The Evaluation of Coca-Cola Company - Case Study Example

The Coca-Cola Company Table of Contents The Coca-Cola Company Outline 3 Executive summary 3 Introduction 3 Financial standing 3 The Coca-Cola Company 3 Executive Summary 4 Introduction 4 Financial Standing 4 Income Statement 5 Competitors 5 Business Ethics 6 Main Characteristic of Coca Cola’s Business 6 Focus on the Excellent Lines 7 Reinvestment 7 Focus on Consumers 8 Differentiation with Customers 8 Acquiring a Bigger Market Share 9 Conclusion 10 Outline Executive summary Introduction Financial standing Competitors Business ethics Main characteristic of Coca Cola’s business a) Focus on the excellent lines b) Reinvestment c) Focus on consumers d) Differentiation with customers e) Acquiring a bigger market share Conclusion Reference The Coca-Cola Company Executive Summary This report gives an evaluation and an analysis of The Coca-Cola Company. It gives the historical information of the company. Again, analyses the financial standing, the competitors, business ethics, and characteristics of the business of the company. In the analysis of the characteristic of business, the report looks deeply on six issues. These are the focus on the excellent line, Re-investment, differentiation with customers, focus on consumers, and acquiring bigger market share. In the conclusion, it gives the general evaluation of the company and synthesizes the information to give the reason of the success The Coca-Cola in the soft drink industry. Introduction The Coca-Cola Company is a multinational beverage firm, and manufacturer, marketer, and retailer of non-alcoholic beverage drink and syrups. The company has a headquarter in Atlanta, Georgia. The company is popular for its Coca-Cola product that a pharmacist John Stith Pemberto invented in 1886 in Columbus, Georgia. Asa Griggs Candler bought the formula from Permberto in 1889 and built-in The Coca-Cola Company in 1892. The company runs a business distribution arrangement, which dates back to 1889 where the company produces a syrup concentrate and sell it to various bottlers all over the world. The company owns Coca-Coca Refreshments, a bottler in North America. It exists in more 200 nations and sells over 50 billion drink servings of various types every single day. Financial Standing The spin-off of the bottling operations belonging to Coca Cola in Brazil and Philippines in 2013 affected negatively the profits of Coca Cola as it slowed sales growth. Apart from the spin-off, the continuing global macroeconomic problems in many markets have also led to the reduction of profits. In addition, the weakness in sales in North America, the largest market for Coca-Cola has led to slow growth of profits. Global sales rose in volume by 2 percent in 2013 as related to 4% of 2012. The global last quarter sales in 2013 rose by 1%, which was below the expected level of 3%. As a consequently of reduction in the sales, Coke’s shares reduced by 3.8%. A share was sold by $37.47 in 2013. Revenue reduced by 3.6% to 11.04 billion U.S dollars. Therefore, revenue for 2013 was lower than that of 2012, which was 11.46 billion U.S dollars. Drink sales reduced by 1% in North America. The income statement shows the impacts of the three issues earlier mentioned. Income Statement Income Statement 2013 2012 2011 2010 2009 Revenues $48,854 $48,017 $46,542 $35,119 $30,990 Gross Profit $28,433 $28,964 $28,326 $22,426 $19,902 Operating Income $10,228 $10,779 $10,154 $8,449 $8,231 Net Income $8,584 $9,019 $8,572 $11,809 $6,824 Diluted EPS $1.9 $1.97 $1.85 $2.53 $1.47 Cash is in Million Competitors PepsiCo is the main rival of Coca-Cola in the soft drink industry. PepsiCo is second to Coca-Cola. It outsells Coca-Cola in certain markets. RC Cola comes third in the beverage industry. Throughout the world, there are numerous local brands, which compete with the Coca-Cola Company. In the South and central America, there exists Kola Real which Mexicans famously recognized it as Big Cola. Kola Real is a rising rival of Coca-Cola. In Corsica, a French island, there is the Corsica Cola and in Britaany, another French region there is Breizh Cola. Julmust, in Sweden outperform Coca-Cola. Tropicola is a local brand in Cuba that outperforms Coca-Cola. Qibla Cola, a British brand, and French drink Mecca Cola outsell Coca-Cola in the Middle East. Zam Zam Cola, Parsi Cola, and Cola Turka also outperform Coca-Cola in most parts of the Middle East. In China, there is China Cola, while in Slovenia; there are Mercator Cola and Cockta that do better than Coca Cola. Business Ethics The Coca-Cola Company is an international company operating in many countries. It survival depends on its reputation. Trust maintained by the company helps it protect its reputation. The company protects its reputation with five codes of conducts that guide the business and any other activities within the company. The codes are to act with truthfulness, adhere to the law, be honest, be accountable, and conform to the code. Through these codes of conduct, the company can act without any disturbance from the government or people. Again, it can operate in places with high government presences. Main Characteristic of Coca Cola’s Business The Coca-Cola Company leads in the soft drink industry. It is leading in the production and the marketing of soft drinks. The company owns 16 billion U.S dollars brands. It owns and markets four of top five soft drinks in the world. They are the Diet Coke, Fanta, Sprite, and Coca-Cola. Other top brands that the company owns are the vitaminwater, Powerade, and Minute Maid. Furthermore, the company markets over 500 drink brands, which are mostly sparkling drinks, and also juice drinks, sports and energy drinks, ready-to-drink coffees and teas, and water. The Coca-Coca Company achieved its success due to several business strategies. They are the focus on the excellent lines, Reinvestment, differentiation with customers, focus on consumers, and acquiring bigger market share Focus on the Excellent Lines The Coca-Coca Company focuses on its mainly profitable lines. In 1984, 77 percent of Coca-Cola revenues came from Soft drinks. Today, 97 percent of revenues are sourced from soft drinks. The company sells off businesses that are not profitable. Again, it acquires soft drinks brands from its competitors that it presumes profitable. Through these ways, the company has ensured that it operates in an area that is most profitable. For instance, Coca-Cola sold Columbia Pictures to Sony as the film firm was underperforming. It acquired Columbia Pictures for 692 million U.S dollars and sold it to Sony at a cost of 3 billion U.S dollars in 1989. Reinvestment Re-investing profit is a key feature of the Coca Cola’s business. The company tries to ensure that ensure that it is also profitable in the future. The Coca-Coca Company mostly reinvests its profits by acquiring profitable competitors. Therefore, it can strengthen itself while cutting out a competitor from the market. In the 1990s, the company focused its profits on reinvestment. Before then, most of its profits were paid out as dividends. For instance, in 1983, 65 percent of the profits went into paying dividends. When the company started focusing more on reinvestment, it has been raising dividends at a rate slower than the growth rate of earnings. In 1994, the company invested 660 million U.S dollars, which was 60 percent of the total profits in that particular year. It investment has been increasing over the years. In 2011, its net investing cash was 2,524 million U.S dollars. It increased in 2012 to 11, 404 million U.S dollars. However, it reduced to 4,214 million U.S dollars in 2013. Nonetheless, the company always reinvests much of its profits to ensure it is ahead of its competitor. Focus on Consumers A main measure of accomplishment in business is the values and volume of sales that the company makes. The company ensures that the value and volume of its sales are high, by maintaining and even increasing its market share. All successful companies focus on the consumers. A company that concentrates on it consumers ensure that it meets the various demands of its customers. By so doing, it ensures that it maintains it current market share and even attracts new customers. The Coca-Cola Company understands this fact. Through its various activities like advertising and acquisition, the company tries to portray itself as the world’s best beverage company. It tries to differentiate its products from those of its competitors. In addition to its branding, the company has a history of production of quality drinks. Furthermore, the company has various types of soft drinks to meet the different needs of customers. Differentiation with Customers The Coca-Cola Company has millions of people worldwide, consuming its products. Over the years, the company expanded horizontally in country after country. Today, the company is operating in over 200 countries. The company does not operate in less than 20 countries of the world. Therefore, its horizontal expansion is almost not possible anymore. Coca-Cola is now trying to develop its brands vertically. The company is trying to develop a strong consumer desire for its brands than has existed in any other day. Coca- Cola is trying to give people extra reasons to consume it products. However, vertical expansion of Coca-Cola is difficult, as 5.6 billion consumers have already formed an idea of Coca-Cola. However, the company is using its brand image, marketing expertise, and action orientation to appeal to its current and prospective consumers. The company attempt to differentiate itself from other beverage companies through this way. Acquiring a Bigger Market Share Being a key participant in the business market is imperative for success in business. A company becomes a main participant in the market by understanding the consumers’ needs and exceeding their expectations. When a firm is a key player in the market, it has an edge over its competitors. It can use its, financially stability to compete successfully with its rivals. It is also able to reinvests its profits to ensures that its competitors and new company in the market are far behind. As mentioned earlier, Coca-Cola is the leading and the biggest company in the beverage business. The Coca-Cola Company constantly tries to remain at the top. The company has used various strategies to ensure that it is constantly at the top. Some of these strategies are extensive use of adverting and acquisition of other corporations. Coca-Cola Company constantly uses advertising to sell its brands and attract customers and, consequently bring about brand loyalty. The goal of Coca-Cola advertising is to make certain that every person on earth drinks Coke beverage. The company has gone through various adverting slogans that include “Coke is it,” “the pause that refreshes,” and “welcome to the good side of life.” In 2006, The Coca-Cola Company came up with “My Coke Rewards,” a campaign that rewarded loyal customers. In Australia, Coca-Cola introduced “Share a Coke” campaign in 2011. In this campaign, organizer removed the Coca-Cola, logo on bottles and replaced it with the brand names. The company connected the campaign to Facebook page, online, and website page where the campaign slogan was “share a virtual Coke.” In 2013, the Coca-Cola Company introduced a similar campaign in UK. The campaign targeted Diet Coke and Coke Zero, and Coca-Cola bottles. In also sponsor sports to market its brands. For instance, since 1928 games, the company has been sponsoring the Olympics games. It started sponsoring FIFA World Cup in 1978. Apart from the World Cup, it also sponsors other competitive games planned by FIFA. Through these various marketing strategies, the company has created a firm brand image and thus made hard for its competitors to compete it. It has been also able to expand its market presence horizontally. Apart from marketing, the company use acquisition to increase its market share. In 1960, it obtained Minute Maid. In 1993, it acquired Thums up and in 1995; it acquired Barq’s. It obtained Odwalla brand of smoothies, bars, and fruit juices at a cost of 181 million U.S dollars. It obtained Fuze Beverage in 2007 at an estimated cost of 250 million U.S dollars (Hays, 2013). Conclusion Coca Cola is the largest beverage company in the world. However, it faces tough competitions from various companies. Some of them are PepsiCo, Kola Real, RC Cola, and many others. Nonetheless, Coca-Cola has been able to stay ahead in the beverage industry. The achievement of the Coca-Cola lies in its business strategy. The main aspects of its business are an excellent line, Reinvestment, differentiation with customers, focus on consumers, and acquiring bigger market share. These factors have enabled Coca-Cola stay ahead amid tough competition. The stability of the company at the top is ensured by the five codes of conduct. Reference Hays, Constance L. The Real Thing: Truth and Power at the Coca-Cola Company. New York: Random House, 2013. Print. Read More