A Case study on Coca-Cola Company

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1. Introduction
One of The Coca-Cola Company headquarters buildings in Atlanta. The Coca-Cola
Company (NYSE: KO) is an American multinational beverage corporation and
manufacturer, retailer and marketer of non alcoholic beverage concentrates and syrups,
which is headquartered in Atlanta, Georgia.
 The company is best known for its flagship product Coca-Cola, invented in 1886
by pharmacist John Stitch Pemberton in Columbus, Georgia.
 The Coca-Cola formula and brand was bought in 1889 by Asa Griggs Candler
(December 30, 1851 - March 12, 1929), who incorporated The Coca-Cola
Company in 1892.
 The company operates a franchised distribution system dating from 1889 where
The Coca-Cola Company only produces syrup concentrate which is then sold to
various bottlers throughout the world who hold an exclusive territory.
 Besides its namesake Coca-Cola beverage, Coca-Cola currently offers more than
500 brands in over 200 countries or territories and serves over 1.7 billion servings
each day. The Coca-Cola Company owns its anchor bottler in North America,
Coca-Cola Refreshments. Its stock is listed on the NYSE. Its current chairman and
chief executive is Muhtar Kent.
2. History
 Coca Cola Founded in 1886, Worlds leading manufacturer, marketer, and
distributor of nonalcoholic beverage concentrates and syrups, used to produce
more than 230 beverage brands.
 The corporate headquarters are in Atlanta, with local operations in nearly 200
countries around the world. The Coca Cola Company is a leader in the coke’s
industry, with thousands of employees and offices in the entire world, making it
an emporium of beverages. Coca cola is known in the entire world as a leader in
the industry. The quality of the products reaches highest standards. These products
have added value. The products that this company produces are hard to copy.11.
Strengths.
 In the 1923 Coca Cola was sold in six packs.
 Since then Coca Cola was sold for $1
 In 1894 Joseph Biedenharn became first to put Coca Cola in a bottle.
 Coca Cola soon became worried about the copycats of the product.
1) Coca-Cola BlāK Diet Coke Plus (2007)
2) Diet Coca-Cola Black Cherry Vanilla (2006)
3) Coca-Cola Black Cherry Vanilla (2006)
4) Coca-Cola Zero (2005)
5) Diet Coke Sweetened with Splenda (2005)

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6) Diet Coke with Lime (2004)
7) Coke with Lime (2004)
8) Coca-Cola C2 (2004)
9) Diet Vanilla Coke (2002)
10) Vanilla Coke (2002)
11) Diet Coke with Lemon (2001)
12) Coke with Lemon (2001)
13) Diet Cherry Coke (1986)
14) Diet Coke Caffeine-Free Cherry Coke (1985)
15) Diet Coke (introduced in 1982)
 From the 1st day of launching till today coca-cola has been introduced in 27
different varieties
 Coca-Cola in Bangladesh: Coca-Cola is the most popular and biggest-selling soft
drink in history, as well as the best-known product in the world. Coca cola is the
oldest brand in Bangladesh. From the last 50 years Coca cola has been marketing
its products through local representatives of Bangladesh. However, now it is
marketed by Abdul Monem Limited. It marketed coca cola under the authority of
the coca company, USA and distributes of Coca-Cola, Sprite and Fanta in
Bangladesh.
 In India, Coca-Cola ranked third behind the leader, Pepsi-Cola, and local drink
Thums Up. However, The Coca-Cola Company purchased Thums Up in 1993. As
of 2004, Coca-Cola held a 60.9% market-share in India. Pepsi is often second to
Coke in terms of sales, but outsells in some locations. The biggest competitor of
coke is Pepsi.10
 Coca Cola was transferred around America usually by Truck on a highway to
conserve energy8.
 United Nations – 2 millions
 China Youth Development – 6 millions
 Africa – 11 millions
 The biggest contributions:  2002-2010 more than $690 millions of contribution
and charity.
 The Coca Cola Foundation, 1984. Financial support for improving society.
 Charity and contributions 1% from the total income
 Sponsorship: Olympics, FIFA, EURO etc.
 More than 3500 kinds of beverages
 More than 1.7 billion servings per day
 Beverage being sold in 200+ countries
Coke comes in a variety of the world’s population sizes worldwide so you can use it
for a crowd or as a personal snack drink Coke is affordable in all the countries. It

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was not out of the price range for an afternoon snack. Coca-Cola is recognized by
94%  Coca cola owns more than ½ of the world’s beverages.
3. Company background
Name The Coca Cola Company
Industries served Beverages
Geographic areas served Worldwide
Headquarters U.S.
Current CEO Muhtar Kent
Revenue $ 48.01 billion (2012)
Profit $ 9.01 billion (2012)
Employees 146,200
Main Competitors
PepsiCo Inc., Dr Pepper Snapple Group, Inc., Unilever,
Groupe Danone, Kraft Foods Inc., Nestlé S.A. and others.
The Coca Coola Company is the largest beverage business in the world serving more than
200 countries and offering more than 500 brands.
4. Levels of Diversification
Low Level of Diversification: A firm pursuing a low level of diversification uses either
a single or dominant business corporate level diversification strategy.
In this perspective, Coca-Cola Company is a single business diversification strategy
wherein the firm generates 95% or more of its sales revenue from its core business area,

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5. Vision & Mission
 The Coca-Cola Company vision statement is to be “the leader in the beverages
industry”.
 The company’s main goal is to keep being number one selling coke in the world
and to increase their incomes, the same way they have done in their past years.
6. Coca-Cola Corporation and Its Competitors
Coca-Cola was discovered as a result of an accident. In 1886 a pharmacist named John
Pemberton cooked up medicinal syrup. When he was done, he figured he had created a
fine tonic for people who were tired, nervous, or plagued with sore teeth. He and his
assistant mixed it with ice water, sipped it, and proclaimed it tasty. They wanted some
more, and the assistant accidentally used carbonated water to mix the second batch.
Instead of medicine, these men had created a fizzy beverage - one that is now consumed
around the world. Today people guzzle 1 billion drinks a day from the Coca-Cola
Company. But this new beverage was not an instant success. In the first year, Pemberton
spent $73.96 promoting his new product but managed to sell only $50 worth.
"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 United States alone. The
company takes pride in being a worldwide business that is always local. Bottling plants
with some exceptions are locally owned and operated by independent business people
who are native to the nations in which they are located. The company manufactures,
distributes and markets non-alcoholic beverage concentrates and syrups, including
fountain syrups. The product includes primarily carbonated soft drinks, a variety of non-
carbonated beverages, juices and juice drinks, and certain water products, such as Dasani.
The company supplies the concentrates and beverage bases used to make the products and
it provides management assistance to help it's bottler's ensure the profitable growth of
their business.
Coca-Cola competes in the nonalcoholic beverages segment of the commercial beverages
industry. Based on available data and a variety of industry sources, the estimate is that in
2004, worldwide sales of Company products comprised approximately10 percent of total
worldwide sales of nonalcoholic beverage products. The nonalcoholic beverages segment
of the commercial beverages industry is highly competitive, consisting of numerous
firms. These include firms that, like Coca-Cola, compete in multiple geographical areas
as well as firms that are primarily local in operation. Competitive products include
carbonated soft drinks, packaged water, juices and nectars, fruit drinks and dilatable
(including syrups and powdered drinks), sports and energy drinks, coffee and tea, still
drinks and other beverages. Nonalcoholic beverages are sold to consumers in both ready-
to-drink and not-ready-to-drink form. In many of the countries in which Coca-Cola does
business, including the United States, the primary competitor is PepsiCo, Inc. (PEP).

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Other significant competitors include Nestlé S.A. (private), Cadbury Schweppes plc
(CSG), and Groupe Danone (private). In the future analysis we will choose the company
market share and profit comparison with publicly trades companies only, like Pepsi and
Cadbury Schweppes.
7. Coca-Cola’s Resources, Capabilities, and Core Competencies
The currently dominant view of business strategy – resource-based theory or resource-
based view (RBV) of firms – is grounded on the view of the company as a collection of
capabilities. This view of strategy has a coherence and integrative role that places it well
ahead of other mechanisms of strategic decision making. Traditional strategy models such
as Michael Porter's five forces model focus on the company's external competitive
environment. Most of them do not attempt to look inside the company. In contrast, the
resource-based perspective highlights the need for a fit between the external market
context in which a company operates and its internal capabilities. The resource-based
view supports the perspective that a firm's internal environment, in terms of its resources
and capabilities, is more critical to the determination of strategic action than is the
external environment.
7.1 Coca-Cola Resources and Capabilities
Resources and capabilities are the building blocks of a company. The Coca-Cola
Company operates out of more than 200 countries and has about 275 Coca-Cola
bottlers. The bottle allows the company the ability to manufacture and distribute their
products to customers and producers around the world.
7.2 Coca-Cola Resources
Resources are the inputs that firms use to create goods or services. Resources can be
tangible and/or intangible. The physical attributes are the tangible resources. Patents,
trademarks, location, and knowledge are the intangible resources
The currently dominant view of business strategy – resource-based theory or resource-
based view (RBV) of firms – is grounded on the view of the company as a collection of
capabilities. This view of strategy has a coherence and integrative role that places it well
ahead of other mechanisms of strategic decision making. Traditional strategy models such
as Michael Porter's five forces model focus on the company's external competitive
environment. Most of them do not attempt to look inside the company. In contrast, the
resource-based perspective highlights the need for a fit between the external market
context in which a company operates and its internal capabilities. The resource-based
view supports the perspective that a firm's internal environment, in terms of its resources

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and capabilities, is more critical to the determination of strategic action than is the
external environment.
Resources are inputs into a firm's production process, such as capital, equipment, skills of
individual employees, patents, finance, and talented managers. Resources are either
tangible or intangible in nature. With increasing effectiveness, the set of resources
available to the firm tends to become larger. Individual resources may not yield to a
competitive advantage. It is through the synergistic combination and integration of sets of
resources that competitive advantages are formed.
Coca-Cola Company resources might be divided into five categories:
(1) Financial Capital
(2) Physical Capital
(3) Human Capital
(4) Organizational Capital
(5) Brand Capital.
Net operating revenues, gross profit, operating income, income before income taxes, and
net income per share are key measurements of the key operating performance of the
company. In 2004, net operating revenues totaled approximately $22B, a 4% increase
from 2003. Gross profit totaled approximately $14.3B in 2004, an 8% increase from
2003. Operating income was approximately $5.7B, a 9% increase from 2003. Net income
per share was $2 for 2004, a 13% increase from 2003. (SEC, 2005). Based on the
financial results of the first quarter of 2005, cash from operations was $1.4B, compared
with $1.2B in the prior year period, an increase of 18 percent. The Company intends to
repurchase at least $2 billion of its stock this year. In February, the Company approved its
43rd consecutive annual dividend increase, a 12 percent increase over 2004.
Physical Capital:
Physical Capital is the stuff the Coca-Cola Company owns - manufacturing sites,
distribution centers, telecommunications infrastructure and so on. Company headquarters
is located is located on a 350-acre office complex in Atlanta, GA. The complex includes
about 2,000,000 square foot buildings including office, manufacturing, technical, and
engineering facilities. The company also owns and leases multiple facilities for
administrative operations, manufacturing, processing, packaging, packing, storage, and
warehousing throughout the United States. As of December 2004. Company owned and
operated 33 principle beverage concentrate and/or syrup manufacturing plants throughout
the world. In addition, it owns 83 principle beverage bottling and canning plants located
outside of United States.

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Human Capital
Human Capital includes all the people who work for Coca-Cola Company, their skills,
experience, expertise and credibility. As of December, 2004, company employed
approximately 50,000 employees, compared to 49,000 at the end of 2003. Approximately
9,600 company employees are located in United States.
Organizational Capital
Organizational Capital presents the effectiveness of a company's organizational
functioning derived from the complex interplay between a company's processes,
structure, information technology and culture. The Coca-Cola Company is organized into
five geographic operating segments (North America, Africa, Asia, Eurasia and Middle
East, and Latin America) as well as a corporate segment.
Brand Capital
Brand Capital of Coca-Cola Company includes the product itself (as the first wave of
branding), the aspiration lifestyle associated with the product (as the second wave of
branding), and the set of values, experiences, and ideas that the product represents (as the
third wave of branding). "Our flagship Coca-Cola brand empowers us, without a doubt,
with a tremendous competitive advantage and a solid foundation for success. But it is just
one of many elements that enable Coca-Cola to create increasing levels of value in an
ever changing market environment," said Hector Gorosabel, vice president, North Latin
America Division, The Coca-Cola Company.
7.3 Coca-Cola Capabilities
A capability is how a firm uses its resources to create the good or services. Capabilities
can range from marketing, placing orders, or the daily operations.
Coca-Cola capabilities are the capacities for a set of resources to perform a stretch task
or an activity. Through continued use, those capabilities become stronger and more
difficult for competitors to understand and imitate. As a source of competitive advantage,
Coca-Cola Company capabilities are neither so simple that they are highly imitable, nor
so complex that they defy internal steering and control.
Each organization is a collection of unique resources and capabilities that provides the
basis for its strategy and the primary source of its returns. In the 21st-century hyper-
competitive landscape, a firm is a collection of evolving capabilities that is managed
dynamically in pursuit of above-average returns. Thus, differences in firm's performances
across time are driven primarily by their unique resources and capabilities rather than by
an industry's structural characteristics.

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7.4 Core Competencies
Core Competencies are those features that a company has that either can't be matched, or
that will be difficult to be matched by other firms. Core Coca-Cola competencies include
company brand, its distribution system, and its human assets. Coca-Cola is the most
popular and biggest-selling soft drink in history, and is recognized as the most valuable
brand in the world. Company owns and licenses nearly 400 brands – included carbonated
soft drinks, juices and juice drinks, sport drinks, water products, teas, coffees, and other
beverages – of which approximately 1.3B servings a day are consumed worldwide. Coca-
Cola distribution system covers certified bottlers, selling company branded products in
over 200 countries on six continents to businesses and institutions including retail chains,
supermarkets, restaurants, small neighborhood grocers, sports and entertainment venues,
schools and colleges. Company employees contribute greatly to the business model
success. To meet its long-term objectives, company actively cultivate a diverse workforce
and establishes the business culture that fosters learning, innovation, and value creation
on a daily basis.
8. Coca-Cola VRIO Framework
VRIO framework provides the evaluation structure to determine which company’s
resources and capabilities result in which strengths and weaknesses. All the company
resources and capabilities should be (1) Valuable; (2) Rare; (3) Inimitable; (4)
Organization should effectively exploit them:
1. Coca-Cola Company resources and capabilities are valuable, since they contribute to
fulfillment of customer’s needs at a price customer is willing to pay. This price is
determined by customer preferences to use Coca-Cola products over the alternative
products on the soft drinks market, including available substitutes.
2. Company’s resources and capabilities are in a short supply, creating competitive
advantage and going beyond competitive parity. Since rarity of the company’s
capabilities and resources persists over long time period, the sustained competitive
advantage is generated.
3. Coca-Cola Company resources and capabilities are not easy to imitate due to cost
asymmetries on this market. Company without resources and capabilities faces a
significant cost disadvantage in obtaining them compared to company that already
possesses them. Sources of cost disadvantages are in impediments to imitation and early-
mover advantages. By moving on the soft drinks market long time ago, Coca-Cola set in
motion a dynamic that increases the magnitude of the early-mover advantage relative to
the other competitors over the time.
4. Coca-Cola Company organizational structure is optimized to exploit competitive
potential of its resources and capabilities. It includes company’s management and control
systems, compensation policies, and business processes.

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8.1 Competitive implications
Valuable
?
Rare? Costly to
Imitate?
Exploitable
by the
Organization
?
Competitive
implications
Economic
performance
Strengths or
Weaknesses
No - - No Competitive
Disadvantag
e
Below
normal
Weakness
Yes No - No Competitive
Parity
Normal Strength
Yes Yes Yes No Temporary
competitive
advantage
Above
normal
Strength and
distinctive
competence
Yes Yes Yes Yes Sustained
competitive
advantage
Above
normal
Strength and
sustainable
distinctive
competence
Based on the VRIO framework (Jaquier, 2003), Coca-Cola Company has sustained
competitive advantage and above-normal economic performance.
9. Coca-Cola’s Competitive Advantage
Company's competitive advantage derives from its ability to assemble and exploit an
appropriate combination of resources. Sustainable competitive advantage is achieved by
continuously developing existing and creating new resources and capabilities in response
to rapidly changing market conditions. The cola market has been characterized in recent
years by greatly increased trade and consumer promotional campaigns by the market
share leaders. Constantly changing advertising campaigns that are tightly coordinated
with complex promotional calendars Coca-Cola Company stands in contrast to the
smaller firms who have engaged in far fewer campaigns and less complex promotional
calendars. Coca-Cola Company is positioned as heavily promoted brand. Indeed,
although its list prices typically exceed the list prices of the smaller share brands, its
promotional efforts ensure that its products are available at a promoted price at virtually
any given time in a store .
Coca-Cola has a unique position in the drink business. It has created soft-drink flavors
that promote consumption by having very little aftertaste while being extremely
refreshing. However, based on the current economic and social trends, the Coca-Cola
competitive advantage might significantly erode in the future due to the changes in the
non-alcoholic beverages business environment. These include changes in consumer

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preferences, including changes based on health and nutrition consideration and obesity
concerns, shifting consumer developments and needs, changes in consumer lifestyles and
increased consumer information, and aggressive growth of the competitor’s market share.
10. SWOT Analysis
10.1 Strengths
1. The best global brand in the world in terms of value. According to Inter brand,
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 holds 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. Bargaining power over suppliers. The Coca Cola Company is the largest
beverage producer in the world and exerts significant power over its suppliers to
receive the lowest price available from them.
7. 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.
10.2 Weaknesses
1. 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. High debt level due to acquisitions. Nearly $8 billion of debt acquired from CCE’s
acquisition significantly increased Coca Cola's debt level, interest rates and borrowing
costs.

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4. Negative publicity. The firm is often criticized for high water consumption in water
scarce regions and using harmful ingredients to produce its drinks.
5. 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.
10.3 Opportunities
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.
10.4 Threats
1. 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. Decreasing gross profit and net profit margins. Coca Cola’s gross profit and net
profit margin was decreasing over the past few years and may continue to decrease
due to higher water and other raw material costs.
6. Competition from PepsiCo. PepsiCo is fiercely competing with Coca Cola over
market share in BRIC countries, especially India.

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7. Saturated carbonated drinks market. The business significantly relies on the
carbonated drinks sales, which is a threat for the Coca Cola as the market of
carbonated drinks is not growing or even declining in the world.
11. Summary
Coca Cola is now a brand all around the word. Every day they promote their market every
corner of the world. More than 60 percent soft drinks liked people like coca cola.
• They have different kinds of products like Coke, Sprite, Fanta, Lift etc.
• They always try to provide their product with low price with different packaging.
• As it is a soft drink, Coca-Cola Company follows Intensive Distribution. It is found
more or less everywhere in Bangladesh.
• In terms of promotions they use Emotional Appeal.
References

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