Strategic Management

at
Coca-Cola Company
History
 1886: in New York Harbor, workers were constructing the Statue of Liberty. Eight
hundred miles away, another great American symbol was about to be unveiled.
 John Pemberton, an Atlanta pharmacist, was inspired by simple curiosity.
◦ One afternoon, he stirred up a fragrant, caramel-colored liquid and, when it was done, he
carried it a few doors down to Jacobs' Pharmacy.
◦ Here, the mixture was combined with carbonated water and sampled by customers who all
agreed this new drink was something special.
◦ So Jacobs' Pharmacy put it on sale for five cents a glass.

 Pemberton's bookkeeper, Frank Robinson, named the mixture Coca-Cola®, and

wrote it out in his distinct script. To this day, Coca-Cola is written the same way. In
the first year, Pemberton sold just 9 glasses of Coca-Cola a day.

 A century later, The Coca-Cola Company has produced more than 10 billion
gallons of syrup.
◦ Pemberto died in 1888 without realizing the success of the beverage he had created.
 Asa G. Candler, a natural born salesman, transformed Coca-Cola from an invention
into a business.
◦ He knew there were thirsty people out there, and Candler found brilliant and innovative ways
to introduce them to this exciting new refreshment.
◦ He gave away coupons for complimentary first tastes of Coca-Cola, and outfitted distributing
pharmacists with clocks and calendars bearing the Coca-Cola brand.
◦ People saw Coca-Cola everywhere, and the aggressive promotion worked. By 1895, Candler had
built syrup plants in Chicago, Dallas and Los Angeles.

 The Company also decided to create a distinctive bottle shape to assure people
they were actually getting a real Coca-Cola.
◦ The Root Glass Company of Terre Haute, Indiana, won a contest to design a bottle that could
be recognized in the dark.
◦ In 1916, they began manufacturing the famous contour bottle. The contour bottle, which
remains the signature shape of Coca-Cola today, was chosen for its attractive appearance,
original design and the fact that, even in the dark, you could identify the genuine article.

 As the country roared into the new century, The Coca-Cola Company grew
rapidly, moving into Canada, Panama, Cuba, Puerto Rico, France, and other
countries and U.S. territories. In 1900, there were two bottlers of Coca-Cola; by
1920, there were about 1,000.
 Perhaps no person had more impact on The Coca-Cola Company than Robert
Woodruff. In 1923, four years after his father Ernest purchased the Company from
Asa Candler, Woodruff became the Company president. While Candler had
introduced the U.S. to Coca-Cola, Woodruff would spend more than 60 years as
Company leader introducing the beverage to the world beyond.

 In 1941, America entered World War II. Thousands of men and women were sent
overseas. The country, and Coca-Cola, rallied behind them. Woodruff ordered that
"every man in uniform gets a bottle of Coca-Cola for 5 cents, where ever he is,
and whatever it costs the Company.“
 In 1943, General Dwight D. Eisenhower sent an urgent cablegram to Coca-Cola,
requesting shipment of materials for 10 bottling plants. During the war, many
people enjoyed their first taste of the beverage, and when peace finally came, the
foundations were laid for Coca-Cola to do business overseas.

 After 70 years of success with one brand, Coca-Cola®, the Company decided to
expand with new flavors: Fanta®, originally developed in the 1940s and introduced
in the 1950s; Sprite® followed in 1961, with TAB® in 1963 and Fresca® in 1966. In
1960, The Coca-Cola Company acquired The Minute Maid Company, adding an
entirely new line of business juices to the Company.
 The 1980s was the era of legwarmers, headbands and the fitness craze,
and a time of much change and innovation at the Coca-Cola Company. In
1981, Roberto C. Goizueta became chairman of The Board of Directors
and CEO of the Coca-Cola Company. Goizueta, who fled Castro's Cuba in
1961, completely overhauled the Company with a strategy called
"intelligent risk taking." He also led the introduction of diet Coke®,
the very first extension of the Coca-Cola trademark; within two years, it
had become the top low-calorie drink in the world, second in success only
to Coca-Cola.

 In 1990’s New beverages joined the Company's line-up, including

Powerade® sports drink, Qoo® children's fruit drink and Dasani®
bottled water. The Company's family of brands further expanded through
acquisitions, including Limca®, Maaza® and Thums Up® in India, Barq's®
root beer in the U.S., Inca Kola® in Peru, and Cadbury Schweppes'®
beverage brands in more than 120 countries around the world. By 1997,
the Company already sold 1 billion servings of its products every day, yet
knew that opportunity for growth was still around every corner.
Coca-Cola Now
 In 1886, Coca-Cola® brought refreshment to patrons
of a small Atlanta pharmacy. Now well into its second
century, the Company's goal is to provide magic every
time someone drinks one of its more than 500
brands.

 From the early beginnings when just nine drinks a day

were served, Coca-Cola has grown to the world’s
most ubiquitous brand, with more than 1.4 billion
beverage servings sold each day. When people choose
to reach for one of the Coca-Cola Company brands,
the Company wants that choice to be exciting and
satisfying, every single time.
 Coca Cola in India

Coca-Cola, the corporation nourishing the global

community with the world’s largest selling soft drink
concentrates since 1886, returned to India in 1993
after a 16 years break, giving a new thumbs up to the
Indian soft drink market. In the same year, the
Company took over ownership of the nation’s top
soft-drink brand and bottling network. It’s no wonder
our brands have assumed an iconic status in the minds
of the world’s consumers.
Brands in India
 Coca-Cola
 Thums-Up
 Sprite
 Fanta
 Limca
 Minute Maid Pulpy Orange
 Maaza
 Kinley
 Georgia
 Mission

The Roadmap starts with their mission, which is

enduring. It declares their purpose as a company and
serves as the standard against which they weigh there
actions and decisions.

 To refresh the world...

 To inspire moments of optimism and happiness...
 To create value and make a difference.
Vision
There vision serves as the framework for their roadmap and guides every
aspect of the business by describing what they need to accomplish in
order to continue achieving sustainable, quality growth.

 People: Be a great place to work where people are inspired to be the

best they can be.
 Portfolio: Bring to the world a portfolio of quality beverage brands that
anticipate and satisfy people's desires and needs.
 Partners: Nurture a winning network of customers and suppliers,
together we create mutual, enduring value.
 Planet: Be a responsible citizen that makes a difference by helping build
and support sustainable communities.
 Profit: Maximize long-term return to shareowners while being mindful of
our overall responsibilities.
 Productivity: Be a highly effective, lean and fast-moving organization.
Culture
According to Coca-Cola company “Our
Winning Culture defines the attitudes and
behaviors that will be required of us to
make our 2020 Vision a reality”.
Values
Their values serve as a compass for their actions
and describe how they behave in the world.

 Leadership: The courage to shape a better

future
 Collaboration: Leverage collective genius
 Integrity: Be real
 Accountability: If it is to be, it's up to me
 Passion: Committed in heart and mind
 Diversity: As inclusive as our brands
 Quality: What we do, we do well
Focus on the Market
 Focus on needs of our consumers,
customers and franchise partners
 Get out into the market and listen,
observe and learn
 Possess a world view
 Focus on execution in the marketplace
every day
 Be insatiably curious
 Leadership

Leading the Industry & Refreshing the World Responsibly

Since the first soda fountain sales in 1886, they have been a driver of
marketplace innovation and an investor in local economies. Today they lead
the beverage industry with more than 500 beverage brands including four
of the world's top-five sparkling brands.
Muhtar Kent, The Chairman of the Board and Chief Executive Officer, leads
the company into the new century with a firm commitment to the values
and spirit of the world's greatest brand. In the journey to become a
sustainable, profitable growth company, the management structure has
evolved to sharpen external focus on the marketplace with greater speed,
productivity and effectiveness.
Innovation
In the Products

In the Packaging

In the Equipment

In the Marketing

In the Marketplace

Product Innovation
 They continue to expand the beverage portfolio in
order to meet consumers' evolving needs and
preferences. They are currently offering more than
3,300 beverages around the world, including
nutritionally fortified products.

 For instance, they developed NutriJuice, an orange

flavored drink fortified with iron, zinc, lysine and
vitamins A and C, to help address iron-deficiency
anemia and malnutrition in children in the Philippines.
◦ Approximately 36,000 children have benefited from
consuming this free product, which is provided to
elementary school children during the school year
Packaging Innovation
Introducing PlantBottle
Renew. Reuse. Rejoice.

Made from up to 30% plant-based

material, PlantBottle packaging is a natural
step toward the bottle of the future and
is a 100% recyclable bottle like traditional
PET plastic.
 Innovation in Equipment
Coca-Cola Freestyle
Coca-Cola Freestyle is a new fountain dispenser from the Coca-Cola Company that uses
micro-dosing technology to dispense 106 sparkling and still beverage brands from a single
freestanding unit, delivering unprecedented beverage variety with choices to suit any consumer
taste.
Interactive Vending Machine
Samsung 46-inch LCD touch screen was placed in the front of a Coca-Cola vending machine.
The large-format display combined with Flash technology, motion graphics, high-definition
video and Bluetooth capabilities for mobile downloads, creates a uniquely immersive
experience for consumers.
Climate Friendly Coolers
The Coca-Cola Company is committed to sustainable refrigeration for its vending equipment.
Our Climate Friendly Coolers use a CO2 refrigeration system and HFC-free insulation foam
that reduce potential direct CO2 equivalent green house gas emissions by approximately 99%.
They also contain an intelligent management system reducing energy use and indirect carbon
emissions up to 35%. By using these technologies, our typical Climate Friendly Cooler will
reduce direct and indirect carbon emissions by over 3 tons over the Cooler's lifetime
 Innovation in Marketing

Coca-Cola Japan's new water brand I Lohas is helping

consumers contribute to environmental sustainability
with a new ultra-light "crushable" plastic bottle that
weighs 40% less than regular PET packaging. The label
size has been reduced to save in materials and the
water is sourced from places close to the plant to
further reduce CO2 emissions from transportation.
Innovation in Marketplace
 The foodservice industry is an evolving world. Every day new
restaurant concepts open, new items appear on the menu, and new
consumers walk through the door with their own individual wants
and expectations.
 As the leading beverage supplier for the foodservice industry, their
customers turn to them to provide the products, programs,
packaging and marketing support that are in tune with the ever-
changing playing field of foodservice.

 They have become an organization where innovation is paramount

to their success. Through innovation, they have helped, and will
continue to help, their customers, maintain and grow their
businesses, especially in uncertain economic times.
 Some of these innovations offer consumers more beverage choices;
some tap into growing categories like tea, coffee and smoothies;
and some provide custom beverages and food/beverage pairings
BCG Matrix
STARS :- High growth business competing in market where they are
relatively strong compared with the competition. They have a high market
shares and are the ideal businesses.

CASH COWS :- Low-growth business with a relatively high market shares.

These businesses were stars but now have lost their attractiveness.

QUESTION MARK :- Businesses with low mshare but which may have a
high growth rate. This suggests that they have potential but may require
huge ever, a competing force extraordinary effort in order to grow point
share.

DOGS :- Businesses that have low relative share and low expected growth
rate. Dogs may generate enough points to sustain but they are rarely, if
ever, a competing force.
 BCG Matrix of Coca cola

Relative Market share Position

STARS QUESTION MARKS

Industry coke
Sales
Growth
rate CASH COWS DOGS
SWOT Analysis
STRENGTH
World’s leading brand
Large scale of operations
Robust revenue growth
OPPORTUNITY
Acquisitions Intense competition
Growing bottled water market
Growing Hispanic population in US
WEAKNESS
Negative publicity
Sluggish performance in North
America
Decline in cash from operating
activities
THREAT
Intense competition
Dependence on bottling partners
Sluggish growth of carbonated
beverages
New Coke : An innovative Case Study
 Just after World War II, the market share for the Coca-Cola Company's flagship
beverage was 60%, and in 1983 it had shrunk to under 24% in the face of competition
from Pepsi-Cola. Pepsi had begun to outsell Coke in supermarkets

 Battered by competition from the sweeter Pepsi-Cola, Coca-Cola decided in 1985 to

replace its old formula with a sweeter variation, dubbed the “New Coke”. Coca-Cola
spent $4 million on market research.

 Blind taste tests showed that Coke drinkers preferred the new, sweet formula, but the
launch of New Coke provoked a national uproar. Market researchers had measured the
taste but had failed to measure the emotional attachment consumers had to Coca-
Cola.

 There were angry letters, formal protests and even lawsuit threats, to force the
retention of “The Real Thing”. Ten weeks later, the company withdrew New Coke and
reintroduced its century-old formula as “Classical Coke”, giving the old formula even
stronger status in the marketplace.
What Went Right?
 Coke chose to move forward in response to
real market pressure, rather than defending
their existing products.
 They had their best R&D & flavor people
design the new product.
 Extensive taste testing and veteran approval
were sought, and all pointed to them having
a better product.
 They put big $$$ behind a major rollout
campaign
What went wrong?
 The press conference (April ‘85) was a disaster.
Coke failed to explain why they made the
change and did not acknowledge Pepsi taste test,
or any taste testing done by Coke in R&D.
 Pepsi attacked with counter-ads, including a full
page ad in the New York Times.

 According to Gladwell’s Blink and other

sources, the successful taste tests of New coke
didn’t suggest people wanted an entire 12 oz.
portion of the new formula.
Reaction of New Coke on Pepsi
 Placed full page advertisement on the day
of conference.
 They stated that …..maybe they finally
realized what most of us have known for
years: Pepsi tastes better than Coke
 Declared holiday on Friday
Reaction of New Coke on Public
 Public reaction to new coke was swift and
was negative for most of them. For some
it was like changing the constitution.
 Newspaper all over the country ran
negative articles about the newspaper
adding more to the fire.
 By middle of May coke answered 5000
calls per day and 400o letters in one
month.
Reaction of New Coke on customers
 McDonalds' is coke’s number one
customer selling coke as its only cola
product. It stayed with new coke for
about a year and then decided to go back
to the old formula
 Most of the fountain heads at different
foodservice restaurants have only four
head and they had to choose between
new and old coke. Finally they decided to
sell classic coke.
Reaction of New Coke on Wall
Street
 Pepsi showed no reasonable upward or
downward movement that could be
traced to either of the two
announcements.
 Coke share prices went up.
Outcomes
 There was initial acceptance and the product did well it’s first
weeks, sales up 8% compared to previous year.

 However public outrage grew, with groups protesting New

Coke (especially strong in the south).

 By June ‘85 there was enough public pressure and complaints

from bottling suppliers that Coke were under pressure.

 In July ‘85 Coke brought Classic Coke back to the market

To conclude…

 Managers try to stimulate sales by

modifying the four-Ps .

 Customers are not always willing to

accept an improved product .
Thank You!!!

Dr. Pushpinder Gill

Professor, School of Management Studies
Punjabi University, Patiala