Shiena Mae M.

Indac
BSED-MATH 1A

LESSON 4
THE GLOBAL ECONOMY

TAKE OFF:
Accomplish the Venn diagram below. Provide key concepts about the
words “Global” and “Economy”.

GLOBAL ECONOMY
 Interdependence  Trade
 Global citizenship  Financial markets
 Diversity  Technology
 Human rights  Economic system
 Sustainable  Entrepreneurs
development


TAKE ACTION:
Choose one international economic organization or an international
company (ex: Mcdo, Starbucks) and do the following tasks:
1. Research on the key factors of the chosen organization that
facilitate economic globalization
2. How does the organization view the modern world system?

Coca-Cola
The original Coca Cola was invented in 1886 by a pharmacist named
John Pemberton. The company was not incorporated, however, until 1892 by
another pharmacist named Asa Candler. Candler purchased the Coca-Cola
brand and formula in 1889. In recent years the soda industry has been the
source of much negative focus. For many companies this has had a
significant backlash. The Coca-Cola brand, however, has managed to
maintain its standing at the top of the industry.Today, Coca-Cola is
considered an American icon. It's unique taste and secret formula are a part
of what makes it different from its competitors; however, the highly successful
marketing of the Coca-Cola brand is the main factor which makes it stand
apart from other beverage companies.
Key success factors (KSFs) are important to future competitive success
of industry players. These factors comprise resources, product attributes,
competencies, market achievements and competitive capabilities etc. It is
very significant for the strategists to know the background of industry in order
to recognize the most significant competitive success factors. Because of
alteration in driving forces and competitive circumstances, the key success
factors (KSFs) of one industry diverge from other. The key success factors of
Coca-Cola are given below:

Strong global presence

Coca-Cola is a carbonated soft drink sold in the vending machines,

stores, restaurants in more than 200 countries. Coke’s marketing tactics and
global expansion strategies led it to dominate the world soft-drink industry
during the 20th century.

Licensed Bottlers

Coca-Cola’s bottling structure also permits the firm to take advantage of

immeasurable growth opportunities all over the world. This approach provides
Coke the opportunity to serve a greater geographic diverse area. The Coke
manufactures concentrate which is afterward sold to licensed Coca-Cola
bottlers all over the globe. The bottlers, who have territorially limited contracts
with the Coke, manufacture finished goods in bottles and cans from
concentrate in mixture with sweeteners and filtered water. The bottlers then
distribute and sell Coca-Cola to vending machines and retail shops.

High utilization of fixed assets

Coca-Cola’s bottling system allows it to operate on a global scale while

preserve a local approach. The bottling firms are locally operated and owned
by autonomous business persons who are authorized to trade brands of the
Coca-Cola Corporation. Because Coca-Cola does not have complete
possession of its bottling system, its major basis of revenue is the sale of
concentrate to its bottlers.

Advertising and differentiation

Coke mainly is competing on advertising and differentiation rather than

pricing. This resulted in higher profits and disallowed a massive depression in
profits. Soft drink industry needs huge amount of money to spend on
advertisement and marketing. In 2000, Coke and their bottler’s invested
approximately $1.3 billion. Coke has different advertisement campaigns
according to situation. Its advertising has significantly exaggerated American
culture and run different campaigns such as holiday and sport sponsorship etc
which attracts and appeal different segment.
Well recognized and cherished brand name

Brand recognition is the important feature affecting Coke’s competitive

spot. Coca-Cola’s brand name is recognized well right through 90 percent of
the world today. The main brand of the Coca-Cola Company is sold globally
and is recognized as the best-known brand name in the globe. More
prominently, its consumers would not do without it, and have confirmed a
loyalty. Coca-Cola also has further well-known brands on its lists – Sprite,
Evian, Fanta, PowerAde and Minute Maid.

Retail and distribution network

Coke provides significant margins to retailers up to 15-20%; these

margins are reasonably enough for retailers to keep Coke’s products. Coke
has strong network of convenience stores, fast food fountain, vending, food
stores, and restaurants etc globally.

Product innovation capabilities

The Coca-Cola Company offers different products lines according to the

specific needs, preferences and tastes of the customers such as Coca-Cola
Vanilla, Cola-Cola Zero, and Coca-Cola Cherry etc.

Breadth of product line

The Coca-Cola organization has occasionally launched other cola drinks

beneath the Coke brand name. The most familiar of these is Diet Coke with
supplementary including Diet Coke Caffeine-Free, Caffeine-Free Coca-Cola,
Coca-Cola Vanilla, Cola-Cola Zero, Coca-Cola Cherry and special versions
with lemon, coffee or lime. Coca-Cola franchises in different countries offer
different product lines.

For many companies, globalization proves to be a concept as empty as

that other corporate buzzword, synergy. But for the coca-cola company, the
process of going global is now so extreme and rapid that it’s business in the
United States has become secondary.

SELF-CHECK:
Argumentative Essay
Directions. Write an argumentative essay about your stand on the motion
“That global free trade has done more harm than good.”
 Before I state my stand about global free trade, let us define first what is
free trade. Free trade is a pact between two or more nations to reduce
barriers to imports and exports among them. Under a free trade policy, goods
and services can be bought and sold across international borders with little or
no government tariffs, quotas, subsidies, or prohibitions to inhibit their
exchange. So, does it really do more harm that good?

I believe that global free trade has done more good than harm and not
the other way around. Global free trade is one of the reasons of rapid
increase in living standards of those countries who does it. When there is free
trade, consumers can free to buy goods from the producer who is willing to
sell at the lowest price. In free trade, producers from different regions can
compete with each other in terms of price, quality and variety. Increased
competition leads to efficient allocation of resources. With lower cost, higher
profits, globalization helps developing countries take more profit, innovation
and environment stability. With it, it also helped under developing countries,
like Philippines, to gain more jobs for their workers. Another advantage of
global free trade is that it promotes peace and cooperation between nations.
The more nations trade with one another, the more they can benefit from each
other and help each other grow. In fact, one fascinating study in Stanford
University proved that the more trading partner a nation has, the less likely it
is to go to war. This make sense after all. Why would nations want to attack
countries that can either help provide them with goods, or serve as a market
to export to? The fact that trading partners are less likely to go to war with one
another is also incredibly significant to the entire world.

Ultimately, It is up to individual nations to decide whether free trade is in

their best interest. However, with so many compelling benefits, it is easy to
see why many nations have free trade agreements and more are still to come.

SELF-REFLECT:
In five sentences, articulate a stance on global economic integration.

Global economic integration is beneficial to us. More specifically,

economic integration typically leads to a reduction in the cost of trade,
improved availability of goods and services and a wider selection of them, and
gains in efficiency that lead to greater purchasing power. Employment
opportunities also tend to improve because trade liberalization leads to market
expansion, technology sharing and cross-border investment. The political
cooperation among countries improved also because of stronger economic
ties, which provide an incentive to resolve conflicts peacefully and lead to
greater stability.