“Coca-Cola Company”

Case Study
STRATEGIC MANAGEMENT
 EXECUTIVE SUMMARY

Coca-Cola, the product that has given the world its best-known taste was born in Atlanta,
Georgia, on May 8, 1886. Coca-Cola Company is the world’s leading manufacturer, marketer
and distributor of non-alcoholic beverage concentrates and syrups, used to produce nearly 400
beverage brands. It sells beverage concentrates and syrups to bottling and canning operators,
distributors, fountain retailers and fountain wholesalers. Coca-Cola was first introduced by John
Stith Pemberton, a pharmacist, in the year 1886 in Atlanta, Georgia when he concocted caramel-
colored syrup in a three legged brass kettle in his backyard. He first “distributed” the product by
carrying it in a jug down the street to Jacob’s Pharmacy and customers bought the drink for five
cents at the soda fountain. Carbonated water was teamed with the new syrup, whether by
accident or otherwise, producing a drink that was proclaimed “delicious and refreshing”, a theme
that continues to echo today wherever Coca-Cola is enjoyed. 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.
Interbrand’s Global Brand Scorecard for 2003 ranked Coca-Cola the #1 Brand in the World and
estimated its brand value at $70.45 billion. Coca-Cola currently offers nearly 400 brands in over
200 countries or territories and serves 1.5 billion servings each day. Today, products of the Coca
Cola Company are consumed at the rate of more than one billion drinks per day.
HISTORY OF COCA COLA

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.
BRANDS OF COCA COLA

Coca-Cola Zero® has been one of the most successful product launches in Coca
Cola’s history. In 2007, Coca Cola’s sold nearly 450 million cases globally. Put
into perspective, that's roughly the same size as Coca Cola’s total business in
the Philippines, one of our top 15 markets. As of September 2008, Coca-Cola
Zero is available in more than 100 countries.

3.1- Energy Drinks

For those with a high-intensity approach to life,

Coca Cola’s brands of Energy Drinks contain
ingredients such as ginseng extract, guarana
extract, and caffeine and B vitamins.

3.2- Juices/Juice Drinks

We bring innovation to the goodness of juice in
Coca Cola’s more than 20 juice and juice drink
brands, offering both adults and children
nutritious, refreshing and flavorful beverages.

3.3- Soft Drinks

Coca Cola’s dozens of soft drink brands provide

flavor and refreshment in a variety of choices.
From the original Coca-Cola to most recent
introductions, soft drinks from The Coca-Cola
Company are both icons and innovators in the
beverage industry.

3.4- Sports Drinks

Carbohydrates, fluids, and electrolytes team together in Coca Cola’s Sports Drinks, providing
rapid hydration and terrific taste for fitness-seekers at any level

3.5- Tea and Coffee

Bottled and canned teas and coffees provide

consumers' favorite drinks in convenient take-
anywhere packaging, satisfying both
traditional tea drinkers and today's growing
coffee culture.

3.6 Water

Smooth and essential, our Waters and Water

Beverages offer hydration in its purest form.

3.7- Other Drinks

So much more than soft drinks. Coca Cola’s

brands also include milk products, soup, and
more so you can choose a Coca Cola
Company product anytime, anywhere for
nutrition, refreshment or other needs.

4- CONSUMER CHOICE AT A GLANCE

Coca-Cola Mainly preferred by the Youngster & Kids.

Thums-Up Youngster. Limca Common Drink.

Fanta Basically Preferred by Ladies and Kids. Maaza Also Ladies and Kids.

Sprite Not clearly defines. Kinley Soda Mostly those who consume liquor.
Mission Statement (actual)
Our mission declares our purpose as a company. It serves as the standard against which we
weigh our actions and decisions. It is the foundation of our Manifesto.

• To Refresh the World... in body, mind, and spirit.

• To Inspire Moments of Optimism... through our brands and our actions.
• To Create Value and Make a Difference... everywhere we engage.
Vision Statement (actual)
“To maintain our reputation as the leading cola company in the world”

Our vision guides every aspect of our business by describing what we need to accomplish in
order to continue achieving sustainable growth.

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 quality beverage brands that anticipate and satisfy people's
desires and needs.

Partners: Nurturing a winning network of customers and suppliers, together we create mutual, enduring
value.

Planet: Being a responsible citizen that makes a difference by helping build and support sustainable
communities.

Profit: Maximizing long-term return to shareowners while being mindful of our overall responsibilities.

IMPROVED MISSION STATEMENT:

(1) 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.
(2) 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.

IMPROVED VISION STATEMENT:

(1) Coca cola Co responsibility is to continually improve all aspects of the world in which
we operate – environment, social, economic – creating a better tomorrow than today."
(2) Our vision is put into action through programs and a focus on environmental stewardship,
activities to benefit society, and a commitment to build shareholder value by making
Coca cola Co a truly sustainable company.
 Comments on vision and mission (in terms of how they support the strategies)

The vision statement of our company supports the existing strategies that is (generic
strategy) that Coca Cola needs to pursue is that of differentiation. In their current vision
and mission statements, the company says it aims to be a low cost leader, yet through our
thorough analysis of the strategic direction the company needs to adopt a generic strategy
of differentiation. This will allow Coca cola to do three things;

1. Charge a premium 2. Increase unit sales 3. Gain buyer loyalty

However, at the expense of sounding simplistic, it is necessary that the company

communicate its differentiation to its customers, otherwise these three advantages will
not avail themselves. Initially Coca cola will need to adopt a focused differentiation
approach, which means that they should selectively choose which markets will profit
them the most and then target only those markets until such provisions are in place from
where the company is able to expand its target base. After which they should opt for a
broad differentiation generic strategy.

With the market just turning the bend to ‘saturation’, it is entering a phase of intense competition
with all major players diversifying their product lines, ranges and even businesses into a versatile
range of products to put in place more infantry on the battle ground to use to their advantage in
this war of brands. Therefore, we believe that the current strategic objective of Coca cola
should be to consolidate its existing brand, Coca cola through extensive strategic market research
and consumer insights to be able to home in on the correct target market like a precision
targeting missile rather than as an Anti-aircraft gun
Internal Audit
Strength
1. Product line has over 400 brands.
2. Strong global presence, located in
over 200 countries.
3. Long history has built excellent
brand recognition.
4. Partnership longevity with
established sporting events
including the Olympics.
5. Industry leader in market
capitalization with $112 billion.
6. Return on Equity yielded 30
percent in 2006.
7. Leader of dividend yields of 2.6
percent. The company has had 43
consecutive years of an annual
dividend increase.
8. Joint venture between The Coca
Cola Company and Nestle has
resulted in the establishment of
Beverage Partners Worldwide
(BPW).
9. Coca-Cola has formed a strong
partnership with McDonalds, with
McDonalds becoming their largest
customer.
Weakness
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 Pepsi Co.’s 8.0.
Internal Factor Evaluation (IFE) Matrix
Weight Rating Weighted
Key Internal Factors
Score

Strengths

1. Product line has over 400 brands. 0.09 4 0.36

2. Strong global presence, located in over 200 0.10 4 0.40

countries.

3. Long history has built excellent brand 0.06 4 0.24

recognition.

4. Partnership longevity with established 0.05 4 0.20

sporting events including the Olympics.

5. Industry leader in market capitalization 0.12 4 0.48

with $112 billion.

6. Return on Equity yielded 30 percent in 0.04 4 0.12

2006.

7. Leader of dividend yields of 2.6 percent.

The company has had 43 consecutive years
of an annual dividend increase. 0.04 4 0.16

8. Joint venture between The Coca Cola

Company and Nestle has resulted in the
establishment of Beverage Partners 0.06 4 0.24
Worldwide (BPW).

9. Coca-Cola has formed a strong partnership

with McDonalds, with McDonalds
becoming their largest customer. 0.10 4 0.40

Weaknesses
 1. Product line is limited to beverages. 0.09 1 0.09

2. A failed $16 billion acquisition of Quaker 0.10 1 0.10

Oats hinders long-term growth.

3. Negative publicity in India because of 0.03 2 0.06

water issues, has led to poor brand image
and hindered growth there.

4. Lack of management willingness to place 0.02 2 0.04

foreign products into American markets.

5. Marketing deficiencies due to turnover in 0.05 2 0.10

leadership and a 16 percent decrease in
advertising spending.

6. Coca Cola’s inventory turnover is only 5.4 0.05 2 0.10

compared to Pepsi Co.’s 8.0.

TOTAL 1.00 3.09

External Audit
Opportunities Threats

1. Bottled water consumption has 1. Consumption of American

increased 11 percent.
2. According to the S&P Industry
Survey, consumers are drawn to
new smaller beverage brands that
are not sold on a mass scale.
3. Word Economic Forum’s annual
Davos, Switzerland gathering
grants international voice.
4. Less developed countries are in
beverages is denounced by
foreign officials in areas
where conflicting interest
exist.
2. Multiple lawsuits against
the new Enviga beverage
for calorie burning claims
in advertising
 desperate need to improve
community water supplies.
5. Energy drink sales are expected to
increase 7 to 8 percent in 2007.
6. Disposable income has increased
6.2 percent.
7. Consumers are striving to drink
and eat their way to better health
than pervious generations.
8. EPS is expected to rise 7 to 8
percent in 2007.
External Factor Evaluation (EFE) Matrix
Key External Factors
Weight
Opportunities
3. Smaller, lesser known
brands are turning to major
beer distributors for
bottling.
4. Overall carbonated drink
sales have been flat due to
links of sugar to obesity
and high fructose corn
syrup to heart disease.
5. Pepsi is more diversified
offering beverage and food
products.
6. High cost of commodities
such as sugar, and metals
used in production of cans.
7. Many smaller companies
are fierce competitors
around the world in their
local markets.
Rating Weighted
Score
 1. Bottled water consumption has 0.06 4 0.24
increased 11 percent.

2. According to the S&P Industry

Survey, consumers are drawn to new
smaller beverage brands that are not 0.05 2 0.10
sold on a mass scale.

3. Word Economic Forum’s annual 0.02 2 0.04

Davos, Switzerland gathering grants
international voice.

4. Less developed countries are in 0.02 2 0.04

desperate need to improve community
water supplies.

5. Energy drink sales are expected to 0.06 3 0.18

increase 7 to 8 percent in 2007.

6. Disposable income has increased 6.2 0.05 3 0.15

percent.

7. Consumers are striving to drink and 0.07 3 0.21

eat their way to better health than
pervious generations.

8. EPS is expected to rise 7 to 8 percent 0.07 4 0.28

in 2007.

Threats

1. Consumption of American beverages

is denounced by foreign officials in
areas where conflicting interest exist. 0.02 3 0.06

2. Multiple lawsuits against the new

Enviga beverage for calorie burning
claims in advertising 0.04 2 0.08

3. Smaller, lesser known brands are 0.06 2 0.12

turning to major beer distributors for
bottling.

4. Overall carbonated drink sales have

been flat due to links of sugar to
obesity and high fructose corn syrup 0.10 2 0.20
to heart disease.
 5. Pepsi is more diversified offering 0.20 3 0.60
beverage and food products.

6. High cost of commodities such as 0.10 3 0.30

sugar, and metals used in production
of cans.

7. Many smaller companies are fierce 0.08 3 0.24

competitors around the world in their
local markets.

TOTAL 1.00 2.84

CPM – Competitive Profile Matrix

Coca-Cola Pepsi Cadbury Schweppes

Critical Success Weight Rating Weighte Rating Weighted Rating Weighted

Factors d Score Score Score

Market Share 0.15 4 0.60 3 0.45 2 0.30

Price Comp 0.10 3 0.30 3 0.30 3 0.30

Financial 0.12 4 0.48 4 0.48 3 0.36

Position
0.15 3 0.45 3 0.45 3 0.45
Product Quality
0.15 4 0.60 4 0.60 3 0.45
Product Lines
0.15 4 0.60 4 0.60 3 0.45
Customer
Loyalty 0.11 3 0.33 3 0.33 3 0.33

Employees 0.07 3 0.21 3 0.21 3 0.21

1.00 3.71 3.56 2.85

Marketing

Total

SWOT ANALYSIS
SWOT Analysis is a strategic planning tool used to evaluate the Strengths, Weaknesses,
Opportunities, and Threats inside a company, project, or a business venture. It involves
identifying the internal and external factors that are favorable/unfavorable for business to
succeed

SWOT ANALYSIS FOR COCA COLA COMPANY

STRENGTHS

1. Brand equity/image & recognition

2. Product distribution and worldwide network
3. Solid financial performance
4. One of the world's most recognized brand.
5. Product diversification (water, juices, soft drinks, sport drinks, etc)
6. Co-operate identity.
7. Innovation
WEAKNESSES

1. Credit rating
2. Customer concentration, particularly in the US (Wal-Mart accounts for more than 10% of
Coca Cola's business in the US)
3. A lot of loyal Pepsi customers are not enough loyal Coca Cola customers
4. Does not enjoy the number one position in India, Pakistan.
OPPURTUNITIES

1. Possible growing demand.

2. Expansion – Reaching all segments.
3. Globalization
4. Catering to Health Consciousness of People
5. Bottled water growth
6. Acquisitions of smaller players.

THREATS

1. Health Drinks – Fruit Juice Companies

2. Key competitors (Pepsi, etc)
3. Commodity prices growth
4. Image perception in certain parts of the world.
5. Smaller, more nimble operators/players
Suggestion to Stay ahead Of Competition
The three main ways are through innovation, relations or reputation.

ST:

• First of all innovation can be used. This may certainly give coca cola competitive
advantage because it introduces a new product, which many people will want to try.
People will like to purchase the commodity even though price is high because no
substitutes are available. It may also give coca cola brand loyalty which means
customers will stay loyal to them no matter what happens.(S1,S2,S4,S5,S7,T1,T2,T3)

• If coca cola used strong marketing with environment friendly attitude it may raise
barriers to entry, thus decreasing the threat of new entrants to the industry.
(T1,T4,T5,S2,S4,S5,S6)

SO:

• Coca Cola's brand represents quality, taste and excitement to the market, qualities that
remain unmatched by the company's competitors, thus severely reducing any threat of
being substituted. (S1,S4,S2,O1,O2,O3)

WO:

• Another factor is marketing. This is a very important factor for coca cola. In order for the
company to maintain its strong market position, Coca Cola needs to continuously
strengthen its brand to maintain brand loyalty and positive responses and differentiate
itself from its competitors.(W2,W3,W4,O1,O2,O3,O4)

WT:

• They should installed hi-tech water recycling system so that they can save 50% water
savings of its operations. (W3, W4, T4)

• Many of coca cola’s plastic bottles are recycled and as a result less resource are lost and
costs decrease. Through diversification & innovation in water & juices business
supported with aggressive advertising strategy Coca Cola Company can attracts a new
market segment. This will mean they will have a higher revenue increasing long term
profitability and improve credit rating.(W1,W4,T1,T3,T4)
SWOT Strategies
Strengths (S) Weaknesses (W)

1. Brand equity/image & 1. Credit rating

Opportunities (O)
recognition 2. Customer concentration,
2. Product distribution and particularly in the US
worldwide network (Wal-Mart accounts for
3. Solid financial performance more than 10% of Coca
Cola's business in the
4. One of the world's most US)
recognized brand.
3. A lot of loyal Pepsi
5. Product diversification (water, customers are not enough
juices, soft drinks, sport drinks, loyal Coca Cola
etc) customers
6. Co-operate identity. 4. Does not enjoy the
7. Innovation number one position in
India, Pakistan.
SO Strategies WO Strategies

• Another factor is
1. Possible growing marketing. This is a very
demand. important factor for coca
• Coca Cola's brand represents cola. In order for the
2. Expansion – Reaching quality, taste and excitement to company to maintain its
all segments. the market, qualities that remain strong market position,
unmatched by the company's Coca Cola needs to
3. Globalization competitors, thus severely continuously strengthen
4. Catering to Health reducing any threat of being its brand to maintain
Consciousness of substituted. brand loyalty and
People (S1,S4,S2,O1,O2,O3) positive responses and
differentiate itself from
5. Bottled water growth its competitors.
6. Acquisitions of smaller (W2,W3,W4,O1,O2,O3,O4)
players.

Threats (T) ST Strategies WT Strategies

• First of all innovation can be • They should installed hi-

used. This may certainly give tech water recycling
1. Health Drinks – Fruit
 Juice Companies coca cola competitive advantage
because it introduces a new
2. Key competitors product, which many people will
(Pepsi, etc) want to try. People will like to
3. Commodity prices purchase the commodity even
growth though price is high because no
substitutes are available. It may
4. Image perception in
also give coca cola brand loyalty
certain parts of the
which means customers will stay
world.
loyal to them no matter what
5. Smaller, more nimble happens.
operators/players (S1,S2,S4,S5,S7,T1,T2,T3)
• If coca cola used strong
marketing with environment
friendly attitude it may raise
barriers to entry, thus decreasing
the threat of new entrants to the
industry.
(T1,T4,T5,S2,S4,S5,S6)
SPACE Matrix
Coordinate: (3.6, 2.2) FS
system so that they can
save 50% water savings
of its operations.
(W3, W4, T4)
• Many of coca cola’s
plastic bottles are
recycled and as a result
less resource are lost and
costs decrease. Through
diversification &
innovation in water &
juices business supported
with aggressive
advertising strategy Coca
Cola Company can
attracts a new market
segment. This will mean
they will have higher
revenue increasing long
term profitability and
improve credit rating.
(W1,W4,T1,T3,T4)
 +3.6
-1.00
Competitive
Defensive
Aggressive
+6.0
+1.0
-6.00
+2.
Conservative
0
2

CA IS

ES

Financial Strength
Return on Assets (R
Leverage
 Competitive Advan
Market Share
2.2
X-axis: -1.4 + 5.0 = 3.6 Y-axis: 5.4 + -3.2 =

Product Quality
Coordinate: (3.6, 2.2)

The Boston Consulting Group (BCG) Matrix

Industry
Cash
Relative
Question
Dogs
Stars
Coke
Cows
Market Share

Customer Loyalty
Sales
MarksPosition
Growth
Rate

Technological know-
Control over Supplie

Competitive Advan
CONCLUSION:
The Coca Cola Company has a very rich history and spread over the world, the study in this
report specially 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.