Your assignment for this unit is to create a case study of a multinational company. Find information about a multinational company that is headquartered in the United States. Include the following components in your case study.
Your completed case study must be at least three pages in length,
The Business
The Coca-Cola Company, founded in Georgia in 1892 and incorporated in 1919, is the world's largest beverage company. It owns/licenses and markets more than 500 nonalcoholic beverage brands, primarily sparkling beverages but also a variety of still beverages such as waters, enhanced waters, juices and juice drinks, ready-to-drink teas and coffees, and energy and sports drinks. In addition, the business owns and markets four of the world's top five nonalcoholic sparkling beverage brands: Coca-Cola, Diet Coke, Fanta and Sprite. Finished beverage products bearing the company’s trademarks, sold in the United States since 1886, are now sold in more than 200 countries.
Coca-Cola makes its branded beverage products available to consumers throughout the world via a network of company-owned or -controlled bottling and distribution operations as well as independent bottling partners, distributors, wholesalers and retailers - the world's largest beverage distribution system.
Strengths
Brand Awareness: The Coca-Cola Company is one of the most widely recognized brands across the globe. Its signature logo, classic red & white colors, and world-famous jingle resonate with consumers of all ages. There are two key players in this sector of the beverage business, one being Coca-Cola, while the other remains PepsiCo, Inc. (PEP). That said, Coca-Cola maintains its position in the top post as the clear-cut winner. Although both businesses constantly jockey for increased market share, Coca-Cola has the edge here. The beverage producer also garners a core following customers, as many consumers that deem themselves fans of its products tend not to shift toward other brands. Going forward, the company’s vast financial resources ought to fuel its sizable marketing efforts and increased product innovation, which should propel market-share gains over the long haul.
Robust Distribution Network: Coca-Cola makes its products available to individuals in more than 200 countries through the world’s largest distribution network. Its ability to utilize company-owned/-controlled distributors, as well as independent bottlers, wholesalers, and retailers has no parallel. This system enables KO to closely manage costs, rapidly introduce new items into the marketplace, and saturate various geographic locations. Moreover, its meaningful network allows for an enhanced level of quality control and safety for its goods. The stable distribution platform has been a boon for expansion in recent years, as the company has sought to reach new customers in remote locations. These diverse operations have aided market presence, volumes, deliveries, and product introductions during a crucial span.
Weaknesses
Water Management: Water is a main ingredient in substantially all of the company’s products. It is vital to the production of the agricultural ingredients on which the business relies and is needed in KO’s core manufacturing processes. Also, this resource is critical to the prosperity of the communities Coca-Cola serves. Water is a limited resource in many parts of the world, facing unprecedented challenges from overexploitation, as well as rising demand for food and other consumer and industrial products whose manufacturing processes require water. These events increase the risk of pollution, poor management, and effects stemming from climate change. As the demand for water continues to climb around the world, and water becomes scarcer, the overall quality of available water sources may very well deteriorate markedly, leaving the Coca-Cola system to incur higher costs or face capacity constraints that could adversely affect its profitability or net operating revenues in the long run.
Foreign Currency Fluctuation: The company earns revenues, pays expenses, owns assets, and incurs liabilities in countries using currencies other than the U.S. dollar, including the euro, the Japanese yen, the Brazilian real, and the Mexican peso. It used 70 functional currencies in addition to the U.S. dollar and derived $26.2 billion of net operating revenues from operations outside the United States. Because its consolidated financial statements are presented in U.S. dollars, Coca-Cola must translate revenues, income and expenses, as well as assets and liabilities, into U.S. dollars at exchange rates in effect during or at the end of each reporting period. Therefore, increases or decreases in the value of the U.S. dollar against other major currencies affect its net operating revenues, operating income, and the value of balance sheet items denominated in foreign currencies. In addition, unexpected and dramatic devaluations of currencies in developing or emerging markets could negatively affect the value of the beverage provider’s earnings from, and of the assets located in, those markets. Weaknesses in some currencies might be offset by strengths in others over time due to the geographic diversity of the company’s operations. Moreover, KO also employs derivative financial instruments to further reduce its net exposure to foreign currency exchange rate fluctuations. However, it cannot fully hedge the impact from fluctuations in foreign currency exchange rates, particularly the strengthening of the U.S. dollar against major currencies or the currencies of large developing countries.
Opportunities
Diversification: The company has been hard at work utilizing its ample war chest to build a presence in rapidly-growing beverage categories. Currently, it owns 16% of Keurig Green Mountain and is developing a fresh Keurig Kold device that is set to debut this fall. Keurig, famous for pod-based, hot drinks intends to feature Coke-branded products for its upcoming platform. In addition, Coca-Cola recently finalized its purchase of a 17% stake in Monster Beverage. The deal provides the company with access to a popular energy drink growth segment. All told, we anticipate these transactions will bolster the top and bottom lines immediately. These joint ventures also deliver Coca-Cola with established inroads to a younger customer base. Looking ahead, KO will probably aim to forge increased relationships with coffee, energy, and health drink businesses.
Extended Reach: The population continues to increase at a steady clip. In order to capitalize on this fact and consumers’ shift toward healthier living Coca-Cola has focused on bolstering a variety of its business lines. Areas such as India and China have ramped up demand for the company’s latest juice and coffee offerings. Too, developing countries face hefty clean water shortages, which ought to result in surging demand for the company’s bottled water goods. These business segments have increased at double-digit rates in the past year, highlighting an elevated need for beverages other than Coca-Cola’s traditional drinks. We believe Coca-Cola remains dedicated to differentiating its portfolio and delivering emerging markets with various beverage staples over the long term.
Threats
Nutritious Selections: It’s been no secret that soft drink providers have suffered some of late. A cultural shift toward natural and organic products has led many to opt for nutritional waters, smoothies, and various healthy beverage options. Thus, core soda offerings that include high amounts of sugar, or diet items with artificial sweeteners, have fallen out of favor with buyers. What’s more, this trend does not seem likely to abate, as consumers continue to boost their knowledge of proper dietary requirements and exercise programs. Further, many health professionals have called for the elimination of foods and beverages containing lofty amounts of sugar, since these products place individuals at an elevated risk of becoming obese, developing diabetes, and suffering from heart disease. Also, a negative perception of these beverages has surged due to federal regulators’ desire to place excess taxes on sodas and sugary soft drinks.
Indirect Competition: Although companies such as Starbucks (SBUX) and Dunkin’ Brands Group (DNKN) do not compete directly with Coca-Cola, these businesses do place a dent in the company’s market share. The chains offer customers healthier alternatives, unique choices, and customer loyalty rewards that are not easily matched by Coca-Cola. In addition, smaller franchises and retail chains provide patrons with private-label substitutes for traditional Coke products, which allows these businesses to deliver beverages at a lower price. Industry data suggest potential customers will continue to be pulled away from basic drink selections in favor of customizable options that carry a greater nutritional benefit.
Coca Cola’s advantage over competitors:-
Competitive advantage, an advantage over the competitor which is gained by offering consumer the greater value, by either lower price or by providing more benefit that justify higher price.
Competitive advantage is an ability of a company to perform in one or more ways that the competitors cannot or will not match. A company must have a sustainable competitive advantage because it benefits the company in longer runs. Competitive advantage gives customer advantage for example if Coca Cola deliver its product better than any other competitors then customers will choose Coca Cola over other companies
Coca Cola is the number one selling drink and it has been doing it for many decades. Coca Cola spend lot of money in research and development so it has survived on large economic scale. Coca Cola has brand equity which means it is the favorable brand. Coca Cola has competitive advantage on other company to enter its market barrier to entry, for instant there are many companies which product similar product as Coca Cola. Coca Cola didn’t file its patent whereas IBM did but both companies are successful. Coca Cola has competitive advantage so it is making it get bigger and bigger in terms of sales and market share. Coca Cola reputation has also competitive advantage and it is also pursuing environmental friendly product. Coca Cola many products are recyclable and Coca Cola is also going for the green effect.
Being large and having dominant market share has a few advantages over competitors:
Wide audience reach. The Coca-Cola Company’s distribution network allows the chain to reach more customers than most of its rivals could reach. According to the company, the company serves 1.9 billion servings a day, more than any other competitor in the world.Wide audience reach does not only help the company to target more customers and increase brand awareness, but also to introduce new products more easily.
Political Factors
Marketing decisions are strongly affected by the development in the political environment. The Political factors includes the government agencies, pressure groups, rules and policies like trade traffic and fiscal policies which influences the economy of a country and in turn the operations of the business.
With the rules and regulations the government intervenes with the functioning or operations of the company. The members of board of directors of a company have to ensure that in every business decision the rules and regulations must be followed. While formulating the various policies related to recruitments, monitory, fiscal and environment must be in adherence with the political factors.
Coca-Cola being a non alcoholic beverage company falls under the category of Food and Drug Administration. The FDA is an US government recognised agency whose role is to monitor and crosscheck the ingredients used in the drink. Thus the company Coca-Cola has to ensure that its ingredients should meet the FDA guidelines before getting the approval of FDA.
Besides meeting the requirement of FDA, the other political factors that need to adhere by business operations of Coca-Cola are the rules and regulations of income tax, export, import and political crisis. The political crisis like protests, political violence brings fluctuations in demand which makes difficult for the company to penetrate in the countries facing political crisis.
Coca cola can succeed in new markets by targeting all customers except few age groups.
Target marketing for a brand advertising and related marketing program is defined in term of demographics, geo-demographic, psychographic, or product usage characteristic.for instance for a flower shop the target market will be all customer who rarely or often purchase flower.
Coca Cola applies the demographic factor to achieve its target market ; for example it advertise for youths to like the Coca Cola in new generation terms. Coca Cola need to better understand the impact of Coca Cola business and its value for the customer. Coca Cola works in large international chain of retailers and other type of business to create mutual benefits. Customer look forward cost reduction of Coca Cola and improvement of sales to give better quality for diverse group of consumers.
The Coca Cola’s soft drinks are essentially for all consumers but there are some areas where Coca Cola target specific consumers. For instance Coca Cola diet is targeting the consumer whole are older and between the age of twenty five to thirty nine. PowerAde is targeting the people who are very fit and conduct healthy sports. Winnie the Pooh sipper cap is a Juice which is targeting children of small age such as five to twelve. Coca Cola company should advertise and target people of all age groups.
Conclusion
While the number of challenges facing Coca-Cola are abundant, this company does possess a good deal of promise for the future. Its overall size, leverage, and financial resources have it well positioned to take advantage of worthwhile acquisition targets. Too, the company’s brand appeal and cult-like following insure that it will probably remain a top-tier beverage provider going forward. Coca-Cola’s vast distribution network should enable better volumes ahead and success in burgeoning markets. All told, conservative investors wanting a reliable source of income and a bit of capital gains exposure might want to give The Coca-Cola Company a glance.
Your assignment for this unit is to create a case study of a multinational company. Find...