Business

1.0 Introduction
Coca-Cola has sold more than one billion servings every day. More than 10,450 beverages are consumed every second. The company achieved earnings of $4,347,000,000 in 2003. It is present on all seven continents and is recognized
by 94% of the world population. How did Coca-Cola grow from its humble roots as a
home-brewed Georgia-based patent medicine to be the international soft drink
powerhouse that it is today? Coca-Cola used numerous technologies to achieve its
rise to the top of the soft drink industry, defining new technologies and
establishing paradigms that popped the status quo like a cap from a soda bottle.
Through technology, Coca-Cola perfected Coke as a beverage and spread it
throughout the world. Even today, the US soft drink industry is organized on this
principle. "The Coca-Cola Company" is now the largest soft drink company in the
world. Every year 800,000,000 servings of just "Coca-Cola" are sold in the U.S
alone.
1.1 Company Background
The Coca-Cola Company is now the largest soft drink company in the world. Coca-
Cola became the largest manufacturer, distributor, and marketer of non-alcoholic
beverage concentrates and syrups which operate in more than 200 countries. Coca-
Cola was invented on May 1886 by Dr. John Stith Pemberton in Jacob's Pharmacy in
Atlanta, Georgia. The name Coca-Cola was suggested by Pemberton's book-keeper,
Frank Robinson. He penned the name Coca-Cola in the flowing script that is famous
today.

2.0 Corporate Vision & Mission
Coca-Cola has been marketed with catching marketing themes such as "Drink Coca-
Cola" and "Delicious and Refreshing". After years of globalization and brand
building, Coca-Cola proudly pronounces its Mission Statement "The Coca-Cola
Company exists to benefit and refresh everyone who is touched by our business".
And their goals: The basic proposition of our business is simple, solid and
timeless. When we bring refreshment, value, joy and fun to our stakeholders, then
we successfully nurture and protect our brands, particularly Coca-Cola. That is
the key to fulfilling our ultimate obligation to provide consistently attractive
returns to the owners of our business. Indeed, it was!

2.2 Evaluation of the CEO's Overall Strategic LeadershipCoca-Cola persuaded their former executive, E. Neville Isdell to come out of
retirement in June 2004 to steer the company out of their doldrums with new
strategic mission and vision being crafted and executed. Over the years, Coca-
Cola has experienced different strategic paradigm change ranging from financial
re-engineering to offload bottling related debts to product diversification and
growth through distribution.
Goals
"That combination infuses all the elements of the strategy that we are
implementing to deliver value to our share owners in the year to come, and well
into the future:
a) Accelerate carbonated soft-drink growth, led by Coca-Cola;
b) Selectively broaden our family of beverage brands to drive profitable growth;
c) Grow system profitability and capability together with our bottling partners;
d) Serve customers with creativity and consistency to generate growth across all channels;
e) Direct investments to highest potential areas across markets; and
f) Drive efficiency and cost-effectiveness everywhere."

2.2.1 Responsible Business Model and Good Corporate Governance
In today's ultra-competitive world, organizations strive to sustain long-term
growth by having a distinctive competitive advantage. Coca-Cola believes its
long-term success would only be sustained through a responsible business model
with good corporate governance. Essentially, this has lead to the setting up of
their "quadrant framework" to develop and communicate core values (in the
community, market place, environment and workplace) and strategy to its bottlers.

2.2.2 Growth and Collaboration with Bottling Partners
As part of Coca-Cola's Chief Financial Officer, M. Douglas Ivester led financial
re-engineering in 1986. Coca-Cola revamped its strategy to spin off their
bottling operation while retaining minority shareholding but with board control.
Local partnership has since become an essential part of Coca-Cola's business
equation with great support towards the evolvement of their business structures.
Now, wherever Coca-Cola goes, it would tie up with a local bottling partner with
interdependent relationship. Whilst Coca-Cola's business scope is indeed global,
it's remains, at heart, a truly local business (Siewert, 2003).

2.2.3 Product Diversification
Coca-Cola continues to explore new beverage categories, keeping the tradition of
expanding on their current portfolio of brands and products. Coca-Cola is the
proud producer of more than 300 beverage brands with core focus on brand Coca-
Cola, Diet Coke, Sprite, and Fanta. Branching out from its traditional carbonated
soft drinks, Coca-Cola Co. ventured into sports-drink segment in Powerade and Full
Throttle and non-carbonated niche offerings such as Mad River teas and Planet Java
coffee. However this strategy has taken a back seat due to the lukewarm response
from consumers. Nevertheless, Coca-Cola is moving towards the direction of
becoming a beverage-snack company.

2.2.4 Development of New Alliances
Coca-Cola Co. is divided into six operating units which include:-
• North America Group
• Latin America Group
• Greater Europe Group
• Middle East and Far East Group
• Africa Group
• Minute Maid Group

The distribution of Coca-Cola has reach to more than 200 countries around the
globe. With such a vast and spread out consumer base, Coca-cola's marketing
strategy focuses on getting their consumers to reach for their drinks more
regularly as put up by the mantra coined by legendary Coke Chairman Robert W.
Woodruff, "putting a Coke within an arm's reach of desire".
To continue with the expansion, Coca-Cola joined in the bandwagon to take up a
piece of the action in once closed economies such as China, East Germany and the
Soviet Union. Venturing into these new territories, Coca-Cola employs the same
strategic trait in collaborating with local bottler as partner.
2.2.5 Corporate Citizenship and Responsibility
Coca-Cola realized the need to give back to the society that they serve and in
doing such in a sustainable way. It gives birth to the Coca-Cola Foundation with
the purpose to serve those in need. Over the years, Coca-Cola has started
education programs in Malaysia (e-learning for life), Philippine (Little Red
Schoolhouse) and China (Project Hope), microenterprise partnerships in Vietnam and
environmental rainwater harvesting project in India. All these community projects
by Coca-Cola continuously improve the quality of life of those people touched by
its business.

3.0 Environmental Scanning
All businesses operate under two broad environments, namely the external
environment where entrepreneurs have no control over it, and the immediate
industry and competitive environment. Coca-Cola's strategy and operation are
greatly affected by these environmental factors.

3.1 Effects of External Environmental Factors
The external environmental forces exist in every part of Coca-Cola's global
business, and exert influence on Coca-Cola's business strategy and operation. No
one business is capable of being "immune" of such external forces.

3.1.1 Economic Factor
Slow economic growth in the United States has greatly adversely affected the sales
and consumption of Coca-Cola soft drinks. Coca-Cola's market has declined 0.7%
and 0.9% in 2003 and 2004. It also suffered from negative growth of 2%, 3% and
1% from 2002 to 2004. Hence, the company has been working very hard to expand its
presence in the fast growing economies, such as China, India and Middle East
countries.

3.1.2 Political / Legal Factor
Coca-Cola has faced difficulty in gaining vast market share in India, as consumers
are skeptical of the health effects of its products. The company also faces U.S.
government foreign policy constrain where it is not allowed to operate in Israel
(Wikipedia). The opening of China market, which was once inaccessible, has
presented Coca-Cola vast opportunity to capture the soft drink market in the
country. However, the company still needs to struggle to manage the country
political, currency and cultural risks (Raman Muralidharan, 1996).
In the United States, soft drink ingredients have to be tested and certified by
the Food and Drug Administration (FDA) before they are allowed to be used in the
production.
The torn-down of Iraq has urged Coca-Cola to make a come-back after 37 years.
During the international sanctions against Iraq period, Coke products were traded
unofficially. Now Coca-Cola has official arrangement with the local Iraqi
bottlers. However, the company is facing two great challenges: the unstable and
dangerous conditions in the country and strong presence of Pepsi in the Middle
East market. (BeverageWorld, 2005)

Continoue to Part 2

Coca-Cola Business Strategy Part 2