Summary
The Cocacola Company is the world’s largest company in the beverage sector. Leading manufacturer of Non-alcoholic beverage who refresh people all over the world. The Coca-Cola company was founded in the year 1892.The red and white Coca-Cola logo is recognized by 94% of the world’s population. Coca-Cola is recognized as the world’s most valuable brand and is often associated with happiness. In the language Mandarin, Coca-Cola means “Delicious Happiness”.
The company owns more than 350 brands. A couple of them are waters, teas, energy drinks, sport drinks and also coffee. With an enormous number of 1 billion servings every day. The company operates in more than 200 countries across 5 operating regions: Asia Pacific, Europe Middle East & Africa, Latin America, North America and Bottling Investments.
In this report, the assignment is to analyze the strategy of The Cocacola Company. These findings were found by using several methods. The 7s model will be applied to The Cocacola Company. Mckinsey describe seven variables include structure, strategy, systems, skills, style, staff and shared values. All the variables are explained in the report. The 7s model by Mckinsey is not the only method used in this report. Another method used in this report is the Boston Consulting Group Matrix. By using the 2 dimensions, relative market share and market growth potential, of this method the four-different kind of products/businesses will be analyzed.
After using the methods to analyze The Cocacola Company the strategy is located. Porter describes three main strategic options to organization that wants to achieve a competitive advantage. These 3 strategies are: Cost leadership, Differentiation and Focus. The Cocacola Company does not have the lowest price in compare to other companies. The strategy, what is located in Porters’ diagram, is differentiation. The usage for branding and the whole experience around the product is what stands out.
Table of Content
Information page Internship / Graduation report 2
Pre fase 4
Summary 5
Introduction 7
To create value and make a difference 8
BCG Matrix 12
Strategies (porter) 14
Conclusion 15
List of references 16
Appendices 17
Introduction
The Cocacola Company is the world’s largest beverage company. Leading manufacturer of Non-alcoholic beverage who refresh people all over the world. The Coca-Cola company came into existence in the year 1892.
The red and white Coca-Cola logo is recognized by 94% of the world’s population. Coca-Cola is recognized as the world’s most valuable brand and is often associated with happiness. In the language Mandarin, Coca-Cola means “Delicious Happiness”.
The company owns more than 350 brands. A couple of them are waters, teas, energy drinks, sport drinks and also coffee. With an enormous number of 1 billion servings every day. The company operates in more than 200 countries across 5 operating regions: Asia Pacific, Europe Middle East & Africa, Latin America, North America and Bottling Investments.
In this report, the assignment is to analyze the strategy of The Cocacola. There are several research methods used such as the 7s model from Porter or a BCG matrix.
To create value and make a difference
In this chapter, the 7s model will be applied to The Cocacola Company. Mckinsey describe seven variables include structure, strategy, systems, skills, style, staff and shared values. All the variables will be explained in different paragraphs.
Strategy
The strategies of Coca Cola are divided into five strategies. These strategies are R&C strategy, business strategy, corporate strategy, operational strategy and functional strategy. These strategies are all in alignment and delivers together a differentiation strategy in the company.
1. WE FOCUSED ON DRIVING REVENUE AND PROFIT GROWTH
The Cocacola Company relied more on price/mix and improving profitability by offering small- and premium packages like glass and aluminum bottles.
2. WE INVESTED IN OUR BRANDS AND BUSINESS
The company made a choice to invest better marketing for the brands, increasing both the quantity and quality of our advertising. increasing spending more than $250 million on media advertising, and use these funds to share more impactful advertisements.
The phrase, “Taste the Feeling” emphasizes the refreshment, taste and gives personal connections that are all part of enjoying an ice cold Coca Cola. With this campaign, a personal connection is made by its customers.
3. WE BECAME MORE EFFICIENT
As the company took steps to rebuild the growth, it is needed to invest in better marketing while also increasing the financial flexibility. To these ends, the company increased the efficiency and productivity while reducing costs.
4. WE SIMPLIFIED OUR COMPANY
creating a world that is most productive, fun, learning, innovative and exciting. These are some of the goals to enhance the employee experience.
5. WE REFOCUSED ON OUR CORE BUSINESS MODEL
Over the years, the company acquired a number of Coca Cola bottling partners with the aim to refranchising the bottling territories back to independent status. Improving performance, optimizing manufacturing and distribution systems are factors to achieve this goal.
Structure
The Coca Cola Company owns a structure that is on a regional level. In other words, a Separate International Division structure is applied. All the decisions will be made by the Executive Committee (ExCo). This is because the international staffs operate separately and in isolation from the headquarter. Every continent is controlled by the president of that continent.
Cocacola has 5 continental divisions with the following presidents:
Asia pacific group – John Murphy
Europa, Middle East, and Africa group – Brian J. Smith
Latin America group – Alfredo Rivera
North America group – James L. Dinkins
Bottling investments
These continents are led by President and CEO James Quincey
The continental division has also vice presidents that are in control of sub-divisions on countries or regions. Because of the size of ‘The Cocacola Company’ is this method very efficient. The organogram is described in the appendix picture 1: Organogram of The Cocacola Company.
Systems
The cocacola company have three main systems. These systems are directional systems, management systems and process systems.
These 3 systems are pointing all in the same strategy direction: differentiation by Porter.
Day to day management systems is used to get knowledge and results. These results and knowledge is captured by measuring daily feedback. With this knowledge, the company can be flexible in every way to give the customer a personalized experience.
Skills
The Cocacola Company does not simply sell beverages, it sells the “Cocacola experience”. To do this a lot of marketing, advertisements and promotions on frequently bases is necessary. One large marketing stunt is the implementation of the Christmas advertisements. The Cocacola Company differentiates itself by implementing the brand name to a holiday. Almost everybody knows the big red truck or the commercials around the holidays.
Big billboards and the trucks are iconic signs of the brand recognition of Cocacola.
#shareacoke is another differentiation strategy to give the customer a personal experience in different ways.
Style
The managers are responsible for taking the big administrative decisions. These managers work isolated from the other continents. In these continents, the president is responsible for leading the sub divisions.
The Coca-Cola Company leverages a worldwide team that is rich in diverse people, talent and ideas. To attract, retain and develop diverse talent are strategies of the workplace of The Cocacola Company. The company introduces workshops, lectures to master the skills to achieve growth.
Staff
Coca-Cola is always concerned with the highlighted retention and influence policies against the sector. In order to engage the employees and to move forward with innovation, EIP practices has been integrated into business-systems.
EIP focus on Leadership, Professional, Talent and Organisational Development.
Shared values
Leadership: The courage to shape a better future
Collaboration: Leverage collective genius
Integrity: Be real
Accountability: If it is to be, it's up to me
Passion: Committed in heart and mind
Diversity: As inclusive as our brands
Quality: What we do, we do well
With a continuing commitment to construct sustainable society, Coca-Cola focus on initiatives that limits environmental footprints.
Assist active/healthy living.
Develop a secured working atmosphere for staffs and improve the economic improvement of the society where it operates
The major Coca-Cola Corporate Social Responsibility (CSR) practices include
bottle recycling
water stewardship
sustainable packaging
relationships with retailers
BCG Matrix
Market growth and market share are the two dimensions of the Boston Consulting Group Matrix (BCG matrix). With these 2 dimensions 4 categories can be specified. These 4 categories are: Stars, Cash cow, Question mark and Dog. There will be one or more products specified by every category.
Stars: High growth and high market share
In the business are stars the leaders, they require heavily investments to maintain the large market shares. These products lead to high cash flows and cash generations. To stay in the stars position it is necessary to hold the market shares. Otherwise it will become a cash cow. Some products in the stars position are Maaza, Kinley and Thubs up.
Cash Cows: Low growth and high market share
The cash cows are the foundation of The Cocacola Company. The industry is matured and not growing but also not decreasing. 2 well known products in this division are Cocacola and Fanta. These 2 are worldwide known and a great example of a cash cow.
Question Marks: High growth and low market share
Most products or businesses started as a question mark. Question marks have potential to become a star and eventually a cash cow. But it is also possible that it will become a Dog. A product that is located in the question mark is Cocacola zero.
Dogs: Low growth and low market share
When a product is located in the Dog position it will most likely not succeed. The product is in a declining stage. 2 known products who are located in the dog position are diet coke and minute maid.
Conclusion BCG Matrix
For the products located in the stars it is recommended to Invest profits for future growth so the products Maaza, Kinley and Thubs will increase even more in market shares. Cocacola and Fanta are Cash cows. These profits can and will be used in new products and increase growth in these new opportunities. In the category Question mark, for the product Cocacola zero it is necessary to pump heavily investments from example the cash cows to push the product to a star status. For the Dog products, they have to invest to earn market share or stop producing the product at all. For these trade-offs, the BCG matrix is the best way to analyze the products or businesses.
Strategies (porter)
Porter describes three main strategic options to organization that wants to achieve a competitive advantage. To indicate the strategy some questions will asked. These questions are divided in 2 aspects: Sources of competitive advantage and Competitive scope of the market. For example, is the company the lowest cost producer in their sector, or are the products differentiated in a sort of way? Other questions will be asked in the competitive scope of the market. For example, does is focus on a niche market or is the company target more in a wide range market.
The generic strategies are: Cost leadership, Differentiation and Focus
The Cocacola Company does not have the lowest price in compare to other companies. The strategy, what is located in Porters’ diagram, is differentiation. The usage for branding and the whole experience around the product is what stands out. The Cocacola Company said that 94% of the world population recognize the red and white logo from Cocacola.