The Coca-Cola Company is one of the biggest manufacturer and distributor of soft drinks worldwide. With the incredible number of 1.6 billion beverages sold each day in more than 200 countries, it is incorrect to relate the company just to the famous drink; Coca-Cola has a wide product range such as Fanta, Sprite, Kinley and many more. We were inspired by Coca-Cola's mission statement “Our Roadmap starts with our mission, which is enduring. It declares our purpose as a company and serves as the standard against which we weigh our actions and decisions” (Mission, Vision & Values). Coca- Cola's purposes are “to refresh the world, to inspire moments of optimism and happiness, to create value and make a difference”(Mission, Vision & Values). These are the main reasons why we decided to pursue our Group Project towards the understanding of such a meaningful company for the world's economy that will for sure be able to make you “Taste the difference”.
Horizon 2020 is the biggest European Union Research and Innovation programme ever with nearly €80 billion of funding available from 2014 to 2020.
It is possible to affirm that Coca-Cola Company can be considered of this amazing project because of its 2020 Sustainability Goals. Coca-Cola wants to achieve challenging purposes with the help of its 25 bottling partners around the world. As is stated in a letter written by Muhtar Kent, CEO of Coca-Cola Company, and Alexis Herman, U.S Secretary of Labour under the presidency of Bill Clinton, “Sustainability is a priority for the board of directors and the company's executive leaders.”(2017 Sustainability Report, M.Kent)
The mains goals are related to:
the goal is to enhance the sustainability sources of Coca-Cola key agricultural ingredients.
the company wants to reduce carbon emissions in their value chain.
Coca-Cola Company is willing to give back at least 1 percent of the company's operating income annually.
Human & workplace rights
Coca-Cola wants to achieve at least 98 percent compliance with independent franchise bottling partners and 95 percent compliance among their suppliers throughout the Coca-Cola Suppliers Guiding Principles (SGP).
Packaging & Recycling
Coca-Cola wants to work with its partners to recover and recycle the equivalent of 75 percent of the bottles and cans introduced in the market.
the purpose is to return to communities and nature the amount of water equivalent to what the company uses in its finished beverages and to improve water efficiency in manufacturing operations by a factor of 25 percent.
Women's economic empowerment
the company wants to succeed in enabling the economic empowerment of 5 million women across their global value chain cumulative.
The biggest strength of the Coca-Cola company is its unique brand identity, which also contributes to the highly loyal consumers. It is a recognisable brand all over the world. Coca-cola beverage is supplied into 200 countries and enjoys a huge demand for the famous product.
This is the top-ranked brand in the world (no. 4 on Interbrand's annual Best Global Brands in 2017), with an estimated value of 69,733 $m.
Coca-cola is so much more than coca-cola. It owns brands such as Sprite, Fanta, Smart Water, Powerade, Kinley and more.
The Coca-Cola drink has its own special taste, thanks to that it is hard to find the exact substitute in the market.
Consumers not only enjoy the flavour of the beverage, but also the fact that they belong to the certain community. Coca-cola is perceived as an edgy drink, which is a necessity for every huge party (formal and informal).
Coca-cola reaches a wide audience, which means it addresses its message, for example through the commercials, to the young and adult generation. The company achieved this goal by focusing on family values and love.
Coca-cola's image struggle with health-related problems. Due to the fact that people are more educated and aware of good nutrition, healthy lifestyle became extremely important and trendy. Consumption of carbonated drinks leads to obesity, diabetes and other illnesses.
The company purchased many different flavoured versions of iconic coca-cola (coca-cola vanilla, cherry etc.), which did not meet with huge enthusiasm. People tend to choose no-flavoured one.
Poor water management. Coca-cola has some problems with water management- overused resources in dry areas.
Coca-cola could more focus on the food and health business. That would lead to increase of the number of consumers and brighten in the eyes of people concern about the health issues. Coca-cola has a limited range of food products. However, there are lots of products, which seem like result of collaboration with Coca-cola, but in fact they are not. Maybe this is the field to growth, coca-cola gummy, lollipops?
Coca-cola could change its packaging to more eco friendly, as the massive usage of plastic bothers many consumers.
The company could think about the premium version of Coca-cola for example in more exclusive bottles with an artificial shortage to make it more luxurious.
The biggest threat to Coca-cola its still growing substitute Pepsi industry, which offers a wider range of products to consumers. Coca-cola is an unambiguous winner in that competition, but the firm should be still aware of Pepsi power. Coca-cola supplies only beverages, while Pepsi sells despite drinks also snacks like Lays and Kurkure.
Healthy beverages such as smoothies or fresh juices are slightly changing the beverage market. Now it seems unlikely that those drinks will highly emasculate to Coca-cola company, but this is still a threat that should be considered.
Coca-cola is under control of Food and Drug Administration (FDA), which means manufacture procedures are regulated by the US Government. However, Coca-cola is the transnational corporation (TNC) and it supplies its products to more than 200 countries. Law may vary from country to country but obviously, it needs to be observed everywhere by the firm. That is why Coca-cola has to be extremely careful to follow taxes and laws within every country. Changes in taxes may significantly change the company's revenues.
“Coca-Cola's operations have particularly been blamed for exacerbating water shortages in regions that suffer from a lack of water resources and rainfall. Nowhere has this been better documented than in India, where there are now community campaigns against the company in several states.” (War or want, Fighting global poverty)
Without water there is practically no business for coca-cola, therefore the company needs to focus on water management. It should more relay on its own aquifers, in order not to destroy local agriculture, based on irrigation.
On the graph 3 is clearly visible that the operating revenues worldwide from 2007 to 2010 were significantly lower in comparison to later years, it was caused by the 2008 stock exchange crisis. In 2011 situation stabilised, however, from 2012 the revenues started declining year by year. This was a consequence of both social and economic factors, which contributed to the cut of 1,200 jobs. Thanks to those actions Coca-cola is expecting to save $3.8bn by 2019. (Independent, Z. Rodionova)
Consumption of junk food and sugary beverages significantly declined in recent years, as people tend to choose a healthier lifestyle. The vast number of campaigns like for example Jamie Oliver's Food Revolution and raising awareness by governments decreased demand for Coca-cola. People realised that huge consumption of soda leads to obesity, diabetes and other illnesses. The company response was, for example, Coca-cola Zero, which is a healthier substitute of primary drink. However, this cannot entirely change the company's image. That is why the firm spends a lot on advertising, to promote family and love.
Technology is one of the most relevant factors for the big companies like Coca-cola, because it operates on three main sectors: production, packaging and distribution. In order to generate greater revenues, the company needs to invest in the technology. It guarantees the cost, time saving and more efficient supply chain.
Coca-cola had serious problems with water management, as its actions contributed to the water shortages in many regions of the world (India, Africa). However, the company determined sustainability goals for 2020 and it is consequently achieving them. The aims are focused on: agriculture, climate, human rights, water stewardship and women's economic empowerment. Moreover, Coca-cola invested in projects like RAIN and CARE to improve agriculture. Thanks to those goals the company significantly changed its image, which is highly important and can generate greater revenues.
As it was mentioned before the law may vary from country to country and compliance needs to be addressed. In the past, Coca-cola had some difficulties with obeying the law for example with the labour treatment. To prevent the company from a similar situation in the future, Coca-cola has its own ethics and compliance program to be sure that the firm work legally in every part of the world.
Coca-Cola Company Operations
An operating system is a network of activities and buffers that transform flow units (inputs) in products (output). For a company like Coca-Cola, it is very important to have an extremely efficient and effective operations management in order to ensure the highest standards and processes as possible.
We can consider being the inputs of the whole process the chemicals, the vanilla beans, the kola nuts, the sweeteners and the cans; the outputs are the finished soft drink and also the customers' satisfaction.
In order to complete the process, Coca-Cola Company uses a particular management approach called Total Quality Management (TQM); the purpose of this approach is to focus on customer satisfaction for long-term success. This is made by improving the quality of outputs trough improvements in the internal practices.
For this reason, Coca-Cola has very high standards regarding the selection of the raw ingredients and it integrated only high-quality businesses as suppliers. All the requirements are managed through a quality management program called the Coca-Cola Operating Requirements (KORE) that enables Coca-Cola to promote the highest standards in product safety and quality.
Regarding the inventory management, Coca-Cola Company uses a very innovative system called “Track it” which was able to make the company save time, manpower and money. The system is able to collect all the information just by scanning the unique printed barcode of every product, which represents the machine's special asset number, and to transfer them in just one database that can be examined very easily. “Track it” was a need for the company as long as it has a huge number of vending machines.
Coca-Cola is one of the most recognised companies in the world: researchers estimate that almost 94% of the world population is able to recognise the red and white Coca-Cola logo. This is possible because year after year Coca-Cola has expanded the traditional formula for advertising by adopting a multichannel approach in order to reach a bigger reception radius: not only paper and visual ads but also a new Coke TV, advertisements on social media via hashtags and a new Coca-Cola emoji. As an example, in 2016 the company has still spent 10% of its revenue ($4,000,000,000) on advertisement and marketing campaign tactics across multiple geographic regions.
Coca-Cola focuses on selling abstract positive conceptions such as happiness, love and the idea of sharing. It uses a global marketing approach in order to penetrate nearly every market in the world. The strategy is to think globally but act locally: the firm does pursue a basic international marketing strategy but at the same time, it is adapted to local conditions and tastes of a specific geographical area (differences in distribution and differences in media). It possible to affirm that Coca-Cola is part of those companies that we can commonly refer to as “glocal”.
One of the best Coca-Cola advertisement was based on a rebranding strategy in which the brand name was replaced with names and general nicknames such as mom, dad and mate(the script and the colour remained the same and they were immediately recognisable). The campaign started in 2011 in Australia where 250,000,000 named bottles were sold within a population of nearly 24,000,000 people(“The Secret Behind Coca-Cola Marketing Strategy”). After social media coverage blowing up, the campaign spread across the globe. The results were fascinating as the volume increased 4%, the sale transactions grew 3% and the Facebook traffic leap 870% (“Share a Coke”). The campaign capitalised on the global trend of self-expression and sharing by enhancing the power of names, our own unique identifier.
This campaign is just one powerful example of the incredible capacity of the company to engage with their customers and to build very strong brand loyalty. Coca-Cola is able to deliver revolutionary advertising tactics that assist the sales of their products worldwide.
Coca-Cola Company is willing to transmit important values such as collaboration, integrity, passion, diversity and sharing. The relation between the company and the customers is the easiest and fastest way to complete this goal.
In order to have the most effective targeting strategy, Coca-Cola first identified the different prospects groups, then choose among them the ones it can serve and finally create offerings that apply to the needs of the chosen target segments. Coca-Cola serves customers all over the world and currently make no difference of gender.
The brand mainly targets 12 to 30 years old costumers reaching them through partnership, for example with McDonald's, or thanks to its reputation and value. However, the most potential is the age group from 18-25 that covers around 40% of total age segments (“Coca-Cola targeting and positioning”). Consumers are mainly students and family oriented people that love sharing moments of happiness and joy.
Human Resource Management
Coca-Company Human Resource Management reflects the values of the company. The motto is “One Company. One Team. One Passion”. When a new employee enters the company, he/she is able to experience a uniquely diverse environment where creative and fresh thinking is encouraged. At Coca-Cola Company it is strongly believed that are the people working there who make magic happen. For this reason, they are committed to extending education and development programs to associates at all levels of the organisation(“Why work at the Coca-Cola Company?”). Each Coca-Cola employee is considered extremely important to reach the vision and the innovation that the company wants to give to the world. Therefore, the working environment provides equal employment opportunities, and equal employment benefits such as base salary, annual incentives and long-term incentives. The employees work in an environment where they can excel, develop skills for improvement, and move toward their career goals.
Coca-Cola Business Model and the Price Strategy
The Coca-Cola company collaborate with the Coca-Cola HBC (Coca-Cola Hellenic Bottling Company). In order to produce the finished products (in cans and bottles), they supply Coca-Cola HBC with a concentrated syrup, which adds purified water and sweeteners. Afterwards, the final product is distributed to retailers, vending machines and restaurants. The Coca-Cola Company creates demand through marketing while Coca-Cola HBC and other bottling partners meet this demand.
The price strategy is one of the most important branches of management. Due to the wide range of products, the company had to imply different price strategies:
Price skimming: Initially charging high prices to earn maximum revenue.
Market price: Setting the price base on competitors prices.
Market penetration: Charge a low price to sell as much as possible.
Initially, in order to set the price the company utilised a cost-based estimating framework. At a certain point, they started to utilise a market-entrance evaluating at its cost. With the entrance to the market of strong competitors like Pepsi, the Coca-Cola started the competition based pricing. In addition to that strategy the company started using psychological price strategy from 2009, for example, they set the price of 2,49$ for 2l of Coke instead 2,50$, so that it seems cheaper. Moreover, the Coca-Cola company uses promotional pricing strategy to increase their sells, slightly reducing revenues from single sales. Furthermore, they implemented the segmented price strategy based on different types of packaging. Coca-cola costs more in a glass than in a can and also prices are different in the restaurants and stores.
...(download the rest of the essay above)