AMMAR AAMIR ASSIGNMENT#1 Roll No=FA16-BBA-040

Coca-Cola
Background on Coca-Cola:
Coke is one of the most recognizable brands in the world. The goal of the company's
international marketing team is to help expand global sales. The company sold its first Coke in
1886 at Jacobs' Pharmacy Atlanta, but the company's mission hasn't changed; the goal is to sell
the highest number of beverages to the most people.
Based in Atlanta, Georgia, the company focuses on making non-alcoholic beverages accessible.
With hundreds of brands, some of the more popular examples are Diet Coke, Sprite, Dasani,
Nestea, and Fanta. Worldwide, nearly 10,000 Coke beverages are consumed every second. The
more Cokes the international marketing team sells, the more revenue the company makes.
Much of the company's 40 billion dollars in revenue growth now comes from globalization, not
just growth within the borders of the United States. Globalization is the expansion and
development of international markets outside of the company's home country.

The Globalization of Coca-Cola:

Coke, like many successful global companies, focuses on those regions with the greatest
potential for growth. Coke started branching out internationally in the 1920s but really began
its global expansion in the 1980s. This is when Coke implemented its strategic plan to gain entry
into untapped, previously hostile, or undeveloped environments.
Coke started with widening its production, primarily bottling facilities, in friendly areas like
Guam and Europe. As people became more familiar with Coke's products, the company decided
to expand to Australia, Austria, Italy, Norway, and South Africa. These were the areas that had
good relationships with the United States, which meant implementing trade, transportation,
and communications networks went a lot smoother.
Surprisingly, even World War II brought an increase in demand for Coke products. The federal
government worked out a deal with Coke to supply the troops with its products for no more
than a nickel a beverage. In preparation for widening its base, Coke focused on creating
relationships with global stakeholders, like the Olympics and United Nations. The Olympics, for
example, took Coke's name wherever the Games went.
By the 1970s, Coke also entered into partnerships with the Special Olympics, Tour de France,
NASCAR, and FIFA. As these sporting events broadened their fan base worldwide, Coke
followed. Enlarging its consumer base in the 1980s and 90s demanded more planning from
Coke. The company brought production operations to previously fewer stable areas like Russia,
Germany, India, and Vietnam. This is when Coke began looking to expand into China.
The 2000s brought about Coke's involvement in social issues. This is a different type of
marketing effort for the international team. The company provided relief related to the UN
AMMAR AAMIR ASSIGNMENT#1 Roll No=FA16-BBA-040

AIDS initiatives, September 11th terrorist attacks, and earthquake relief in Haiti. Since this time,
the company has entered into additional philanthropic ventures, as well as sponsorships with
the NBA and co-marketing with popular television shows like American Idol.
To market to an international audience, Coke has adapted its marketing strategy. Coke's
international marketing team continues to look for ways that Coke can diversify its production,
marketing, and outreach methods.

Analysis of Coca Cola

Political factors Coca Cola products are at the mercy of the FDA. They must meet
regulations, given by the government, to put products on store shelves.
Changes in established laws may prevent Coca Cola from distributing
drinks. Accounting, taxes, internal marketing, and changes in labor laws
can affect Coca Cola in this way.
The most important political factors which can have a direct impact on
Coca Cola are laws and government regulation of food products. For
example, in US, the Food and Drug regulations apply to its business.
Apart from it, these laws may vary from country to country. Coca Cola
and its products must confirm to the relevant laws in the countries they
are sold. Coca Cola is a maker of non-alcoholic beverages. Tax laws vary
from country to country. The company has to follow the relevant laws in
order to do business in a particular market. Changes to these laws can
potentially impact Coca Cola’s profits and revenue. Any increase or
decrease in tax rates can affect the profits of any corporation. Similarly,
changes in the political situation of the countries like government
changes or any political turmoil can potentially impact its business.
A threat that the Coca-Cola Company had to face recently due to
changes in the political factors was War against Iraq made USA and UK
very unpopular in Middle East as well as in the other Muslim countries.
Because Coca-Cola is known as the very American company, this had a
huge effect on the sale of its products.
Legal factors Coca Cola retains all rights related to their business, including past and
future products developed with a patented process.
Here are some legal affairs that the Coca Cola Company had to face
recently.
 In the 1970‟s, India required Coca Cola to share its secret formula
with the local subsidiary so as to
 continue doing business here. Coca Cola refused and halted
operations in India for almost 16 years.
 The European Commission has altered EU member countries to ban
Coca Cola drinks because of recent poisoning of 100 children in
Belgium and cause seems to be the wrong carbon dioxide which was
used in Coca Cola soft drinks.
AMMAR AAMIR ASSIGNMENT#1 Roll No=FA16-BBA-040

 Recently there was a demonstration all around the India, protestors

demanded Coca Cola to stop production. Demonstrators believe that
Coca Cola is depleting groundwater.
Economic factors As the inflation rate grows higher and higher consumer buying powers
also represents a key threat in the industry. The rivalry between Pepsi
and Coke has produce a slow-moving industry in which management
must continuously respond to the changing altitudes and demands of
their customers or face losing market share to the competition.
Furthermore, consumers can switch to other beverages with little cost or
consequences.
The non-alcoholic beverage industry has high sales in countries outside
the U.S. According to Standard and Poor’s Industry surveys, “For major
soft drink companies, there has been economic improvement in many
major international markets, such as Japan, Brazil and Germany. “These
markets will continue to play a major role in the success and stable
growth for a majority of the non-alcoholic beverages industry.

McDonald’s
McDonald’s, in full McDonald’s Corporation, American fast-food chain that is one of the largest
in the world, known for its hamburgers. Its headquarters are in Oak Brook, Illinois. They bought
appliances for their small hamburger restaurant from salesman Ray Kroc, who was intrigued by
their need for eight malt and shake mixers.
Seeing great promise in their restaurant concept, Kroc offered to begin a franchise program for
the McDonald brothers. On April 15, 1955, he opened the first McDonald’s franchise in Des
Plaines, Illinois, and in the same year launched the McDonald’s Corporation, eventually buying
out the McDonald brothers in 1961. The number of McDonald’s outlets would top 1,000 before
the end of the decade. Boosted by steady growth, the company’s stock began trading publicly
in 1965.
The public face of McDonald’s was created in 1963 with the introduction of a clown named
Ronald McDonald, while the double-arch “m” symbol became McDonald’s most enduring logo
in 1962, lasting far longer than the tall yellow arches that had once dominated the earlier
restaurant rooftops. Other products and symbols would define the McDonald’s brand, including
the Big Mac (1968), the Egg McMuffin (1973), Happy Meals (1979), and Chicken McNuggets
(1983).
The chain continued to expand domestically and internationally, extending to Canada in 1967,
reaching a total of 10,000 restaurants by 1988, and operating more than 35,000 outlets in more
than 100 countries in the early 21st century. Growth was so swift in the 1990s that it was said a
new McDonald’s opened somewhere in the world every five hours. It effectively became the
AMMAR AAMIR ASSIGNMENT#1 Roll No=FA16-BBA-040

most popular family restaurant, emphasizing affordable food, fun, and flavours that appealed
to children and adults alike.
In the late 20th century, McDonald’s moved beyond the hamburger business by acquiring
Chipotle Mexican Grill (1998), Donatos Pizza (1999), and Boston Market (2000) in the United
States, and in the United Kingdom McDonald’s purchased Aroma Cafe (1999) and an interest in
Pret. A Manger (2001), a sandwich restaurant chain. However, by late 2008 McDonald’s no
longer owned or had a stake in any of those companies, instead concentrating on its own
brand.

Political factors Governmental intervention can determine the rate and path of business
development. In McDonald’s case, the most significant political external
factors in the fast food restaurant chain industry environment are as
follows:
 Increasing international trade agreements (opportunity)
 Governmental guidelines for diet and health (threat and
opportunity)
 Evolving public health policies (threat and opportunity)
This political external factor is a threat because it puts pressure on
McDonald’s, which has been the subject of criticism regarding the effects
of its products on consumers’ health. Nonetheless, this same external
factor creates an opportunity for the company to improve its products.
Corresponding changes in McDonald’s generic competitive strategy and
intensive growth strategies can address this external factor. In relation,
governments have evolving public health policies, which present a threat
and an opportunity for the restaurant chain business. For instance, this
external factor threatens the company through policies that change
public schools’ food programs for students. Still, the business can
improve through adjustments to provide more healthful options to
consumers. McDonald’s marketing mix or 4P already includes healthful
options, such as salads, but the company can add more to improve its
status in addressing this political external factor.
Legal factors Changes in legal systems and new laws shape the remote or macro-
environment of businesses by imposing new requirements. McDonald’s
Corporation must consider the following legal external factors in its
industry environment:
 Increasing health regulations in workplaces and schools (threat)
 Increasing animal welfare regulations (threat & opportunity)
 Rising legal minimum wages (threat)
Health regulations impose limits on the accessibility and availability of
fast food in some workplaces and schools. This legal trend threatens
McDonald’s revenues from these market segments. On the other hand,
animal welfare regulations are classified as a threat and an opportunity.
AMMAR AAMIR ASSIGNMENT#1 Roll No=FA16-BBA-040

For example, these regulations increase costs in McDonald’s supply

chain. However, the same external factor creates an opportunity to
improve the business by implementing a comprehensive animal welfare
policy, which can attract more customers who are interested in animal
welfare. Also, McDonald’s faces the threat of higher minimum wages,
which lead to higher costs and prices. However, this external factor has
limited influence on the company’s business.
Economic factors Economic changes directly and indirectly influence business
performance. The global economy, regional economies, and local
economies influence McDonald’s industry environment through the
following economic external factors:
 Slow but stable growth of developed countries (opportunity)
 Slowdown of the Chinese economy (threat)
 Rapid growth of developing countries (opportunity)
The slow but stable economic growth of developed countries is an
opportunity for McDonald’s to grow and increase the stability of its
restaurant chain business. The U.S. market remains the biggest
contributor to the company’s revenues, but the business also benefits
from the stable recovery and growth of European markets. On the other
hand, the slowdown of the Chinese economy is considered a threat. This
external factor is a strategic issue because the Chinese market is a major
contributor to McDonald’s revenues. Nonetheless, the company has the
opportunity to grow through expansion in high-growth developing
markets, such as in Asia.