IQBAL 1

A Report on the Coca-Cola Company

Student Name: Iqbal, Arsalan

THE UNIVERSITY OF ATLANTA

Instructor: Dr. Domingo Salgado

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TABLE OF CONTENTS

i. Introduction

ii. Major Products and their operational relationship

iii. Coca-Cola as a Manufacturing Company

iv. Mission Statement

v. Short and Long term Goals

vi. Strengths, weaknesses, opportunities, threats and competitors

vii. Size of the company

viii. Competition in its own industry

ix. Demand and forecasted changes of the company

x. Quality Management and Customer Services

xi. Scheduling of Materials and Human Resource

xii. Coca-Cola as an user Friendly Organization

xiii. Operational Issues

xiv. Recommendations
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INTRODUCTION:

Coca-Cola is a carbonated soft drink sold in the stores, restaurants, and vending machines of

more than 200 countries. It is produced by The Coca-Cola Company of Atlanta, Georgia, and is

often referred to simply as Coke (a registered trademark of The Coca-Cola Company in the

United States since March 27, 1944). Originally intended as a patent medicine when it was

invented in the late 19th century by John Pemberton, Coca-Cola was bought out by businessman

Asa Griggs Candler, whose marketing tactics led Coke to its dominance of the world soft-drink

market throughout the 20th century.

The company produces concentrate, which is then sold to licensed Coca-Cola bottlers throughout

the world. The bottlers, who hold territorially exclusive contracts with the company, produce

finished product in cans and bottles from the concentrate in combination with filtered water and

sweeteners. The bottlers then sell, distribute and merchandise Coca-Cola to retail stores and

vending machines. Such bottlers include Coca-Cola Enterprises, which is the largest single Coca-

Cola bottler in North America and western Europe. The Coca-Cola Company also sells

concentrate for soda fountains to major restaurants and food service distributors.

MAJOR PRODUCTS AND THEIR OPERATIONAL RELATIONSHIP

The most common products produced by coca-cola are Diet Coke, Fanta, Sprite, Caffeine-Free

Coca-Cola, Diet Coke Caffeine-Free, Coca-Cola Cherry, Coca-Cola Zero, Coca-Cola Vanilla,

and special editions with lemon, lime or coffee. Over the last 10 years, Coca-Cola has moved to

a regional operating strategy with centralized concentrate production facilities that reduce
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manufacturing costs. Coke's main manufacturing activities relate to elaboration of syrup, which

is then distributed to bottling companies.

COCA-COLA AS A MANUFACTURING COMPANY

This is a manufacturing company which manufactures different type of products in the form of

beverages.

MISSION STATEMENT

Roadmap of the Coca-Cola Company starts with mission, which is enduring. It declares the

purpose as company and serves as standard against which the Company weighs its actions and

decisions.

 To refresh the world.

 To inspire moments of optimism and happiness.

 To create value and make a difference.

SHORT AND LONG TERM GOALS

Short Term: Live Positively is not a new initiative for Coca-Cola. Rather it’s an expression of

who they are and what they have been doing for almost 125 years to make a positive contribution

to the world. Coca-Cola now wants to do a better job of sharing and encouraging others to make

positive contributions in their own way. Live Positively is how coca-cola takes these efforts to

the next level – how they listen to what consumers tell them they want.
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Long Term: Sustainability is an integral part of Coca-Cola 2020 Vision, their roadmap for

winning together with their bottlers. Coca-Cola has defined its long-term goals as:

i. Water Goal: To safely return to communities and nature an amount of water equivalent to

what Coca-Cola use in all their beverages and production.

ii. Packaging Goal: To advance a packaging framework in which Coca-Cola packaging is no

longer seen as waste, but as a valuable resource for future use.

iii. Climate Goal: To use the best possible mix of energy sources while improving energy

efficiency of their manufacturing and distribution processes.

iv. Beverage Benefits Goal: To quench every thirst and need; provide and tailor beverages

for every lifestyle, life stage and life occasion based on individual needs; and offer

quality products and information consumers can trust all the time.

v. Active, Healthy Living Goal: To improve the health of their employees and their

communities through education, product variety and physical activity.

vi. Workplace Goal: To foster open environments, as diverse as the communities Coca-Cola

serve, where workplace rights are respected and people are inspired to create superior

results and make a positive difference.

vii. Community Goal: To foster sustainable communities wherever Coca-Cola operates.

STRENGTHS? WEAKNESSES? OPPORTUNITIES? THREATS? COMPETITORS?

Strengths of the coca-cola products:

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a. World’s leading brand

b. Large scale of operations

c. Robust revenue growth in three sectors.

d. It tastes great, gives you energy and it is cheap.

e. It’s leading brand so that its business is stable as a cash cow.

f. Moderate caffeine.

g. It is sweet and fizzy and can give you a little caffeine

Weaknesses of the coca-cola products:

a. Negative Publicity

b. Sluggish performance in North America

c. Decline in cash from operation activities

d. It ruins your teeth, makes you fat, causes you to burp, and too much carbonation is bad.

e. No longer contains cocaine.

f. It has no nutrition, elevates your blood sugar and sucks the calcium out of your bones.

g. It contains phosphoric acid, Phosphoric acid doesn't let calcium to fix in the bones;

therefore it's harmful because could be a cause for osteoporosis.

h. Too gassy.

i. Too much of the consumption is bad for your teeth, bones, stomach and causes cellulite

Opportunities

Acquisitions intensce competition: For the last one year, Coca-Cola has been aggressively

adopting the inorganic growth path. During 2006, its acquisitions included Kerry Beverages,
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(KBL), which was subsequently, reappointed Coca-Cola China Industries (CCCIL). Coca-Cola

acquired a controlling shareholding in KBL, its bottling joint venture with the Kerry Group, in

Hong Kong. The acquisition extended Coca-Cola’s control over manufacturing and distribution

joint ventures in nine Chinese provinces. In Germany the company acquired Apollinaris which

sells sparkling and still mineral water in Germany. Coca-Cola has also acquired a 100% interest

in TJC Holdings, a bottling company in South Africa. Coca-Cola also made acquisitions in

Australia and New Zealand during 2006. These acquisitions strengthened Coca-Cola’s

international operations. These also give Coca- Cola an opportunity for growth, through new

product launch or greater penetration of existing markets. Stronger international operations

increase the company’s capacity to penetrate international markets and also gives it an

opportunity to diversity its revenue stream.

Competitors:

Pepsi is usually second to Coke in sales, but outsells Coca-Cola in some markets. Around the

world, some local brands compete with Coke. In South and Central America Kola Real, known

as Big Cola in Mexico, is a fast-growing competitor to Coca-Cola. On the French island of

Corsica, Corsica Cola, made by brewers of the local Pietra beer, is a growing competitor to

Coca-Cola. In the French region of Brittany, Breizh Cola is available. In Peru, Inca Kola outsells

Coca-Cola, which led The Coca-Cola Company to purchase the brand in 1999. In Sweden,

Julmust outsells Coca-Cola during the Christmas season. In Scotland, the locally produced Irn-

Bru was more popular than Coca-Cola until 2005, when Coca-Cola and Diet Coke began to

outpace its sales. In India, Coca-Cola ranked third behind the leader, Pepsi-Cola, and local drink

Thums Up. The Coca-Cola Company purchased Thums Up in 1993. As of 2004, Coca-Cola held
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a 60.9% market-share in India. Tropicola, a domestic drink, is served in Cuba instead of Coca-

Cola, due to a United States embargo. French brand Mecca Cola and British brand Qibla Cola,

popular in the Middle East, are competitors to Coca-Cola. In Turkey, Cola Turka is a major

competitor to Coca-Cola. In Iran and many countries of Middle East, Zam Zam Cola and Parsi

Cola are major competitors to Coca-Cola. In some parts of China Future cola is a competitor. In

Slovenia, the locally produced Cockta is a major competitor to Coca-Cola, as is the inexpensive

Mercator Cola, which is sold only in the country's biggest supermarket chain, Mercator. In Israel,

RC Cola is an inexpensive competitor. Classiko Cola, made by Tiko Group, the largest

manufacturing company in Madagascar, is a serious competitor to Coca-Cola in many regions.

Laranjada is the top-selling soft drink on the Portuguese island of Madeira. Coca-Cola has stated

that Pepsi was not its main rival in the UK, but rather Robinsons drinks.

Threats:

Threats of substitute- Very Strong:

Substitute of coca-cola products are bottled water, sports drinks, coffee and tea. Bottled water

and sports drinks are increasingly popular with the trend towards health conscious consumers.

There are growing number and varieties of water and sports drinks that appeal to different

consumer tastes. They are advertised as healthier than soft drinks. In addition, coffee and tea are

competitive substitutes because they provide caffeine. Soft drinks can be substitute with coffee.

Low switching cost for the consumer makes the threat of substitute products very strong.

Threat of suppliers- Strong:

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Suppliers to coca-cola are bottling equipments manufacturers and secondary packaging

suppliers. Although coca-cola does not have any bottling, the company owns about 36 percent of

coca-cola Enterprise. The rest of coca-cola enterprise is a publicly traded company. This is the

largest bottler in the world. Since coca-cola own the majority of the bottlers. It looks like those

particular bottlers do not have much bargaining power. This result in tension between coca-cola

and its increasing power independent bottlers like coca-cola enterprise. Coca cola enterprise

holds 80 percent of the US market as well Europe. The operational and distributional complexity

due to new product introduction is affecting the bottom line of the bottlers. Some bottlers have

even refused to carry new products. This conflict with bottlers can be a major threat to coca-cola.

Threats of new Entrants- Low:

New entrants to the industry are not a strong competitive pressure to the soft drink industry.

Coca-cola and PepsiCo dominate with their strong brand name and superior distribution channel.

In addition the soft drink industry is fully saturated. New growth is small. This makes it very

difficult for new unknown entrants to start competing against the existing established firms.

Other barrier to new entrants is the high cost of labors, warehouse, trucks and economies. Now

entrants cannot compete on price without economies of scale. Therefore new entrants are not a

strong competitive force.

SIZE OF THE COMPANY

Coca-Cola Company is the world's biggest drinks company, controlling more than half the

global market in carbonated soft drinks as well as a substantial chunk of the non-carbonated

segment. It owns four of the world's five best-selling soft drinks. Its principal brand is of course
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Coca-Cola itself, the world's best-known and most valuable brand. But the company also sells

almost 500 other beverage brands ranging from variants like Diet Coke and sister products such

as Fanta and Sprite to a vast range of carbonated and non-carbonated juice-based drinks, bottled

waters, iced teas and coffees. Increasingly Coca-Cola has found that its sheer size works against

it. Competition authorities now watch the company's every move, while market saturation and

economic downturns in both emerging and mature markets caused sales growth to stall for more

than a decade. Since 2006, though, the company's performance has begun to sparkle once again.

Advertising Age estimated global measured advertising expenditure of $2.7bn in 2008, making

Coca-Cola the world's #6 advertisers.

COMPETITION IN ITS OWN INDUSTRY AND HOW TO CONFRONT IT

The competitive state of an industry is a key factor in determining how firm develops their

strategies to earn profit overtime. Even thought the nature of competition differs significantly

between industries. Competition in the soft drink industry is determined by its own particular

structure.

What does it have to do well?

The Coca-Cola Company needs to implement some policies to do well. The company needs

policies on 4 main areas:

i. New policies around the legal environment.

ii. Policies around its people.

iii. Policies around its competitors.

iv. Policies around its products.

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The implementation of the above policies will see the company continue to expand as well as

maintain its current market share. There is a need for the company to revise its strategies in line

with overseas staffing policy to make sure that, staff levels are in line with demand as well as the

prevailing market conditions. On the other hand, the company needs to ensure that ,it constantly

maintains a positive public image in line with its vision as well as developing a policy towards

negative publicity resulting from its mistakes or unfair targeting by its competitors .

DEMAND AND FORECAST

Based on the statistics collected in 2009 the daily demand for the Coca-Cola products is 1.6

billion servings. This is clear indication of the company growth and the customer’s satisfaction.

The 17 analysts offering 12-month price forecasts for The Coca Cola Co have a median target of

69.00, with a high estimate of 75.00 and a low estimate of 64.00. The median estimate represents

a +6.79% increase from the last price of 64.61.

QUALITY MANAGEMENT AND CUSTOMER SERVICE

At The Coca-Cola Company, quality is more than just something we taste, or see, or measure or

manage. Quality shows itself in our every action; it encompasses everything we do. From
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processing to packaging to pouring, anything less than 100 percent quality is unacceptable. Our

consumers throughout the world deserve the highest quality beverages we can produce.We

measure key product and package quality attributes to ensure our beverage products in the

marketplace meet Company requirements and consumer expectations. Consistency and reliability

are critical to our product quality and to meeting global regulatory requirements and Company

standards. The global nature of our business requires that the Coca-Cola system has the highest

standards and processes for ensuring consistent product safety and quality -- from our

concentrate production to our bottling and product delivery.

To ensure such consistency and reliability, the Coca-Cola system is governed by The Coca-Cola

Management System (TCCMS). TCCMS is our integrated quality management program, which

holds all of our operations system wide to the same standards for production and distribution of

our beverages. It guarantees the highest standards in the management of product quality, the

environment, and health and safety throughout the Coca-Cola system.

TCCMS has endorsement from all leadership throughout the Coca-Cola system. It guides our

product safety and quality by integrating and aligning business and quality objectives with

consistent metrics to monitor performance; integrating preventive action as a management tool,

including more rigorous demands when planning new product and service introductions;

incorporating Hazard Analysis and Critical Control Points (HACCP) into our system standards;

and defining problem-solving methodologies and tools to drive continuous product safety and

quality improvements.

To stay current with new regulations, industry best practices and marketplace conditions, we

consistently reassess the relevance of our product safety and quality guidelines in TCCMS.
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Given the increased awareness of the importance of food safety, not only in manufacturing but

also throughout the entire supply chain, we are refining our requirements to further ensure that

TCCMS embodies the most recent and stringent manufacturing processes.

Each business within the Coca-Cola system must establish, implement, document and maintain a

safety and quality system in accordance with TCCMS requirements.

In 2007 and 2008, Coca-Cola Company's Global Product Quality Index rating was 94.5, the

company highest-ever value. Coca-Cola 2008 Company Global Package Quality Index rating

increased to 91.2 from 90.4 in 2007, also reaching the company’s highest-ever value.

SCHEDULING OF MATERIALS HUMAN RESOURCE

Handling of materials: The principal raw material used by the soft-drink industry in the United

States is high fructose corn syrup, a form of sugar, which is available from numerous domestic

sources. The principal raw material used by the soft-drink industry outside the United States is

sucrose. It likewise is available from numerous sources.

Another raw material increasingly used by the soft-drink industry is aspartame, a sweetening

agent used in low-calorie soft-drink products. Until January 1993, aspartame was available from

just one source -the NutraSweet Company, a subsidiary of the Monsanto Company- in the United

States due to its patent, which expired at the end of 1992.

Coke managers have long held 'power' over sugar suppliers. They view the recently expired

aspartame patents as only enhancing their power relative to suppliers.

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HUMAN RESOURCES: Regarding with human resource management, Coca-Cola Company

has a very loyal workforce, minimal turnover, and a strong tendency to promote from within.

Overall, Coke provides attractive compensation; places a major emphasis on employee training

and indoctrination into "the Coke way" so that employees worldwide share a similar

understanding of and appreciation for what the product stands for and seeks to be in the

consumer's mind. Coke places a lot of emphasis on having its people "think globally, but act

locally; respond daily to competitive situations; serve customers and consumers with a passion".

COCA-COLA AS USER FRIENDLY ORGANIZATION

The Coca-Cola Company provides a real friendly environment in all its production factories. The

presence of Coca-Cole in 200 countries makes it little difficult having people with different

backgrounds, cultures and social ethics. But with a history of a century and the polices of the

management made the environment really friendly.

OPERATIONS ISSUES

With revenues in excess of $24 billion Coca-Cola has a large scale of operation. Coca-Cola is the

largest manufacturer, distributor and marketer of nonalcoholic beverage concentrates and syrups

in the world. Coco-Cola is selling trademarked beverage products since the year 1886 in the US.

The company currently sells its products in more than 200 countries. Of the approximately 52

billion beverage servings of all types consumed worldwide every day, beverages bearing

trademarks owned by or licensed to Coca-Cola account for more than 1.4 billion.

The company’s operations are supported by a strong infrastructure across the world. Coca-Cola

owns and operates 32 principal beverage concentrates and/or syrup manufacturing plants located
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throughout the world. In addition, it owns or has interest in 37 operations with 95 principal

beverage bottling and canning plants located outside the US. The company also owns bottled

water production and still beverage facilities as well as a facility that manufactures juice

concentrates. The company’s large scale of operation allows it to feed upcoming markets with

relative ease and enhances its revenue generation capacity.

RECOMMENDATIONS:

Looking towards the future, the most important recommendation to Coca-Cola is continuing

product innovation and expansion of their product line. The soft-drinks industry is fully saturated

with competitors. Also, the industry is no longer expanding, and market share is actually

decreasing as more consumers are looking to healthier options. By continually introducing new

products, Coca-Cola will be able to increase their profits and allow the company to continue to

grow. Also, having a diverse product line will make the corporation very stable, which is

appealing to investors and creditors.

A second recommendation would be to sustain or increase the global market share. Coca-Cola is

very well-established globally, and is the global soft-drinks leader. This is very important to

sustain because it is the source of the majority of their profits. If they lose global market share,

their profits will decline dramatically.

A final recommendation for Coca-Cola is to maintain and try to increase their brand loyalty. Diet

Coke has the second highest brand loyalty of all the soft-drink competitors’ brands, and solid

advertising campaigns will help maintain the brand loyalty. They can also strive to obtain higher

brand loyalty in all other brands, not solely Diet Coke. The brand loyalty is important because it

will allow Coca-Cola to sustain profits and maintain their market share.
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Works Cited

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http://www.ameribev.org/variety/facts.asp

Cadbury Schweppes. (2004). 2004 Annual Report. Retrieved February 17, 2006 from

http://www.cadburyschweppes.com

Datamonitor. (2005, May). Global Soft Drinks: Industry Profile. New York. Reference Code:

0199-0802.

Hein, Kenneth. (2004). Brand Loyalty 2004. Retrieved February 12, 2006 from

http://www.brandkeys.com/news/press/102504Brandweek.Loyalty.pdf

Murray, Barbara. (2006a). The Coca-Cola Company. Hoovers. Retrieved February 13, 2006,

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http://premium.hoovers.com/subscribe/co/profile.xhtml?ID=11166

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http://premium.hoovers.com/subscribe/ind/overview.xhtml?HICID=1049

Murray, Barbara. (2006d). Cadbury Schweppes Inc. Hoovers. Retrieved February 13, 2006,

http://premium.hoovers.com/subscribe/co/profile.x html?ID=41767

Murray, Barbara. (2006e). Comparison Data. Hoovers. Retrieved February 13, 2006, from

http://premium.hoovers.com/subscribe/co/fin/comparison.xhtml?ID=10359

PepsiCo Inc. (2004). 2004 Annual Report. Retrieved February 17, 2006 from

http://www.pepsico.com

Sicher, J. D. (2005). Beverage Digest/Maxwell ranks U.S. soft drink industry for 2004. Retrieved

February 10, 2006

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http://www.beverage-digest.com/pdf/top-10_2005.pdf

The Coca-Cola Company. (2004). 2004 Annual Report. Retrieved February 17, 2006 from

http://www.cocacola.com

Walker, Tim. (2006). Cott Corporation. Hoovers. Retrieved February 13, 2006, from

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