THE COCA-COLA COMPANY ANALYSIS

1. COMPANY OVERVIEW

1.1 Executive Summary

The Coca-Cola Company is currently the world’s largest

beverage company. Coca-Cola owns or licenses more than 400

brands, including diet and light beverages, waters, juice and

juice drinks, teas, coffees, sports and energy drinks. It has

ownership interests in numerous bottling and canning operations.

Coca-Cola sells finished beverage products bearing the Coca-Cola

trademarks in more than 200 countries. Examples of well-known

brands they own include Coke, Sprite, Fanta, Vitamin Water,

Minute Maid, Bonaqua and Powerade. As December 31, 2006, Coca-

Cola operated through eight segments: Africa; East, South Asia

and Pacific Rim; European Union’ Latin America; North America;

North Asia, Eurasia and Middle East.

1.2 History and Growth

Coca-Cola® originated as a soda fountain beverage in 1886

selling for five cents a glass. Early growth was impressive, but

it was only when a strong bottling system developed that Coca-

Cola became the world-famous brand it is today.

1894 – A modest start for a Bold Idea

In a candy store in Vicksburg, Mississippi, brisk sales of the

new fountain beverage called Coca-Cola impressed the store's

owner, Joseph A. Biedenharn. He began bottling Coca-Cola to sell,

using a common glass bottle called a Hutchinson.

Biedenharn sent a case to Asa Griggs Candler, who owned the

Company. Candler thanked him but took no action. One of his

nephews already had urged that Coca-Cola be bottled, but Candler

focused on fountain sales.

1899 The first bottling agreement

Two young attorneys from Chattanooga, Tennessee

believed they could build a business around

bottling Coca-Cola. In a meeting with Candler,

Benjamin F. Thomas and Joseph B. Whitehead obtained exclusive

rights to bottle Coca-Cola across most of the United States

(specifically excluding Vicksburg) -- for the sum of one dollar.

A third Chattanooga lawyer, John T. Lupton, soon joined their

venture.

1900-1909 … Rapid growth

The three pioneer bottlers divided the country into territories

and sold bottling rights to local entrepreneurs. Their efforts

were boosted by major progress in bottling technology, which

improved efficiency and product quality. By 1909, nearly 400

Coca-Cola bottling plants were operating, most of them family-

owned businesses. Some were open only during hot-weather months

when demand was high.

1916 … Birth of the contour bottle

Bottlers worried that the straight-sided

bottle for Coca-Cola was easily confused

with imitators. A group representing the

Company and bottlers asked glass

manufacturers to offer ideas for a distinctive bottle. A design

from the Root Glass Company of Terre Haute, Indiana won

enthusiastic approval in 1915 and was introduced in 1916. The

contour bottle became one of the few packages ever granted

trademark status by the U.S. Patent Office. Today, it's one of

the most recognized icons in the world - even in the dark!

1920s … Bottling overtakes fountain sales

As the 1920s dawned, more than 1,000 Coca-Cola bottlers were

operating in the U.S. Their ideas and zeal fueled steady growth.

Six-bottle cartons were a huge hit after their 1923 introduction.

A few years later, open-top metal coolers became the forerunners

of automated vending machines. By the end of the 1920s, bottle

sales of Coca-Cola exceeded fountain sales.

1920s and 30s … International expansion

Led by longtime Company leader Robert W. Woodruff, chief

executive officer and chairman of the Board, the Company began a

major push to establish bottling operations outside the U.S.

Plants were opened in France, Guatemala, Honduras, Mexico,

Belgium, Italy, Peru, Spain, Australia and South Africa. By the

time World War II began, Coca-Cola was being bottled in 44

countries.

1940s … Post-war growth

During the war, 64 bottling plants were set up

around the world to supply the troops. This

followed an urgent request for bottling equipment and materials

from General Eisenhower's base in North Africa. Many of these

war-time plants were later converted to civilian use, permanently

enlarging the bottling system and accelerating the growth of the

Company's worldwide business.

1950s … Packaging innovations

For the first time, consumers had choices of Coca-Cola package

size and type -- the traditional 6.5-ounce contour bottle, or

larger servings including 10-, 12- and 26-ounce versions. Cans

were also introduced, becoming generally available in 1960.

1960s … New brands introduced

Following Fanta® in the 1950s, Sprite®, Minute Maid®, Fresca® and

TaB® joined brand Coca-Cola in the 1960s. Mr. Pibb® and Mello

Yello® were added in the 1970s. The 1980s brought diet Coke® and

Cherry Coke®, followed by POWERADE® and DASANI® in the 1990s.

Today hundreds of other brands are offered to meet consumer

preferences in local markets around the world.

1970s and 80s … Consolidation to serve customers

As technology led to a global economy, the retailers who sold

Coca-Cola merged and evolved into international mega-chains. Such

customers required a new approach. In response, many small and

medium-size bottlers consolidated to better serve giant

international customers. The Company encouraged and invested in a

number of bottler consolidations to assure that its largest

bottling partners would have capacity to lead the system in

working with global retailers.

1990s … New and growing markets

Political and economic changes opened vast markets that were

closed or underdeveloped for decades. After the fall of the

Berlin Wall, the Company invested heavily to build plants in

Eastern Europe. And as the century closed, more than $1.5 billion

was committed to new bottling facilities in Africa.

21st Century

The Coca-Cola bottling system grew up with roots deeply planted

in local communities. This heritage serves the Company well today

as people seek brands that honor local identity and the

distinctiveness of local markets. As was true a century ago,

strong locally based relationships between Coca-Cola bottlers,

customers and communities are the foundation on which the entire

business grows.

2. MISSION AND VISION STATEMENT

2.1 Current Mission

“The world is changing all around us. To continue to thrive

as a business over the next ten years and beyond, we must look

ahead, understand the trends and forces that will shape our

business in the future and move swiftly to prepare for what's to

come. We must get ready for tomorrow today. That's what our 2020

Vision is all about. It creates a long-term destination for our

business and provides us with a "Roadmap" for winning together

with our bottling partners.” (The Coca-Cola Company, 2013).

Coca-Cola’s Roadmap starts with their mission, which is enduring.

It declares their purpose as a Company and serves as the standard

against which they weigh their actions and decisions.

1. “To refresh the world in body, mind and spirit”

2. “To inspire moments of optimism through our brands and our

actions”

3. “To create value and make a difference everywhere we engage”

2.2 Current Vision

Coca-Cola’s vision serves as the framework for their Roadmap

and guides every aspect of their business by describing what they

need to accomplish in order to continue achieving sustainable,

quality growth.

People: Be a great place to work where people are inspired

to be the best they can be.

Portfolio: Bring to the world a portfolio of quality

beverage brands that anticipate and satisfy people's desires

and needs.

Partners: Nurture a winning network of customers and

suppliers, together we create mutual, enduring value.

Planet: Be a responsible citizen that makes a difference by

helping build and support sustainable communities.

Profit: Maximize long-term return to shareowners while being

mindful of our overall responsibilities.

Productivity: Be a highly effective, lean and fast-moving

organization.

2.3 Current Objectives

The main objectives for the Coca-Cola Company are to be

globally known as a business that conducts business

responsibility and ethically and to accelerate sustainable growth

to operate in tomorrow’s world. By having these objectives, it

forms the foundation for companies in the decision making

process.

2.4 Current Strategies

The Coca-Cola Company aims to be globally known, they do

this by targeting different areas across the globe with different

products, gaining their brand name and popularity. All the

bottling partners work closely with their customers such as

convenience stores, grocery stores, movie theaters and street

vendors to create and use localized strategies developed in

partnership with the Company. Their competition with other

beverage companies are also narrowed down as they own various

brands that could be possible competition. For example, the

Company sells Coke without the competition of other popular soft

drink brands like Sprite and Fanta because the Company owns those

brands as well. The Company often reviews and evaluates their

business plans and performance to improve their earnings and

analyze their competitive position in the market. They make

decisions in realigning their business models to match the

objectives of the Company by using strategies and tactics in the

analysis of their performance.

2.5 Improved Mission statements

(a) At Coca-Cola we're committed to achieving business and

financial success while leaving a positive imprint on

society – delivering what we call Performance with Purpose.

(b) Our mission is to be the world's premier consumer

Products Company focused on convenient foods and beverages.

We seek to produce financial rewards to in8vestors as we

provide opportunities for growth and enrichment to our

employees, our business partners and the communities in

which we operate. And in everything we do, we strive for

honesty, fairness and integrity.

2.6 Improved Vision statements

(a) The Coca-Cola Company responsibility is to continuallyimprove all aspects of the world in which we operate –environment, social, economic – creating a better tomorrowthan today."

(b) Our vision is put into action through programs and afocus on environmental stewardship, activities to benefitsociety, and a commitment to build shareholder value bymaking Coca-Cola Company a truly sustainable company.

Why it is improved:

It is our vision to be the best and leading provider of food

and beverage (F&B) products in the world, to facilitate the

people and we emphasis on consumer rather more than competitors.

We are among the top ten food and beverage companies in the world

by continually challenging present conventions and always staying

a step ahead of the competition.

It is our mission to be the number one F&B company in the

world by providing our customers with the highest product quality

in terms of taste, experience, and satisfaction. We will ensure

this through an unwavering dedication to the continuous

development of our products and processes ensuring that we remain

best in class. We will strive to hire the most competent and

dedicated employees whose work ethic will set the standard in the

industry. We will be paymasters, as we strongly believe that

human resource is the only asset that truly appreciates over

time. We will also be a responsible social corporate citizen,

and strive to enhance the quality of life in the markets we

serve.

3. SITUATION ANALYSIS

3.1 External assessment

3.1.1 Opportunities

It is highly difficult for the new entrants to enter in the

soft drink industry because of some factors such as brand image

and loyalty, bottling network, advertising expense, retail

distribution and fear of retaliation. Coke has significant

opportunities within global supply chain to encourage and develop

more sustainable practices to benefit consumers, customers and

suppliers. While, it is still in the premature stages of

exploring these opportunities and dedicated to the economic

vitality and health of the farming communities our supply chain

engages.

Coke can diminish the fear of substitute by diversifying

(related or unrelated) by offering substitute products. Focusing

on its advertising and differentiation can increase its profits.

Coke promotes and support sustainable agriculture not only

because it makes good business sense.

World population is expected to grow at 8 billion 2025, and

9.2 billion by 2050. Nearly 99% growth will take place in

developing countries. Changing consumer lifestyle; by becoming

health conscious and preferring substitute products. Coke

can relatively diversify and offering health conscious

products.   

Bottled water consumption in increasing day by day, 11

percent growth is reported.

3.1.2 Threats

Pepsi is the major and primary rival of the Coca-Cola in the

soft drink industry, Pepsi is 2nd in revenue behind the Coca-

Cola, and also hit Coca-Cola in some markets. Its primary

competitor PepsiCo is highly diversified by providing big range

of food products. 

Coca-Cola also faces the tough competition from local brands

in all over world such as in Central and South America Kola Real

also known as Big Cola in Mexico is giving tough competition to

Coca-Cola etc.   

Large numbers of substitutes are available in the market

such as water, tea, juices coffee etc.

Coca-Cola is facing different regulations and policies set

by government in different countries.

Low growth rate in carbonated drinks, which is recorded less

than one percent in primary market of Coca-Cola.

Changing consumer lifestyle; by becoming health conscious

and preferring substitute products. Different studies has been

conducted and found other drinks and Coke harmful if consumed

excessively.    

3.1.3 Competitive Profile Matrix (CPM)

A competitive profile matrix (CPM) categorizes a firm’s main

rivals and its particular strengths and weaknesses in relation to

a design firm’s strategic position. In CPM, an organization

assess itself as well its rivals by giving rating and weights to

the critical/key success factors. It then recognizes its

strategic competitive place with its major rivals. A firm which

obtains superior weighted points would have the stronger

competitive place than its rivals. We will be using weighted

rating system for the construction of CPM. Some of the important

steps involved in the construction of CPM are given below:

1. In the first column, list down all the key success

factors of Coca-Cola (usually from 6 to 10).

2. In the second column, assign weights to each factor

ranging from 0.0 (not important) to 1 (most important).

Greater weights should be given to those factors which have

greater influence on the organizational performance. The sum

of all weights must equal 1.

3. Now rate each factor ranging from 1 to 4 for all the

firms in analysis. Here, rating 1 represents major weakness,

rating 2 shows minor weakness. Similarly, rating 3 indicates

minor strength whereas rating 4 shows major strength. It

means that weakness must receive 1 or 2 rating while

strength must get 3 or 4 rating.

4. Calculate weighted score by multiplying each factor’s

score by its rating.

5. Find the total weighted score of all the firms by adding

the weighted scores for each variable.

Competitive Profile Matrix of Coca-Cola Company

The competitiveness of a Company can be assessed on the basis of

its general strength rating. If the dissimilarity among firm’s

overall rating and the points of lower-rated rivals is greater

than the firm has greater net competitive advantage.

Alternatively, if the dissimilarity among a firm’s overall rating

and the points of higher-rated rivals is larger than the Company

has net competitive advantage.

Conclusion: In the above matrix, it demonstrates that Coca-Cola is

the market leader and dominates its rivals with highest points of

3.74. Pepsi is the runner up with 3.42 points and Cadbury

Schweppes is the weakest rival among these three with the score

of 2.80. This Matrix also shows that Coca-Cola is strong in all

the aspects of rivalry and has strong position in the market

place.

3.1.4 External Factor Evaluation (EFE) Matrix

External Factor Evaluation (EFE) Matrix is a strategic-

management device which is frequently use for evaluation of

current business environment. The EFE Matrix is a superior

instrument to prioritize and visualize the opportunities and

threats that a Company is facing. An external factor in the EFE

Matrix comes from social, political, legal, economic and other

external forces.

The EFE Matrix can be developed in five steps:

1. In the first column, lists down all the opportunities and

threats. EFE matrix should include 10 to 20 key external

factors as identified in the external-audit process.

2. In the second column assign weights to each factor that

ranges from 0.0 (not important) to 1 (most important). The

total weights must sum up to 1.00 (It should be noted that

the importance of weights depend upon the probable impact of

factors on the strategic position of the Company).

3. In the column three, rate each factor (ranging from 1 to 4)

on the basis of Company’s response to that factor. (Here, 1

shows poor response, 2 shows average response, 3 shows above

average response and 4 shows superior response).

4. In the column four, calculate the weighted score by

multiplying the each factor’s weight by its rating.

5. Sum the weighted scores for each variable to determine the

total weighted score.

External Factor Evaluation Matrix of Coca-Cola Company

By adding the weighted score of various opportunities and threats

of Coca-Cola Company, we get the total weighted score of 3.05.

Here it should be noted that the highest possible total weighted

score of a firm is 4 whereas the lowest possible total weighted

score is 1. The total weighted score remains in the limit of 1 to

4 regardless of the total number of opportunities and threats.

Similarly, the average total weighted score is 2.5. If the total

weighted score of a Company is 4, it means that the Company is

effectively taking advantage of existing opportunities and is

also able to minimize the risk. On the other hand, the total

weighted score of 1 show that firm is not able to take advantage

of current opportunities or avoid external threats.

Conclusion: In the case of Coca-Cola Company, the total weighted

score is above average, which means that the Coca-Cola Company

strategies are effective and the Company is taking advantage of

existing opportunities along with minimizing the potential

adverse effects of external threats.

3.2 Internal assessment

3.2.1 Strengths

World’s leading brand Coca-Cola has strong brand

recognition across the globe. The company has a leading brand

value and a strong brand portfolio. Coca-Cola is one of the

leading brands in their top 100 global brands ranking in 2006.

The value of the Coca-Cola was $67,000 million in 2006. Coca-Cola

ranks well ahead of its close competitor Pepsi which has a

ranking of 22 having a brand value of $12,690 million.

Furthermore, Coca-Cola owns a large portfolio of product brands.

The company owns four of the top five soft drink brands in the

world: Coca-Cola, Diet Coke, Sprite and Fanta. Strong brands

allow the company to introduce brand extensions such as Vanilla

Coke, Cherry Coke and Coke with Lemon. Over the years, the

company has made large investments in brand promotions.

Consequently, Coca-Cola is one of the best recognized global

brands. The company’s strong brand value facilitates customer

recall and allows Coca-Cola to penetrate new markets and

consolidate existing ones. Coca-Cola Company has a large scale of

operation with revenues in excess of $24 billion. Coca-Cola is

the largest manufacturer, distributor and marketer of

nonalcoholic beverage concentrates and syrups in the world. Coco-

Cola is selling trademarked beverage products since the year 1886

in the US. The company currently sells its products in more than

200 countries. Of the approximately 52 billion beverage servings

of all types consumed worldwide every day, beverages bearing

trademarks owned by or licensed to Coca-Cola account for more

than 1.4 billion. The company’s operations are supported by a

strong infrastructure across the world. Coca-Cola owns and

operates 32 principal beverage concentrates and/or syrup

manufacturing plants located throughout the world. In addition,

it owns or has interest in 37 operations with 95 principal

beverage bottling and canning plants located outside the US. The

company also owns bottled water production and still beverage

facilities as well as a facility that manufactures juice

concentrates. The company’s large scale of operation allows it to

feed upcoming markets with relative ease and enhances its revenue

generation capacity. Robust revenue growth in three segments

Coca-Cola’s revenues recorded a double digit growth, in three

operating segments. These three segments are Latin America,

‘East, South Asia, and Pacific Rim’ and Bottling investments.

Revenues from Latin America grew by 20.4% during fiscal 2006,

over 2005. During the same period, revenues from ‘East, South

Asia, and Pacific Rim’ grew by 10.6% while revenues from the

bottling investments segment by 19.9%. Together, the three

segments of Latin America, ‘East, South Asia, and Pacific Rim’

and bottling investments accounted for 34.8% of total revenues

during fiscal 2006. Robust revenues growth rates in these

segments contributed to top-line growth for Coca-Cola during

2006.

3.2.2 Weaknesses

Company received negative publicity in India during

September 2006. The Company was accused by the Center for Science

and Environment (CSE) of selling products containing pesticide

residues. Coca-Cola products sold in and around the Indian

national capital region contained a hazardous pesticide residue.

These pesticides included chemicals which could cause cancers,

damage the nervous and reproductive systems and reduce bone

mineral density. Such negative publicity could adversely impact

the company’s brand image and the demand for Coca-Cola products.

This could also have an adverse impact on the company’s growth

prospects in the international markets. Sluggish performance in

North America Coca-Cola’s performance in North America was far

from robust. North America is Coca-Cola’s core market generating

about 30% of total revenues during fiscal 2006. Therefore, a

strong performance in North America is important for the company.

Summary in points:

Strengths:

1. The Coca-Cola Company operates in over 200 countries and

product line has over 400 brands – is the world’s largest

beverage Company.

2. Long history has built excellent brand recognition.

3. Partnership longevity with established sporting events

including the Olympics.

4. Industry leader in market capitalization with $112 billion.

5. Return on Equity yielded 30 percent in 2006.

6. Leader of dividend yields of 2.6 percent. The Company has

had 43 consecutive years of an annual dividend increase.

7. Joint venture between The Coca-Cola Company and Nestle has

resulted in the establishment of Beverage Partners Worldwide

(BPW).

8. Coca-Cola has formed a strong partnership with McDonalds, with

McDonalds becoming their largest customer.

Weaknesses:

1. Product line is limited to beverages.

2. A failed $16 billion acquisition of Quaker Oats hinders long-

term growth.

3. Negative publicity in India because of water issues has led to

poor brand image and hindered growth there.

4. Lack of management willingness to place foreign products into

American markets.

5. Marketing deficiencies due to turnover in leadership and a

16 percent decrease in advertising spending.

6. Coca-Cola’s inventory turnover is only 5.4 compared to

PepsiCo’s 8.0.

3.2.3 Internal Factor Evaluation (IFE) Matrix

Internal Factor Evaluation (IFE) Matrix is a strategic

management instrument for assessing main strengths and weaknesses

in useful areas of a Company. IFE matrix also gives a foundation

for recognizing and assessing associations among those parts. The

IFE matrix is utilized in strategy formulation. Steps in the

construction of IFE Matrix are given below:

1. In the first column, lists down all the strengths and

weaknesses. IFE matrix should include 10 to 20 key internal

factors.

2. In the second column, assign weights to each factor ranging

from 0.0 (not important) to 1 (most important). Greater

weights should be given to those internal factors which gave

greater influence on the organizational performance. The sum

of all weights must equal 1

3. In the third column, rate each factor ranging from 1 to 4.

Here, rating 1 represents major weakness, rating 2 shows

minor weakness. Similarly, rating 3 indicates minor strength

whereas rating 4 shows major strength. It means that

weakness must receive 1 or 2 rating while strength must get

3 or 4 rating.

4. In the fourth column, calculate weighted score by

multiplying each factor’s score by its rating.

5. Find the total weighted score by adding the weighted scores

for each variable.

Internal Factor Evaluation Matrix of Coca-Cola Company

The total weighted score ranges from 1 to 4 (where 1 is low, 4 is

high and 2.5 is average) regardless of the total number of

internal factors used in the analysis. If the total weighted

score is less than 2.5 it indicates that the organization is weak

internally. On the other hand, the scores above 2.5 show strong

internal position. An internal factor could be included twice in

the IFE matrix if the factor is both strength and weakness.

Conclusion: In case of Coca-Cola Company, the total weighted score

is above than average, it means that the Company is strong

internally.

4. STRATEGY DEVELOPMENT

4.1 Strengths-Weaknesses-Opportunities-Threats (SWOT)

Matrix

Business owner's challenge is to create products and

services the customer values and the means to produce and deliver

those products and services in ways that are exceptional compared

to the competition. To address these challenges, a company must

define business objectives and address operational issues based

on its current situation and the factors that impact its

financial and operational goals. Such decision-making processes

are frequently supported by structured brainstorming, which, in

turn, can be supported by a SWOT Matrix.

Advantages

The advantages of the SWOT methodology, such as its

appropriateness to address a variety of business issues, make it

a desirable tool to support some brainstorming sessions.

Disadvantages

However, to significantly impact company performance, business

decisions must be based on reliable, relevant and comparable

data. SWOT data collection and analysis entail a subjective

process that reflects the bias of the individuals who collect the

data and participate in the brainstorming session. In addition,

the data input to the SWOT analysis can become outdated fairly

quickly.

SWOT Matrix of Coca-Cola

  Strengths Weaknesses

Intern

al

- Popularity

- Well known

- Branding obvious and

easily recognized

- A lot of finance

- Word of mouth

- Lack of popularity of

many Coca-Cola’s brands

- Most unknown and rarely

seen

- Customer loyalty

- International Trade

- Result of low profile or

non-existent advertising

- Health issues

  Threats Opportunities

Extern

al

- Changing health-

consciousness attitude

- Legal issues

- Health ministers

- Competition (Pepsi)

- Many successful brands to

pursue

- Advertise its less

popular products

- Buy-out competition.

- More Brand recognition

 

Strengths: Coca-Cola is an extremely recognizable Company.

Popularity is one of its superior strengths that is

virtually incomparable. Coca-Cola is known very well

worldwide. It's branding is obvious and easily recognized.

Things like, logos and promos shown on t-shirts, hats, and

collectible memorabilia. Without a doubt, no beverage Company

compares to Coca-Cola's social popularity status. Some people

buy coke, not only because of its taste, but because it is

widely accepted and they feel like they are part of something so

big and unifying. At the other end of the spectrum, certain

individuals choose not to drink coke, based solely on rebelling

from the world's idea that coke is something of such great

power. Overwhelming is the best word to describe Coca-Cola's

popularity. It is scary to think that its popularity has been

constantly growing over the years and the possibility that there

is still room to grow. If you speak the words “Coca-Cola”, it

would definitely be recognized all around the world. Money is

another thing that is a strength of the Company. Coca-Cola deals

with massive amounts of money all year. Like all businesses,

they have had their ups and downs financially, but they have

done well in this compartment and will continue to do well and

improve. The money they are earning is substantially better than

most beverage companies, and with that money, they put back into

their own Company so that they can improve. Another strength

that is very important to Coca-Cola is customer loyalty. The

80/20 rule comes into effect in this situation. Eighty percent

of their profit comes from 20% of their loyal customers. Many

people/families are extremely loyal to Coca-Cola. It would not

be rare to constantly find bottles and cases of a product such

as coke in a house. It seems that some people would drink coke

religiously like some people would drink water and milk. This is

an improbable feat. Customers will continually purchase these

products, and will probably do so for a very long time. If two

parents were avid Coca-Cola drinkers, this will be passed down

do their children as they grow loyal to the Company. With Coca-

Cola’s ability to sell their product all over the world,

customers will continue to buy what they know and what they

like…Coca-Cola products.

Weaknesses: Coca-Cola is a very successful Company, with limited

weaknesses. However they do have a variety of weaknesses that

need to be addressed if they want to rise to the next level.

Word of mouth is probably a strength and weakness of every

Company. While many people have good things to say, there are

many individuals who are against Coca-Cola as a Company, and the

products in which they produce. Word of mouth unfortunately is

something that is very hard to control. While people will have

their opinions, you have to try to sway their negative views. If

bad comments and views are put out to people who have yet to try

Coca-Cola products, then that could produce a lost customer

which shows why word of mouth is a weakness. Another aspect that

could be viewed as a weakness is the lack of popularity of many

of Coca-Cola’s drinks. Many drinks that they produce are

extremely popular such as Coke and Sprite but this Company has

approximately 400 different drink types. Most are unknown and

rarely seen for available purchase. These drinks do not probably

taste bad, but are rather a result of low profile or non-

existent advertising. This is a weakness that needs to be looked

at when analyzing their Company. Another weakness that has been

greatly publicized is the health issues that surround some of

their products. It is known that a popular product like coke is

not very beneficial to your body and your health. With today’s

constant shift to health products, some products could possibly

loose customers. This new focus on weight and health could be a

problem for the product that are labeled detrimental to your

health.

Opportunities :  Coca-Cola has a few opportunities in its business.

It has many successful brands that it should continue to exploit

and pursue. Coca-Cola also has the opportunity to advertise its

less popular products. With a large income it has the available

money to put some of these other beverages on the market. This

could be very beneficial to the Company if they could start

selling these other products to the same extent that they do

with their main products. Another opportunity that we have seen

being put to use before is the ability for Coca-Cola to buy out

their competition. This opportunity rarely presents itself in

the world of business. However, with Coca-Cola’s power and

success, such a task is not impossible. Coca-Cola has bought out

a countless number of drink brands. An easy way to turn their

profit into your profit is too buy out their Company. Even

though this may cost a vast amount of money initially, in the

long run, if all goes to plan, it results in a large profit.

Also, the Company will no longer need to worry about this

product being part of the competition. Brand recognition is the

significant factor affecting Cokes competitive position. Coca-

Cola is known well throughout 90% of the world population today.

Now Coca-Cola wants to get there brand name known even better

and possibly get closer and closer to 100%. It is an opportunity

that most companies will ever dream of, and would be a supreme

accomplishment. Coca-Cola has an opportunity to continue to

widen the gap between them and their competitors.

Threats: Despite the fact that Coca-Cola dominates its market, it

still has to deal with many threats. Even though Coca-Cola and

Pepsi control nearly 40% of the entire beverage market, the

changing health-consciousness attitude of the market could have

a serious effect on Coca-Cola. This definitely needs to be

viewed as a dominant threat. In today’s world, people are

constantly trying to change their eating and drinking habits.

This could directly affect the sale of Coca-Cola’s products.

Another possible issue is the legal side of things. There are

always issues with a Company of such supreme wealth and

popularity. Somebody is always trying to find fault with the

best and take them down. Coca-Cola has to be careful with

lawsuits. Health minister could also be looked at as a threat.

Again, some people may try to exploit the unhealthy side of

Coca-Cola’s products and could threaten the status and success

of sales. Other threats are of course the competition. Coca-

Cola’s main competition being Pepsi, sells a very similar drink.

Coca-Cola needs to be careful that Pepsi does not grow to be a

more successful drink. Other product such as juices, coffee, and

milk are threats. These other beverage options could take

precedent in some people’s minds over Coca-Cola’s beverages and

this could threaten the potential success it presents again.

4.2  Strategic Position and Action Evaluation (SPACE)

Matrix

The Strategic Position and Action Evaluation (SPACE) Matrix

is one of the important tools to assess the company and its

environment.

Advantages

It is relatively easy to understand and use method as a decision

aid. It has four quadrants and each quadrant indicates which

strategy a firm should adopt i.e. competitive, aggressive,

conservative, or defensive in a current position. These four

dimensions are the most important determinants of a firm’s

overall strategic position. Each dimension holds many factors

from EFE, IFE, and SWOT Analysis etc.

Disadvantages

However, as pointed out by Radder and Loew, there are some

drawbacks in the method. For example: While the method is

applied, the factors included in each dimension are considered

of equal importance. Whilst the factors may be considered of

equal importance (as a hypothesis) one has to take into

consideration the fact that most of the time, the factors under

each dimension does not have equal weights. Hence, the final

result may show some differences and this will affect the

outcome of the method, i.e. the appropriate strategy of the

company under evaluation.

Strategic Position and Action Evaluation Matrix of Coca-Cola

SPACE Matrix calculations

ES Average Score = -1.83 + Average FS Score (+5.00) = +3.17

CA Average Score = -1.50 + Average IS Score (+5.00) = +3.50

According to the graph above, we noticed that the Coca-Cola

Company falls into the aggressive quadrant of the SPACE matrix.

It is located at the coordinates of +3.50 for x-component and a

y-component of +3.17. It shows that the company has an admirable

position to use its IS in order to take advantage of external

opportunities, overcome weaknesses, and avoid threats.

Conclusion: In this position Coca-Cola has set of possible

strategies such as market development, product development,

market penetration, forward integration, backward integration,

horizontal integration, horizontal diversification, concentric

diversification and conglomerate diversification depending on

detailed conditions that face the company.

4.3  Grand Strategy Matrix (GSM)

Grand Strategy Matrix is famous tool for alternative

strategies in addition to SPACE Matrix, and SWOT Matrix. All the

firms can fall one of the GSM’s four strategy quadrants. GSM

evaluation is based on two dimensions i.e. market growth and

competitive position. Each quadrant provides the set of possible

strategies in which company falls such as quadrant 2 contains

market development, market penetration, horizontal integration,

divestiture, and liquidation strategies. Quadrant 3 contains the

set of retrenchment, related diversification, divestiture,

unrelated diversification and liquidation strategies. Quadrant 4

contains the set of diversification, joint ventures and

unrelated diversification strategies.

Advantages

The model allows better implementation of strategy because of

the intensified focus and objectivity. It conveys a lot of

information about corporate plans in a simplified format. 

Disadvantages

However, it may not be as simple as it seems, upon application

to real life due to the unforeseen factors and also

complications in the business world. In addition, the

relationship between market share and profitability differs in

different industries.

Another issue about this model is that, the grand strategy

options are mostly concern on cash related issues but not values

of the firm.

Grand Strategy Matrix of Coca-Cola

Conclusion : As figure identify that Coca-Cola comes in the 1st

quadrant. The company management must focus on current market

and achieve growth by adopting product development, market

development and market penetration strategies. The company has

abundant resources and competitive advantage through which it

can achieve growth by adopting the backward and forward

integration strategies. Coca-Cola can also adopt the related

diversification strategy to reduce its risk with broad portfolio

or product line. Coca-Cola can afford to take benefit of

external opportunities in many areas. It can also take risks

being aggressive when necessary.

5. LONG-TERM OBJECTIVES

Willing continue to intensify and expand it Research and

Development (R&D) capacity to further enhance its competitive

edge in the industry.

To ensure profitability and benefits of its shareholders and

consumers.

To gain customer loyalty by fulfilling consumer preferences.

6. RECOMMENDATIONS

6.1 Good quality and

price

Quality is always an important factor. Coca-Cola should

concentrate on receiving the product with less cost so that it

can calculate in the purchasing pattern if it requires. The

suppliers should have strong connection with the production

process so that no mistake can take place or the late delivery

can avoid. COCA COLA should maintain the chain of quality with

the comprehensive price system so that customer feel attached.

There should have an especial focus on quality ensuring as well

lowering the price for capturing the market.

6.2 Relationship

between Coca-Cola and its environment

Due to the growing voice for the environmental

consciousness, Coca-Cola should concentrate on this closely. It

should assure the people about the environment friendly

production. Company factory should erase the carbon emission and

should focus on using the green energy in transportation and

other means. There should have strong rule to demotivate the

child labor and this should incorporate in the marketing

strategy of Coca-Cola.

Everyone should get concern over the limited resources in

the earth. Coca-Cola is strongly inspiring people in this regard

through using the plastic bag so that it can use repeatedly.

7. PROPOSED STRATEGIES

7.1 Consumer

Engagement

What differentiates Coke from its competitors is the level at

which is performs consumer engagement. Notice the word

used here is ‘consumer’ rather than ‘customer’ because

Coke’s direct customers are actually the distributers; however

they are wise enough to know that it is the end customer’s

demand and level of satisfaction that truly matters. Due to

this they have formulated many different marketing

strategies that help them engage customers, and that is

what customers truly admire and enjoy about Coke. For

example, The latest Coke marketing campaign attempts to

unite the people of Pakistan and India by installing a Coke

machine which allows you to make a friend across the border and

you can also play an interactive game with them on the spot.

Consumers believe Coke to be a full of life and fun brand which

has then intrigued and loyal at

all times. This technique gives Coke its competitive edge

and it something we propose they should continue to do in

the future too.

7.2 Use of Bottlers

Coke should keep on manufacturing and bottling its own products

as it is doing in most places.

This ensures good quality and timely delivery. They

should definitely follow this whilst in a country where

they face strong competition. Initially upon entering Pakistan

they used a local bottler and many a time a complaint was

recorded about insects being found in the bottles. This

deteriorated the image of the brand in the mind of the

Pakistani’s and had a role to play in the dominance of Pepsi

over Coke in the country.

7.3 Licensing

Coke should refrain from using Licensors in countries

with strong competition prevailing in them. This is because

Coke mainly beats its competitors over two things: Taste and

Marketing. The marketing budget of a Licensee can never

match that of a Licensor; hence the marketing campaign

created there will not be of the value that Coke is known for.

This is why they should keep the marketing in their own hands.

7.4 Africa

Although Coke is present in Africa the research showed

that in 2010 the Annual Per capita consumption of Coke

in Kenya was only 39 servings. This was due to the

trade barriers and unfavorable environment present in the

area. However, today the wars in Africa are ending and they are

making a conscious effort to reduce trade barriers. Coke

should take a quick step forward and step into the market

fully before its competitors have a chance to, because it has

reached maturity or near maturity in many countries, and many

growth opportunities are present in Africa that will increase

its global market share.

Contingency plan: Penetrating the impoverish market can be a

difficult task. Therefore, Coke shall use Bottom of the Pyramid

strategy when going into the impoverished areas. Coke can come

up with buddy packs and introduce them for the people who cannot

afford the big packs. They will also have to lower their prices

in such area. Frequent sales on bulks can also be a good tact to

market product.

7.5 Packaging

Packaging plays a large role in the image that is

created in the minds of consumers about a brand. Coke

has previously launched limited edition packaged products

which has different names written on the bottles and the

slogan was for example: “Share a Coke with Sarah”.

Limited edition packaging makes Coke stand out from its

competitors and portrays the image of it being an exciting

product rather than a mundane one. It should continue

to launch similar marketing strategies.

Contingency Plan: People can become reluctant to new packaging

style. Therefore heavy advertising of the new packaging can be

done to attract customers.

7.6 Pricing

Coke should price its products in such a manner that it is

cheaper than water, especially in places where water itself is

a rare commodity. They should create strategies that create the

image of Coke as being a substitute of water in the minds of

consumers and thereby increase the intake of coke, making it

higher than the intake of water. For example, till

recently Coke was actually cheaper than water in Saudi Arabia

which is why it became the most popular beverage in the area.

Contingency Plan: Coke has its side effects on health. Day

by day, we can see that the benefits of drinking water

are being highlighted on TV and internet. The trend of

healthy drinks are increasing therefore this strategy can

backfire. In such a case Coke can introduce their other brands

like Kinley and Minute Maid.

7.7 Target Market

Coke should focus their efforts on countries with a growing

population thereby increasing the

total beverage consumption of their product. Here the focus is

not on per-head consumption but

on total beverage consumption. This is a strategy that

can be focused upon in countries like India.

8. PROJECTED RATIOS AND FINANCIAL STATEMENTS

PROJECTED INCOME STATEMENT  2013 2012

  $ Percent $Percen

t

Income Statement(in

millions)  

(inmillions)  

Revenue 46,573 100.0% 38,810 100.0%Cost of Goods Sold 18,693 40.1% 13,156 33.9%Interest Expense 421 0.9% 381 1.0%Tax Expense 3,027 6.5% 2,834 7.3%Income from Cont Operations 9,827 21.1% 8,189 21.1%Net Income 9,827 21.1% 8,189 21.1%

   PROJECTED BALANCE SHEET        2013 2012Balance Sheet      Cash 3,984 12.7% 3,306 10.8%Short Term Investments 324 1.0% 66 0.2%Accounts Receivable 2,704 8.6% 2,281 7.4%Inventory 1,641 5.2% 1,424 4.6%Current Assets 8,441 26.9% 10,250 33.5%Long Term Investments 6,783 21.6% 6,922 22.6%Net Fixed Assets 6,903 22.0% 5,786 18.9%Other Assets 7,843 25.0% 6,652 21.7%Total Assets 31,374 100.0% 30,638 100.0%Current Liabilities 8,942 28.5% 8,272 27.0%Total Liabilities 13,178 42.0% 12,968 42.3%Stockholders' Equity 17,256 55.0% 16,843 55.0%

         Cash Flow        Cash Flow from Operations 11,644   9,703  Dividends Paid 4,489   3,982  Interest Paid 421   381           Per Share        Market Price at Year End 92.00   77.00  Earnings Per Share - Basic 4.20   3.51           

25- PROJECTED RATIO ANALYSIS        Growth Ratios        

Sales Growth 20.0%  #DIV/0!  

Income Growth 20.0%  #DIV/0!  

Asset Growth 2.4%  #DIV/0!  

Activity Ratios        Receivable Turnover 18.7   34.0  Inventory Turnover 12.2   18.5  Fixed Asset Turnover 6.7   6.7  Profit Ratios        Profit Margin 21.1%   21.1%  Return on Assets 31.7%   53.5%  Return on Equity 57.6%   97.2%  Dividend Payout Ratio 45.7%   48.6%  Price Earnings Ratio 21.9   21.9  Liquidity Ratios        Current Ratio 0.94   1.24  Quick Ratio 0.78   0.68  Solvency Ratios        Debt to Total Assets 0.42   0.42  Times Interest Earned (Accrual) 31.53   29.93  Times Interest Earned (Cash) 28.66   26.47                    

9. STRATEGY EVALUATION AND CONTROL

9.1 Procedures

Performance measurement is the process whereby an

organization establishes the parameters within which

programs, investments and acquisitions are reaching the desired

results.

Coca Cola links the mission and vision to its operations

and functions in a very good way. The whole performance is

managed in a very well manner in order to get best out of it.

Managers and employees are highly involved in the system to take

decisions which results in employee loyalty.

Goals of the company are formulated at the higher level,

than head of the departments make their own goals accordingly,

and then comes the unit office, then functional heads which

generate reports, in the end supervisors and employees also set

their goals. All these incomparable policies lead to the

success of Coca cola globally.

After the goals and strategy has been formulated,

performance is measured in order to check the

implementation of strategy and goals. Monthly review is

done to check the implementation results. During review

periods no changes in the goals can be changed. During the mid-

year stage goals can be further refined or altered and new

policies can be designed to achieve the organizational level

goals. At the final stage the performance is matched with the

standards and goals of the organization. If there are positive

results with increase in overall productivity, the

individual performance of the employees is evaluated and

the rewards are then given on the basis of performance.

9.2 Critical Success Factors

Product quality and taste is a key success factor for Coca-

Cola. These both attributes are very important to get high

customer base.

Product diversity and innovation is one of the most

important critical success factors for Coca-Cola. Changing

customer’s needs with time should be recognized by the

company in order to keep its customers satisfies.

Market share and size of the firm is also a critical

success factor. Due to the high market share, Coca-Cola has

been able to negotiate with large distributers and thus

making the product available in most of the regions. In

order to remain competitive it’s highly important for the

company to maintain effective distribution channel.

Company image leads to the brand loyalty which is very

important for the success. Brand loyalty in return

increases the market share.

Global expansion plays a very vital role in the company’s

success. Brands that are globally present are usually

preferred by the customers.

9.3 Balanced Scorecard

For performance measurement at smaller units, balanced

scorecard should be used:

Perspective Goal Measurement

Financial Firm financial

growth in terms of

profitability

Annual sales growth

Net profitability

improvement

Reduce cost of

production

Customer Value creation,

satisfaction,

support

High market share,

leading position

globally

Consistent decrease

in cost of sales

Internal Business Efficient

production with

waste production

Brand expansion

Consistent decrease

in cost of

production,

increased

productivity

Number of new

markets entered

Learning and growth Innovation

Employee training

and satisfaction

New products and

processes added in

the company

Reduced rate of

employee turnover

10. CONCLUSION

The Coca-Cola Company has a very rich history and spread

over the world, the study in this analysis especially the

particular SPACE matrix tells us that Coca Cola Company should

pursue an aggressive strategy. Coca Cola Company has a strong

competitive position in the market with rapid growth. It needs

to use its internal strengths to develop a market penetration

and market development strategy. This includes focus on Water

and Juices products, and catering to health consciousness of

people through introduction of different coke flavor and

maintaining basic coke flavor. Further company should integrate

with other companies, acquisition of potential competitor

businesses, innovation in branding and aggressive marketing

strategy can bring long term profitability.

REFERENCES

Fred R. David (2011). Strategic Management: Concepts and Cases.

13th edition. Francis Marion

University. Florence, South Carolina. Prentice Hall.

Gerry Johnson, Kevan Scholes (2011). Exploring Corporate

Strategy: Text and Cases. 9th edition

Harlow. Prentice Hall.

Bazil, M. (2013). The Motley Fool. Coca-Cola Has a Prosperous

2013 Ahead of It. Available at

http://beta.fool.com/muhammadbazil/2013/01/04/coca-cola-

has-prosperous-2013-ahead-it/20272/?

ticker=KO&source=eogyholnk0000001

The Coca-Cola Company (2013). Coca-Cola Journey. Available at

http://www.coca-colacompany.com

Valuation Academy. Porter’s Five Forces in Action: Sample

Analysis of Coca-Cola. Accessed on 02 October 2013.

Available from http://valuationacademy.com/porters-five-

forces-in-action-sample-analysis-of-coca-cola/