|Type of paper:||Essay|
|Categories:||Strategy Coca-Cola International business|
International Strategy Research
International presence for a business organization is essential for growth and development. Firms operating in multiple states provides the platform for the advanced market scope and customer base. The multinational corporation requires strategic planning for internal stability and external competitiveness. The level of capital invested in the business is not enough to guarantee business continuity; therefore, the organization requires strategic planning and management of the firm affairs. Through different mechanisms of expansion and global implementation, the firm stands a chance of high profitability and extended market coverage (Rotha'rmel, 2017). Worth noting is that the implementations could result in positive impacts on the business or adverse effect on the strategy and structure. Therefore, understanding of the performance of the organization as well as the approaches used to control the operations of the company is essential for essential recommendations and business realignment (Rotha'rmel, 2017). This paper evaluates the international corporate strategy for Coca-Cola Company with the objective of determining the appropriateness of the techniques as well as the shortcomings.
Coca-Cola Company started in 1886 as a soft drink manufacturing firm in Atlanta. The idea of the business was a masterpiece of John Pemberton and Frank Robinson. The organization improved the first brand and expanded the market with the view of establishing a competitive firm (Hartogh, 2004). The firm has managed to achieve over 1.9 billion servings of different brands a day across the globe from a low number of daily sales (Coca-Cola, 2015). The move to produced bottled brands was an essential turnover point to growth and sustainability. The introduction of different structure and strategies associated with production and share of ownership created new challenges for the business. New managerial approaches were required to spark escalating revenue and minimizing the cost of operation. The firm introduced a standard bottle for packaging, coupons for marketing and promotion, and other media advertisements to improve the market share. By 2009, the open happiness campaign resulted in tremendous increase in sales and international presence (Coca-Cola, 2017; Coca-Cola, 2015). The organization is currently operating in the main markets across the globe and is the number one beverage producer in the world. Although the firm is characterized by a competitive market control over the rivals, it is worth understanding the corporate planning and implementations in the company to improve the international presence (Hartogh, 2004).
The initial approach to international presence was the focus on the provision of beverage and soft drinks to customers. The organization focused on product promotion and customer acquisition. In the 20th century, the management created an emotional tendency among clients and brands to improve the market preferences (Coca-Cola, 2017). The objective of such moves was to ensure that the products are known to customers within the segmented market niche. By 1988, Coca-Cola brand became the most known trademark in the world. Such an achievement enhanced the position of the company in the competitive market. The level of growth improved gradually with the firm establishing more multinational units. The introduction of brands based on the market demands became the new approach during the late 1990s with more emphasis on health concerns (Coca-Cola, 2017). Although the firm registered increasing sales, the need for a more improved and modern approach to the market shifts and demand was necessary. Later in 2000, the organization established five major strategic actions that will enable the company to achieve the designated performance targets. The five action have been based on the learning curve associated with the previous approaches to an international presence and market stability and growth.
The Coca-Cola Company
The Coca-Cola Company is currently focusing on driving revenue and profit growth. The management has concentrated on the over 200 countries where the organization is serving to improve the market share control. The company has implemented a segmented revenue approach based on the variability of the market types and economic shifts (Coca-Cola, 2017). Therefore, tailoring the revenue targets to the nature of the segmented market as well as the positioning of the brands assist the firm to balance resources and objectives. Such an approach allows the firm to focus on making the products affordable, increase the volume of sales, and competitiveness. Since the market of operation falls into two broad categories, the firm uses the balance between price and volume as the market approach technique in developing economies and price mix in advanced markets (Coca-Cola, 2017). On the other hand, the firm is investing in the brands and the business. Therefore, the firm has increased the funds channeled to marketing, quality management, production process, and beverage portfolio implementation. Using global campaigns meant to support all brands has considered a universal approach trademark support. Influential promotional approaches include the Taste the Feeling program for Coke Zero, Coca-Cola Life, and the Diet Coke brands in 2016 (Coca-Cola, 2017).
Furthermore, the company has been particular when it comes to efficiency the organization has focused on improving the level of operations and market approach to enhance the capacity of the firm in line with financial flexibility. Therefore, the management has been currently working towards cost control and balancing the production and the market demand. The decision to reduce non-media promotion and capitalize on media-based advertisements is because of the need to increase output for each expenditure (Coca-Cola, 2017; Yuvaraju, Subramanyam, and Rao, 2014). Moreover, the evolving consumer preferences and expectation, as well as the escalating competition in the industry of operation, has generated a tendency where efficiency, timeliness, and employee empowerment levels define the extent to which an organization will remain successful. The Coca-Cola Company is currently shifting its strategy towards structure simplification (Coca-Cola, 2017). Restructuring the management and the production processes are some of the undertakings that the firm is pursuing. Nevertheless, the organization has remained within the scope of operation. The core mandate of the company has been the creation of refreshing beverages, which the firm has included the element of diversity in brand management (Webb, 2006). With over 500 alternatives, the organization is seeking to maintain and improve the market share through the incorporation of the changing tastes and preferences of customers (Coca-Cola, 2017).
Firm's Strategic Approach to Expansion
The Coca-Cola Company has several products in the market, which can be traced from the mergers and acquisitions carried out by the management as a strategy for growth and competitiveness. The company has been enhanced customer satisfaction based on the multiple brands that the organization is currently managing. The shift in the market towards healthy alternatives created a new dimension of competition, which created the need to diversifying market approach and revenue growth. Therefore, the company undertook several measures to sustain its success (Rossolillo, 2016; MarketLine, 2016). One of the approaches used in the organization is mergers where the organization combines its operations with other firms based on a mutual corporate deal. The firm has purchased other business and taken control of their operations. On the other hand, the Coca-Cola Company has acquired shares partially from other enterprises. For example, the Coca-Cola Company owns over 16% of Monster Beverages, purchased FUZE Beverages in 2007, acquired Vitamin Water in 2007, conglomerated bottlers in over 19 states, and acquired Minute Maid brands among others (MarketLine, 2016). Worth pointing out is the success and failure lessons learned from the approaches used to expand the business operations in line with the objectives of the company.
One of the significant mergers for the organization is the new combination of the Coca-Cola Enterprises and the Portugal, Spain, and German units, which have been operating as separate entities. The company has learned from the previous mergers and acquisition and is currently associated with the multidimensional experience (Rossolillo, 2016). With the mega-merger, the firm is looking forward to achieving the highest revenue that will lead to strategic market positioning. The objective of the move was to control the Western Europe market depicted by the volume of sales. In 2015, the cumulative sales for the three firms were estimated to be over $12 billion with a corresponding profit of over $700 million and more than 300 million customers (Rossolillo, 2016). The move to eliminate the managerial complexity saw the firm retain the leadership team and the structure of operation. The possibility of increased profitability through the merger is a move that is expected to boost the shareholderst wealth through effective cost-benefit balance. The evaluation of the appropriateness of the merger revealed that the move decreases the cost of operation by 3% of the total sales while profits are set to increase by 50% (Rossolillo, 2016). Therefore, critical assessment of the success of the merger allowed for the shareholders to consider the benefits associated with the move.
Based on the advantages that the company has achieved through mergers and acquisitions, the Coca-Cola Company has been considering external growth as the best option to expansion. Internal diversification of production and product development proved to be insufficient for the performance targets and competitiveness desires of the organization (MarketLine, 2016). However, through mergers and acquisition, the firm managed to control hundreds of customer brands and increased the market scope. The firm has enjoyed high revenue and market positioning above the competitors in the industry and globally (Rossolillo, 2016). Nevertheless, the move to combine the three major independent subsidiaries is based on the advantages of the synergistic production for multinational corporations. The long-term implication of the merger could see the company control the European beverage and soft drinks industry since it could lead to the largest market share growth (Rossolillo, 2016). Although the firm has faced challenges with mergers associated with the complexity of incorporation and management, through learning and market innovation the firm has improved the capacity to control risks associated with such strategic changes (MarketLine, 2016).
International Operations and Management
The Coca-Cola Company has been keen on its approach to international operation and management structure based on the diversity associated with the market of exploitation. The concern of the management has been on mechanisms meant to enhance the momentum of the company and the transformational approach to strategic planning and implementation (Bailey, 2015). A keen assessment of the structure of the organization reveals how the company is strategically positioned in the industry based on the high level of competitiveness. With the market shifts and economic variability, the leadership of the company has ensured that the operations regarding production, marketing, growth, and risk management have been unified on the main functional factors (Bailey, 2015).
Currently, the management has established five fundamental factors that define the expansion approach for global competitiveness. The Coca-Cola Company has valued a multidimensional approach to international operation and administration structure based on the level of market experience associated with the multinational corporation (Bailey, 2015). The elements that have been presented to inform strategic international operation and management structure have been identified as the focus on productivity, streamlining the organization, making discipline investments, adopting a segmented approach to market control, and focusing on core business model (Bailey, 2015). Each of these factors has a significant influence on the cumulative growth but do not exist as independent measures of organizational growth and sustainable development.
The company has focused on productivity to improve the revenue margin. Through strategic planning and market analysis, the organization has designed over 500 products in line with the tastes and preference of customers. The management has been keen to note the market shifts based on customer expectation. Customer satisfaction is central to growth in business sector (Sumathisri, Veerakumar, and Prabhakara, 2012). The magnitude of competition is another factor that the organization has incorporated in the production process (Bailey, 2015). A keen analysis of the success of the organization links the degree of performance to the nature of production efficiency. Through cost management, the firm has enhanced the capacity to meet global demand. Moreover, the use of technology to improve manufacturing process has ensured that the company does not face the production shortages (Bailey, 2015). With an efficient supply chain system, the company has maintained a global presence.
The supreme management arm
On the other hand, the management is currently focusing on organizational streamlining as an approach to growth and development. The strategy involves the tailoring of each subsidiary in line with the cultural and economic characteristics of the market of operation; however, the headquarter remains the supreme management arm. Moreover, the company has concentrated on the customer feedback to inform the decision process (Coca-Cola, 2017). Through effective planning, the management has enhanced the rate of customer acquisition and retention. A significant customer baseline is central to growth and global competitiveness in the corporate sector. In fact, the Coca-Cola Company has ensured that strategies focus on both the needs of the internal and external stakeholder to encourage international expansion (Bailey, 2015).
Moreover, in the process of expanding the business, the management has been selective on investments where more emphasis is on profitability and revenue generation (Bailey, 2015). Disciplined Investments that focus on brand management has enhanced the journey of growth and development associated with the company. Currently, the organization has initiated productivity programs meant to control international operations such as joint marketing and coordinated supply chain management (Coca-Cola, 2017). For example, the company has restructured the global supply chain to improve cost efficiency and high production (Bailey, 2015). Approaches such as zero-based budgeting for all subsidiaries has improved financial control, which is encouraging growth.
Furthermore, the Coca-Cola Company has incorporated segmented approach and focusing on the core business model to increase revenue and encourage efficiency in international operation and management structure. Strategies such as driving efficiency through market investments and product promotion have been essential in simplifying the business model (Bailey, 2015). An environmental based supply chain system has increased the level of sustainability; therefore, the organization has expanded the scope of operation and increased the capital base. Such moves have ensured that the company enjoys the economies of scale and competitive advantage.
The recent analysis of the nature of private investment associated with the organization indicated that the company is inclined to productivity savings and improving market competence for customer satisfaction (Bailey, 2015). The increase in customer base, which is in line with the business model tailored to the specific segmented market for each country of operation, has guaranteed high revenue. However, the cost of marketing has been escalating every year. For example, in 2015, the firm spent over $2 billion in product promotion, which was about 29% increase in the cost of advertisement (Bailey, 2015).
Social Responsibility Strategy
The operations of the Coca-Cola Company have been established to incorporate the socioeconomic and environment dimensions of the market of exploitation. Such a move ensures that the business is guaranteed of the performance targets as well as a high level of sustainability. The management has been evaluating the activities of the company based on the impacts associated with each process (CCI, 2011). The strategy to sustainability incorporates the needs of each country of operation; however, the focus the unifying focus remains on environmental conservation and community support. The implementation of each social responsibility strategy is planned within the ten principles of the UN Global Compact framework, which defines the manner in which business organization should conduct their activities in line with the social, environmental, and economic dimensions (CCI, 2011). Currently, the company has divided the approach to CSR into four major areas of focus: product responsibility, community development, the environment, and workplace management (Sauerbronn, Faria, and Barros, 2014).
The Coca-Cola Company has considered the advantages of maintaining a safe and efficient working environment as a measure of corporate responsibility. The management has set strategies that ensure the employee rights are upheld. Since the market of operation is diverse, the implementations are based on the local labor frameworks and legal jurisdictions. Maintaining continuous compliance to occupational health and safety for workers enables the firm to achieve a high human resource output as well as corporate reputation (CCI, 2011). The top leadership guarantees the efficient workplaces for long-term sustainable engagement, which includes working with the management at the subsidiary. When handling employees' affairs in a multinational organization, the element of cultural diversity cannot be ignored (Khoreva, Kostanek, and van Zalk, 2015). The Coca-Cola company has undertaken an inclusion approach and employee engagement through internal communication (Sauerbronn, Faria, and Barros, 2014). Therefore, the objective of all the workplace-related implementations is to ensure that the company provides a safe, fair, and environmentally friendly working conditions that will support personal and professional development among employees (CCI, 2011).
Moreover, community development approaches have been used to enhance the contribution of the company to socioeconomic support. The organization has been contributing to the welfare of the society by engaging in sponsorship programs. The use of support programs is a common approach for all the subsidiaries (CCI, 2011). Economic development ensures that the organization assists the community to achieve their financial stability targets through training and sensitization. On the other hand, the social development techniques are tailored to enhance integration and safety within the social setup associated with the country of operation (Sauerbronn, Faria, and Barros, 2014). Moreover, incorporating the ethical values of the community allows the business to be identified with the society (CCI, 2011; Bull and Adam, 2011). The customers of the company are part of the community where the business is operating; therefore, by implementing the support and development programs, the organization is in a position to share the generated profit with the society.
Furthermore, environment responsibility is another dimension that the company has included in the corporate social responsibility strategy. The core of environment-based implementation is the energy management and climate protection. The company achieved the gold rating in green status acknowledgment. Implementing the standard requirements of the leadership in energy and environmental design has ensured that the firm constructs sustainable structures (CCI, 2011). The management has ensured the incorporation of energy and water efficiency with the objective of recycling and reuse of resources of production. Some of the significant achievements regarding environment conservation include over 20% of constructions based on recycled materials, over 90% of construction wastes are reused, and landscaping is meant to reduce the heat island effect. Moreover, the firm has achieved over 40% reduction in water usage, which is part of the environmental measures in the organization (Coca-Cola, 2016).
On the other hand, the product responsibility implementations have enhanced the competitiveness of the organization and improved the level of compliance. The firm has ensured that the production processes adhere to the environmental standards such as safety, emissions, and reuse of wastes. Moreover, the supply chain is tailored to include the conservation blueprints. Therefore, all suppliers undergo regular audits to guarantee a high level of compliance (CCI, 2011). Each production activity is based on the value chain and the business model but includes the external requirement such as the legal framework for each country of operation. Furthermore, the management has price control strategies to ensure that the market cost of the products does not lead to exploitation of consumers (CCI, 2011). Each of the four dimensions provides a common platform where the company's management can incorporate the stakeholders in sustaining the operations of the organization.
In conclusion, the Coca-Cola Company is associated with a comprehensive system of administration that has contributed to constant growth and development. The company has focused on international presence to improve the revenue generated from sales. Through merger and acquisition, the organization has expanded the market of operation, which has contributed to increasing in profit. However, the most contributing factor to growth is the strategy implemented in the organization to improve the level of global efficiency. The management has focused on brand management, customer satisfaction, and core business model to improve competitive advantage. On the other hand, transforming the approach to the market through business reengineering has enabled the firm to learn from previous failures and increase the level of corporate competence. Finally, through a comprehensive corporate social responsibility focusing on four key areas of environment, community, product responsibility, and workplace management, has ensured that the needs of external and internal stakeholders are addressed based on the objectives of the organization.
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