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INTERNATIONAL BUSINESS

Presented by:-

Alisha Mody - 9

Jesal Vaidya - 38

Shibin Varughese - 101

Kirk Quadros - 52

Pratish Manchalwad - 60

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COCA-COLA

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Name The Coca Cola Company

Logo

Industries served Beverages

Geographic areas served Worldwide

Headquarters U.S.

Current CEO Muhtar Kent

Revenue $ 46.85 billion (2013)

Profit $ 9.01 billion (2013)

Employees 146,200 (2013)

Main CompetitorsPepsiCo Inc., Dr Pepper Snapple Group, Inc., Unilever, Groupe Danone, Kraft Foods Inc., Nestlé S.A. and many others.

THE COCA-COLA COMPANY'S NET OPERATING REVENUES WORLDWIDE FROM 2007 TO 2013 (IN BILLION U.S. DOLLARS)

2007 2008 2009 2010* 2011* 2012 20130

10

20

30

40

50

60

28.8631.94 30.99

35.12

46.54 48.02 46.85

Rev

enue

s in

billi

on U

.S. d

olla

rs

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MARKET SHARE OF THE COCA-COLA COMPANY AND OTHER SOFT DRINK COMPANIES WORLDWIDE IN 2013, BASED ON SALES VALUE

The Coca-Cola Co. PepsiCo Inc Nestlé SA Other0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

25.9%

11.5%

3%

59.6%

Glo

bal m

arke

t sha

re

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PESTLE ANALYSIS

POLITICAL ANALYSIS AND FACTORSChanges in laws and regulations—changes in accounting standards, taxation requirements (tax rate changes, modified tax law interpretations, entrance of new tax laws), and environmental laws either in domestic or foreign authorities.

Changes in non-alcoholic business era—competitive product and pricing policy pressures and ability to maintain or earn share of sales in worldwide market compared to rivals.

Political conditions, specifically in international markets—civil conflict, governmental changes, and restrictions concerning the ability to relocate capital across borders.

Ability to penetrate emerging and developing markets—this also relies on economic and political conditions, such as civil conflict and governmental changes, as well as Coca-Cola's ability to form effectively strategic business alliances with local bottlers, and to enhance their production amenities, distribution networks, sales equipment, and technology.

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ECONOMIC ANALYSIS AND FACTORS1. During the recession of 2001, most of the

governments took aggressive actions to turn the economy around by 2002.

2. Coca-Cola took note of this, and realized that loan interest rates would likely rise as the economy returned. Thus, they took out low-cost loans in 2001 to fund growth in 2002. They used the loans for research and development on new products to capitalize on in a strong 2002 economy. 

3. Currently, as global growth is slowing, Coca-Cola may be watching for a similar opportunity.

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SOCIAL ANALYSIS AND FACTORS1. The majority of people in Europe are showing increasing

interest in healthy lifestyles. That has strongly influenced the sales within non-alcoholic beverage sector as many customers switch to bottled water and diet colas such as Coca-Cola Light or Zero.

2. Time management is a concern for 43 percent of all households, a percentage that has increased over the years.

3. Customers from ages 37 to 55 are concerned with their nutrition. Also, a large portion of the population are baby boomers. As they become seniors, they are more concerned about life choices that will impact their life expectancy. That will continue to affect the non-alcoholic beverage sector by increasing the demand for healthier drinks.

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TECHNOLOGICAL ANALYSIS AND FACTORSThe efficiency of a company's advertising, marketing, and promotional programs—For example, television, web, and social media advertising are constantly evolving. The ability of a company to effectively promote their products through these channels impacts sales.

Packaging design—In the past, the introduction of cans and plastic bottles increased sales volume for the company due to how easy these containers were to carry and dispose.

New equipment—Because the technology is continuously advancing, new equipment is constantly being introduced. Because of these new technologies, Coca-Cola's production volume has increased sharply compared to that of a few years ago.

New factories—Coca-Cola Enterprises (CCE) has six factories in Britain that use modern technology to ensure the quality and speedy delivery of product. In 1990, CCE opened one of Europe's largest soft drinks factories in Wakefield, Yorkshire. The factory has the ability to produce cans of Coca-Cola at a faster rate than a machine gun can fire bullets.

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SWOT ANALYSIS

Weakness

Threat

Opportunity

Stre

ngth

SWOT

1. The best global brand in the world in terms of value ($77,839 billion)

2. World’s largest market share in beverage

3. Strong marketing and advertising

4. Most extensive beverage distribution channel

5. Customer loyalty6. Bargaining power

over suppliers7. Corporate social

responsibility

1. Bottle water consumption Growth.

2. Increase in demand of healthy food and beverages.

3. Growing Beverages consumption in emerging markets.

4. Growth through acquisition.

COCA-COLA SWOT ANALYSIS

ANALYSIS

1. Significant focus on carbonated drinks2. Undiversified product portfolio3. High debt level due to acquisitions4. Negative publicity5. Brand failures or many brands with insignificant amount of

revenues

1. Changes in consumer preferences2. Water scarcity3. Strong dollar4. Legal requirements to disclose negative information on product labels5. Decreasing gross profit and net profit margins6. Competition from PepsiCo7. Saturated carbonated drinks market

SWOT

1.The best global brand in the world in terms of value. According to Interbrand, The Coca Cola Company is the most valued ($77,839 billion) brand in the world.

2.World’s largest market share in beverage. Coca Cola has the largest beverage market share in the world (about 40%).

3.Strong marketing and advertising. Coca Cola’ advertising expenses accounted for more than $3 billion in 2012 and increased firm’s sales and brand recognition.

4.Most extensive beverage distribution channel. Coca Cola serves more than 200 countries and more than 1.7 billion servings a day.

5.Customer loyalty. The firm enjoys having one of the most loyal consumer groups.

6.Corporate Social Responsibility (CSR). Coca Cola is increasingly focusing on CSR programs, such as recycling/packaging, energy conservation/climate change, active healthy living, water stewardship and many others, which boosts company’s social image and result in competitive advantage over competitors.

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STRENGTHS

SWOT1.Significant focus on carbonated drinks. The business is still focusing on selling Coke, Fanta, Sprite and other carbonated drinks. This strategy works in short term as consumption of carbonated drinks will grow in emerging economies but it will prove weak as the world is fighting obesity and is moving towards consuming healthier food and drinks.

2.Undiversified product portfolio. Unlike most company’s competitors, Coca Cola is still focusing only on selling beverage, which puts the firm at disadvantage. The overall consumption of soft drinks is stagnating and Coca Cola Company will find it hard to penetrate to other markets (selling food or snacks) when it will have to sustain current level of growth.

3.Negative publicity. The firm is often criticized for high water consumption in water scarce regions and using harmful ingredients to produce its drinks.

4.Brand failures or many brands with insignificant amount of revenues. Coca Cola currently sells more than 500 brands but only few of the brands result in more than $1 billion sales. Plus, the firm’s success of introducing new drinks is weak. Many of its introduction result in failures, for example, C2 drink.

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WEAKNESS

SWOT

1.Bottled water consumption growth. Consumption of bottled water is expected to grow both in US and the rest of the world.

2.Increasing demand for healthy food and beverages. Due to many programs to fight obesity, demand for healthy food and beverages has increased drastically. The Coca Cola Company has an opportunity to further expand its product range with drinks that have low amount of sugar and calories.

3.Growing beverages consumption in emerging markets. Consumption of soft drinks is still significantly growing in emerging markets, especially BRIC countries, where Coca Cola could increase and maintain its beverages market share.

4.Growth through acquisitions. Coca Cola will find it hard to keep current growth levels and will find it hard to penetrate new markets with its existing product portfolio. All this can be done more easily through acquiring other companies.

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OPPORTUNITIES

SWOT1. Changes in consumer tastes. Consumers around the world become more health

conscious and reduce their consumption of carbonated drinks, drinks that have large amounts of sugar, calories and fat. This is the most serious threat as Coca Cola is mainly serving carbonated drinks.

2. Water scarcity. Water is becoming scarcer around the world and increases both in cost and criticism for Coca Cola over the large amounts of water used in production.

3. Strong dollar. More than 60% of The Coca Cola Company income is from outside US. Due to strong dollar performance against other currencies firm’s overall income may fall.

4. Legal requirements to disclose negative information on product labels. Some Coca Cola’s carbonated drinks have adverse health consequences. For this reason, many governments consider to pass legislation that requires disclosing such information on product labels. Products containing such information may be perceived negatively and lose its customers.

5. Competition from PepsiCo. PepsiCo is fiercely competing with Coca Cola over market share in BRIC countries, especially India.

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THREAT

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ENTRY STRATEGY OF COCA-COLA IN EUROPE

WHY HAS COCA-COLA ENTERED EUROPE1. Market Potential and Share

• European market has great potential and Cokes Market Share in Europe is low as compared to its competitors.

2. Improve Market Position

3. Reduction in costs

4. Formation of European Union:• It was the period where Formation of European Union was to take place and

this would lead to no tariff between EU countries and hence making it possible for coke to utilize it Manufacturing and bottle assets and partners to efficiently supply its products to retailers taking into consideration that it was cheapest and most rapidly available factors.

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HOW HAS COCA-COLA ENTERED EUROPE

• Coke opened its first bottling plant in Europe in Paris and Bordeaux in 1919

• This was through acquisition “backward vertical FDI”.

• Coca-Cola has also used Network Model(Alliance and Joint Ventures)

MODE OF ENTRY:Assembling: The firm produces domestically all or most of the components or ingredients of its product and ships them to foreign markets to be put together as a finished product. The firm is saving on transportation costs and also on custom tariffs .

Another benefit is the use of local employment which facilitates the integration of the firm in the foreign market. Coca-Cola ships its syrup to foreign markets where local bottle plants add the water and the container .

Licensing: Licensing is another way to enter a foreign market with a limited degree of risk. Coca-Cola has highest licensed bottlers in Europe in UK.

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HOW HAS COCA-COLA ENTERED EUROPE1. Construction of new bottling plants is helping the company

produce a low cost product.2. Marketing expenditures are helping the company to gain the

product recognition needed for growth.3. Direct investments in facilities closer to the market are reducing

delivery time and eliminating import duties.

• The Coca-Cola company is having extensive production abroad with foreign direct investment and all functions like exporting and importing and also franchising.

• For example in Turkey Coca-Cola gives first franchising to IMSA(HAS Group) in 1964.

• Coke is making FDI in order to improve its market position especially in Europe.

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ENTRY MODE STRATEGY IN RUSSIA• Plant facilities• Moscow and St. Petersburg

corporate facilities• Local Infrastructure

GREENFIELD

• Suppliers• Manufacturing• Distribution

JOINT VENTURE

• PlantsACQUISITION

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IB CHALLENGES FACING COKE.

IB CHALLENGES FACING COKE.

• Health threatening and cheering obesity

• “Child labour sweatshops”

• The British Monopolies and Mergers Commission is investigating possible anti-competitiveness in Coke’s joint ventures.

• In Italy, San Pellegrino, the mineral water company, has filed a complaint with the Commission of the European Communities,

• Infiltration of the beverages market by other strong Companies such as Pepsi and co

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The road to success has never been smooth and easy. For Coca-Cola Company the phrase seems perfectly matched, the Company faced a lot of challenges in some countries as it was trying to globalize.

IB CHALLENGES FACING COKE.

• Fluctuation of monetary capital exchange between countries.

• Health Concern raised and Negative Publicity: In 2003, the Centre for Science and Environment (CSE), identified toxins including lindane, DDT, malathion and chlorpyrifos.

• Tested products included Coke, Pepsi, and several other soft drinks (7Up, Mirinda, Fanta, Thums Up, Limca, Sprite), many produced by The Coca-Cola Company.

• In March 2004, local officials in Kerala shut down a $16 million Coke bottling plant blamed for a drastic decline in both quantity and quality of water available to local farmers and villagers.

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CONCLUSION

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THANK YOU