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BUS 370 Coca-Cola
Transcript of BUS 370 Coca-Cola
William McMillan II, Molly Przybylski, Brady Sirek, Cameron Seidl, LanLan Liu, Nicholas Reising
Porter's 5 Forces
Threat of New Entrants
Entry in Beverage Industry is relatively low
Little to no customer switching costs
Increasing number of new brands (Similar prices to Coca-Cola)
Coca-Cola is not seen as a beverage, rather a brand
Very significant market share
Loyal customers unlikely to try new brands
Threat of Substitute Products
Medium to High Pressure
Many different kinds of energy, soda and fruit juices
Coca-Cola does not have a unique flavor
Blind Taste Test (No difference between Pepsi and Coca-Cola
Bargaining Power of Buyers
Individual buyer has no direct pressure on Coca-Cola
Wal-Mart has bargaining power (Large order quantity)
Bargaining power is reduced because of end consumer brand loyalty
Bargaining Power of Suppliers
Main ingredients are carbonated water, phosphoric acid, sweetener and caffeine
Suppliers are not concentrated or differentiated
Coca-Cola is most likely the largest customer of these suppliers
Rivalry among Existing Firms
Main competitor is Pepsi (also wide range of beverage products)
Both Coca-Cola and Pepsi are highly committed to sponsoring outdoor events
Other soda brands like Dr. Pepper have unique flavor, but fail to reach the success of Pepsi and Coca-Cola
Information system used for 5 years, never improved
Lack of necessary information
If managers want to find material or labor costs, they would have to log in two different databases
Low efficiency of this information system resulted in 20% of the loss in the net profit in 2010
Net profit of $36.1 Million in 2010
(5.5% decrease over 2009)
Microsoft's Enterprise Project Management (EMP) system can better solve Coca-Cola's current problems.
~With this solution, all the data from different departments will be gathered into one database
~It can also integrate SAP and Microsoft products to reduce our maintenance costs
~EMP narrows the information down into fine details, as well as carries out data mining, Coca-Cola can precisely get the information they want
~Additional benefit is that resources and schedules can be managed more effectively
Gaining a Competitive Edge
Coca-Cola is a leader in the way that they are trying to reposition the soda isle so that more people don't just walk around the edges of the grocery store. The techniques they use were developed in house but are copy-able.
Bringing the customers back to the center of the store
Beverage isle renovation (BAR)
2-Liter Neck Hanging System
Brand Shelf Set
Strike Zone System using intentional lighting and electroluminescent technology
Providing Financial Gain
Price/Share up $10 in 2 years
Analysts say they are going to continue upward trend
Tough to Copy
Other companies benefit from this too
All of their information can be found online, very transparent
History of Coca-Cola
Created in 1886 by Atlanta pharmacist,
Mixed up a caramel-colored liquid, took is to a nearby pharmacy and added carbonated water. Sold it for $.05 a glass.
During the 1st year, only 9 glasses a day of Coca-Cola were sold.
By 1986, 10 billion gallons of syrup were produced
Pemberton died in 1888, and never
saw the success of his creation
Between 1905 and 1918, new plants were opened
in Canada, Panama, Puerto Rico, France and
other US territories.
In 1900 there were two bottlers to 1,000 bottlers in 1920
Coca-Cola because the official drink of the 1928 Olympic Games in Amsterdam
The Coca-Cola company developed and distributed the "six-pack", the open top cooler and other innovations that made it easier for people to drink Coca-Cola at home or away.
In 1960, Coca-Cola acquired its first juice company, The Minute Maid Company.
Coca-Cola's lead over the competition increased and they remain the leading soft drink beverage today.
The Coca-Cola Polar Bear was introduced in 1993 with the famous "Always Coca-Cola" advertising campaign
Competing on Analytics
by Thomas Davenport
"The Oakland A's aren't the only one playing moneyball.
Companies of every stripe want to be a part of the game."
$13 Billion in Revenue annually from juice alone
Coca-Cola accounts for 17% of juice related volume sold in 22 markets worldwide
Total Cost > Cost of the New System
It Doesn't Matter
by Nicholas Carr
"You only gain an edge over rivals
by doing something they can't have or do"
So is Coca-Cola's Algorithmic system proprietary
enough to gain competitive advantage?
Problems with Coca-Cola's
The systems need to be updated regularly and most time the upgrade is expensive
People need to be very careful when they collect data and try to put them into the system
The data must be up to date and accurate
You have to make sure you have the right systems and teach everyone how to use it
Different Tastes in Different Countries