Strategic Management Case

Of

Coca-Cola

Presented by

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Contents

(1) Coca-cola's Current situation (1)

a. Current performance

b. Strategic posture

Vision & mission

Objectives

Strategies

Policies

(2) Strategic Management (2)

a. Board of Directors

b. Top Management

(3) External Environment (EFAS Table) (3)

a. Opportunities

b. Threats

(4) Internal Environment (IFAS Table) (3)

a. Strengths

b. Weaknesses

(5) Analysis of Strategic Factors (SWOT) (6)

a. Situational Analysis SWOT analysis.

b. Review of current mission and objectives.

(6) Strategic Formulation & Strategic alternatives & recommended strategy.(7)

a. SPACE matrix

b. BCG

c. IE Matrix

d. QSPM

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I – Current situation

a. Current performance

- Good Financial Position, as shown in exhibit (3) : Ratio analysis.

- Good profitability ratio despite the decrease in E/S from 2.57 to 2.162 as shown

in exhibit (4): common size Income statement.

- Company is more stable in getting loans from institutions to keep tax saving.

b. Strategic Posture

1 – Vision and mission

- Coca-Cola vision guides every aspect of its business by describing what it

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.

- Coca-Cola mission declares its purpose as a company. It serves as the

standard against which it weigh its actions and decisions.

(1) To refresh the world in body, mind and spirit.

(2) To inspire moments of optimism through our brands and our actions.

(3) To create value and make a difference everywhere we engage.

2 – Objectives

1 – To be profitability leader in industry for every product line.

2 - To be number one in total customer satisfaction.

3 – To increase profitable market share growth all over the world.

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3 – Strategies

1 – Outsource Coca-Cola distribution networks.

2 – Global growth through acquisition of potential competition business.

3 – Strengthen its brand to maintain its strong market position.

4 – To compliance with all regulatory environmental requirements.

4 – Policies

1 – innovation in branding.

2 – promotion to develop a market penetration.

3 - Operation cost reduction on the account of increase of the R&D Cost.

II – Strategic Management

a. Board of directors.

John  F.  Brock Chairman and Chief Executive OfficerDirector Since 2006Coca-Cola Enterprises Inc.

Fernando AguirreChairman, Chief Executive Officer, and PresidentDirector Since 2005Chiquita Brands International, Inc.

Calvin DardenFormer Senior Vice President, U.S. OperationsUnited Parcel Service, Inc. (UPS)

Irial Finan

Executive Vice President and President Bottling Investments and Supply ChainDirector Since 2004The Coca-Cola Company

L. Phillip HumannFormer Chairman of the BoardDirector Since 1992SunTrust Banks, Inc.

Donna A. JamesPresidentDirector Since 2005Lardon & Associates LLC

Thomas H. Johnson

Former Chairman and Chief Executive OfficerDirector Since 2007Chesapeake Corporation

Suzanne B. Labarge

Former Vice Chairman and Chief Risk OfficerDirector Since 2007RBC Financial Group

Curtis R. WellingPresident and Chief Executive OfficerDirector Since 2007AmeriCares Foundation Inc.

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b. Top management

III – External Environment (EFAS Table; See exhibit 1)

- Key external factors.

a. Opportunities

O1. Possible growing demand. (Economics)

O2. Expansion – Reaching all segments. (Bargaining power of buyer)

O3. Globalization. (Economics)

O4. Catering to Health Consciousness of People. (Sociocultural)

O5. Bottled water growth.

O6. Acquisitions of smaller players.

b. Threats

T1. Health Drinks – Fruit Juice Companies.

T2. Key competitors (Pepsi ,etc.).

T3. Commodity prices growth.

T4. Image perception in certain parts of the world.

T5. Smaller, more nimble operators/players

IV – Internal Environment IFAS Table; See exhibit (2)

a. Strengths World’s leading brand Coca-Cola has strong brand recognition across the globe.

The company has a leading brand value and a strong brand portfolio. Coca-Cola is

one of the leading brands in their top 100 global brands ranking in 2006.8The value

of the Coca-Cola was $67,000 million in 2006. Coca-Cola ranks well ahead of its

close competitor Pepsi which has a ranking of 22 having a brand value of $12,690

million. Furthermore; Coca-Cola owns a large portfolio of product brands. The

compan8y owns four of the top five soft drink brands in the world: Coca-Cola, Diet 5

Coke, Sprite and Fanta. Strong brands allow the company to introduce brand

extensions such as Vanilla Coke, Cherry Coke and Coke with Lemon. Over the years,

the company has made large investments in brand promotions. Consequently, Coca-

cola is one of the best recognized global brands. The company’s strong brand value

facilitates customer recall and allows Coca-Cola to penetrate new m2arkets and

consolidate existing ones. Coca-Cola Company, The large scale of operations with

revenues in excess of $24 billion Coca-Cola has a large scale of operation. Coca-Cola

is the largest manufacturer, distributor and marketer of nonalcoholic beverage

concentrates and syrups in the world. Coco-Cola is selling trademarked beverage

products since the year 1886 in the US. The company currently sells its products in

more than 200 countries. Of the approximately 52 billion beverage servings of all

types consumed worldwide every day, be8verages bearing trademarks owned by or

licensed to CocaCola account for more than 1.4 billion. The company’s operations

are supported by a strong infrastructure across the world. Coca-Cola owns and

operates 32 principal beverage concentrates and/or syrup manufacturing plants

located throughout the world. In addition, it owns or has interest in 37 operations

with 95 principal beverage bottling and canning plants located outside the US. The

company also owns bottled water production and still beverage facilities as well as a

facility that manufactures juice concentrates. The company’s large scale of

operation allows it to feed upcoming markets with relative ease and enhances its

revenue generation capacity. Robust revenue growth in three segments Coca-cola’s

revenues recorded a double digit growth, in three operating segments. These three

segments are Latin America, ‘East, South Asia, and Pacific Rim’ and Bottling

investments. Revenues from Latin America grew by 20.4% during fiscal 2006, over

2005. During the same period, revenues from ‘East, South Asia, and Pacific Rim’

grew by 10.6% while revenues from the bottling investments segment by 19.9%.

Together, the three segments of Latin America, ‘East, South Asia, and Pacific Rim’

and bottling investments, accounted for 34.8% of total revenues during fiscal 2006.

Robust revenues growth rates in these segments contributed to top-line growth for

Coca-Cola during 2006.

b. Weaknesses Negative publicity, Company received negative publicity in India during

September 2006.The Company was accused by the Center for Science and

Environment (CSE) of selling products containing pesticide residues. Coca-Cola

products sold in and around the Indian national capital region contained a

hazardous pesticide residue. These pesticides included chemicals which could cause

cancers, damage the nervous and reproductive systems and reduce bone mineral

density. Such negative publicity could adversely impact the company’s brand image

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and the demand for Coca-Cola products. This could also have an adverse impact on

the company’s growth prospects in the international markets. Sluggish performance

in North America Coca-Cola’s performance in North America was far from robust.

North America is Coca-Cola’s core market generating about 30% of total revenues

during fiscal 2006. Therefore, a strong performance in North America is important

for the company.

c. Summery points

Strengths

S1. Leading brand value and a strong brand portfolio Coca-Cola, Diet Coke,

Sprite and Fanta Large investments in brand promotions sells its products in

more than 200 countries Company also owns bottled water production and

still beverage facilities as well as a facility that manufactures juice

concentrates.

S2. These three segments are Latin America, East, South Asia, and Pacific Rim

and Bottling investments.

S3. Return on total assets increases over the period consistently 2005, 06, 07

15.47%, 16.55%, and 16.95% respectively.

Weaknesses:

W1. Negative publicity in India

W2. Inventory turnover decreased by 13.29%

W3. Return on equity decreased by 40.50%

W4. Sluggish performance in North America

W5. Coca-Cola’s performance in North America was far from robust

W6. Collection form debtors decreased by 15.68%

V – Analysis of strategic factors (SWOT)

a. Situational Analysis SWOT analysis

- Strengths

S1. Brand equity/image & recognition.

S2. Product distribution and worldwide network.

S3. Solid financial performance.

S4. One of the world's most recognized brand.

S5. Product diversification (water, juices, soft drinks, sport drinks, etc).

S6. Co-operate identity.

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S7. Innovation.

- Weaknesses W1. Credit rating

W2. Customer concentration, particularly in the US (Wal-Mart accounts for

more of Coca Cola's business in the US).

W3. A lot of loyal Pepsi customers are not enough loyal Coca Cola customers

W4. Does not enjoy the number one position in India, Pakistan.

- Opportunities

O1. Possible growing demand.

O2. Expansion – Reaching all segments.

O3. Globalization.

O4. Catering to Health Consciousness of People.

O5. Bottled water growth.

O6. Acquisitions of smaller players.

- Threats

T1. Health Drinks – Fruit Juice Companies.

T2. Key competitors (Pepsi, etc).

T3. Commodity prices growth.

T4. Image perception in certain parts of the world.

T5. Smaller, more nimble operators/players.

b. Review of current mission and objectives

Improved Mission Statement

(1) At Coca Cola they're committed to achieving business and financial

success while leaving a positive imprint on society – delivering what it call

Performance with Purpose.

(2) Coca-Cola's mission is to be the world's premier consumer Products

Company focused on convenient foods and beverages. it seek to produce

financial rewards to investors as it provide opportunities for growth and

enrichment to its employees, its business partners and the communities in

which it operate. And in everything it do, it strive for honesty, fairness and

integrity.

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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) Coca-Cola's 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.

VI – Strategic Formulation & Strategic alternatives & recommended strategy.

a. SPACE Matrix

The SPACE matrix is a management tool used to analyze a company. It is

used to determine what type of a strategy a company should undertake. The

Strategic Position & Action Evaluation matrix or short a SPACE matrix is a

strategic management tool that focuses on strategy formulation especially

as related to the competitive position of an organization.

The SPACE matrix can be used as a basis for other analyses, such as the

SWOT analysis, BCG matrix model, industry analysis, or assessing strategic

alternatives (IE matrix).

The SPACE matrix calculates the importance of each of these dimensions and

places them on a Cartesian graph with X and Y coordinates.

The following are a few model technical assumptions:

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- By definition, the CA and IS values in the SPACE matrix are plotted

on the X axis. -CA values can range from -1 to -6. - IS values can take

+1 to +6.

-The FS and ES dimensions of the model are plotted on the Y axis. -

ES values can be between -1 and -6. - FS values range from +1 to +6.

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b. BCG

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c. IE Matrix

d. QSPM of Coca-Cola

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Exhibit (2)

Key internal Factors Weight Rating

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Exhibit (1)

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Exhibit (3)

Ratio Analysis

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Exhibit (4)

Common Size Income Statement

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