Name Huda ArifUllah

Madonna ID 227228

Subject Business Policy

Subject Code: MGT_4950_WB_58_00_2014_30

Date June 2014

Coca-Cola Company Inc.

Case Analysis

Executive Summary

Coca-Cola, the product that has given the world its best-known taste was born in Atlanta,
Georgia, on May 8, 1886. Coca-Cola Company is the worlds leading manufacturer, marketer
and distributor of non-alcoholic beverage concentrates and syrups, used to produce nearly 400
beverage brands. It sells beverage concentrates and syrups to bottling and canning operators,
distributors, fountain retailers and fountain wholesalers. The Companys beverage products
comprises of bottled and canned soft drinks as well as concentrates, syrups and not-ready-todrink powder products. In addition to this, it also produces and markets sports drinks, tea and
coffee. The Coca-Cola Company began building its global network in the 1920s. Now
operating in more than 200 countries and producing nearly 400 brands. The Coca-Cola
Company and its network of bottlers comprise the most sophisticated and pervasive
production and distribution system in the world. This unique worldwide system has made The
Coca-Cola Company the worlds 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 Company aims at increasing shareowner value over time. It accomplishes this by working
with its business partners to deliver satisfaction and value to consumers through a worldwide
system of superior brands and services, thus increasing brand equity on a global basis. They
aim at managing their business well with people who are strongly committed to the Company
values and culture and providing an appropriately controlled environment, to meet business
goals and objectives.

Coca-Cola Company
Brief Profile:

The company is best known for its flagship product Coca-Cola, invented by pharmacist John
Stith Pemberton in 1886.. Besides its namesake Coca-Cola beverage, The company is best
known for its flagship product Coca-Cola, invented by pharmacist John Stith Pemberton in
1886. The company operates a franchised allocation system since 1889. The Coca-Cola
Company is headquartered in Atlanta, Georgia. Its stock is listed on the NYSE and is part
of DJIA, S&P 500 Index, the Russell 1000 Index and the Russell 1000 Growth Stock Index. Its
current chairman and CEO is Muhtar Kent.
The Coca-Cola Company was formerly established in 1891 as the J. S. Pemberton Medicine
Company, a co-partnership between Dr. John Stith Pemberton and Ed Holland. The company
was formed to sell three main products: Pemberton's French Wine Cola (later known as CocaCola), Pemberton's Indian Queen Hair Dye, and Pemberton's Globe Flower Cough Syrup. In
1884, the company became a stock company and the name was changed to Pemberton
Chemical Company. The new president was D. D. Doe while Ed Holland became the new
Vice-President. Pemberton stayed on as the superintendent. The company's factory was located
at No. 107, Marietta St. Three years later, the company was again changed to Pemberton
Medicine Company, another co-partnership, this time between Pemberton, A. O. Murphy, E. H.
Bloodworth, and J. C. Mayfield. Finally in October 1888, the company received a charter with
an authorized capital of $50,000. The charter became official on January 15, 1889. By this time,
the company had expanded its offerings to include Pemberton's Orange and Lemon Elixir.

History of Coca-Cola
Coca-Cola originated as a soda fountain beverage in 1886 selling for five cents a glass. Early
growth was impressive, but it was only when a strong bottling system developed that CocaCola became the world-famous brand it is today.
1894 A modest start for a Bold Idea
In a candy store in Vicksburg, Mississippi, brisk sales of the new fountain beverage called
Coca-Cola impressed the store's owner, Joseph A. Biedenharn. He began bottling Coca-Cola to
sell, using a common glass bottle called a Hutchinson.
Biedenharn sent a case to Asa Griggs Candler, who owned the Company. Candler thanked him
but took no action. One of his nephews already had urged that Coca-Cola be bottled, but
Candler focused on fountain sales.
1899 The first bottling agreement
Two young attorneys from Chattanooga, Tennessee believed they could build a business
around bottling Coca-Cola. In a meeting with Candler, Benjamin F. Thomas and Joseph B.
Whitehead obtained exclusive rights to bottle Coca-Cola across most of the United States
(specifically excluding Vicksburg) -- for the sum of one dollar. A third Chattanooga lawyer,
John T. Lupton, soon joined their venture.
1900-1909 Rapid growth
The three pioneer bottlers divided the country into territories and sold bottling rights to local
entrepreneurs. Their efforts were boosted by major progress in bottling technology, which
improved efficiency and product quality. By 1909, nearly 400 Coca-Cola bottling plants were
operating, most of them family-owned businesses. Some were open only during hot-weather
months when demand was high.
1916 Birth of the contour bottle
4

Bottlers worried that the straight-sided bottle for Coca-Cola was easily confused with imitators.
A group representing the Company and bottlers asked glass manufacturers to offer ideas for a
distinctive bottle. A design from the Root Glass Company of Terre Haute, Indiana won
enthusiastic approval in 1915 and was introduced in 1916. The contour bottle became one of
the few packages ever granted trademark status by the U.S. Patent Office. Today, it's one of the
most recognized icons in the world - even in the dark!
1920s Bottling overtakes fountain sales
As the 1920s dawned, more than 1,000 Coca-Cola bottlers were operating in the U.S. Their
ideas and zeal fueled steady growth. Six-bottle cartons were a huge hit after their 1923
introduction. A few years later, open-top metal coolers became the forerunners of automated
vending machines. By the end of the 1920s, bottle sales of Coca-Cola exceeded fountain sales.
1920s and 30s International expansion
Led by longtime Company leader Robert W. Woodruff, chief executive officer and chairman
of the Board, the Company began a major push to establish bottling operations outside the U.S.
Plants were opened in France, Guatemala, Honduras, Mexico, Belgium, Italy, Peru, Spain,
Australia and South Africa. By the time World War II began, Coca-Cola was being bottled in
44 countries.
1940s Post-war growth

During the war, 64 bottling plants were set up around the world to supply the troops. This
followed an urgent request for bottling equipment and materials from General Eisenhower's
base in North Africa. Many of these war-time plants were later converted to civilian use,
permanently enlarging the bottling system and accelerating the growth of the Company's
worldwide business.
5

1950s Packaging innovations

For the first time, consumers had choices of Coca-Cola package size and type -- the traditional
6.5-ounce contour bottle, or larger servings including 10-, 12- and 26-ounce versions. Cans
were also introduced, becoming generally available in 1960.
1960s New brands introduced
Following Fanta in the 1950s, Sprite, Minute Maid, Fresca and TaB joined brand
Coca-Cola in the 1960s. Mr. Pibb and Mello Yello were added in the 1970s. The 1980s
brought diet Coke and Cherry Coke, followed by POWERADE and DASANI in the
1990s. Today hundreds of other brands are offered to meet consumer preferences in local
markets around the world.
1970s and 80s Consolidation to serve customers
As technology led to a global economy, the retailers who sold Coca-Cola merged and evolved
into international mega-chains. Such customers required a new approach. In response, many
small and medium-size bottlers consolidated to better serve giant international customers. The
Company encouraged and invested in a number of bottler consolidations to assure that its
largest bottling partners would have capacity to lead the system in working with global
retailers.
1990s New and growing markets
Political and economic changes opened vast markets that were closed or underdeveloped for
decades. After the fall of the Berlin Wall, the Company invested heavily to build plants in
Eastern Europe. And as the century closed, more than $1.5 billion was committed to new
bottling facilities in Africa.
21st Century

The Coca-Cola bottling system grew up with roots deeply planted in local communities. This
heritage serves the Company well today as people seek brands that honor local identity and the
distinctiveness of local markets. As was true a century ago, strong locally based relationships
between Coca-Cola bottlers, customers and communities are the foundation on which the entire
business grows.
Existing Vision, Mission, Objectives and Strategies
Vision: To achieve sustainable growth, the companyhasestablished a vision with clear goals.
i.

Profit. Maximizing return to shareowners while being mindful of our overall

responsibilities.

ii.

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

iii.

Portfolio. Bringing to the world a portfolio of beverage brands that anticipate and
satisfy peoples; desires and needs.

iv.

Partners. Nurturing a winning network of partners and building mutual loyalty

v.

Planet. Being a responsible global citizen that makes a difference.

Mission:The Roadmap starts with the mission, which is enduring. It declares the purpose as a
company and serves as the standard against which the company weighsthe actions and
decisions. It is the foundation of company manifesto.

i.

To refresh the world in body, mind and spirit. (Market, Customer, Philosophy)

ii.

To inspire moments of optimism through the brands and actions. (Products)

iii.

To create value and make a difference. (Self concept)

Objectives:
i.

To engage Coca-Cola in exploring the viability and options for using their distribution
networks in developing countries to distribute social products such as oral rehydration salts
(ORS) and related educational materials on health, hygiene and sanitation.

ii.

To support Coca-Cola and its partners in modeling different scenarios which combine CocaColas distribution network with local health initiatives in order to achieve the aim.

iii.

To establish a core group of enablers and activists to lead on the different aspects of this
campaign.

iv.

To monitor the progress of the campaign and ensure that any trials and roll-outs are effectively
monitored and evaluated.

Strategies:

The strategic goals are decided by the top management. However, they are

reviewed every year in the annual meeting to make sure that they are in line with the changing
environment. These are:

i.

To continue to be an organization providing the quality products to the valuable

customers.

ii.

To select and retain the professional people for the organization.

iii.

To project an outstanding corporate image.

iv.

To satisfy the customer through extra ordinary service and an excellent service along
with the complete tactical and operational support.

Developed Vision and Mission Statement of Coca- Cola.

Mission:
Coca-Cola believes that nutrition and health should not insinuate that we have to sacrifice taste
and flavor. With all natural ingredients, we are able to produce nourishing beverages in which
flavor is not diminished. Our mission has been and will Always be to gratify our customers
by dispensing superior-quality, healthy, as well as enticing beverages. Using the best
choices that nature has to offer and the best technology in the market today, we at Coca-Cola
are determined to grow to be the number 1beverage producer in the world
Vision:
8

Our goal is long-term success in the beverage business.

It takes people with experience, insight, and effort to make long-term success possible. It
takes people that care. It takes teamwork. We strive for success and profits, short-term
and long-term, for everyone at Coastal Beverage Company. With the proper care and
guidance and everyones dedication to the job at hand, we will be successful. We are all
partners in this effort to achieve success. We must trust and rely on each other.

We must share our resources, ideas, and experiences our mistakes as well as our

triumphs. This is what our mutual partnership is all about. Working together, we can
accomplish far more than we ever could alone. It is a relationship that benefits us all.

Coca-Colas External Opportunities and Threats:

Opportunities:

Many successful brands to pursue.

Advertise its less popular products.

Buy out competition.

More Brand recognition.

This Coca Cola has a few opportunities in its business. It has many successful brands that it
should continue to exploit and pursue. Coca Cola also has the opportunity to advertise its less
popular products. With a large income it has the available money to put some of these other
beverages on the market. This could be very beneficial to the company if they could start
selling these other products to the same extent that they do with their main products. Another
opportunity that we have seen being put to use before is the ability for Coca Cola to buy out
their competition. This opportunity rarely presents itself in the world of business. However,
with Coca Colas power and success, such a task is not impossible. Coca Cola has bought out a
countless number of drink brands. An easy way to turn their profit into your profit is too buy
9

out their company. Even though this may cost a vast amount of money initially, in the long run,
if all goes to plan, it results in a large profit. Also, the company will no longer need to worry
about this product being part of the competition. Brand recognition is the significant factor
affecting Cokes competitive position. Coca Cola is known well throughout 90% of the world
population today. Now Coca Cola wants to get there brand name known even better and
possibly get closer and closer to 100%. It is an opportunity that most companies will ever
dream of, and would be a supreme accomplishment. Coca Cola has an opportunity to continue
to widen the gap between them and their competitors.

Threats:

Changing health-consciousness attitude

Legal Issues

Health Ministers

Competition (Pepsi)

Despite the fact that Coca Cola dominates its market, it still has to deal with many threats.
Even though Coca Cola and Pepsi control nearly 40% of the entire beverage market, the
changing health-consciousness attitude of the market could have a serious effect on Coca Cola.
This definitely needs to be viewed as a dominant threat. In todays world, people are constantly
trying to change their eating and drinking habits. This could directly affect the sale of Coca
Colas products. Another possible issue is the legal side of things. There are always issues with
a company of such supreme wealth and popularity. Somebody is always trying to find fault
with the best and take them down. Coca Cola has to be careful with lawsuits. Health minister
could also be looked at as a threat. Again, some people may try to exploit the unhealthy side of
Coca Colas products and could threaten the status and success of sales. Other threats are of
10

course the competition. Coca Colas main competition being Pepsi, sells a very similar drink.
Coca Cola needs to be careful that Pepsi does not grow to be a more successful drink. Other
product such as juices, coffee, and milk are threats. These other beverage options could take
precedent in some peoples minds over Coca Colas beverages and this could threaten the
potential success it presents again.

CPM Of Coca Cola Company:

Coca-Cola

Pepsi
Rating

Weighted
Score

Cadbury
Schweppes
Rating Weighted
Score

0.24

0.24

Key Success Factors

Weight

Ratin
g

Financial Position

0.08

Weighte
d
Score
0.32

Advertising

0.12

0.48

0.48

0.36

Market Share

0.12

0.48

0.36

0.24

Brand Image

0.10

0.40

0.40

0.30

Customer Loyalty

0.10

0.30

0.30

0.20

Product Quality

0.12

0.48

0.48

0.48

Product Range

0.08

0.24

0.32

0.24

Distribution

0.10

0.40

0.30

0.30

Price Competition

0.08

0.24

0.24

0.24

Geographical Expansion 0.10

0.40

0.30

0.20

Total Score

1.00

3.74

3.42

2.80

Coca-Cola is the worlds no. 1 beverage producer and CPM of coke suggests that the company
is also strong with its success factors. The company has to work hard in order to keep the
scores in the some level and it will be beneficial for the company if they try to improvise over
some factors like Loyalty, Price competition and product range. Because that will make their
position safe and secure in the market.

EFE (External Factor Evaluation) Matrix:

11

External Strategic
Weight Rating Weighte
Comments
Factor
d Score
OPPORTUNITIES
Strong and diversified 0.13
4
0.52
Due to the strong and diversified product portfolio the
product
company is not affected by the any new invention in
the market.
Packaging
0.08
4
0.32
The arrangements made by the company relating to
the cola packaging are most advantageous for the
company for enhancement in the whole world.
The acceptance of the 0.03
4
0.12
The acceptance of the new projects in the company
new projects in the
has been stared in the industrial level that increases
company
the demand for the companys product.
New technology
0.14
4
0.56
New technology should be introduced by the
company in order to improve the performance and
efficiency of the work.
Niche market could be 0.05
3
0.15
The company can focus on the niche areas of the
focused.
market that generates and improves the sales of the
products within the company.
Advertisement of
0.03
2
0.06
There is an opportunity for the coca cola company to
unpopular products
advertise its product that is not much popular among
the customers or the people and it is beneficial for the
company to stable their low profit generating
products.
Gap between
0.04
2
0.08
There is the great opportunity for the company to
competitors
overcome the gap between them and their
competitors.
Great number of
0.14
3
0.42
The coca cola company has lots of brands that
successful brands
continue and pursue it to the great success.
THREATS
Health conscious people 0.04
4
0.16
Although the coca cola company is attaining almost
about 40 % control over the entire beverage market
but due to the factor of health conscious people
attitude the company can be affected badly and affects
the sales of the company.
The factor of lawsuits 0.06
4
0.24
The factor of lawsuits is also the threat for the
company that causes decline in the wealth and
popularity and also affects the sales of the company.
Falters showing the
0.09
3
0.27
The success and sales of the coca cola company were
unhealthy side of the
threaten by the falters showing the unhealthy side of
product
the product and also the health minister take action as
the threat.
Competitors (Pepsi)
0.07
4
0.28
The major threat for the company is its competitor
especially Pepsi which is selling most similar product
same as the coca cola and also the various sorts of the
branded juices, coffee and milk are threat for the
company.
12

Economical changes

0.08

0.24

Economical changes and impacts are also playing

adverse role in the success of the company and the
growth that is among the sales.

Increase in demand of
substitutes.

0.02

0.06

The increase in the demand of the production of the

non carbonated products like juices and nectars etc
can affects the growth of the company.

3.48

The large numbers of substitutes regarding the

companys product are also available in the market
that reduces the demand.

Total Weighted Score 1

Based on the above calculations it has been concluded that the companys Total Weighted
Score is 3.48 which shows that the company is hugely successful in utilizing its opportunities
and minimizing the threats around it.

References
www.coca-cola.com, Retrieved on June 28, 2012.
Clark, N., (2005). "Coca-Cola restructures in healthy drinks focus". Brand Republic

Coca Colas Internal Strengths and Weaknesses:

Strenghts:
Cocacola being the largest bevereges of the world enjoys the follwos strengths in its
business:

Popularity
Well known
Branding obvious and easily recognized
A lot of finance
13

 Customer Loyality
International Trade
Coca Cola is an extremely recognizable company. Popularity is one of its superior strengths
that is virtually incomparable. Coca Cola is known very well worldwide. It's branding is
obvious and easily recognized. Things like, logos and promos shown on t-shirts, hats, and
collectible memorabilia. Without a doubt, no beverage company compares to Coca Cola's
social popularity status. Some people buy coke, not only because of its taste, but because it is
widely accepted and they feel like they are part of something so big and unifying. At the other
end of the spectrum, certain individuals choose not to drink coke, based solely on rebelling
from the world's idea that coke is something of such great power. Overwhelming is the best
word to describe Coca Cola's popularity. It is scary to think that its popularity has been
constantly growing over the years and the possibility that there is still room to grow. If you
speak the words Coca Cola, it would definitely be recognized all around the world. Money is
another thing that is a strength of the company. Coca Cola deals with massive amounts of
money all year. Like all businesses, they have had their ups and downs financially, but they
have done well in this compartment and will continue to do well and improve. The money they
are earning is substantially better than most beverage companies, and with that money, they put
back into their own company so that they can improve. Another strength that is very important
to Coca Cola is customer loyalty. The 80/20 rule comes into effect in this situation. Eighty
percent of their profit comes from 20% of their loyal customers. Many people/families are
extremely loyal to Coca Cola. It would not be rare to constantly find bottles and cases of a
product such as coke in a house. It seems that some people would drink coke religiously like
some people would drink water and milk. This is an improbable feat. Customers will
continually purchase these products, and will probably do so for a very long time. If two
14

parents were avid Coca Cola drinkers, this will be passed down do their children as they grow
loyal to the company. With Coca Colas ability to sell their product all over the world,
customers will continue to buy what they know and what they likeCoca Cola products.
Weakness:
The companies main weekeneses are as below:

Word of mouth

Lack of popularity of many Coca Colas brands

Most unknown and rarely seen

Result of low profile or non-existent advertising

Health issues

Coca Cola is a very successful company, with limited weaknesses. However they do have a
variety of weaknesses that need to be addressed if they want to rise to the next level. Word of
mouth is probably a strength and weakness of every company. While many people have good
things to say, there are many individuals who are against Coca Cola as a company, and the
products in which they produce. Word of mouth unfortunately is something that is very hard to
control. While people will have their opinions, you have to try to sway their negative views. If
bad comments and views are put out to people who have yet to try Coca Cola products, then
that could produce a lost customer which shows why word of mouth is a weakness. Another
aspect that could be viewed as a weakness is the lack of popularity of many of Coca Colas
drinks. Many drinks that they produce are extremely popular such as Coke and Sprite but this
company has approximately 400 different drink types. Most are unknown and rarely seen for
available purchase. These drinks do not probably taste bad, but are rather a result of low profile
or nonexistent advertising. This is a weakness that needs to be looked at when analyzing their
company. Another weakness that has been greatly publicized is the health issues that surround
15

some of their products. It is known that a popular product like coke is not very beneficial to
your body and your health. With todays constant shift to health products, some products could
possibly loose customers. This new focus on weight and health could be a problem for the
product that are labeled detrimental to your health.
http://coca-cola-remodel.tripod.com/id21.html
IFE (Internal Factor Evaluation) Matrix.
Internal factor evaluation (IFE) of Coke is as follows:
Factors
Strengths
Brand Name
Variety of products
High market share
Financial strength
Strong global presence
Product quality
Geographic spread
New products
Innovative packing
Weaknesses
Strong & tough
competition
Substitute products
Advertising & promotion
Non availability of all
flavors/
products in every
operating group
Affordability of coke
products in Bangladesh
Total

Weight

Rate

Wt. Score

0.12
0.1
0.1

4
3
3

0.48
0.3
0.3

0.1
0.1
0.05
0.05
0.05
0.05

4
3
3
4
4
3

0.4
0.3
0.15
0.2
0.2
0.15

0.1
0.05
0.08

1
1
2

0.1
0.05
0.16

0.05

0.05

0.075
1.0

0.15
2.99

Analysis of IFE matrix of Coke.

According to the analysis of IFE, the score of Coke is 2.99, which is above
average. This shows that Coca-Cola is internally strong and good enough. So by
using their strengths, the can overcome their weaknesses.
16

SWOT MatrixOf Coca-Cola

Strengths

Weaknesses

1. The best global brand in the world in

terms of value ($77,839 billion)
2. Worlds largest market share in
beverage
3. Strong marketing and advertising
4. Most extensive beverage distribution
channel
5. Customer loyalty
6. Bargaining power over suppliers
7. Corporate social responsibility.

1.
2.
3.
4.
5.

Significant focus on carbonated drinks

Undiversified product portfolio
High debt level due to acquisitions
Negative publicity
Brand failures or many brands with
insignificant amount of revenues.

Opportunities

Threats

1. Bottled water consumption growth

2. Increasing demand for healthy food and
beverage
3. Growing beverages consumption in
emerging markets (especially BRIC)
4. Growth through acquisitions.

1.
2.
3.
4.

Changes in consumer preferences

Water scarcity
Strong dollar
Legal requirements to disclose negative
information on product labels
5. Decreasing gross profit and net profit
margins
6. Competition from PepsiCo
7. Saturated carbonated drinks market

Ref: http://www.strategicmanagementinsight.com/swot-analyses/coca-cola-swot-analysis.html

The company has to concentrate on effective utilization of the opportunities and they have to
plan for avoiding the threats of their business. No doubt Coca-Cola is a well placed company
so any changes in the market will create an impact for the company.

17

Strategic Position and Action Evaluation (SPACE) Matrix

INTERNAL STRATEGIC
POSITION
COMPETITIVE
ADVANTAGE
Market share -1
Product quality -2
Customer loyalty -3
Control over suppliers and
distribution -1
AVERAGE -1.75
TOTAL X-AXIS SCORE
FINANCIAL STRENGTH
Return on investment 5
Liquidity 5
Working capital 5
Cash flow from operations
6
AVERAGE 5
TOTAL Y-AXIS SCORE

EXTERNAL STRATEGIC POSITION

INDUSTRY STRENGTH
Growth potential 5
Profit potential
5
Financial stability 6
Ease of entry into market

AVERAGE 4.25
2.5
ENVIORMENTAL STABILITY
Rate of inflation -6
Demand variability -4
Price range of competing products
Barriers to entry -2
Competitive pressure -1
AVERAGE
-2

18

-3

-2

Boston Consulting Group (BCG) Matrix

From the above diagram it is clear that Thums-up and Maaza are the stars for the company.
Coca-Cola must concentrate on sprite and Fanta in order to improve the market share as such.
And the company has to frame new business policies to improve the business with regard to
Coke and Georgia, or it will be beneficial for the company to divest from these products lines.

19

IE (Internal-External) Matrix: The IFE Total Weighted Score

Strong
3.0 to 4.0

High
3.0 to 3.99

Average
2.0 to 2.99

Weak
1.0 to 1.99

I.

II.

III.

IV.

V.

VI.

VIII.

IX.

Medium
Coca-Cola
The EFE Total
2.0 to 2.99
Weighted Score
VII.

Low
1.0 to 1.99

Grow and Build

Divisions
North America
Bolting Investments
North Asia, Eurasia & Middle East
European Union
Latin America
Africa
East. South Asia & Pacific Rim
Corporate

Percent Revenue 2006

29.1
21.2
16.5
14.6
10.3
4.6
3.3
0.4

After analyzing the Internal External Matrix, we can conclude that the company is strong in
their financial performance and the company has full competitive advantage in the business. So
the company has to work effectively in order to maintain the standards which are achieved so
far by the company.
20

Grand Strategy Matrix

After analyzing the Grand Strategy matrix of Coca-Cola we can conclude that the company is
strongly positioned in the current market. The company has to concentrate on the current
markets effectively and the company has to be consistent with the present products and
strategies.

21

QSPM (Quantitative Srategic Planning ) Matrix

Strategic Alternatives

Key
Weight

Acquire
KKD Produce
new
and GLDC
diet drinks that
Factors
have
healthier
sugar substitutes

Internal

Strengths
1. Product line has over 400 brands.
2. Strong global presence, located in over
200 countries.
3. Long history has built excellent brand
recognition.
4. Partnership longevity with established
sporting events including the Olympics.
5. Industry leader in market capitalization
with $112 billion.
6. Return on Equity yielded 30 percent in
2006.
7. Leader of dividend yields of 2.6 percent.
The company has had 43 consecutive
years of an annual dividend increase.
8. Joint venture between The Coca Cola
Company and Nestle has resulted in the
establishment of Beverage Partners
Worldwide (BPW).
9. Coca-Cola has formed a strong
partnership with McDonalds, with
McDonalds becoming their largest
customer.
Weaknesses
1. Product line is limited to beverages.
2. A failed $16 billion acquisition of Quaker
Oats hinders long-term growth.
3. Negative publicity in India because of
water issues, has led to poor brand image
and hindered growth there.
4. Lack of management willingness to place
foreign products into American markets.
5. Marketing deficiencies due to turnover in
leadership and a 16 percent decrease in
advertising spending.
6. Coca Colas inventory turnover is only 5.4
compared to Pepsi Co.s 8.0.
SUBTOTAL

AS
0.09
0.10

2
---

TAS
0.18
---

0.06

0.12

0.24

0.05

---

---

---

---

0.12

0.48

0.36

0.04

0.16

0.12

0.04

---

---

---

---

0.06

---

---

---

---

0.10

---

---

---

---

0.09
0.10

4
---

0.36
---

1
---

0.09
---

0.03

---

---

---

---

0.02

---

---

---

---

0.05

---

---

---

---

0.05

0.20

0.05

1.00

22

1.50

AS
4
---

TAS
0.36
---

1.22

Key External Factors

Weight
Opportunities
1. Bottled water consumption has increased 11
percent.
2. According to the S&P Industry Survey, consumers
are drawn to new smaller beverage brands that are
not sold on a mass scale.
3. Word Economic Forums annual Davos,
Switzerland gathering grants international voice.
4. Less developed countries are in desperate need to
improve community water supplies.
5. Energy drink sales are expected to increase 7 to 8
percent in 2007.
6. Disposable income has increased 6.2 percent.
7. Consumers are striving to drink and eat their way
to better health than previous generations.
8. EPS is expected to rise 7 to 8 percent in 2007.
Threats
1. Consumption of American beverages is denounced
by foreign officials in areas where conflicting
interest exist.
2. Multiple lawsuits against the new Enviga beverage
for calorie burning claims in advertising
3. Smaller, lesser known brands are turning to major
beer distributors for bottling.
4. Overall carbonated drink sales have been flat due to
links of sugar to obesity and high fructose corn
syrup to heart disease.
5. Pepsi is more diversified offering beverage and
food products.
6. High cost of commodities such as sugar, and metals
used in production of cans.
7. Many smaller companies are fierce competitors
around the world in their local markets.
SUB TOTAL
SUM TOTAL ATTRACTIVENESS SCORE

AS

TAS

Produce new diet

drinks that have
healthier sugar
substitutes
AS
TAS

0.06

---

---

---

---

0.05

0.05

0.15

0.02

---

---

---

---

0.02

---

---

---

---

0.06

---

---

---

---

0.05

---

---

---

---

0.07

0.14

0.28

0.07

0.28

0.21

---

---

---

---

---

---

---

---

---

---

---

---

0.20

0.40

0.80

0.40

---

---

---

---

---

---

---

---

Acquire
KKD and
GLDC

0.0
2
0.0
4
0.0
6
0.1
0
0.2
0
0.1
0
0.0
8

1.47
2.97

1.44
2.66

The QSPM strategies assessed whether acquiring KKD and GLDC (a potato chip and snack
food company) was a better option than producing a new diet soda line made form more
healthy sugar alternatives. Both scores on the QSPM are relatively close and given the

23

financial condition of KKD and GLDC, it is recommended Coca Cola undertake both strategic
alternatives. The Net Worth of both companies is provided below. It is estimated it would cost
$200 million to research, produce and market the new diet drinks.
Strategy Implementation.

Analysis Based On Ratio

Liquidity Position of the company:
Thecompanys liquidity position is in an average level. Current ratio is almost 1 and quick ratio
is less than 1. So the company has to increase both these ratios in order to keep good liquidity
position in the organization. Efforts have to be done to bring the ratio to a level of 2.
Profitability Position of the company:
The company is having a very good profitability position. But the company lost its profitability
when compared to 2010. But the company enjoys a good return from its business. Efforts have
to be made in order to keep the returns on a constant basis. exhibit
Turnover position of the Company:
The company is having good turnover ratios. Since the company is into FMCG industry,
turnover ratios play a important role. So these ratios clearly indicate that the company has good
control over their operational activities and over the suppliers as well.
Solvency Position of the Company:
The company is having a very low solvency ratio. The company can think of financing its
expansion activities through debt financing. The company can have a debt-equity ratio of 2:1
which will give better leverage for the company.

24

FINANCIAL STATEMENTS
Followings are the Financial statements for Coca-Cola Company Inc for 2011, 2012& 2013

Income Statement
In Millions of USD (except for per share
items)
Revenue
Other Revenue, Total

12 months ending 2013-12-31

12 months ending 2012-12-31

12 months ending 2011-12-31

48,017.00
-

46,542.00
-

35,119.00
-

Total Revenue
Cost of Revenue, Total

48,017.00
19,053.00

46,542.00
18,215.00

35,119.00
12,693.00

Gross Profit
Selling/General/Admin. Expenses, Total
Research & Development
Depreciation/Amortization
Interest Expense(Income) - Net Operating
Unusual Expense (Income)
Other Operating Expenses, Total

28,964.00
12,506.00
5,679.00

28,327.00
12,112.00
6,042.00

22,426.00
7,199.00
-4,733.00
6,219.00

Total Operating Expense

37,238.00

36,369.00

21,378.00

Operating Income
Interest Income(Expense), Net Non-Operating
Gain (Loss) on Sale of Assets
Other, Net

10,779.00
141.00

10,173.00
529.00

13,741.00
-107.00

Income Before Tax

11,809.00

11,458.00

14,243.00

Income After Tax

Minority Interest
Equity In Affiliates

9,086.00
-67.00
-

8,646.00
-62.00
-

11,859.00
-50.00
-

Net Income Before Extra. Items

9,019.00

8,584.00

11,809.00

25

In Millions of USD (except for per share

items)
Accounting Change
Discontinued Operations
Extraordinary Item

12 months ending 2013-12-31

12 months ending 2012-12-31

12 months ending 2011-12-31

Net Income
Preferred Dividends

9,019.00
-

8,584.00
-

11,809.00
-

Income Available to Common Excl. Extra

Items

9,019.00

8,584.00

11,809.00

9,019.00

8,584.00

11,809.00

Basic EPS Including Extraordinary Items

Dilution Adjustment
Diluted Weighted Average Shares

11.48
4,584.00

0.00
4,646.00

4,666.00

Diluted EPS Excluding Extraordinary Items

1.97

1.85

2.53

Income Available to Common Incl. Extra

Items
Basic Weighted Average Shares
Basic EPS Excluding Extraordinary Items

26

Balance Sheet
In Millions of USD (except for per share items)
Cash & Equivalents
Short Term Investments
Cash and Short Term Investments
Accounts Receivable - Trade, Net
Receivables Other
Total Receivables, Net
Total Inventory
Prepaid Expenses
Other Current Assets, Total

As of 2013-12-31
8,442.00
8,109.00
16,551.00
4,759.00
4,759.00
3,264.00
2,284.00
3,470.00

As of 2012-12-31
12,803.00
1,232.00
14,035.00
4,920.00
4,920.00
3,092.00
2,963.00
487.00

As of 2011-12-31
8,517.00
2,820.00
11,337.00
4,430.00
4,430.00
2,650.00
3,162.00
-

Total Current Assets

Property/Plant/Equipment, Total - Gross
Accumulated Depreciation, Total
Goodwill, Net
Intangibles, Net
Long Term Investments
Other Long Term Assets, Total

30,328.00
23,486.00
-9,010.00
12,255.00
15,082.00
10,448.00
3,585.00

25,497.00
23,151.00
-8,212.00
12,219.00
15,450.00
8,374.00
3,495.00

21,579.00
21,706.00
-6,979.00
11,665.00
15,244.00
7,585.00
2,121.00

Total Assets
Accounts Payable
Accrued Expenses
Notes Payable/Short Term Debt
Current Port. of LT Debt/Capital Leases
Other Current liabilities, Total

86,174.00
1,844.00
6,376.00
16,297.00
1,577.00
1,727.00

79,974.00
1,966.00
6,488.00
12,871.00
2,041.00
917.00

72,921.00
1,887.00
6,972.00
8,100.00
1,276.00
273.00

Total Current Liabilities

Long Term Debt
Capital Lease Obligations

27,821.00
14,736.00
-

24,283.00
13,656.00
-

18,508.00
14,041.00
-

Total Long Term Debt

14,736.00

13,656.00

14,041.00

Total Debt
Deferred Income Tax

32,610.00
4,981.00

28,568.00
4,694.00

23,417.00
4,261.00

27

In Millions of USD (except for per share items)

Minority Interest
Other Liabilities, Total

As of 2013-12-31
378.00
5,468.00

As of 2012-12-31
286.00
5,420.00

As of 2011-12-31
314.00
4,794.00

53,384.00

48,339.00

41,918.00

1,760.00
11,379.00
58,045.00
-35,009.00
-3,385.00

1,760.00
10,332.00
53,621.00
-31,304.00
-2,774.00

880.00
10,057.00
49,278.00
-27,762.00
-1,450.00

Total Equity

32,790.00

31,635.00

31,003.00

Total Liabilities & Shareholders' Equity

Shares Outs - Common Stock Primary Issue

86,174.00
-

79,974.00
-

72,921.00
-

4,469.00

4,526.00

4,584.00

Total Liabilities
Redeemable Preferred Stock, Total
Preferred Stock - Non Redeemable, Net
Common Stock, Total
Additional Paid-In Capital
Retained Earnings (Accumulated Deficit)
Treasury Stock Common
Other Equity, Total

Total Common Shares Outstanding

28

Cash Flow Statement

12 months ending 2013-1231
9,086.00
1,982.00
632.00
123.00
-1,178.00

12 months ending 2012-1231

8,646.00
1,954.00
1,035.00
-48.00
-2,113.00

12 months ending 2011-1231

11,859.00
1,443.00
617.00
-4,112.00
-275.00

10,645.00
-2,780.00
-8,624.00

9,474.00
-2,920.00
396.00

9,532.00
-2,215.00
-2,190.00

-11,404.00
100.00
-4,595.00
-3,070.00
4,218.00

-2,524.00
45.00
-4,300.00
-2,944.00
4,965.00

-4,405.00
50.00
-4,068.00
-1,295.00
1,848.00

Cash from Financing Activities

Foreign Exchange Effects

-3,347.00
-255.00

-2,234.00
-430.00

-3,465.00
-166.00

Net Change in Cash

Cash Interest Paid, Supplemental
Cash Taxes Paid, Supplemental

-4,361.00
574.00
981.00

4,286.00
573.00
1,612.00

1,496.00
422.00
1,766.00

In Millions of USD (except for per share items)

Net Income/Starting Line
Depreciation/Depletion
Amortization
Deferred Taxes
Non-Cash Items
Changes in Working Capital
Cash from Operating Activities
Capital Expenditures
Other Investing Cash Flow Items, Total
Cash from Investing Activities
Financing Cash Flow Items
Total Cash Dividends Paid
Issuance (Retirement) of Stock, Net
Issuance (Retirement) of Debt, Net

http://www.google.com/finance?fstype=ii&q=NYSE:KO

29

Strong full-year global volume growth of 4%, in line with our long-term growth target
and led by brand Coca-Cola, up 3%. Global volume grew 3% in the quarter, driven by
international volume growth of 4% and North America volume growth of 1%.

Full-year reported net revenues grew 3% and comparable currency neutral net revenues
grew 6%, in line with our long-term growth target. Fourth quarter reported net
revenues grew 4% and comparable currency neutral net revenues grew 5%.

Full-year reported and comparable currency neutral operating income both grew 6%, in
line with our long-term growth target. Fourth quarter reported operating income grew
12% and comparable currency neutral operating income grew 14%.

Currency was a 3% headwind on comparable net revenues and a 5% headwind on

comparable operating income for the full year.

Full-year reported EPS was $1.97, up 6%, and comparable EPS was $2.01, up
5%. Fourth quarter reported EPS was $0.41, up 14%, and comparable EPS was $0.45,
up 15%.

Full-year cash from operations was up 12%.

Evolution of global bottling system continues, with bottler-led consolidation announced

in Japan and Brazil, and a majority interest in our Philippine bottling operations sold
to Coca-Cola FEMSA (transaction completed in January 2013).

30

Recommendations: Some recommendations are as follows:

a

Coca- cola must use advertisement media extensively.

The Coca-Cola Company has a high level of uncertainty when it comes to

the raw materials it uses. For a few of the ingredients, the company only has
one or two viable suppliers. This could be extremely problematic for a variety of
reasons. Another problem could arise if a supplier experiences an event that
economically devastates them. If a supplier goes bankrupt, or is in some type of
natural disaster, the Coca- Cola Company would suffer greatly as well.
The Coca-Cola Company can improve and secure relationships with suppliers.
The most optimal method would be to use backward vertical integration and
purchase a supply.
c.

Marketing team should try to increase the availability of Coke in rural areas.

d.

They should also focus on all age groups not only concentrating on the young

generation.
Recommendation: Policies And Objectives:

Assume control of more bottling subsidiaries.

Invest more in research and development

Develop more health conscious products

Adopt more locally responsive flavors of drink

Recommendation of Strategic review and evaluation

This section is to identify future key challenges that Coca-Cola will face in the
future. These key challenges may pose negative impact on the long-term profitability and
market share of Coca-Cola. Therefore, recommendations are provided to turn challenges
into opportunities.
31

1.

Declining Sales Volume in Soft Drink Sector

William Pecoriello, a leading beverage industry analyst from Morgan Stanley &
Co, predicts the carbonated soft drink (CSD) category,
The current set of teens may become the lost generation for the CSD
category. ... Our latest survey of 1,550 consumers aged 13-65 supports our
view that the US CSD segment is likely to remain under pressure. We
maintain a forecast for a 1.5 percent annual volume decline for the CSD
segment (Beverage World 2012).
In the major market of Coca-Cola, US market, the volume sale of carbonated soft
drink dropped more than 8% in 5 successive years, from 2008 to 2012, with 0.2% in 2008,
0.6% in 2009, 2.3% in 2010, 3% in 2011 and 2.1% in 2012. It is likely that the volume
will keep declining.
2. Recommendations for Declining Sales Volume in Soft Drink Sector
If Coca-Cola focuses only on the carbonated soft drink sector competitively, it
will weaken or make Coca-Cola lose the market leader in beverage industry. Coca-Cola
can focus more on bottled water, noncarbonated drinks, and especially energy drinks. In
2006, energy drinks shot up by almost 50%. In 2012, energy drinks still had 10% growth.
Energy drinks and healthy drinks will be major beverage needs of new generations of
young consumers and health conscious consumers.
3. Recommendations for Health and Wellness Trend
Coca-Cola should provide industry leadership in the health and wellness area. It
should produce different kinds of products for different segments of the market. In baby
boomers market, Coca-Cola should focus on marketing tea and water beverage which
contain less sodium and sugar. In younger generation market, besides sport drink and
32

energy drink, Coca-Cola can produce organic beverages for younger people.
4.

Recommendations for Increased Competition from PepsiCo

As PepsiCo has a horizontal expansion, Coca-Cola should has a vertical

expansion. Within the products in PepsiCo, only 37% of products are beverages. CocaCola should focus on beverages business and related businesses, e.g. bottling, sugar
plantation, or even tin can and glass recycling business.
Nowadays, environmental change is rapid. Coca-Cola should be sensitive of any
new trend and position itself as a unique brand in order to keep its competitive advantage.

Conclusion. The Coca Cola Company has a very rich history and spread over the world.
Coca Cola Company has a strong competitive position in the market with rapid growth. It
needs to use its internal strengths to develop a market penetration and market development
strategy. This includes focus on Water and Juices products, and catering to health
consciousness of people through introduction of different coke flavor and maintaining basic
coke flavor. Innovation in branding and aggressive marketing strategy can bring long term
profitability.

33

References

Strategic Management Concepts and Cases 12th Edition by Fred R. David

Source: H. Rowe, R. Mason and K. Dickel, Strategic management and Business Policy:
Methodological Approach (Reading MA: Addison-Wesley Publishing Co. Inc.,
1982)

R Allio and M. Pennington, eds., Corporate Planning: Techniques and Applications

(New York: AMACOM, 1979)

Adapted frm Roland Christensen, Norman Berg, an Malcolm Salter, Policy

Formulation
And Administration (Homewood, IL: Richard D. Irwin. 1976)

Greg, Dess, G. T. Lumpkin and Alan Eisner, Strategic Management: Text and Cases
(New York: McGraw- Hill/Irwin, 2006): 72

Biblography
http:// www.coca-colacompany.com/annual-review/2012/pdf/form_10K_2012.pdf
www.google.com/finance?fstype=ii&q=NYSE:KO
www.stock-analysis-on.net/NYSE/Company/Coca-Cola-Co/Ratios/Liquidity

34