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Fahad Umar
ABSTRACT
This paper focuses on global business strategy of Coca-Cola Company. The first part of
the paper concentrate on the internal and external analysis of the company in the
international business environment as well as the extent of globalisation on the
company with a detailed report on different organisational structure being implemented
on an international scale. The second part of the paper explicitly congregate issues on
Corporate Social Responsibility on organisations operating internationally with regards
to moral and ethical issues, conflicts between social responsibilities and ethical issues
and regulations/guidance as regards to social responsibilities with emphasis on Coca-
Cola company.
ABSTRACT ............................................................................................................................ 1
Introduction and Coca-Cola Company’s overview ................................................. 3
PESTEL ANALYSIS .............................................................................................................. 4
SWOT ANALYSIS ................................................................................................................. 9
The impact of international business environment on Coca-Cola Company:
............................................................................................................................................... 16
Globalization: ................................................................................................................... 17
Brief history of Globalization ...................................................................................... 18
Benefits of Globalization ............................................................................................... 18
Factors affecting Globalization ................................................................................... 19
Extent of Globalization on Coca-Cola Company .................................................... 20
Challenges faced by Coca-Cola Company on Globalization. .............................. 21
Structures of organisation operating on international scale ........................... 22
Moral and ethical issues faced by organisations operating internationally
............................................................................................................................................... 24
Conflicts between corporate strategy and ethical and social responsibility
............................................................................................................................................... 26
The legislation, regulation and guidance as to corporate social
responsibility ................................................................................................................... 28
Code of ethics in regards to guidance on corporate social responsibility ... 29
Conclusion and recommendations ............................................................................ 30
Reference ........................................................................................................................... 31
2
Introduction and Coca-Cola Company’s overview
(2006) the Coca-Cola Company was established in Atlanta, Georgia, in the year
product (concentrate and syrups). Concentrates and syrups are being sold out to
Company produces a wide range of about 500 different beverage brands across
the world. In the late 1920’s the company begins its journey for globalisation and
The Coca-Cola Company together with the bottling companies forms the best
production and distribution system in the world, the system is designed in such a
way that employees dedicated and put the company’s objectives as their number
one priority. Products of this company have proven to be the number one soft
to Montreal and from Beijing to Boston all over the world for more than 115
years of its existence. One of the key objective of the company is to increase its
market share-value, which was achieved by operating with associates with the
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aim of satisfying customers and valuing customers interest as well as protecting
PESTEL ANALYSIS
companies to analyze the whole EXTERNAL environment from every angle the
PESTL analysis to know more about its external environment, precisely the
and position.
The Political factors establish the extent as to which the serving political policies
and rules influence the economy or rather the business organisation. This
policies and rules include, how much tax is impose, trade tariffs and fiscal
The economic factors are the determinants of economic performance that impact
the company in one way or the other, factors such as interest rate, inflation rate,
foreign exchange rate and economic growth. These factors will affect the
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The social factors comprises of environmental trends, which includes cultural
few. For example, in the western countries there is high demand of things during
holiday seasons.
Legal factors involves both internal and external segment of the organisation,
internal in the sense that the organisation develop some inside laws and
regulations to maintain its operations and dealings while external in the case
where certain law, policies and regulations are imposed to the company by
POLITICAL:
Political changes in accordance with the ruling government, changes that has to
should operate and as to how the products should also be. By setting up those
rules and regulations the government intervene with the company’s decisions
because the board have to make sure in every decision that is being made those
policy.
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The Coca-Cola Company being a non-alcoholic beverages company falls in the
category of what is known as the Food and Drug Administration (FDA), FDA is a
monitor and verify ingredients that are being used in manufacturing non-
However, aside from the FDA’s requirements other political majors that are
being set in accordance with the jurisdictions of countries includes income tax,
import and export regulations and the uncertainty of political crisis. Political
crisis can be in form of protest, which might affect the demand of products, as
well as political violence that makes it hard for the products to penetrating in
ECONOMIC:
living, wages, exchange rate, unemployment rate and the overall economic
growth of the country. These economical factors differs in each of the operating
mentioned factors.
power, this is what most marketers use in penetrating the market. Coca-Cola
Company uses this tool to market their product across the world, which brought
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about the 63 different types of currency being used by the company. However,
due to constant fluctuation on exchange rate strong or weak currency are some
the company generate 72% of its operating profit outside the United State.
derivative instrument. In the case of inflation, the Coca-Cola Company sort their
employees with higher wages and salaries in countries with high inflation rate so
as to enable them cope with the situation. This increase in wages increase
product cost and couldn’t be reflected on the product price due to the
competitive and risk of the market, a threat being faced by external environment
in most companies.
SOCIAL:
The social factors have to do with people’s cultures, traditions, health perception,
safety majors, population growth and new trends among the population. A
company is not expected to change the social factors but rather, to adapt and
This is a very important section as regards to a company like Coca-Cola that has a
direct link to the customers, companies of this nature are considered to be B2C.
Countries are diversify in terms of culture and tradition, this element have to be
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Cola Company has about 3300+ different products, in penetrating new market
after intensive market analysis the Company start by introducing few of their
Consumers and government are very cautious on the issue of health and safety,
with nutritional content nowadays. This is one threat that the management was
youth and children, which is why population growth is being given high
emphasis in market analysis and being one of the major factor of social analysis.
TECHNOLOGY:
Coca-Coca Company rely on its bottling partner for packaging, 83% of case
which the company don’t have total control power over. This is why it’s essential
for the company to keep a healthy relationship not just with its bottling company
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The availability of different Coca-Cola packaging has everything to do with the
advance in technology, various vending machines are available all over the
world. This let to the production of some stylish non-refillable bottles and cans,
which are trending among youth and attractive to children which also serves as a
LEGAL:
Legal laws includes, employment law, antitrust law, customer law, health and
Various acts and regulations exist in the United State of America some of which
includes Federal Food Act, Federal Trade Commission Act, Drug and Cosmetic
Act, health and safely Act apart from the upper mentioned Acts several
in either of the laws, regulations or act could yield to positive or negative impact
acts, or regulations will escalate serious penalty which will definitely affect the
company.
SWOT ANALYSIS
external factors some of which the company has control over and some of which
it has no control over. This analysis is been used as a tool of auditing of generally
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The factors can be overviewed as follows
Strengths: These are qualities of an organization that facilitate that support the
the organization operates to take advantage of, when opportunities arise its
have the tendency of jeopardizing the organization. This are sometimes being
mistaken for weakness, but threats are external while weakness are internal
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SWOT ANALYSIS FOR COCA-COLA COMPANY
opportunity and threats, where the strengths and weakness are considered to be
internal factors while the opportunities and threats are the external factors
STRENGTHS:
ranked Coca-Cola number one brand on the hierarch of top 100 global
Moreover, aside from being the number one brand, it owns the top four
beverages brand in the world that include Fanta, Sprite, Coca-Cola, and
Diet Coke. This is why the Coca-cola brand posses the largest portfolio of
Coke, Cherry Coke, and Limon Coke. Coca-Cola Company heavily invest in
promoting the brand over the years, this is one major advantage the
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Company uses in penetrating new market meanwhile strengthening
existing markets.
(fifty two billon) consumed everyday. The company account for more
and canning plants outside the United State. In addition the company also
produce bottle water and concentrates juice. This advantage enable the
growth in Latin America, Pacific Rim and East, South Asia. In the year
2006 its recorded revenue grew by 20.4% in Latin America, and grew by
company accounted for 34.8% of revenue generated during the fiscal year
WEAKNESS:
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human right violations, there have been rapid allegations raised
concerning the Middle East and U.S foreign policy over the years. In the
ingredients used for producing its products by CSE (centre for Science
residue.
note on the 10th of December 2008 from FDA warning him about some of
its product that are violating the Act. Products include Diet Coke, Plus,
20FL and OZ. Furthermore, Coca-Cola Company has been suit by United
generate about 30% of it total revenue during the fiscal year 2006, this
activities in the year 2006. Comparing it to the preceding year in 2006 the
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in the year 2005 is recorded to be $6,423,000 which decrease to
strategy in the year 2005, which was lacked in 2006. Decline liquidity
reduced the financial investment rate that will positively impact on the
OPPORTUNITIES:
Beverages (KBL) this made it possible for the company to take control
also the company owns 100% interest in South African company named
Zealand in the year 2006. This acquisition did not only expand the
growth and make it much more easier for the company to penetrate into a
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2. Emergence of Bottle Water: In beverage market today bottle water is the
fastest growing commodity study has showed that in the year 2006 bottle
The value of bottle water is estimated to reach $19.3 billion in 2010 while
Cola bottle water Dasani brand is rated to be the third best selling water.
where at the same year census estimated that Hispanic population will
2003.
THREATS:
within the United State and outside. PepsiCo is the major competing company
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Cadbury Schweppes, and Nestle to mention few. The presence of these
brand, advertising, sales and protection. High competition rate could impact
companies of which the Coca-Cola Company have no total control of. It was
approximated in 2006 that 83% of the total volume unit is been produce and
Health cautious is now becoming major concern among people. In the United
beverages and at the same time highly cautious with carbonated and
faces criticism for promoting obesity and poor diet to their consumers.
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and development in the outskirts market. Wide brand expansion is one of the
million bottles of different sizes. Aside from the upper mentioned Coca-Cola
product, the company owns Schweppes in the Great Britain name and
imprisoning the national and international market for the purpose of quality
the economic environmental structure over the years; in the year 2005 there
was high marketing strategy that was why distribution of products was being
done through advertising campaign. This got success and yield to 35%
increase in international sales force in the year 2006 while in the preceding
Globalization:
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economy so as to make it easier to trade and conduct transactions within and
between every nations there by putting the whole world under the same
century particularly in the 1945, but the process has been moving on a slow
rate until in the last 20 year when it became much more faster due to
According to James and Peck (1998) Globalization started in the 17th century
with the inventions of new ships which gave Europeans avenue to trade with
tiny part of the economy as of then. With the recent development and
These developments contributed hugely in the sense it shrinks the world and
make it more convenient and faster for people to travel across the world and
carry out trade, with the presence of the Internet it makes it even much more
different countries increase international trade that makes the world’s GDP
Benefits of Globalization
Economy used to be self-contained in the sense that import and export are
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economies are closely dependent in the sense that importing raw materials
small number until recently with the advance in technology and they have
exchange between countries: This has to do with the policies and regulation
free movement of funds like in the 90’s huge amount of funds enter United
globalization. Its started in the UK in the 80’s when many policies and rules
place, this prompt foreign investors to carry out their businesses across the
world. A clear example is the one that took place in the UK, many of their
utilities which used to be own by the government are now owned by local
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Rapid development in technological and communication sector is another
open and accessible to everyone and anywhere. This gives investors all over
the world a chance to search and take chance of new business opportunities.
medium.
airplanes, containerisation that was developed in the 50’s was a major drive
of the must popular brands in the world and the company is ranked the
Cola Company continuer to gain growth due to the prompt expanding across
the world, the Company operate presently in more than 200 countries with
84,000 suppliers this makes 70% of the company’s turn over to be from other
foreign country.
and high quality, in the early stage storekeepers requested for an attractive
package with brand recognition. The Coca-Cola Company focus and meets
those requests with a brand name Coca-Cola and a red and white attractive
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package with a uniform taste of product across the country, this became
plants where built in Panama and Cuba as military spread through those
regions, this spread prompt the rise in demand of the product. These plants
reduced the shipping cost of the product in these regions, the success of these
plants swift the Company to build many more across which includes Hawaii,
Puerto Rico and Philippines. By the year 1926 the Company established a
strong foreign relationship with other countries around the world this gave
the company a chance to continue on its quest of rapid expansion and mass
production of its product across the world by the use of local branches and
centuries until the end of World war II and Cold war that is when the
The road to success has never been smooth and easy. For Coca-Cola Company
the phrase seems perfectly matched, the Company faced a lot of challenges in
used of Coca-Cola products with the assertion that the products are health
threatening and cheering obesity, which are two major concern for people
nowadays. Aside from these assertions so many suits had been filed against
other countries suits the Company for being selective in providing healthcare
to their workers. Another major challenged faced by the Company was the
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infiltration of the beverages market by other strong Companies such as Pepsi
colacompany.com/sustainability/global-challenges.html).
really helps the Company in overcoming some of the challenges and the
Company’s number one goal to be the number one beverages company in the
world.
Organisational structure
where the owner is likely to be the manager of the business, this structure is
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characterized with low degree subdivision of tacks. This made it easy for the
the owner of the business. From the name simple structure, its consider to be
simple with little formalization, this makes it flexible, easy to control, more
paper work with the intent of achieving predefined complex goal efficiently
structure with high level of formality and the structure has a strict orderly,
highly efficient and fair line of command at all times with centralized
authority as well. This structure has many layers of line management, flowing
continental divisions around the world, this includes Eurasia and Africa
Group, Pacific Group, Europe Group, North America Group and South
America Group. Each of those continental groups has a vice president that
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assumes the control of each sub-division. The company’s structure is
cross-cultural setting are being exposed to divers ethical norm and values
such ethical issues has never been easy but it could be influence using some
normative approach”.
moral reasoning and value of groups and individuals when making decision
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on ethical matters, in this approach ethical decision making process is being
personal experience.
Ethical standards are often not clear or not defined explicitly in many
dilemma in both local and international market place. This problem is more
accepted in one country might be rejected in another country. This gave raise
to the issue of universal ethical norms that had been based upon some basic
bridge. Most of this basic morals values are cultivated using a scenarios in
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Pricing: The issue as regards to pricing involve differential pricing and
for a different price written on the invoice other than the actual transactional
price and secondly for the prices to be unjustly different form the host
country.
illegal in the hosting country due to the negative effect it has on the country,
having a predefine decision making ability on rules and policies is the key
ethical and social principles, which will defiantly bring conflict between the
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society and the corporation. A most common conflict that usually arises
promote certain goods or services. This process is conducted with the aim of
the general public and constructing some certain values to the society.
This process can bring conflict between the society and the corporation if
slogan that uses to exist many year ago “Do whatever you want” this slogan is
believed to have violate sensibility of the audience which was argued on and
letter modify to “Do what you should”. The second phase is the conveying
slogan is “You only live once” this is inspiring and it teaches the audience the
value of life, on the contrary some does convey negative values. Examples of
such are the hedonism as well as the patriarchy; the hedonism adverts
always encourage the value of material wealth to be the greatest good such
adverts distort the moral and ethical value of human and encourage trend of
contains some violent sexual implication which are some of the reasons why
many countries regulate the type of advert to shown due to these negative
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influence on audience. Examples includes, Sweden and Norway prohibit
advert of any kind to children under 12, Greece prohibits adverts on war
games, Germany and Finland prohibits advert of products that children can
Hence, its expected for the corporation’s advert to stay within the society’s
Feris (1997) These are parameters most managers and government agencies
shaped within the organisation by the managers and outside the organisation
Legal responsibility in this phase has to do with the rules and regulation
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Any organisation that is found to compromise any of those rules and
Tenet healthcare; this health organisation had a federal lawsuit on one of its
hospitals for performing excessive cardiac procedure to some client that has
such federal lawsuit against organisation across the world this is making
organisation revelling the company’s stands of social and ethical issues, this
certain level of social, moral behaviours and values that are being expected
from them at the same time those that wont be tolerated. This statement
often comes in two categories, the policy based statement and the principal
based statement.
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employee welfare and company’s responsibilities. The policy-based
detailed analysis of the international market of its products. PESTL and SWOT
needs to focus on in order to achieve its objectives so also the trends and factors
affecting the company on an international scale. The report also examines the
global position and structure of the company. Although there were some
limitations and challenges being faced by the company, it still maintained its
It is clear that customers are being regards as the number one factors to be
company can not satisfy his/her desired product they will eventually switch to
the other sources. Hence, for any company or organization to endure its market
competition they need to put in their best in given customers what the desired
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Reference
Ahmad ElAmin (2007). “Coca-Cola reports progress in red environmental impact”
http://www.polity.co.uk/global/research.asp
http://www.studymode.com/essay
http://www.coca-colacompany.com/sustainability/global-
challenges.html
G.A Cole (2006). “personnel management theory and practices ” Hemisphere D.P
publication Ltd.
G Jeffrey (2003) ”Winners and losers over two centuries of globalization ” Retrieve
M. Porter (2006). “Strategy and society: the link between competitive advantage
Thomas Donaldson (2014). Ethical Issues in Business. Retrieved June 15, 2014
from https://www.karlknapp.com/resources/ethics
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