University of the Philippines Cebu

Management Division

CASE NO.

TITLE

Submitted to
Prof. Yvonne Gomos
, 2015

de Asis, Rose Camille O.

Pingoy, Valeriza Joy D.
Velasco, Alisa Marie G.

EXECUTIVE SUMMARY STATEMENT

For over a century, Coca-cola has become a dominant brand in the beverage industry
worldwide. It offers hundreds of brands and continuously operates in the seven geographical
regions to suit the varying customer preferences and changes within the environment that it is
operating. Coca-cola has various great distribution network, possess and excellent brand
reputation and good marketing campaigns that allows it to leverage and differentiate itself from
its competitors.
Several external and internal occurrences such as the weakening dollar, fast-paced technology
changes, varying tastes of customers have changed the course of Coca-colas operations and
business processes. In order for it to remain competitive within the industry, Coca-cola must
pursue a market penetration strategy.
Market penetration aims to increase market share through intensive marketing campaigns such
as tapping sport persons and athletes to serve as brand ambassadors of the companys
carbonated and healthy beverages. As mentioned earlier, the company possesses the existing
facilities, resources and expertise that could aid in marketing and providing availability for their
products. Promotional campaigns and features that shows the benefits of Coca-colas products
that are developed through an appropriate mix of pricing and quality concerns could contribute
in improving market share because the customers are perceiving that Coca-cola is also a
company that offers healthy products and would go away with the common perception that only
PepsiCo provides healthy beverages to the market.

1.0 STATEMENT of the PROBLEM/ IDENTIFICATION of KEY PROBLEM(S) AND

STRATEGIC ISSUES

2.0 VISION and MISSION STATEMENT

2.1. Existing Mission Statement
Coca-Cola Companys current vision statement is a three-fold, and as follows:

To refresh the world in body, mind and spirit.

To inspire moments of optimism and happiness through our brands and our actions.
To create value and make a difference everywhere we engage.

2.2 Existing Vision Statement

Our vision serves as the framework for our Roadmap and guides every aspect of
our business by describing what we need to accomplish in order to continue achieving
sustainable, 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.

2.3 Evaluation of the Existing Vision and Mission Statements

Mission Statement Evaluation
A mission statement defines what an organization is, why it exists, and its reason for
being. To evaluate the existing mission statement of Coca-Cola, the nine (9) components should
be considered whether they were stated in the companys existing mission statement or not. An
effective mission statement will include all 9 components being illustrated in the companys
mission statement. The nine components are as follows:
Customers. Coca-Cola offers its products to more than 200 countries around the world. And it is
evident in the companys mission statement that its customers are everyone all across the
globe, as represented by the term world.
Products or services. Coca-Cola used the term refresh which vaguely meant drinks. The
company envisioned that they were to bring happiness to the consumers through its different
brands.
Markets. As previously mentioned, Coca-Colas customers are the people across the world.
Having this being said, the companys market(s) is the world.
Technology. It was not illustrated in the companys mission statement with regards to how they
are doing with their technology or of being technologically innovative.
Concern for survival, growth and profitability. The company aspires to create value and make a
difference everywhere it engages. Creating value would translate into the company growing and
being profitable. If the company is able to satisfy its consumers, refreshing them with the
different brands it offers, then it would translate to an increase in the companys sales thus
improving the status of the company as a whole.
Philosophy. Among the companys beliefs are the creating value and making a difference. Also,
the company firmly stands that it will be inspiring moments of optimism and happiness.
Self-concept. Coca-Cola has not named what its distinctive competence or major competitive
advantage is. It is important that the company would include this characteristic in its mission
statement because it would guide them in their operations in order to perform better and be the
market leader.

Concern for public image. How the company responds to the varying social and environmental
concerns was no explicitly illustrated in the mission statement. The companys concern for
public image is answered by the optimism and happiness that it inspires the public, and the
value and difference that it brings in everywhere it engages. Its obligation and contribution to the
society should be stated.
Concern for employees. The company gave much importance to its employees, regarding them
as valuable assets. Although this is the case, Coca-Cola has not illustrated in its mission
statement how it gives value to its employees.

The Coca-Cola Companys has mentioned that it hopes to refresh the world, to inspire
moments of optimism and happiness, and to create value and make a difference. The
companys mission statement is clear enough for the readers to understand. After evaluating its
mission statement using the 9 components, the group found that Coca-Colas mission statement
lacks some of the components.

Vision Statement Evaluation

The vision statement identifies what the company would like to achieve or accomplish in
the long run. As what could be observed in the companys vision statement, -----. To evaluate
the vision statement, the group used the nine components used to evaluate the mission
statement.
Customers. The companys existing vision statement identified its customers being one
of its partners whom the company creates value with.
Products or services. The vision statement mentioned that the company has a portfolio
of quality beverage brands. These brands of beverages sought to satisfy the needs and desires
of the customers.
Markets. As what could be observed in the Portfolio section of Coca-Colas vision
statement, the market was identified to be the world.
Technology. The company envisioned to be a highly-effective, lean and fast-growing
organization. This is especially important in a highly modernized and globalized economy that
we have now since being technologically innovative would help the company stay competitive.
Concern for survival, growth and profitability. Coca-Colas commitment to growth and
financial soundness is demonstrated in its vision for its profit. The company has recognized that
it should be maximizing long-term return for its shareowners. Also, it is gearing towards being a
fast-moving organization.
Philosophy. The company believes in inspiring its employees to be the best they can be.
Also, the company has taken much emphasis on the value that they create with their network of
customers and suppliers.
Self-concept. The company excels in its advertising and marketing campaigns that are
tailored for the countries that they are operating. Coca-cola invests heavily on its marketing
strategies to further improve their market share.

Concern for public image. Coca-Colas vision statement shows that it has concern for
the environment, as suggested by their vision for the planet. The company aims at being mindful
of its responsibilities not just to its shareowners but also to the planet.
Concern for employees. The company gave much value to its employees and so it
aspires to provide employees a place that is great to work at and where these employees would
be inspired to be the best they can be.
Generally, Coca-Colas existing vision statement is very thorough and has included what
it wants to achieve in the long run for the organization and for different sectors be it for the
employees, the products, the society, and shareowners among others.
2.4 Proposed Vision and Mission Statements
Although the company operates and engages itself in a fast-changing environment with
a lot of rivals operating in the different parts of the world that offers beverage products, the
companys current Vision and Mission statements are still applicable for them in the long run
because of it reflects their commitment to their stakeholders, customers, employees and
managements and other publics.

3.0 STATEMENT of OBJECTIVES

4.0 ANALYSIS of the EXTERNAL ENVIRONMENT

4.1 Assessment of the Firms Opportunities and Threats
4.1.1 Social, Economic, Political and Ecological Factors (VAL)
Coca-Cola Company is a multinational company based in the Atlanta, Georgia,
producing and distributing beverage products in several countries all across the globe. The
company, operating not just in the US, is faced by various factors domestically and
internationally that may leave major impacts to the company.
There has been a growing trend of consumers preferring and purchasing more healthy
drinks and snacks. Parents want to maintain a healthy lifestyle for their children. Because of
this, parents have increased their spending for more naturally healthy and organic foods. The
company is threatened by this trend since it produces traditional sugar and sugar-substitutebased drinks. However, this trend also serves as an opportunity for the company. More healthy
products or drinks could be produced by Coca-Cola in order to capitalize on this opportunity. An
example would be one of Coca-Colas brands, Minute-Maid, which uses high-quality fruits and
fruit juices. Urban consumers have also increased their health consciousness in order to cope
better with their busy lifestyle. Coke has introduced new products in order to address this issue
and that is through Diet Coke, which contains lesser calories than the ordinary Coca-Cola drink.
Generally, this trend on healthier eating and drinking has been responsible for Coca-Colas
shifting focus from carbonated drinks to fruit drinks or juices and bottled water.
In addition to the growing trend towards healthier eating and drinking, the United States
has taken into consideration the fact that more and more children are becoming obese. CDC

(2013) defined childhood obesity as the result of eating too many calories and not getting
enough physical activity. Because of the growing problem of child obesity, many states in the
United States have implemented federal regulations banning the selling of some soft drink
brands in public schools. School beverage guidelines were implemented in order to control the
shipment of beverages, especially full-calorie soft drinks, to schools (ABA, 2015). Because of
such regulation, beverage mix in schools have resulted to a continued shift to waters, portioncontrolled sports drinks, diet drinks, and 100 percent juices (ABA, 2015).
One ecological factor that may affect the operation of Coca-Cola is the problem on the
limitation of water. Water is a limited resource and it is especially true in many parts of the world.
The problem with water supply is a big challenge for Coca-Cola most especially since water is
known to be the main substance in the manufacturing of soft drinks. This serves as a threat to
the company since costs in manufacturing the products increases. However, at present, many
major multinational companies are addressing this issue and are actively working to improve
water availability, quality and sustainability, for both continuing their operations and for the
benefit of the communities where they operate (Biswas & Bozer, 2015). Another ecological
factor that is a threat to the company is in terms of the natural disasters that seem inevitable.
These disasters are not under the companys control and they bring great damage to the
company. One natural disaster for example that had struck the company is the Hurricane that
took place in Florida in 2006. Coca-Cola acquires their supply for oranges, to be used in the
production of fruit juices or drinks, in the said state. The hurricane left a huge damage,
destroying the orange plantations, and leaving the companys production to a halt.
Coca-Cola has also been involved in issues regarding environmental pollution. In India,
the company has earned the reputation toxic-cola because of the atrocious activities its been
practicing which involves polluting the people, the water and the land (Srivastava, 2006). CocaCola threw its wastes in surrounding areas causing land pollution and also affecting the
groundwater thereby making it unfit for human consumption. The pollution that the company
have caused brought with it the effect of having its sales in the region decreased. Issues and
scrutinies such as this one are very harmful for any company because not only will it affect the
company financially, but it will also result to a tarnishing of the companys reputation to its
consumers and the general public.
An economic factor that brings a major threat to Coca-Cola is that the dollar has
weakened compared to other countries currencies. The company draws approximately 72
percent of their revenues outside the United States. Foreign exchange rates play a huge part in
the process. This foreign exchange is the value of one currency relative to another countrys
currency. When the economy of lets say the Philippines is doing well, the PHP appreciates and
the USD depreciates. When this happens, it would mean that it would take Coca-Cola

4.1.2 Product/Service and Technological Factors

The trend towards a healthy lifestyle dictates the needs for products that have high
nutritional content and veer away from those sugar-based ones. Due to this drift in the
consumers taste, Coke fears declining sales from their traditional sugar and sugar-substitutebased drinks. However, to continue satisfying Cokes consumers, the company is gearing
towards drinks with high nutritional values such as Minute Maid Forte in Mexico, flavored water
in Colombia, and 100% Cepita juice in Argentina. Moreover, Coke is trying to outsmart PepsiCo

by trying to foray the brewable coffee industry through their dispensing technology via the Far
Coast brand. Coke is doing test marketing efforts for this huge plan. This technology that Coke
will be using enables astounding speed in the process of preparing brewed coffee for customers
from establishments like restaurants, cafes, and kiosks (Rubner, 2006). This venture towards
the coffee industry entails an advantage since the markets overall consumption of coffee is
increasing while the sales in carbonated soft drinks is dropping in some certain areas (Rubner,
2006).
The Coca-Cola Company offers several refreshment products yet the company is known
for its carbonated drinks. In the production of these drinks, ingredients include water, sugar,
carbon dioxide, and their secret concentrate labeled as the merchandise 7X. With the increase
in manufacturing costs per unit of water in areas where water is limited, Coca-Cola aims to
enhance the manufacturing process of water so as to lessen costs. This new technology,
labeled as the new water recovery system, is expected to solve Coca-Colas dilemma with the
rising water costs because this advancement could turn wastewater into water that is suitable
for drinking (Clancy, 2012). According to Heather Clancy, a journalist specializing in
transformative technology and innovation, The giant beverage company figures it could save
close to 26.4 billion gallons of water annually across its global bottling operations (Clancy,
2012). Sugar is another main ingredient in the production of Coca-Colas products and the most
controversial one due to health concerns. In the latest discovery, a shrub that is used as
sweetener in South America could reduce this health concerns. Stevia is a natural sweetener,
200 times sweeter than sugar and is considered friendly to those people with diabetes since it
does not raise blood sugar levels in the body (Hagan, 2014).

4.1.3 Industry and Competitive Factors (CAMILLE)

Rivals
The soft drink industry is made up primarily of Coca-cola and Pepsi because they hold
majority of the market share of this industry. Competition is fierce as evidenced by the intense
advertising campaigns rather than by engaging in price competition to allow their brands to
differentiate from one another and gain additional market share. Both Coca-cola and Pepsi offer
a wide range of beverage products such as bottled water, juices and carbonated drinks. Major
activities and sports events were also sponsored by these soft drink giants with Coca-cola
sponsoring NBA, NCAA and the Olympic Games while Pepsi focused its efforts on the National
Football League and the International Cricket Council. Compared to Coca-cola, PepsiCo
positioned itself in the minds of health-conscious consumers because of their better for you
products. These large companies are expanding into every niche of the market by adding new
products and to take away market share from competitors to grow. Other soft drink companies
operating in other places of the world are becoming increasingly popular such as the Cadbury
Schweppes PLC which possess strong regional presence in the America and Australia regions.
Bargaining power of suppliers
The bargaining power of suppliers towards Coca-cola is low because the company
operates in a large scale basis. Although the company interacts with various bottling equipment
manufacturers and secondary packaging suppliers, Coca-cola owns about 36% of the Cocacola Enterprises, the largest Coke bottler in the world. Moreover, the companys suppliers offer

the same and readily available products therefore Coca-cola, when suppliers decide to exert
some influence over the company, Coca-cola could easily switch to another supplier.
Threat of Substitute products
The drinking industry has shifted because health-conscious customers are now
patronizing bottled water, juices and sports drinks. The increasing varieties of water and sports
drinks also appeal to the different tastes of the consumers. Caffeine, which is found in soft
drinks could also be obtained from coffee and tea. In particular, a lot of tea shops and blend
coffee stores are sprouting all over the world. It is relatively cheap for customers to switch to
these substitutes coffee and tea because these items are priced lower or at par with the soft
drink products. In addition, these beverages are available in ready-to-drink packages, which
made them easily accessible and convenient to the buyers.
Bargaining Power of Buyers
The bargaining power of bulk buyers is high while for individual purchasers is low. The
frequent buyers of Coca-cola are the large grocery stores and restaurants who purchase Cocacola products in large volumes so they could ask for bulk discounts. Individual buyers are also
becoming health-conscious nowadays that is why they are purchasing and consuming less soft
drinks. The bargaining power of these customers could increase due to the decreasing demand
for soda products. Since soft drinks are not that important for survival, customers who are
sensitive of the price are willing to change brand preference if its product becomes more
expensive. Meanwhile, in a research done in America last 2013, an average American drinks
over 38.6 gallons of soda each year yet, since the average price of a soft drink is under $ 2.00,
making individual purchase relatively insignificant.
Threat of New Entrants
Brand Loyalty. Coca-cola and Pepsi are the dominant players in the soft drink industry. These
companies have been offering soda drinks to the world for decades and they are considered
established companies with famous brand names, thus entering the industry would be difficult.
High capital investments. In order for new companies to engage themselves in operating in the
soft drink industry, they must High fixed costs for warehouses, trucks, labor and economies of
scale; difficult to compete in price without the economies of scale
Setup. Apart from the fixed investments, new entrants must consider supplier relationships to
ensure the timely and quality supply of raw materials. Further, distribution channels should also
be laid well so that the customers could easily access or purchase their products.
Absolute cost advantages. A lot of companies such as Coca-cola, are starting to locate their
plants and factories in Asian countries like China and India to exploit cost and performance
advantages.
New offerings. New entrants must offer differentiated products or invest heavily in marketing in
order to effectively promote, position their products and obtain a part of the established brands

market share. In addition, because of the heavy fundings of the existing established companies
in their R & D and commitment to product innovation, Coca-cola and Pepsi still continuously
bring out new products to the market.

4.2 The External Factor Evaluation (EFE) Matrix

4.3. The Competitive Profile Matrix (CPM)

5.0 ANALYSIS of the INTERNAL ENVIRONMENT

5.1 Profile of Current Strategy
5.1.1 Concept of Business (VAL)
What customer functions does it provide?
Coca-Cola is the worlds largest beverage company, with more than 500 sparkling and
still brands at present. The company provides various non-alcoholic beverages such as
carbonated drinks, sports drinks, ready-to-drink coffees, juices and juice drinks, and bottled
water. Cokes products are positioned relatively high in the market compared to the products of
competing companies as suggested by their market share being the largest in the beverage
industry. The companys advertising campaigns pretty much captivated the attention of viewers
and these have brought positive feedbacks to the company. Coca-Cola (2012) provide
beverages that offer hydration, refreshment, and moments of affordable happiness for people
worldwide. The companys products quenches the thirst of consumers and thus the
consumption of the companys products are higher during the summer season, wherein the
climate is hot. Generally, the Coca-Cola products aims to provide beverages that satisfy the
needs of the consumers. The company recognizes the different needs of the consumers and
produces the products that could satisfy these consumers.
What customer segments does it serve?
The company is a multinational beverage company. Coca-Cola produces non-alcoholic
products and basically everyone can drink its beverages. However, having market segments
helps the company improve with its products and services. The company has been innovative
with the different products that they offer. There are drinks which targets different age groups,
lifestyles, etc. Take for example Diet Coke, Coke Zero, among others. Because people are now
more health conscious, they have taken their concern into great consideration such that they
really keep an eye on the ingredients of different snacks and drinks. Trends such as this one
has influenced Coke to produce healthier products. Another example is Coca-Colas sports drink
brand, Powerade. This drink targets athletes or consumers with an active lifestyle, specifically.
The various Coca-Cola products are sold all around the world, to people of diverse population.
What is the degree of vertical integration?
The consumption rate of Coca-Cola beverages across more than 200 countries is at 1.4
billion servings a day. With this in mind, the company produces its products at a large volume

every day. The company operates in multiple channels. The company has various suppliers
providing the company with the ingredients for the beverages, materials for packaging and
machinery among others. In addition to this, Coca-Cola operates as manufacturers of
concentrates, beverage bases and syrups and the company sells these to bottling investments.
The Coca-Cola System, as mentioned by Coca-Cola (2015), owns the various brands and is
responsible for consumer brand marketing initiatives. Because the company has various bottling
investments, they have no doubt not much of a problem regarding the manufacturing of the
beverages. The bottling investments of the company has the responsibility of manufacturing,
packaging, merchandising and distributing the final branded beverages to the companies
retailers, vending partners and customers. Coke is known to have the largest beverage
distribution system in the world, with more than 900 bottling and manufacturing facilities at
present. This being the case, Coca-Cola is able to distribute its products to more geographic
locations, reaching its customers in different areas. The company is pretty much vertically
integrated as suggested by the number of value chain stages that its operating in.
With what technology does the organization perform its customer functions?
Coca-Cola reaches out to its consumers through media. The company makes use of
advertising campaigns which attracts a huge amount of buzz from the public. Among the
companys most recent digital campaign is Share a Coke which gives people the chance to
order personalised Coke bottles. This campaign brought a massive success on social network
causing an increased by 870% traffic on the Coke Facebook site (Moth, 2013). The companys
website is up-to-date, providing recent updates about their company. Information becomes
readily available in the process. Another program launched by Coke is the My Coke Rewards
which started in 2006. This program was developed by Coca-Cola in order to reward its
consumers for picking Coca-Cola beverages.
In order to effectively pursue the different campaigns and programs that Coca-Cola have
for its consumers, it is important that the products are readily available to the end users. As
earlier mentioned, the company has the worlds largest distribution system thus it is able to
distribute its products to more geographic locations. Because of this, Coke products could be
bought and enjoyed by consumers with convenience. Beverages of Coke are distributed to
grocery stores, retailers, street vendors, and restaurants making it more accessible for
consumers to enjoy the drink. Vending machines are also effective means in making Coke
beverages more available.

5.1.2 Concept of Competition (CAMILLE)

Coca-cola operates in a highly competitive business environment that offers more or less the
same products with the same price that caters to the same needs of the consumers. As
mentioned in the case however, sales in India and Philippines dropped in 2006 because of
affordability issues. In 2006, the percentage of Filipinos who are living below the poverty line is
28.8 percent and if a family needs to support basic needs such as food and water (Rappler,
2013), purchasing a product that is not essential for survival like Coke which costs about P20 is
not part of the daily budget. Therefore, Coke needs to maintain or offer budget-priced items
such as Coke Sakto in countries like the Philippines to remain competitive. Such endeavor

would require strict adherence to quality control measures, efficient systems processes and
affordable yet quality raw materials to lessen costs.
However, in order to maintain and improve further the companys market share, the company
needs to differentiate itself from its competitors. Since Coke is a well-renowned brand, it is
perceived to be of superior quality coupled with its high brand image and recognition. Moreover,
the Coca-cola bottle has become an international symbol that is recognizable worldwide due to
the companys intensive promotion and packaging strategies. In 2010 alone, Coca-cola spent
$2.9 billion on advertising, which is much more compared to Microsoft with $1.6 billion and
Apple with $ 691 million combined on the same year (Bhasin, 2011).
Intended competitive position
These key success factors that would enable a company operating in the soft drink industry to
succeed are possessed by Coca-cola Company, which makes them undeniably the market
leader in this industry.
Product Innovation. This term is defined that could be the changes in the design of existing
products, the use of new materials or ingredients or the development of entirely new products.
The changing customers wants, demands and preferences including other external factors
paved the way for soft drink industry players to improved and maintain their position by varying
their product tastes, ingredients used and product storage. Coca-cola recently launched Cocacola Life, by offering the first-ever reduced-calorie sparkling cola that is sweetened by cane
sugar and stevia leaf extract. According to the company page, this beverage is said to have 35
percent fewer calories than other colas (Journey Staff, 2014). To further cater to the increasingly
health conscious trend and prevent wastage, Coca-cola started introducing smaller portion
packages such as 7.5 oz. mini cans and 8 oz. glass bottles (Coca-cola Ambassador, 2013).
Strong global presence. Although the United States remains to be a top consumer for soft drinks
and other carbonated drinks, In order for soft drink companies to access an extensive global
reach, they have utilized various ways and selling points such as vending machines, stores,
restaurants and eateries. The United States market for soft drinks is becoming saturated, that is
why these companies are pursuing global expansion. For Coca-cola, its products are patronized
worldwide as evidence by this percentage of market share - Coca-cola (50%), PepsiCo (21%),
Cadbury Schweppes at 7%. Accordingly Coke products are not available in the countries of
Cuba and North Korea.
Size of the organization. The organization size is also critical in bringing success because large
organizations produce more products and possess connections such as large distributors that
would also be establishing relationships to schools, stadiums, groceries and restaurants.
Ability to manage external contracts. Companies should also consider and effectively manage
outsourcing non-core functions to lower costs and this would allow them to focus on what they
do best such as product innovation and advertising. Coca-cola relied on its contracts with
various independent companies the Mosanto Chemical Company, Hershey Chocolate
Company and others that obtain, processes and refine the critical materials used in creating the

carbonated drinks. This is also a beneficial strategy for Coca-cola because the company could
now focus on performing what they do best, which is the manufacture of the syrups and
advertising which entails low cost and high efficiency for their part.
Price. Consumers who dont have a strong brand preference will purchase the product with the
most competitive price and the company offers products that are more or less the same price
with their competitors which is evident by the low switching cost from one brand to another or
one beverage to another.
Marketing and Differentiation. The soft drink industry is characterized by its tough competition,
therefore, the major players are investing heavily on their advertising and research and
development to drive demand for their products. According to Quester (1998), an important and
effective marketing practice used by the players in the soft drink industry would include the
corporate sponsorship in sports and other activities because of the extensive television press
coverage that appeals to everyone from different countries and relates universal messages of
hope, pain or victory (as cited in Saeidinia, et. al, 2012). Coca-cola is one of the official
sponsors of the 2014 Sochi Winter Olympics and it contributed in generating an 11% growth in
the Russian unit case volume in 2014 (Bailey, 2014). In addition, in a study done with reference
to the Pepsi Challenge organized by PepsiCo in 1979, it was concluded the possibility that the
respondents preferred Pepsi over Coke during the blind test because of its sweeter taste.
However, the case would be entirely different if the respondents were allowed to see the name
of the brand they are trying because ad campaigns could override the impact of the taste buds.
Brand Loyalty. It is defined to be a form of repeating purchasing behavior caused by a positive
attitude and conscious decision to continue buying the same brand (Solomon, et al., 2007). This
brand loyalty is evident when the PepsiCo is gaining its market share from Coca-colas and the
company resorted to introducing a New Coke. However, the customers prefer the classic one
and instead of purchasing Pepsi products, the people instead intensified their call in bringing
back Cokes original recipe which after a while, the company decided to give in to their
demands.
Market Share. It is important for companies to be mindful of the market share because it is the
percentage of an industry or markets total sales that is earned by a company over a particular
period (Investopedia, 2014). Market share shows more or less an idea regarding the size of the
company relative to its market and competitors. According to Beverage Digest (2013), Cocacola comprises 34.2% share of the overall liquid refreshment beverages while Pepsi was trailing
behind at 25.8%. Meanwhile, the carbonated soft drinks market share of Coca-cola declined by
2.2% while PepsiCo decreased by 4.4% primarily. A significant reason for such decline could be
traced from the health conscious trend that is hitting the market nowadays.
Perceived quality. It refers to the customers perception of the overall quality of superiority of a
product or service with its intended purpose compared with the alternatives. Some dimensions
of perceived quality could include product features and performance. Coca-cola strictly adheres
to its standards to maintain high quality products because they believe that it is the cornerstone
of their success and part of their heritage. This belief is reflected in the companys gold standard
that, Perfect Product, Trusted Everywhere.

HR and Management. Another key success factor that should be considered are the human
resources and the management because these people drives the company, utilizes its
resources and in a way, helps in creating a reputation for the firm they are working with. In 2013,
Coca-cola was named as one of the Worlds Top 25 Global Employers by the Great Place to
Work Institute primarily because of the companys sustainability and entrepreneurship efforts.
Moreover, employees of Coca-cola also served as global ambassadors of Coke especially
during major global events such as the Olympics and World Cup (Unbottled Staff, 2014). In
order for the company to attract, develop and retain a highly talented workforce, Coca-cola
organized the Coca-cola University which is intended for the companys high performance
employees to allow them develop their knowledge, skills and expertise. The management also
sees to it that open communication is practiced throughout the organization to create a healthy
and well-updated workplace by providing talks, offering speeches and posting them online for
the employees to read and understand. The companys focus on beverages also proved to be
an appropriate choice since the management and the employees themselves could focus in
what they are doing best because the company operates in related fields. According to some
articles, PepsiCo lost the cola wars because of its constant shuffling of its managers between
the different departments and brands hurt the companys sales. During the first quarter report of
PepsiCo in 2012, the company experience a 2.5% percent decline in drink sales and 4 percent
decrease in soda sales primarily because the management themselves find it hard to support a
particular brand when no one stays long enough on a brand to build up knowledge about how to
improve and/or maintain its position in the market (Russell, 2012).
Brand positioning. This term refers to the perception of the customers of a particular brand in
comparison with that of the competitors or simply put, the mental image of a brand or a
company in the minds of the public. When Coca-cola was launched in the 1880s, it created a
new category of beverage was created and the brand name became the name of the product
itself. Due to the brilliant advertising campaigns of Coca-cola which circulates around cultural
themes like the Santa Claus in 1930s, the selling of Coke products to American GIs during the
Second World War which provided comfort and encouragement to these soldiers and the
promotion of peace and unity among countries through the Hilltop commercial, Id Like to Teach
the World to Sing. In addition, the company has successfully positioned its brand with images
of happiness and togetherness, tradition and nationalism. PepsiCo has also established itself as
the choice of the new generation by utilizing the appeal of celebrity endorsers, popular music
and young people in their ad campaigns.
5.1.3 Company Self-Concept
Performance Goals and Objectives
2020 Vision: Roadmap for Winning Together: TCC and our Bottling Partners
Our Vision

Our Goals

Our System Priorities

Our Metrics

Profit

More than double

Maximize Company and bottler long-

Total shareholder

system revenue

term cash flow:

return

while increasing

Boost system investment in sales and Economic profit

system margins.

market execution.

growth

Operate the lowest cost

System Cash flow

manufacturing and logistics in every

market, while maintaining our quality
standards
Use our size and expertise to create
economies of scale.
People

Be a great place to

Attract, engage and retain the best

Engagement

work.

talent.

Employer of choice

Increase people's system knowledge

Workplace rights

and cross-system movement.

Diversity

Inspire our people to be passionate

Retention

ambassadors for our brands.

Recruit, develop and advance women
and achieve true diversity.
Portfolio

More than double

Develop and deploy the world's most

Volume & value

our servings to

innovative and effective marketing.

share

over 3 billion a day.

Win with Coca-Cola:

Servings growth

Be #1 in NARTD

Accelerate growth of Trademark

Brand health

business in every

Coca-Cola. the epicenter of our

Category ranking

market and every

business. Act now to ensure the next

# of new billion

category that's of

generation of youth falls in love with

dollar brands

value to us.

Coca-Cola.

Commercialization:

Aggressively increase the value of

Percentage Speed

our portfolio:

Longevity

Acquire or develop scalable,

Quality index

innovative premium brands

Bring innovations to the market faster.
Satisfy the needs of older consumers
with the right brands and marketing.
Together with our bottlers, use new
technologies to reinvent our fountain
business
Ensure that our products are always
the 'gold standard* for quality.

Partners

Be the most

Think and act like an integrated

Customer

preferred and

global enterprise while intensifying

relationship health

trusted beverage

our local focus. Become a critical part

Retail sales growth

partner.

of our customers growth strategies:

Shopping trips with a

Align our franchise structure to create

Company product

unsurpassed value for our customers. Immediate

Focus on selling and merchandising;

consumption growth

be flexible on delivery method.

Win at the point of sale:
Anticipate and serve local tastes,
traditions and needs, providing
outlets with products and
communications tailored to their
specific shoppers. Expand immediate
consumption investment.
Planet

Global leadership

Create competitive advantage by

Reputation tracking

in sustainable

fulfilling our Live Positively

Environmental

water use.

commitments:

performance

PLANET Industry

Community

Safety record

leadership in

Workplace

packaging, energy

Marketplace (beverage benefits and

and climate

active healthy living)

protection

Environment (climate packaging and

water)

Productivity

Manage people,

Design and Implement the most

Market-driven

time and money for

effective and efficient business

spending levels

greatest

system:

Supply chain costs

effectiveness.

Redirect resources to drive profitable

Overhead per unit

growth.

Total energy use

Standardize and simplify our

business processes, data and IT
systems.
Create a competitive cost advantage
across the entire supply chain.
Build a continuous improvement and

cost management culture.

Minimize our energy use.

Active Healthy Living

Since the company started its campaign on active healthy living, it started to place calorie or
energy information on almost all of its products to allow the customers to create informed dietary
decisions through the use of visible, clear and easy-to-understand package labels. It only shows
that companies commitment to not only meet the customers refreshment, enjoyment, nutrition
and hydration needs but also concerned of the consumers overall well-being as a whole. The
Coca-Cola Company also desires to sponsor at least one physical program that is organized in
every country that they are operating.
Year

2011

2010

2009

2008

2007

No. of Physical Activity

280+

~ 150

~ 150

120+

N/A

No. of Nutrition Ed. Programs

115+

~ 100

~ 100

85

N/A

To support the increasing clamor to support women and provide them with jobs and sources of
living, the company sees to it that could empower women through their business operations that
as of 2011, about 131 000 women are provided with jobs.
The company also allocated 1% of their annual operating income to the Coca-cola Foundation
to fund activities involving youth development, HIV/AIDS prevention and awareness programs
and emergency relief.
Year

2011

2010

2009

2008

2007

Charitable contributions
and
equivalent
percentage of operating
income

$ 124 MM

$102 MM

$88 MM

$ 82 MM

$ 99 MM

1.2%

1.2%

1.1%

1.0%

1.4%

Human and Workplace Rights

By 2015, the company aims to achieve a 98% compliance level for all company-owned and
managed facilities on the Workplace Rights Policy and 90% compliance for the Supplier Guiding

Principles among independent franchise bottling partners and suppliers to maintain and
encourage the well-being of the employees and ensure good and quality performance within the
organization and its partners.
Water is a valuable resource for soft drink companies such as Coca-cola. To save cost and
maintain the companys reputable name in the ecological and environmental concern spheres,
the company managed to improve its water efficiency in manufacturing by 20 percent annually
compared to the 2004 baseline. The company would also aim to perform a comprehensive
wastewater treatment in order to reduce the companys carbon footprint and wastage.
2011

2010

2009

2008

2.16

2.26

2.37

2.43

Percent of Coca-cola system plants in compliance

with internal wastewater treatments standards

96

93

89

88

Number of community water partnerships

supported by the Coca-cola system and number of
countries where projects exist

382, 94

323, 86

250, 70

203, 56

Percent of water replenished by the Coca-cola

system based on the total water used in our
finished beverages

35%

33%

22%

N/A

Water use ratio efficiency

The company also plans to improve the packaging material efficiency and invest in recycling
programs to achieve their goals of recovering about 50% of the equivalent bottles and cans that
the company is using annually.
Leadership Style
Democratic leadership
This leadership style is headed by a leader who is sharing his/her decision-making abilities with
the group members through the promotion of their interests and the practice of social equality.
The group, which is made up of the managers, junior managers and employees are involved in
the generation of ideas as well as in the final decision-making process. Employees are
empowered in this type of leadership and the more they would feel comfortable in interacting
with the people within the organization and create decisions with them. Usually, the democratic
leadership produces contented, happy and productive employees because they would feel
respected and honored. Moreover, because the management practices this type of leadership, it

is open-minded and ready to accept feedbacks and opinions coming from the managers in the
different countries that the company is operating to create sound and appropriate strategies for
the company.
Autocratic Leadership
An autocratic leadership is also practiced by Coca-cola because the management keeps a strict
and a close control over the employees through the use of the policies and procedures followed
and implemented. This leadership style is evident inside the factories and bottling plants of
Coca-cola to ensure that the guidelines are followed and consistency in the quality of the output
would be achieved.
Risk-taking Behavior
The company knows that risk is present in every industry and in every business decision it
makes. Coca-cola does not view risk in isolation and recognize that it is impossible to eliminate
all risk. Therefore, to remain competitive globally and to obtain the objectives that are indicated
in their 2020 Vision, the company ensured the assignment of a Board and management
responsibilities.
Shareowners elected the Board members and allow them to oversee their interest on the overall
success of the business and security of financial strength. They see to it that assets are
safeguarded well, appropriate financial and internal controls are maintained and complied and
regulations and laws are properly followed. In addition, some of their major responsibilities
would include risk oversight, evaluation of the risk management processes, to nurture an
environments of integrity and risk awareness and to maintain an open communication between
the management and Directors.
The Management meanwhile is in-charge with managing risks and ensure that the internal
processes and environment are present and always available in identifying and managing risks
while sharing this information with the board. Programs such as the enterprise risk management
program, the establishment of a Risk Management Committee and disclosure of internal
management issues during every meetings are some of the management activities that are
done by Coca-cola.
Founders Philosophy
Coke was developed because of John Pembertons innovative spirit to create some sort of
medicine to cure headaches by creating a flavored drink made from syrup and carbonated
water, thus Coca-cola was born. Up to this day, the company maintained its position because of
its constant product innovation to keep up with the varying preferences and needs of the
consumers worldwide.
The founders also consider marketing as a major contributor of the companys success. Asa
Candler, a salesman who purchased Coca-cola from Pemberton is noted for his excellent
marketing campaign in distributing clocks, urns and calendars that bear the Coca-cola logo to
attract customers and make the products, as well as the company, well-known.

Moreover, as stated on the company website:

Our values serve as a compass for our actions and describe how we behave in the world.

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

5.2 Assessment of the Firms Strengths and Weaknesses

5.2.1 Operational/Marketing/Technical Dimension
The beverage industry is composed of several companies which compete for a
significant share in the market. In order to be largely acknowledged in the industry, several
critical factors should be considered. First is the organizations size (Zeigler). It would be of
great advantage for large organizations to seize opportunities since they could have enough
funds to support proactive programs. Also, with their size, they could produce more but with
lowers costs (Jeon, 2013). Furthermore, large organizations have a lot of products to offer such
that it could cater several market groups (Jeon, 2013). Another factor is the effectiveness of the
companys R&D (Zeigler et al., 2006). With a changing environment, and as well as consumer
trends, the products being marketed should be innovated to continuously suit to the consumers
taste. Next would be the companys market share. Large market share entails that a company is
dominating the market. Another critical success factor is the consumers brand loyalty. With an
established brand that is being patronized by target consumers, the companys sales could be
more stable and their competitors could be left behind. Lastly, a companys marketing efforts
play a huge role in their success in the beverage industry. With the stiff competition among other
companies, intensive marketing should be done in order to attract consumers to buy the
product. Moreover, the marketing should be done in such a way that the consumers would
choose the companys products over several other products being offered by the competitors.
One of the critical success factors mentioned about the importance of size in this type of
industry. In this factor, the Coca-Cola Company overpowers other companies for they are
considered the worlds largest company and that they produce 400 brands. This entails that
Coca-Cola, given its size, could easily take advantage of opportunities and could think of ways
to lessen their costs. Another critical success factor that the Coca-Cola Company is famous of is
their large market share. For how many years, the company has been leading the beverage
industry. Also, the company is strengthening their marketing efforts with their several campaigns
which enticed a lot of consumers. These campaigns include Its Your Heimspiel-Make it Real
campaign in the EU which increased the companys volume growth in 2006, and the sensitivity
marketing being undertaken in the EU which gained the respect of the European Commission,
the MyCokeRewards in North America which encouraged brand loyalty among millions of
participants, and among others.

With the trend towards healthy eating and drinking, if the company would continue
producing a lot of carbonated products over those which offers nutritional values, there is a
large possibility that their large chunk in the market share would be taken by those companies
which concentrate in offering healthy beverages. However, since the company has been staying
up in the list of top companies for over a century, there is a greater chance that they could still
remain at the top with the appropriate strategy.
5.2.2 Financial Dimension

Coca Cola Company's income statement showed an increase of all the items in the
income statement except for the 18.36 decline in Total Other Inc/Exp Net. The increase in
percentage of the total revenue for three years is recorded to be 4.73%, greater than the
increase of 3.46% in their cost of revenue and yielding to an increase in the gross profit from
5.45%. Other significant increases include Coca-Cola's interest expense with 7.06% and the
income tax expense of 7.31%. The net income also improved by 2.39% in from 2004-2006.

The vertical analysis in the company's income statement project a decrease of the cost
revenue's percentage from the company's total revenue. From 35% in 2004 and 2005, it
dropped down to 34% in 2006. However, an increase in the percentage of selling, gen, and
admin is evident from 39% in 2004 to 40% in 2006. This means that Coca-Cola increased their
marketing efforts. However, although an increase could be sighted in the net income's horizontal
analysis, it is evident in the vertical analysis that Coca-Cola's net income decreased as a
percentage in revenue.

Coca-Cola's balance sheet shows a decrease of 39% in the company's handling of cash
and other cash equivalents. This implies that the company is using its cash more to finance their
operations and that they are taking advantage of opportunities in the industry. This usage of
cash could be evident in the company's increase of short term investment by 67.73%. The

decline in the company's cash and other cash equivalents largely contributed to the decline of
16.45% in their total current assets. Although the inventory increased by 17.91%, the large
decline in cash caused the company's total assets to decline by 2.12%. In the liabilities side,
the decrease in the company's short term liabilities by 26.31% and the decrease of 15.13% in
other liabilities caused the decline of the company's total liabilities.

In the company's vertical analysis, it shows that in 2004, the largest percentage in the
company's total assets in the company's cash and cash equivalents of 21%, followed by their
long-term investments of 20% and 19% from property, plant & equipment. However, in the year
2005-2006, the largest percentage shifted towards the company's long-term investments and
property, plant and equipment. The company's cash and cash equiv decreased to 8% in 2006.
This could imply that the funds from cash and other cash equiv were invested in long-term
securities or were spent in the company's fixed assets. In the company's Liabilities side, a

decrease in the current liabilities from 35% in 2004 to 30% in 2006 is largely evident. This
decrease in the company's current liabilities caused a decline in the total liabilities percentage
over TLSE. In the Equity side, a significant increase in the retained earnings from 93% to 106%
to 112% in 2004 to 2006, respectively, could be observed. Moreover, huge decreases in
treasury stock is also evident.

Coca-Cola companys financial ratios as projected above have declined for a

span of 3 years. Both their current and quick ratios decreased which further implies that the
company is decreasing the amount of their current assets. Also, this means that their ability to
finance short-term debts is negatively affected. The company is also decreasing their
dependence to creditors as providers of their funds, as reflected in their decreasing leverage
ratios. In the firms activity ratios, it could be concluded that their ability to transform inventory
into sales has slowed down by 2.31%. If the firm continues such practice, it could affect the
performance of their annual revenue. Furthermore, a decrease in the companys fixed assets
turnover implies that they have lessen the productivity relative to their fixed assets. However,
the decrease is not that significant and that it could easily be solved by improving asset
utilization methods. Meanwhile, the companys profitability ratios decreased in three years,
except for their return on total assets. Though the decline is not that big, it is important that they
should take this seriously and act on it since these ratios reflect the companys overall
effectiveness.
5.2.3 Management Dimension (ALISA)

The Coca-Cola Company is recognized as part of the several companies

with a strong leadership team. The companys organization chart shows how well represented
each segment is with a President assigned to each geographic divisions. Through this,
operations in each segments are managed well and that problems and difficult situations could
be easily distinguished and solved as well. Moreover, with this fair representation, each
geographic segment could be studied well so as to provide specialized product offerings to cater
to each specific needs. However, in the companys profitability ratio, which is an indicator of the
managements overall effectiveness, most of the values slightly decreased. This means that in
the last three years, the managements effectiveness has been reduced.
5.2.4 Research and Development Dimension (VAL)
Coca-Cola has been innovative with the products that they provide to their customers.
Their innovativeness could be observed in the kind of products that they produce. The company
considers the different trends and consumer needs when developing their beverages. Take for
example the growing trend on healthy drinking and eating. Coca-Cola has taken advantage of
this trend and has developed beverage drinks that could provide health-conscious consumers
the kind of drink that they need.
Coca-Cola has better understanding of consumer needs with its six R&D centers around
the world. Each of Cokes R&D centers and the regional Coke marketing teams work closely
together in order to address specific customer needs and to focus on certain areas of
innovation.
http://www.coca-colacompany.com/innovation/rethinking-r-d-how-coke-uses-its-globalscale-to-take-innovations-further-faster
5.2.5 Management of Information System (CAMILLE)
Management Information Systems
An information system is basically a software that allows the user to collect and analyze
data. It is important for companies to maintain an information system that is timely and updated
because it could be a competitive advantage for them if they are able to collect, analyze data
and create appropriate decisions based from the information available. Coca-cola is one of the
companies who realized the importance of information that is why, it is taking significant
measures to improve the companys existing information system to make information available,
accessible, easy to understand, timely and useful for all the management and employees
around the globe. The companys Senior Vice President and Chief Information Officer, Mr. Ed
Steinike is responsible for the decisions regarding the companys information technology
strategy, services and operations. Coca-cola relies on the information system, Internet and other
third-party hosted services to support many of its business processes and activities involved in
the procurement and supply chain, manufacturing, distribution, invoicing and collection of
payments. According to Margaret Carton, the Coca-cola Bottling Corp. Chief Information Officer,
the company is now collaborating with SAP to develop a software that would improve the overall
efficiency of the organization. More information at the different stores and account levels would
be gathered, organized and processed to improve planning and reduce the potential of
unwanted deliveries. Managers and employees who are needing the information could also

access them through the computers, hand-held devices and smartphones that are provided by
the company. Decision-making, high standards and processes would be disseminated and
understood well to ensure consistency and quality.
The Coca-Cola System also recently adopted KORE, a framework that would aid them
in governance and in the management system of their company and operations. The main goals
of this framework to ensure the sustainable performance, drive continuous improvement and
other pertinent goals. It is a flexible system that has the ability to allow Coca-cola to locally
customize their products and operations according to global requirements. KORE also allows a
culture of collaboration within the system. Contrary to the past system that the quality and
operational control is the responsibility of the top level, the current system, however relies on
people in the operations at all levels of the supply chain which is good in empowering and
motivating individuals. The KORE Information System also provides information that is
accessible to everyone to enable collaboration and information sharing. This information system
also includes the following:

A documentation library which shows the beverage and product requirements, standards
methods and requirements for operations with environmental and employee consideration and
specifications on using packaging and facility operations.
A collaborative Wiki-style reference tool that would serve as an accessible reference and guide
for information and decision-making where anyone is allowed to post articles about their
respective expertise.

5.2.6 Others (VAL)

5.3 The Internal Factor Evaluation (IFE) Matrix

6.0 THE STRATEGIC AGENDA

6.1 SWOT Matrix

STRENGTHS

WEAKNESSES

1. Being the world's largest company, Coca- 1. Failure to meet expectations in Japan, 3%
cola could easily act upon opportunities.
decline in unit sales volume
2. Coca-Cola's recognized presence globally 2. Healthy beverages are lagging behind
with their seven geographical segments.
PepsiCo's
3. The percentage of Coca-Cola's net income 3. Decline in Net Operating Revenues by

from revenue is
PepsiCo's 16.12%.

21.09%,

greater

4. Extensive retail and distribution network

5. Brand loyalty and reputation

than 9.5% (European Union) and about 3.9% in

North Asia
4. Brand names could be interchangeably
used by customers in soda products.

6. Highest market share among players in the 5. Declining Coke sales in the east, south
soft drink industry
Asia and Pacific Rim of 1% which is brought
about by the political and economic
7.Test marketing of coffee dispensing instability in these areas.
technology
6. Negative reputation of Coca-cola in India
8. Strong leadership team
because of the pesticide content in their
products that made their products dubbed to
9. Compared from PepsiCo, the Coca-cola has as "toxic colas".
better employee efficiency
10. Increase in revenue by 4.73%

OPPORTUNITIES

THREATS

1. Cadbury's beverage division could be a 1. If the Cadbury beverage division is

significant addition to Coca-cola's existing purchased by a rival, the acquisition could
product portfolio.
result to more competing products within the
industry.
2. The consumers who are patronizing healthy
products are increasing annually.
2. Carbonated drinks are the core products
of Coca-cola, thus, the trend to a healthier
3. Globalization improved the company's quick living could affect the sales of Coca-cola.
anticipation and perception of the changing
needs and preferences of the customers 3. Due to certain events, costs of raw
worldwide.
materials such as sugar and oranges could
decrease the profits of the company.
4. The improving technology could help in
improving the company's retail and distribution 4. Increasing manufacturing cost per minute
network, operations efficiency and CSR.
of water
5. Tea is the second most widely consumed 5. Political issues, such as the banning of
beverage after water, thus the bottled tea Coca-cola products in US schools and the
industry could expect growth annually.
selective advertising implemented in the
European Union.
6. In the last decade, consumption growth of
coffee in the Americas and Asia increased by 6. Weaker dollar

about 2.5%.
7. Economic problems and uncertainty in
Europe could limit Coca-cola growth in the
said region.
8. Market saturation and sluggishness in the
United States because of the arrival of
healthier beverages.
9. Strength of PepsiCo's healthy products
(Glaceau, Gatorade, Aquafina)
10. PepsiCo complementary
(snacks and beverages)

SO Strategies

products

ST Strategies

Coca-cola should evaluate and improve

Propose better financial and strategic
their existing ERP, MIS and distribution system incentives to the owners or shareowners on
(S4, O4)
Cadbury to acquire its beverage division (S1,
T1)

Develop new products, perform intensive Look and for other suppliers from other
market studies, purchase and/or acquire locations (S1, T3)
undervalued or underperforming companies
that are offering healthy drinks (S1, O2)

Develop complementary products such

as snacks and other food items (S1, T10)

Invest on sustainable projects such as

water-saving technology (S1, O4)

Provide intensive marketing and

advertising efforts in other regions of the
Market Cadbury products using the existing world (S2, T7, T8)
networks in the seven regions (S2, O1)
Develop new beverages such as brewed

Use high brand reputation to market coffee (S7, T8)

Cadbury products together with existing Cocacola products in advertising (S5, O1)

Conduct meetings, seminars, market

studies to provide more sound decisions (S8,
Perform more market studies and market T7)
testing for coffee in other locations; develop
coffee and coffee-mixed products (S7, O6)

Improve MIS and provide more online

venue for communication and collaboration

among employees and the management,
online tutorials and forums (S8, O3)
Provide trainings and information manuals
to workers to improve efficiency and coping
mechanisms towards technology (S9, 04)

WO Strategies

WT Strategies

Perform market studies and include the

Invest on improving MIS, conduct intensive existing healthy beverages and sports drinks
study on consumer trends (W2, O3)
to sport event sponsorships (W2, T9)
Feature Coke in magazines, televisions

Increase product portfolio with healthier and events together with Coca-colas healthy
beverages, provide more advertisements on brands (W3, T7)
the existing healthy drinks (W3, O2, O5)
Improve retail and distribution networks in
this area, e.g., trucks, vending machines,
engage in ERP (W5, O4)

6.2 SPACE Matrix

6.4 IE Matrix

Considering Coca-Colas scores from their IFE matrix with 3.11 and their
EFE matrix with 2.95, the company belongs to the fourth division in the IE matrix.
This means that the company should grow and build through integration and
intensive strategies.

6.5 Grand Strategy Matrix

In the beverage industry, where Coca-Cola is competing actively, the revenue growth for
each quarter is 6.6%. Since it exceeds the average market growth of 5%, the beverage industry
is said to be rapidly growing. Coca-Colas competitive position in this growing industry is strong
considering that they have the highest market share of $111.18B compared to their strongest
rival whose market share is $103.10B. Moreover, Coca-Colas market share is way beyond the
industry average of $2.21B. Thus, with an industry considered to have a rapid growth, and
Coca-Cola having a strong competitive position, the company could be located in the 1st
quadrant of the grand strategy matrix. This means that they could proceed with strategies like
market development, market penetration, product development, forward integration, backward
integration, horizontal integration, and related diversification.
6.6 QSPM Matrix
6.7 Recommendations: STRATEGIC CHOICE
It is recommended for Coca-cola to perform market penetration because a series
of intensive marketing strategies to increase market share for their current products in the
markets that they are operating. Market penetration offers the lowest amount of risk and
provides more opportunity to increase revenues and profit. This intensive strategy is beneficial
for the firm because Coca-cola is operating in a familiar business environment with the existing
human capital, infrastructure and facilities and strong management team.
In order to sell more to current customers and find new customers, the company must
first differentiate itself within the industry. Promotional campaigns featuring the benefits and
availability of the companys products should be pursued. Another option is to broaden
distribution and retail network so that customers could be attracted to the products availability
and ease of access. Altering product usage such offering smaller sizes for convenience and
additional purchases would be made, more sales would be achieved and market share would
be increased. In addition, market share could be increased through the combination of pricing
strategies in order to attract non-loyal buyers, attractive advertising and sales promotion to
attract new and hopefully retain these consumers. A detailed market and competitor intelligence

should also be present such as market penetration analysis and compilation of market research
pertaining to competitor and industry products.
The company also has existing sports drinks and energy drinks that are always way below the
performance and sales of PepsiCos healthy and sports-related products. An intensive
marketing approach is to find appropriate brand ambassadors and host major sports events and
sponsorships to make the advertisements and marketing campaigns more appealing and
effective because the buyers would perceive that in order to reach the potential to being a good
athlete or sportsperson, consuming Coca-colas products would aid in their performance. Cocacola also possesses one of the most efficient distribution network for Coke that is why, the
company could utilized these existing resources to make their healthy beverages available and
accessible.

7.0 IMPLICATIONS of the STRATEGIC AGENDA

7.1 Management VAL

Organizational structure, retain or not?

Increase collaboration and communication among departments (finance and marketing) and
other geographical units
7.2 Marketing ALISA
With Coca-Colas strategy of market penetration, this implies that the company should
increase marketing efforts so as to increase their market share especially in their healthy
beverages. This is in response to the trend towards healthy drinking among consumers. Given
that Coca-Cola already has a portfolio of energy drinks, flavored water, and juices which are
healthier compared to their carbonated products, they should prioritize these healthy beverages
in their marketing efforts and advertisements. They could do these by sponsoring leading varsity
teams in famous schools, hiring famous sports icons as brand ambassadors, and organizing
sports events to facilitate the promotion of these healthy beverages. With the intensive
marketing efforts planned for these non-carbonated beverages, the marketing department
should also facilitate the distribution of these products for it to be highly available to anyone in
the different geographic segments. Also, the differences in culture among the different market
segments should be taken into consideration to effectively appeal the promotional message to
the target consumers. Another way to effectively market these products to the consumers is to
provide attractive labels to make it more appealing to the eyes of the consumers. In this action,
the marketing department should to increase their efforts and think of more creative ways to
design and to advertise their healthy beverages. With these plans for intensive marketing
efforts, this would entail an increased budget in the marketing department to finance such
activities. But, the marketing department should continue to be as resourceful as possible to
somehow minimize costs.
7.3 Production and Operations VAL

Volume of products must be sufficient for healthy beverages

Capitalize on their existing distribution networks (accessible and available to the public)

Quality assurance not to tarnish their reputation like what happened in India
7.4 Finance ALISA
7.4.1 Total Project Cost/ Investment Cost
7.4.2 Financial Modelling
7.4.3 Vertical and Horizontal Analysis
-3- years, use year-year
-increase or decrease growth rate

-cheaper raw materials and facilities

7.7 Management of Information Systems
Coca-cola is a company that is recognized and operates internationally. A lot of company
stores and production plants situated in the different parts of the globe should be informed and
updated about the latest changes and strategies that the company decides to implement,
especially if their regions are affected. In order for the company to perform market penetration
appropriately, investments on ERP and the development of a more interactive and more userfriendly MIS program must be made. This could also serve as a two-way communication
medium between the regional companies and the base company with the regional companies
offering on-site information and trends to fully aid in facilitating market penetration in their
respective areas. In addition to the software, hardware such as computers and hand-held
devices could aid employees in learning more about their company, their responsibilities, in
decision-making and latest updates.
7.8 Corporate Social Responsibility VAL

Youth development and sports-related activities

Health and wellness programs and sponsorships

7.9 Environmental Concerns CAMILLE

Since the company would pursue a market penetration strategy, Coca-cola would need
to be knowledgeable and mindful about environmental concerns of the areas that they are
operating. Further, in performing intensive marketing campaigns such as organizing fun runs
and sporting activities, the company should also provide trash and recycling bins to show and
provide a positive perception in the minds of the attendees that Coca-cola is an
environmentally-ethical company. Another option is to offer sari-sari and other micro-enterprises
tarpaulins with the name of the store and the Coca-cola logo because not only would it add to
the companys marketing efforts, it would provide a more sustainable and attractive addition to
their stores. In pursuing marketing efforts, Coca-cola must consider environmental laws and
regulations, environmental activists and other environmental concerns because different
countries have different perspective on how things are managed in their area.

STRATEGY EVALUATION

Strategies
Criteria for
Evaluation

Strategy

Develop products
advantage
of
opportunities

to take Focus
on
marketing
and
existing advertising healthy beverages

a. Suitability
b. Validity

The information gathered in

organizing assumptions are
obtained from reliable articles
and published by experts and
the academe. Coupled with the
information coming from the
horizontal and vertical analysis
of the various case exhibits,
these assumptions are wellrounded, realistic and up-todate. Industry growth rate and
revenue growth rate are some
of the basis for assuming that it
would a lucrative choice for
Coca-cola.

The company undeniably has

strong brands on healthy
beverages however, they are
lagging behind because of
marketing issues and availability
of these products to other
regions of the world. Such
assumption has been obtained
through comparison between the
PepsiCo
and
Coca-cola
campaigns of their products from
various articles and published
researches.

c. Consistency

This strategy is consistent with

the companys objectives such
as the provision of competitive
product
offerings
and
capitalizing on the industry
growth because offering more
products or modifying or
improving them according to
consumer
preferences
to
increase revenue for Coca-cola
products.

Pursuing market penetration is

consistent with the objectives of
the company to obtain revenue
growth,
increase
brand
recognition and increase product
availability.

d. Feasibility ALISA

With Coca-Colas increasing

Coca-Cola has been doing a
revenue over the last three series of marketing efforts
years, it is safe to say that they throughout the century and thus

could finance this type of

strategy. Moreover, since they
are considered the worlds
largest beverage company, they
have already a lot of facilities
which they could use in the
production of these new
products.

they have built several channels

and accumulated several ideas
in creating effective marketing
strategies. With this creative
resources already present in the
company, Coca-Cola would not
be having grave difficulties in
pursuing
this
intensive
marketing. As to the costs to be
incurred, Coca-Colas increasing
revenue could finance this
action.

e. Vulnerability VAL
f. Potential
ALISA

Rewards

8.0 STRATEGY IMPLEMENTATION: THE BALANCED SCORECARD

8.1 Functional Fits

The functional strategies and policies that Coca-cola must establish in order to
implement the strategy in the best way possible are the following:

Invest in improving sales and marketing campaigns

Maintain sustainable and low cost manufacturing and logistics processes
Improve marketing efforts and differentiate products
Improve product delivery and accessibility through technology
Hire, train and retain knowledge workers
Provide an updated and employee-friendly operation systems

The strategies and policies that the company is currently pursuing are as follows:

Invest in improving sales and marketing campaigns

Improve product delivery and sustainability through technology
Hire, train and retain knowledge workers
Provide an updated and employee-friendly operation systems

8.2 Administrative Fits

In order for the company to implement the strategy well a well-organized structure, leadership
style, systems and culture must be fostered first. The organizational structure that would match
this strategy is the functional organizational structure wherein there are top level managers and
sub-level managers of both different departments and low-level employees. It dictates the
hierarchy of power and determines who reports to who. In addition, the leadership style must be
a combination of democratic and autocratic wherein employees and basically, everyone are
given the chance to speak up, give suggestions and offer solutions to problems during company
meetings and or through personal interaction with the immediate supervisor. Top to bottom and
bottom to up information or a two-way communication relationship must be maintained. An
autocratic leadership is also important to show that the company is strict in adhering to the
company regulations and standards to ensure the products are of the best quality and decisions
made are consistent and appropriate. An open, creative and nurturing culture must also be
promoted so that employees are encouraged to air out their concerns and the management
likewise are committed in knowing the situations of the employees and their suggestions.
Currently, the company possesses more or less the desired structure, leadership style, systems
and culture that would aid in fully-implementing the recommended strategy.

8.3 Plan of Action

8.4 Strategic Control

The company adheres to the control systems and standards presented in the company manuals
and company policies to ensure conformance and consistency in production. As often as
possible, Coca-cola develops and promotes a visionary statement available in their company
website and workplaces to serve as constant reminder for the employees and the management.
Another option to ensure consistency of the employees and maximize their efficiency, the
company sees to it that competitive salaries, benefits and good performance are rewarded.
The current MIS provides up-to-date, timely and readily available information for all employees
and management that would be needing them. Everyone is encouraged to post information and
latest know-hows on their respective expertise so that these information would be
communicated and used for collaboration to improve decision-making and strategy formulation.
The company website and published annual reports presents the company goals, objectives
and strategies that they are currently pursuing and how far is the company from achieving it.
Moreover, the company also conducts meetings and online postings to make everyone within
the organization knowledgeable about the latest happenings in the industry and discuss upon
themselves whether they are contributing to the achievement of the company strategies.
Strategies are evaluated annually to ensure that the companys actions are still consistent in

achieving it and in cases wherein unexpected occurrences happen, the managers are open for
reconsideration and determine what made the strategy ineffective.

9.0 REFERENCES
American Beverage Association (2015). School beverage guidelines. Retrieved from
http://www.ameribev.org/nutrition-science/school-beverage-guidelines/
Bailey, S. (2014). Investing in Coca-cola: the worlds largest soft drink company. Retrieved from
http://marketrealist.com/2014/12/investing-coca-cola-worlds-largest-soft-drink-company/

Bhasin, K. (2011). 15 facts about Coca-cola that will blow your mind. Retrieved from
http://www.businessinsider.com/facts-about-coca-cola-2011-6?op=1
Biswas, A.K., & Bozer, A.C. (2015). Water: Future, prospects and challenges. Retrieved from
http://www.coca-colacompany.com/opinions/water-future-prospects-and-challenges
Centers for Disease Control and Prevention (2013). Overweight and Obesity. Retrieved from
http://www.cdc.gov/obesity/childhood/problem.html
Coca-Cola. 2011. Front-of-pack energy labelling.
http://hkupop.hku.hk/english/report/nutrition11/content/resources/Fact
%20Sheet_FOP_ENG_FINAL.pdf
Journey Staff. (2014). Coca-cola life arrives on shelves nationwide. Retrieved from
http://www.coca-colacompany.com/coca-cola-unbottled/coca-cola-life-to-make-us-debut
Moth, David (2013). 10 inspiring digital marketing campaigns from Coca-Cola. Retrieved from
https://econsultancy.com/blog/63175-10-inspiring-digital-marketing-campaigns-from-coca-cola/
Rappler. (2013) PH poverty in h1 2012 unchanged
http://www.rappler.com/business/27210-poor-filipinos-in-2012

from

2006.

Retrieved

from

Russell, M. (2012). How Pepsi went from Cokes greatest rival to an also-ran in the cola wars.
Retrieved from http://www.businessinsider.com/how-pepsi-lost-cola-war-against-coke-2012-5?
op=1
Saeidinia, M., Salehi, M., Hashemi, S., Darabkhani, Y. & Ahanijan, B. (2012). Operation
strategies for Coca-cola vs Pepsi companies to attract their customers. Retrieved from
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Srivastava, Amit (2006). Coca-Cola: poisoning water, land, and people. Retrieved from
http://www.indiaresource.org/campaigns/coke/2006/cokepoisoning.html
The Coca-Cola Company (2012). The Coca-Cola sustainability project: product safety and
quality. Retrieved from http://www.coca-colacompany.com/sustainabilityreport/me/productsafety-and-quality.html#section-our-policy-on-biotechnology

The Coca-Cola Company (2015). The Coca-Cola system. Retrieved from http://www.cocacolacompany.com/our-company/the-coca-cola-system

With the trend towards healthy lifestyle, and Coca-Cola Companys healthy products lagging
behind PepsiCos, the company needs to formulate a strategy to address this problem and at
the same time to take advantage of opportunities such as the increase in bottled water and
coffee consumption in some areas of the geographic segment.