Coca-Cola Is Truly a Global MNE - Essay Example

Running Head: Coca Cola Company Profile By _____________________ "Only Coca-Cola is truly a global MNE. Ranking as 129th in the Fortune 500 list, it has over 20% of its sales across all three parts of the triad: 38.4% in North America, 22.4% in Europe, and 24.9% in Asia" (Rugman, Verbeke: 2004). Introduction Coca Cola was originally founded by Dr. John Pemberton in May, 1886. The name was suggested by a bookkeeper named Frank Robinson. The company Coca Cola was however formed by Asa Chandler. Today, the company Operations are in more than 200 Countries. It is also having a diverse workforce comprising of more than 200 different Nationalities. Business Interaction / Communication in more than 100 different languages. 49,000+ individuals are employed worldwide by the Coca-Cola Company and its subsidiaries. In Britain the brand arrived in the year 1990 when the son of the founder, Charles Chandler brought the brand to England. The company today is extremely popular and surprisingly, "the word 'Coca-Cola' itself is even thought to be the second most widely understood word in the world after 'OK'!" (Coca Cola). The company is facing fierce competition with Pepsi Co. that is the other giant in the industry. Coca Cola is having a share of merely 50% in the Europe, the company is a market leader in Europe, however the company is rated 2nd in many parts of the world such as India. The company is having a wider product line and length that forced me to prepare the profile. The product line includes Coca Cola, Coca Cola Zero, Diet Coke, Sprite, Fanta, Lilt, Dr. Pepper, Oasis, Kia-Ora, Schweppes, Five Alive, Minute Maid, Rose's, Sprit 3G, and Powerade. The company is having a concern about the health too, it is unusual to think about since the company is manufacturing a drink that many people view as unhealthy, nevertheless the company cares about people when it says, "You can enjoy 'Coca-Cola' and all of our other products as part of a healthy balanced diet and active lifestyle" (Your Health). It is also a healthy sign that Coca Cola has associated it self with various healthy activities such as Football. SWOT There are number of strengths, weaknesses, opportunities and threats regarding Coca Cola. In UK, the strengths include, highest market share possessed by any soft drink company, the biggest product line and length, a strong focus on society's health as the company mentions clearly on their products, "'Big 8: energy, protein, carbohydrate, carbohydrate of which sugars, fat, saturated fat, fibre and sodium" (What our labels tell you). The customers are welcomed at anytime to inspect the company's internal environment, the company has mentioned the free number '0800 227711'. A strong focus on fulfilling social responsibility as the company has associated itself with many important events such as sports etc. The weaknesses are limited for Coca Cola, The company has not got the full penetration in the market, there are many gaps in the society. The company is focusing on brand extension rather than the penetration of current brands. Obesity is getting common is Britain and company is not taking the issue in account. The different sales headquarters are not interlinked directly and they are having problems in internal communications, "We are currently developing new communications programmes to improve employee engagement and to ensure that they all understand our business priorities" (Key challenges in Britain). The opportunities for Coca Cola are, the obesity is getting common in Britain, Coca Cola can target that segment specifically and make it aware of the may Diet Coke that can help people understand the benefits of such drinks. The company can then cater each segment individually, such as kids who prefer sports should be targeted through advertisements using powerade, when every segment would be targeted, the outcome could be very profitable, "developing new, and hopefully successful, products is vital and, as Band says: Coca-Cola also needs to get the mix of products correct; that is the things it is trying to market are actually the things that people want to buy" (Sterlicchi: 2005). The threats are always there, had it been a smaller company, it would have no problem in managing its operations, but Pepsi is a continuous threat for Coca Cola, it is constantly trying to work its way and pull back Coca Cola. Since the company has not planned any attack, Pepsi may launch a frontal attack soon, there are many similar strategies being acquired by both of these companies, it is hard to decide who would be the end winner. The Coca Cola World Wide Operating System Coca Cola internationally forms two companies in every country it operates in: Coca Cola Export Corporation Coca Cola Bottling Operations The Export Corporation: It deals with the marketing activities of the company such as brand building, advertisement, market planning activities, future planning etc. It further acts as a functional headquarters of the company in each country. The Bottling Operation: It looks for all the production activities, bottling operations, logistics, planning of future bottling operations to support the future market planning made by the export corporation. The bottling operation's modus operandi is further subdivided its system into three categories which may exist in any country, F.O.B.O. (Franchise Owned /bottling Operations): These are bottlers who are franchisees of the Company and in this case the company has no ownership in the bottling operations. C.O.B.O. (Company Owned Bottling operations): These are wholly owned company bottling operations. J.V. (Joint Ventures): These are collaborated bottling operations in which company has a non-controlling share. Aggregate Planning (Labour Force) The company believes in using chase strategy which means that it hires and lays off workers on the basis of its daily requirements. However it also gives overtime to its own staff for short periods of time. As the Beverage industry is very sensitive to seasonality therefore it hires only contractual staff through labor contractor/s on day-to-day basis. Labor contractors are informed in advance of future labor requirements therefore they ensure the availability of workforce in accordance to the company's demand. Such unskilled labour is easily available in the market and therefore the hiring and laying off costs are minimal and they can be done with much ease. Outsourcing As Coca Cola bottling operations UK is run on a COBO system, and excess plant capacity exists therefore none of the functions are outsourced, however in some areas where Coca Cola is not carrying logistical/distribution activities it self, outsourcing is done by third part logistics in those areas. Nevertheless, keeping in view Coca Cola's existing strategy of expanding its company owned logistical fleet, outsourcing is being substantially reduced. "Outsourcing can provide a shortcut to a more competitive product, but it typically contributes little to building the people-embodied skills that are needed to sustain product leadership" (Domberger 36: 1998). Coca Cola's Information System Coca Cola was previously using SCALA, BASIS and FMS software's for managing different activities of the business. SAP sooner got implemented in Coca Cola after entering into 21st century. SAP is a Sophisticated, integrated, client-server software package & is the leading software solution for enterprise resource planning. It helps synchronise and integrate all the functional activities of Coca Cola which enhance their ability to work together as a better close knit and well communicated company. Benefits of SAP include, integration (Process, data, and organisational integration/Application and technical integration), grows with business needs, provides ability to monitor and resolve errors quickly, improves ability to analyze data, real-time interactive processing, timely information for decision making, single point of data entry, lower cost of system maintenance, integrated data available for use in planning, reporting, and long range forecasting. Leadership, Quality & Environment The leadership has always been at its best at Coca Cola, the company does not believe in the upper management taking every decision but it involves every employee so that a better decision can be taken, it is a success secret. The three pillars of quality on which Coca Cola strives continuously to improve and maintain the highest level of excellence are product quality, customer service and consumer satisfaction. In 1995, Coca Cola launched its first internal quality system program to fight it everlasting battle against quality. In 1997, Coca Cola won its first prestigious Bronze division quality award followed by another one in the year 2000. In 2002, Coca Cola launched its TCCQS (The Coca Cola Quality System), phase I certification which is its world wide internal audit certification of world class quality bottling operations. The Coca Cola bottling operation UK has the prestigious honour of being the only Coca Cola bottling operation in the world to win this certification four times, therefore ranking it as one of the best bottling operations quality wise present in the world, such high is the standard of TCCQS that once you qualify for your certification, you can be automatically qualify for the ISO 9000 certification. In the year 2005, Coca Cola launched EMS audit to further raise the quality bar and got the TCCQS certification audit in the same year. Conclusion The CSD industry of today bears little relation to that of 30 or even 15 years ago. Rapid change and complexity have replaced stability and simplicity. The leading companies have responded with new strategies, featuring product and package introductions and vigorous and frequently changing price and nonprice promotions. The success of Coca Cola can be measured with the fact which says, "McDonald's now accounts for about 5 percent of all domestic Coca-Cola soft drink sales (in all channels). Prior to its switch to Coca-Cola in April, 1990, Burger King accounted for about 2.5 percent of total domestic soft-drink sales of PepsiCo" (Muris, Scheffman, Spiller 63: 1993). The core strategies of Coca Cola according to analysis are to, 1. Accelerate carbonated soft-drink growth, led by Coca-Cola, 2. Selectively broaden its family of beverage brands to drive profitable growth, 3. Grow system profitability and capability together with their bottling partners, 4. Serve customers with creativity and consistency to generate growth across all channels, 5. Direct investments to highest-potential areas across markets, 6. Supply Chain efficiency and cost-effectiveness everywhere. Reference "A Big Thanks to Coca Cola Employees" Coca Cola, . Coca Cola sees profits rebound, . Domberger S. (n.p.), "The Contracting Organisation: A Strategic Guide to Outsourcing", Oxford: Oxford University Press. Muris T.J., Scheffman D.T. and Spiller P.T. (1993), "Strategy, Structure and Antitrust in the Carbonated Soft-Drink Industry", Westport, CT: Quorum Books. Rugman A.M., Verbeke A. (2004), "A Perspective on Regional and Global Strategies of Multinational Enterprises", Journal of International Business Studies: Volume: 35. Issue: 1. Sterlicchi J. (2005), "COCA-COLA Crunch Time", The Evening Standard. Read More