COCA-COLA COMPANY

INTERNATIONAL BUSINESS

MANAGEMENT

SUBMITTED TO:

PROF. EMIL HEILNEK

SUBMITTED BYGARIMA ARORA (13)RADHIKA KOHLI (34)

SHIVANI AGGARWAL (45)SMITA SWARUP KAPUR (51)

TARUNA KASHYAP (56)

“The Coca-Cola Company exists to

benefit and refresh everyone it touches.”

COCA-COLA COMPANY

ACKNOWLEDGEMENT

This report has been prepared with the support and guidance provided by Dr.

Emil Helienek, International Business faculty, Nottingham Trent University.

We gratefully acknowledge the co-operation and inputs we have received

from our faculty without whose guidance and help we would have been

unable to complete this report.

COCA-COLA COMPANY

TABLE OF CONTENTS

1. INTRODUCTION

2. COMPANY HISTORY

3. SCOPE OF OPERATIONS

FINANCIALS

OPERATING STRUCTURE

PRODUCT AREA

TYPE OF MARKET/ INDUSTRY

4. COCA COLA- GLOBAL COMPANY

5. INDUSTRY ANALYSIS- PORTERS FIVE FORCE MODEL

6. CULTURE AT COCA-COLA COMPANY

CORPORATE CULTURE

ETHICS

VALUE SYSTEMS

7. SWOT ANALYSIS

8. BIBLIOGRAPHY

COCA-COLA COMPANY

COCA-COLA’S MISSION

Mission Statement: “We exist to create value for our share

owners on a long-term basis by building a business that enhances

The Coca-Cola Company’s trademarks. This is also our ultimate

commitment. As the world’s largest beverage company, we refresh

the world. We do this by developing superior soft drinks, both

carbonated and non-carbonated, and profitable non-alcoholic

beverage systems that create value for our Company, our bottling

partners and our customers.” (www.coca-cola.com)

Company History:

Dr John Syth Pemberton in Atlanta, United States of America

developed coca cola in 1886. In its very first year of existence - on

an average - nine glasses of coca-cola were sold daily. The

ownership of coca-cola was passed on to Asa Candler in 1888,

after Dr Pemberton sold of his share in coca-cola. The first syrup

manufacturing plant of coca-cola was set up in Dallas Texas in

1894. 1894 also witnessed the appointment of Coca-cola’s first

ever bottler – Joesph Biednham. Coca cola set foot in the foreign

Mission + Commitment = Focus

Focus + Action = Results

COCA-COLA COMPANY

markets in 1906 by setting up a bottling plant in Canada. The

ownership of coca cola changed hands once again in September

1919. Ernst Woodruff purchased coca cola along with an investor

group. During the 1960’s and 1970’s the coca cola company

diversified its business ranging from food, wine and soft drinks to

film and water treatment. Coca cola took one of the most drastic

steps in 1985 by changing the concentrate formula. Coke lovers

rejected the new coca cola that was introduced. This gave

competitors like PepsiCo a chance to break into the coke market.

The severe dislike of the new coke by the public forced coca cola

to quickly relaunch the old coke in the market. Presently coca cola

produces nearly 230 different brands in over 200 countries. Today

the daily average consumption of coke is more than one billion

drinks per day.

Scope Of Operations:

Since it’s beginning in the spring of 1886, Coca-Cola has grown to

become the most recognized trademark in history. Operating out of

more than 200 countries worldwide, Coca-Cola is the most popular

beverage on earth and is enjoyed over one billion times daily. The

Coca-Cola Company is the world’s leading manufacturer,

COCA-COLA COMPANY

marketer, and distributor of non-alcoholic beverage concentrates

and syrups, with world headquarters in Atlanta, Georgia. The

Company and its subsidiaries employ nearly 31,000 people around

the world. Syrups, concentrates and beverage bases for Coca-

Cola, the Company’s flagship brand, and over 230 other Company

soft-drink brands are manufactured and sold by The Coca-Cola

Company and its subsidiaries in nearly 200 countries around the

world. Seventy percent of coca cola’s revenue is generated from

outside North America. The Company takes pride in being a

worldwide business that is always local. Bottling plants are, with

some exceptions, locally owned and operated by independent

business people who are native to the nations in which they are

located. Bottlers provide the required capital for investments in

land, buildings, machinery, equipment, trucks, bottles and cases.

Most supplies are purchased from local sources, often creating

new supply industries and areas of employment within local

economies. The Company supplies the concentrates and

beverage bases used to make its products and provides

management assistance to help its bottlers ensure the profitable

growth of their businesses. Product manufacturing, quality control,

plant and equipment design, marketing and personnel training are

just a few of the areas in which the Company shares its expertise.

COCA-COLA COMPANY

COCA-COLA COMPANY

FINANCIALS:

THE COCA-COLA COMPANY AND SUBSIDIARIES

Operating Segments

(In millions)

2002 2001

Net

Operating

Revenues

Opera

ting

Incom

e*

Income before

income taxes

and cumulative

effect of

accounting

change*

Net

Opera

ting

Reve

nues

Operati

ng

Income

Income before

income taxes and

cumulative effect of

accounting change

North

America

$ 6,264 $

1,494

$ 1,515 $

5,729

$ 1,480 $ 1,472

Europe,

Eurasia &

Middle East 5,262 1,612 1,540 3,961 1,461 1,413

Asia 5,054 1,820 1,848 4,861 1,763 1,808

Latin

America

2,089 1,033 1,081 2,181 1,094 1,279

Africa 684 224 187 633 276 262

Corporate 211 (725) (672) 180 (722) (564)

Consolidate

d

$ 19,564

$

5,458* $ 5,499*

$

17,54

5 $ 5,352 $ 5,670

COCA-COLA COMPANY

As on December 31st 2002 coca cola owned assets worth $24501

million. The asset base of the company increased from $22417

million in 2001. The coca cola trademark is invaluable. The value

of the coca cola trademark was approximated at $3553

million in 2002. The net operating revenue of Coca Cola

Company and subsidiaries in 2002 increased to $19564 million

from $17545 million in 2001.

Operating Structure:

The Company’s operating management structure consists of five

geographic groups.

1) The North America Group comprises of the US and

Canada.

2) The Latin America Group includes the Company’s

operations across Central and South America, from Mexico

to the tip of Argentina.

3) The Europe and Eurasia Group stretches from Greenland

to Russia’s Far East, including some of the most established

markets in Western Europe and the rapidly growing nations

of East and Central Europe.

COCA-COLA COMPANY

4) The Africa and Middle East Group , the Company’s most

populated operating group, encompasses the Middle East

and the entire continent of Africa.

5) The Asia Pacific Group has operations from India through

the Pacific region including China, Japan and Australia.

(source – www.cocacola.com)

The North American group has the highest sales volume of coca

cola of 30%. Africa and Middle East group is the smallest market

of coca cola with the sales volume equaling 7%.

COCA-COLA COMPANY

Product Area:

The product area of coca cola ranges from non-alcoholic

carbonated soft drinks, teas & coffees, sports drinks, juices & juice

drinks to mineral water. Coca cola holds a forty seven percent

market share in the carbonated soft drinks market. The company

divides all its brands into four categories. These are as follows:

1) Refreshment

Within Coca cola’s range of carbonated soft drinks, they refresh

consumers through a variety of brands that appeal to different

tastes, different cultures and lifestyles. The company’s global

brands, Coca-Cola, diet Coke/Coca-Cola light; Fanta and Sprite

are some of the refreshing brands of Coca Cola. These are also

supported by some local carbonated soft drinks like Kuat, Lift

Apple, Barq's root beer, Quatro grapefruit, Thums Up and Limca.

2) Rejuvenation

Beverage Partners Worldwide (BPW), is the company which has

been formed by a strategic alliance between coca cola and Nestle

S.A. BPW's portfolio features successful products with solid

presence in a wide range of markets: The rejuvenating products of

Coca Cola are marketed by BPW. BPW markets ready-to-drink

COCA-COLA COMPANY

coffees like Georgia, teas like Nestlé’s iced tea, and herbal

beverages.

3) Health and nutrition

Minute Maid Premium orange juice is the world’s leading marketer

of juices. Coca Cola’s complete range of health products meets

the needs of consumers who are looking for foods and drinks that

taste good and help them live a healthier life.

4) Replenishment

Coca Cola’s replenishment drinks are healthy and convenient and

are tailored to the local tastes. Some of the replenishment

products are simple and basic — safe, purified water like Dasani.

In the sports drink category, the PowerAde beverage is the No. 2

sports drink in the United States, but outside the U.S, the sports

drinks hold the number one position.

Market/Industry Type:

The beverage industry comprises of the carbonated Soft Drinks,

Water, Juices and Juice Drinks, Sports Drinks and Tea’s &

Coffees. The commercial beverage industry only provides 25% of

the liquid that is consumed by the world’s population. The non-

commercial beverage consumption is tap water and/or homemade

COCA-COLA COMPANY

fruit juices. The commercial beverage industry is divided into three

segments i.e. alcoholic, not ready to drink and ready to drink

nonalcoholic.

Segments Of Commercial Beverage Industry:

(http://www.thecoca-colacompany.com/investors/octpresents/sld012.htm).

The CSD (carbonated soft drinks) and packaged water segments are the

largest. The coca cola company is one of the largest players of CSD sector.

The CSD sector has the largest growth rate. Coca cola and Pepsi together

hold a forty percent market share in the CSD segment.

COCA-COLA COMPANY

Coca-Cola’s share in beverage categories in 2000

(http://www.thecoca-colacompany.com/investors/octpresents/sld014.htm).

Coca-Cola - A Global Company:

Originally designed as a cure for the flu in 1886, Coca-Cola has

turned into the world’s largest manufacturer, marketer and

distributor of non-alcoholic beverages and in this process it has

become the icon of globalization.

Coca-Cola expanded beyond the American borders in the early

1900’s into numerous countries including Cuba, Puerto Rico and

France. In 1920’s Coca –Cola pursued aggressive global branding.

COCA-COLA COMPANY

This was done through a central strategy, where the branding was

done, by being insensitive to local conditions.

However, in the 1990’s, a greater degree of localization took place

whereby global marketing also took place but the company often

tailored the flavor, packaging, price and advertising to match the

tastes in specific markets. Indeed, it was Coca-Colas global

strategy that made coke a worldwide success and thus today

Coca-Cola stands as a global soft-drink industry leader. The

strategy of the company has for a long time

been best characterized as “think global, act local”. Coca-Cola

grants national businesses the freedom to conduct operations in a

manner appropriate to the market. However Coca Cola still stands

to be a global company as a “global product” maybe the “same”

product everywhere, but yet “different”. For eg, In Spain coke is

used as a mixer with wine; in Italy, Coke is served with meals in

place of wine or cappuccino and in China, the beverage is served

at special government occasions. Thus Coca-Cola adapts its

product according to consumer tastes and preferences.

Coca-Cola’s global business system consists of three partners:

The coca-cola company itself, which develops brands and

produces concentrates.

COCA-COLA COMPANY

Its bottlers who manufacture and distribute finished products

and undertake local marketing.

And it’s customers- for e.g. retailers who present the

company’s product to the public.

Thus, Coca-Cola’s management is a Geocentric Orientation,

where the company sees similarities and differences in markets as

well as countries and seeks to create a global strategy that is fully

responsive to local needs and wants, but the key assets like

product manufacturing, quality control, product and engineering

design, marketing and personnel training are undertaken by the

company in the home country itself.

However in the year 2000, Coca-Cola has changed its global

corporate strategy by delegating more authority to the franchise

bottlers to market its products to suit local demand. Thus, Coca-

Cola’s phrase has changed from “think global, act local”, to “think

local, act local”. This is primarily because of the following reasons:

The company is using innovative and tailored marketing

programmes to adapt to customer preferences. For e.g. the

company is using local celebrities of each country in their

advertising campaigns to appeal to the masses of each

specific country.

COCA-COLA COMPANY

The company is setting up local offices around the world so

that the company becomes an integral part of each

community.

Thus, Coca-Cola is a truly global company because their products

meet the various taste preferences of consumers everywhere!

However the Coca-Cola Company has chosen to expand into the

ready-to-drink non-alcoholic segment of the commercial beverage

industry because this is the fastest growing segment. For e.g.

Coca-Cola manufactures and sells soft drinks and non-carbonated

beverage concentrates and syrups including fountain syrup, some

finished beverages and certain juice drink products.

Coca-Cola’s Industry Environment

:

Every industry has an underlying structure, or a set of fundamental

economic and technical characteristics that gives rise to

competitive forces. To analyze the industry environment where

Coca-Cola operates, we have fit Coca-Cola in the Porters Five

Force Model.

PORTERS FIVE FORCE MODEL

DIAGRAM

COCA-COLA COMPANY

Source: Michael E. Porter, Competitive Strategy (New York: Free press,

1980)

THREAT OF NEW ENTRANTS:

Porter has described 8 major sources of barriers to entry, the

presence or absence of which determines the extent of the threat

new industry entrants. These are as follows:

Economies of scale, product differentiation, capital requirements,

one-time switching costs, government policy, difficulty in accessing

supply or distribution channels and expected competitor response.

THREAT OF SUBSTITUTE PRODUCTS:

RIVALRY AMONG

EXISTING COMPETITORS

THREAT OF NEW

ENTRANTS

BARGAINING POWER OF BUYERS

THREAT OF SUBSTITUTE

PRODUCTS OR SERVICES

BARGAINING POWER OF SUPPLIERS

COCA-COLA COMPANY

The availability of substitute products places limits on the prices

market leaders can charge in an industry; high prices may induce

buyers to switch to the substitutes.

BARGAINING POWER OF SUPPLIERS:

The suppliers to an industry include providers of raw materials,

components, labour, etc. supplier power will be greatest when they

are few in number and large in size, their products are important to

the industry, when switching costs are high. By locating alternative

sources of supply, the supplier power can be reduced.

BARGAINING POWER OF BUYERS (CUSTOMERS):

The customers purchasing a product can include manufacturers,

retailers, wholesalers, etc. Customers are powerful if individually

they are large purchasers of the industry’s product, switching costs

are low, etc.the business will try to reduce the power of their

customers by differentiating their products and taking other action

to increase actual or perceived switching costs.

RIVALRY AMONG EXISTING COMPETITORS IN THE

INDUSTRY:

COCA-COLA COMPANY

Rivalry among competitors can take various forms. The most

common are price competition, product development, product

differentiation, promotion and advertising.

COCA-COLA COMPANY

EVALUATION OF PORTERS FIVE FORCE MODEL

WITH RESPECT TO COCA-COLA:

Threat of New Entrants: (Low)

•Coca-Cola enjoys significant economies of scale.

•Coca-Cola has huge market share.

•Coca-Cola has tremendous brand loyalty.

These factors minimize the threat of new entrants into the soda

industry.

Threat of Substitutes: (Medium)

•Coca-Cola has successfully differentiated their product.

•Loyal Coca-Cola patrons do not see Pepsi as a conceivable

substitute.

•Tremendous brand loyalty minimizes threat of substitutes.

Consumers may replace their carbonated beverages, juices, and

sports drinks with milk, coffee and alcohol.

Bargaining Power Of Suppliers: (Low)

•Coca-Cola faces no significant threats in this area

COCA-COLA COMPANY

•Within U.S., Coca-Cola uses high fructose corn syrup as a raw

material.

•Outside U.S., Coca-Cola uses sucrose

•Both are readily available therefore restricting supplier power.

Bargaining Power Of Buyers:( High)

•Coca-Cola was restricted from vertically integrating until 1980.

•With this restriction lifted, Coca-Cola has been investing in its

distribution systems to improve them.

•Consumers have many categories of soft drinks to choose from

as well as brands and flavors.

As proven when Coca-Cola introduced a new Coke, buyers will

walk away from flavors they think are below their standards and

switch brands.

Intra-Industry Rivalry: (High)

•Pepsi is Coca-Cola’s main rival

• However, Coca-Cola prevailed from the “Cola Wars”

•Coca-Cola has two of the top three soft drinks:

Coca-Cola Classic (#1)

–Pepsi (#2)

–Diet Coke (#3)

CORPORATE CULTURE

COCA-COLA COMPANY

An organisation’s culture is the way in which it does things - its

culture defines what Coca-Cola considers to be important and

what the company stands for. The culture will be reflected in

everything the organisation does. Coca-Cola has a strong

commitment to the wider community through every aspect of the

way the Company operates e.g. the way in which it sponsors

sporting activities or its commitment to recycling and minimum use

of scarce resources etc. Philanthropy is a central part of the

Coca-Cola culture and contributes to one of the Company’s

strongest assets.

"Coke has a very corporate, conservative culture”. The

company's culture is aggressive, as Coca-Cola maintains a

professional business environment among employees, the Coca-

Cola business systems as well its customers. Coke is a large

company and has a large company corporate culture. The

company is very proud of its heritage and integrity. Coke people

tend to be professional in dress and nature, and tend to be

conservative in behavior. However, this is not to say enthusiasm is

not appreciated, in many cases, it is required.

Coca-Cola Company therefore has established strategies

for corporate citizenship. Coca-Cola’s strategy recognizes that the

well being of communities is inextricably linked to the well being of

COCA-COLA COMPANY

the business environment. The vision is clear, and the corporate

culture remains strong and focused, regardless of changes

occurring in the marketplace. The Company believes that it is

important to give something back to the communities in which it

does business. This philosophy, grounded in the Company’s value

system, is a key part of the corporate culture. At The Coca-Cola

Company, employees are fervently attached to their employer.

"Everyone is very

loyal to the company. They are very proud of all of the

accomplishments achieved. The "intense" loyalty meshes with

what is invariably described as a” conservative" atmosphere, an

ambience linked to the sheer size of the company. Coca-Cola is

thus committed to cultivating a diverse, rewarding culture that

encourages its employees to develop to their fullest potential. The

heart and soul of coca cola has always been its

Employees. Over the past century, employees have led successes

by living and working with a consistent set of values. Coca cola

believes while the world and its business will continue to change

rapidly, respecting these values will continue to be essential to

their long-term success.

COCA-COLA COMPANY

CORE PRINCIPLES AND ORGANIZATIONAL VALUES

COCA-COLA COMPANY

ETHICS AND VALUE SYSTEMS AT COCA COLA

Coca-Cola is committed to managing business around the world

with a consistent set of values - honesty, integrity, diversity,

quality, respect, responsibility and accountability - that

represent the highest standards of integrity and excellence.

The essence of Coca-Cola Promise is to benefit and refresh

everyone who is touched by their business i.e. to continually

operate as a model business citizen, consistently shaping

business decisions to improve the quality of life in the communities

in which it does business. The Company is committed to

monitoring performance in the area of social responsibility against

benchmarks to make sure that it is, and continues to be, a good

citizen as well as the benchmark global brand.

The Coca-Cola Company has used its resources to benefit the

global community and to demonstrate its leadership to such an

extent that the Coca-Cola name has become synonymous with

good corporate citizenship.

COCA-COLA COMPANY

COCA-COLA AND THE ENVIRONMENT

INTERNAL ENVIRONMENT

WORKPLACE:

The Company is an equal opportunity employer, committed to

fair and effective practices in relation to workplace diversity,

work/life balance, health and safety, training and staff

development. The Company uses professional benchmarking

and diagnostic tools to evaluate performance, ensuring

continuous improvement in these areas and in addition,

measures and reports on the outcomes of its impact in the

workplace, including employee perception measures. The

Company engages in effective two-way consultation with

employees and has in place a team that represents each

function and meets fortnightly to raise topics and discuss

developments with senior management.

THE EXTERNAL ENVIRONMENT

CUSTOMERS:

More than a billion times every day, thirsty people around the

world reach for Coca-Cola products for refreshment. Coca-

Cola believes the customers deserve the highest quality—

COCA-COLA COMPANY

every time. Coca-Cola promises to deliver the highest quality

and that is the most important promise they make. It involves a

worldwide, yet distinctively local, network of bottling partners,

suppliers, distributors and retailers whose success is

paramount to their own sucess. The company’s investment in

local communities in some 200 countries totals billions of

dollars in jobs, facilities, marketing, the purchase of local goods

and services, and local business partnerships. Always and

everywhere, Coca-Cola pursues continuous innovation in the

products they offer, the processes they use to make them, the

packages they develop and the ways they bring them to

market.

COMMUNITY

The Coca-Cola Company, believes that being a model

corporate citizen is central to doing business. The company

understands that their business decisions should improve the

quality of life in the communities where we do business.

Society advances on the strength of community: people

sharing their ideas and resources to reach common goals.

Coca-Cola seeks to strengthen local communities worldwide

through our support for education, through partnerships with

COCA-COLA COMPANY

other organizations and through the acts of citizenship by the

people of Coca-Cola. Coca-Cola supports education because

of its power to expand opportunities for individuals and

increase understanding between cultures. Coca-Cola partners

with national and international organizations to alleviate

economic disadvantage and help improve the quality of life in

local communities. Together with their local bottling partners,

the company strengthens communities by giving with their

hands and their hearts, as partners in the promise of a better

life.

DIVERSITY:

Coca-Cola has created the world's leading brand by

establishing a deep and lasting bond with their consumers.

From there, they built a global marketing and distribution

system second to none. They wove a global web of

interconnected

relationships. But all those relationships are local. And diversity

is at the core of those relationships. . When they connect with

consumers locally, their brands - particularly Coca-Cola - have

become significantly stronger and more relevant.

COCA-COLA COMPANY

Coca-Cola’s commitment to diversity also extends into the

community. Valuing people helps them better meet the needs

of their customers and partners. Through their people and their

local bottling partners, they build relationships through local

marketing, local civic programs and local business

opportunities.

The company is energized with a new entrepreneurial

operating culture, fuelled by the twin engines of innovation and

diversity. They’re committed to their values and we are trying to

live them every day.

ENVIRONMENT:

The environmental management system of The Coca-Cola

Company is known as the eKOsystem. The Company

‘conducts its business in ways that protect, preserve and

enhance the environment.’ The eKOsystem of the company

translates this principle into action by establishing a framework

for successfully managing the company’s environmental

performance worldwide. ‘Coca-Cola’ sets itself this objective:

‘we cooperate with public, private and governmental

organisations in seeking solutions to environmental challenges.

We direct our skills, energies and resources to those activities

COCA-COLA COMPANY

and issues where we can make a positive and effective

contribution.’ The Company takes progressive actions that

focus on minimizing environmental impact, striving for

continuous improvement and seeking to provide leadership in

three critical areas - water efficiency and quality, energy

efficiency and the elimination or minimization of solid

waste. It also supports local initiatives that have a positive

environmental impact. Taken together, these help promote a

sustainable future.

COCA-COLA COMPANY

Analysis of Coca Cola’s Corporate Culture

Corporate culture drives the organization and its actions. It guides

how employees think and feel. The important aspects of Coca

cola’s culture are the organizations heritage, integrity and diversity.

Philanthropy is the central part of coca cola’s corporate culture,

thus making it the company’s strongest asset.

Thus, Coca cola’s management orientation is Geocentric. An

organization with a geocentric management orientation views the

entire world as a potential market and strives to develop integrated

world market strategies. (Keegan W.J, Global Marketing

Management, 7th edition, page 13) and this is what Coca-Cola as a

company believes to do by adapting its products to the consumer

tastes and preferences keeping in mind the customer,

environment, community and employees beliefs.

COCA-COLA COMPANY

SWOT ANALYSIS OF COCA-COLA COMPANY:

STRENGTHS:

More than 100 years in the business

World’s most recognized brand name

World’s largest producer and distributor of soft drink syrups

and concentrates.

Produces more than 230 brands in nearly 200 countries

Positioned as a worldwide company acting locally

WEAKNESSES:

Product recall in Europe

Possible decline in sales due to health conscious consumers

Relationships with bottling subsidiaries could create territorial

and other legal problems.

COCA-COLA COMPANY

OPPURTUNITIES:

New opportunities in the foreign market

New technology such as Go2

Worldwide economic development and population growth

to sustain sales and profits.

THREATS:

Government regulations from other countries

Competition from Pepsi and other generic brands

Political and economic instability in many developing regions

of the world.

Competition from other national, regional and global soft

drink companies.

COCA-COLA COMPANY

BIBLIOGRAPHY

Keegan, W.J., Global Marketing Management, 7th Edition,

Pearson Education Asia, 2002

Hill, C. T.W, International Business, 3rd Edition, McGraw-Hill

Higher Education, 2000

www.cocacola.com

www.cokecce.com

www.coca-cola.com

www.cocacola.co.jp

www.economist.com

www.securities.com

www.thecocacolacompany.com

www.diversitydtg.com

www.vault.com

Pendergrast, M, For God, Country and Coca-Cola, Orion

Business Books