COCA COLA
The College of St
Scholastica
Ekta Gupta
1 August 2013
COCA COLA (KO)
Company Background
The Coca-Cola Company, incorporated on
September 5, 1919, is a beverage company. The Company owns or licenses and
markets more than 500 nonalcoholic beverage brands, primarily sparkling
beverages but also a variety of still beverages, such as waters, enhanced
waters, juices and juice drinks, ready-to-drink teas and coffees, and energy
and sports drinks. It owns and markets a range of nonalcoholic sparkling
beverage brands, which includes Coca-Cola, Diet Coke, Fanta and Sprite. The
Company's segments include Eurasia and Africa, Europe, Latin America, North
America, Pacific, Bottling Investments and Corporate
Mission and Vision Statement:
A good
mission statements should talk about: Customers,
Products or services, Markets, Technology, Concern for
survival, growth, and profitability, Philosophy, Self-concept
(major strengths and competitive advantages), Concern for public image, and
Concern for employees.
I found following are missing components in this mission statement:
What the product is? Are they more than in beverages? Are they eco-friendly or social
responsible? Are they employee friendly? Last statement of its mission
statement is “to create values …” which appears too vague to me. However “to
refresh the world” and inspire moments of optimism” are some really catchy
words that enables the power of mission statement.
New
mission statement could be:
Our mission is to
·
Refresh the world
with our beverages : in mind, body and spirit
·
Inspire moments of optimism and happiness
·
Committed to being unadulterated and eco-friendly and
serving communities
·
Healthy financial rewards for our stakeholders
·
Strive to act fairly and honestly
Vision
Effective vision statement should be: Future Focused, Directional, Clear, Relevant, Inspiring, Vivid, Unique, Challenging, Values Based, and Purpose-Driven
Effective vision statement should be: Future Focused, Directional, Clear, Relevant, Inspiring, Vivid, Unique, Challenging, Values Based, and Purpose-Driven
The
Coca-Cola Company Vision:
Its
vision statement looks good to me but I certainly add some target goals like specific milestones we must achieve by 2020.
3-30-3-1
3: $3 billion in revenues.
30: 30% of total revenue from Business Outcomes contracts.
2: Among the top 2 in the preferred employers’ list.
1: No. 1 in earnings growth
30: 30% of total revenue from Business Outcomes contracts.
2: Among the top 2 in the preferred employers’ list.
1: No. 1 in earnings growth
|
Reflection:
I checked coca cola website to know about its products and what country it operates to. It does have sustainability report and flyers about being eco-friendly but its mission statement doesn’t talk on it. Seems KO got conscious about environment after developing the mission statement so KO should update its mission statement. Despite this adverse notation, I must say it is world’s most valuable brand. Its marketing strategies and product differencing are working very well for them. |
|
External Factor
Evaluation (EFE) Matrix
|
Key External Factors
|
||||||
|
OPPORTUNITIES
|
Weight
|
Rating
|
Score
|
|||
|
1
|
Global
Expansion
|
0.10
|
3
|
0.30
|
||
|
2
|
Acquisition
and Mergers
|
0.06
|
2
|
0.12
|
||
|
3
|
Health
conscious consumers
|
0.08
|
2
|
0.16
|
||
|
4
|
Owning Bottle
Manufacturing and Packaging
|
0.05
|
2
|
0.10
|
||
|
5
|
Coca Food
chain
|
0.10
|
1
|
0.10
|
||
|
6
|
Complimentary
food with specific beverages
|
0.02
|
1
|
0.02
|
||
|
7
|
Innovation
New machines and ideas
|
0.07
|
2
|
0.14
|
||
|
|
|
|
|
|
||
|
THREATS
|
|
|
|
|||
|
1
|
Government
Regulations
|
0.11
|
2
|
0.22
|
||
|
2
|
Increased
competition such as Pepsi
|
0.05
|
4
|
0.20
|
||
|
3
|
Recession
|
0.10
|
3
|
0.30
|
||
|
4
|
Long Term
debts
Balance sheet
2011 shows increase to 14,736,000 from 13,656,000
|
0.05
|
2
|
0.10
|
||
|
5
|
Increasing
demands of non-carbonated food.
|
0.11
|
2
|
0.22
|
||
|
6
|
Criticism of
Coca-Cola , including health effects, environmental issues, and business
practices
|
0.10
|
2
|
0.20
|
||
|
|
|
|
|
|
||
|
Total
|
1
|
|
2.18
|
|||
Reflection: Knowing and understanding the threats
and opportunities of a firm helps planning and prioritizing the business
strategies. I took help of this link http://mba-lectures.com/management/strategic-management/1094/efe-matrix-of-coca-cola-company.html which broadened my knowledge and
helped in thinking more critically about it. I think consumers are planning to
move to non-corroborated drinks which is a biggest threat for KO, they should
try to proactive in handling this situation as diet products won’t serve them
longer.
IFE (Internal
Factor Evaluation Matrix)
|
Key Internal Factors
|
||||
|
Strengths
|
Weight
|
Rating
|
Score
|
|
|
1
|
Differentiation
|
0.10
|
4
|
0.40
|
|
2
|
World’s most
valuable band
|
0.10
|
4
|
0.40
|
|
3
|
Variety of
Product
|
0.09
|
4
|
0.36
|
|
4
|
Geographical
Expansion
|
0.07
|
4
|
0.28
|
|
5
|
Good Branding
Heavy
advertising and promoting activities
|
0.06
|
4
|
0.24
|
|
6
|
Strong
financial position and profit
|
0.05
|
3
|
0.15
|
|
7
|
High
Market share
|
0.08
|
4
|
0.32
|
|
8
|
Enormous
distribution and production facilities
|
0.04
|
3
|
0.12
|
|
|
|
|
|
|
|
Weakness
|
|
|
|
|
|
1
|
Big Long term
debt
|
0.05
|
2
|
0.10
|
|
2
|
Product
offering restricted to beverages
|
0.06
|
1
|
0.06
|
|
3
|
Bad image in
India
|
0.10
|
1
|
0.10
|
|
4
|
Blamed for
being environment unfriendly in India and China
|
0.10
|
1
|
0.10
|
|
5
|
Ethical
complaints ( discrimination )
|
0.10
|
1
|
0.10
|
|
|
|
|
|
|
|
Total
|
1
|
|
2.73
|
|
Reflection: Identifying ones internal strength
and weakness is as difficult as important. I took help of this link http://mba-lectures.com/management/strategic-management/1097/ife-matrix-of-coca-cola-company.html which broadened my knowledge and
helped in thinking more critically about it. Knowing ones strength and weakness
helps one to plan how to plan your effort and resources to meets goals. Firm
needs to work on its weakness along with maintaining highs on strengths.
Intangibles like bad image in India and discriminations issues bring more loss
than tangibles. Hence I think KO should really work aggressively on improving
its image across the globe. Internet and Global market kind of things don’t
give much time to react to situation.
CPM (Competitive
Profile Matrix)
This matrix identifies firm’s major competitors and its
particular (internal and external issues) strength and (internal and external
issues) weaknesses in relation to a firm’s strategic position.
|
|
Coca
|
Pepsi
|
Dr Pepper
|
|||||
|
Key Success Factors
|
Weight
|
Rating
|
Weighted Score
|
Rating
|
Weighted Score
|
Rating
|
Weighted Score
|
|
|
1
|
Financial
Positions
|
0.08
|
4
|
0.32
|
3
|
0.24
|
3
|
0.24
|
|
2
|
Advertising
|
0.12
|
4
|
0.48
|
4
|
0.36
|
3
|
.036
|
|
3
|
Market Share
|
0.12
|
4
|
0.48
|
3
|
0.36
|
2
|
0.24
|
|
4
|
Brand Image
|
0.11
|
4
|
0.44
|
4
|
0.44
|
3
|
0.33
|
|
5
|
Customer
Loyalty
|
0.10
|
3
|
0.30
|
3
|
0.30
|
2
|
0.20
|
|
6
|
Product
Quality
|
0.11
|
4
|
0.44
|
4
|
0.44
|
4
|
0.44
|
|
7
|
Product Range
|
0.08
|
3
|
0.24
|
4
|
0.32
|
3
|
0.24
|
|
8
|
Distribution
|
0.09
|
4
|
0.36
|
3
|
0.27
|
3
|
0.27
|
|
9
|
Price
competition
|
0.10
|
3
|
0.30
|
3
|
0.30
|
3
|
0.30
|
|
10
|
Geographical
expansion
|
0.09
|
4
|
0.36
|
3
|
0.27
|
2
|
0.18
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
1.00
|
|
3.72
|
|
3.3
|
|
2.476
|
|
Reflection: The rating values are
1= major weakness, 2= minor weakness and 3 = minor strength 4 = major strength.
I took help of this
link http://mba-lectures.com/management/principles-of-management/1091/competitive-profile-matrix-of-coca-cola.html
which broadened my
knowledge and helped in thinking more critically about it. Competitor 3 with rating 2.476 looks weakest and KO
scores highest with 3.72 as expected. Competitors can compare where they lag
behind and where they are ahead of competitors. Such as Pepsi scores low on
geographical expansion than coca cola.
Internal Factors and External Forces
|
|
Internal Forces
|
Who is impacted and
how.
|
|
1
|
Differentiation
|
·
Big advantage to KO and
consumers for the unique taste.
·
Competitors are heavily in loss as they
don’t have access to secret recipe.
·
Shareholders are
making lot of money.
|
|
2
|
World’s most
valuable band
|
·
Shareholders are
making money
·
Competitors have to
strive much having any stand against it.
|
|
3
|
Variety of
Product
|
·
Consumers are really
happy to have variety which goes with different meal and occasions.
·
Competitions are struggling
to match this.
|
|
4
|
Big Long term
debt
|
·
Loss for
shareholders if KO doesn’t use proper strategies and utilize this debt in
profitable manner or if some natural disaster happens.
|
|
5
|
Product
offering restricted to beverages
|
·
Loss for KO as it could
make more money through this venture.
|
|
6
|
Bad image in
India
|
·
Big loss for KO as
consumers lose Trust on the brand.
|
|
7
|
Blamed for
being environment unfriendly in India and China
|
·
Big loss for KO as
consumers lose Trust on the brand.
·
Recoverable or irrecoverable
damage to Environment i.e. to whole live species.
|
|
|
External Forces
|
Who is impacted and
how.
|
||
|
1
|
Global
Expansion
|
·
More consumers are
being served.
·
Shareholders earn
profit if KO have strong supply chain management.
·
Challenge for competitors.
|
||
|
2
|
Acquisition
and Mergers
|
·
Competitions are
getting reduced which is not good for consumers sometime as it can reduce
innovation and can bring price monopoly.
·
Less competition for
KO
|
||
|
3
|
Health
conscious consumers
|
·
Loss for KO as their
sale will be reduced
·
KO has to diversify
its product line
·
Gain for Health –drinks.
|
||
|
4
|
Owning Bottle
Manufacturing and Packaging
|
·
KO can do in-house
production of bottles to save big money but it needs big planning and
management. However it can bring long term financial benefits to KO
|
||
|
5
|
Coca Food
chain
|
·
KO will gain more
market share
·
Customers will get
ease to have one stop for their favorite coke recipes.
|
||
|
6
|
Recession
|
·
Financial Loss to KO
and it needs to be creative to survive in market.
·
Loss to consumers as
they can’t afford their favorite drink and may switch to cheap drinks.
·
Customer’s diversion
at any point for any reason is risky as you don’t know how many of them will
really come back. So it’s a risky deal for KO.
|
||
|
7
|
Increasing
demands of non-carbonated food.
|
·
Loss for KO
shareholders as reduced demands for carbonated drinks.
·
KO has to be
innovative to bring differentiate non-carbonated drink in market, so huge
pressure on KO in this regard.
|
Reflection: Used IFE and EFE
Matrix for completing this table. Who is impacted and how really gives a deep
perspective into the matter in hand. Business persons can give the weightage to
‘Who’ factor and should decide if they care about them that point of time and
if yes, analyses ‘how’ factor of analysis. For example irrecoverable
environment losses will damage the brand name and value so they should be
attentive in their actions.
Business
Policy Case Analysis
The
goal of The Coca-Cola Company is 'to be the world's leading provider of branded
beverage solutions, to deliver consistent and profitable growth, and to have
the highest quality products and processes.To achieve this
goal, the Company has established six strategic priorities and has built these
into every aspect of its business:
·
Accelerate carbonated
soft drinks growth, led by Coca-Cola
·
Broaden the family of
products, wherever appropriate e.g. bottled water, tea, coffee, juices, energy
drinks
·
Grow system
profitability & capability together with the bottlers
·
Creatively serve
customers (e.g. retailers) to build their businesses
·
Invest intelligently
in market growth
·
Drive efficiency &
cost effectiveness by using technology and large scale production to control
costs enabling our people to achieve extraordinary results every day.
Suggested
strategies for Coca Cola:
SO Strategies
1. Improve
environmental awareness with community involvement
2. Market
new diet drinks that have healthier sugar substitutes.
WO
Strategies
1. Market
international beverages to American consumers.
2. Increase
marketing efforts for bottled water.
ST
Strategies
1. Acquire
Krispy Kreme (KKD) to help diversify the product line.
2. Acquire
Golden Enterprises (GLDC) to help diversify the product line.
Reflection: I could not find the
strategies on Coca cola site. After browsing for a while got a link http://businesscasestudies.co.uk/coca-cola-great-britain/creating-an-effective-organisational-structure/the-relationship-betweenstrategy-and-structure.html#axzz2bxbfXUVb having explained these in their case
study. Company should try translating their Strengths,
Weaknesses, Opportunities and Threats
into strategies. It can use strengths to
take advantage of opportunities and minimize threats (SO and ST strategies).
And taking advantage of opportunities
and by mitigating threats minimize weaknesses (WO and WT strategies).
Such as Coca cola is a most
valuable brand and it could easily set rules for good eco-friendly processes
then can install containers in different locations to recycle their can or
plastic bottles, consumers and competitors will easily follow them.
Space
Matrix
|
Internal
Strategic Position
|
|
External
Strategic Position
|
|||
|
|
|
||||
|
Competitive
Position – (CP)(- x axis)
|
Industry
Position (IP) x axis
|
||||
|
|
|
||||
|
Market Share
|
-1
|
Growth Potential
|
5
|
||
|
Brand Image
|
-1
|
Profit Potential
|
5
|
||
|
Product Quality
|
-1
|
Financial Stability
|
6
|
||
|
Product Life Cycle
|
-2
|
Ease of Entry
|
4
|
||
|
Customer Loyalty
|
-1
|
Resource utilization
|
6
|
||
|
Technological Know How
|
-2
|
Extent Leveraged
|
3
|
||
|
Control Over Suppliers and Distributers
|
-2
|
|
|||
|
Average
|
-10/7= -1.42
|
Average
|
29/6= 4.8
|
||
|
|
|||||
|
Financial
Position (FP) y axis
|
|
Stability
Position (SP) (-y axis)
|
|||
|
|
|||||
|
Working capital
|
5
|
Technological Changes
|
-1
|
||
|
Return on Equity ROE
|
3
|
Rate of Inflation
|
-2
|
||
|
Return on Assets ROA
|
3
|
Demand Variability
|
-1
|
||
|
Liquidity
|
5
|
Barriers to Entry in Market
|
-2
|
||
|
Cash Flow
|
4
|
Competitive Pressure
|
-4
|
||
|
Inventory Turnover
|
4
|
Ease of Exit from Market
|
-5
|
||
|
Earnings Per share
http://www.nasdaq.com/symbol/ko/revenue-eps
|
2
|
Price Elasticity of Demand
|
-1
|
||
|
|
|
|
|
||
|
Average
|
3.71
|
Average
|
-2.28
|
||
|
|
|
|
|
||
|
Directional Vector Coordinates :
X Axis :
-1.42+4.8 = 3.38
Y Axis
3.71-2.28= 1.43
|
|||||
Space Matrix - Directional Vector falls in Aggressive
Quadrant
Reflection:
I took help of this
link http://www.nasdaq.com/symbol/ko/financials?query=balance-sheet which broadened my knowledge and
helped in thinking more critically about it. 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. Coca cola lies in Aggressive quadrant
which means it is in best organizational position to use its internal strength
to take advantage of external opportunities and overcome internal weakness and
can avoid external threats. I think due to its strong branding only coca cola
is still earning profits despite being charged for doing damage to environment.
This is an external threat which it had avoided earlier and sustained the
market, however it had started working for environment and marketing its
efforts very well.
Product
Positioning Map
|
High in Sugar
|
|
Low Sugar
|
|
High in Caffeine
|
|
Low Caffeine
|
|
Coke
|
|
Diet Mt Dew
|
|
Fanta
|
|
Pepsi
|
|
Coke Zero
|
|
Diet Coke
|
|
Pepsi
Max
|
|
Mt Dew
|
|
Sprite
|
|
Pepsi
light
|
|
Pepsi Caffeine Free
|
|
Diet Cherry Coca-Cola
|
|
Diet
Wild Cherry Pepsi
|
Reflection:
I was not aware about composition of their
products and where they fall in this quadrant so I used http://www.energyfiend.com/the-caffeine-database
and http://www.perceptualmaps.com/example-maps/
for the help. I have not covered all their respective products here. I was
impressed to know that KO owns The Beverage Institute for Health & Wellness
(BIHW) which is ongoing commitment to advance scientific knowledge, awareness
and understanding of beverages, and the importance of an active, healthy and
balanced lifestyle. This positioning helps company knowing which market they
are still behind the competitor and how they can explore the uncovered market
to take a lead.
Determining Cash
values
|
Input
|
|||
|
Shareholder Equity
|
32,790,000
|
||
|
Net Income
|
|
||
|
Stock Price
|
35.9916
|
||
|
EPS
|
1.97
|
||
|
# of share outstanding
|
4584 million
|
||
|
Goodwill and Intangible
|
12,255,000 + 15,082,000 =16307500
|
||
|
Total assets
|
86,174,000
|
||
|
Calculating
cash value
|
||
|
Method 1
|
Shareholder’ Equity + Goodwill + Intangible
|
19,586,500
|
|
Method 2
|
Net Income x 5
|
45,095,000
|
|
Method 3
Price earnings Ratio
|
(Stock Price/EPS ) x Net Income
|
164,775,756.5
|
|
Method 4 Outstanding Share method
|
# of share outstanding x Stock Price
|
164,985,494,400.00
|
|
Average of all 4 methods
|
|
41,303,737,914
|
Reflection: I opened some Finance management chapters
to understand this concept better which was fun for sure. Had to browse
different sites to get the reliable data. Each Cash values methods have given
different worth value as also mentioned in our Text by Fred David. Company will
surly pick the method which give the highest worth value while selling it
however I am still not clear how it will convince purchasing party to use the
same cash value methods to make a deal. Anyways as suggested in our Text I also
had taken the average of all the values. Following links are used to get the
data required for calculations:
|
|
Sources:
|
|
Total assets, Goodwill and Intangible, Net Income, Shareholder Equity,
|
|
|
Stock Price
|
Average of stock price of 2012
http://finance.yahoo.com/q/hp?s=KO&a=00&b=1&c=2012&d=11&e=31&f=2012&g=d
|
|
# of share outstanding
, EPS
|
(
http://www.gurufocus.com/financials.php?symbol=ko)
|
Code
of conduct/code of ethics
Code of conducts I like most are:
1. Coca
Cola employee can use Ethics Line which is a reporting service offered by The
Coca-Cola Company and administered by a third party, Global Compliance available online (www.KOethics.com), or by calling
toll-free using the access codes that can be found on the website. Some
highlights of Ethic line are:
·
EthicsLine is
available 24 hours a day, seven days a week.
·
Translators are
available.
·
Ethics Line reports
are forwarded to the Ethics & Compliance Office.
2. As
Coca cola operates across the globe it has elucidated in its code of conduct
document how to handle things at global level for e.g. If a provision of the Code conflicts with
applicable law, the law controls and if one is uncertain what laws apply, or if
one believe there may be a conflict between different applicable laws, consult
Company legal counsel before proceeding. They have local ethics officer which
seems to be very helpful for company which operates at global level
3. They
have also mentioned the code of financial transactions across the globe. Different
cultures across the globe could make the financial transactions difficult,
however Coca Cola has mentioned the code for financial transactions across the
globe which is really helpful in following the company expectations being at
any place of world. For e.g. it expound “Never enable another person’s efforts
to evade taxes or subvert local currency laws. For this reason, payments
generally should be made only to the person or firm that actually provided the
goods or services. Payments should be made in the supplier’s home country,
where it does business”.
Things which surprised me and I think they should have
included it:
1. Talk
explicitly on dealing and protecting environment in their code of conduct.
Though they have information on Suitability on their websites.
2. I
have read some discriminatory complaints against coca cola. Hence they should
have written about discouraging any kind of discrimination in their code of conducts.
Reflection: I searched on coca cola website for their
code of conduct and found an exclusive PDF. I think Coca Cola code of Business conducts
are well written and quite helpful to any employee sitting anywhere in the
world. Their 24x7 helpline for whistleblower is really appreciable. Under such
safe code of conducts employees should have been performing at their best, I
suppose. It all about people by the way.
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