Running head STRATEGY IMPLEMENTATION 1

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Executive summary

Coca Cola is one of the largest beverage companies, operating in different parts of the

world. The company has a mission of refreshing the body, mind and spirit of the world. Its

strength lies in its brand equity, large market share as well as customer loyalty, with a weakness

due to law product diversification and poor water management. The company has decentralized

its operations with both a functional and divisional organizational structure. Its organizational

structure assists it in meeting its mission and goals. With the increasing health issues, the

company is developing new products to diversify its production, like bottled water.

The strong relationship that the company has created with its partners is a fundamental

strength in the production process. The teamwork culture that the company has cultivated

among its employees is a building block for the good customer service and inspired workforce

that the company has. The company’s strong capital position gives it an opportunity to access

key financial markets. The challenge is that the organizational structure does not address on

the threat that the company faces of losing its customers to non-carbonated drinks. This paper

recommends that the company should diversify its production to more nutritious and healthier

products.

Introduction

Refreshing the body, mind and spirit of the world is the mission of Coca cola, with a

vision serving it as a framework that guides every aspect of business by describing what it

needs to attain in order to continue realizing a sustainable growth. To people, the company

wants to create an environment where the people are inspired to work in by giving the best that

they can. The company wants to cultivate a winning network of suppliers and consumers to

create an enduring mutual value, bring a portfolio of quality beverages which anticipate and
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satisfy the world’s needs and desires. Coca Cola wants to be a responsible company which

makes a difference by supporting and helping in building sustainable communities. Its profit

objective is to maximize the long-term return it gives to shareowners and at the same time meet

overall responsibilities by being a highly effective and fast-moving company.

Coca cola SWOT analysis

Strengths

Company valuation- it is one of the most valuable in the world, valued at more than 79

billion dollars, which includes its assets, factories spread all over the world and its brand value

as well as the profits and costs of the company .

Brand equity- the company has a unique brand identity and a vast global presence. It is

regarded as one of the coolest brand in the world. In the 2011 world inter-brand award, coca

cola had the highest brand equity (Coca-Cola Company, 2016)

Largest market share- out of the two biggest beverage companies, Pepsi and coca cola,

the company has the largest market share.

Vast global presence- the company operates in about 200 countries in the world. In any

country you travel to, there is a possibility that you will get the company’s products.

Marketing strategies- the company has unique marketing strategies always trying to

win the hearts of many people. Unlike its close competitor, Pepsi, that targets mostly

youngsters, the company targets all classes of people- the company has

Distribution networks- due to the demand patterns in the market, the company has the

largest distribution patterns enabling it to command a large market (Porter, 2006).

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Customer loyalty- the company has many loyal customers and funs due to its strong

products and marketing strategies, and many people prefer its products to others.

Weaknesses

Competition- the company is facing stiff competition with Pepsi. Their competition is

very strong that coca cola loses some its customers to Pepsi. If not for Pepsi, the company

would have been the market leader.

Low product diversification- coca cola has a low product diversification. Its close

competitor that has diversified into snacks segments, making additional revenue from it.

Health issues- being the largest manufacturer of carbonated drinks, it will lose

customers due to current concerns in developed countries that these drinks are related to obesity

as many people prefer a healthy alternative.

Water management- the company consumes a high quantity of water even in areas with

scarce water, raising issues with people in those regions. Additionally, the company is accused

of using pesticides to clear contaminations in water.

Opportunities

Developing nations- the company is introducing its beverages in many developing

countries with high demands for soft drinks. The high demand of such drinks is a good

opportunity for the company to utilize, especially during summers when the demand for cold

drinks go up.

Diversification- the company has good grounds to diversify to health and food business,

it can use its supply chain to distribute these products and share the cost of the supply chain.
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Supply chain improvement- with the rising transportation costs, the supply chain costs are

increasing, the company is able to improve this sector as its business is based on distribution

as well as transportation.

Packaged drinking water- through Kinley, the company can focus on expanding the

segment of packaged drinking water. It will have an additional advantage as water consumption

is an increasing health issue and it can use this to increase its brand awareness (Dransfield,

2001).

Threats

Indirect competition- the coffee chain is a healthier competitor of the carbonated drinks.

Healthy and energy drinks like Gatorade are an indirect competitor to beverages, taking away

the market share.

Raw material sourcing- the scarcity of water is becoming a big issue to coca cola. With

changes in climate, some regions face water shortages and when water will be rationed, the

company will face a blow in its production process.

Organization strategy

The Coca-Cola Company has both a functional and divisional organizational structure.

In the functional structure, Coca-Cola has separate production, administration, marketing and

distribution departments, while the divisional structure of Coca cola involves many different

subsidiaries operating in the different regions of the world. These include 3E (Cyprus) Limited,

HBC holding, involved in the production as well as the marketing of its products. To meet the

dynamic demand of its customers, the company decided to decentralize itself. It has two

operating groups, cooperate and the bottling investment that are located in different parts of

the world. The groups are further divided into regions, allowing for decisions to be made at the
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local level. This allows the organization to give quick response to the demands in the market.

The management at the higher levels can then focus on the long-term needs of the company.

The corporate division manages the roles dealing with human resource, finance and innovative

marketing (Coca-Cola Company, 2016)

Coca cola Company uses differentiation strategy to compete in the global beverage

market, creating value to its consumers. As its mission statement, the company has a mission

of refreshing and inspiring the whole world. It wants to create value as well as make a

difference. It does this by: growing its core brands of carbonated and soft drinks. The company

captures its full potential and speeds up the growth of its core brands in the market. It uses the

consumption opportunities as a tool to improve its margins and revenues as well as increase

the number of consumers. Secondly, the company meets its mission by creating customer

value. The company tries to listen to its customers’ needs and requirements, understands them

and improves its services to meet the consumers’ preferences.

Product strategy

The company applies a high degree of product adaptation as well as modification in

different markets. First, it does market research, then, it does product testing and adaptation in

different markets. Different regions have different market trends and the market research and

product testing helps it identify where the product will do well and in which places the product

requires modifications. With the increasing health issues, the company is developing new

products to diversify its production, like bottled water. Its new products are also being designed

to suit the local preference, mainly targeting the developing nations where there is high demand

for soft and carbonated drinks. In 2007, the company launched Dasani plus vitamin –enhanced

water, this had three varieties to refresh and revive, the second being to cleanse and restore

while the third variety was to defend and protect. The mineral enhanced water target the
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developed countries where carbonated drinks are health issues and vitamin enhanced water

sells at a very high rate (Smit, 2007).

Marketing strategies

One of the weapons that the company has used is to thorough creating of awareness

through advertising. Coca cola uses unique advertising each time and different ways of sales

promotion. I would say that one thing that has created consumer loyalty is the fact that Coca

cola is always creating a brand awareness, from TV’s to radios, before you could think, it would

have introduced a new advert that makes you feel like taking its products. The company

customizes its products to fit consumers, for example, in the current time, the company is

customizing its products by writing names on the bottles like,” Mary shares a coke with James.”

With the marketing strategy the company can help fight competition bringing a portfolio of

quality beverages which anticipate and satisfy the world’s needs and desires.

Organizational culture

In most places Coca cola do not bottle and distribute it products. The primary operations

of the organization is to manufacture as well as sell syrups and beverage concentrates. The

syrups and concentrates are sold to its bottling partners, which manufacture and distribute as

well as sell the branded products. The strong relationship that the company has created with its

partners is a fundamental strength in the production process. The partners ensure that syrup and

concentrates is made into finished products and distributed to the consumers around the world.

The culture of the company is reflected on the teamwork that the company emphasizes and

practices.

Coca Cola Company has a very large workforce in different countries. The workers of

this company are very loyal as the company provides them with an attractive compensation,
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there is minimal employee turnover as the company offers training for these employees and

there is strong tendency of promotion within the company. With motivated workforce, the

company is able to create a teamwork that helps maintain its brand leadership. There is global

thinking in the employees of the company, though they act locally as they serve the customers

with passion and respond to the competitive market situations. With this, Coca cola meets its

mission to the people, where the company wants to create an environment where the people

are inspired to work in by giving the best that they can.

Capital structure

Based on its cash flows, debt equity ratio and interest coverage ratio the company

maintains a prudent debt level. To lower its overall cost of capital, the company uses a debt

financing, increasing the shareowners’ return on equity. The company’s strong capital position

gives it an opportunity to access key financial markets. This enables it to raise sufficient funds

at a relatively low effective cost (Ahmad, 2007).

Strategic fit

The non-alcoholic beverage industry is rapidly changing due to the changes in

preferences of consumers. The main changes are related to health and nutrition as well as

concerns of obesity. Many consumers are changing their lifestyle by going for beverages

without health issues. The government and public health officials are increasing awareness of

the consequences of using carbonated drinks and some publicly threaten to litigate companies

that manufacture those drinks, hence, reducing the demand for such products.

The company’s growth strategies described are very promising, however, the company

has not addressed the issue that the highest fraction, about 80%, of its product, are carbonated

soft drinks, which is one of the main debates in the international markets. Carbonated drinks
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are being associated with obesity and many people, especially in the developed countries, are

substituting these drinks with bottled water and other non-carbonated drinks. Unlike its

competitor, Pepsi, the company has not diversified its portfolio and due to health conscious, it

will lose its customers (Smit, 2007).

Considering Coca cola’s organization culture, current strategy, company structure,

product strategy and capital structure as well as marketing strategy, the company is doing a lot

and is strategically fit to meet its vision and mission.

Ethical issues

One ethical issue revolving the company is whether the carbonated drinks are healthy

for humans. Some people, especially in the developed countries, consider carbonated drinks

unhealthy for human consumption, relating it to cause of obesity. If these drinks are not healthy,

then selling them to people is very unethical. At the same time, the company is accused of

using pesticides to clear contamination in the water that it uses to make these drinks, this is

another unethical practice.

Another ethical issue is having the right pay structure. The pay structure of Coca Cola

Company is such that the employees are paid according to their metrics. This is why its

employees are inspired and motivated to give their best to the customers.

One of the ethical issues that the company has addressed is making the employees’

development a part of its strategy. Coca Cola Company has included the employees, welfare

as part of its mission. It trains its employees on ethical issues and customer management.

Recommendation
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The company should use a system that replenishes water such that it will be able to

reduce water wastage, instead of the usual wastage of water, the water is returned back to its

nature and recycled. This system will support proper usage of water as well as balance the

amount of water the company uses for the fished products (Hill et al, 2010)

Diversification- the company should plan on diversifying its operations and production

to healthier drinks. The company products will lose customers to other more nutritious

products, due to change in life style, it should utilize its brand awareness and supply chain to

manufacture and distribute more nutritious and healthier beverages as well as bottled water

instead of just majoring in the carbonated drinks. It can also manufacture snacks that will go in

hand with the beverages.

Do more marketing and product promotion in Africa. Since the company is targeting

the developing countries due to health issues in developed areas, more product promotion

should be done in Africa to get a larger market share of the high demands for the soft drinks

and to beat the competition.

Conclusion

The company is trying to gain more customers in different parts of the world, however,

it has close rivals like Pepsi and another big problem is the issue that carbonated drinks is a

health concern. Diversifying its production to more nutritious products can help reduce loss of

customers at the same time more product promotion will help it create awareness in its potential

markets. Improving service delivery can also amount into substantial gains in market share.
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REFERENCES

Ahmad ElAmin (2007). “Coca-Cola reports progress in red environmental impact”William

Reed Business Media. United State.

Brian Nordmann (2004) “Organizational Structure”http://www.studymode.com/essay

G.A Cole (2006). “Personnel management theory and practices” Hemisphere D.Ppublication

Ltd.

M. Porter (2006). “Strategy and society: the link between competitive advantage and corporate

social responsibility”.

Harvard Business Review Thomas Donaldson (2014).Ethical Issues in Business. Retrieved

June 27, 2016from https://www.karlknapp.com/resources/ethics

Ferrell, O. C., & Hartline, M. D. (2008). Marketing strategy. Mason, OH: Thomson South-

Western.

Smit, P. J. (2007). Management principles: A contemporary edition for Africa. Cape Town,

South Africa: Juta.

Thompson, J. L. (2001). Understanding corporate strategy. London [etc.: Thomson Learning.

Hill, C. W. L., & Jones, G. R. (2010). Strategic management theory: An integrated approach.

Boston, MA: Houghton Mifflin.

Dransfield, R. (2001). Corporate strategy. Oxford [u.a.: Heinemann.

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Coca-Cola Company “Sustainability report” Retrieved June 27, 2016 http://www.coca-

colacompany.com/sustainability/global-challenges.html

Anthony McGrew. “Researching Globalization” Retrieved June 27, 2016

http://www.polity.co.uk/global/research.asp