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Corporate Strategies
1. Refocus on core business model, drive efficiency through aggressive
productivity
Vertical Integration
In this case, Coca-Cola started the Coca-Cola System, which refers to their
network of Company owned or controlled bottling and distribution operations,
independent bottling partners, distributors, wholesalers and retailers- the worlds
largest beverage distribution system. This is done by entering in a bottlers
agreement with their independent bottling partners and from time to time
acquiring or taking control of bottling operations to improve performance.
Their five largest independent bottling partners based on unit case volume in
2016 were:
Coca-Cola European Partners plc ("CCEP"), which has bottling and distribution
operations in Andorra, Belgium, France, Germany, Great Britain, Iceland,
Luxembourg, Monaco, the Netherlands, Norway, Portugal, Spain and Sweden;
Regrouping through cost and asset reduction to reverse declining sales and profit
Coca-Cola uses this strategy to explore new drink categories continuously, and it
is keeping the tradition of expanding on their current portfolio of brands and
products. Coca-Cola has more than 3000 products in over 200 countries of the
beverage brands with core focus on brand of Coca-Cola, Diet Coke, Coke Zero,
Sprite and Fanta. Branching out from its traditional soft drinks, Coca-Cola
ventured into energy drinks segment in Powerade.
They produce and/or distribute certain other third-party brands, including brands
owned by Dr Pepper Snapple Group, Inc. ("DPSG"), which they produce and
distribute in designated territories in the United States and Canada pursuant to
license agreements with DPSG.
They have a joint venture with Nestl S.A. ("Nestl") named Beverage Partners
Worldwide ("BPW") which markets and distributes Nestea products in Europe
and Canada under agreements with their bottlers. The Nestea trademark is
owned by Socit des Produits Nestl S.A.
Drive revenue and profit growth with clear portfolio roles across TCCCs
markets
They increased spending on media advertising by more than $250 million, and
we used these funds to share stronger, more impactful ads.
Other Strategy
They aim to increase efficiency and productivity while reducing costs and part of
the solution was zero-based work starts from the assumption that
organizational budgets start at zero and must be justified annually, not simply
carried over at levels established in the previous year. They also cut spending on
non-media marketing like in-store promotions and we continuously finding new
savings in their supply chain around the world.
Employees
As of December 31, 2016 and 2015, Coca-Cola Company had approximately 100,300 and 123,200
employees, respectively, of which approximately 2,900 and 3,300, respectively, were employed by
consolidated variable interest entities ("VIEs"). The decrease in the total number of employees in 2016
was primarily due to the refranchising of certain bottling territories that were previously managed by
CCR to certain of the Company's unconsolidated bottling partners, as well as the deconsolidation of their
German and South African bottling operations. As of December 31, 2016 and 2015, our Company had
approximately 51,000 and 60,900 employees, respectively, located in the United States, of which
approximately 400 and 500, respectively, were employed by consolidated VIEs. Our Company, through
its divisions and subsidiaries, is a party to numerous collective bargaining agreements. As of December
31, 2016, approximately 16,300 employees, excluding seasonal hires, in North America were covered by
collective bargaining agreements. These agreements typically have terms of three years to five years.
We currently expect that we will be able to renegotiate such agreements on satisfactory terms when
they expire. The Company believes that its relations with its employees are generally satisfactory.
https://www.ukessays.com/essays/business/background-vision-mission-goals-and-
values-of-coca-cola-business-essay.php Published: 23rd March, 2015 Last
Edited: 18th July, 2017
http://www.coca-
colacompany.com/content/dam/journey/us/en/private/fileassets/pdf/investors/2016-
AR/10-K.pdf
http://blog.euromonitor.com/2016/05/coca-colas-refranchising-effort-seeks-global-
efficiencies-as-consumption-shifts.html
http://www.coca-colacompany.com/stories/five-strategic-actions
Notes:
Apart from that, the company has also established a long-standing relationship with
various distributors and bottlers that would lower transaction frequency. This could in
turn lower transaction costs and unreliability. This is done by entering long-term
contracts with its counter parties.
We make our branded beverage products available to consumers in more than 200
countries through our network of Companyowned or -controlled bottling and distribution
operations, independent bottling partners, distributors, wholesalers and retailers the
world's largest beverage distribution system. We have separate contracts, to which we
generally refer as "bottler's agreements," with our bottling partners regarding the
manufacture and sale of Company products. However, from time to time we acquire or
take control of bottling operations, often in underperforming markets where we believe
we can use our resources and expertise to improve performance. Owning such a
controlling interest enables us to compensate for limited local resources; help focus the
bottler's sales and marketing programs. In line with our long-term bottling strategy, we
may periodically consider options for divesting or reducing our ownership interest in a
Company-owned or -controlled bottler, typically by selling our interest in a particular
bottling operation to an independent bottler to improve Coca-Cola system efficiency.
When we sell our interest in a bottling operation to one of our other bottling partners in
which we have an equity method investment, our Company continues to participate in
the bottler's results of operations through our share of the equity method investee's
earnings or losses.
The distribution of Coca-Cola has reached all around the globe; it has a huge and wide
customer base. Therefore, Coca-Cola highly focuses on enabling their customers to
reach their products more regularly. Thus, all partners of Coca-Cola work closely with
customers - street vendors, amusement parks, convenience stores, grocery stores,
restaurants and movie theaters, among many others -- to execute localized strategies
developed in partnership with Coca-Cola.
On the other hand, Coca-Cola also gained profit by going into joint ventures with other
companies. For example, in February 2001, the Coca-Cola Company and Procter &
Gamble announced a $US 4.2-billion joint venture to use Coca-Cola's huge distribution
system to increase reach and reduce time to market for the P&G products Pringles and
Sunny Delight.