Business and Marketing Strategy

Q1: Assessment of environmental issues affecting Coca Cola

Provide a detailed assessment of the environmental issues affecting Coca Cola global business and marketing strategy. Given guidance in terms of opportunities or threats they may pose for the company in the future. Lo; illustrate how marketing decisions are affected by various forces in the external business environment
WATER is to Coca-Cola as clean energy is to BP. So declares Jeff Seabright, Coca-Cola's manager of environmental affairs, when asked about the firm's new global water strategy. The fizzy-drinks maker unveiled that strategy as part of its annual environmental report, released this week. We need to manage this issue or it will manage us, says Mr Seabright. At first sight, the analogy with oil may seem odd, but it is not so far-fetched. Big Oil has long been the target of activists clamouring for action on global warming. BP stole a march on its oily brethren by accepting that climate change is a real problem, making smallish investments in clean energy, and grandly proclaiming itself beyond petroleum. Coca-Cola has also been targeted by activists, but over the issue of water rather than energy. The firm has been hit hardest in India. First, experts from Delhi's Centre for Science and Environment, a green think-tank, tested various soft drinks and determined that they contained high levels of pesticide. It turned out that Coca-Cola was not the cause of the problem. But its inept
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handling of the accusations left the firm exposed to a much more damaging allegation: that it is aggravating the growing global problem of fresh-water scarcity. An ongoing controversy in India concerns allegations that some of the firm's bottling plants use too much water in drought-prone areas, thus leaving poor local villagers with too little. Amit Srivastava of the India Resource Centre, a Californian non-governmental group, has been using the Indian controversies to stoke an international grass-roots campaign against CocaCola. The firm brags that it operates in 200 countriesmore than the UN itself, says Mr Seabright. But Coca-Cola's global reach and iconic status make it an easy target. Mr Srivastava points with glee to recent decisions at a handful of university campuses in America and Britain to suspend or challenge its contracts on ethical grounds. Worse may be in store, if some have their way. Corporate Accountability International (CAI), an activist group best known for organising a noisy boycott of Nestl (for selling infant milk powder in countries without reliable access to clean water), now has its sights set on the world's largest producer of nonalcoholic drinks. CAI turned up at Coca-Cola's last shareholder meeting to grill the firm's management over the water issue. Kathryn Mulvey, CAI's boss, is concerned not only about its fizzy-drinks divisions but also its newish and booming bottled-water business. Echoing the sentiments of other campaigners, she insists that the misleading marketing campaign for the bottled water needlessly undermines confidence in tap water, and amounts to the commodification of something that should not be bought and sold. Company officials argue that they started measuring and improving their use of water long before its troubles in India. The firm improved its water efficiency by 6% between 2003 and 2004. In 2002, it took 3.12 litres of water to produce one litre of final product (as much water is used to clean the assembly lines, flush out glass bottles, and so on). In 2004, that global average came down to 2.72 litres. Mr Srivastava is not impressed: he grouses that it is ridiculous that a firm that calls itself a hydration company should waste so much water; most of it does not even end up in the product. To improve that situation, Coca-Cola has just completed a detailed assessment of the water risks to its businesses and their local communities. Going plant by plant, the firm's boffins have calculated local water-scarcity ratios, depletion levels for local aquifers, water needs for the local plant, and so on. With this new information, the firm is now setting local targets for improving each plant's efficiency of water and energy use. Mr Seabright explains that before this new study, the firm tried to impose one-size-fits-all global targets which local bottlers (who are often not owned by Coca-Cola) refused to accept. Coca-Cola is also working with non-governmental groups such as the World Wildlife Fund and CARE, as well as UN agencies, in an effort to burnish its image. In India, it is now promising to capture enough water via rainwater
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harvesting (an age-old technique for capturing monsoon run-off) to offset all of its water use by 2006. Even the deeply sceptical Mr Srivastava concedes that if this company were really not to put any strain on local resources then it would be a different matter. Let us see if this is just greenwash. The accusation of greenwashenvironmental window-dressing as a front for business-as-usualhas also been hurled at BP. But there the similarities between Coca-Cola andBP end, for the question of water is far more important to Coca-Cola than the issue of climate change is to BP. That is because if oil and gas run out, or are deemed too dirty to use one day, BP could still peddle ethanol or hydrogen fuel; it is, in the end, an energy company. Coca-Cola, on the other hand, simply would not exist without water. So while BP may yet see life beyond petroleum, Coca-Cola will never get Beyond Water. The Coca Cola Company and other organizations have their own weaknesses and strengths that can both affect the future performance of their respective business. Analyzing the future constraints is an advantage for the companies since they can identify the possible factors that tend to leave an impact on their business. PESTLE analysis is a popular method that focuses in the external factors of the business and the environment where it operates. PESTLE stands for Political, Economic, Sociological, Technological, Legal, and Environmental. All of them examine the changes in the marketplace. Political Analysis Political analysis examines the current and potential influences from political pressures. The non-alcoholic beverages falls in the category under the FDA and the government plays a role within the operation of manufacturing these products. In terms of regulations, the government has the power to set potential fines for the companies that did not meet their standard law requirement. The changes in laws and regulations, such as accounting standards, taxation requirements and environmental laws and foreign jurisdictions might affect the book of the company as well as their entry in foreign country. Other than that, the changes in the nature of business as non-alcoholic beverages can gain competitive product and pricing pressures and the ability to improve or maintain the share in sales in global market as a result of action by competitors. The political conditions of the country are also basis of the study, especially in internal markets and other governmental changes that affects their ability to penetrate the developing and emerging markets that involves the political and economic conditions. However, Coca Cola continuously monitoring the policies and regulations set by the government. Economic Analysis Economic analysis examines the local, national and world economy impact which is also includes the issue of recession and inflation rates. The nonalcoholic beverage industry has high sales in countries outside the U.S.
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According to the Standard and Poor's Industry surveys, "For major soft drink companies, there has been economic improvement in many major international markets, such as Japan, Brazil, and Germany." These markets will continue to play a major role in the success and stable growth for a majority of the non-alcoholic beverage industry. There is a low growth in the market for carbonated drinks, especially in Coca Colas main market, North America. The market growth recorded at only 1% in 2004 for North America. Sociological Analysis This analyzes the ways in which changes in society affect the organization such as changing in lifestyles and attitudes of the market. Consumers from the ages of 37 to 55 are also increasingly concerned with nutrition. There is a large population of the age range known as the baby boomers. Since many are reaching an older age in life they are becoming more concerned with increasing their longevity. This will continue to affect the non-alcoholic beverage industry by increasing the demand overall and in the healthier beverages. The demand for carbonated drinks decreases and this pulled down the revenues of Coca Cola. Technological Analysis Technology is the main focus of the analysis where the introduction and the emerging technological techniques are valued. This creates opportunities for new products and product improvements in terms of marketing and production. As the technology advances, new products are introduced into the market. The advancement in technology has led to the creation of cherry coke in 1985 but consumers still prefers the traditional taste of the original coke Opportunities Acquisitions For the last one year, Coca-Cola has been aggressively adopting the inorganic growth path.During 2006, its acquisitions included Kerry Beverages, (KBL), which was subsequently,reappointed Coca-Cola China Industries (CCCIL). Coca-Cola acquired a controlling shareholdingin KBL, its bottling joint venture with the Kerry Group, in Hong Kong. The acquisition extendedCoca-Colas control over manufacturing and distribution joint ventures in nine Chinese provinces.In Germany the company acquired Apollinaris which sells sparkling and still mineral water inGermany. Coca-Cola has also acquired a 100% interest in TJC Holdings, a bottling company inSouth Africa. Coca-Cola also made acquisitions in Australia and New Zealand during 2006.These acquisitions strengthened Coca-Colas international operations. These also give Coca-Cola an opportunity for growth, through new product launch or greater penetration of existingmarkets. Stronger international operations increase the companys capacity to penetrate international markets and also gives it an opportunity to diversity its revenue stream. Growing bottled water market
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Bottled water is one of the fastest-growing segments in the worlds food and beverage marketowing to increasing health concerns. The market for bottled water in the US generated revenuesof about $15.6 billion in 2006. Market consumption volumes were estimated to be 30 billion litersin 2006. The market's consumption volume is expected to rise to 38.6 billion units by the end of2010. This represents a CAGR of 6.9% during 2005-2010. In terms of value, the bottled watermarket is forecast to reach $19.3 billion by the end of 2010. In the bottled water market, therevenue of flavored water (water-based, slightly sweetened refreshment drink) segment isgrowing by about $10 billion annually. The companys Dasani brand water is the third best-sellingbottled water in the US. Coca-Cola could leverage its strong position in the bottled water segment to take advantage of growing demand for flavored water. Growing Hispanic population in US Hispanics are growing rapidly both in number and economic power. As a result, they havebecome more important to marketers than ever before. In 2006, about 11.6 million UShouseholds were estimated to be Hispanic. This translates into a Hispanic population of about 42million. The US Census estimates that by 2020, the Hispanic population will reach 60 million oralmost 18% of the total US population. The economic influence of Hispanics is growing evenfaster than their population. Nielsen Media Research estimates that the buying power ofHispanics will exceed $1 trillion by 2008- a 55% increase over 2003 levels. Coca-Cola hasextensive operations and an extensive product portfolio in the US. The company can benefit from an expanding Hispanic population in the US, which would translate into higher consumption of Coca-Cola products and higher revenues for the company. Threats Intense competition Coca-Cola competes in the nonalcoholic beverages segment of thecommercial beverages industry. The company faces intense competition in various markets fromregional as well as global players. Also, the company faces competition from variousnonalcoholic sparkling beverages including juices and nectars and fruit drinks. In many of thecountries in which Coca-Cola operates, including the US, PepsiCo is one of the companysprimary competitors. Other significant competitors include Nestle, Cadbury Schweppes, GroupeDANONE and Kraft Foods. Competitive factors impacting the companys business includepricing, advertising, sales promotion programs, product innovation, and brand and trademarkdevelopment and protection. Intense competition could impact Coca-Colas market share andrevenue growth rates. Dependence on bottling partners Coca-Cola generates most of its revenues by selling concentrates and syrups
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to bottlers in whomit doesnt have any ownership interest or in which it has no controlling ownership interest. In2006, approximately 83% of its worldwide unit case volumes were produced and distributed bybottling partners in which the company did not have any controlling interests. As independentcompanies, its bottling partners, some of whom are publicly traded companies, make their ownbusiness decisions that may not always be in line with the companys interests. In addition, manyof its bottling partners have the right to manufacture or distribute their own products or certain products of other beverage companies. If Coca-Cola is unable to provide an appropriate mix of incentives to its bottling partners, then thepartners may take actions that, while maximizing their own short-term profits, may be detrimentalto Coca-Cola. These bottlers may devote more resources to business opportunities or productsother than those beneficial for Coca-Cola. Such actions could, in the long run, have an adverseeffect on Coca-Colas profitability. In addition, loss of one or more of its major customers by anyone of its major bottling partners could indirectly affect Coca-Colas business results. Suchdependence on third parties is a weak link in Coca-Colas operations and increases thecompanys business risks. Sluggish growth of carbonated beverages US consumers have started to look for greater variety in their drinks and are becoming increasingly health conscious. This has led to a decrease in the consumption of carbonated and other sweetened beverages in the US. The US carbonated soft drinks market generated total revenues of $63.9 billion in 2005, this representing a compound annual growth rate (CAGR) of only 0.2% for the five-year period spanning 2001-2005. The performance of the market is forecast to decelerate, with an anticipated compound annual rate of change (CAGR) of -0.3% for the five-year period 2005-2010 expected to drive the market to a value of $62.9 billion by the end of 2010. Moreover in the recent years, beverage companies such as Coca-Cola have been criticized for selling carbonated beverages with high amounts of sugar and unacceptable levels of dangerous chemical content, and have been implicated for facilitating poor diet and increasing childhood obesity. Moreover, the US is the companys core market. Coca-Cola already expects its performance in the region to be sluggish during 2007. Coca-Colas revenues could be adversely affected by a slowdown in the US carbonated beverage market

Q2: Business & marketing practices of Coca Cola in global market

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Select and highlight the business and marketing practices which Coca Cola has adopted when tapping into global markets.
A global company is one that can create a single product and only have to tweak elements for different markets. For example, Coca-Cola uses two formulas (one with sugar, one with corn syrup) for all markets. The product packaging in every country incorporates the contour bottle design and the dynamic ribbon in some way, shape, or form. However, the bottle or can also includes the countrys native language and is the same size as other beverage bottles or cans in that same country. How the product is distributed is also a country-by-country decision influenced by how the competition is being offered to the target market. Using Coca-Cola as an example again, not all cultures use vending machines. In the United States, beverages are sold by the pallet via warehouse stores. In India, this is not an option. Placement decisions must also consider the products position in the market place. For example, a high-end product would not want to be distributed via a dollar store in the United States. Conversely, a product promoted as the low-cost option in France would find limited success in a pricey boutique.

The Faces of Coca-Cola around the World

Hi! Thanks for the question. I have found the following Coca Cola company activities for 2003. I will categorize them according to different elements of the companys activities. I will also provide small snippets from the articles whenever possible so as to save you time but I highly recommend that you read them in their entirety so as to get a better understanding of the issues.

Market Analysis: 1. Coke vs. Pepsi No matter how hot or "cool" the flavor feud becomes this summer, Coke
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won't be sweating it too much. In fact, the company increased its market share of the $63 billion U.S. soft-drinks market by 0.6 percent to 44.3 percent in 2002. Industry analysts credit Vanilla Coke, launched last year, as a huge success Mountain Dew Code Red, a cherry-flavored variation of the drink. Industry watchers say Coke's pick of Sprite as its "golden child" this year is clever, given that Sprite is the company's third-strongest brand in the United States. Coke vs. Pepsi: What's your flavor? http://money.cnn.com/2003/04/17/news/companies/coke_pepsi/ for Coke similar to Pepsi's breakthrough in 2001 with

Financially speaking, Coke is the real thing. The company expects to produce an average of just over $6 billion in annual cash flow over the next five years. While it's true that the stock ran ahead of its sobering fundamentals during the 1990s, the frothy fizz is over. Coke vs. Pepsi http://www.fool.com/specials/2003/03041400sp.htm?source=mppromo

2. Cokes Global Water Business Coke's fledgling water network has come together with little fanfare and still resembles more of a patchwork than a formal strategy. But observers think Coke is aiming at getting a bigger and bigger handle on the world's water market. 'They've been aggressive in buying brands,' said John Faucher, an analyst with JP Morgan. 'From an acquisition standpoint, water has been a big focus for them.' However, water remains a small part of Coca-Cola's business. Coke still gets 85 per cent of its business from soft drinks. But in 2002, Coca-Cola's global water business grew by 68 per cent. Coke spokesman Kelly Brooks said the company's three-year compounded growth rate for water was 59 per cent. Coke slowly builds up a water empire

http://216.239.51.100/search?q=cache:9_igmbhPJdwJ:businesstimes.asia1.com.sg/storyprintfriendly/0,4568,84379,00.html+coke+ %22water+empire%22&hl=en&ie=UTF-8

---------------------New Projects and Business Moves: A. Products 1. Swerve After tinkering with milk products for at least two years, Coca-Cola is planning to roll out a new milk-based drink called Swerve. At the same time, Coke is dropping two brands that were in testing. Swerve will be made with at least 50 percent milk, Beverage Digest said Friday in a report that was confirmed by Coke. With a low fat content and about 150 calories per 12-ounce can, Swerve could find a niche in places like schools, where soft drinks are increasingly coming under fire. Coke swerves into dairy market http://www.montereyherald.com/mld/mcherald/business/5937039.htm The new drink, which will be called Swerve, will come in chocolate, vanilla-banana and blueberry flavors and contain more than 50 percent dairy products, allowing it to carry the "Real" seal of the American Dairy Association. Coke to unveil dairy drinks this summer http://www.bizjournals.com/atlanta/stories/2003/05/19/daily53.html

2. Sprite Remix (US) Atlanta-based Coke (NYSE: KO) said "Sprite Remix" will first hit shelves in 20-ounce bottles, and then will be available in additional package sizes later in the spring and summer. Coca-Cola plans new Sprite flavor http://atlanta.bizjournals.com/atlanta/stories/2003/02/24/daily17.htm l http://www2.cocacola.com/presscenter/nr_20030225_americas_sprite_remix.html
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3. Sprite Ice (Canada) http://www2.cocacola.com/presscenter/nr_20030409_canada_sprite_mint_flavor.html

4. Sprite Super Lemon (Hong Kong) http://www2.cocacola.com/presscenter/nr_20030402_china_sprite_super_lemon.html 5. Fanta Blueberry Plush (Thailand) http://www2.cocacola.com/presscenter/nr_20030620_thailand_fanta_blue_success.html 6. New Nestea Lemon (Thailand) http://www2.cocacola.com/presscenter/nr_20030306_thailand_nestea_launch.html 7. Coke Light Lemon (Germany) http://www2.cocacola.com/presscenter/nr_20030214_europe_coke_light_lemon.html 8. New Odwalla Products http://www2.cocacola.com/presscenter/nr_20030204_odwalla_new_juices.html 9. New Nescafe Patented Technology http://www2.cocacola.com/presscenter/nr_20030410_china_coffee_series.html 10. Improved Marocha Green Tea http://www2.cocacola.com/presscenter/nr_20030210_japan_marocha_tea.html

B. Promotional Programs 1. Theme Park Partnerships The world's largest beverage maker said Tuesday it has entered into a 10-year marketing partnership with Universal Parks & Resorts, a division of television and film giant Vivendi Universal.
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The new agreement also extends Coca-Cola's relationship to Universal Studios Hollywood and CityWalk Hollywood and Universal Orlando, which includes Universal's Islands of Adventure, Universal Studios Florida and CityWalk Orlando. Coke extends marketing partnership with Universal theme parks http://www.miami.com/mld/miamiherald/business/4892007.htm 2. Marketing Partnership with College Sports Network http://www2.cocacola.com/presscenter/nr_20030407_corporate_cstv_partnership.html

3. IHOP Deal Coca-Cola Foodservice and Hospitality, the division of Atlanta-based Coca-Cola North America that serves the restaurant and food service industry, will continue to be IHOP's preferred beverage provider, supplying soft drinks including Coke, Diet Coke and Sprite to the chain's restaurants. IHOP extends Coke contract http://losangeles.bizjournals.com/losangeles/stories/2003/05/26/daily 4.html 4. TV Network Marketing Alliance http://www2.cocacola.com/presscenter/nr_20030313_americas_tnt_alliance.html

C. Social Projects: 1. Africa AIDS Healthcare http://www2.cocacola.com/presscenter/nr_20030415_hivaids_benefits.html 2. Texas Recycling Program http://www2.cocacola.com/presscenter/nr_20030324_americas_nascar_recycling_program.ht ml 3. Independent Filmmaking http://www2.cocacola.com/presscenter/nr_20030305_americas_project_greenlight.html
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D. Management 1. Chief Marketing Officer Daniel P. Palumbo http://www2.cocacola.com/presscenter/nr_20030603_corporate_palumbo.html Coca-Cola Co. named an outsider its new chief marketing officer on Tuesday, four days after he resigned as an executive at Eastman Kodak Co. Daniel P. Palumbo worked at Rochester, N.Y.-based Eastman Kodak as a senior vice president and head of consumer imaging products and services - the photographic unit that accounts for half of the company's sales. The company announced he was leaving Friday to pursue other interests. Coke names outsider new chief marketing officer http://www.macon.com/mld/macon/news/local/6005397.htm 2. New Officers Senior Vice President Danny Strickland Vice Presidents Ralph Carlton and Harry L. Anderson http://www2.cocacola.com/presscenter/nr_20030416_corporate_elects_officers_regular_di vidend.html 3. Board of Directors Maria Elena Lagomasino http://www2.cocacola.com/presscenter/nr_20030416_corporate_shareowners_elects_lagomas ino.html 4. Coke Consolidated completes $53.5M deal http://charlotte.bizjournals.com/charlotte/stories/2003/03/31/daily1. html

--------------------International Projects: 1. Australia Soft drink manufacturer and distributor Coca-Cola Amatil has said it has increased its stake in water bottler Neverfail Springwater to
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76.11 per cent. Coke increases Neverfail stake http://www.foodingredientsfirst.com/newsmaker_article.asp? idNewsMaker=3681&fSite=AO545 SOFTDRINK company Coca-Cola Amatil Ltd has waded further into the bottled water market with its acquisition of Peats Ridge Springs' assets. The move is on top of CC-Amatil's $280 million hostile takeover offer for Neverfail Springwater, with some investors also speculating the group could be eyeing Palm Springs Ltd. Coke targets Peats Ridge http://www.news.com.au/common/story_page/0,4057,6532463%255E1702,00.h tml

2. India Finally, Coke is starting to inject some fizz into its Indian operations. On Feb. 28, the company plans to sell 49% of its Indian bottler, Hindustan Coca-Cola Beverages, for $41 million. Key to Coke's battle plans is operations chief Sanjeev Gupta. After being promoted from marketing director three years ago, the boyish, straight-talking Gupta persuaded his Coke bosses to change the way they do business. Finally, Coke Gets It Right in India http://www.businessweek.com/magazine/content/03_06/b3819080.htm

--------------------Lawsuits and other problems: 1. Fraud Claims A former employee of The Coca-Cola Co. filed a lawsuit against the company May 19 which charges it used theft, fraud and deception to cheat shareholders, customers and competitors. Coke hires firms to investigate fraud claims
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http://sanfrancisco.bizjournals.com/atlanta/stories/2003/05/19/daily2 0.html

2. India Environmental Problems The activists are protesting against a Coca-Cola plant located in Mehdiganj, some 20 kilometers from Varanasi. They claim that the plant draws electricity from two diesel power generators, one of which consumes 360 liters of diesel per hour. Two tube-wells draw thousands of liters of underground water. Water-Guzzling Coke Plant Triggers Protests in Indian Town http://story.news.yahoo.com/news? tmpl=story&cid=655&ncid=655&e=3&u=/oneworld/20030624/wl_oneworld/1050 21056456386

3. Indian Politics The government of India is on the verge of changing its policy because of the pressure exerted by the Atlanta, US-based soft drinks giant, Coca-Cola. Coke is one of the best-known brands in the world. But the corporation and its Indian associates have not exactly covered themselves with glory by the manner in which they appear to have successfully lobbied with the government in New Delhi to change the rules of the game. Finance Minister Jaswant Singh recently overruled the views of bureaucrats Cabinet change government norms related to divestment of equity shares by international companies in their Indian associates. How Coke arm-twisted the Indian government http://www.rediff.com/money/2003/jun/21paran.htm in his own ministry and recommended that the Union

4. Labor Problems Over 100 trade unionists and supporters marched through the Pilsen neighborhood on May 3 to rally in front of the Coca-Cola bottling plant on Cermak Road. The crowd had gathered to protest Cokes complicity in the murder of trade unionists in Coca-Colas bottling
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plants in Colombia. Stop Coke killings! http://www.newsandletters.org/Issues/2003/June/Coke_June03.htm Daft said Coke and its bottlers have not abused or condoned abuse of trade unions in Colombia and the company has worked hard to deal with human rights issues in China. In Venezuela, the company's operations were shut down during the national strike in January and February. The biggest decline abroad for Coke was in Germany, where unit case volume dropped 10 percent due to a new deposit law on nonreturnable packages, such as beer or soda cans. The January change resulted in major retailers pulling nonreturnable packages, Coke said. Coke shares plunge despite solid earnings http://www.kansascity.com/mld/kansascity/business/5646184.htm

5. Sports Houston subsidiary in an effort to stop it from using his picture on commemorative bottles sold in his hometown of Shanghai. Yao sues over Coke promotion http://www.philly.com/mld/dailynews/2003/05/27/sports/5950228.htm Rockets star Yao Ming is suing Coca-Cola's Chinese

6. OSHA violations A list released by OSHA in February that identifies 14,200 U.S. facilities that had accident and illness rates at twice the national average of about three illnesses or injuries for every 100 workers included 96 facilities owned by Coke bottlers. OSHA cites Coke for 222 violations http://sanjose.bizjournals.com/atlanta/stories/2003/04/14/story1.html

7. Coke NCAA deal Despite a national marketing and sponsorship partnership with soft drink giant Coca-Cola, when the NCAA's Frozen Four tournament is held
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at

Buffalo's

HSBC

Arena,

hockey

fans

will

be

drinking

Pepsi

products. The arena has a longstanding and exclusive arrangement with Pepsi. All non-alcoholic beverages served in the downtown arena are Pepsi or Pepsi-distributed. Coke deal won't dry up Pepsi http://buffalo.bizjournals.com/buffalo/stories/2003/04/07/story5.html

8. Burger King Lawsuit Burger King franchisees are organizing to seek up to $65 million in compensation from The Coca-Cola Co. for their expenses related to selling a failed Frozen Coke, USA Today reported on its Web site. Burger King franchisees debate lawsuit against Coke http://atlanta.bizjournals.com/atlanta/stories/2003/06/02/daily40.htm l

9. Defective Beverage Machines A former Coca-Cola manager alleged Wednesday that more than 80,000 of the company's frozen beverage machines nationwide are defective and tainting slush drinks with metal residue. Whitley said he notified Coke about the problem in February. A week later, he said, Coke gave him the worst performance review of his 11-year career and fired him seven weeks later. The complaint says the machines located at stores such as Burger King, 7-11 and Wal-Mart cost about $10,000 each and bring in about $100 million in annual syrup sales for Coke. Former employee claims Coke frozen beverage machines tainting product http://boston.com/dailynews/176/economy/Former_employee_claims_Coke_f r:.shtml

10. Sweden Naming Rights The Coca-Cola Co. and some Swedish people named Urge are locked in a naming-rights dispute - the surname is the same as a Coke citrus
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beverage. The family surname Urge also happens to be the name of a citrus drink bottled by Coke that's available only in Norway. Swedish law prohibits registration of trademarks that use someone else's family name. But the Court of Patent Appeals ruled in favor of Coca-Cola commonly known than the family name, which is pronounced OOR-geh." Coke, Swedes in Naming-Rights Dispute http://www.ledgerenquirer.com/mld/ledgerenquirer/business/5638546.htm last month, saying the English word urge was more

Q3: Application of strategic concepts and analytical techniques in practical context

Apply the strategic concepts and analytical techniques which you have studied relating them to practical examples. You should use recognised theories and models to support your arguments. Demonstrate critical understanding and application of relevant theories associated with global business and marketing strategies;

Show how organisations overall resources can be directed to meeting market requirements in the light of changing business and organisational environment;

Understand the holistic nature of strategy and apply analytical techniques to solve complex problems in real life organisations;

Use critical reflective skills to reflect on the impact of their understanding on the problem solving process

International marketing involves recognising that people all over the world have different needs. Companies like Gillette, Coca-Cola, BIC, and Cadbury Schweppes have brands that are recognised across the globe. While many of the products that these businesses sell are targeted at a global audience using a consistent marketing
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mix, it is also necessary to understand regional differences, hence the importance of international marketing. Organisations must accept that differences in values, customs, languages and currencies will mean that some products will only suit certain countries and that as well as there being global markets e.g. for BIC and Gillette razors, and for Coca-Cola drinks, there are important regional differences - for example advertising in China and India need to focus on local languages. Just as the marketing environment has to be assessed at home, the overseas potential of markets has to be carefully scrutinised. Finding relevant information takes longer because of the unfamiliarity of some locations. The potential market size, degree and type of competition, price, promotional differences, product differences as well as barriers to trade have to be analysed alongside the cost-effectiveness of various types of transport. The organisation then has to assess the scale of the investment and consider both short- and long-term targets for an adequate return. Before becoming involved in exporting, organization find the answers to two questions: 1. Is there a market for the product? 2. How far will it need to be adapted for overseas markets? The product must possess characteristics that make it acceptable for the market - these may be features like size, shape, design, performance and even colour. For example, red is a popular colour in Chinese-speaking areas. Organisations also have to consider different languages, customs and health and safety regulations. Standardisation If a company offers a product, which is undifferentiated between any of the markets to which it is offered, then standardisation is taking place. The great benefit of standardisation is the ability to compete with low costs over a large output. The diagram below illustrates the use of a standardised products and marketing mix:

In most markets, however, there are many barriers to standardisation. It is not difficult to think about the standard marketing mix for a product and how this might vary from one country to another. For example: product - tastes and habits differ between markets price - consumers have different incomes place - systems of distribution vary widely promotion - Consumers' media habits vary, as do language skills and levels of literacy.
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With differentiated marketing, on the other hand, an organisation will segment it, and offer marketing mix to meet the needs of each of its markets. The great benefit of standardisation is that costs are lowered, profitability is increased and the task of supplying different markets becomes substantially easier. The diagram illustrates the process of adapting the marketing mix to meet the needs of different geographical markets:

However, it could also be argued that the success of many products in international markets has come about because marketers have successfully adapted their marketing mix to meet local needs. To a large extent the standardisation/adaptation dilemma depends upon an organisation's view of its overseas markets and the degree to which it is prepared to commit itself to meeting the needs of overseas customers. There are three main approaches, which can be applied:

1. Polycentrism - with this marketing approach, a business will establish subsidiaries, each with their own marketing objectives and policies, which are decentralised from the parent company. Adaptation takes place in every market using different mixes to satisfy customer requirements.

2. Ethnocentrism - overseas operations are considered to be of little importance. Plans for overseas markets are developed at home. There is little research, the marketing mix is standardised and there is no real attention to different customer needs and requirements in each market.
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3. Geocentrism - standardisation takes place wherever possible and adaptation takes place where necessary. This is a pragmatic approach.

A confectionery and soft drinks manufacturer like Cadbury Schweppes typically produces a range of standard items that are sold throughout the globe using similar marketing mix. However, differences may occur in such aspects as distribution channels and pricing as well as advertising in languages that are relevant to particular cultures. In addition such a company would produce some products which cater for particular tastes, and which are relevant to particular cultures. New products might then be tested in a regional area, before consideration of which other areas of the globe to roll out that product to.

Standardisation - refers to manufacturing, marketing or employing other processes in a standard way.

Differentiation - is the process of making products or aspects of the marketing mix different so as to appeal to different markets

PRODUCTS: There are different brands of the Coca Cola Company, which are currently in use throughout the world. This company not only deals in the carbonated drinks but also other drinks.While launching its product, the marketing team considers the culture of the country. Major brands of coca cola Coke
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Sprite Fanta Diet coke Coke classic 17

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The over all volume of this company is as follows. (Figure) The commitment of the company is to devote resources to water only in markets where itexpects profitable growth. This strategy has paid dividends. The company has successfullyapplied its approach to brands in several key markets, including Ciel in Mexico, Mori NoMizudayori in Japan,Bonaqua in Russia and Kinley in India. Backed by a strong network ofbottling partners through out the United States, Dasani became the nation's fastest-growingwater brand. In Eurasia, the entire Turkuaz brand team worked together to launch Turkey'sfirst purified water brand. This year, Coca-Cola Company also successfully energized amajor piece of its beverage strategywater. By the end of 2001, its bottled water volumeexceeded 570 million unit cases, making it the second biggest contributor to the growth ofthe company after carbonated soft drinks. Three of the water brands, Dasani, Ciel andBonaqua each achieved sales of over 100 million unit cases for the year. In 2001and 2002, the company has also made good progress in coffees and teas.Beverage Partners Worldwide, the renewed and strengthened marketing partnership withNestl S.A., began operations in 2001. This partnership combines
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Nestl's knowledge inlife science, research and development with the expertise of Coca Cola Company in brandbuilding and distribution. At the same time, the company grew Georgia coffee in Japan by 3 percent through award-winning marketing in a category that was flat for the year. Also in Japan where The Coca-Cola Company is the leader in the total tea category, the secondlargest category in thenon-alcoholic ready-to-drink segmentit launched Marocha Green Tea. With sales of 46million unit cases for the year, Marocha Green Tea is the fastest-growing product in thefastest-growing category: green tea. The popularity of Marocha is also recognized by theindustry with a leading trade journal naming Marocha the most popular new food andbeverage product of the year. 18

Know the most recognized word on the planet after OK! 19

Coca-Cola Global Business and Marketing Strategy Introduction As domestic markets mature, it is becoming more and more fashionable for organisations to seek growth through opportunities in foreign countries. Faster communication, new technologies and improved transport links are making international markets more accessible and businesses pursuing a global position can experience an upsurge in brand awareness and cost effectiveness. Global marketing is a relatively new concept linked to these developments. In the main, it is concerned with decisions for integrating or standardizing marketing actions across a number of geographic markets. This does not rule out any customization of the marketing mix to individual countries but suggests that organisations should capitalize on similarities between markets to build competitive
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advantage. Compelling cases can be put forward for both a standardization or adaptation approach to international marketing practice. These arguments are keenly explored, drawing from examples of Coca-Cola's international marketing programme to elucidate key points. Background of Coca-Cola As the world's largest manufacturer and distributor of non-alcoholic beverages, CocaCola is certainly no stranger to global marketing. Established in the US, Coca-Cola initiated its global expansion in 1919 and now markets to more than 200 countries worldwide. It is one of the most recognizable brands on the planet and also owns a large portfolio of other soft drink brands including Schweppes, Oasis, 5 alive, Kea Oar, Fanta, Lilt, Dr Pepper, Sprite and Powerade. Despite this, Coca-Cola often struggles to maintain its market share over its main rival PepsiCo in some overseas markets, particularly Asian countries. Arguments for Standardization

Converging customer needs and preferences

It is proposed by Levitt that the forces of globalization driven by technology and wider travel are leading to more homogenized customer needs and wants worldwide. This paves the way for the building of global brand identities where companies are able to export their domestic brands to mass markets abroad and consumers will react to them in similar ways. In this sense, standardized marketing with a universal product and message can be an integrating force across national borders. To send out different communication messages across countries could lead to customer confusion and even dilution of the brand. In keeping with this, Coca-Cola sells virtually the same Coke beverage worldwide. The design of Coca-Cola soft drinks has changed little in its history, from the logo to the distinctive glass bottle. These unique and consistent characteristics evoke a strong brand image which has cross-cultural appeal.

Economies of scale/experience

In many industries, companies can reap cost advantages by operating on a global scale and ultimately improve their all-round competitiveness. Using a centralized structure, a firm can draw economies from bulk purchase discounts or by sharing functions such as product development, marketing, production and managerial resources among different markets.
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In Coca-Cola's example, economies are gained through the competent running of a large-scale franchising system for its bottling operations.

Technological viability

In sectors where technological and production processes are homogeneous, extra weight is placed on standardization of products as a prerequisite for success. As part of its vision that Coke should taste the same around the world, Coca-Cola has chosen to standardize its product and manufacturing process. The knock on effects of this are more streamlined procedures and greater cost efficiencies. It is worth noting Levitt's argument that companies' which opt to produce an assortment of products serving different customer segments would be unable to survive globalization due to inefficiencies in their operation. Arguments for Adaptation

Consumer Diversity

Supporters of the adaptation view contend that, regardless of globalization, consumers in different countries continue to vary dramatically in their geographic, demographic, economic and cultural characteristics. It is sensible to imply that, where there are differences in product preferences, product uses, attitudes, shopping patterns, income levels and education, a business will need to adapt its product offering or communication programme in some shape or form. By carefully singling out the most significant differences, organisations can tailor products to suit local tastes and conditions. Dennis and Harris pronounced that global branding strategy should actually be a local plan for each component market, as to apply a standard approach worldwide without considering local preferences and cultural differences is doomed to failure. Food and beverage organisations in particular, can easily fall prey to obstacles such as regional taste and category development issues. On the other hand, organisations that market internationally have to bear in mind that customizing communication and product strategy will increase overall marketing costs. Traditionally, Coca-Cola used a standardized marketing campaign strategy where it would pull advertisements for specific markets from a common pool of adverts designed to have universal appeal. Lately, Coca-Cola has chosen to back away from a full standardization approach and to instead tweak its efforts to accommodate local culture and nuances. Its former approach was deemed too rigid with some of its campaigns not always successfully
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transcending national borders. Although the branding and position of Coca-Cola remains consistent worldwide, its execution is based on what is judged to be best for each local market. This is evident in its 'Live on the Coke Side of Life' advertisement campaign launched in 2006 where elements of local culture are included. On the product side, Coke bottles and cans include the target countries native language and are sized to match up to other beverage bottles or cans in that country. The company also offers a varied product line-up to capture different consumer tastes, for example, soy drinks for its Asian markets.

3.2 Differences in Infrastructure and Regulations

Several multinational companies, including Coca-Cola, have discovered that operating from a completely central and standardized perspective can impede the progress of the company, especially when it comes to understanding and integrating with local conditions. Coca-Cola is well known for its widespread accessibility through a variety of channels such as large supermarkets, petrol stations, restaurants, hospitals, cafes and so on. Having a strong brand gave Coca-Cola the supplier bargaining power it needed to break into the more complex and entrenched distribution systems of lots of countries. Adding the fact that food laws can vary tremendously from one country to another, it is not surprising that Coca-Cola describes itself as multi-local'. Despite a standardized product, Coca-Cola is obliged to adopt different approaches to the global marketplace. This goes some way to disproving Levitt's idea that one size fits all and emphasizes a plan global, act local approach instead. Conclusion In essence, the arguments above reveal that global marketing is not necessarily an all or nothing proposition. Companies have the freedom to choose from many possibilities on the spectrum from total standardization through to complete customization. Clearly there are circumstances where multinationals can gain through increased standardization of products and marketing, especially with respect to keeping costs down and building brand power. On the other hand, in conditions where national market differences are more marked, this strategy would harm the company and its reputation. By making standardization decisions using target market conditions as its starting point, an organization can
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ensure that, in the long-term, customers are being offered what they want. Although Coca-Cola can seemingly gain a great deal from a standardized agenda, its decision to combine global and local resources is ultimately more long-standing in a market where national customer differences are influential. References;

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