Mncs Strategies for a New Egypt: Coca Cola - Essay Example

?MNC'S STRATEGIES FOR A 'NEW' EGYPT - CASE STUDY: COCA COLA Table of Contents Table of Contents 2 Introduction 3 Analysis 7 Findings 10 Recommendations 13 Conclusion 14 References: 16 Bibliography 20 Appendix 1: 22 Introduction We stay in one global country. This is said because there is free trade and commerce between all the countries. People staying in any country can use products of another country. Everyone is free to travel around the world with valid passport. Boundaries have disappeared and the world has combined into a world country with one world market. From this very concept the term global marketing has come up (Hindle, 2008, p. 1-2). So for successful expansion of various brands and products, companies are formulating various successful marketing strategies. There are certain principles that are very important when a company opts for global market. This is because the possibilities, market condition, culture, religion, political condition and many other factors are there which differs for all countries. None of the two countries are same. The most important thing is that the people staying in these different places are different from each other. So the correct marketing mix is required for fitting into different market place and catering to different sets of people in different countries (Keegan, 2002, p. 53). The main thing that binds the world in one string is the technology. Due to the evolution of technology round the world multinational companies as well as other small companies round the world are spreading their wings to the other nations in search of a good market, where they can flourish their business. But to plan out flawless marketing strategy for introducing the product globally, the marketer should have knowledge about the history, culture and business and economic conditions of the country. They must also have to know about the social customs and also the taboo if any prevailing in that country. If the sentiments of the people are hurt, the product becomes unacceptable in the market (Chirapanda, 2012, p. 2). Now, when we say that the world has become one market, we can also say that the economy of different countries also affects the global economy, especially the international trade. There is a lot of capital involved in international trade and commerce. Products and services costing billions of money are traded everyday among nations in the world market. So the price of currency exchange and fluctuations also affect the profit and income of the marketers in a big way. In this kind of global environment, the MNC's should centre their marketing strategies around these main dimensions: strategic integration, coordination and configuration and adaptation of standardization (Steers & Nardon, 2006, p. 6). So, firstly, the marketing strategies of the multinational company's should be not be standardised. This should be adapted. Each country is different, so the strategy to penetrate should not be same for all the countries. It should be adaptive and follow the values of the people in the country. Then we come to the second dimension, that is, configuration and coordination of the value chain of the company for different countries and lastly, the MNC's must plan strategies to compete with the regional companies of the countries (Furrer, n. d., p. 2). So keeping in mind these three dimensions, MNC's have to form combinations of target countries to offer their products. The following dimensions suggest that the MNC's should firstly focus on building an effective channel and network within the focus countries, so as to conduct the operational tasks efficiently and coordinate all the activities simultaneously. They should also focus on responding to the preferences of the people. They can focus on one specific need and cater to that to a wide number of countries and customers preferring that particular kind of Product.The Company must follow a strategy to execute all these activities (Raju., 2009, p. 83-84). Let us take the example Coca Cola. This company came into existence in the year 1886 in the country Atlanta, Georgia. Since then it has grown to become one of the most popular names in the beverage market round the world. Presently, Coca Cola operates in more than 195 countries round the world. It has more than 30000 employees working for its different SBU’s worldwide. One of the greatest strength of Coca Cola is its worldwide presence and excellent planning. The unique feature of Coca Cola is that they do not act like a MNC. They do business locally (The Coca Cola Company. 2012). Coca Cola started its global expansion plans in the year 1919. It has a large product portfolio among all the other companies in this industry. In Case of Coca Cola they have standardised their core product. They focus on the fact that a coke should taste same in all the parts of the world. Though the product is same, but the approach is different for all countries. The sales promotion techniques and even the advertisement are different keeping in mind the cultural values of the country. Coca Cola follows a decentralised form of operation. Its motto is to make their product accessible to people of all age group and to every part of the country. They work locally planning and setting up channels of distribution which is spread throughout the country. Even they have to keep in mind the food laws of different countries. Coca Cola considers itself to be multi-local company (Sirwinston, 2009). In terms of market share too Coca Cola leads the league. About 43 percent of the market is capture by Coca Cola. The sales figure for the last year was $ 46,542.0 million approximately. This signifies that there has been a growth of 32.5 percent in the sales from the previous years. The profit was around $ 8,572.0 million that is 27.4 percent growth in net income (Reuters, 2011). The statistics clearly signifies that Coca Cola’s strategies are following the right path leading to their production and licensing of about 3500 drinks in more than 200 countries. As the time passed Coca Cola added new products to its product line and sold them successfully in the world market. Soft drinks market is huge in hot tropical countries. There the temperature is such that people prefer cold drinks more than any hot beverage. In a country like Egypt where is climate is usually hot and dry is favourable for the sales of Coca Cola. Moreover, it is often said that Egyptians do have a sweet tooth. Then since it is a Muslim dominated country and their religion tells them to avoid alcoholic drinks, they would surely prefer a soft drink. There are many brands available in Egypt but the leaders are Coca Cola and Pepsi (Aliraqi, 2001). Coca Cola is sold in Egypt since the year 1945. But the company had to face many hurdles due to its American origin. But Coca Cola's marketing strategy of functioning locally has not brought it to the top even in these countries. Coca Cola tried to connect with the sentiments of the country and its people. They tried to educate their worker and also contribute a percentage of their income in Egypt to the charity groups in Egypt. They sponsored various projects along with the NGO for youth education. In this process though they achieved great importance in the country but they also faced anti-religious allegations too (JihadWatch, 2011). The managers in the MNC’s prefer multinational strategy due to different market conditions in different countries. When they discover that there are differences in preferences among the customers of different countries. The government policies, political conditions prevailing within the country are also important for consideration. The main area of focus in this approach is the differences of countries. Many companies such as Unilever, Philips and Coca Cola have followed the multinational strategy religiously. There are flexible functioning independent offices in different countries functioning smoothly and catering to the needs of that country. It also plays a major role in reducing the unemployment of the country (GlobalVoices, 2011). Analysis The recent revolution has devastated the Egyptian economy. But post-revolution, the situations are changing slowly. It would be safe to respect the spirit of the Egyptian revolution and encourage the democratic power of the people and the country. Marketers are trying to introduce this type of advertisement campaigns (Alshorbagy & Elsaman, 2011). To get the true picture of the economic and political environment of Egypt and analyse the approach of the MNC’s in this atmosphere, one should be able to answer these following questions. These are the actual focus points in this study. So only after analysing the research question against the back drop of the Egyptian revolution, we can understand the motive behind the marketing strategy of Coca Cola, which motivates people of Egypt to keep up the revolutionary spirit (ISS, 2011, p. 8). Question 1: What effect has the Egyptian revolution had on MNCs' marketing strategies in current day Egypt? It goes without saying that the MNC’s have indeed incurred a huge loss from not only Egypt but the other Arab countries involved in this revolution and in those countries too which were directly connected to these countries. The marketing strategies are futile in situation such as a revolt or revolution in the country. People face death and go through such turmoil that they only think about buying the very basic requirement for survival that is food. In such a situation no marketing strategy of big brands or even soft drinks from Coca Cola would be attractive enough to the people. So one can simply say that MNC’s were incurring losses and there was almost a complete stoppage of sales for the MNC’s The past marketing strategies of the MNC’s that the companies were following before the revolution were of no use. So they tried to revamp the strategies. The promotional strategies were specially redesigned. The country was suffering from the autocratic rule of a corrupt president. Question 2: Why are MNCs changing their marketing strategies in the Egyptian market? Egypt's environment has changed a lot during the year due to some historical events that occcured in last year and is still continuing. The revolution began on January 25, 2011. This was mainly a political revolution which after the whole country and also the neighbouring countries of Egypt. There was a massacre and the only thing that prevailed in the country was violence and forces to crush those revolts among the people (Lindsey, 2011). The dictatorship of the former president and his son has been corrupt and they were strongly opposed by the people of the country. In a situation like this company are left with no other way but to wait for the right time when the change for good finally prevails in the country (Cultural Anthropology, 2012). Egypt is going through such situation when the previous strategies or customer research would be no use for the MNC’s. It the total reengineering of a country’s political environment. The economy of the country was completely distorted and there was no other option but to remain hopeful that IMF would somehow revive the condition finally. So, all the advertising agencies were changing their style of advertisements because MNC’s as well as local companies were looking forward to use the backdrop of the revolution to popularise their products (NPR, 2011). Question 3: How are MNCs marketing their products in the post-revolution Egypt market? The MNC's do not only follow their preset environment but also take examples from their past experiences too. MNC's functions as symbols or brand in different countries because it is their task to follow the path of the country's values, norms and practices. Culture of the country also affects a lot in strategy formation of MNC's (International Public Relations., 2011). During the Egyptian revolution the MNC's did not have much to do because of the revolution but post- revolution c MNC's did start to make strategies to grab attention of the customers. For this purpose the marketer had to feel the pulse of the market. They had to analyse what were the mental status of the customers after such turmoil. Which message would appeal to them and which will create a feeling of hatred? Now MNC's are targeting at people with revolutionary tag lines and slogans. They are specially targeted to focus on the sentiments which involve the country and its well- being. Coca Cola is targeting people by telling them to make a better tomorrow (The Wall Street Journal, 2011). Findings Multinational companies generally follow a multinational strategy. In this strategy, the company is operated in decentralised format. This means that Head Office of the company would not take decisions for all the countries. This signifies that different countries will have their own offices for that country. They will have their own marketing plans and strategies according to the country and the product are also customised according to the preferences of the people of that country. The teams designing the products, the products and the top level management are also segregated according to the country and their preferences and needs. These are also known as strategic business units. MNC's involve this kind of strategy to act as a local company in the market where they are doing business. This also helps in winning the trust of the residents of the nation. In case of companies operating in Egypt such as Coca Cola, the strategies were not applicable due to the revolution. So, they waited for the right time. Coca Cola utilised the social media to increase its popularity post-revolution. This was a very smart strategy because social media such as facebook played a very important role in this revolution of Egypt (The Coca Cola Company, 2011). Several positive effects have come up through this revolution are: 1. Social media played a very important role in the revolution. People send revolutionary messages, organised events and spread information and news through social-media. The social media itself acted as a revolution which was made by the people and for the people. YouTube videos were shared, Passion! A Coca Cola initiative was liked by 22.3 million (Eltantawy & Wiest, 2011). 2. Most of the people using social media were from the young generation. So they spread the event planning through this medium to the world. This says that the youth of this country is free and active spirited (Movements, 2011). 3. The spirit of revolution has to be used positively because this is the demand of the situation. 4. Marketers promoting free thinking will survive in Egypt at this moment because this is what people would prefer. The spending on promotion and advertising have increased to $ 329 million after the revolution. So those promoting freedom and independence will get an upper hand in this situation (The Guardian, 2011). 5. MNC's taking part in corporate social responsibility will benefit. This would not be including planting trees. But here the social responsibility would be contributing in revival of the environment, both social and economical. Coca Cola is taking initiatives in providing clean water to the residents in Egypt. This would be a step to connect to the people’s heart. Coca Cola always target to relate to the sentiments of the people and this is why they are always among the market leader not only in one country but also in all the countries round the word (Global Water Challenge, 2011). 6. MNC’s often do follow a lot of cost cutting methods, when they suffer losses. This is usually done by slashing the human resource size. But considering the present condition of Egypt, MNC’s cannot do this. This would create a negative impact on their product demands in the market (Buono & Savall, 2007). 7. Coca Cola has launched 60 learning centres partnering with Discovery channel. This project will train teachers to use educational media and will engage them to use technology will educating students. Approximately 220,000 individuals will be benefitted by this program. The company has always come up with such initiatives in developing countries and this ensures that they have an emotional connect with the people in that country (tccaf.org, 2010). 8. The company provided scholarships to Egyptian students to attend a science camp at a premier university in US. Students who submitted their ideas about rebuilding a new Egypt were rewarded on the basis of the ideas that garnered maximum number of votes on the company’s Egypt Facebook page. Such projects have ensured that the company creates sustainable model for economic development. The students get a chance of a lifetime and get to interact with students from all around the world (Aspeninstitute.org, n.d). This also shows that the company is ready to experiment and is willing to make a place for the organisation in the heart of the people. 9. Earlier in 2007 the Coca Cola had joined hands with the world body UNICEF to provide Egyptians with greater access to clean and safe drinking water. The company’s African foundation is providing financial help to UNICEF’s activities and contributed US$250,000, towards the same. Water quality is poor in many areas of Egypt due to the dumping of agricultural and industrial wastes. This impacts the overall health of the nation and Coca-Cola is helping the nation to regain its lost health (Unicef.org, 2007). 10. In Egypt the company is promoting the brand by putting an advertisement where kids climb to the tops of building in the city of Cairo and then lasso the sun to pull it out from among the storm clouds. This advertisement is a metaphor used for the new Egypt with the slogan of “Make tomorrow better”. The company is spending very high on its advertising campaigns as the best way for the company to capture the market in Egypt is to spend on the marketing and communications. Recommendations Spreading the right message at the right time is very important and Coco-Cola has managed to do that well. In its campaign for capturing the top spot in the beverage market of Egypt the company has made good use of Social media to raise awareness. Besides the company has from time to time participated and donated towards the cause of rebuilding a new Egypt. Post revolution the country is torn between politics and the youth. The company is using the power of the youth and has adopted its marketing strategy to grab their attention. The company should not opt for any cost cutting measures. These are difficult times and the company should focus on building a unique brand image in the minds of the people. It should particularly focus on measures that help in improving the situation for the people of Egypt. The company is already on the right path. Also Coca-Cola should focus on using funds in rebuilding Egypt. As the country is on the path of recovering, there are huge amounts of investment flowing in from everywhere. All the multinationals are trying to spend on project in the country to help improvise the state of the country. The country has been witness to one of the worst revolution in the history of mankind. This revolution saw many a people being massacred on the streets of Egypt. Hence the company should opt for spending on infrastructure and development programmes in the country. These development programmes should be targeted at the masses and this will help in creating a unique image in the minds of the customer. The number of Facebook users of Coca-Cola has been multiplied due to its strategy of giving a chance to the youth for voicing their opinions and concerns and to make Egypt a better place in the days to come. Coca-Cola has been a little late in identifying the market for alternative beverages such as dairy beverages and gives more stress on ventures to develop its brands like Honest Tea, Illy, etc. It will create a sustainable advantage for the company. Soft drinks should be the key area of operation for the company but it also needs to sell other juice beverages to capture a different segment of the market. Conclusion In this study the strategies of MNC’s has been shown in context of the new Egypt. New because the nation has been witness to a revolution of enormous size which has reshaped the political, economical, social as well as cultural and technological situation of the country. Egypt is going through a phase where the country needs to be restructured and reshaped and needs to be built from scratch. MNC’s can play a vital role in the development of the country by investing for the cause of development of the country. In fact many companies are investing huge sums to raise the situation for the people in the country. The marketing strategies of MNC’s will play an important role in the rebuilding the nation. The Methodology section concentrates on the research questions and objectives at hand. Different research methods helped the researcher to draw conclusions on how the MNCs were impacted by the Egyptian revolution and how and why they have changed and are continuing to change their strategies due to this radical socio-economic and geopolitical transformation of Egypt. This investigation carried out, helps in identifying the findings and drawing conclusions in the following sections of the paper. The company has done well to take care of the sentiments of the people and also raise awareness about the revolution by using social media such as Facebook and Twitter. There have been various campaigns initiated by the company on Facebook and applications like “Like-o-meter” have helped the youth to voice their opinion. Having worked in various geographies and demographics the company can use all its experience to build up a strong base in the Egyptian market and this will also help them to strengthen political ties in the country. The company has also united with different cultures to ensure that its products reach out to a large base. The company should stick to its theme of ascending globally while being pertinent locally. References: Aliraqi. (2001). Soft Drink Market in Arab World Expected to Boom. [Pdf]. Available at: http://www.aliraqi.org/forums/showthread.php?t=6299. [Accessed on May 5, 2012]. Alshorbagy, A. A., & Elsaman, R. S. (2011). Doing Business in Egypt after the January Revolution: Capital market and Investment laws. [Pdf]. Available at: http://rjglb.richmond.edu/archives/11.1/egypt_rgl_11-1.pdf. [Accessed on May 5, 2012]. Aspen Institute. (No date). PNB Egypt Local Chapter. [Online]. Available at: http://www.aspeninstitute.org/policy-work/new-beginning/pnb-local-chapters/egypt. [Accessed on May 5, 2012]. Buono, A. F., & Savall, H. (2007). Socio-Economic Interventions in Organizations: The Intervener-Researcher and the SEAM Approach to Organizational Analysis. USA: IAP. Chirapanda, S. (2012). Technological Environment – International Marketing Strategy Relationship. [Pdf]. Available at: http://www.waset.org/journals/waset/v64/v64-210.pdf. [Accessed on May 5, 2012]. Cultural Anthropology. (2012). Revolution and Counter- revolution in Egypt a year after January 25th. [Online]. Available at: http://www.culanth.org/?q=node/484. [Accessed on May 5, 2012]. Eltantawy, N., & Wiest, J. B. (2011). Social Media in the Egyptian Revolution: Reconsidering Resource Mobilization Theory. International Journal of Communication, 5. [online]. Available at: http://ijoc.org/ojs/index.php/ijoc/article/download/1242/597. [Accessed on May 5 2012]. Furrer, O. (no date). Marketing Strategies. [Pdf]. Available at: http://radboud.academia.edu/OlivierFurrer/Papers/1316094/Marketing_Strategies. [Accessed on May 5, 2012]. Global Voices. (2011). Egypt Revolution 2011. [online]. Available at: http://globalvoicesonline.org/specialcoverage/2011-special-coverage/egypt-protests-2011/ . [Accessed on May 5, 2012]. Global Water Challenge. (2011). Coca-cola and Care launch major initiative to provide access to water in Egypt. [Pdf]. Available at: http://www.globalwaterchallenge.org/newscenter/Egypt%20Press%20Release.pdf. [Accessed on May 5, 2012]. Hindle, T. (2008). Guide to Management Ideas and Gurus. USA: John Wiley & Sons. International Public Relations. (2011). How marketing messages change post revolution - lessons from Egypt. [Pdf]. Available at: http://nettresultspr.blogspot.in/2011/06/how-marketing-messages-change-post.html. [Accessed on May 5, 2012]. ISS. (2011). Egypt Rise Up. [Pdf]. Available at: http://oaithesis.eur.nl/ir/repub/asset/10610/Sara%20Salem.pdf . [Accessed on May 5, 2012]. JihadWatch. (2011). Cola wars as Coke moves on Baghdad. [Online]. Available at: http://www.jihadwatch.org/2005/07/cola-wars-as-coke-moves-on-baghdad.html. [Accessed on May 5, 2012]. Keegan. (2002). Global Marketing Management. USA: Pearson Education. Lindsey, U. (2011). Middle East Research and Information Project. [Online]. Available at: http://www.merip.org/mero/mero021511. [Accessed on May 5, 2012]. Movements. (2011). Revolt Part Two: Why one Egyptian Activist is celebrating. [Online]. Available at: http://www.movements.org/blog/entry/revolution-two-egyptian-activist-ahmad-hegab/. [Accessed on May 5, 2012]. NPR. (2011). Graffiti Reclaims Egypt's Revolution From Marketers. [Online]. Available at: http://www.npr.org/2011/07/03/137402744/artists-street-artists-defend-egypts-revolutionary-imagary. [Accessed on May 5, 2012]. Raju. (2009). Marketing Management, (Ed. 2). India: Tata McGraw- Hill Education. Reuters. (2011). Coca-Cola sales surprise on worldwide increase. [Online]. Available at: http://www.reuters.com/article/2011/02/09/us-cocacola-idUSTRE7180OQ20110209. [Accessed on May 5, 2012]. Sirwinston. (2009). Centralized vs. Decentralized marketing Strategies. [Online]. Available at: http://sirwinston.dsbn.org/BBB4M/Unit%2009%20%20Intl%20Marketing%20(Ch.11)/Lecture%20Notes/11-02%20-%20Decentralized%20-%20Centralized%20strategies.htm. [Accessed on May 5, 2012]. Steers, R. M., & Nardon, L. (2006). Managing in the Global Economy. USA: M. E. Sharpe. Tccaf.org. (2010). Coca-Cola Egypt Launches 60 Learning Centres with Discovery Channel Global Education Partnership. [Online]. Available at: http://www.tccaf.org/downloads/DCGEP%20centre%20launch%20in%20Egypt.pdf. [Accessed on May 5, 2012]. The Coca Cola Company. (2011). The Market research Event. [Pdf]. Available at: http://www.iirusa.com/upload/wysiwyg/2012-M-Div/M2421/media/TMRE_Insider_CocaCola.pdf. [Accessed on May 5, 2012]. The Coca Cola Company. (2012). Heritage. [Pdf]. Available at: http://www.thecoca-colacompany.com/. [Accessed on May 5, 2012]. The Guardian. (2011). The Truth about Twitter, facebook and the Uprisings in the Arab World. [Online]. Available at: http://www.guardian.co.uk/world/2011/feb/25/twitter-facebook-uprisings-arab-libya. [Accessed on May 5, 2012]. The Wall Street Journal. (2011). Revolution Sells in Egypt. [Online]. Available at: http://www.commercialalert.org/news/archive/2011/06/revolution-sells-in-egypt. [Accessed on May 5, 2012]. Unicef. (2007). The Coca-Cola Africa Foundation, UNICEF and partners join hands for improving water quality management in Egypt. [Online]. Available at: http://www.unicef.org/egypt/media_3942.html. [Accessed on May 5, 2012]. Bibliography Cateora, P. R., & Hess, J. M. (1971). International marketing. India: Tata McGraw-Hill Education. Colado, E. I., Clegg, S., & Rodriquez, L. B. (1999). Global Management: Universal Theories and Local Realities. USA: Sage. Doole, I., & Lowe, R. (2008). International Marketing Strategy: Analysis, Development and Implementation. USA: Cengage Learning EMEA. Garten, J. E. (2000). World View: Global Strategies for the New Economy. Boston: Harvard Business Press. Hoppenstedt, W., & Rathkolb, O. (2005). Global Managment. Munster: LIT Verlag. Jeannet, J. P., & Hennessey, H. D. (2005). Global Marketing Strategies, (Ed. 6). India: Dreamtech Press. Kettl, D. F. (2005). The Global Public Management Revolution, (Ed. 2). Washington DC: Brookings Institution Press. McLoughlin, D., & Aaker, D. A. (2010). Strategic Market Management: Global Perspectives. USA: John Wiley & Sons. Public Citizen’s Commercial Alert. (2011). Revolution Sells in Egypt. [Online]. Available at: http://www.commercialalert.org/news/archive/2011/06/revolution-sells-in-egypt. [Accessed on May 5, 2012]. Rehman, A. A. (2007). Dubai & Co: Global Strategies for Doing Business in the Gulf States. India: McGraw-Hill Professional. Stonehouse, G., & Campbell, D. (2004). Global and Transnational Business: Strategy and Management. USA: John Wiley & Sons. Tccaf. (no date). Humanitarian Assistance. [Online]. Available at: http://www.tccaf.org/coca-cola-africa-foundation-humanitarian-assistance.asp. [Accessed on May 5, 2012]. Unicef.org. (No date). Unicef Egypt’s with the Private Sector to Further Development: Partners for Children. Unicef, 1(1). [Online]. Available at: http://www.unicef.org/egypt/UNICEFEgyptPrivatesectorNewsletter.pdf. [Accessed on May 5, 2012]. Web Design Professionals. (2011). Did Coca-Cola just create an ad campaign for Facebook? [Online]. Available at: http://www.awdp.org/blog/244/Did-Coca-Cola-just-create-an-ad-campaign-for-Facebook. [Accessed on May 5, 2012]. Weitz, B. A., & Wensley, R. (2002). Handbook of Marketing. USA: Sage. Appendix 1: Name: Contact No: Age: Questionnaire: What do you feel about the new advertisement campaigns of Coca-Cola promoting a new Egypt? Does the awareness program of the company make good use of the social media? Will you be interested to try out different types of beverages other than soft drinks? Is the company dedicated of the cause of restructuring the country? Do you find the slogan of the worthy of the cause of the campaign? Do you think Coca-Cola has done enough to support the people of Egypt in their mission to reshape the country? Any other suggestions Read More