BUS 5910-01 Management Capstone

Written Assignment Unit 8

University of People

Instructor:  Dr. Akash Mathapati

Assignment Due Date (Thursday, 23 March 2023)

Introduction

Innovation and reinvention are the keys to business success. This case studies is

about the Coca-Cola Company. The largest manufacturer and supplier of soft drink

syrups and distillates worldwide. The Coca-Cola Company started out in 1886 as a

manufacturer and retailer of beverages with its iconic product, Coca-Cola. The Coca-

Cola Company's culture is permeated with marketing tactics, innovation, and

reinvention, which has contributed to its long-term success. The Coca-Cola Company

works around the clock and in every country to make the world a better place while

also giving people the beverage they want.

Company background

The Coca-Cola Company is an American business that was established in 1892

and is now primarily focused on producing and selling syrup and concentrate for Coca-

Cola, a sweetened carbonated beverage that is a cultural icon in the United States and

a universal representation of American tastes. The company also manufactures and

markets other soft drinks and citrus-flavoured beverages. The largest beverage

producer and distributor in the world, Coca-Cola offers more than 2,800 products in

more than 200 nations. It ranks among the biggest corporations in the American. The

company's administrative headquarters are in Atlanta, Georgia.

The Coca-Cola System franchise model served as the foundation for the business,

which sold only concentrate to its numerous bottling partners around the world.

While Coca-Cola manages global clients like McDonald's, manufactures concentrates,

and maintains its brand strategy, the bottling partners develop the ultimate branded
products, take care of marketing and distribution, and interact with customers directly

(Chua, n.d).

Problem Statement:

The Coca-Cola Company refers to its sparkling beverage category as carbonated

beverages. Sparkling beverages have received harsh criticism from health authorities

and consumers in recent years (Jafri, F. 2015). These drinks, also known as CSDs

(carbonated soft drinks), have been criticised for their high sugar and caffeine content.

Several health agencies have also accused the drinks of causing obesity, diabetes, and

osteoporosis. (Jafri, F. 2015).

Consumers are gradually shifting away from CSDs and toward still beverages.

Coca- Cola's noncarbonated beverage portfolio includes flavoured water, juices, ready-

to-drink tea, coffee, and sports drinks. According to a significant industry report that

showed volume has now stabilized at levels last seen in the mid-1990s, sales of

carbonated soft drinks declined for the tenth year in a row in 2014, with Pepsi and

Coca-Cola each posting modest declines, according to a report from Fortune.com.

Another issue for the Coca-Cola Company is the growing number of competitors

in the non-alcoholic beverage industry, which necessitates greater innovation to stay

ahead of the competition. Many of the competitors are small businesses, allowing

them to be more nimble and inventive than large corporations like Coca-Cola. The

corporation's franchise business model was also under threat. Bottlers had an

incentive to use the valuable concentrate in low-volume, high-margin goods, whereas

Coca-Cola revenues were based solely on the volume of concentrate sold to bottlers,

not on the price paid by customers. Because of this, Coca- Cola's relationships with its

partners were becoming increasingly strained. (John, 2011).

 Some of the company's processes are facing challenges as a result of changing

lifestyles and cultures. The company has made the necessary efforts to innovate new

products while employing the same marketing strategies. As a result, consumers have

little product differentiation. As a result, it appears appropriate that the company

pursue a strategy of full vertical integration.

This will increase consumers' trust in the quality of the products. As previously

stated, bottler incompetence is costing the company market share and may do so in

the future. Though the company provides quality guidelines to distributors, it may be

difficult to improve such guidelines because bottlers wield significant power over the

company. Because of the high cost of installing production lines, there are relatively

few bottling companies.

According to Yoffie (2004), a small bottling plant would cost more than $75

million based on 1998 estimates. The US market alone would necessitate

approximately 100 such plants. Correcting these figures to the present shows that it is

quite costly to set up plants; as a result, the cost restriction limits competition among

bottlers; as a result, they have a lot of clout over other companies seeking their

services because they have few alternatives. They hold the company hostage with

such thoughts in their heads.

However, if vertical integration was used to purchase these bottling companies, the

company would be solely responsible for the quality of its products. Thus, owning the

bottling companies is crucial to the coca – Cola Company’s future.

Statement of Cause(s):

People are becoming more aware of, and concerned about, living a healthy

lifestyle. The decline in demand for Coca-Cola beverages is due to a shift in people's
eating habits, which may be one of the company's problems. Consumers in their later

years are more concerned about their health and the nutrients they require; as a

result, they are increasingly focused on living longer. Customers and health officials

have recently criticized the high sugar content of non-alcoholic beverages.

Because of health-conscious lifestyles and increased awareness of environmental

issues, the commercial strategy and business environment of carbonated soft drinks

must change. Carbonated soft drinks, according to health officials, cause dehydration,

increased sugar intake, weight gain, and calcium depletion. In the United States, there

is strong evidence that rising refined carbohydrate intake and, particularly, added

sugars, particularly in the form of sugar sweetened beverages, are linked to weight

gain and obesity rates (Lavie, C. et al., 2018). For example, Coca-Cola Classic contains

10.6 grams of sugar per 100 millilitres.

A 350ml bottle of cola has 140 calories in it. The high levels of phosphoric acid

and citric acid found in sodas such as Coca-Cola beverages can remove calcium from

the bone, leach calcium from your teeth, and reduce calcium absorption. Excess sugar

consumption has been shown to have negative metabolic effects in both human and

animal models, including dyslipidaemia, an increase in inflammatory markers, weight

gain, an increased risk of type 2 diabetes, and other changes associated with NCDs

(Gallagher et al., 2016). Furthermore, as more non-alcoholic beverage companies

enter the market, the beverage sector is becoming more competitive.

The company's main and closest competitor is PepsiCo, which was founded 12

years after Coca-Cola. PepsiCo has a competitive advantage over Coca-Cola because it

has created "complementary" or "synergistic" business divisions. PepsiCo's entry into

the snack sector has boosted revenue and sales growth. Because of the similarities in
 manufacturing, taste, and pricing, people are finding it easier to obtain PepsiCo

products. Coca-Cola Company needed to have excellent marketing techniques to win

the competition in this scenario.

Every year, the Coca-Cola Company uses three million tonnes of plastic for

packaging. Plastic products in large quantities are discarded in the environment. The

majority of these are plastic garbage bottles, such as mineral water bottles and

beverage bottles. (BBC News. 2019). Pollution has a significant negative impact on the

natural environment because plastic is not biodegradable and is composed of

hazardous substances.

After consuming plastic garbage, marine species have died and been poisoned.

Plastic ingestion by fish is also a source of concern due to potential health

consequences, despite the fact that there is still very little information on plastic

ingestion in commercial fish species, with only 7.5 percent of them having been

studied. Plastic pollution also degrades the quality of the land surface and destroys it.

This is because when plastic reacts with water, it emits harmful chemicals. Despite the

fact that the Coca-Cola Company is investigating a number of plastic waste solutions,

there is always room for improvement.

Alternative Courses of Action.

According to Mikel (2007), companies that want to conquer the future must build on

what they have now rather than relying on future competencies that cannot be guaranteed.

Coca-Cola has clearly identifiable core competencies that, if the company focuses on, the

future will be easy to conquer. In the framework of this case study, the following alternative

courses of action can be offered:

1) Because the company intends to target the health-conscious consumer base, it must

articulate the offering in a way that covers the natural ingredient component of Coca-

Cola while also engaging the cola's traditionalists. In doing so, it should heavily

advertise with a focus on natural sugar ingredients in order to maintain a top-of-mind

position in the customer's mind. The advertisement should depict the true natural

essence that not only fights obesity but also provides consumers with a healthy taste

and lifestyle. To drive demand before the total distribution in the markets, the

advertisement should market before the total distribution in the markets (The case

solutions, n.d).

2) The company should broaden its knowledge in providing strategies aimed primarily at

increasing consumer satisfaction, as this would imply increase product growth and

distribution across countries. Additional marketable details about health awareness

would help to improve another aspect of the brand's image. This should also include

taglines that associate more of its consumption with happiness, as health is a major

concern these days.

3) The Coca-Cola Company should diversify its product line more effectively. The

company can create new products to meet today's demand for a healthy lifestyle.

According to recent studies, the number of customers who prefer organic and natural

products is increasing (Glanz et al., 2016).

4) The Coca-Cola Company should conduct new research that is both transparent and

will rekindle public interest in the company's products (IvyPanda. 2021).

5) Management must devise mechanisms to ensure that all matters pertaining to

corporate communications are in their best interests. This means that management
 should make certain that corporate communications are handled professionally. This

is due to the fact that corporate communications have a direct impact on the nature

of the image that the organization projects. If the organization manages its corporate

communications professionally, it will project a positive corporate image. In contrast,

if the organization handles its corporate communications in an unprofessional

manner, it will project a negative corporate image. As a result, the organization's

inability to handle communications professionally exacerbated the situation

(Wowessays, 2020).

Recommended Action Plan.

Sweetened beverages have evolved into the primary source of calories in the average

person's daily diet. Many studies indicate that consuming too much sugar is more likely to

lead to obesity than consuming too much fat. Furthermore, it has been found that the rise

in sugar consumption around the world is associated with conditions like diabetes, heart

disease, and cancer. To address this issue, the Coca-Cola Company can implement the

following recommendations.

1) To begin, a frequent technology upgrade is recommended for Coca-Cola Company to

solve problems. The business must switch to new technology in order to ensure

greater productivity and efficiency. Because technology evolves so quickly, the Coca-

Cola Company must keep track of technological revolutions to ensure that issues

such as plastic bottle waste and water scarcity are addressed in the most appropriate

and effective manner. For example, there are many technological solutions to the

problem of water scarcity, but Coca-Cola Company requires upgrading technology

for better results (Chua, n.d).

2) The Coca-Cola Company's management must take into account various concepts

related to strategic management, given the fierce competition in the soft drink

industry. The management can better meet customer needs by integrating customer

focus. This will make it possible for it to produce its soft drink products in a way that

increases client satisfaction (StudyCorgi, 2021).

3) Coca-Cola should pursue strategies of differentiation and cost leadership (Generic

Strategies). In terms of differentiation, the company should differentiate itself from

its competitors by incorporating something into its product that provides a unique

value to its customers. This can be accomplished through well-planned and managed

marketing activities that result from perceived superior product quality and high

brand image and recognition. Cost leadership can also be attained through

economies of scale, learning, knowledge, and experience in production and

operational processes, as well as effective/efficient distribution networks and

manufacturing systems.

4) The management should make sure that its products are well-positioned in the

market given the aggressive competition present within the sector. This is

accomplished by fusing ideas like product customization, branding, sales promotion,

and research and development. The company will be able to develop new products

to meet market demand thanks to research and development. The company will be

able to raise market awareness of its products through sales promotion (StudyCorgi,

2021).

5) Corporate social responsibility should be incorporated by the management. The

company will gain a favourable reputation through CSR, enabling it to carry out

foreign direct investment more successfully (StudyCorgi, 2021).

 6) The Coca-Cola Company should implement the Supplier relationship management

(SRM) concept in order to foster positive relationships with its suppliers. Due to the

efficient supply of resources, this will allow it to conduct its operations cost-

effectively (StudyCorgi, 2021).

7) Coca-Cola should hold more event sampling in each market to raise consumer

awareness of the no sugar version of Coca-Cola. Consumers will have the

opportunity to try out new flavours and find the perfect beverage to meet their

needs. Furthermore, this can raise consumer awareness and encourage them to try

the new flavour (Chua, n.d).

Conclusion

Coca-Cola, the world's leading soda beverage, with the strength of a large company

and a very good and well-known brand image, will be accepted almost everywhere in the

world. As a result, Coca- Cola's strategic focuses should on covering the entire market

segmentation, anywhere (Library, 2015).

However, as the soda industry has grown, many competitors, ranging from domestic

to global manufacturers, have emerged, reducing Coca- Cola’s market share in each country.

As a result, Coca-Cola must innovate in their marketing strategies. Coca-Cola, armed with

their bottling partners and the ability to 'think global, act local,' could adjust its strategy to

penetrate the market more complex and in-depth in order to continue to expand market

share (Library, 2015).

 Reference

Chua, Y. (n.d). Challenges and Solutions: The Coca-Cola Company as a Case Study. Retrieved from:
https://pdfs.semanticscholar.org/331a/0407c3563466b1a8b6c15bb0dcf6f60b776b.pdf

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Retrieved From: https://www.majortests.com/essay/The-Coca-Cola-Company-Coke-Gets-
Back-F3CPVSUQAA.html

Glanz, K., et al., (2015). Reviews of retail food store environments and sales, and their implications
For programs promoting healthy eating. Journal of Nutrition Education and
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IvyPanda. (2021, July 22). Coca-Cola Company: Strategic Management.  Retrieved

From: https://ivypanda.com/essays/coca-cola-company-strategic-management/

Mikel, L. (2007, September 09), Marketing and management basics, (Birmingham, Soul) “Coca-cola
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International sales” Atlanta business chronicle, 2008. Retrieved from:
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http://library.binus.ac.id/eColls/eThesisdoc/Bab5/RS1_2015_1_1348_Bab5.pdf

StudyCorgi. (2021, October 29). Coca Cola Company: Strategic Management

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The case solutions (n.d). Coca-Cola: Green Harvard Case Solution & Analysis. Retrieved from:

https://www.thecasesolutions.com/coca-cola-green-142040
Wowessays (2020, March 03). Free Coca Cola Case Study Example. Retrieved from:
https://www.wowessays.com/free-samples/free-coca-cola-case-study-example/