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Coca-Cola Case Analysis

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Jeremy Hatley

on 2 October 2013

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Transcript of Coca-Cola Case Analysis

Coca-Cola Formal Case Analysis
Acquisitions
Cultural Environment
Ethical & Social Responsibility
Create a strong sense of entrepreneurialism in third world countries by providing stable jobs to men and women and building schools that will reduce the level of child labor.
What is Coca-Cola doing to help the environment?
Making a difference in quality control
Bring Coca-Cola to poor countries.
Questions?
Jeremy Hatley
Ashley Bradshaw
Shannon Thompson
Thomas Boydstun
Dewar Gaines
Porter's Five Forces
Threat of New Entrants
Low switching cost for buyer, Low product differentiation
High economies of scale, High capital requirement, Low access to distribution channel
Power of Buyers
Low switching cost for buyer, Moderate product differentiation for supplier
Low purchase volume for buyer, Low threat of backward integration
(Moderate-High)
(Low)
Power of Suppliers
(High)
High switching cost to another supplier, High suppliers concentration, Low availability for product substitute, High importance of customer, Low threat of forward integration
Threat of Substitute Product
(Moderate-High)
High differentiation of substitute product Low price performance relationship
Intensity of Rivalry
(Very-High)
High number of competitors, Low industry growth rate, high fixed cost and storage cost, Low switching cost for buyers, High exit barriers
SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats
Business/Corporate Level Strategy
-Coca Cola has successfully implemented the integrated cost leadership/differentiation strategy.
-Coca Cola performs the cost leadership strategy by minimizing costs and selling goods at the market price or lower than the market price.
-Coca Cola’s long time established brand name makes it stand out as well as focusing on image, quality, and being affordable.
-Has the flexibility to perform both effectively efficiently because of capital resources and knowledge from experience.
-Everyone can buy coke products it just depends on what they are looking for to satisfy their needs at that specific moment
Target Markets
All Demographics
Domestic
Coca Cola ClassicDiet Coca ColaFantaDasaniSpritePoweradeVitaminWaterSmart WaterMellow YellowFuseSeagramsHonest TeaCoca Cola ZeroMinute MaidSimply OrangeFresca
International
Siel
Light Coca Cola
Delvalle
Strategic Leadership
Corporate Governance
Goizueta Era
-Introduced eleven new products including consumer favorite Diet Coke in 1982-Changed original formula in April 1985 to create “New Coke”. This proved to be a huge disaster, causing dissatisfaction among loyal customers and stock prices to plummet.-Brought back the original formula three months later, which caused stock price to soar to a twelve year high.-Under Goizueta, Coke’s market value increased from $4 to $147 billion, and their stock price rose 5,000%.
Douglas Ivester Era
(1997-1999)
(1981-1997)
-Asian financial crisis hurt overseas profits.
-Asian markets accounted for two-thirds of Coke’s global market.-Fears of contamination caused Coke’s largest recall in company history.-Ivester was viewed as someone who was, “slow to react” and “lazy”, which hurt the Coke brand.
Douglas Draft Era
(2000-2004)
-Cut cost by firing by over 6,000 employeesCoke suffered from racial discrimination issues and poor marketing practices, which cost them $200 million in settlements.-Underwent government scrutiny for “channel stuffing” to inflate profits.-Contamination issues in their India and European markets-Had trouble acquiring companies to expand into new markets.
E. Neville Isdell Era
(2004-2008)
-Brought together 150 senior managers from all over the globe to create a 10-year strategic plan.-Re-motivated the company, and approved $400 million for new marketing strategies.-Expanded into the non-sparkling drinks market.
Coca-Cola had seven different CEO’s in a twenty-seven year span:
Coca-Cola is recognized by 94% of the world
When entering a new region, Coca Cola has the ability to decide whether it should use a global, transnational, or multi-domestic strategy depending on political, economic and cultural aspects.
Coca Cola has the ability to decide whether it should use a global, transnational, or multidomestic strategy depending on political, economic and cultural aspects.
At one point encountered liability of foreignness in terms of branding and linguistics
Coca Cola also demonstrates an international diversification strategy by moving into regions all around the world and tailoring its products to the needs of that specific region. It’s desire is to have a product that satisfies every one of its customers needs.
International Level Strategy
Cooporative Strategy
-A cooperative strategy is a means by which firms collaborate for the purpose of working together to achieve a shared objective.

-Cooperative strategies can be accomplished through strategic alliances. Coca Cola mostly uses joint ventures and equity strategic alliances.
-Business level cooperative strategy- Forward vertical complementary strategic alliance with bottlers
-Corporate level cooperative strategy- a main focus on franchising
-From the top down, Coca-Cola’s strategy is to create and maximize value for shareholders.
-Transforming our commercial models to focus on our customers’ value potential and using a value-based segmentation approach to capture the industry’s value potential
-implementing multi-segmentation strategies in our major markets to target distinct market clusters
-implementing well planned product, packaging and pricing strategies through different distribution channels;
-driving product innovation along our different product categories and
-achieving the full operating potential of our commercial models and processes to drive operational efficiencies throughout our company.
-Market Leadership..
-Business partnerships.
-Collaborative customer relationships.
-Channel Marketing.
-Multi-Segmentation.
-Client Value Management.
-Go-to-market strategies.
-Flexible sales and distribution models.
-Full Operating Potential.
-Managerial expertise.
-Sustainable Development.
Competitive Advantages
-Acquisition of water sources around the globe to ensure quality control.
oCoca-Cola’s has a standard of water purity they maintain when producing all of their products.
-Strive for new product differentiation by the acquisition of or creation of a snack food line
oTeaming with or acquiring smaller snack food companies in order to compete better with their largest competitor Pepsi Co, who owns both Quaker and Frito Lay
-The introduction of an all organic soda and beverage line
oWe believe with the recent emerging trend of organic food and beverage consumption, specifically in the United States, an organic line will help further set apart Coca-Cola through beverage differentiation and create a new product line.
Ideas For Coca-Cola to Pursue
Coca-Cola Custom
A new innovative, customizable vending machine would diversify Coca-Cola and give it a competitive advantage over its competitors' vending.
-First invented by John Pemberton in 1886.
-During World War 2 Woodruff says every man in uniform gets Coke for 5 cents wherever he is and whatever it costs the company
-Biggest acquisition was the $12 billion purchase CCE, the largest franchised bottler, on October 3th 2010
Coca Cola: From Pharmacy to Infamy
Our Question:
Should Coca-Cola control the entire value chain or should they refranchise distribution similar to other competitors in the industry?
Financial Impications of Suggestions
Company Strategy Changes?
Strategy Implementation
-What Coca-Cola is trying to accomplish -What Coca-Cola's goals are
-What the company does well
-What the company does not do well
-What opportunities and threats Coca-Cola needs to address

You will understand:
-Most recognized, most powerful brand in the world (Valued at 70 billion in 2010)-Strong brand image and customer loyalty - Robust global infrastructures and distribution system - Various product offerings - Solid financial condition and market presence-Coke now controls 90% of its total North American volume by purchasing the North American operations of Coca-Cola & Enterprises (Largest Franchised Bottler)- largest acquisition-World’s Largest Soft Drink Company-Strength Coke’s major fountain accounts: McDonald’s, Subway, and Burger KingCoke held 69% of US fountain businesses!!!
-High fixed costs of business - Several product recalls - Higher prices compared to others-In some situations such as when pepsi bought the remaining equity stakes of its two biggest bottlers on august 4 2009, Coke soon followed this idea by taking control of the bottling business again by buying back CCE on Feb. 25, 2010. This could show in some situations how Coke is more reactive to competitor changes than proactive when the opportunity presents itself.
-Coke’s major fountain accounts: McDonald’s, Subway, and Burger King-Coke held 69% of US fountain businesses!!! -New Digital Media Platforms and Global Campaigns at Sports events-Expand to other developing countries - Offer new beverages/drinks - Shift focus to volume/price/mix-Coke diversifies portfolio-Marketing (digital media and social networks)
-Pepsi Co buys Quaker oats (owns Gatorade) and SOBE -1985- Bought two of Coke’s biggest bottlers-Federal trade commission tried to charge concentrate owners (coke) restricted competition by granting exclusive territorial rights to bottlers-Congress passed an act that guaranteed the concentrate makers’ right to uphold the practice -Anti-Obesity campaign and active lifestyle movements-Alternative non-carbonated beverages (teas to coconut water)-Environmental Concerns (packaging to rising commodity costs)-Emergence of Still Beverages -False threat: Originally thought that Pepsi wins the taste test
-Our goal is to use our Company’s assets — our brands, financial strength, unrivaled distribution system, global reach, and the talent and strong commitment of our management and associates — to become more competitive and to accelerate growth in a manner that creates value for our shareowners-Coca Cola’s desire to maximize profit for shareholders drives them to pursue growth opportunities, be a leader in beverage innovation, and continue to dominate worldwide markets.
-2020 Vision for sustainable growth and competitive advantage:
-People: Being a great place to work where people are inspired to be the best they can be.
-Portfolio: Bringing to the world a portfolio of beverage brands that anticipates and satisfies people’s desires and needs.
-Partners: Nurturing a winning network of partners and building mutual loyalty. -Planet: Being a responsible global citizen that makes a difference.
-Profit: Maximizing return to shareowners while being mindful of our overall responsibilities.
-Productivity: Managing our people, time and money for greatest effectiveness.
Coca-Coca: Accomplishments and Future Goals
-http://www.businessinsider.com/the-difference-between-coke-and-pepsi-2012-12 http://www.coca-colacompany.com/annual-review/2011/

-http://assets.coca-colacompany.com/c4/28/d86e73434193975a768f3500ffae/2012-annual-report-on-form-10-k.pdf

-http://assets.coca-colacompany.com/45/59/f85d53a84ec597f74c754003450c/COBC_English.pdf

-http://ehis.ebscohost.com.ezproxy.bsc.edu/eds/pdfviewer/pdfviewer?sid=6e7fbe79-2625-4a44-9df3-1e7c2707cb65%40sessionmgr14&vid=6&hid=4

-http://ehis.ebscohost.com.ezproxy.bsc.edu/eds/pdfviewer/pdfviewer?sid=6e7fbe79-2625-4a44-9df3-1e7c2707cb65%40sessionmgr14&vid=8&hid=4

-http://ehis.ebscohost.com.ezproxy.bsc.edu/eds/detail?vid=9&sid=6e7fbe79-2625-4a44-9df3-1e7c2707cb65%40sessionmgr14&hid=4&bdata=JnNpdGU9ZWRzLWxpdmU%3d#db=buh&AN=21304688

-http://www.abrmr.com/download.php?file=18.pdf
Bibliography
Should Coca-Cola control the entire value chain or should they refranchise distribution similar to other competitors in the industry?
We believe Coca-Cola should focus even more heavily than it already has on providing environmental-friendly packaging and bottling and heavily promoting this environmental-friendly packaging and bottling due to the environmental movement in the U.S. We believe innovative biodegradable bottling could increase sales and profits.
Bottling and Packaging
“We sell moments of happiness, for cents at a time, more than 1.7 billion times a day and more than 200 companies”

-Muhtar Kent CEO of the Coca-Cola Company (2011)

Specifically speaking, sice the aquisition of CCE under now CEO, Muhtar Kent, Coca-Cola has flourished by continuing to seek out new opportunities to innovations that allow them to become an even more dominate force. With continued acquisitions, mergers, and franchising agreements, Coca-Cola Brands move forward towards controling the value chain.
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