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Coca-Cola

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wong kim may

on 6 January 2014

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Transcript of Coca-Cola

photo credit Nasa / Goddard Space Flight Center / Reto Stöckli
PRESENTATION OUTLINE
COCA-COLA HERITAGE TIMELINE
1886 -2013
How might Coca-Cola have responded differently when this situation first occured, specially in terms of responsibility to negative perceptions among Indians of Coke and other MNCs?
If Coca-Cola wants to obtain more of India's soft drink market, what change does it need to take?
Companies like Coca-Cola and PepsiCo in
demonstrating their commitment to working
with
different countries
and r
especting the cultural and natural environments
of those societies.

WONG KIM MAY
ESHA CHOWDHURY
KHO XIAN WEI

3.1%
of all beverages consumed around the world are Coca-Cola products.
DO YOU KNOW?
Coke make so many different beverages that if you drank one per day, it would take up
9 years
to try them all.
Coca-cola's $35.1 billion in revenue makes it the
84th largest economy
in the world, just ahead of Costa Rica.
The Coca-cola brand is worth an estimated
$74 billion
: more than Budweiser, Pepsi, Starbucks and Redbull combined.
If every drop of Coke ever produced were put in 8-ounce bottles and laid end-to-end, they would
reach the moon
and back over
2000 times.
DO YOU KNOW
The red & white Coca-cola logo is recognized by
94% of the World's population.
There are 33 non-alcoholic brands that generate over $1 billion in revenue. Coca-cola owns a whopping
15 of them.
Around the world, the average person consumes a Coke product
every four days.
Coca-cola spends more money on advertising than
Microsoft and Apple combined.
1. DO YOU KNOW?
2. HISTORY OF COCA-COLA
3. ASPECTS OF US CULTURE AND INDIAN CULTURE THAT HAVE BEEN CAUSES OF COKE'S DIFFICULTIES IN INDIA
4. COKE'S RESPONSE TO NEGATIVE PERCEPTIONS AMONG INDIANS OF COKE AND OTHER MNCS
5. WAYS TO OBTAIN MORE OF INDIA'S SOFT DRINK MARKET
6. WAYS THAT COCA-COLA AND PEPSICO DEMONSTRATE THEIR COMMITMENT TO DIFFERENT COUNTRIES, CULTURE AND ENVIRONMENT
7. COCA-COLA IN CHINA

DO YOU KNOW?
Coca-cola sells
more than 1000 kinds of juice drinks
, including: Simply, Minute Maid, Fruitopia, Hi-C, Fanta, Fuze and Odwalla.
Around
1.7 billion servings
of all Coke's product are consumed
every day.
1905-1918
1919-1940
1960-1981
1941-1959
1893-1904
1886-1892
Coca-Cola is enjoyed in 8 countries worldwide
TO COMBAT COPYCATS, COCA-COLA DEVELOPS A UNIQUE BOTTLE
Coca-Cola is enjoyed in 53 countries worldwide
Coca-Cola is enjoyed in 120 countries worldwide
INTRODUCING "COKE"
Coca-Cola is enjoyed in 163 countries worldwide
THE 1ST LIFT-TOP CANS ARE INTRODUCED

SPRITE AND 1ST DIET SOFT DRINK ARE INTRODUCED

THE DYNAMIC COKE "WAVE" ARE INTRODUCED

COCA-COLA COME TO CHINA - THE ONLY PACKAGED COLD DRINK ALLOWED IN CHINA

GEORGIA COFFEE ARE INTRODUCED IN JAPAN

ROBERTO C. GOIZUETA - CHAIRMAN OF COCA-COLA
Coca-Cola is enjoyed in the United States
COCA-COLA MADE ITS DEBUT IN ATLANTA, AT THE JACOBS' PHARMACY SODA FOUNTAIN, WHERE IT SOLD FOR 5 CENTS A GLASS.
Coca-Cola is enjoyed in the United States
THE COCA-COLA TRADEMARK IS REGISTERED IN THE U.S. PATENT OFFICE

COCA-COLA IS FIRST PUT INTO BOTTLES IN VICKSBURG, MISSISSIPPI - JOSEPH BIEDENHARN

COCA-COLA IS SOLD AND CONSUMED IN EVERY STATE AND TERRITORY OF US

THE FIRST MAGAZINE ADS FOR COCA-COLA APPEAR IN NATIONAL CONSUMER PUBLICATIONS
1982-1989
Coca-Cola in enjoyed in 165 countries worldwide
1990-1999
Coca-Cola is enjoyed in nearly 200 countries worldwide
REFRESHING THE WORLD THROUGH SPORTS
2000-NOW
Coca-Cola is enjoyed more than 200 countries worldwide
80TH CONSECUTIVE YEAR OF OLYMPIC SPONSOR -til 2020

SPONSOR FOR "AMERICAN IDOL"

"MAKE EVERY DROP COUNT" CAMPAIGN

OPENING OF WORLD LARGEST RECYCLING BOTTLE PLANT

E. NEVILLE ISDELL - CHAIRMAN
MUHTAR KENT - CEO

COCA-COLA TURNS 127TH!!!


THE ANNUAL ADS BUDGET REACHES $1 MILLION
ROBERT W. WOODRUFF IS ELECTED THE PRESIDENT OF COCA-COLA COMPANY

COCA-COLA IS LISTED IN THE NEW YORK STOCK EXCHANGE, AT $40/SHARE

THE 6 PACK CARRIER FOR COCA-COLA

COCA-COLA IN OLYMPICS GAME

THE 1ST STANDARDIZED COIN-OPERATED VENDING MACHINE ARE USED

50TH ANNIVERSARY WAS CELEBRATED!!!
In the 1st year, the company sold about 9 glasses of Coca-cola a day
Free drink coupons are distributed to encourage people to try Coca-cola
Cola-cola first uses calender and outside posters for advertising
1st ever product to appear on the cover of TIME magazine
ANNUAL ADVERTISING BUDGET SURPASSES $30 MILLION!
BECAME A WELCOME ACCOMPANIMENT TO 1950s LEISURE ACTIVITIES
DIET COKE IS INTRODUCED
COKE IN SPACE
INTRODUCED NEW COKE
BRINGS BACK COCA-COLA CLASSIC
HAPPY 100TH ANNIVERSARY!!!
BARQ'S ROOTBEER AND CREAM SODA BRANDS JOINED COCA-COLA COMPANY

DASANI, WATER PRODUCT JOINED
Headquarter in Atlanta, Georgia
Beverage retailer, manufacturer and marketer
Offers 500+ brands and has 3500+ beverages
200+ countries
127 years in business
146,200 worldwide employees
Revenue: Increase US$ 48.01 billion (2012)
Total assets: Increase US$ 86.17 billion (2012)
HOFSTEDE CULTURAL DIMENSION
COMMUNICATION
LOW CONTEXT CULTURE
SERVICE AND EMPOWERMENT
WAY OF DOING BUSINESSES
POLYCENTRIC
CULTURE DIVERSITY
MELTING POT, LESS CULTURE DIVERSITY
What aspects of U.S. culture and of Indian culture may have been causes of Coke’s difficulties in India?
INDIA VS USA
HIGH CONTEXT CULTURE
Different ways and styles of communication
Miscommunication in the spoken and writen language
Different way of expressing their language commands during the contact with the India government.
Direct , explicit
Implied messages
LESS CONSERVATIVE
MORE CONSERVATIVE
Traditional thinking
Focus on empowerment issue and service
India, a developing country which is still striving in poverty is very much in traditional thinking leads to the difficulties of Coke's survival in India
Indians concern great values to trust and quality
ETHNOCENTRIC
following Rule and regulation as per Indian standards, where environment standards is less stringent.
Follow the rules and regulations as per home country specially in environment and social standards
India 's interference in stopping Coke's operations due to the villagers' accusation of the water shortage and contamination caused by Coca-Cola
HIGH CULTURE DIVERSITY
Fully developed with primarily western culture
Big & poor developing country with cultural niche : South, North & Northest
Rural consumption habit and buying capacity are different from urban people.
Flavor preferences are different between two countries
Law in US are much more wholesome
Therefore Coca Cola Should have……..

1. Proactively stopped temporary operation in Kerala plant and recall all pesticide bottles from market

Coca Cola should proactively
stopped their operations plant
and
recall all pesticide bottles
from market even if they did not agree.
This would mitigate all controversies and the company could have
gained consumers confidence
The example of Tylenol Case in 1980 when they proactively recalled all products. This gave the company very
short term loss
, but in return the company gained
long term trust, respect and also profit.
2. Be vocal, transparent and call for press conference

In Kerala the literacy rate is high as at
90.02%
against the all India literacy rate of
65.38%.
This implies people are aware on
environmental issues
Coca Cola should immediately
confront the media, local government
and
run campaign and PR
on issues such as
health and environment
and that they care and are equally concerned.


3. Further investigation on water depletion
They should have taken the allegation of ground water depletion into consideration and take
proactive measures to further investigate .
If it was found true then take measures to
compensate the local communities.
It must be noted that in Kerala most of the population relies on agriculture.

4. Mutual understanding with CSE and state of government
Instead of accusing CSE for faulty results, Coca should
mutually agree with the CSE and Karela Pollution board
and
take action together
Test the samples
of the soft drinks and bottled water across India by
reputable institutions and abroad
to assure families that Coca-Cola products are
safe to consume in India.

5. CSR campaign by celebrity endorsement
Coca Cola should have used a
celebrity
and run an
immediate ad campaign on CSR related activities
Indian have always been in admiration of the stars of the bollywood
The main message should convey that they
care about communities and the environment
and
promise to take several actions
to illuminate he allegations they currently hold

Coca-Cola's Allegation
COCA-COLA - DEFENSE STRATEGY
Coca-Cola CEO stated:
Coca Cola –Defense Strategy
As a result ………
Coca-cola bottling plants in Plachimada in Kerala & Mehdiganj in Uttar Pradesh pass on sludge as fertilizer causing
health and environmental damage.
Excessive
depletion of water table
- drastically
reduced the availability of water
for irrigation purposes which is devastating local communities.
The plant was accused of
exploiting and polluting ground water with toxic metals.
Coca-Cola bottled water and drinks manufactured in New Delhi and Mumbai
contained pesticides.
SCENARIO SCREENING
India’s economic status
India's economic growth is expected to remain robust in 2012 and 2013, despite likely headwind of double-dip recessions in Europe and the US.

As per the world bank report, during this time of global recession the India’s economy was less affected.

The Gross Domestic Product per capita in India was last recorded at 3649.53 US dollars in 2011and consumer spending in India increased to 9298.39 INR Billion in the fourth quarter of 2012

India’s Social Status
New research from the McKinsey Global Institute (MGI) shows India will become a nation of upwardly mobile middle-class households that will surpass Germany as the world's fifth largest consumer market
In India the new consumer market in emerging as the middle class segment in growing. Evidence shows that as income increases, the amount of discretionary spending and variety of these discretionary spending increases (Saxena, 2010).
India’s population in 2012 is 1260 million
The total carbonated soft drink market is estimated at 284 million crates or $1billion
The market is seasonal
On average the monthly consumption is 4.9 million crates during off peak and 5.2 millions crate during peak

Coca Cola’s market share
Coca-Cola has an estimated market share of close to 9% in India, while rival Pepsi has nearly 15%.

According to industry estimates, Coca-Cola has close to a 58% share of the market, compared with Pepsico's 38% due to Coca-Cola's other drinks, especially Thums Up and Sprite

In 2012, Coca Cola’s sales jumped to 20% in first quarter.

PRODUCT DIVERSIFICATION - JUICES, TEA, COFFEE
Urban young adults and teenagers - getting more health, obesity aware, rejecting carbonated drinks
A survey in metropolitan cities of India found that 79% respondent refused carbonated drinks
Demand for fresh juices increased and coffee consumption in India has doubled over the last 10 years

Change Marketing Strategy
The current marketing strategy is mostly focused on rural market.

"Thanda Matlab Coca-Cola” firmly established Coke in India. This vague term diluted the beverage.

Hence a new positioning is required so that consumers associate Coca Cola as a socially and environmentally responsible company.

Create different and separate IMC planning for rural and urban areas.
Shift of production plants
Coca cola’s current plantation are Rajasthan, Plachimada, Kerala, Uttar Pradesh
These areas are dessert and have droughts and the communities complain for being affected due to Coca Cola’s ground water extraction
Therefore, Coca Cola should shift their production in areas near the sea areas such as West Bengal, Andar Pradesh

Alternative water extraction procedure
Coca- Cola has taken initiatives to improve drinking water situation like WWF
According to case, Coca Cola’s India report they will bring “net zero” use of ground water as they are extracting rain water
But still in 2013 they are still using ground water for their drinks
Alternative water extraction should be implemented and ensure zero ground water extraction
Also desalination of sea water surged more than a decade ago as the technology became more efficient and cost-competitive, Coca cola being a monster company can also invest in doing so.



Increase PR and networking with state governments, local NGOs and media
Perform Philanthropic CSR activates as promised
Coca Cola publishes the sustainability report every year.

The company claims to work for community, economic growth, water management, social development.

Still coca cola faced charges over its bottling operation in Palakkad district, which campaigners say has caused environmental damage in 2011 as per BBC

Need to ensure that they perform their philanthropic CSR activities as promised

Changes Coca-cola needs to make to increase and sustain market share in India
" If pesticides are in ground water then why are we only being challenged? It is because of who we are?"
Coca-Cola denied charges and quoted that the allegations were motivated by
anti-globalization agenda.
The company stated the ban of closing the plant in Kerela was based on
flawed test results.
Coca-cola promoted on website arguing that the beverage industry was responsible for just
0.0002% of total water usage in India.
Coca-cola fought back pesticide issues by stating that Coca-Cola product had been tested using
stringent EU and it said it is safe.
“Is there anything better for you to drink?"
India’s Beverage Industry
Keep good and cordial relationship with the government parties of all the states in India
Work together with the NGOs more often for sustainability
Help improve the government standards in India
Ensure to be vocal an transparent to media and take responsibility of their actions


Challenges for MNCs in working with different countries
High transaction costs: uncertainty in the market environment and the opportunistic behaviour of market agents.

Consequences of bounded rationality: - limited knowledge about the paternalistic attitude of the Chinese Government in nurturing indigenous soft drink makers. It was certainly difficult for Coca-Cola to fully appreciate the financial difficulties that were faced by some of its local partners in expanding business operations.

Further intensified by opportunism and uncertainty in the market environment. To reduce the impact of these constraints, a change in Coca-Cola’s operations was required.

COCA-COLA IN CHINA
(1979-1992) highlights 4 major challenges to the company's long term development strategy:
Chinese market was
highly fragmented
, and the
wholesale and distributional systems were outdated
Coca-Cola was the de facto wholesaler of concentrate, and
did not have access to the operation of the bottling plants
Coca-Cola was not permitted to enter into JV bottling business with its local partners until 1985
The local partners were
too poor to finance further business expansion
How Coca-Cola overcome challenges
Internalized market transactions through a strategy of long-term investment

Increased control of production and domestic distribution

The acquisition of majority stakes in the bottling plants

Teamed up with two foreign bottlers under a franchise agreement.

Synergistic effect of pooling the resources of Coca-Cola, its local partners and its foreign bottlers was high, and it delivered revenue-enhancing and cost-reducing benefits.

Coca-Cola Global Business initiatives: New Rules for Business
Forming Local Relationship
: operate with those local partners make really understand the local conditions and consumers much better
Understand Consumer
: able to be ahead of those trends
Mobility and Flexibility
: expect leaders to be as comfortable in Munich as in Shanghai
Localization
: hire people locally, train people locally
Risk Taking
: No risk, No reward
Technology influence
: Technology as effective manner to achieve productivity
Productivity:
Reduce costs to stay ahead where labour costs are rising ahead of GDP


Strong franchise system relationship

Effectiveness depends of relationship with bottles and brands
Geographic orientation
Juice business require different organizational structure
Quality standards adhere to local government safety regulations
Global rigorous, quality control standards


Managing disagreements between the field and headquarters

Ability to collaborate globally
Important in decision making
Make the right choice

Managing the dramatic variations in cultures and politics

Business units: South Africa, Kenya, Turkey, Russia, India and Dubai

Functional team in Istanbul

Stay connected to global team through finance and marketing communities


Foresee the opportunities

Into 2020, half of the favourable changes will be located in Eurasia and Africa

“Brand Coke”- locally relevant brand building with consumers

Understanding the psyche of the local consumers
Work with very good marketing agencies
Be optimistic of the political and social upheaval
Being effective with partnerships
Centres of excellence that the bottles can access
Strategy discussions and business plan discussions
Expansion to other markets

The Diversification for employee

Critical experiences and functional competencies
Global Leadership

“As long as it is the cat that could catch the mouse, not to eat and sleep”

Commitment in working with different countries
“Think global, Act local”
The right mix of global and local in operations
THINK GLOBAL, ACT LOCAL
THINK GLOBAL, ACT LOCAL
THINK GLOBAL, ACT LOCAL
THINK GLOBAL, ACT LOCAL
Practises “Localization” context

THINK GLOBAL, ACT LOCAL
THINK GLOBAL, ACT LOCAL
THINK GLOBAL, ACT LOCAL
Provide training to managers (Global leadership and be flexible when dealing locally)

Foster collaboration between home country and offshore employee

Mutual respect
(HOST and HOME countries)

Accomplishment: Delegated major decision making to individual markets and maintains its global brand strategy through collaborative practices.
Coca-Cola Initiatives in social natural environment
WWF partnership

And with United Nations Development Programme, Global Water Challenge, CARE, Ocean Conservancy and others to protect watersheds and support initiatives that bring clean water and sanitation to underserved areas.

Kenya: Community Watershed Partnership- Working with partners to provide safe water to primary schools in Western Kenya.
World Water week
Highlight Coca-Cola’s global commitment to water stewardship, and to building sustainable communities.

Coca-Cola Malaysia collaborates with volunteers from Raleigh International to provide villagers with a sustainable supply of clean water through gravity-fed water supply systems.

Packaging: Recycling

Partners on initiatives with key retail partners.
worked with Wal-Mart and China Resources Vanguard Supermarket, to launch environmental campaigns in order to fully leverage their access to large numbers of consumers.
In June 2011, together with China resources Vanguard Supermarket in Hangzhou we launched a three-month PET bottle recycling program called “Everybody Begins to Protect Their Environment in Daily Life.”
Consumers could send a used plastic Coca-Cola bottle to any Vanguard store, participate in trade-in deals and take part in various games, such as a creative craftsmanship contest on environmental protection, raising their environmental awareness.

International Coastal Cleanup

In 2012, Clean-up picked up more than 10 million pounds of trash from the oceans and waterways throughout the world. That’s the equivalent to the weight of 41 blue whales or 10 Boeing 747 jumbo jets.
More than 2 million cigarettes/cigarette filters collected – enough disposable cigarette lighters to start more than 175,000,000 campfires.
In 27 years, more than 1 million diapers collected – enough to put one on every child born in Japan last year.
Volunteers have collected enough cups, plates, forks, knives and spoons over 27 years to host a picnic for 2.3 million people.

Community Water Programs

Malaysia: Every Bottle Has a Story: 3 Films Bring to Life Coke's Water Programs

China: Everybody begins to protect their environment

Summary of Coca-Cola strategic Framework
Strategic Framework:
Workplace
Being as diverse in people and thought as the markets we serve
Marketplace
Winning in the marketplace, by appealing to diverse consumers and customers with our brands
Community
Enhancing the lives of the diverse communities we serve
Partners
Maximizing supplier diversity opportunities, and engaging with our customers/business partners to provide value-added consulting



Coca Cola was first invented by a pharmacist name John Pemberton as a medicine for
headache cure!


If you accidentally got
gum in your hair
, rinse it in coca-cola and the gum will come of very easily.
Coca Cola can be used to
remove grease stains and loosen rusty bolts

1977: Pulled out operation from India (government demanded its secret formula)
Re-entered India through its wholly owned subsidiary, Coca-Cola India Private Limited and re-launched Coca-Cola in 1993
Coca-cola faced some difficult challenges in India regarding social and ethical issues
Criticized by Indian government, NGOs and international environmentalists.
Consumers ran anti-cocacola campaign & refused to drink Coca-cola.
The company's strategic plan during this crisis situation was very bad and it fueled up the situation further - sales dropped, profit fell
Lesson learnt: internationally more aggressive to invest in CSR - WWF, water reduction plans, building awareness on health & so on

COCA-COLA IN INDIA
Full transcript