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A Report on Strategic Planning Of COCA COLA
Subject: Strategic Management [MBA – Evening Program] Faculty: Sir Yousuf
Prepared & Presented by: Rohail Riaz (51515)
Strategic Planning
Table of Contents 1- EXECUTIVE SUMMARY...........................................................................................4 2- HISTORY OF COCA COLA.......................................................................................5 3- BRANDS OF COCA COLA.........................................................................................7 3.1- Energy Drinks...................................................................................................7 3.2- Juices/Juice Drinks............................................................................................7 3.3- Soft Drinks........................................................................................................8 3.5- Tea and Coffee.................................................................................................8 3.6 Water.................................................................................................................8 3.7- Other Drinks.....................................................................................................9
...........................................................................................................................................10 5- DIFFERENT PLAYERS IN THE SOFT DRINKS MARKET..............................11 Cadbury Schweppes are ed force of Cadbury found in 1824 of U.K. and Schweppes of Ireland founded in 1783. Cadbury Schweppes is unified bussing which manages the relations his with over 240 franchised bottling operation on Zambia and Zimbabwe. Cadbury Schweppes has fottlery and partnership operations in 14 countries around the world.................................................................................................................................11 6- OUR MISSION:..........................................................................................................11 7- OUR VISION:..............................................................................................................11 8- IMPROVED MISSION STATEMENT:...................................................................12 9- IMPROVED VISION STATEMENT:......................................................................12 10- CURRENT ORGANIZATIONAL CHART...........................................................16 11- E-COMMERCE:.......................................................................................................16 12- VALUE OF THE FIRM...........................................................................................17 13- KEY INTERNAL FACTORS
Weight
Rating weight Score
.................20
14- KEY EXTERNAL FACTOR...................................................................................21 15- COMPETITORS ......................................................................................................22 2
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16- SWOT ANALYSIS..............................................................................................23
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1- EXECUTIVE SUMMARY Coca-Cola, the product that has given the world its best-known taste was born in Atlanta, Georgia, on May 8, 1886. Coca-Cola Company is the world’s leading manufacturer, marketer and distributor of non-alcoholic beverage concentrates and syrups, used to produce nearly 400 beverage brands. It sells beverage concentrates and syrups to bottling and canning operators, distributors, fountain retailers and fountain wholesalers. Coca-Cola was first introduced by John Syth Pemberton, a pharmacist, in the year 1886 inAtlanta, Georgia when he concocted caramelcolored syrup in a threelegged brass kettle in his backyard. He first “distributed” the product by carrying it in a jug down the street to Jacob’s Pharmacy and customers bought the drink for five cents at the soda fountain. Carbonated water was teamed with the new syrup, whether by accident or otherwise, producing a drink that was proclaimed “delicious and refreshing”, a theme that continues to echo today wherever Coca-Cola is enjoyed. Coca-Cola originated as a soda fountain beverage in 1886 selling for five cents a glass. Early growth was impressive, but it was only when a strong bottling system developed that Coca-Cola became the world-famous brand it is today. Coca- Cola was the leading soft drink brand in India until 1977, when it left rather than reveal its formula to the Government and reduce its equity stake as required under the Foreign Regulation Act (FERA) which governed the operations of foreign companies in India. In the new liberalized and deregulated environment in 1993, Coca-Cola made its re-entry into India through its 100% owned subsidiary, HCCBPL, the Indian bottling arm of the Coca-Cola Company. The main objective of this study lies in understanding the organization and studying and understanding the consumers’ perception and opinion about the latest product, Minute Maid Pulpy Orange, introducedinto India, by the Coca-Cola Company. A consumer sampling involving 5.5 lakh people was conducted in a span of 30 days across major cities in order to give the product the required marketing push and to recognize the prospective consumers and their opinion in order to develop and market the product in a better way in the near future. The methodology used in studying and understanding the perceived views of consumers towards the product was ‘SAMPLING’. The findings of the activity have been drawn out in form of graphs and suggestions have been offered there from.
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2- HISTORY OF COCA COLA Coca-Cola® originated as a soda fountain beverage in 1886 selling for five cents a glass. Early growth was impressive, but it was only when a strong bottling system developed that Coca-Cola became the world-famous brand it is today. 1894 – A modest start for a Bold Idea In a candy store in Vicksburg, Mississippi, brisk sales of the new fountain beverage called CocaCola impressed the store's owner, Joseph A. Biedenharn. He began bottling Coca-Cola to sell, using a common glass bottle called a Hutchinson. Biedenharn sent a case to Asa Griggs Candler, who owned the Company. Candler thanked him but took no action. One of his nephews already had urged that Coca-Cola be bottled, but Candler focused on fountain sales. 1899 The first bottling agreement Two young attorneys from Chattanooga, Tennessee believed they could build a business around bottling Coca-Cola. In a meeting with Candler, Benjamin F. Thomas and Joseph B. Whitehead obtained exclusive rights to bottle Coca-Cola across most of the United States (specifically excluding Vicksburg) -- for the sum of one dollar. A third Chattanooga lawyer, John T. Lupton, soon ed their venture. 1900-1909 … Rapid growth The three pioneer bottlers divided the country into territories and sold bottling rights to local entrepreneurs. Their efforts were boosted by major progress in bottling technology, which improved efficiency and product quality. By 1909, nearly 400 Coca-Cola bottling plants were operating, most of them family-owned businesses. Some were open only during hot-weather months when demand was high. 1916 … Birth of the contour bottle Bottlers worried that the straight-sided bottle for Cocawas easily confused with imitators. A group representing Company and bottlers asked glass manufacturers to offer ideas for a distinctive bottle. A design from the Root Glass Company of Terre Haute, Indiana won enthusiastic approval in 1915 and was introduced in 1916. The contour bottle became one of the few packages ever granted trademark status by the U.S. Patent Office. Today, it's one of the most recognized icons in the world - even in the dark!
Cola the
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1920s … Bottling overtakes fountain sales As the 1920s dawned, more than 1,000 Coca-Cola bottlers were operating in the U.S. Their ideas and zeal fueled steady growth. Six-bottle cartons were a huge hit after their 1923 introduction. A few years later, open-top metal coolers became the forerunners of automated vending machines. By the end of the 1920s, bottle sales of Coca-Cola exceeded fountain sales. 1920s and 30s … International expansion Led by longtime Company leader Robert W. Woodruff, chief executive officer and chairman of the Board, the Company began a major push to establish bottling operations outside the U.S. Plants were opened in , Guatemala, Honduras, Mexico, Belgium, Italy, Peru, Spain, Australia and South Africa. By the time World War II began, Coca-Cola was being bottled in 44 countries. 1940s … Post-war growth During the war, 64 bottling plants were set up around the world to supply the troops. This followed an urgent request for bottling equipment and materials from General Eisenhower's base in North Africa. Many of these war-time plants were later converted to civilian use, permanently enlarging the bottling system and accelerating the growth of the Company's worldwide business. 1950s … Packaging innovations For the first time, consumers had choices of Coca-Cola package and type -- the traditional 6.5-ounce contour bottle, or larger servings including 10-, 12- and 26-ounce versions. Cans were also introduced, becoming generally available in 1960.
size
1960s … New brands introduced Following Fanta® in the 1950s, Sprite®, Minute Maid®, Fresca® and TaB® ed brand CocaCola in the 1960s. Mr. Pibb® and Mello Yello® were added in the 1970s. The 1980s brought diet Coke® and Cherry Coke®, followed by POWERADE® and DASANI® in the 1990s. Today hundreds of other brands are offered to meet consumer preferences in local markets around the world. 1970s and 80s … Consolidation to serve customers As technology led to a global economy, the retailers who sold Coca-Cola merged and evolved into international mega-chains. Such customers required a new approach. In response, many small and medium-size bottlers consolidated to better serve giant international customers. The Company encouraged and invested in a number of bottler consolidations to assure that its largest bottling partners would have capacity to lead the system in working with global retailers.
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1990s … New and growing markets Political and economic changes opened vast markets that were closed or underdeveloped for decades. After the fall of the Berlin Wall, the Company invested heavily to build plants in Eastern Europe. And as the century closed, more than $1.5 billion was committed to new bottling facilities in Africa. 21st Century The Coca-Cola bottling system grew up with roots deeply planted in local communities. This heritage serves the Company well today as people seek brands that honor local identity and the distinctiveness of local markets. As was true a century ago, strong locally based relationships between Coca-Cola bottlers, customers and communities are the foundation on which the entire business grows. 3- BRANDS OF COCA COLA
Coca-Cola Zero® has been one of the most successful product launch hes in Coca Cola’s history. In 2007, Coca Cola’s sold nearly 450 million cases globally. Put into perspective, that's roughly the same size as Coca Cola’s total business in the Philippines, one of our top 15 markets. As of September 2008, Coca-Cola Zero is available in more than 100 countries.
3.1- Energy Drinks
For those with a high-intensity approach to Coca Cola’s brands of Energy Drinks contain ingredients such as ginseng extract, guarana extract, caffeine and B vitamins.
life,
3.2- Juices/Juice Drinks We bring innovation to the goodness of juice in Coca Cola’s more than 20 juice and
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juice drink brands, offering both adults and children nutritious, refreshing and flavorful beverages. 3.3- Soft Drinks
Coca Cola’s dozens of soft drink brands provide flavor and refreshment in a variety of choices. From the original Coca-Cola to most recent introductions, soft drinks from The Coca-Cola Company are both icons and innovators in the beverage industry. 3.4- Sports Drinks
Carbohydrates, fluids, and electrolytes team together in Coca Cola’s Sports Drinks, providing rapid hydration and terrific taste fitness-seekers at any level
for
3.5- Tea and Coffee
Bottled and canned teas and coffees provide consumers' favorite drinks in convenient take-anywhere packaging, satisfying both traditional tea drinkers and today's growing coffee culture.
3.6 Water
Smooth and essential, our Waters and Water Beverages offer hydration in its purest form.
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3.7- Other Drinks
So much more than soft drinks. Coca Cola’s brands also include milk products, and more so you can choose a Coca Cola Company product anytime, anywhere for nutrition, refreshment or other needs.
soup,
4- CONSUMER CHOICE AT A GLANCE
Coca-Cola Mainly preferred by the Youngster & Kids. Thums-Up Youngster.
Limca Common Drink.
Fanta Basically Preferred by Ladies and Kids.
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Maaza Also Ladies and Kids.
Sprite Not clearly defines.
Kinley Soda Mostly those who consume liquor.
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5- DIFFERENT PLAYERS IN THE SOFT DRINKS MARKET PEPSI Caleb Brandhum, a North Caroline Pharmacist, structure Pepsi Cola In2 the 1890’s as cure of dyspepsia (indigestion). In 1902, Bradhum applied for a trade mark, issued ninety seven share of stock and began selling Pepsi syrup in earnest. In his first year of business he spend $1900 on advertising a huge sum that he sold only 8000 gallons of syrup. In 1905 Bradhum built Pepsi’s bottling plant. By 1907 he was selling 10,000 gallons a year, two years later, he hired a New York advertising agency. After ing through many troubles for some period now Pepsi is a market leader in international arence and is available in 187 Nations throughout the world. CADBURY SCHWEPPES Cadbury Schweppes are ed force of Cadbury found in 1824 of U.K. and Schweppes of Ireland founded in 1783. Cadbury Schweppes is unified bussing which manages the relations his with over 240 franchised bottling operation on Zambia and Zimbabwe. Cadbury Schweppes has fottlery and partnership operations in 14 countries around the world. 6- OUR MISSION: Our mission declares our purpose as a company. It serves as the standard against which we weigh our actions and decisions. It is the foundation of our Manifesto. (1) To refresh the world in body, mind and spirit. (2) To inspire moments of optimism through our brands and our actions. (3) To create value and make a difference everywhere we engage. 7- OUR VISION: Our vision guides every aspect of our business by describing what we need to accomplish in order to continue achieving sustainable growth. People: Being a great place to work where people are inspired to be the best they can be. Portfolio: Bringing to the world a portfolio of quality beverage brands that anticipate and satisfy people's desires and needs. Partners: Nurturing a winning network of customers and suppliers, together we create mutual, enduring value. Planet: Being a responsible citizen that makes a difference by helping build and sustainable communities.
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Profit: Maximizing long-term return to shareowners while being mindful of our overall responsibilities.
8- IMPROVED MISSION STATEMENT: (1) At Coca Cola we're committed to achieving business and financial success while leaving a positive imprint on society – delivering what we call Performance with Purpose. (2) Our mission is to be the world's premier consumer Products Company focused on convenient foods and beverages. We seek to produce financial rewards to in8vestors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity. 9- IMPROVED VISION STATEMENT: (1) Coca cola Co responsibility is to continually improve all aspects of the world in which we operate – environment, social, economic – creating a better tomorrow than today." (2) Our vision is put into action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholder value by making Coca cola Co a truly sustainable company.
Why it is improved:
There is It is our vision to be the best and leading provider of food and beverage products in Pakistan, to facilitate the people of Pakistan and we emphasis on consumer more rather than competitors we among the top ten food and beverage companies in the world, by continually challenging present conventions and always staying a step ahead of the competition.
It is our mission to be the number one food and Beverage Company in Pakistan by providing our customers with the highest product quality in of taste, experience, and satisfaction. We will ensure this through an unwavering dedication to the continuous development of our products and processes ensuring that we remain best in class. We will strive to hire the most competent and dedicated employees whose work ethic will set 12
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the standard in the industry. We will be paymasters, as we strongly believe that human resource is the only asset that truly appreciates over time. We will also be a responsible social corporate citizen, and strive to enhance the quality of life in the markets we serve.
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Comments on vision and mission (in of how they the strategies)
The vision statement of our company s the existing strategies that is (generic strategy) that Coca Cola needs to pursue is that of differentiation. In their current vision and mission statements, the company says it aims to be a low cost leader, yet through our thorough analysis of the strategic direction the company needs to adopt a generic strategy of differentiation. This will allow Coca cola to do three things; 1. Charge a 2. Increase unit sales 3. Gain buyer loyalty However, at the expense of sounding simplistic, it is necessary that the company communicate its differentiation to its customers, otherwise these three advantages will not avail themselves. Initially Coca cola will need to adopt a focused differentiation approach, which means that they should selectively choose which markets will profit them the most and then target only those markets until such provisions are in place from where the company is able to expand its target base. After which they should opt for a broad differentiation generic strategy. With the market just turning the bend to ‘saturation’, it is entering a phase of intense competition with all major players diversifying their product lines, ranges and even businesses into a versatile range of products to put in place more infantry on the battle ground to use to their advantage in this war of brands. Therefore, we believe that the current strategic objective of Coca cola should be to consolidate its existing brand, Coca cola through extensive strategic market research and consumer insights to be able to home in on the correct target market like a precision targeting missile rather than as an Anti-aircraft gun
MAP: Showing Workforce [71,000 in
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10- CURRENT ORGANIZATIONAL CHART CEO EVP/ President Bottling Invest/ Supply Chain
CFO and EVP
President of Eurasia Group
EVP/ President MKT Strategy
President European Union Market
President & COO
SVP & General Counsel
SVP & Director Human Resources
President of African Group
President Latin America Group
President of Pacific Group
SVP & Director Public Affairs/ Communi-cation
11- E-COMMERCE:
Good points: 16
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• • •
• • •
Brand Promotion Attractive products selection Look and feel 8 Provision of multimedia product, catalogue pages Personal attention Community relationships
Weak points: • •
Performance and service: that is not easy navigation, shopping and purchasing, and prompt shipping and delivery. Discount pricing is not being offered.
12- VALUE OF THE FIRM Financial and Value Review Defensive: 1) Size of firm Net worth of $16.92billion 2) Financial condition with a weighted current ratio of 0.94 Coke falls below the required 2, therefore they fail this test. 3) Earnings stability there has been positive net income for the past ten years and they 8 this test. 4) Earnings growth Earnings are greater than five years ago. . Overall we would not suggest Coke being placed in the defensive investor’s portfolio at this time. Opinion: Seeing that currently Coke is trading at a much higher price than our internal valuation we would be skeptical to purchase this security at this time. However, Coke is an excellent firm with great management, products, dividend history, and earnings. This stock we would place on our review list and periodically watch the share price to see if it dips and falls more in line with what we would be comfortable paying. Strengths
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World’s leading brand Coca-Cola has strong brand recognition across the globe. The company has a leading brand value and a strong brand portfolio. Coca-Cola is one of the leading brands in their top 100 global brands ranking in 2006.8The value of the Coca-Cola was $67,000 million in 2006. Coca-Cola ranks well ahead of its close competitor Pepsi which has a ranking of 22 having a brand value of $12,690 million Furthermore; Coca-Cola owns a large portfolio of product brands. The compan8y owns four of the top five soft drink brands in the world: Coca-Cola, Diet Coke, Sprite and Fanta. Strong brands allow the company to introduce brand extensions such as Vanilla Coke, Cherry Coke and Coke with Lemon. Over the years, the company has made large investments in brand promotions. Consequently, Coca-cola is one of the best recognized global brands. The company’s strong brand value facilitates customer recall and allows Coca-Cola to penetrate new m2arkets and consolidate existing ones. CocaCola Company, The large scale of operations with revenues in excess of $24 billion Coca-Cola has a large scale of operation. Coca-Cola is the largest manufacturer, distributor and marketer of nonalcoholic beverage concentrates and syrups in the world. Coco-Cola is selling trademarked beverage products since the year 1886 in the US. The company currently sells its products in more than 200 countries. Of the approximately 52 billion beverage servings of all types consumed worldwide every day, be8verages bearing trademarks owned by or licensed to Coca-Cola for more than 1.4 billion. The company’s operations are ed by a strong infrastructure across the world. Coca-Cola owns and operates 32 principal beverage concentrates and/or syrup manufacturing plants located throughout the world. In addition, it owns or has interest in 37 operations with 95 principal beverage bottling and canning plants located outside the US. The company also owns bottled water production and still beverage facilities as well as a facility that manufactures juice concentrates. The company’s large scale of operation allows it to feed markets with relative ease and enhances its revenue generation capacity. Robust revenue growth in three segments Coca-cola’s revenues recorded a double digit growth, in three operating segments. These three segments are Latin America, ‘East, South Asia, and Pacific Rim’ and Bottling investments. Revenues from Latin America grew by 20.4% during fiscal 2006, over 2005. During the same period, revenues from ‘East, South Asia, and Pacific Rim’ grew by 10.6% while revenues from the bottling investments segment by 19.9%. Together, the three segments of Latin America, ‘East, South Asia, and Pacific Rim’ and bottling investments, ed for 34.8% of total revenues during fiscal 2006. Robust revenues growth rates in these segments contributed to top-line growth for Coca-Cola during 2006. Weaknesses Negative publicity, Company received negative publicity in India during September 2006.The Company was accused by the Center for Science and Environment (CSE) of selling products containing pesticide residues. Coca-Cola products sold in and around the Indian national capital region contained a hazardous pesticide residue. These pesticides included chemicals
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which could cause cancers, damage the nervous and reproductive systems and reduce bone mineral density. Such negative publicity could adversely impact the company’s brand image and the demand for Coca-Cola products. This could also have an adverse impact on the company’s growth prospects in the international markets. Sluggish performance in North America Coca-Cola’s performance in North America was far from robust. North America is Coca-Cola’s core market generating about 30% of total revenues during fiscal 2006. Therefore, a strong performance in North America is important for the company. Summary in points: Strengths:
• • • • • • •
Leading brand value and a strong brand portfolio Coca-Cola, Diet Coke, Sprite and Fanta Large investments in brand promotions sells its products in more than 200 countries Company also owns bottled water production and still beverage facilities as well as a facility that manufactures juice concentrates. These three segments are Latin America, ‘East, South Asia, and Pacific Rim’ and Bottling investments Return on total assets increases over the period consistently 2005, 06, 07 15.47%, 16.55%, and 16.95% respectively.
Weaknesses:
• • • • •
Negative publicity in India Inventory turnover decreased by 13.29% Return on equity decreased by 40.50% Sluggish performance in North America Coca-Cola’s performance in North America was far from robust Collection form debtors decreased by 15.68%
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13- KEY INTERNAL FACTORS weight Score
Weight
Rating
Strengths Average customer purchases increased by 18.54%
0.11
2
0.22
Employee moral
0.05
3
0.15
Technical and research efficiency
0.08
1
0.08
Newspaper ment expenditures increased
0.09
4
0.36
Revenues from other segments
0.14
4
0.56
Debt to total asset ratio decline
0.05
2
0.10
Locations in the world
0.15
4
0.20
Inventory turnover decreased by 13.29%
0.10
3
0.30
Return on equity down decreased
80.11
1
0.11
Website
0.04
2
0.08
Supplier time delivery
0.08
1
0.08
Total
1.00
Weaknesses
2.24
Ranked 1 to 4. Low to High respectively. Current Evaluation: 2.24 Less than average of 2.50 Need efficiency in the Management, Marketing, finance, MIS, R & D, and other operations..
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14- KEY EXTERNAL FACTOR S. No.
Factor
Weight
Rate
Score
Opportunities 1 2 3
0.100 0.050 0.050
3.50 4.00 4.00
0.35 0.20 0.20
0.025
3.50
0.09
0.015
1.50
0.02
0.075
3.50
0.26
0.050
2.50
0.13
0.025
2.50
0.06
9 10 Opportunities - Total 11 Hurting products containing sugar & sugar-substitute based drinks (trend towards more healthy eating & drinking) 12 Increase in raw material costs 13 Government policies may hurdle in expansion 14 Government policies - for disclosure of health warning 15 Ban in public schools due to obesity issues 16 Lack in snacks business 17 Lack of share in homeland market (refer Exhibit 8) - room for other brands 18 Availability of purified water (being main component) in different parts of the world 19 Competitor may access unreached parts of the world prior to Coca Cola
0.025 0.015 0.430 0.100
3.00 3.00
0.08 0.05 1.43 0.40
0.075 0.075 0.100 0.075 0.075 0.015
3.50 4.00 4.00 3.50 3.50 2.00
0.26 0.30
0.025
3.50
0.09
0.015
3.50
0.05
20 Salesman not equipped with sales ordering devices Threats - Total
0.015 0.570
2.00
0.03 1.43
Grand Total
1.000
4 5 6 7 8
Entering into snacks business (Pepsi earns 60% from snacks) Expansion by taking over Cadbury division or product line Expansion by introducing new ready-to-drink products (tea, coffee, etc.) Entering into or introducing new sports events (e.g. Formula I) to introduce energy drinks Strong financial and assets available worldwide to take financing for expansion Introduce soft drink with focus of "healthy soft drink" - eliminate obesity concept Diversification of bottling business to other industries like pharmaceuticals Link with computer internet/network/cell gaming business to focus on youth worldwide - to take advantage of technology
4.00
0.26 0.03
2.86
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15- COMPETITORS •
Cadbury Schweppes plc
•
Nestle S.A.
•
PepsiCo, Inc.
•
Unilever
•
Procter & Gamble
•
Cott Corporation
•
Kraft Foods, Inc.
•
National Grape Cooperative
•
National Beverage Corp.
•
Quilmes Industrial S.A.
•
Quinenco SA
•
Yeo Hiap Seng Limited
•
Wimm-Bill-Dann Foods OJSC
•
Co-Ro Food A/S
•
Rynkeby Foods A/S
•
Spadel SA
•
Delta Holding S.A.
•
Spendrups Bryggeri AB
•
Pago
•
Hermann Pfanner Getraenke GmbH
•
J Garcia Carrion
•
Vitasoy International Holding Ltd
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16- SWOT ANALYSIS SWOT Analysis is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats inside a company, project, or a business venture. It involves identifying the internal and external factors that are favorable/unfavorable for business to succeed SWOT ANALYSIS
FOR COCA COLA COMPANY
STRENGTHS 1. 2. 3. 4. 5. 6. 7.
Brand equity/image & recognition Product distribution and worldwide network Solid financial performance One of the world's most recognized brand. Product diversification (water, juices, soft drinks, sport drinks, etc) Co-operate identity. Innovation
WEAKNESSES 1. Credit rating 2. Customer concentration, particularly in the US (Wal-Mart s for more than 10% of Coca Cola's business in the US) 3. A lot of loyal Pepsi customers are not enough loyal Coca Cola customers 4. Does not enjoy the number one position in India, Pakistan. OPPURTUNITIES 1. 2. 3. 4. 5. 6.
Possible growing demand. Expansion – Reaching all segments. Globalization Catering to Health Consciousness of People Bottled water growth Acquisitions of smaller players.
THREATS 1. 2. 3. 4. 5.
Health Drinks – Fruit Juice Companies Key competitors (Pepsi, etc) Commodity prices growth Image perception in certain parts of the world. Smaller, more nimble operators/players
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17- BCG MATRIX
Sr# 1 2 3 4 5 6 7 8 Total
Division Africa East South Africa & Pacific Rim European Union Latin America North America North Asia, Eurasia & Middle East Bottling Investment Corporate --
Profits $227.75
Percent Profits 4.00%
Percent Market Value 5
3.43%
$174.42
5.00%
10
$4,364
17.16%
$871.17
18.66%
45
$2,616
10.29%
$522.27
11.20%
35
$7,029
27.64%
$1,567.72
25.85%
60
$4,123
16.21%
$823.35
15.05%
40
$5,198
20.44%
$874.42
10.48%
20
$93 $25,435
0.37% 100.00%
$18.88 $5,079.98
9.76% 100.00%
15 -
Percent Revenues 4.48%
$872
Revenues $1,140
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Perce Grow Rat
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BCG MATRIX
From our Strategic Alternatives evaluation, we see that it is more attractive to outsource our distribution networks rather than launch a diet line of products. This is in line with their current strategic direction, and will allow Pakola to fortify their market reach before introducing new products that will be harder to push through the distribution channels.
18 -STRATEGIC GOALS: The strategic goals are considered when company is thinking of the long-term objectives but at coca cola strategic objectives and goals are set up for three years. These strategic goals are decide by the top management with consultation by the parent company head quartered at Singapore. However, they are reviewed every year in the annual meeting to make sure that they are in line with the changing environment. They are: To continue to be an organization providing the quality products to the valuable customers. To select and retain the professional people for the organization. To project an outstanding corporate image. To satisfy the customer through extra ordinary service and an excellent service along with the complete tactical and operational .
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19-TACTICAL GOALS: The top management of the company on an annual basis devises these goals together with the consultation of the lower level employees. Then each departmental director is given these annual tasks that then subdivide it on the quarterly or monthly basis to have a proper check to ensure that these objectives are achieved, mainly through marketing, is the job of the director of each division. For this year, these goals are:
To increase the revenues by 20% as compared to last year. To increase the total retail customers by around 10%. To increase the market share by 5%. To reactivate the discontinued customers by 30%.
20 - OPERATIONAL GOALS: Operational goals are decided by the top management in consultation with the lower level employees. They are following the concept of management by objectives (MBO). Each employee is assigned its goals and is told what is expected of him and then he is evaluated on the basis of certain rules and regulations followed evenly by the company. For example: a sales man is given following tasks, duties and certain targets: Each salesman has to oversee around 100-125 outlets. The frequency of visits to each outlet depends upon the sales of that particular outlet. Normally, a salesman has to visit a single outlet thrice a week i.e. every alternate day. This means that a salesman visits at least 20-30 outlets per day. The salesman has three basic functions to perform. • • •
To find new customers, To retain existing ones, To bring back the discontinued s.
Each salesman has to bring in at least three new s every month. These may either be new customers or the reactivation of the discontinued s. Sales manager is made responsible for the performance and achievement of operational goals and is assigned to set certain milestones for the salesman so as to give him proper , which definitely helps the salesman achievement of the above-mentioned goals.
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21- CONCLUSION: The Coca Cola Company has a very rich history and spread over the world, the study in this report specially the particular SPACE matrix tells us that Coca Cola Company should pursue an aggressive strategy. Coca Cola Company has a strong competitive position in the market with rapid growth. It needs to use its internal strengths to develop a market penetration and market development strategy. This includes focus on Water and Juices products, and catering to health consciousness of people through introduction of different coke flavor and maintaining basic coke flavor. Further company should integrate with other companies, acquisition of potential competitor businesses, innovation in branding and aggressive marketing strategy can bring long term profitability.
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Subject: Strategic Management [MBA – Evening Program] Faculty: Sir Yousuf
Prepared & Presented by: Rohail Riaz (51515)
Strategic Planning
Table of Contents 1- EXECUTIVE SUMMARY...........................................................................................4 2- HISTORY OF COCA COLA.......................................................................................5 3- BRANDS OF COCA COLA.........................................................................................7 3.1- Energy Drinks...................................................................................................7 3.2- Juices/Juice Drinks............................................................................................7 3.3- Soft Drinks........................................................................................................8 3.5- Tea and Coffee.................................................................................................8 3.6 Water.................................................................................................................8 3.7- Other Drinks.....................................................................................................9
...........................................................................................................................................10 5- DIFFERENT PLAYERS IN THE SOFT DRINKS MARKET..............................11 Cadbury Schweppes are ed force of Cadbury found in 1824 of U.K. and Schweppes of Ireland founded in 1783. Cadbury Schweppes is unified bussing which manages the relations his with over 240 franchised bottling operation on Zambia and Zimbabwe. Cadbury Schweppes has fottlery and partnership operations in 14 countries around the world.................................................................................................................................11 6- OUR MISSION:..........................................................................................................11 7- OUR VISION:..............................................................................................................11 8- IMPROVED MISSION STATEMENT:...................................................................12 9- IMPROVED VISION STATEMENT:......................................................................12 10- CURRENT ORGANIZATIONAL CHART...........................................................16 11- E-COMMERCE:.......................................................................................................16 12- VALUE OF THE FIRM...........................................................................................17 13- KEY INTERNAL FACTORS
Weight
Rating weight Score
.................20
14- KEY EXTERNAL FACTOR...................................................................................21 15- COMPETITORS ......................................................................................................22 2
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16- SWOT ANALYSIS..............................................................................................23
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1- EXECUTIVE SUMMARY Coca-Cola, the product that has given the world its best-known taste was born in Atlanta, Georgia, on May 8, 1886. Coca-Cola Company is the world’s leading manufacturer, marketer and distributor of non-alcoholic beverage concentrates and syrups, used to produce nearly 400 beverage brands. It sells beverage concentrates and syrups to bottling and canning operators, distributors, fountain retailers and fountain wholesalers. Coca-Cola was first introduced by John Syth Pemberton, a pharmacist, in the year 1886 inAtlanta, Georgia when he concocted caramelcolored syrup in a threelegged brass kettle in his backyard. He first “distributed” the product by carrying it in a jug down the street to Jacob’s Pharmacy and customers bought the drink for five cents at the soda fountain. Carbonated water was teamed with the new syrup, whether by accident or otherwise, producing a drink that was proclaimed “delicious and refreshing”, a theme that continues to echo today wherever Coca-Cola is enjoyed. Coca-Cola originated as a soda fountain beverage in 1886 selling for five cents a glass. Early growth was impressive, but it was only when a strong bottling system developed that Coca-Cola became the world-famous brand it is today. Coca- Cola was the leading soft drink brand in India until 1977, when it left rather than reveal its formula to the Government and reduce its equity stake as required under the Foreign Regulation Act (FERA) which governed the operations of foreign companies in India. In the new liberalized and deregulated environment in 1993, Coca-Cola made its re-entry into India through its 100% owned subsidiary, HCCBPL, the Indian bottling arm of the Coca-Cola Company. The main objective of this study lies in understanding the organization and studying and understanding the consumers’ perception and opinion about the latest product, Minute Maid Pulpy Orange, introducedinto India, by the Coca-Cola Company. A consumer sampling involving 5.5 lakh people was conducted in a span of 30 days across major cities in order to give the product the required marketing push and to recognize the prospective consumers and their opinion in order to develop and market the product in a better way in the near future. The methodology used in studying and understanding the perceived views of consumers towards the product was ‘SAMPLING’. The findings of the activity have been drawn out in form of graphs and suggestions have been offered there from.
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2- HISTORY OF COCA COLA Coca-Cola® originated as a soda fountain beverage in 1886 selling for five cents a glass. Early growth was impressive, but it was only when a strong bottling system developed that Coca-Cola became the world-famous brand it is today. 1894 – A modest start for a Bold Idea In a candy store in Vicksburg, Mississippi, brisk sales of the new fountain beverage called CocaCola impressed the store's owner, Joseph A. Biedenharn. He began bottling Coca-Cola to sell, using a common glass bottle called a Hutchinson. Biedenharn sent a case to Asa Griggs Candler, who owned the Company. Candler thanked him but took no action. One of his nephews already had urged that Coca-Cola be bottled, but Candler focused on fountain sales. 1899 The first bottling agreement Two young attorneys from Chattanooga, Tennessee believed they could build a business around bottling Coca-Cola. In a meeting with Candler, Benjamin F. Thomas and Joseph B. Whitehead obtained exclusive rights to bottle Coca-Cola across most of the United States (specifically excluding Vicksburg) -- for the sum of one dollar. A third Chattanooga lawyer, John T. Lupton, soon ed their venture. 1900-1909 … Rapid growth The three pioneer bottlers divided the country into territories and sold bottling rights to local entrepreneurs. Their efforts were boosted by major progress in bottling technology, which improved efficiency and product quality. By 1909, nearly 400 Coca-Cola bottling plants were operating, most of them family-owned businesses. Some were open only during hot-weather months when demand was high. 1916 … Birth of the contour bottle Bottlers worried that the straight-sided bottle for Cocawas easily confused with imitators. A group representing Company and bottlers asked glass manufacturers to offer ideas for a distinctive bottle. A design from the Root Glass Company of Terre Haute, Indiana won enthusiastic approval in 1915 and was introduced in 1916. The contour bottle became one of the few packages ever granted trademark status by the U.S. Patent Office. Today, it's one of the most recognized icons in the world - even in the dark!
Cola the
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1920s … Bottling overtakes fountain sales As the 1920s dawned, more than 1,000 Coca-Cola bottlers were operating in the U.S. Their ideas and zeal fueled steady growth. Six-bottle cartons were a huge hit after their 1923 introduction. A few years later, open-top metal coolers became the forerunners of automated vending machines. By the end of the 1920s, bottle sales of Coca-Cola exceeded fountain sales. 1920s and 30s … International expansion Led by longtime Company leader Robert W. Woodruff, chief executive officer and chairman of the Board, the Company began a major push to establish bottling operations outside the U.S. Plants were opened in , Guatemala, Honduras, Mexico, Belgium, Italy, Peru, Spain, Australia and South Africa. By the time World War II began, Coca-Cola was being bottled in 44 countries. 1940s … Post-war growth During the war, 64 bottling plants were set up around the world to supply the troops. This followed an urgent request for bottling equipment and materials from General Eisenhower's base in North Africa. Many of these war-time plants were later converted to civilian use, permanently enlarging the bottling system and accelerating the growth of the Company's worldwide business. 1950s … Packaging innovations For the first time, consumers had choices of Coca-Cola package and type -- the traditional 6.5-ounce contour bottle, or larger servings including 10-, 12- and 26-ounce versions. Cans were also introduced, becoming generally available in 1960.
size
1960s … New brands introduced Following Fanta® in the 1950s, Sprite®, Minute Maid®, Fresca® and TaB® ed brand CocaCola in the 1960s. Mr. Pibb® and Mello Yello® were added in the 1970s. The 1980s brought diet Coke® and Cherry Coke®, followed by POWERADE® and DASANI® in the 1990s. Today hundreds of other brands are offered to meet consumer preferences in local markets around the world. 1970s and 80s … Consolidation to serve customers As technology led to a global economy, the retailers who sold Coca-Cola merged and evolved into international mega-chains. Such customers required a new approach. In response, many small and medium-size bottlers consolidated to better serve giant international customers. The Company encouraged and invested in a number of bottler consolidations to assure that its largest bottling partners would have capacity to lead the system in working with global retailers.
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1990s … New and growing markets Political and economic changes opened vast markets that were closed or underdeveloped for decades. After the fall of the Berlin Wall, the Company invested heavily to build plants in Eastern Europe. And as the century closed, more than $1.5 billion was committed to new bottling facilities in Africa. 21st Century The Coca-Cola bottling system grew up with roots deeply planted in local communities. This heritage serves the Company well today as people seek brands that honor local identity and the distinctiveness of local markets. As was true a century ago, strong locally based relationships between Coca-Cola bottlers, customers and communities are the foundation on which the entire business grows. 3- BRANDS OF COCA COLA
Coca-Cola Zero® has been one of the most successful product launch hes in Coca Cola’s history. In 2007, Coca Cola’s sold nearly 450 million cases globally. Put into perspective, that's roughly the same size as Coca Cola’s total business in the Philippines, one of our top 15 markets. As of September 2008, Coca-Cola Zero is available in more than 100 countries.
3.1- Energy Drinks
For those with a high-intensity approach to Coca Cola’s brands of Energy Drinks contain ingredients such as ginseng extract, guarana extract, caffeine and B vitamins.
life,
3.2- Juices/Juice Drinks We bring innovation to the goodness of juice in Coca Cola’s more than 20 juice and
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juice drink brands, offering both adults and children nutritious, refreshing and flavorful beverages. 3.3- Soft Drinks
Coca Cola’s dozens of soft drink brands provide flavor and refreshment in a variety of choices. From the original Coca-Cola to most recent introductions, soft drinks from The Coca-Cola Company are both icons and innovators in the beverage industry. 3.4- Sports Drinks
Carbohydrates, fluids, and electrolytes team together in Coca Cola’s Sports Drinks, providing rapid hydration and terrific taste fitness-seekers at any level
for
3.5- Tea and Coffee
Bottled and canned teas and coffees provide consumers' favorite drinks in convenient take-anywhere packaging, satisfying both traditional tea drinkers and today's growing coffee culture.
3.6 Water
Smooth and essential, our Waters and Water Beverages offer hydration in its purest form.
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3.7- Other Drinks
So much more than soft drinks. Coca Cola’s brands also include milk products, and more so you can choose a Coca Cola Company product anytime, anywhere for nutrition, refreshment or other needs.
soup,
4- CONSUMER CHOICE AT A GLANCE
Coca-Cola Mainly preferred by the Youngster & Kids. Thums-Up Youngster.
Limca Common Drink.
Fanta Basically Preferred by Ladies and Kids.
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Maaza Also Ladies and Kids.
Sprite Not clearly defines.
Kinley Soda Mostly those who consume liquor.
10
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5- DIFFERENT PLAYERS IN THE SOFT DRINKS MARKET PEPSI Caleb Brandhum, a North Caroline Pharmacist, structure Pepsi Cola In2 the 1890’s as cure of dyspepsia (indigestion). In 1902, Bradhum applied for a trade mark, issued ninety seven share of stock and began selling Pepsi syrup in earnest. In his first year of business he spend $1900 on advertising a huge sum that he sold only 8000 gallons of syrup. In 1905 Bradhum built Pepsi’s bottling plant. By 1907 he was selling 10,000 gallons a year, two years later, he hired a New York advertising agency. After ing through many troubles for some period now Pepsi is a market leader in international arence and is available in 187 Nations throughout the world. CADBURY SCHWEPPES Cadbury Schweppes are ed force of Cadbury found in 1824 of U.K. and Schweppes of Ireland founded in 1783. Cadbury Schweppes is unified bussing which manages the relations his with over 240 franchised bottling operation on Zambia and Zimbabwe. Cadbury Schweppes has fottlery and partnership operations in 14 countries around the world. 6- OUR MISSION: Our mission declares our purpose as a company. It serves as the standard against which we weigh our actions and decisions. It is the foundation of our Manifesto. (1) To refresh the world in body, mind and spirit. (2) To inspire moments of optimism through our brands and our actions. (3) To create value and make a difference everywhere we engage. 7- OUR VISION: Our vision guides every aspect of our business by describing what we need to accomplish in order to continue achieving sustainable growth. People: Being a great place to work where people are inspired to be the best they can be. Portfolio: Bringing to the world a portfolio of quality beverage brands that anticipate and satisfy people's desires and needs. Partners: Nurturing a winning network of customers and suppliers, together we create mutual, enduring value. Planet: Being a responsible citizen that makes a difference by helping build and sustainable communities.
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Profit: Maximizing long-term return to shareowners while being mindful of our overall responsibilities.
8- IMPROVED MISSION STATEMENT: (1) At Coca Cola we're committed to achieving business and financial success while leaving a positive imprint on society – delivering what we call Performance with Purpose. (2) Our mission is to be the world's premier consumer Products Company focused on convenient foods and beverages. We seek to produce financial rewards to in8vestors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity. 9- IMPROVED VISION STATEMENT: (1) Coca cola Co responsibility is to continually improve all aspects of the world in which we operate – environment, social, economic – creating a better tomorrow than today." (2) Our vision is put into action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholder value by making Coca cola Co a truly sustainable company.
Why it is improved:
There is It is our vision to be the best and leading provider of food and beverage products in Pakistan, to facilitate the people of Pakistan and we emphasis on consumer more rather than competitors we among the top ten food and beverage companies in the world, by continually challenging present conventions and always staying a step ahead of the competition.
It is our mission to be the number one food and Beverage Company in Pakistan by providing our customers with the highest product quality in of taste, experience, and satisfaction. We will ensure this through an unwavering dedication to the continuous development of our products and processes ensuring that we remain best in class. We will strive to hire the most competent and dedicated employees whose work ethic will set 12
Strategic Planning
the standard in the industry. We will be paymasters, as we strongly believe that human resource is the only asset that truly appreciates over time. We will also be a responsible social corporate citizen, and strive to enhance the quality of life in the markets we serve.
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Comments on vision and mission (in of how they the strategies)
The vision statement of our company s the existing strategies that is (generic strategy) that Coca Cola needs to pursue is that of differentiation. In their current vision and mission statements, the company says it aims to be a low cost leader, yet through our thorough analysis of the strategic direction the company needs to adopt a generic strategy of differentiation. This will allow Coca cola to do three things; 1. Charge a 2. Increase unit sales 3. Gain buyer loyalty However, at the expense of sounding simplistic, it is necessary that the company communicate its differentiation to its customers, otherwise these three advantages will not avail themselves. Initially Coca cola will need to adopt a focused differentiation approach, which means that they should selectively choose which markets will profit them the most and then target only those markets until such provisions are in place from where the company is able to expand its target base. After which they should opt for a broad differentiation generic strategy. With the market just turning the bend to ‘saturation’, it is entering a phase of intense competition with all major players diversifying their product lines, ranges and even businesses into a versatile range of products to put in place more infantry on the battle ground to use to their advantage in this war of brands. Therefore, we believe that the current strategic objective of Coca cola should be to consolidate its existing brand, Coca cola through extensive strategic market research and consumer insights to be able to home in on the correct target market like a precision targeting missile rather than as an Anti-aircraft gun
MAP: Showing Workforce [71,000 in
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10- CURRENT ORGANIZATIONAL CHART CEO EVP/ President Bottling Invest/ Supply Chain
CFO and EVP
President of Eurasia Group
EVP/ President MKT Strategy
President European Union Market
President & COO
SVP & General Counsel
SVP & Director Human Resources
President of African Group
President Latin America Group
President of Pacific Group
SVP & Director Public Affairs/ Communi-cation
11- E-COMMERCE:
Good points: 16
Strategic Planning
• • •
• • •
Brand Promotion Attractive products selection Look and feel 8 Provision of multimedia product, catalogue pages Personal attention Community relationships
Weak points: • •
Performance and service: that is not easy navigation, shopping and purchasing, and prompt shipping and delivery. Discount pricing is not being offered.
12- VALUE OF THE FIRM Financial and Value Review Defensive: 1) Size of firm Net worth of $16.92billion 2) Financial condition with a weighted current ratio of 0.94 Coke falls below the required 2, therefore they fail this test. 3) Earnings stability there has been positive net income for the past ten years and they 8 this test. 4) Earnings growth Earnings are greater than five years ago. . Overall we would not suggest Coke being placed in the defensive investor’s portfolio at this time. Opinion: Seeing that currently Coke is trading at a much higher price than our internal valuation we would be skeptical to purchase this security at this time. However, Coke is an excellent firm with great management, products, dividend history, and earnings. This stock we would place on our review list and periodically watch the share price to see if it dips and falls more in line with what we would be comfortable paying. Strengths
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Strategic Planning
World’s leading brand Coca-Cola has strong brand recognition across the globe. The company has a leading brand value and a strong brand portfolio. Coca-Cola is one of the leading brands in their top 100 global brands ranking in 2006.8The value of the Coca-Cola was $67,000 million in 2006. Coca-Cola ranks well ahead of its close competitor Pepsi which has a ranking of 22 having a brand value of $12,690 million Furthermore; Coca-Cola owns a large portfolio of product brands. The compan8y owns four of the top five soft drink brands in the world: Coca-Cola, Diet Coke, Sprite and Fanta. Strong brands allow the company to introduce brand extensions such as Vanilla Coke, Cherry Coke and Coke with Lemon. Over the years, the company has made large investments in brand promotions. Consequently, Coca-cola is one of the best recognized global brands. The company’s strong brand value facilitates customer recall and allows Coca-Cola to penetrate new m2arkets and consolidate existing ones. CocaCola Company, The large scale of operations with revenues in excess of $24 billion Coca-Cola has a large scale of operation. Coca-Cola is the largest manufacturer, distributor and marketer of nonalcoholic beverage concentrates and syrups in the world. Coco-Cola is selling trademarked beverage products since the year 1886 in the US. The company currently sells its products in more than 200 countries. Of the approximately 52 billion beverage servings of all types consumed worldwide every day, be8verages bearing trademarks owned by or licensed to Coca-Cola for more than 1.4 billion. The company’s operations are ed by a strong infrastructure across the world. Coca-Cola owns and operates 32 principal beverage concentrates and/or syrup manufacturing plants located throughout the world. In addition, it owns or has interest in 37 operations with 95 principal beverage bottling and canning plants located outside the US. The company also owns bottled water production and still beverage facilities as well as a facility that manufactures juice concentrates. The company’s large scale of operation allows it to feed markets with relative ease and enhances its revenue generation capacity. Robust revenue growth in three segments Coca-cola’s revenues recorded a double digit growth, in three operating segments. These three segments are Latin America, ‘East, South Asia, and Pacific Rim’ and Bottling investments. Revenues from Latin America grew by 20.4% during fiscal 2006, over 2005. During the same period, revenues from ‘East, South Asia, and Pacific Rim’ grew by 10.6% while revenues from the bottling investments segment by 19.9%. Together, the three segments of Latin America, ‘East, South Asia, and Pacific Rim’ and bottling investments, ed for 34.8% of total revenues during fiscal 2006. Robust revenues growth rates in these segments contributed to top-line growth for Coca-Cola during 2006. Weaknesses Negative publicity, Company received negative publicity in India during September 2006.The Company was accused by the Center for Science and Environment (CSE) of selling products containing pesticide residues. Coca-Cola products sold in and around the Indian national capital region contained a hazardous pesticide residue. These pesticides included chemicals
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which could cause cancers, damage the nervous and reproductive systems and reduce bone mineral density. Such negative publicity could adversely impact the company’s brand image and the demand for Coca-Cola products. This could also have an adverse impact on the company’s growth prospects in the international markets. Sluggish performance in North America Coca-Cola’s performance in North America was far from robust. North America is Coca-Cola’s core market generating about 30% of total revenues during fiscal 2006. Therefore, a strong performance in North America is important for the company. Summary in points: Strengths:
• • • • • • •
Leading brand value and a strong brand portfolio Coca-Cola, Diet Coke, Sprite and Fanta Large investments in brand promotions sells its products in more than 200 countries Company also owns bottled water production and still beverage facilities as well as a facility that manufactures juice concentrates. These three segments are Latin America, ‘East, South Asia, and Pacific Rim’ and Bottling investments Return on total assets increases over the period consistently 2005, 06, 07 15.47%, 16.55%, and 16.95% respectively.
Weaknesses:
• • • • •
Negative publicity in India Inventory turnover decreased by 13.29% Return on equity decreased by 40.50% Sluggish performance in North America Coca-Cola’s performance in North America was far from robust Collection form debtors decreased by 15.68%
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Strategic Planning
13- KEY INTERNAL FACTORS weight Score
Weight
Rating
Strengths Average customer purchases increased by 18.54%
0.11
2
0.22
Employee moral
0.05
3
0.15
Technical and research efficiency
0.08
1
0.08
Newspaper ment expenditures increased
0.09
4
0.36
Revenues from other segments
0.14
4
0.56
Debt to total asset ratio decline
0.05
2
0.10
Locations in the world
0.15
4
0.20
Inventory turnover decreased by 13.29%
0.10
3
0.30
Return on equity down decreased
80.11
1
0.11
Website
0.04
2
0.08
Supplier time delivery
0.08
1
0.08
Total
1.00
Weaknesses
2.24
Ranked 1 to 4. Low to High respectively. Current Evaluation: 2.24 Less than average of 2.50 Need efficiency in the Management, Marketing, finance, MIS, R & D, and other operations..
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14- KEY EXTERNAL FACTOR S. No.
Factor
Weight
Rate
Score
Opportunities 1 2 3
0.100 0.050 0.050
3.50 4.00 4.00
0.35 0.20 0.20
0.025
3.50
0.09
0.015
1.50
0.02
0.075
3.50
0.26
0.050
2.50
0.13
0.025
2.50
0.06
9 10 Opportunities - Total 11 Hurting products containing sugar & sugar-substitute based drinks (trend towards more healthy eating & drinking) 12 Increase in raw material costs 13 Government policies may hurdle in expansion 14 Government policies - for disclosure of health warning 15 Ban in public schools due to obesity issues 16 Lack in snacks business 17 Lack of share in homeland market (refer Exhibit 8) - room for other brands 18 Availability of purified water (being main component) in different parts of the world 19 Competitor may access unreached parts of the world prior to Coca Cola
0.025 0.015 0.430 0.100
3.00 3.00
0.08 0.05 1.43 0.40
0.075 0.075 0.100 0.075 0.075 0.015
3.50 4.00 4.00 3.50 3.50 2.00
0.26 0.30
0.025
3.50
0.09
0.015
3.50
0.05
20 Salesman not equipped with sales ordering devices Threats - Total
0.015 0.570
2.00
0.03 1.43
Grand Total
1.000
4 5 6 7 8
Entering into snacks business (Pepsi earns 60% from snacks) Expansion by taking over Cadbury division or product line Expansion by introducing new ready-to-drink products (tea, coffee, etc.) Entering into or introducing new sports events (e.g. Formula I) to introduce energy drinks Strong financial and assets available worldwide to take financing for expansion Introduce soft drink with focus of "healthy soft drink" - eliminate obesity concept Diversification of bottling business to other industries like pharmaceuticals Link with computer internet/network/cell gaming business to focus on youth worldwide - to take advantage of technology
4.00
0.26 0.03
2.86
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15- COMPETITORS •
Cadbury Schweppes plc
•
Nestle S.A.
•
PepsiCo, Inc.
•
Unilever
•
Procter & Gamble
•
Cott Corporation
•
Kraft Foods, Inc.
•
National Grape Cooperative
•
National Beverage Corp.
•
Quilmes Industrial S.A.
•
Quinenco SA
•
Yeo Hiap Seng Limited
•
Wimm-Bill-Dann Foods OJSC
•
Co-Ro Food A/S
•
Rynkeby Foods A/S
•
Spadel SA
•
Delta Holding S.A.
•
Spendrups Bryggeri AB
•
Pago
•
Hermann Pfanner Getraenke GmbH
•
J Garcia Carrion
•
Vitasoy International Holding Ltd
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16- SWOT ANALYSIS SWOT Analysis is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats inside a company, project, or a business venture. It involves identifying the internal and external factors that are favorable/unfavorable for business to succeed SWOT ANALYSIS
FOR COCA COLA COMPANY
STRENGTHS 1. 2. 3. 4. 5. 6. 7.
Brand equity/image & recognition Product distribution and worldwide network Solid financial performance One of the world's most recognized brand. Product diversification (water, juices, soft drinks, sport drinks, etc) Co-operate identity. Innovation
WEAKNESSES 1. Credit rating 2. Customer concentration, particularly in the US (Wal-Mart s for more than 10% of Coca Cola's business in the US) 3. A lot of loyal Pepsi customers are not enough loyal Coca Cola customers 4. Does not enjoy the number one position in India, Pakistan. OPPURTUNITIES 1. 2. 3. 4. 5. 6.
Possible growing demand. Expansion – Reaching all segments. Globalization Catering to Health Consciousness of People Bottled water growth Acquisitions of smaller players.
THREATS 1. 2. 3. 4. 5.
Health Drinks – Fruit Juice Companies Key competitors (Pepsi, etc) Commodity prices growth Image perception in certain parts of the world. Smaller, more nimble operators/players
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17- BCG MATRIX
Sr# 1 2 3 4 5 6 7 8 Total
Division Africa East South Africa & Pacific Rim European Union Latin America North America North Asia, Eurasia & Middle East Bottling Investment Corporate --
Profits $227.75
Percent Profits 4.00%
Percent Market Value 5
3.43%
$174.42
5.00%
10
$4,364
17.16%
$871.17
18.66%
45
$2,616
10.29%
$522.27
11.20%
35
$7,029
27.64%
$1,567.72
25.85%
60
$4,123
16.21%
$823.35
15.05%
40
$5,198
20.44%
$874.42
10.48%
20
$93 $25,435
0.37% 100.00%
$18.88 $5,079.98
9.76% 100.00%
15 -
Percent Revenues 4.48%
$872
Revenues $1,140
24
Perce Grow Rat
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BCG MATRIX
From our Strategic Alternatives evaluation, we see that it is more attractive to outsource our distribution networks rather than launch a diet line of products. This is in line with their current strategic direction, and will allow Pakola to fortify their market reach before introducing new products that will be harder to push through the distribution channels.
18 -STRATEGIC GOALS: The strategic goals are considered when company is thinking of the long-term objectives but at coca cola strategic objectives and goals are set up for three years. These strategic goals are decide by the top management with consultation by the parent company head quartered at Singapore. However, they are reviewed every year in the annual meeting to make sure that they are in line with the changing environment. They are: To continue to be an organization providing the quality products to the valuable customers. To select and retain the professional people for the organization. To project an outstanding corporate image. To satisfy the customer through extra ordinary service and an excellent service along with the complete tactical and operational .
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Strategic Planning
19-TACTICAL GOALS: The top management of the company on an annual basis devises these goals together with the consultation of the lower level employees. Then each departmental director is given these annual tasks that then subdivide it on the quarterly or monthly basis to have a proper check to ensure that these objectives are achieved, mainly through marketing, is the job of the director of each division. For this year, these goals are:
To increase the revenues by 20% as compared to last year. To increase the total retail customers by around 10%. To increase the market share by 5%. To reactivate the discontinued customers by 30%.
20 - OPERATIONAL GOALS: Operational goals are decided by the top management in consultation with the lower level employees. They are following the concept of management by objectives (MBO). Each employee is assigned its goals and is told what is expected of him and then he is evaluated on the basis of certain rules and regulations followed evenly by the company. For example: a sales man is given following tasks, duties and certain targets: Each salesman has to oversee around 100-125 outlets. The frequency of visits to each outlet depends upon the sales of that particular outlet. Normally, a salesman has to visit a single outlet thrice a week i.e. every alternate day. This means that a salesman visits at least 20-30 outlets per day. The salesman has three basic functions to perform. • • •
To find new customers, To retain existing ones, To bring back the discontinued s.
Each salesman has to bring in at least three new s every month. These may either be new customers or the reactivation of the discontinued s. Sales manager is made responsible for the performance and achievement of operational goals and is assigned to set certain milestones for the salesman so as to give him proper , which definitely helps the salesman achievement of the above-mentioned goals.
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Strategic Planning
21- CONCLUSION: The Coca Cola Company has a very rich history and spread over the world, the study in this report specially the particular SPACE matrix tells us that Coca Cola Company should pursue an aggressive strategy. Coca Cola Company has a strong competitive position in the market with rapid growth. It needs to use its internal strengths to develop a market penetration and market development strategy. This includes focus on Water and Juices products, and catering to health consciousness of people through introduction of different coke flavor and maintaining basic coke flavor. Further company should integrate with other companies, acquisition of potential competitor businesses, innovation in branding and aggressive marketing strategy can bring long term profitability.
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