Coca Cola Company: Background Information
The Coca Cola Company is one of the most successful multinationals in the world today. It has branches in several countries in the world. The organization is the leading player in the non-alcoholic beverage syrups and concentrates market in the world today. It manufactures, markets, and retails these products and others. It has its headquarters in Atlanta, United States of America.
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The company manufactures and markets many brands across the world. The main product of the company is Coca- Cola (also referred to as Coke). The brand has a very interesting history.
It was invented by John Stith Pemberton in 1886. In 1889, Asa Candler bought the Coca Cola brand and formula from Pemberton, and incorporated the company three years later. Currently, the company has more than five hundred brands and offers more than 1.7 billion servings of drink every day (Behrooz 1-2).
Coca Cola Company began its distribution system in 1889. As already indicated in this report, one of the major products manufactured and marketed by this organization is concentrates. The organization produces and distributes the commodity to its stakeholders in the world market.
It operates using the franchising system, where the local producers are given the license to manufacture and distribute the products on behalf of the company. The bottlers produce the canned and bottled beverages and distribute them locally.
They distribute them to vending machines, retailers, and restaurants. Coca Cola Refreshments (herein referred to as CCR) is the company’s North American anchor bottler. In the United States of America, the Coca Cola Company manufactures and bottles fountain syrups. It sells the products directly to wholesalers and selected retailers (The Coca-Cola Company 2).
Since 1960, the company has made various acquisitions and mergers around the world. For example, the company has over the years acquired such companies as Minute Maid, Thums UP, Barqs, and Fuze Beverage. The company distributes its products in over 200 countries in the world using the aforementioned franchising system.
Tab signifies the first attempt made by Coca Cola to produce a diet beverage. Instead of using sugar, the soft drink was made using saccharin. The product was introduced in the market in 1963. Almost 50 years down the line, the product is still in the market today. However, its sales volume went down after Coca Cola introduced the Diet Coke.
Fanta and Sprite are some of the most notable products distributed by the company. Fanta was introduced in the market during the Second World War, and was mainly sold in Nazi Germany.
After the end of the war, Max Keith, the operations manager at that time, proposed that the product be added on to the list of the company’s brands. Sprite was introduced to neutralize the competition brought about by 7Up. In the 1990s, Coca Cola introduced non- carbonated brands to expand the company’s brand portfolio. The brands included such products as Minute Maid, Powerade, Nestea, Fruitopia, and Dasani (Behrooz 1-3).
Coca Cola Company: An Analysis of the Organizational Structure Adopted
According to Sellers (139), the organizational structure of a company is largely related to its business strategy. The structure defines how the various aspects of the organization fit together.
In addition, it addresses and defines the type of association the company has with external partners, such as customers, suppliers, and distributors. For a company to attain the envisaged goals and objectives, it needs to establish a seamless relationship between the structure and the strategy (Brison 196).
Many scholars and analysts have examined the organizational structure adopted by the Coca Cola Company. The aim of such analysis is to determine how the structure impacts on the operations of the company. The mission statement of the Coca Cola Company is related to the organizational structure adopted.
The mission of the company is to “strive to refresh the world, inspire moments of optimism and happiness, create value, and make a difference” (Thecoca-colacompany.com 1).
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In attempts to achieve this goal, the company has put in place a flexible organizational structure that encourages teamwork. The management has come to the realization that teamwork is very important to the development of the various brands associated with the company.
On 30th July 2012, Coca Cola announced that the company was going to make major changes on its organizational structure. The proposed changes will be effected on 1st January 2013. According to a press statement released by the company, Coca Cola will have three main operating businesses.
The first business will be Coca Cola International, which will encompass the company’s operations in Europe, Pacific, Eurasia, and Africa. The second proposed business will be Coca Cola Americas. The business will involve the operations of the company in Latin America and North America.
The third business proposed by the company is Bottling Investment Group (herein referred to as BIG). The business will oversee the bottling operations carried out by Coca Cola, but which are located outside North America.
According to the proposed organizational structure, the current Eurasia and Africa Group president will be the new Coca Cola International president. Steve Cahillane, who is currently serving as the Chief Executive of CCI, will be the new president of Coca Cola Americas.
Another person who will play an important role in the reorganization is Irial Finan. The latter will remain at the helm of BIG. In addition, Muhtar Kent will retain his position as the Chief Executive and Chairman of the company.
All the three senior officers will be answerable to Kent. What this means is that they will all report to Kent. In addition, they will receive their instructions from Kent. According to Kent, the proposed change was necessitated by the changes in demand and business trends (Coca-colacompany.com 1-7). The chart depicting the current organizational structure adopted by the company is provided in Appendix 1.
Coca Cola Company: An Analysis of Business Strategy
In this section, the author will look at the various business strategies adopted by the company. To this end, the author will analyze the overall strategy adopted by the company, sustainability and success, expansion of product portfolio and sales channel, and generic business strategy.
According to Thecoca-colacompany.com (par. 1), what will drive the success of the company in the future is more than just growth, it is sustainable growth. Coca Cola defines this kind of growth as the one that is able to meet short term goals while spurring investments to attain long term objectives.
Coca Cola has over the years worked on the company’s fundamental strengths, such as innovation and marketing. Currently, the company owns the “most recognized family of brands” in the world (Colacompany.com par. 4). In addition, the company distributes over 3,500 products all over the world. The products include, among others, soft drinks, sport drinks, juice, water, milk, and coffee.
Each day, the company comes up with innovative ways to manufacture and sell beverages that hydrate, nourish, relax, and energize the consumers. In addition to this, Coca Cola is the world’s largest non- alcoholic beverage distributor. As a result, the company maintains a local presence in all the communities consuming its products.
The trust and loyalty that the company enjoys in these communities is as a result of continuous research on the needs and aspirations of the locals with regard to non- alcoholic beverages (The Coca-Cola Company par. 2-3). The company has over the years increased its marketing budget.
In addition, it has come up with new products. It has created a model that helps retailers to maximize their sales as they continue to make plans of remaining in business in the future. The company has achieved its legendary success through the service of its experienced, ambitious, and skilled professionals (Sellers 139).
Sustainability and Success
Coca Cola has endeavored to invest in an ethical and responsible manner (Colacompany.com par. 3). The company understands that the success of the organization is measured by the wellbeing of the community within which the company is operating.
To this end, the company understands that sustainability drives value, which benefits both the society and the organization. Coca Cola incorporated the aspect of sustainability into the company’s growth agenda in 2008. The company redefined its main objective as “accelerating and increasing sustainable growth to operate in tomorrow’s world” (Colacompany.com par. 2).
The company uses the aspect of sustainability as a yardstick to measure its performance. Sustainability has become part of the company’s strategic plan.
In the company’s annual corporate social responsibility (herein referred to as CSR) report, the management points out that the business practices have not only improved the revenue of the company, but also strengthened sustainability. Consequently, the company is realigning its business model to cater for the interests of the organization, the environment, and the society (Behrooz 7).
Expansion of Product Portfolio and Sales Channel
The performance of the Coca Cola Company in 2011 surpassed that recorded in the previous years. The sales volume recorded in 2011 were more than those recorded in the past. The Coca Cola distribution system has expanded its share in the market by incorporating convenience stores and vending machines. The performance of the company and its distribution system was acclaimed in the global market (Walsh and Dowding 107-109).
Japan was announced the winner of the Woodruff Cup in 2011 because of the country’s business track record. The Coca Cola system won in the business units’ category. According to the vice president of Coca Cola Japan, the company’s focus on innovation and marketing has played a critical role in the success of the organization in Japan. In 2011, the company introduced two innovative products in the Japanese market.
The first was Ayataka Green Tea, which used comparative advertising to gain ground in the new market. Today, the product is one of the best-selling green tea brands in convenience stores around the country. It has attained a 70% growth within the first year of introduction. Nationally, Ayataka is number three in terms of market share, but it is ranked either number one or number two in the western parts of Japan.
In early 2012, the company launched two new products in Japan under the Burn brand. Burn was first introduced in Japan and is currently marketed in 85 countries in the world. One of the main factors that have improved the performance of the company’s sales channel is the introduction of Coca Cola Freestyle dispensers. The dispensers have increased the volume of sales in stores around the country.
As far as vending machines are concerned, the company has introduced QR code promotion. The code is used to enhance the relationship between Coca Cola Company and the consumers around the world (The Coca-Cola Company par. 4-7).
Generic Business Strategy
Coca Cola pursues a ‘broad differentiation and focused low cost’ business strategy to attain competitive advantage in the market. According to Sellers (140), there are various ways through which Coca Cola has managed to lower the cost of its products. The various strategies are analyzed below:
- The company adopts mass production in manufacturing the products. The strategy helps the company attain economies of scale, which leads to low costs.
- Wide knowledge, improved learning, and experience in processes and production because of the long duration of time the company has been in operation.
- The third strategy has to do with effectiveness and efficiency. The company aspires to enhance the two aspects of the manufacturing and distribution undertakings.
- Spreading the costs associated with promotion, advertising, and research and development across all the brands.
In addition, Sellers (140-141) is of the view that the company employs broad differentiation with regard to various factors related to production and distribution of the products. The various factors are analyzed below:
- The wide range of brands and products associated with the company in the global market.
- Wide recognition of the company’s brand in the global market, as well as improved brand image. Brand recognition and brand image has improved the performance of the company in the global market. Consumers regard the products of the company as superior to those manufactured and distributed by competitors.
- In addition, the company has adopted differentiation as far as bottling and packaging the products is concerned. According to Sellers (139), the shape of the bottles used and the font used in labeling the products have made it easy for consumers to recognize Coca Cola as a symbol.
According to Sellers (138), the company has faced stiff competition in the global, regional, and local markets. Coca Cola has faced stiff competition from local firms and other multinationals, mainly PepsiCo.
According to analysts, PepsiCo uses the focus generic strategy to concentrate the company’s resources in the beverage industry. In comparison to Coca Cola, PepsiCo has fewer brands in the local, regional, and global markets. As a result, PepsiCo does not use broad differentiation as a business strategy (Sellers 142).
The focused low cost generic strategy adopted by Coca Cola Company in the global market is very appropriate. The strategy has enabled the company to manufacture and supply high quality products at low costs. To this end, the strategy has helped Coca Cola to compete with other key players in the major beverage markets.
In addition, the strategy has enabled the company to attain wide acceptance in the global, regional, and global market as far as the quality and image of the company’s brand is concerned. As a low- cost producer, Coca Cola is a force to reckon with in the soft drinks’ industry (Sellers 142).
In addition to this, the strategy has successfully seen Coca Cola through some of the fiercest price wars in the global market. The strategy has made it difficult for new entrants to make an impact in the market. It has also increased the company’s share in the global market.
The low cost strategy is associated with various weaknesses, which may affect the success of a particular company in the global market. To this end, the Coca Cola Company has faced various challenges in the past as a result of adopting the low cost strategy. It is noted that the company has found it necessary to invest heavily in the business processes to reduce the costs associated with the manufacture and distribution of the products.
As consumer tastes continue to evolve in tandem with the changes taking place in the technological sector, the benefits that Coca Cola has enjoyed for a long time in account of its cost leadership in the market may be eroded.
However, in spite of the various challenges brought about by the strategy, its benefits to the organization cannot be downplayed. The broad differentiation strategy has made it possible for the company to reach out to various markets in the world. In addition, it has enabled the company to address the needs associated with the changing tastes among consumers.
Coca Cola has enjoyed widespread brand loyalty in the market as a result of the various products associated with the company. For example, Coke, which is the company’s main product, is enjoyed by many consumers in the global market. The widespread loyalty serves as a barrier, which discourages the entry of new competitors in the industry.
The main demerit of broad differentiation is that competitors can easily imitate the products associated with the company adopting the strategy. For example, many companies in the world have in the past made attempts to imitate Coke and other brands associated with Coca Cola. The imitation can negatively affect the performance of the company concerned, especially if the imitations are enjoyed by the consumers.
In addition, it is important to note that the preferences of the global consumer are changing rapidly. The rapid change makes it difficult for the company to innovate (Sellers 142-143). When the company succeeds in establishing the new product in the market, the preferences of the consumers may shift from the new product, which means that the company may incur losses in the process.
Coca Cola Company: An Analysis of Types of Brand Strategies Adopted by the Company
The success of the Coca Cola Company in the global market is attributed to the success of the brand strategies adopted by the organization. According to Sellers (144), the company has adopted several brand strategies in its global operations. In this section, the author will critically analyze some of the brand strategies implemented by the company.
The strategies analyzed in this section include brand equity, brand identity, brand image, brand loyalty, brand personality, brand positioning, and brand extension. The researcher will critically analyze the success (or lack of it thereof) associated with these strategies as far as the operations of Coca Cola Company are concerned.
Measuring brand equity is quite hard given that it depends on the perceptions of consumers, as well as their opinions towards the brand. A brand is considered to have high brand equity if it is able to retain and satisfy its current customers. The satisfaction is achieved through the provision of high quality products and services in the market. The company boasts of more than 3,000 items under its brand.
Because of the large number of products marketed by Coca Cola, it is hard to determine the company’s brand equity. As a result of this, Coca Cola not only faces external competitive pressure, but also competition among its own products. For example, such products as Coke and Fanta compete in the same market. The competition, while locking out pressure from other companies, may turn out to be detrimental to the company.
In addition to this, Coca Cola has more than saturated the soft drink market in the world. What this means is that a customer may prefer one product over the other, regardless of the fact that both products are from the same company, Coca Cola (Walsh and Dowding 106). For example, the consumer may prefer Fanta over Coke, even though both are produced and marketed by the same company.
Moreover, there are consumers who have no idea that most of the non- alcoholic drinks they are taking are manufactured by the Coca Cola Company. In spite of these hurdles, it is reasonable to assert that the company’s brand equity is relatively high compared to that of competitors in the market.
The high brand equity is an indication of a company that has existed for a long time. In addition, it is an indication of a successful global company with regard to growth and sales (The Coca-Cola Company par. 4-5).
Behrooz (12) is of the view that brand identity has propelled the Coca Cola Company to greater success in the global market. As a strategy, brand identity refers to the audio- visual “appearance” associated with a given brand. According to Behrooz (13), brand identify is what convinces consumers that they have made the best choice by purchasing the product.
On its part, brand definition refers to the formal presentation of what is entailed in a brand. The formal presentation includes the personality of the brand, its emotional benefits, its values, and the story behind it. Brand proposition is slightly different from brand identity and brand definition. It refers to the deal that the brand offers its customers at a specific time (Walsh and Dowding 107).
According to analysts in this sector, the Coca Cola Company is one of the organizations enjoying high brand identity in the global market. The company is considered to have a high brand identity compared to other companies given that it has operations all over the world.
In addition, the company has existed for a very long time compared to other brands in the soft drink industry. In 2011, Inter Brand ranked Coca Cola as the most valuable brand in the world. Coke, which is the company’s flagship product, is a symbol of contemporary popular culture.
It is a fact beyond doubt that Coca Cola faces stiff competition from other players in the soft drinks’ industry. However, in spite of this competition, Coke remains as the number one brand when it comes to global consumer’s preference. The brand is advertised as the “real” Coke, painting other companies distributing similar products as imitators.
The identity associated with the Coca Cola bottle further outlines the difference between the company and the brands produced by the competitors. Coca Cola’s brand identity reflects the unique brand equity, which has sustained the profitability of the product in the global market (The Coca-Cola Company par. 5).
Brand image is another strategy associated with multinational corporations operating in the world. As a strategy, brand image refers to the associations created in the minds of consumers with regard to a brand and the promises it offers.
The number of people in the world who have never heard of Coca Cola is very small. The brand name ‘Coca Cola’ has stood the test of time. It has remained popular among people from all geographical locations. It is popular among people of all ages, class, and gender.
Many people around the world consume soft drinks along with their meals. From the first time that Coca Cola was introduced in the market, it has remained at the top of the ladder. The company’s brand image has significantly influenced its sales volumes. The various changes in the packaging of the product have to some extent affected the positioning of Coca Cola in the global market.
In addition, the changes in packaging have affected the sales realized by the company. It is important to note at this juncture that members of the public tend to respond positively when Coca Cola introduces new products in the market. In addition, the company’s bottling system has created numerous growth opportunities for Coca Cola (Walsh and Dowding 108).
Brand loyalty is a very important aspect of all companies operating in the global market. It is noted that brand loyalty is the marketing mainstay in most industries in the global market. In light of the rapid changes in consumers’ tastes and preferences, convincing the client to use and remain loyal to one product for a long time is becoming increasingly difficult.
The difficulty notwithstanding, it is noted that established brands, such as Coca Cola, are enjoying a great deal of brand loyalty in the market. Such iconic products as Coke are regarded as symbols of trust and confidence by consumers in the global market (Walsh and Dowding 108-109).
As a strategy, brand personality refers to the human characteristics associated with a given brand. Well known brands, such as Coca Cola, are more than just a service or a product enjoyed by the consumer.
It is important to note that brand positioning is a sophisticated endeavor that takes a lot of time to accomplish. To come up with an appropriate brand positioning strategy, the company must utilize the marketing mix components with a lot of caution.
Positioning refers to the ways the consumer regards a given brand in the market. During brand positioning studies, consumers are asked to describe a product using human attributes. Most of the consumers taking part in such surveys describe Coca Cola as a brand that represents their day- to- day life.
Such a perception is another indication of the reasons why Coca Cola continues to enjoy widespread brand loyalty in the global market. Brand personality helps the consumer in making a decision to purchase the product (Walsh and Dowding 109-110).
As already indicated, brand positioning refers to the location of the brand relative to the location of competitors in a predefined space. Such a space is defined using consumer- based criteria, which may include the age of the consumer and money value. According to Walsh and Dowding (110), there are five elements of brand positioning. The five are analyzed in detail below:
It is the first attribute of brand positioning. It refers to the benefits and features associated with a given brand.
It is the second attribute. It refers to the benefits and features associated with competitor brands in the same market
It is somehow related to the first two elements. It defines what the consumers anticipate from brands available in the market.
Different products are offered at different prices in the market. As an element of brand positioning, ‘price’ refers to the differences between the prices of the brand and those of the competitors.
Consumer perception is very important in brand positioning. As an element of brand positioning, it refers to the perceptions of the consumers as far as the value and quality of a brand is concerned. The perceptions are defined with respect to value for money and cheap solutions or alternatives.
It is another important strategy adopted by multinationals in the global market. As a strategy, brand extension is also referred to as brand stretching. A firm extends its brand by using a brand name to market its products in different categories. Companies use the strategy for the purpose of increasing and leveraging brand equity. Coca Cola has used its brand name to market new products (Walsh and Dowding 111).
Coca Cola Company: An Analysis of the Implementation of Brand Strategy
From the time the company was founded, Coca Cola has dominated the leadership position in the non- alcoholic beverages’ industry. The company’s distribution system is one of the factors differentiating Coca Cola from its competitors. For more than a hundred years, the company has managed to continuously enhance its brand in the global market.
It has proven that it will persist in the minds of consumers for a long time to come. There are various brand building strategies adopted by this company. Some of them include redesigning the products and policies of brand development, which is aimed at addressing the changing preferences of consumers.
During its formative years, the Coca Cola brand was founded on acceptability, availability, and affordability. However, the brand development policies were changed with time to reflect preference, pervasive penetration, and price value (Behrooz 3-4).
The organization makes efforts to continuously test its brand identity. To this end, it carries out regular surveys to analyze various attributes of the products. The brand building approach adopted by the company is very effective because Coca Cola has managed to create, structure, and maintain a favorable brand image. In addition, the brand has connected very well with the international customers.
As a result, it has increased the brand’s global acceptability, which has increased brand loyalty. Furthermore, the company uses purchase frequency enhancement strategy to build a strong brand by marketing some of the best products in the market. The consumers are proud to be associated with such products.
In building its brand, Coca Cola has invested in high quality advertisement campaigns that connect with local communities and make use of celebrities. For instance, when the company was introducing the Coca Cola Zero product, it came up with a very unique advert that stood out in the market (Brison 197).
The company manufactures very many products, including cordials, energy drinks, soft drinks, water, juice, and diet drinks. The different products are suited to different occasions, lifestyles, stages, and ages. They are used by people from all walks of life as part of their balanced, varied, and healthy diets.
The company is committed to assist consumers determine the drinks that suit them the most by providing information about the various products. In addition, the company provides advice on healthy living. The different products marketed by the company have different energy levels.
The reason for this is that different consumers have varied energy needs. Coca Cola takes advantage of its global influence to promote physical activity and sports among individuals in the society (The Coca-Cola Company par. 6-8).
Coca Cola and Children
Coca Cola acknowledges the fact that parents are the ones primarily charged with the responsibility of assisting their children lead health lives. To this end, the company provides detailed nutritional information to assist parents choose the drinks that best suit their children. In addition, the company has formulated a global marketing policy as far as children are concerned.
According to this policy, the products of the company should not be marketed to children who are under twelve years of age. Likewise, the products should not be marketed to a population whose 30% of its members are below twelve years. The company does not advertise its products during television programs targeted at children.
The company works in collaboration with schools around the world to make sure that the products sold by vending machines are of low energy and are attractively priced. Coca Cola has formulated guidelines informing the partnerships between the company and schools to oversee the sale of products in tuck shops. The company has a longstanding policy of selling sugar free and diet products at the same price as carbonated drinks.
There are special retailers selected by the company to sell both carbonated and regular drinks. The company is working with nutritionists to come up with new products aimed at enhancing the health of children (The Coca-Cola Company par. 9-10).
Supporting Physical Activity and Sport
Throughout the world, Coca Cola has enjoyed a long standing sporting history. From 1928, the company has emerged as one of the major sponsors of the Olympic Games and other international sporting events, such as the FIFA World Cup. Other major sporting activities that are exclusively associated with the brand include the All Black football and rugby teams.
In addition, the company is involved in several grassroots empowerment programs, where it develops and implements programs to encourage physical activity. Furthermore, it sponsors tournaments in such communities. For example the company began a program dubbed Get Moving in New Zealand, whose main aim is to motivate children to take part in local recreation and sports’ courses.
In African countries, such as Kenya, the company is the main sponsor of the Coca Cola Junior Challenge (herein referred to as CCJC). The program aims at identifying young talented footballers from the grassroots and bringing them to the frontline. Some of the sportsmen who play in the local premier leagues were discovered during the CCJC (The Coca-Cola Company par. 10-12).
Labeling is another strategy adopted by the company to implement its brand strategy. The company makes sure that all its canned products clearly display the nutritional information on the pack. However, the company has not been able to provide the same for its glass- bottled soft drinks.
According to Kent, this is because of the large sum of money needed to replace all the glass bottles that are currently in circulation all over the world. To address this problem, the company provides the consumers with a customer care number where they can call and access detailed information regarding the product from a company representative (Behrooz 12).
The company is committed to emerge as a responsible corporate citizen in all countries where it has operations. Because of the company’s strict adherence to environmental guidelines, the management makes sure that the packaging and production process has minimal negative effects on the surrounding environment.
In most countries, Coca Cola works in collaboration with bottling companies and the government to recycle cans and plastic bottles. The company has adopted an ‘almost-zero-environmental-effect system’ aimed at recycling and reusing the glass bottles. In countries where the recycling plants are functional, the Coca Cola plastic bottles and cans are manufactured using at least 10 percent recycled material (Behrooz 13).
The company operates many customer care centers from where distributors, retailers, and other stakeholders can access information on the company 24 hours a day (Behrooz 13).
As already mentioned in this paper, the company has a practice of selling its sugar free and diet drinks at the same price with the carbonated products. In the same manner, diet Coke consumers can enter into any Coca Cola promotions or competitions. At the discretion of the retailers, the company provides the consumers with reduced prices and special offers for both diet and regular versions of its products (Brison 198).
Interview with a Marketing Manager and a Discussion of Research Findings
It is a fact beyond doubt that Coca Cola has delegated the responsibility of making major decisions to specific operators in the market. However, it is important to note that the company has an effective brand strategy with a global outlook, which is maintained through collaborative practices (The Coca-Cola Company par. 8). Clancy Moore is one of the senior managers of Coca Cola Company in the United States of America.
She has witnessed and actively participated in the creation of an organizational structure and strategy that has placed the company in a strategic position to compete in the international market. Coca Cola is a very active international company, as evidenced by the fact that 80% of its sales are generated from nations outside the United States of America.
The company has a wide experience in dealing with emerging markets, such as Pakistan and Egypt, where tensions have threatened the existence of multinationals. The strategy adopted by Coca Cola has helped the company remain resilient in such markets.
Moore was born in Chicago and began working with Coca Cola in the mid-1990s. She has worked in various capacities, such as finance and operations. She has also served in South Africa, where she was supposed to work in collaboration with the bottling partner.
Currently, she is a senior marketing manager under the sales and marketing department in the United States. She is directly responsible to the company’s sales and marketing director. Following is an excerpt from the interview:
According to the late Coca Cola chief executive, Roberto Goizueta, the company is supposed to think globally while acting locally. In your capacity as a marketing manager, how have you achieved this?
Achieving that objective is not as simple as the slogan sounds. The backbone of any successful international company is the ability to strike a balance between the local and the global with regard to their operations.
Coca Cola is a global brand, but it has to provide meaning and relevance to people living in a local community in China, Orange County, California, or in El Salvador. As a company, we may be communicating the same message of happiness through our adverts. In addition, we may be promoting the same Coca Cola architecture, but we have to take a different approach in every country.
The Company’s organizational structure consists of regional directors, like the one you are currently serving under. However, the managers at the company’s headquarters are responsible for directing sales, marketing, and finance operations throughout the world. How do you manage to strike such a balance?
The Coca Cola system is basically franchise in nature. Bottling is done by a local company. For example, in El Salvador, Industrias La Constancia (ILC) works under SABMiller as the bottler in the country. Consequently, our effectiveness and efficiency is largely determined by the brands we offer.
In addition, it is determined by the relationship between the company and the various stakeholders. The main prerequisite for proper management of such a relationship is geographical orientation. What this means is that Coca Cola is a geographical organization.
We realized that we needed a separate structure for our juice business. The cost of raw materials is not only high, but also very unstable because of fluctuations in the local market. In addition, we needed to take advantage of innovation opportunities. For example, in one year we provide several variants (up to five) of the same juice because of changes in tastes and preferences in the market.
The resulting matrix is quite sophisticated. Consequently, the company decided to construct an organizational structure situated in Atlanta to take care of the juice business. However, the structure takes into consideration geographical organizations.
We may appear as a company that has everything figured out, but just like any other enterprise, we are still evolving and gaining experience. For instance, we are still figuring out the most appropriate global and local combination that will grant every stakeholder, from the sugar farmer in Rwanda to Muhtar Kent, maximum returns from the business.
With regard to franchise dealings with our bottling partners, we have adopted a local approach. The company regulates the quality of the products at the local level. To this end, the company makes efforts to meet the safety requirements established by governments.
At the global level, we have the company’s rigorous quality control standards. However, we promote collaboration between all global partners. We also deal with specific issues depending on their nature.
How does the company manage disputes between the headquarters and the field operations?
From the time I joined Coca Cola in 1995, the company has been working hard to solve such disagreements. Nothing is perfect given that organizations are made up of flawed systems and imperfect humans. For example, assuming I am appointing a leader for a particular function, I will have the last word concerning who is hired or not.
However, at the back of my mind, I know that this leader will operate in the Coca Cola global system. The implication is that the person must have the capability to collaborate with global stakeholders and the system must be comfortable with them.
That is the point where maturity is put to test. As an organization, we have always embraced collaborative leadership and participative decision making process. The culture of our company settles for what is right, as opposed to defining turfs. As a result, we are capable of making quick decisions, which reduces disagreements.
Maintaining a global-local balance is a challenge to most international brands. The managers at the head office must realize that regions are different from one another and that it is not feasible to achieve the same level of success across the board.
The observation explains why some of the leading multinationals are now led by persons who joined the organization through sales and not through brand marketing. The idea of including the regional leaders in the headquarters has worked for Coca Cola and serves as an effective model for other international companies (The Coca-Cola Company par. 13).
In addition, the brand distribution mechanism, in this case the franchise system, is critical to the success of global brands. It has created room not only for the growth of Coca Cola, but also for sharing successful strategies across different markets. In the case of Coca Cola, the regions are well connected. The connection flows from the company and from the customers as well.
A good example is occasion-based marketing, where the company lays down mechanisms and structures for its global operations. In addition, the company avails materials used to deliver culturally relevant messages. The arrangement makes it easy for consumers to switch from traditional drinks to Coke (Behrooz 13-14).
Leadership is one of the most essential components of an organization. Resilient leadership is very important. It helps in analyzing the markets and organizational visions. Leaders who have tried to fully control every agent have only realized failed systems (Sellers 142-144).
Conclusion and Recommendations
The external environment in the soft drink industry is changing and competitors are gaining ground. The change in the company’s organizational structure, which will be effected in 2013, will bring with it numerous threats and opportunities as far as the operations of the company are concerned.
The resulting challenges must be taken into consideration by the management for the company to continue experiencing growth in the developed and the emerging markets. As already mentioned, the company is currently operating using a generic strategy.
The style is quite successful, but the management should not get so comfortable with it. Coca Cola should fix its eyes on the competition and pay attention to the dynamics of the external environment, which will constantly inform the generic strategy.
Coca Cola continues to enter into new markets in the soft drink industry. The current study recommends that the company should continue to pursue a low cost generic strategy as it penetrates new markets. The strategy will make sure that the company is in a position to compete with local and international companies by favorably pricing its products while still retaining a healthy profit margin.
In addition, the company should consider expanding its value chain system through e-commerce. E-retailing will enable the company to sell its products all over the world. The strategy can help the company reduce its operation costs to enhance the low cost strategy. However, for the sake of feasibility and management, the company should only make use of e-commerce to sell to wholesalers.
It is important to create a link between demand and production by the use of technology. Such a connection will enhance the management of the value chain.
Ultimately, automation will improve brand equity. In addition to e-commerce, the company should exploit other internet-based channels, such as video blogging, to promote its brand. Video blogging is an effective way of reaching out to vendors, customers, and business partners in real time.
The structure adopted by the organization has its own benefits and demerits, as already discussed in this paper. The structure was very effective in managing the businesses of the company in more than 200 countries.
The company’s former CEO was working on the vision of ensuring that all humans in the world have taken a Coke at least once in their life. To attain this objective, it is imperative to reduce the business groups from five to three. In addition, the company should focus more on business creation as opposed to business management.
In light of the recent global economic challenges, the company is regarded as having been less aggressive in the market compared to the competitors. Although there is credible explanation for such docility, the company should remain completely focused on building a strong brand and a globally successful business just as it has promised all the global partners.
Another weakness of the current structure is that there are inconsistencies in the setting of goals and objectives. Different groups have varying objectives due to their different experiences in the marketplace. Such an inconsistency is detrimental to the operations of the company because it is only workable in the developed economies.
In the developing world, such as Africa, there is need for the organization to provide direction in goal setting. The company should provide franchises in such regions with more resources and training facilities. For example, in the United States, the business is not affected very much in the cold season as compared to Asia and Africa.
The company has realized that the global market is quite large and as a company, the organization should focus beyond the sale of soft drinks.
The group formed to promote the sale of juice products has created one of the most significant opportunities for Coca Cola to continue growing. In 2011, the company opened one more plant in China. The country is the largest consumer of beverages and food in the world. Such moves have continued to create room for the growth of Coca Cola Company.
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