Coca Cola company overview and business analysis

Coca-Cola Company Executive Summary

The following are 'snapshots' of current conditions at what is arguably world's largest producer of soft drinks.

Strategic planning and development

While Coke has been the generic word for 'brown soft drink' for decades, it has lots market share, calling for strategic plans to win it back. In fact, market development is a big feature of Coke's planning this holiday season. To do that, it plans to "spend an extra $350 million to $400 million on marketing and advertising worldwide" (Leith, 2004) with $100 million of that in North America; that may be necessary to spend that much to overcome the weak U.S. soft drink market and Coke is willing to do it. Despite the global nature of Coke's business, and the fact that North America (U.S., Canada) comprises only about 30% of the company's business overall, it is considered "critical" (Leith, 2004)

Economic planning and forecasting

Economic forecasting at Coke is also targeted on North America. In response to several factors -- higher prices for raw materials such as aluminum cans and plastic bottles, for example -- it is altering its projections for income (see income section, below) and using a program of moderate price increases (Leith, 2004) to attempt to balance its expenditures in general, and in the attempt to regain market share noted above. In fact, it is likely that, in addition to raw materials and marketing expenses, Coke will have additional expenses arising from some ethics issues, which will be mentioned later.

Global marketing

The biggest failure in Coke's global marketing strategies was underestimating the growth in the 'fizzy water' market (Howard, 2004). It is now in a game of catch-up, but its name brand recognition in the world's largest emerging market, China, should help it overcome this weakness of planning, as long as it pays better attention to what is demanded globally. With 70% of its market in nations other than the U.S., it is essential for Coke to properly assess both the taste preferences of the markets and the sorts of promotion those markets respond to best.

Ethics and social responsibility

One place Coke's ethics and social responsibilities problems have come home to roost is in employee morale and loyalty. By surveying its employees recently, the company discovered that "lack of trust" and "overall low morale inside the company" exceeded the expectation of senior management. In addition, Coke had shifted a great deal of expense from corporate to its independent bottlers (a move that has had an effect on its distribution system, to be addressed later). In addition, the company admitted in interviews to having "shortchanged its brands in terms of marketing and innovation" (Sellers, 2004). It is now attempting to address these issues, in addition to addressing the question of minority hiring. Between 2000 and 2002, Coke had spent more than $200 million to settle racial and gender discrimination suits, and was under court supervision to come up with a better system for hiring minorities and also promoting minorities into executive positions. Coke's progress is being handled by two business executives, two lawyers and three former civil rights officials (AP Online, 2004). It is likely that Coke has gotten the affirmative action message and will continue to improve in this area.

The company might have a bigger problem remaining, however, which is part of its culture and its distribution system. Dubious billing arrangement, in which hundreds of the company's vendors engaged, is problematical both inside the company and in terms of public relations impact when such things become common knowledge. The practice is represented by a vendor adding two cents for labor to the price of postage when the vendor bills Coke. This is a drain on Coke's profits, naturally, but it is also a matter of ethics. Coke has an obligation to avoid 'graft' situations or unfair billing and the like in order to keep its prices reflective of the value of the product for customer's benefits. At times, Coke has simply accepted this 'sloppiness' so it could get on with other matters (Edwards, 2004). However, in the current ethics climate, it has decided the better course would be to keep all areas of business out of compromising conditions and will more closely oversee financial relationships with vendors.

Organizational structure

Coke's organizational structure works well for distribution, but it does present problems, outlined elsewhere, in terms of financial relationships. To its credit, the system of independent bottlers seems to be able to put virtually the same Coke on every table on the globe with precious little variation in taste, etc. Aside from greater oversight in financial areas especially of the vendors/bottlers, and greater sensitivity in human resources areas in the company's core operations, it doesn't appear that this is an area that would require upheaval, perhaps just minor 'tweaking.'

Operational and distribution strategy

The fact that Coke operates with a system of independent bottlers and vendors has resulted in the "graft culture" noted above that escalates the cost of doing business (Edwards 2004). Aside from keeping closer watch on the relationships with these entities, partially through more thorough financial oversight, Coke has no current plans to change its operational and distribution strategies, which have worked well for many decades.

Product management and marketing

Industry observers think Coke has not introduced a successful new soda since it introduced Diet Coke in 1982. Its "Real Thing" campaign of 35 years ago is arguably the most creative thing it has done for half a century (Clayton, 2004). The company does have a few things in the works, however. Among the new entries from Coke are:

Sprite BerryClear Remix

Coca-Cola C2

Diet Coke with Lime

CADBURY SCHWEPPES

Up Plus

Cherry Vanilla Dr. Pepper

While most of the entries are simply flavors, or in the case of Cadbury Schweppes, a conglomeration of two popular British brand names, conceivably for their 'added value' appeal to an upscale American soft drink consumer, C2 is an innovation, a mid-calorie cola. But it does have competition, Pepsi Edge, to overcome (Leith 2002).