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Essay: Evaluate the strategy process of the Coca-Cola brand

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The aim of this assignment is to evaluate the strategy process of the Coca-Cola brand while discussing characteristics of deliberate and emergent strategies as examined by Mintzberg and Waters in their “Of Strategies, Deliberate and Emergent” journal. I chose the Coca-Cola brand for this assignment to examine how the strategic management of Coca-Cola is the reason behind it continuously retaining its title as the leader in its industry, especially amongst its strong competitors. The development of this strategy interconnects with the constant waves of innovation by Coca-Cola since the beginning of the brand in 1886, which will also be discussed.

It is important to have a comprehensive understanding of the terms deliberate and emergent as strategy formation terms and the difference between them, as they can be applied to understand any small, medium or multinational business. Mintzberg and Waters’ “Of Strategies, Deliberate and Emergent” journal provides a very good foundation of knowledge for these. According to Mintzberg and Waters, “the fundamental difference between deliberate and emergent strategy is that whereas the former focuses on direction and control – getting desired things done – the latter opens up this notion of ‘strategic learning” (Mintzberg and Waters, 1985). This view gives rise to the concept that there are more advantages than disadvantages to both ends of the spectrum and that companies should strive to incorporate both into their overall strategy. Any company, regardless of the industry they are in, will always have a mix of both deliberate and emergent in their strategy but will be bias towards one. Companies need to have a management which has specific intentions for the business and outlined plans on how to achieve these goals. Once these plans are executed, the business is then part of a learning process as their behaviours and actions will be affected by responses to changes in the marketplace (Mintzberg and Waters 1985).

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“Leaders at the centre of authority formulate their intentions as precisely as possible and then strive for their implementation” (Mintzberg and Waters 1985). A long-term, deliberate plan of Coca-Cola that has spanned over a decade is its operation of refranchising 100% of North American bottling territories by the end of 2017 (Coca-Cola 2011). This refranchise has been very successful so far as the company is regularly announcing new deals and due date expected to be even sooner than estimated. This demonstrates that their tightly-controlled, deliberate plan is doing well. Please refer to the image 1 in appendices which demonstrates this refranchise.

One example of an incredible entrepreneurial strategy by Coca-Cola came internally from an employee, Dan Vermeer, the director of Sustainable Value Chain. Dan Vermeer had a strategic vision regarding water sustainability which Coca-Cola implemented globally in 2005. By working with multiple different stakeholders, Vermeer’s idea involved developing water scarcity solutions to help the company becoming water neutral in different manufacturing operations. This not only helped Coca-Cola reduce the risk that is using such a vast amount a scarce resource but it also sparked a number of water sustainability projects in over 50 countries. (Coca-Cola 2012).

Coca-Cola has been pursuing a humanitarian ideology as their vision and identity since they began. This began with their 1971 ad “Teach the World to Sing” which showed people from different races and nationalities holding a bottle of Coca-Cola asking the world to sing while the Vietnam War was going on in the background. Coca-Cola made a cultural statement here by indicating how acts of love can overcome the Vietnam War, demonstrating its brand’s ideology. This ideology still exists as strong as ever through Coca-Cola’s marketing and also its charitable donations. The entrepreneurial strategy of water sustainability initiatives, as mentioned above, is another example of this ideology.

Top-management “set general guidelines for behaviour – define the boundaries – and let other actors manoeuvre them” (Mintzberg and Waters 1985). As mentioned earlier, Coca-Cola strives to send out a ‘happiness’ message with its brand, but this must be established differently in every country and culture it sells to. Different politics, consumers and environments prove this to be a challenge. In an interview with Ahmet C. Bozer, president of the Coca-Cola Company’s Eurasia and Africa Group, he explains that there is a functional team in every region Coca-Cola is involved in and each of these are trained to work as part of a worldwide team to formulate and develop strategic plans to suit each market. Bozer also explains that each local team remains in contact with the global team in the Atlanta headquarters “through the finance and marketing communities” (Holstein 2011).

The process strategy of Coca-Cola is very similar to the Umbrella regarding the different divisions in different regions. However, this uniform global strategy allows the different divisions to explore their boundaries and come up with new ideas. The top-management designed the strategy to always promote “happiness and optimism” and the regional quarters have the freedom to adapt how they sell this. Ahmet C. Bozer gave an example of how the marketing team in the Egyptian division created a unique and successful marketing campaign during the Arab Spring (Holstein 2011). This campaign could be seen as deliberate as it was a planned marketing campaign which reflects Coca-Cola’s basic ideology. It can also be seen as emergent as Coca-Cola Egypt was reacting to an external cultural issue at the time.

In 2013, Coca-Cola launched a new strategy platform called ‘Coca-Cola Founder’ which involves them partnering with external entrepreneurs. The Founder start-ups have access to Coca-Cola’s equipment, event partnerships, media relationships, distribution channels, and expertise in multiple areas such as marketing, tax, supply chain, and more to test, build and scale their ideas. Coca-Cola receives no equity or return from the start-ups which is what makes them very different from other ‘accelerators’ (Coca-Cola 2017). Coca-Cola only invests in the best entrepreneurs, so when they are successful it reflects very well on them as an investor.

A consensus strategy is “not driven by any intentions of a central management, it just evolves through the results of a host of individual actions” (Mintzberg and Waters 1985). When Coca-Cola was under severe pressure from the external environment because the whole beverage industry was under scrutiny for being closely linked with obesity (further explained as imposed strategy) it reacted by developing a product to suit these issues (Coca-Cola Zero). Not only did this product help Coca-Cola in this testing time, but it ended up sparking a whole range of ‘sugar alternative’ products and a focus on tackling obesity for the company which has landed them a new niche of customers.

For the past number of years, all soda companies such as Coca-Cola and Pepsi etc. have been in negative limelight globally, as the relationship between soft drinks and obesity has been a widely discussed. Both the Governments and consumers are clear examples of Mintzberg and Waters’ “External individual or group with a deal of influence over the organisation imposes a strategy on it”(Mintzberg and Waters 1985). Coca-Cola dealt with this issue in a number of different ways. Soon after George Osbourne, British Finance Minister, announced the introduction of a sugar tax, Coca-Cola developed Coke Zero as a healthier alternative for their regular beverage (Zillman 2016).

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In my opinion, Coca-Cola is a slightly more deliberate company than it is emergent. We can see from the more deliberate of the 8 Categories of Strategy above, that Coca-Cola has always been very successful in forming and implementing plans set out by the top management in Atlanta, Georgia. Not only are the top management plans carried out impeccably, such as the refranchising plan and several acquisitions Coca-Cola has made over the years, but the regional divisions implement their own valuable ideas with clear intentions from functional managers that are fitting to the overall brands ideological strategy. It is important to note that very few industries change as rapidly as the non-alcoholic beverage industry does. There are constantly different tastes and preferences from consumers and brand new innovations in the manufacturing and retail sectors of the beverages industry. These are quite emergent characteristics for any industry. With Coca-Cola being slightly more deliberate, this would give the impression that they are in trouble. However, Coca-Cola has been the significant leader in the global marketplace since it was first established. They have, by no means, ever been left behind by emergent changes in the industry they work in, but instead, have always managed and utilised to their advantage any surprises that have cropped up throughout the years.

Although they have always been market leader, this does not mean that they have not been fully prepared for, or affected by, external emergent issues throughout the years. But when they have, they have reacted very well and deliberately. Coca-Cola acknowledged that the non-alcoholic beverages industry has “created an environment in which speed, precision and empowered employees determine who wins in the marketplace” (Coca-Cola 2016). Coca-Cola took these rapidly changing, emergent aspects of the industry and seized them as an opportunity to improve. In early 2016, Coca-Cola realized that for their corporation to keep up with this environment and to not slack on their growth momentum, they needed to change their international structure. Coca-Cola announced a change in their organizational structure worldwide “to better align its operating units against its global bottling footprint and to promote and develop key Coca-Cola leaders” (Coca-Cola 2016). Coca-Cola also decided to invest a lot more into their employees and the environments they work in to “nourish curiosity, learning, innovation and growth” (Coca-Cola 2016). This is one example where Coca-Cola took its environments emerging characteristics and deliberately utilized them to improve.

Another example of Coca-Cola being successfully deliberate in an emerging environment is the imposed example explained earlier where Coca-Cola had to be reactive and adjust many different features of their business when the soda-drink beverage industry was being negatively portrayed in the public. Coca-Cola was pushed to a strategic limit here but worked well throughout this difficult time, and still continues to do so. It controlled its marketplace well by expanding their product line to suit consumers who wanted to cut down on sugar and calories by using Stevia sweeteners. It also agreed with the argument that obesity is an epidemic and has shown huge involvement in trying to tackle this problem. Coca-Cola has a “Together Counts ™” campaign which provides tips, tools and lesson plans to teachers and parents alike” (Gable, 2013). Coca-Cola also became a founding member of The Healthy Weight Commitment Foundation (HWCF) along with over 230 other organisations (Gable, 2017). In my opinion, Coca-Cola strikes a perfect balance between being deliberate and emergent in the industry they are in. Although they are slightly more deliberate than their environment, it does not negatively affect their success.

In 2014, Coca-Cola Israel created a revolutionary, innovative, internal technology whereby a special algorithm gave the printers an ability to produce millions of different designs for their bottles in all sizes (see image in appendices). This original technology was not just an internally oriented innovation which changed how they manufactured their bottles but it also sparked an innovative, external marketing campaign “Extraordinary Diet Coke Collection” (Coca-Cola 2017). Coca-Cola produced hundreds of differently designed billboards to advertise this new design. This marketing campaign took social media by storm and even eBay began selling these unique bottles for up to 200$ each (Coca-Cola 2016). Coca-Cola used the essence of their brands ideology of happiness and optimism by creating the belief that every consumer is as unique as each bottle. This was not a radical, risky innovation by Coca-Cola which success took them by surprise. But rather, a steady and planned innovation that Coca-Cola brought to the marketplace from their emerging, developing market in Israel. Coca-Cola has been operating successfully in Israel’s innovative nation where they have remained “committed to investing and innovating to strengthen its business, the beverages it produces and the contribution it can make to local communities” (Coca-Cola 2016).

Subsequent to this successful and well managed innovation, Coca-Cola used this plateau to launch yet another productive technology innovation in Israel. Coca-Cola teamed up with Gett (Israel\’s popular taxi-hailing app) to produce a TV “commercial that prompts viewers to order an immediate delivery of two bottles of Coke in a branded mini-cooler” (Coca-Cola 2016). They added ultrasonic waves to the TV ad which prompted the app immediately on the viewer’s phone and within minutes a coca cola would be delivered to their door. Coca-Cola practices open innovation which can be seen through all of the conscious decisions it makes regarding the research & development it carries out, how it brings its innovation to the market and its use of internal and external ideas. Coca-Cola have never been shy to team up with other companies who may have more expertise in a certain area. This can be seen in their partnership with Gett in Israel and all of the start-ups it shares it expertise freely with.

“Strategic planning has a negative effect on innovative effect on innovative activity but a positive effect on financial performance” (Song et al 2015). As discussed earlier, Coca-Cola is a deliberate company that is market leader in a slightly more emergent environment. Even Coca-Cola’s innovations were carefully planned out with budgets and different criteria. Their innovations are also carefully controlled and managed by global and regional leaders so as to be as successful and productive as they can, while also leveraging them as a plateau to launch another wave of innovation. When one considers the initial perception in Songs journal, this does not seem to be the case for Coca-Cola as they are constantly developing internal and external innovations and had a market capitalization of $192.8billion in 2016 (Forbes 2016). Song’s later conclusion that “exploiting contingencies with firm-level characteristics managers can and have used strategic planning without trade-off” (Song 2015) depicts the overall strategy that Coca-Cola has in place since 1888. Strategies such as well deliberated long-term plans to refranchise, clever acquisitions, a clear humanitarian ideology, functional leaders all over the world, continued efforts to maintain growth momentum and invest generously in human capital are what make Coca-Cola the market leader it today and since it began.

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