Table of Contents

Strategic Intent.................................................................................................................................1

Mission........................................................................................................................................1

Vision 2020..................................................................................................................................1

A Winning Culture......................................................................................................................1

Core Values.................................................................................................................................2

Business Definition......................................................................................................................2

Customer Groups (who)..........................................................................................................2

Customer Function (what).......................................................................................................2

Alternative Technologies (How).............................................................................................2

Key Success factors of Coca Cola...............................................................................................3

Environmental Analysis...................................................................................................................4

SWOT..........................................................................................................................................4

Strengths..................................................................................................................................4

Weaknesses..............................................................................................................................5

Opportunities...........................................................................................................................6

Threats.....................................................................................................................................6

Competitor analysis.....................................................................................................................7

Porter’s Five forces Model..........................................................................................................7

Threat of new competitors.......................................................................................................7

 Intensity of Competitive Rivalry.............................................................................................7

Threat of Substitute Products...................................................................................................7

The Bargaining Power of Customers.......................................................................................8

The Bargaining Power of the Suppliers...................................................................................8

Environmental Appraisal.................................................................................................................9

PESTEL Analysis........................................................................................................................9

Political....................................................................................................................................9

Economic.................................................................................................................................9

Sociological.............................................................................................................................9

Technological........................................................................................................................10

Legal......................................................................................................................................10

Environmental........................................................................................................................10

Environment Opportunity Threat Profile (ETOP) for SAP.......................................................11

Organizational Appraisal...............................................................................................................12

Internal Analysis........................................................................................................................12

Porters generic value chain model.............................................................................................12

Support Activities......................................................................................................................13

Firm Infrastructure.................................................................................................................13

Managerial and administrative support Activities.................................................................13

Technology Development......................................................................................................13
 Procurement...........................................................................................................................13

Primary Activities......................................................................................................................14

Operations..............................................................................................................................14

Inbound and Outbound Logistics...........................................................................................14

Sales and marketing activities...............................................................................................14

VRIO Framework......................................................................................................................14

Organizational Capability Profile for SAP................................................................................15

Organizational Structure................................................................................................................16

Coca Cola International Strategy:..............................................................................................16

Roles and responsibilities of Top Functionaries........................................................................17

Corporate Headquarter:.........................................................................................................17

Regional Office:.....................................................................................................................17

Country Subsidiary:...............................................................................................................17

Corporate Strategy & Business Level Strategies...........................................................................18

Differentiation Strategy (Business Level).................................................................................18

Innovation Strategy....................................................................................................................18

Globalization Strategy...............................................................................................................19

Related Diversification..............................................................................................................19

Concentration Strategy..............................................................................................................19

Cooperation Strategies...............................................................................................................19
 Joint Venture:.........................................................................................................................19

Acquisitions:..........................................................................................................................19

Strategic Alliances:................................................................................................................20

Growth and Expansion Strategies..............................................................................................20

Direct Exporting....................................................................................................................20

Licensing:..............................................................................................................................20

Franchising:...........................................................................................................................20

Channeling:............................................................................................................................20

Functional Level Strategies and Implementation..........................................................................21

Functional and Operational Level Implementation of Differentiation Strategy........................21

Functional and Operational Level Implementation of Innovation Strategy..............................22

Functional and Operational Level Implementation of Globalization Strategy..........................22

Functional and Operational Level Implementation of Diversification, Expansion and Growth

Strategy......................................................................................................................................22

Functional and Operational Level Implementation of Concentration Strategy.........................22

Functional and Operational Level Implementation of Cooperation Strategy............................23

Functional and Operational Level Implementation of Growth and Expansion Strategy...........23

Scenario: Coke launching a new product or product line..........................................................24

Vertical and Horizontal Fit........................................................................................................24

Performance Measurement:...........................................................................................................25
 Critical Success Factors.............................................................................................................26

Balance Scorecard.....................................................................................................................26

Performance Evaluation and Strategy Success..........................................................................27

Sustainability Reporting Guidelines (G3.1)..........................................................................27

Proposed Strategy..........................................................................................................................29

Consumer Engagement..............................................................................................................29

Use of Bottlers...........................................................................................................................29

Licensing....................................................................................................................................29

Africa.........................................................................................................................................30

Contingency plan:..................................................................................................................30

Packaging...................................................................................................................................30

Contingency Plan...................................................................................................................30

Pricing........................................................................................................................................30

Contingency Plan...................................................................................................................31

Target Market............................................................................................................................31

 Works Cited...........................................................................................................................32
 Strategic Intent

Mission

Coca Cola’s Roadmap starts with their mission, which is enduring. It declares their purpose as a company
and serves as the standard against which they weigh their actions and decisions.

 To refresh the world...

 To inspire moments of optimism and happiness...
 To create value and make a difference.

Vision 2020

Their vision serves as the framework for their Roadmap i.e. their mission and guides every aspect of the
company’s business by describing what is needed to accomplish in order to continue achieving a long-
term, sustainable and quality growth.

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

Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and satisfy people's
desires and needs.

Partners: Nurture a winning network of customers and suppliers, together we create mutual, enduring
value.

Planet: Be a responsible citizen that makes a difference by helping build and support sustainable
communities.

Profit: Maximize long-term return to shareowners while being mindful of our overall responsibilities.

Productivity: Be a highly effective, lean and fast-moving organization.

A Winning Culture

Their Winning Culture defines the attitudes and behaviors that will be required of them to make their
2020 Vision a reality.
Core Values

These values serve as a compass for actions and describe how to work with the environment and
customers.

Leadership: The courage to shape a better future

Collaboration: Leverage collective genius

Integrity: Be real

Accountability: If it is to be, it's up to me

Passion: Committed in heart and mind

Diversity: As inclusive as our brands

Quality: What we do, we do well

Business Definition

Customer Groups (who)

Coke is for everyone! Children, teenagers, middle-aged and old aged people; everyone is the target
market of Coca Cola company. It is a mass market product sold globally. Though everyone does drink
Coca cola but its major target markets are children and teen-agers.

Customer Function (what)

Coca Cola Company produces a vast range of beverages ranging from sodas to power/energy drinks to
juices, bottled water and ice teas. Thus we can say that its customer function is to quench thirst.

Alternative Technologies (How)

Focus on the Market

 Focus on needs of their consumers, customers and franchise partners

 Get out into the market and listen, observe and learn
 Possess a world view
 Focus on execution in the marketplace every day
  Be insatiably curious

Work Smart

 Act with urgency

 Remain responsive to change
 Have the courage to change course when needed
 Remain constructively discontent
 Work efficiently

Act Like Owners

 Be accountable for our actions and inactions

 Steward system assets and focus on building value
 Reward our people for taking risks and finding better ways to solve problems
 Learn from our outcomes -- what worked and what didn’t

Be the Brand

Inspire creativity, passion, optimism and fun

Key Success factors of Coca Cola

1. Coca-Cola is a unique and recognized brand among the most recognized trademarks.

2. Its quality which is consistently offering consumers products of the highest quality

3. Marketing that deliverers creative and innovative marketing programmes worldwide

4. The global availability of Coca-Cola and its products are bottled and distributed worldwide
efficiently.

5. The ongoing innovation that keeps the company continually providing their consumers with new
product offerings such as Diet Coke, Coca-Cola Vanilla, etc.
 Environmental Analysis

SWOT

Coca Cola SWOT analysis 2013

Strengths Weaknesses

1. The best global brand in the world in 1. Significant focus on carbonated drinks
terms of value ($77,839 billion) 2. Undiversified product portfolio
2. World’s largest market share in 3. High debt level due to acquisitions
beverage 4. Negative publicity
3. Strong marketing and advertising 5. Brand failures or many brands with
4. Most extensive beverage distribution insignificant amount of revenues
channel
5. Customer loyalty
6. Bargaining power over suppliers
7. Corporate social responsibility
Opportunities Threats

1. Bottled water consumption growth 1. Changes in consumer preferences

2. Increasing demand for healthy food and 2. Legal requirements to disclose negative
beverage information on product labels
3. Growing beverages consumption in 3. Competition from PepsiCo
emerging markets 4. Saturated carbonated drinks market
4. Growth through acquisitions

Strengths

1. The best global brand in the world in terms of value. According to Interbrand, The Coca Cola
Company is the most valued ($77,839 billion) brand in the world.

2. World’s largest market share in beverage. Coca Cola holds the largest beverage market share
in the world (about 40%).
 3. Strong marketing and advertising. Coca Cola’ advertising expenses accounted for more than
$3 billion in 2012 and increased firm’s sales and brand recognition.

4. Most extensive beverage distribution channel. Coca Cola serves more than 200 countries and
more than 1.7 billion servings a day.

5. Customer loyalty. The firm enjoys having one of the most loyal consumer groups.

6. Bargaining power over suppliers. The Coca Cola Company is the largest beverage producer in
the world and exerts significant power over its suppliers to receive the lowest price available from
them.

7. Corporate Social Responsibility (CSR). Coca Cola is increasingly focusing on CSR programs,
such as recycling/packaging, energy conservation/climate change, active healthy living, water
stewardship and many others, which boosts company’ social image and result in competitive
advantage over competitors.

Weaknesses

1. Significant focus on carbonated drinks. The Coca Cola Company is still focusing on selling
Coke, Fanta, Sprite and other carbonated drinks. This strategy works in short term as
consumption of carbonated drinks will grow in emerging economies but it will prove weak as the
world is fighting obesity and is moving towards consuming healthier food and drinks.

2. Undiversified product portfolio. Unlike most company’s competitors, Coca Cola is still
focusing only on selling beverage, which puts the firm at disadvantage. The overall consumption
of soft drinks is stagnating and Coca Cola Company will find it hard to penetrate to other markets
(selling food or snacks) when it will have to sustain current level of growth.

3. High debt level due to acquisitions. Nearly $8 billion of debt acquired from CCE’s acquisition
significantly increased Coca Cola's debt level, interest rates and borrowing costs.

4. Negative publicity. The firm is often criticized for high water consumption in water scarce
regions and using harmful ingredients to produce its drinks.

5. Brand failures or many brands with insignificant amount of revenues. Coca Cola currently
sells more than 500 brands but only few of the brands result in more than $1 billion sales. Plus,
 the firm’s success of introducing new drinks is weak. Many of its introduction result in failures,
for example, C2 drink.

Opportunities

1. Bottled water consumption growth. Consumption of bottled water is expected to grow both in
US and the rest of the world.

2. Increasing demand for healthy food and beverages. Due to many programs to fight obesity,
demand for healthy food and beverages has increased drastically. The Coca Cola Company has an
opportunity to further expand its product range with drinks that have low amount of sugar and
calories.

3. Growing beverages consumption in emerging markets. Consumption of soft drinks is still

significantly growing in emerging markets, especially BRIC countries, where Coca Cola could
increase and maintain its beverages market share.

4. Growth through acquisitions. Coca Cola will find it hard to keep current growth levels and will
find it hard to penetrate new markets with its existing product portfolio. All this can be done more
easily through acquiring other companies.

Threats

1. Changes in consumer tastes. Consumers around the world become more health conscious and
reduce their consumption of carbonated drinks, drinks that have large amounts of sugar, calories
and fat. This is the most serious threat as Coca Cola is mainly serving carbonated drinks.

2. Legal requirements to disclose negative information on product labels. Some Coca Cola’s
carbonated drinks have adverse health consequences. For this reason, many governments consider
to pass legislation that requires disclosing such information on product labels. Products
containing such information may be perceived negatively and lose its customers.

3. Competition from PepsiCo. PepsiCo is fiercely competing with Coca Cola over market share in
BRIC countries, especially India.

4. Saturated carbonated drinks market. The company significantly relies on the carbonated
drinks sales, which is a threat for the Coca Cola as the market of carbonated drinks is not growing
or even declining in the world.
Competitor analysis

The top four competitors of Coca Cola Company are listed below:

1. Pepsi Co.
2. Nestle
The major competition is faced by Coca Cola Company is Pepsi company. Pepsi is one of the world
leader brand with approximate revenues of $27billion and over 143,000 employees. Pepsi products are
available in nearly 200 countries (Pepsi Co 2011).

Porter’s Five forces Model

Porter’s five forces model help the companies to evaluate their business strategy. Three out of five forces
talk about the rivalry which is expected from micro-environment, macro-environment and also some of
the internal threats as well.

Threat of new competitors

The soft –drink market is already ruled by big giants like Pepsi and Coca-Cola. A survey done in 2000
which showed that advertisement expenditure is almost about $ 8.3 million of the current competitors. It
is very huge amount for the new player to invest in the marketing from an early stage.

Also, due to the huge investment in advertisement, Coca-cola and Pepsi have created a strong brand
image and position in the minds of consumers. Customer loyalty has been increased and they are not
ready to leave this product for a new player (IvyThesis , 2009). Moreover the extended supply chain and
bottling networks of Coca-Cola and Pepsi are major threat for the new players.

Intensity of Competitive Rivalry

The soft-drink industry is dominated by two large players, namely Coca-Cola and Pepsi. This industry is
also known for duopoly created by Pepsi and Coca-cola. These players have the huge market share and
other small players have very less market share (Valuation Academy, 2011). The bigger giants are mostly
competing with each other on the factors of differentiation and advertisement. The price war hasn’t seen
between the two competitors. However, a price war is experienced in some of the International markets.

Threat of Substitute Products

This beverage industry has a lot of substitutes which are available to the end consumers. Some of these
substitutes include: water, tea, coffees, juices, and beer etc. All of the suppliers of these substitutes only
need a huge advertisement campaign in order to create brand loyalty and consumer demand (Valuation
Academy, 2011). However the switching cost to substitute products is quite low but consumers prefer
differentiation of Coca-cola to the lower prices of substitute products.

The Bargaining Power of Customers

There are some major buyers of soft-drink industry including fast-food-chains, restaurants, convenience
stores etc. The bargaining power of the buyers depends on the position and potential market it has. For
example: Fast-food chain segment is regarded as the “Paid-Sampling” by the Coke and PepsiCo due to
quite small profit margins. The bargaining power of these buyers is quite high. Contrary to that, vending
machines provide no power to the customers (Valuation Academy, 2011).

The Bargaining Power of the Suppliers

The raw materials used to manufacture soft-drink or Coca-cola include color, caffeine, flavor, and sugar
etc. the supplier of these products have relatively no power over the price bargaining. These raw materials
can easily available to any of the producer so they don’t need to hire some specific suppliers. Switching
costs to these suppliers is very low because the producers can shift to other suppliers anytime.
 Environmental Appraisal

PESTEL Analysis

Political

In every business environment, there are potential pressures from the government. Coca-Cola produces
non-alcoholic beverages which come under the category of FDA and government plays an important role
in the manufacturing of these products. There are certain regulations that governments of different
countries enforce on these companies. If the company fails to produce the product according to the
required quality standard, there are certain fines which they have to pay.

It is equally important to consider the changing laws and regulations of the foreign countries. These
changes may occur in the accounting standards, environmental laws and the taxation requirements etc.
These changes have the severe impact on the account books of the companies. There profit potential can
be dependent on such factors as well. So companies like Coca-cola should adapt proactive approach and
remain aware of such changes to able to cope up with the changing business laws and regulations.

The current political conditions of the target country also hold a lot of importance for the company
wishing to enter in the foreign markets. The governmental laws and other political scenario can affect the
ability of the company to penetrate its business successfully in the emerging market. All the emerging
markets have volatile political and economic conditions. Coca-cola always monitors the changing policies
and government regulations set by the government.

Economic

Economic Analysis is used to examine the local, national, international markets and world economy
which can play a major role for the company in selection of its target markets. The economic analysis also
includes the issues of recession and inflation. This recession and inflation has also affected coke as its
prices have considerably increased over the years.

Sociological

Changes in society such as lifestyle changes and attitudes of the people can also determine the market
potential. It is important to analyze the current sociological factors which can help in understanding the
market growth and demand of the products in any area.
There has been seen a changing trend among the people in the age –group of 37 to 55 that they are
concerned with the nutrition (IvyThesis , 2009). They want to eat healthy food in order to live a healthy
life. The baby boomers are now grown adults and as they are becoming old so their concern with their
health is also increasing with time.

Technological

In this rapid-paced world, we encounter with new emerging technologies which can increase the
efficiency of the business in many ways. Technological advancements create opportunities for new
product development and also product improvements (Valuation Academy, 2011). Technological
improvements and enhancements also force companies to develop new products in order to remain
competitive in the market. This advancement of technology has also helped Coca-Cola in development of
Cherry Coke in 1985.

Legal

The legal environment also holds a lot of importance in every business progress. Coca-Cola has
determined all the rights applicable to its business and they gain patent of all the products they develop.
All the companies must align company’s policy with the changing legislation of the world (IvyThesis ,
2009).

Environmental

Environmental analysis includes the close examination of local, international and all world environmental
issues. The companies must respect the environment and must carry out some projects to reduce the
environmental pollution. The basic idea here is that a company must be environmental-friendly (Goos
Kant, 2007). The Coca-Cola Company strictly monitors all the environmental regulations and laws
imposed by the foreign and local governments.
Environment Opportunity Threat Profile (ETOP) for SAP

Environmental sectors Nature of Impact Impact of each sector

Economic Unfavorable Impact The overall impact of inflation
has effected everyone. Therefore
we can say that economy has an
unfavorable impact on Coke too
as the prices have raised
considerably in past 10years.
Market Favorable The majority of customers
worldwide have a strong
preference for Coca Cola instead
of its competitor Pepsi. Also, soft
drinks are something that are
consumed by people of all age
groups.
International Favorable It is already a global brand and
has its operations worldwide.
Still the economic trade groups
are increasing opportunities for
Coke to expand.
Political Neutral Political system usually does not
impact the food and beverage
industry much.
Regulatory Favorable The products are in accordance to
the quality standards.
Social Less favorable The socio culture trend is that
people are becoming more health
conscious.
Supplier Favorable The supplying system of Coke is
strong worldwide.
Technological Favorable The Coca Cola company is up to
date with technology in their day
to day operations and activities.
 Organizational Appraisal

Internal Analysis

Porters generic value chain model

As far as coca cola is concerned the cross business strategic fits can exist anywhere along the value chain
of coca cola. We will discuss these value chains one by one and see how coca cola can strategically fit
into these value chains
Support Activities

Firm Infrastructure

Firm has a strong infrastructure as it is shown by its financials. The financial data is readily available to
the management for strategic decision making. Financial data can be extracted through different networks
that are present at the Coca-Cola Company for e.g. they use mySAP which helps them in forecasting and
consolidation of data.

Managerial and administrative support Activities

Coca cola can also diversify because of its managerial and administrative support activities. Many times
most of the businesses require same management, administrative and operating know how. The products
which coca cola is producing are under the control of same management. This is a huge cost saving
benefit for coca cola.

Technology Development

Coca cola can fit into a kind of business where it can utilize its resources of R & D and technology. As we
already know that the R & D and technology of coca cola is very strong. In the area of technology coca
cola is very advance when we see their packaging and bottling technology. When coca cola will diversify
into any other business which is related to its industry it will obviously have the advantage of its
technological expertise. The coca cola company has always worked for bringing in technological changes
to meet the customer needs. These are the various examples of latest technology adopted by the company

Procurement

Businesses who have supply chain strategic fit can perform better together because of potential for skills
transfer in procurement, greater bargaining power and benefits of collaboration with common supply
chain partners. Coca cola has a strong supply chain network. It makes the syrup used to make the coke
and gives it to its distributors and they make the final good. It also has contract with a bottling company
which makes bottles for coca cola. So having such a strong supply chain network it can also diversify into
relative business as this will help the company in reducing costs and increasing efficiency. Coca cola is
using the same supply chain for its diversified products.
Primary Activities

Operations

Coca cola has the World sixth largest production plant. One assembly line can produce 2000 cans in
minute. Production line has 25000 bottle storage capacities per minute. So coca cola can also fit because
of its production related activities. Such a strong production capacity will result in lower costs.

Inbound and Outbound Logistics

Separate contracts (‘‘Bottler’s Agreements’’) exist between Company and each of its bottlers regarding
the manufacture and sale of soft drinks. Subject to specified terms and conditions and certain variations,
the Bottler’s Agreements generally authorize the bottler to prepare particular designated Company
Trademark Beverages, to package the same in particular authorized containers, and to distribute and sell
the same in (but generally only in) an identified territory. The bottler is obligated to purchase its entire
requirement of concentrates or syrups for the designated Company Trademark Beverages from the
Company or Company authorized suppliers. They typically agree to refrain from selling or distributing or
from authorizing third parties to sell or distribute the designated Company Trademark Beverages
throughout the identified territory in the particular authorized containers; however Coca-Cola typically
reserve for ourselves or our designee the right (1) to prepare and package such beverages in such
container sin the territory for sale outside the territory and (2) to prepare, package, distribute and sell
such beverages in the territory in any other manner or form.

Sales and marketing activities

Many cost saving opportunities arise for coca cola as single sales and marketing activities will be used to
sell the products. There will be a single sales force for the related products. Advertising of the related
products is carried out together. The strong company brand name is also important in this case. The new
product gains attractiveness because of the strong brand name.

VRIO Framework

Resources and Value Rarity Inimitable Organized for

capabilities Usage
Brand (Coca Yes No Yes yes
Cola)
Value: Coke’s main value would be their Brand. Coke is globally recognized.

Rare: This asset is semi-rare. While it is true that few of their competitors have the strength of brand that
Coke has, it is not a resource that is unattainable by other companies.

Inimitable: As we have well established, Cola is easily inimitable. Perhaps the strength of their brand
however, is not as easy to imitate.

Organized: The resource is definitely useable by Coke to drive sales and capture market share

Organizational Capability Profile for SAP

Capability Factor Nature of Impact Competitive Strengths and

weaknesses
Finance Strength

Marketing Neutral There is a strong competition

between Pepsi and Coke going in the
industry. Both try hard to market
their products in best possible way.
Therefore we can say that Coke has
a secure position in the Industry

Operations Neutral Plant and machinery are

compareable to that of competitors.

Personnel Strength Really good managers and workers

are present at coke

Information Strength Advanced information systems are

available. Coke website also has
extensive company information
available on it
General Management Strength High quality and experienced top
management available
 Organizational Structure

Coca Cola has a very tall and bureaucratic organizational structure. A graphical representation of its
organizational structure is given below:

The above graphical representation shows the top functionaries of the company.

Coca Cola International Strategy:

Coca Cola has a global strategy to operate in the 200 countries it is offering its products. This is because
Coca Cola has unique yet consistent recipe/taste of beverages all across the world but the marketing and
sales strategies are localized as per the region’s socio-cultural dimensions.

Considering the corporate and business strategies of Coca Cola mentioned earlier in the report, we could
analyze its organizational structure and see that it is structured in a way to complement its strategies in the
best possible manner.
The reason for the tall structure of the organization is because the corporate headquarters want full control
of its product. Since, the one of the key success factors for the company is the consistent unique tastes of
its beverages; hence the higher ups of Coca Cola don’t want to take any risks in that matter.

Coca Cola faces some problem in slow process of communication because of tall hierarchy of the
organization but to keep it centralized, this is the cost the company needs to pay. It can reduce this
problem by introducing latest IT solutions to speed up its communications.

Roles and responsibilities of Top Functionaries

Corporate Headquarter:

Corporate headquarters is where all corporate decisions are made. It also keeps an eye over the different
operations across the world. The strategic decisions of innovations, diversification, introducing new
beverages are taken here. Once the decision is taken, then it is communicated to all the regional offices
which further pour it down to the country subsidiaries.

Regional Office:

There are a total of four regional offices of Coca Cola around the world. Regional offices keep a check of
all country subsidiaries coming under its defined boundary. It keeps a track of all the sales, financials of
all the country subsidiaries and then reports them to the corporate headquarters. Also, any orders from the
corporate headquarters for the country subsidiary are channelized through regional offices.

Country Subsidiary:

The corporate headquarter keeps a watch over the activities of different regional offices located in every
continent where Coca Cola operates. Under a regional office, every country has its own subsidiary. This
subsidiary is responsible for the manufacturing of the beverages from the secret recipe, distribution of the
products and the sales & marketing as well. As mentioned earlier, the marketing is localized as per the
country the product is selling in.
 Corporate Strategy & Business Level Strategies

Making the essential moves to different businesses and achieve an appropriate kind and type of
diversification is very important for a business and a key part of Coca Cola’s corporate strategy is making
decisions on how many, what are the types and on which specific line of business the company should be
in. This may involve deciding to increase or decrease the breadth of diversification. This corporate
strategy may involve closing down or opening up of a line of different other businesses (LOB). Corporate
strategies initiate actions to boost the combined performance of the businesses and the company has
diversified into many different businesses by strongly involving itself into pursuing rapid growth
strategies in the most promising LOB's. They have kept their core businesses healthy; initiating
turnaround efforts in weak-performing yet promising LOB's and dropped the LOB's that are no longer
attractive or profitable with respect to existing structure of the company and market demand. Coca Cola
has pursued many ways to capture valuable cross-business strategic fits and has turned them into
competitive advantage. For example, transferring and sharing related technology, procurement leverage,
operating facilities and distribution channels - All such changes and establishments are a vital part of
Coca Cola’s corporate strategy.

The various strategies pursued by Coca Cola that have been instrumental in making it the world’s largest
brand in the beverage industry are:

Differentiation Strategy (Business Level)

There are many bases on which a product can be differentiated. However Coke has differentiated its
product on the following base:

1. Product Differentiation: Coke differentiates its product from its competitors on the basis
of brand, quality and taste. Coke does mass production but at the same time has been able to
retain its distinct formula that presently no one has been able to imitate or replicate fully.
2. Image Differentiation: The Coca Cola logo is a vital too for image differentiation as it establishes
a brand name in the mind of the consumer. It is the brand’s identification, signature and image.
3. Price Differentiation: Prices are kept competitive with Coke’s biggest rival Pepsi Co. Therefore,
we can say that it has a mix of low cost and differentiation at the same time.

Innovation Strategy

Coca Cola, since its birth, has been as successful as it is today because of its ability to systematically
innovate and deliver new products with respect to the ever changing market. The trends of the market are
not constant; they change every quarter. Keeping that in mind, Coke moved from a single core product to
a comprehensive beverage offering. As of now Coca Cola offers nearly 400 different products – the
reason for it still dominating the beverage industry around the globe.

Globalization Strategy

Technology is continually changing the way businesses operate. The trends and methodologies which are
responsible for making businesses more feasible and profitable for the purpose of expansion are given
strict emphasis. Presently, Coca-Cola is able to exploit large revenue opportunities by participating in a
global market - Coke products are delivered in 200 countries around the world.

Related Diversification

Coca Cola started their business from sodas and then went into power drinks, bottled water, and healthy
drinks like Minute Maid and ice teas.

Concentration Strategy

Coke has been able to maintain a consistent formula for its drinks, especially Coke. This indicates their
consideration for their loyal customers who do not want to lose the essence of the original fizzy taste of
Coca Cola.

Cooperation Strategies

Joint Venture:

 Coke joined forces with different suppliers and bottlers such as Femsa’s popular JV.
 Beverage Partners Worldwide: the joint venture partnership between Coca-Cola and Nestle was
created in 2001.

Acquisitions:

 Coca Cola has a long history of acquisitions. For example, the acquisition of Minute Maid in
1960.
 The Indian cola brand Thums-Up in 1993.
 In 2001 it acquired the Odwalla brand for $181 million.
 In 2007, it acquired Fuze Beverage for an estimated $250 million and etc.
These acquisitions shows Coca Cola’s success in the market because most of them have been seen
successfully adapting with Coke’s business strategies.

Strategic Alliances:

Coca Cola has been extremely active in strategic alliances over the years. - The most noteworthy alliance
being with McDonald’s.

Growth and Expansion Strategies

Direct Exporting

Coca Cola has entered into foreign markets in various ways. Among them, the most common approaches
are Direct Exporting, Licensing and Franchising. Besides beverages and special syrups, Coca Cola also
directly exports its merchandise to overseas distributors and companies which has been an integral part in
creating the brand’s global presence successfully.

Licensing:

Coca Cola markets internationally as well by licensing bottlers around the world - supplying them with
the syrup needed to produce the product.

Franchising:

Among the different types of franchising, Coca Cola has been using a manufacturer-sponsored wholesaler
franchise system whereby the finished products are sold to the retailers in the local market directly.

Channeling:

Coca Cola has managed the company’s marketing and sales strategy within their previously defined
channels. The Company operates three primary delivery systems that are:

 Bulk delivery for large channels such as supermarkets, mass merchandisers and club stores.
 Advanced sale delivery system for smaller channels like convenience stores, drug stores etc.
 Full service delivery for their full service vending customers.
 Functional Level Strategies and Implementation

Seeing the magnitude of Coke in terms of the size of the company and its presence globally, the
functional level strategies pertaining to this soft drink powerhouse carry vital significance. The functional
strategy relates to the direction a functional area namely Marketing, Human Resource, Operations
Management and Finance would need to adopt to attain Coke’s proposed corporate and business unit
objectives/strategies. Moreover, uniformity with other functional strategies is also very important - The
rule of thumb, always: maximize resources and productivity.

The functional strategies are the measures or ways to implement the tactics of the business. For example
when Coca Cola decides that it is going to add a new product to its portfolio, the ‘functions’ will make
strategies in order to make the new product successful and gain market share – Attain market leadership
in a new market to increase global market share or snatch the market share from the players present in the
market in which the new product is being launched.

How will the functions make strategies? This is how it would work with respect to Coke’s various
Corporate and Business-level strategies:

Functional and Operational Level Implementation of Differentiation Strategy

Owing to the fact that Coke differentiates itself on the basis of product, image and price, the functional
strategy is required to back that tactic. In terms of differentiating itself on product, R&D and market
research is of the utmost important. Not only is it important to understand the changing preferences of
their target audience but also their satisfaction with the current offering. Being proactive is vital.
Moreover, the operations and supply chain need to be responsible for the mass production of the global
drink to service the demand created. In terms of image differentiation, the marketing functional area takes
top priority. The marketing efforts, be them active TVC’s, CSR activities or subtle subliminal indicators,
maintaining Coke’s unique brand elements is of the utmost importance. Since Pepsi has always been a
direct rival on Coke’s radar, managing and matching price with respect to competition is also extremely
important. This is because not all consumers are loyal customers and product switching would be quite
easy for the price-sensitive audience. To ensure this competitive pricing, the Finance function would need
to expertly manage budgets – where to increase investment with respect to supply chain and marketing
and where to cut costs.
Functional and Operational Level Implementation of Innovation Strategy

Since Coke finds itself in the midst of a dynamic and demanding global audience, the need to innovate is
not just a tool for growth but a prerequisite for survival. On a functional level, having to innovate would
require allocation of the right budget to various departments or product lines, R&D to understand present
and future customer preferences, Marketing to create a push or pull with respect to the market and
product offering the operations management to ensure that the idea is turned into a product and readily
available for consumption.

Functional and Operational Level Implementation of Globalization Strategy

Coca Cola products are delivered and appreciated in 200 countries globally. This not only requires
functional efficiency in terms of finance and operations management, but also marketing and research to
understand various cultural do’s and don’ts along with coming up with a message that is in line with
Coke’s core ideology and relatable to a diverse consumer-base. Coke’s core message is ‘sharing
happiness’ – an emotion or state that is common to all cultures. The fact that happiness is shared over an
aftari table in the sacred month of Ramadan for Muslims or with a turkey dinner over thanksgiving for a
Christian state is something that is altered with respect to cultural, religious and social variability.

Functional and Operational Level Implementation of Diversification, Expansion

and Growth Strategy

Coca Cola started out as mere black-colored soda in a glass bottle but has expanded into energy drinks,
health-oriented fresh juices, bottled water and culture-specific beverages since. For example, Coke
launching Limca in India was to cater to the local population’s preference and identification with lemon
and soda. The R&D, market efforts, standardization of the formula needs to be efficiently coordinated.
The functional level strategy has to be adventurous enough to create some ripples in the minds of the
local population and yet be disciplined enough to stay within the limitations of Coke’s core philosophy
and global outlook.

Functional and Operational Level Implementation of Concentration Strategy

Coke once tried to alter its original flavor with the excuse of ‘progress and innovation with respect to
changing times’. The opposition from the consumer was quite strong. Since then, Coca Cola has
concentrated on maintaining the sanctity of their primary product. This has required strict quality checks
to ensure consistency with respect to Coke bearing its original sweetness, carbonation and outlook (the
formula behind the shade of Coke’s Red color is just as much a secret as its constituting ingredients)
while ‘Share’ and ‘Happiness’ have been constant and recurring themes in their marketing campaigns.

Functional and Operational Level Implementation of Cooperation Strategy

Cooperation Strategies regarding coke has seen joint ventures between Coke and various suppliers along
with partnerships with other beverage makers. A cooperation with suppliers meant coordinating supply
chain efforts, creating the right amount that is in line with the generated demand due to marketing
initiatives along with the capacity of bottling units and supplier’s means of transportation. In this form of
strategy, while efficiently and effectively managing a function is important, it is equally important to
coordinate those efforts on a unified functional front. Acquiring product lines like Minute Maid in 1960
meant creating a right balance of retaining the essence of the citrus drink along with changing some
elements to accent Coke’s own philosophy. The same consideration is present when opting for a Strategic
Alliance. For example, joining forces with McDonald’s as the official drink to be served with their food.
In such case, the reputation of the ally bears direct correlation to Coke’s brand image in the global
market. Also, visibility of the Coke brand name is a must for the strategic ploy to work. This includes in-
store merchandising and promotional activities like the Coke glass given away with a McDonald’s meal
along with a clear visual demarcation of its logo on the McDonald’s menu. The visual sync should be in
such a way that neither brand is overshadowed or cannibalized by the other but both coexist in the form of
a synergy. On the financial front, allocation of budget to various departments or product lines along with
getting an idea of their respective profitability is important as it becomes a source of information for the
top management to come up with long-term decisions based on present trends and projected forecasts.

Functional and Operational Level Implementation of Growth and Expansion

Strategy

Expanding operations would require getting the right mix of labor and machinery to be able to learn,
execute and sustain in accordance to Coke’s strict evaluation of quality, quantity and consistency. Direct
Exporting puts more pressure on operations as capacity needs to be increased to satisfy the aggregate
demand of the local and foreign audience. Licensing may be a more cost-saving alternative financially
and operationally, but it also makes the company vulnerable as Coke’s reputation would be in the hands
of the licensee. The visibility of Coke’s brand name in the finished product is also important along with
the accurate information on its packaging that the final product has been due to the result of a license
agreement rather than any singular efforts either way – this is also important for potential legal
considerations. As far as franchising is concerned, Coke uses a manufacturer-sponsored wholesaler
franchise system which requires an efficient distribution and supply chain network to be able to directly
sell to the retailer without a wholesaler in the middle. The bullwhip effect is an important consideration
for Coke’s operations here as any miscommunication of demand would have a magnified effect on the
supply side which would add to Coke’s inventory costs and reduce the product’s shelf life. Increased
stock with an expiry date around the corner would require trade promotions and discounts to clear shelf
space - denting Coke’s profits had the product been sold sooner but avoiding the off chance of a sale of an
expired product which could potentially erode Coke’s positive image in the mind of the customer.

Scenario: Coke launching a new product or product line

1. Finance: The finance function will lay out the budgets for the new product. Will give guidelines
on how much is there to spend, when and where it will be spent.

Managing the cash inflows and outflows and help the other functions know how much do they
have in their pockets. For example: Finance department will make periodic reports to tell whether
the marketing department is overspending or not.

2. Marketing: The marketing department will make strategies to create awareness among the
potential customers. Putting out new ads on TV to be top of mind of their target market.
3. Sales: The sales team will do its best in order to get an upper hand and implement the marketing
strategies. Also the department through its sales force will go all out to achieve sales targets set
for itself by the company.
4. Human Resource: The HR department’s job is to hire right type of people for the company.
Making sure that the personnel hired have their goals aligned with the business and corporate
goals of the company.

The above example for a few functions shows how the strategies at functional level are related to the
business level. Eventually the success at the functional level helps the company attain success and
achieve goals at the business level.

Vertical and Horizontal Fit

Overall the Coca-Cola Company shows a strong vertical fit i.e. the strategy created at the corporate level
is implemented throughout all the levels of hierarchy. Whatever is done at the functional level is actually
in accordance to the goals and objectives of top management.

Similarly, a great level of horizontal fit can also be seen as different departments work together, wherever
needed, in order to achieve the overall goal of the firm.
 Performance Measurement:

Performance measurement is the process whereby an organization establishes the parameters within
which programs, investments and acquisitions are reaching the desired results.

Coca Cola links the mission and vision to its operations and functions in a very good way. The whole
performance is managed in a very well manner in order to get best out of it. Managers and employees are
highly involved in the system to take decisions which results in employee loyalty.

Goals of the company are formulated at the higher level, than head of the departments make their own
goals accordingly, and then comes the unit office, then functional heads which generate reports, in the end
supervisors and employees also set their goals. All these incomparable policies lead to the success of
Coca cola globally.

After the goals and strategy has been formulated, performance is measured in order to check the
implementation of strategy and goals. Monthly review is done to check the implementation results.
During review periods no changes in the goals can be changed. During the mid year stage goals can be
further refined or altered and new policies can be designed to achieve the organizational level goals. At
the final stage the performance is matched with the standards and goals of the organization. If there are
positive results with increase in overall productivity, the individual performance of the employees is
evaluated and the rewards are then given on the basis of performance.
Critical Success Factors

 Product quality and taste is a key success factor for coca cola. These both attributes are very
important to get high customer base.
 Product Diversity and innovation is one of the most important critical success factors for coca
cola. Changing customer’s needs with time should be recognized by the company in order to keep
its customers satisfied.
 Market share and size of the firm is also a critical success factor. Due to the high market share
coca cola has been able to negotiate with large distributers and thus making the product available
in most of the regions. In order to remain competitive it’s highly important for the company to
maintain effective distribution channel.
 Company image leads to the brand loyalty which is very important for the success. Brand loyalty
in return increases the market share.
 Global expansion plays a very vital role in the company’s success. Brands that are globally
present are usually preferred by the customers.

Balance Scorecard

For performance measurement at smaller units, balanced score card is used by the company.

Perspective Goal Measurement

Firm financial growth in terms of Annual sales growth
Financial profitability Net profitability Improvement
Reduce cost of production

Value creation , satisfaction , support High Market share , leading position

Customer globally
Consistent decrease in cost of sales

Efficient production with waste Consistent decrease in cost of

Internal Business reduction. production , increased productivity
Brand expansion Number of new markets entered
 Innovation New products and processes added in
Learning and growth Employee training and satisfaction the company
Reduced rate of employee turnover

Performance Evaluation and Strategy Success

For a global company like coco-cola, the measures of success are defined in far broader terms than the
economic parameter alone. This is because of the diverse ways in which it affects lives of the people
around the world. Thus, it is only befitting for the company to evaluate its success based on social and
environment aspects it touches upon internationally apart from the obvious economic indicator. For this
purpose it evaluates its performance based on the Sustainability Reporting Guidelines 1 (G3.1) of Global
Reporting Initiative. According to the framework present in G3.1, the company declared itself to be of
grade B+ in its 2010/11 Sustainability Report2.

The above framework is very comprehensive and due to the constraint of time and scope of this report,
we will be only focusing on only the most important points.

Sustainability Reporting Guidelines (G3.1)

The goal of sustainable development is to fulfill the present needs without hampering the ability of future
generations to meet their own needs.

The three factors of economic, social &environment that concern stakeholders according to these
guidelines include: civil society, customers, employees including trade unions, local communities,
shareholders and suppliers.

Economic

Apart from the obvious economic performance indicators, which are present in annual reports, two other
less reported indicators include the company’s market presence & indirect economic impact that
1

2
determines the contribution of a company for a larger economic system.

 Economic Performance Indicators: Important elements in this category include direct economic
value generated and distributed, including revenues, operating costs, employee compensation,
donations and other community investments, retained earnings, and payments to capital providers
and governments.
 Market Presence: These include policy, practices, and proportion of spending on locally-based
suppliers at significant locations of operation. Other factors include hiring of senior management
from local community.
 Indirect Economic Impacts: These include development of infra-structure and similar services for
the benefit of the general public.

Social

The social dimension deals with the impact that coca-cola has on the social systems in the places where it
operates. Such social performance indicators define how well the company deals with issues such as labor
practices, human rights and product responsibility (Customer health and safety, compliance etc.)

Environment

The social aspect of sustainability deals with concern of an organization to living and non-living life it
impacts through its operations. It deals with the aspect of how well a company manages the waste and
emissions that results out from the production of various goods at different sites.
 Proposed Strategy

Consumer Engagement

What differentiates Coke from its competitors is the level at which is performs consumer
engagement. Notice the word used here is ‘consumer’ rather than ‘customer’ because Coke’s
direct customers are actually the distributers; however they are wise enough to know that it is the
end customer’s demand and level of satisfaction that truly matters. Due to this they have
formulated many different marketing strategies that help them engage customers, and that is
what customers truly admire and enjoy about Coke. For example: The latest Coke marketing
campaign attempts to unite the people of Pakistan and India by installing a Coke machine which
allows you to make a friend across the border and you can also play an interactive game with
them on the spot.

Consumers believe Coke to be a full of life and fun brand which has then intrigued and loyal at
all times. This technique gives Coke its competitive edge and it something we propose they
should continue to do in the future too.

Use of Bottlers
Coke should keep on manufacturing and bottling its own products as it is doing in most places.
This ensures good quality and timely delivery. They should definitely follow this whilst in a
country where they face strong competition. Initially upon entering Pakistan they used a local
bottler and many a time a complaint was recorded about insects being found in the bottles. This
deteriorated the image of the brand in the mind of the Pakistani’s and had a role to play in the
dominance of Pepsi over Coke in the country.

Licensing

Coke should refrain from using Licensors in countries with strong competition prevailing in
them. This is because Coke mainly beats its competitors over two things: Taste and Marketing.
The marketing budget of a Licensee can never match that of a Licensor; hence the marketing
campaign created there will not be of the value that Coke is known for. This is why they should
keep the marketing in their own hands.
Africa
Although Coke is present in Africa the research showed that in 2010 the Annual Per capita
consumption of Coke in Kenya was only 39 servings. This was due to the trade barriers and
unfavorable environment present in the area. However, today the wars in Africa are ending and
they are making a conscious effort to reduce trade barriers. Coke should take a quick step
forward and step into the market fully before its competitors have a chance to, because it has
reached maturity or near maturity in many countries, and many growth opportunities are present
in Africa that will increase its global market share.

Contingency plan: Penetrating the impoverish market can be a difficult task. Therefore, Coke shall use
Bottom of the Pyramid strategy when going into the impoverished areas. Coke can come up with buddy
packs and introduce them for the people who cannot afford the big packs. They will also have to lower
their prices in such area. Frequent sales on bulks can also be a good tact to market product.

Packaging
Packaging plays a large role in the image that is created in the minds of consumers about a
brand. Coke has previously launched limited edition packaged products which has different
names written on the bottles and the slogan was for example: “Share a Coke with Sarah”.
Limited edition packaging makes Coke stand out from its competitors and portrays the image of
it being an exciting product rather than a mundane one. It should continue to launch similar
marketing strategies.

Contingency Plan: People can become reluctant to new packaging style. Therefore heavy advertising
of the new packaging can be done to attract customers.

Pricing
Coke should price its products in such a manner that it is cheaper than water, especially in places
where water itself is a rare commodity. They should create strategies that create the image of
Coke as being a substitute of water in the minds of consumers and thereby increase the intake of
coke, making it higher than the intake of water. For example, till recently Coke was actually
cheaper than water in Saudi Arabia which is why it became the most popular beverage in the
area.
Contingency Plan: Coke has its side effects on health. Day by day, we can see that the benefits of
drinking water are being highlighted on TV and internet. The trend of healthy drinks are increasing
therefore this strategy can backfire. In such a case Coke can introduce their other brands like Kinley and
Minute Maid.

Target Market
Coke should focus their efforts on countries with a growing population thereby increasing the
total beverage consumption of their product. Here the focus is not on per-head consumption but
on total beverage consumption. This is a strategy that can be focused upon in countries like
India.
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