Coca-Cola Company - Research Paper Example

? Coca Cola Inserts His/Her Inserts Grade Inserts 4 February Table of Contents ..………………………………………………………………………………………………………………………………………….3 Introduction .…………………………………………………………………………………………………………………………………….4 History of Coca Cola…………………………………………………………………………………………………………………………..4 Line of Business…………………………………………………………………………………………………………………………………7 Financial Statement Analysis: Coca Cola America……………………………………………………………………………..8 Relevant Ratios from Financial Analysis, Trends……………………………………………………………………………..10 Current Financial Climate of Organization ………………………………………………………………………………………12 Similarities Between Making of Coca Cola in Mexico and America…………………………………………………..12 Differneces Between Making of Coca Cola in Mexico and America………………………………………………….13 Conclusion ………………………………………………………………………………………………………………………………………14 References……………………………………………………………………………………………………………………………………….15 Abstract Coca Cola’s strategic marketing and management plans makes it one of world’s popular non-alcoholic beverages. The company constantly implements innovative changes to the packaging of the company’s products. In addition, the company’s ingredients have been creatively adjusted to meet the discriminating needs of the current and prospective Coca Cola’s clients. The changes contribute to the favorable financial pictures of Coca Cola. There are some similarities and differences between the production processes of the Coca Cola America bottling plants and the Coca Cola Mexico bottling plants. Indeed, Coca Cola’s strategic marketing and management processes add to the company’s firmly embedded financial leadership in the non-alcoholic beverage market segment. Introduction Coca Cola’s strategic marketing and management plans catapults the entity as one of the world’s popular non-alcoholic beverages. The research centers on the history of Coca Cola. The research includes producing a financial statement analysis of Coca Cola America. The study incorporates the similarities and differences between the production processes of both Coca Cola America and Coca Cola Mexico. Coca Cola’s strategic marketing and management processes precipitates to the company’s current financial leadership in the non-alcoholic beverage market segment. History of Coca-Cola. Lonnie Bell (2004) emphasized Coca – Cola, the world’s soft drink, was accidentally invented by Dr. John Pemberton. Dr. Pemberton, a pharmacist from Atlanta, Georgia, formulated the Coca-Cola syrup using a three legged brass pot. Dr. Pemberton used two chief ingredients for his invention in 1886. The two ingredients are coca plant and the Kola nut. The Coca plant is a good source of Cocaine. However, Dr. Pemberton insisted that Coca Cola contains only 1 % Cocaine percentage. Paul Gootenberg (1999) theorized “Cocaine made its first appearance in the United States during the 1880s, when physicians first interested themselves in the drug's therapeutic potential. Limited at first to a relatively narrow range of therapeutic use, cocaine's popularity grew far beyond the boundaries of medical practice. By the late 1890s, many observers came to believe that the popular consumption of cocaine posed a serious threat to public health and to public safety. The campaign to control cocaine gradually became part of a broader Progressive-era campaign to regulate the development and distribution of new drug products by the pharmaceutical industry”. The above quote clearly proves that Dr. Pemberton, a medical practitioner, use the drug to make the current and prospective clients of the Coca Cola products addictive to the contents of Dr. Pemberton’s tonic. Cocaine is considered one of the deadliest illegal drugs sold to drug users. Dr. Pemberton intentionally created the tonic to cure illnesses and health problems, especially headaches. Dr. Pemberton sold the tonic in Jacob’s Pharmacy and soda Fountains. Dr. Pemberton requested the Pharmacy manager, Willis Venable, to mix tonic water with the syrup and sell the product at $0.05 per soda fountain glass. Frank Robinson, Dr. Pemberton’s partner and bookkeeper, recommended the name “Coca-cola”. They advertised Coca- Cola using “delicious and refreshing” as the product’s official slogan. Later, tonic water was accidentally replaced by carbonated water. The accident increased the demand for the Coca Cola products. In 1891, Asa Candler bought the entire Coca Cola Company from Dr. Pemberton and the other partners. Candler registered Coca Cola in the U.S. Patent Office in 1893. In 1899, two Tennessee businessmen, Benjamin Thomas and Joseph Whitehead paid Dr. Candler $1.00 for the right to bottle and sell Coca-Cola in the United States. Traditionally, the Coke product was sold in soda fountains. Using the Coca-Cola syrup, Coca Cola factories spread like wildfire throughout the United States and around the world. Dr. Pemberton and later owners fought court battles against copy cats like King Cola, Gay- Ola, Cold Cola, Cola Ree, and Candy Cola. In 1929, Coca Cola came up with its trademark curve -shaped bottle in order to pinpoint to the current and prospective Coca Cola clients the distinctive difference between the Coca Cola product and the competitors’ products. Further Timothy Muris (1993) reported “The carbonated soft-drink industry has become a big and complex business, at both the distributors and bottler levels. There are many more brands and packages than even 20 years ago, and Pepsi-Cola and Coca Cola are on the cutting edge of marketing, advertising, and promotion. Prior to the recent move to captive bottling, the typical independent bottler was much larger, handled many more brands and packages, and faced a more complicated competitive environment than 20 years ago. At the same time, the product, packaging, and marketing strategies of Pepsi-Cola and Coca Cola place a great premium on implementing advertising and promotion campaigns throughout the distribution system. This development has dramatically increased the importance of coordination among bottlers and between bottlers and their distributors”. The above quote clearly shows that Coca Cola’s current financial success did not come without much hard work. The company regularly allocates a large amount of money to advertise the many advantages of taking a sip from the Coca Cola bottle. The company advertises its products in the four media outlets. The three media outlets are television, radio, newspaper and internet. The company’s advertisements include persons drinking the Coca Cola product. In addition, Coca Cola America sells its products through third parties. McDonalds sells its fast food products by offering a free Coke soft drink with each value meal. Groceries sell products that sell like hotcakes. Thurs, groceries include the products of Coca Cola America and Coca Cola Mexico in their store shelves because the grocery stores and fast food chains automatically grab a Coca Cola America and Coca Cola Mexico product without thinking twice or being remorseful in their decision. The massive marketing strategy of both Coca Cola America and Coca Cola Mexico convinces the current and prospective clients that buying a Coca Cola is okay. Based on the above quote, Coca Cola America implemented the four P’s of marketing. Coca Cola America sold a product that is of high unquestionable taste quality. The company sold the Coca Cola product at a price that is reasonable. The company’s marketing plan includes selling the Coca Cola products in stores so that the average person can easily reach for the nearest bottle. As discussed earlier, advertising one Coca Cola America’s version of promoting the many advantages of drinking a glass of Coke to quench one’s thirst urges. Stephen Brown (2000) stresses “we argue that marketing is not mere 'subject matter' for science fiction, something that science fiction has periodically addressed, usually by attacking its wanton and socially destructive materialism. Marketing and science fiction, we argue, has an implicate relationship. Most obviously the demands and opportunities of commerce were, and continue to be, significant in the development of the genre.” In addition, the company also implements a viable supply chain process. The supply chain ensures that the Coca Cola products reach the store shelve in time. In time includes ensuring that the store shelves are not left empty. The Coca Cola supply chain includes trucks that deliver the Coca Cola products from the bottling plants to the groceries, restaurants, and other possible Coca Cola outlets. The Coca Cola supply chain also includes the use of boats to carry the Coca Cola products to places that cannot be reached using land routes. The transportation supply chain also includes the airplanes. The airplanes bring the Coca Cola products from one community to another faster than the boat alternative. Line of Business. Valerie Bodden (2008) reiterated Coca Cola America is engaged in the soft drink business. The coke product is composed of carbonated water and other secret ingredients. Originally, the product included Coca ingredients. However, the ingredient had been dropped due to bad publicity that the Coca leaves contained cocaine. The soft drink market segment includes many competitors. One of the popular competitors is Pepsi Cola. Today, Coca Cola produces branched out by selling more than 2,400 beverage products. The other beverage products fall under the juices, sports, drinks, teas, and bottle water market segments. The Coke product is used as replacement for plain tap water in parties, restaurants, and other places where food is served. Financial Statement Analysis: Coca Cola America Pauline Weetman (Weetman, 2006) theorized financial statement analysis is an important management decision making tool. The analysis includes the careful selection of data from relevant financial statements. The purpose of the analysis is to ascertain if the entity, including Coca Cola America, performed well or dismally within one accounting period. The analysis is used to determine the company’s trend in terms of future revenues, profits, assets, and other financial statement data. Table 1: Documentary Financial Statement Analysis Table Period ending 2010 Financial Statement Ratio Coke America Profit Margin Ratio 34% Return on Equity Ratio 33% Receivables Turnover 8.58 Inventory Turnover 14.04 Total Asset Turnover 0.48 Liquidity: Current Ratio 1.17 Debt to Total Assets 0.57 1. Profit Margin ratio. Based on the above table, the profitability position of Coca Cola America remains strong in 2010 during 2010. Its net profit margin is 34% in 2010. The profit margin is arrived at by dividing the net profit by the company’s net sales for the year. The ratio indicates a favorable image of the company, Coca Cola America. 2. Return on Equity. The above table indicates the company generated a return on equity ratio of 33% during 2010. The ratio shows the returns earned by the stockholders. The equity includes the investors. The ratio shows an encouraging image of the company. 3. Receivables Turnover. The above table shows Coca Cola America generated a receivables turnover of 8.58 for 2010. The ratio measures the company’s effectiveness in granting credit to its clients as well as the length of time to collect the clients’ debts. The ratio shows that coca cola USA is efficiently collecting its receivables. 4. Inventory turnover. The company generated an inventory turnover of 14.04. The ratio shows the number of times the company turned its inventories into cash or cash equivalents during the year, 2010. The ratio indicates the company, Coca Cola America, is performing financially well during the accounting year. 4. Inventory turnover. The above table displays Coca Cola America generated an inventory turnover of 14.04 during the year 2010. The ratio measures the company’s effectiveness in granting credit to its clients as well as the length of time to collect the clients’ debts. The ratio shows that coca cola USA is efficiently collecting its receivables. 5. Total Asset turnover. The above table indicates Coca Cola America generated a total asset turnover of 0.48 during 2010. The ratio shows the company’s ability to maximize its total assets to produce its sales figure for the year. The ratio includes the current assets, property, plant, equipment, intangible, and other assets. The ratio is strong evidence that Coca cola America’s operations generated a favorable picture during the 2010 accounting period. 6. Liquidity ratio (current ratio). The documentary table indicates Coca Cola America generated the 2010 liquidity (current ratio) of 1.17. The ratio indicates the availability of the company’s current assets to pay for the company’s currently maturating liabilities. The ratio is an effective tool to show Coca cola America’s beverage operations produced a positive picture, during the 2010 accounting period. 7. Debt to total assets ratio. The documentary table indicates Coca Cola America generated a 2010 debt to total assets ratio of 0.57. The ratio indicates the company’s leverage picture. The ratio shows the percent of total assets that were generated from loans. The debt amount includes the current liabilities, long term liabilities, and other liabilities. The ratio result indicates Coca Cola America’s operations have a favorable picture during the same accounting period. Relevant Ratios from Financial Analysis, Trends. Table 2 Relevant Ratios     NET PROFIT   YEAR REVENUE PROFIT MARGIN TREND 2010 35119 11809 0.34 0.13 2009 30990 6824 0.22 (0.03) 2008 31944 5807 0.18 (0.18) 2007 38857 5981 0.15 0.61 2006 24088 5080 0.21   Based on the financial statement of table, the profit margin ratio has been fluctuating favorably for Coca Cola. Using financial statement ratio analysis, the 21% profit margin for 2006 had declined to only 15% during 2007. Favorably, the company’s 2007 profit margin increased to 18% in 2008. Continuing its favorable trend, the company’s profit margin ratio had climbed higher to 22%. Lastly, the current year, 2010, saw the company’s profit margin literally skyrocketed to 34%. In terms of trend analysis, table 3 shows the Coca Cola America revenue trend has been fluctuating. Financial trend analysis shows the company’s 61% revenue trend ratio during 2007 declined to -18 % in 2008. Favorably, the 2008 revenue trend ratio improved to only -03% in 2009. Further, the 2009 revenue trend ratio blossomed to the favorable 13% revenue trend ratio. Table 3 Trend Ratios     Profit   REVENUE Margin YEAR TREND TREND 2010 0.13 0.73 2009 (0.03) 0.18 2008 (0.18) (0.03) 2007 0.61 0.18 In addition, the Coca Cola America profit margin trend is similarly fluctuating. Coca Cola America’s profit margin analysis specifies the company’s 18% profit margin trend ratio during 2007 decline to -03 % in 2008. Satisfactorily, the 2008 profit margin trend ratio significantly increased to 18% in 2009. Lastly, the 2009 profit margin trend ratio skyrocketed to the overwhelmingly favorable 73% trend ratio. Current Financial Climate of Organization. The current financial climate of Coca Cola America is very heartwarming. The trend analysis shows that profit margin will continue to increase during the 2011 accounting period (Crosson, 2011). In addition, the same trend analysis indicates the company’s revenue trend will increase at 13 percent during the same 2011 accounting term. Using numbers, the company’s revenue will be higher than $35,119 during 2011. In addition, the 2011 accounting year profit margin is projected to reach a figure higher than $11,809. In addition, the decline in the effects of the current economic difficulty enveloping the United States will precipitate to higher revenues and higher profit margins during 2011. The implementation of the innovative mass production process ensures the efficient and cost-effective Coca Cola America products produce high product demand. To ensure success, using the innovative and timely customer- first strategic marketing and production process will catapult the current Coca Cola America revenues to achievable levels in 2011 and beyond (Gilmore, 2011). With the current economic upswing, the unemployment rate has declined. The decline will translate to more people having the purchasing power to buy a bottle of Coca Cola America product (Blinder, 2011). Similarities Between Making of Coca-Cola in Mexico and America. There are similarities between the Coca Cola America coke production process and the Coca Cola Mexico coke production process. Al Rise (2005) insists both companies use carbonated liquid as one of the coke ingredients. Both companies use patented the patented Cola ingredient. The two entities use non-alcoholic ingredients. The two entities use the same patented Coca Cola bottle designs. Both produce the Coca Cola products by placing them in bottle containers. Both companies include caramel color and phosphoric acid ingredients to generate the world –famous Coca Cola product. Currently, both Coca Cola America and Coca Cola Mexico do not use Cocaine (Coca leaves) as ingredients in the production of the company’s soft drink product. In addition, the similar marketing of the Coca Cola brand easily draws people to buy a coke product from the stores of both the American and Mexican markets. Joseph LePla (1999) proposed “What is this elusive quality, "the brand"? Ask the average person on the street, and he or she may respond with logos, tag lines, or ad campaigns. "'It's the Rolls Royce winged Mercury," or "Microsoft's 'Where do you want to go today?'" Move to marketing professionals and ask an advertising executive what a brand is. He or she may respond with a slightly broader definition, saying it is your product's unique selling proposition or a corporate identity”. The quote clearly shows that the Coca Cola America and Coca Cola Mexico products are on the same product recall level as the popular Rolls Royce premium car brand and the Microsoft software products. In fact, Mexicans who view the Coca Cola America advertisement are persuaded to buy a Coca Cola product when the Mexicans return back to their home country, Mexico. In the same light, the American visitor will remember the Coca Cola Mexico product advertisements and buy the Coca Cola products when they arrive in Los Angeles or New York. Similarities Between Making of Coca Cola in Mexico and America There are differences between the production of Coca Cola in Mexico and America. Archie Carroll (2008) accentuates Coca Cola Mexico’s Coke Zero has the unhealthy sodium Cyclamate; Coca Cola America’s Coke Zero has no hazardous sodium Clyclamate. Coca Cola America sells it vanilla taste;. Coca Cola Mexico does not sell the vanilla flavor. Coca Cola America sells its Coke Lemon brand; Coca Cola Mexico is not producing the Coca Cola Lemon taste. William Pride (2008) stresses Coca Cola Mexico sells their coke in glass bottles; Coca Cola America sells their products in tin cans. Lastly, Al Rise (2005) insists the Coca Cola America produces the Coca Cola C2 brand; Coca Cola Mexico does not the C2 brand in Mexico. Conclusion Based on the above discussion, Coca Cola’s strategic marketing as well as management plan contributes to company’s retaining its century old popularity in the non-alcoholic beverages market segment. The constant innovative changes in the company’s packaging and ingredients translate to the current pinnacle of Coca Cola’s financial success. The financial statement analysis indicates Coca Cola’s innovative and creative production and marketing strategies significantly contribute to Coca Cola’s current favorable financial picture. There are some similarities and differences between the production processes of both Coca Cola America and Coca Cola Mexico. Indeed, Coca Cola’s strategic marketing and management processes metamorphose to the company’s firmly entrenched financial leadership in the non-alcoholic beverage market segment. REFERENCES: Bell, L. (2004). The Story of Coca-Cola. New York: Black Rabbit Press. Blinder, A. (2011). Economics: Principles and Policy. Cengage Learning Press. Bodden, V. (2008). The Story of Coca-Cola. New York: The Creative Company Press. Brown, S. (2000). Marketing: Art, Aesthetics, and the Avant -Garde. New York: Routledge Press. Carroll, A. (2008). Business and Society: Ethics and Stakeholders Management. New York: Cengage Learning Press. Coca cola, retrieved March 4, 2012, from Crosson, S. (2011). Managerial Accounting. New York: SouthWestern Press. Gilmore, J. (2011). The Experience Economy. New York: Business Press . Gootenberg, P. (1999). Cocaine: Global Histories. New York: Routledge Press. LePla, J. (1999). Integrated Branding: Becoming Brand-Driven Through Companywide Action. Westport: Quorum Books Press. Muris, T. (1993). Strategy, Structure, and Antitrust in the Carbonated Soft Drink Industry. Westport: Quorum Press. Pride, W. (2008). Foundations of Marketing. New York: Cengage Learning Press. Ries, A. (2005). Marketing Warfare. New York: McGraw-Hill Press. Weetman, P. (2006). Financial and Management Accounting. New York: Prentice Hall Press. Read More