1.

Analyze 2 reasons why Coca-Cola operates globally

When operating globally, Coca-Cola is exposed directly to its main market. This way, the
company can not only lower its transport cost for finished goods but also grasp better market
information about consumer tastes. In addition, Coca-Cola may also benefit from paying lower
costs of production, in LEDCs countries. For example, LEDCs countries usually have lower
labor rates, cheaper rent and site costs, as well as government grants and tax incentives for
industrialisation.

2. Analyze 2 potential problems to Coca-Cola of operating in so many different countries

When operating in so many different countries, communication links with headquarters tends to
be where problems happen because of language, legal and cultural differences between the
local company and headquarters. Therefore, this may lead to misunderstanding. Coordination
with other plants in the multinational group in producing new products and monitoring markets
on a global level may produce conflict and skills between employees at local companies may
vary when compared to headquarters.

3. Why do you think Coca-Cola has agreements with many local bottling companies and
does not own and operate all of the bottling plants?

● build socio-economic responsibility at local area → improve the business local reputation
by offering more jobs and economic growth
● local sourcing → ensure taste quality and local source in type of sugar (e.g. America use
corn syrup, Europe used beet sugar, Asia used cane sugar) + the product doesn't travel
further than hundred miles
● Coca-Cola distribution strategy: reach every local stores, and all bottling partners work
closely with suppliers (in this case, suppliers are grocery stores, restaurants,
convenience stores) and the company execute localized strategies between Coca-Cola
and its partners
● Coca-Cola business model: make money through selling syrup to local bottling
companies and sell to local wholesalers and retailers.
● Not owning a company allows Coca-Cola to diversify its product portfolio as the
company only need to establish the syrup recipe, then other stages are taken care by
bottling partners around the globe