkling flavors
• Hydration, sports, coffee and tea
• Nutrition, juice, dairy and plant-based beverages
• Emerging beverages

In terms of operating revenue, Europe, Middle East and Africa is the largest contributor, followed by North
America. The figure below provides a snapshot of the distribution of operating income (FY2021).
 Asia Pacific
North 18%
America
26% Global
Ventures
2%

Bottling
Investments
4%
Europe,
Middle East &
Latin America Africa
20% 30%

Source: Annual Report for FY2021

In terms of unit case volume mix, Europe, Middle East and Africa is the largest contributor, followed by
North America. The figure below provides a snapshot of the distribution of unit case volume mix by
operating segment (FY2021).

Global
Ventures, 3%

Europe,
Asia Pacific, Middle East &
23% Africa, 29%

Latin
North America, 27%
America, 18%

Source: Annual Report for FY2021

Business Strategy

The non-alcoholic beverage market is fiercely competitive on a global scale. Access to potentially wider
markets and broader production conveniences, such as raw materials, labour, qualified managers, and
technical personnel, are some of the strategies used in beverage industry to gain sustainable competitive
advantage. The focus of Coca-Cola’s business strategy is differentiation, which encompasses five essential
areas summarised in the figure below.
 Continuously Becoming more
Investing in Simplifying the Refocusing on
driving revenue efficient in
brand and organization core business
and profit every task
business structure model
growth performed

Additionally, the organization's personnel make significant contributions to Coca- Cola’s success. Coca-
Cola successfully builds a diverse workforce and a corporate culture that fosters daily learning, growth,
and value creation in order to achieve their long-term objectives. Coca-Cola maintains its competitive
advantage in the face of its rivals like Dr. Pepper Snapple Group, Inc., Kraft Heinz Foods Inc., Nestlé S.A.,
and primary rival PepsiCo Inc. by concentrating on their market, working more efficiently, acting like
owners, and fostering enthusiasm, optimism, and fun within the company.

Leadership

The ability to perform well is critical given how puzzling, dynamic, and hostile business situations have
become as a result of globalisation. Organizational leaders need to be able to develop realistic strategic
goals if they are to help their organisations overcome global difficulties. Coca-Cola accomplishes this by
creating a compelling and clear vision, aligning systems, and effectively conveying change and adversity
inside the company.

Muhtar Kent took the helm as CEO of Coca-Cola in 2008. Investors' opinions of him during his tenure as
CEO have been conflicted, particularly in recent years. In the midst of the re-franchising activities, it was
announced in December 2015 that Mr. Kent would be
stepping down as CEO but would continue to serve as
Chairman of the Board of Directors of Coca-Cola through
2017. Post which James Quincey, a former Chief Operating
Officer, became the CEO of the largest beverage company in
the world on May 1, 2017. Mr. Quincey has sworn to
continue to develop Coca-Cola's business strategy as a
comprehensive beverage company. He has in-depth
knowledge of the company's operational challenges and has
managed the re-franchising of the company's bottling operations. JAMES QUINCEY
However, during this rejig a regrettable choice was made to fire 20% of their corporate workforce in
April 2017. Former CEOs Quincey and Kent had no regrets about their tactics. Quincey stressed, "By
eliminating 1,200 positions, we will enable the company to run a more focused, lean corporate centre.
The reductions will come from a global pool of approximately 5,500 personnel". In order to preserve its
position in the market, Mr. Quincey is concentrating on assembling a portfolio of "consumer-centric
brands". With continued divestment initiatives and by becoming leaner, Coca-Cola wants to achieve this.

Rethinking some of the company's beverage formulations to cut sugar and investing in the development
of the next generation of zero-calorie sweeteners are the first steps taken by Mr. Quincey towards
putting the consumer first. The objective is to provide consumers with the low- and no-sugar beverages
which they desire without requiring them to give up the delicious flavours they are accustomed to. To do
this, the focus must shift from what the company needs to sell to what customers want to buy.

Internal Strengths and Weakness Analysis

Strengths

● Resources - Resources that are accessible to the company allow it to develop competitive
advantages. Resources might either be physical or abstract. The value chain of Coca-Cola, the
global leader in non-alcoholic beverages, makes use of a variety of resources, including cash and
marketing, manufacturing and equipment, personnel skills, and product patents.
● Vast global presence - There are more than 200 countries where Coca-Cola products are sold.
There's a good chance that wherever you travel, Coca-Cola will be available there. Coca-Cola has
a huge global following, which has helped to establish its enormous brand reputation. This
massive global recognition in itself is a huge strength against all the new players that have
entered (or planning to enter) the beverage industry.
● Distribution Network - Due to the market demand for Coca-Cola's it has developed the greatest
distribution network. On the other side, Coca-Cola has been able to maintain such a strong
market position because of this effective distribution network.

Weaknesses

● Product Diversification is low - Coca-Cola is absent from the snacking market, whereas Pepsi
made a wise decision to diversify into it with snacking products like Lays and Kurkure. The
market is also a strong source of revenue for Pepsi, and had Coca-Cola products participated,
they would have provided an additional source of income for the business.
● Absence in health beverages - You would learn that obesity is a significant issue impacting
people today if you watched the news. People are making efforts to avoid becoming obese as
the business climate changes. One of the main contributors to fat consumption is carbonated
beverages, of which Coca-Cola is the largest producer. The implication is that individuals will
favour a healthier alternative, which could result in a decrease in beverage consumption in
industrialised nations.
● Water management & plastic waste generation - Because of its water management difficulties,
Coca-Cola has in the past drawn criticism. Due to their extensive water usage, especially in areas
where there is a shortage of water, several groups have filed lawsuits in the name of Coca-Cola.
People have also accused Coca-Cola of adding pesticides to the water to remove pollutants at
the same time. Therefore, Coca-Cola needs better water management. Another reason for
increasing flak from environmentalists is its high contribution in increasing plastic waste
generation.

External Analysis
Political Factor: Government regulations pertaining to the intake of sugar and caffeine have a significant
impact on the Coca-Cola brand. And because of the general deterioration of health conditions, politicians
are increasing harsher about such aspects, forcing Coca-Cola to change the chemical components in
certain of its drinks.

Economic Factor: Water consumption in large volumes has a variety of effects on Coca-Cola. The
corporation is compelled to use a significant portion of its money to address water crisis issues and make
sure that customers' water needs are addressed.

Social Factor: The main societal aspect influencing Coca-Cola is the shift in customer mindset. Due to the
health risks associated with carbonated drinks, Gen X and millennial customers are quickly switching to
energy drinks. Long-term Coca-Cola usage has been linked to diseases including obesity, and recent
research has brought this to light. Coca-Cola is not a beneficial product at this time because the general
public's perspective has changed to one of healthy living.

Technological Factor: Advertising on social media has shown to be really beneficial for the brand. It has
one of the largest followings across all social media channels, and it actively promotes its products on
these sites. Coca-Cola presently has 108 million Facebook fans, 3.34 million Twitter followers, and
significant numbers across other platforms. These platforms are the main means by which the brand
reaches its target audience. The brand has also benefited from technological developments like AI-based
analytics and big data operations in determining market trends and service chain management
procedures.

Environmental Factors: The largest global consumer of freshwater is reportedly Coca-Cola. The
corporation has received a great deal of criticism from environmental groups just for this reason. Coca-
Cola is being blamed for entirely emptying significant regions of groundwater in nations like India. Coca-
Cola must take action right away to implement water management operations, or it risk having its
products outlawed in these nations. The brand has already implemented some of these measures. Many
people view it as a model firm and it has pledged to reduce its carbon impact to almost zero in the
upcoming years.

Porter’s Five Forces Analysis

Threat of new entrants: Beverage companies are required to make substantial investments in developing
distribution networks. These cannot be easily developed and perfected overnight. A highly efficient
distribution network plays a critical role in the growth of a company. The ease of availability of products
plays a primary role in the growth of sales. Furthermore, this holds true for marketing activities as well. As
per analysis published in Coca Cola’s Potential and Dividend Analysis, 2017, some of the largest beverage
brands in the world, including Coca Cola, PepsiCo and Nestle spent over 6.5% of their revenue in FY2016
in marketing. In case of Nestle, it was as high as 24%.

Competitive rivalry: There exists intense competition between Coca Cola and PepsiCo. These brands
collectively hold over 50% of market share in the US. Similar trends can be observed in other geographies
as well.

Bargaining power of suppliers: The bargaining power of the suppliers is low as the switching costs for
suppliers in case of major players is quite low. For suppliers dealing with Coca Cola, losing their account
could translate into substantial losses in revenue and profits. In addition, sugar is a key ingredient in soft
drinks and there are numerous suppliers worldwide.
Bargaining power of buyers: There exists limited differentiation between Pepsi and Coca Cola and
individual customers tend to buy in very small volumes. Switching costs for customers are low as there is
a small percentage of customers who are loyal to certain brands. However, for restaurants, retailers and
other entities that buy in bulk, they can only offer one brand, thus, their bargaining power is relatively
higher than individual customers.

Threat of substitutes: As customers are becoming more aware about the sugar content in aerated drinks
and other beverages, they now prefer to take a low sugar alternative. In addition, there are many
substitutes to aerated sugary beverages and their quality and intake is increasing.

Threats of new
entrants(Low)

Bargaining Bargaining
Competitive
power of power of
Rivalry (High)
suppliers(Low) buyers (Low)

Threat of
substitutes
(Moderate to
high)

Recommendations
• The company has about 200 brands in its portfolio, however, Coca Cola enjoys top of the mind
recall. Company needs to aggressively promote other products in their portfolio as customers are
becoming more conscious of their sugar consumption and are switching to sugar free or lower
sugar content beverages. To improve the awareness, company could use social media as one of
the tools for the same.
• The company needs to consider portfolio diversification. Its two key competitors, PepsiCo and
Nestle have also acquired and/or ventured into snacking products. Snacks act as a complementor
and can help the company increase its sales.