Coca-Cola: Global Economic Interdependence Research Paper

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Introduction

Global interdependence means that companies open up to conduct their trading activities with other nations in the world. In other words, it is a free trade where organizations share their commodities and services without protectionism that hinders foreign competition (Armstrong & Kotler, 2009).

Therefore, a multinational firm such as Coca Cola has benefited from the advantages of global interdependence, which are fast spreading around the globe. These include establishing their branches in countries such Ivory Coast and Liberia, which have achieved significant political stability.

In addition, this interdependence has resulted to Coca Cola sharing technology with its branches in order to enhance profits and uphold fair trade practices (Kotler & Keller, 2009). Global interdependence has also caused industrialization and foreign investment between the other organizations and Coca Cola.

Furthermore, it has resulted to the company relaxing its long held guarding of trade secrets such as how they manufacture coke. Therefore, such practices have led to more transparency in conducting business and renewing agreements with other trading partners.

Demographic and Physical Structure

In order for a multinational company such as Coca Cola to boost their sales and maximize on profits, it needs to focus on demographic factors and the physical infrastructure. In this case, the company should consider demographic factors such as the age structure of their clients, gender, religion, income level, education, social class among others.

For instance, Coca Cola cannot conduct its trade in a market that more than half its population cannot afford a meal a day. This means that, in order to counter competitors, Coca Cola has to carry out its demographic calculations to attract demand for its products and maximize on profits.

When it comes to physical structures, Coca Cola should do business with countries with adequate infrastructures such as availability of roads, railway stations, and advanced airports among others, which will help in the ease of transportation and distribution.

Coca Cola has also realized the use of distribution systems such as bicycles, handcarts, auto-rickshaws and even camels to reach their clients in the rural areas who cannot easily access their products (Armstrong & Kotler, 2009).

Cultural Differences

Another critical factor that affects global and domestic marketing decisions is the cultural differences. For instance, when Coca Cola took its products to Asian countries, it had to involve linguistic specialists in translating its products to the market. The understanding of the culture of the market, which means understanding the local taste, is what has made Coca Cola penetrate into different markets (Kotler & Keller, 2009).

For example, in some countries, Coca Cola moderates the amount of sugar and carbon dioxide in satisfying their customers with low-income levels. In addition, Coca Cola has maintained its name everywhere in order to fits in every nation and appeals to every culture. Furthermore, it has recruited other members of their management from countries where they do their businesses to enhance cultural integration. This often assists in building a team that understands the market in relation to Coca Cola products.

Social Responsibility and Ethics

Apart from considering cultural differences, Coca Cola has been at the front in fulfilling their social responsibility and moral ethics. For instance, the company has established the Coca Cola foundation that donates money to community projects. Additionally, the company offers sponsorships that assist bright students who cannot afford the cost of their education. This goes to upholding the moral ethic of providing education and other opportunities to those who deserve them (Armstrong & Kotler, 2009).

The company also collaborates with various environmental organizations to conserve the environment through proper disposal of its products. Furthermore, the company has been teaching its suppliers on the significance of employee rights and social responsibility of corporations.

It has also sensitized them on ethical issues of the society such as child labor. Lastly, Coca Cola workers have the legal obligation to report unethical offences of their colleagues to the management immediately. This aims at ensuring employees from Coca Cola behave in the best way to reflect the image of the company (Kotler & Keller, 2009).

Political Systems and International Relations

The influence of political systems and international relations is a significant factor that has affected Coca Cola greatly. For instance, at one time, a Supreme Court in India mounted pressure on Coca Cola and its rival Pepsi to reveal the chemicals they apply in manufacturing their products.

The court argued that these two companies use pesticides in some of their soft drinks, which could result to poisoning. This led to the banning of Coca Cola products in some areas of India thus leading to tremendous losses. This means that conducting business with countries that have political systems that back such court decisions should be avoided to survive in the market (Kotler & Keller, 2009).

In other words, apart from being compelled to expose their manufacturing secret, Coca Cola faced a ban from the Indian market. Additionally, considering countries that have stable political climate in terms of security and promising economies has helped the company to boost its sales (Armstrong & Kotler, 2009).

On the other hand, Coca Cola has been able to create jobs for other countries through its various marketing and distribution opportunities, which promote inter-nation friendships. In addition, their philanthropic activities help in promoting humanitarian care that improves its international relationships with the states.

Foreign Corrupt Practices Act

Foreign Corrupt Practices Act and other various legislations have had a crucial impact on the Coca Cola Company, which have influenced how it conducts its business. For instance, when there were suspicions that coke was illegally manufacturing its products using rebates, the US passed the Foreign Corrupt Act to protect consumers from being offered inferior products.

This local Act passed in 1977 aims at controlling any firm in the US such as Coca Cola from offering payments to foreign officials to manipulate buying of goods and services, which is unlawful in the US (Kotler & Keller, 2009). The violation of this Act can lead to a jail of up to five years for convicted individuals and huge fines amounting to millions of dollars for guilty companies.

In other words, this legislation aims at ensuring companies uphold both social and corporate responsibility without harming their consumers. Other influential international policies are those that compel companies to reveal their trade secrets as occurred to Coca Cola in India. These draconian policies affect negatively on the businesses of companies leading to tremendous loses.

Impact of Technology

Finally, the impact of technology especially in a soft drink company such as Coca Cola has been crucial to both its consumers and their trading partners. For instance, the use innovative and creative advertisements of its various products on the TVs have boosted its sales beating its rival such as Pepsi.

In addition, Coca Cola Company has now equipped its clients with wireless web phones that help them trace the nearest shop selling its products. Furthermore, there have been m-commerce machines that help customers buy Coca Cola products from the comfort of their mobile phones without using cash during the purchase. Additionally, the use of green freeze by Coca Cola since 2004 has been a welcome by environmental organizations for its environment-friendly nature and profitability for the company (Kotler & Keller 2009).

Conclusion

Coca cola is among the renowned corporations in the beverage industry. The company’s environmental factors, both internal and external factors, constantly affect the making of their fundamental decisions. Come of these significant factors include infrastructural development, physical interdependence, cultural differences, demographics among other aspects.

The company also engages in different activities such as meeting their social, ethical and legal responsibilities. This often influence the decision making process regarding various aspects about the company. Other factors that also influence the decision making process, include political systems and Foreign corrupt practices act.

References

Armstrong, G. & Kotler, P. (2009). Marketing: An Introduction. New Jersey, NJ: Prentice Hall.

Kotler, P. & Keller K. (2009). Marketing Management. New Jersey, NJ: Prentice Hall.

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