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Coca-Cola a Multinational Corporation (1) Coca-Cola is worlds largest manufacturer, distributor, and marketer of nonalcoholic beverage concentrates and syrups, which operates in more than 200 countries. The Companys logo is the most recognizable brand name in the world, because Coca-Cola has been pursuing expansionist policy, in regards to foreign markets, since the end of WWII. Just as it is the case with any commercial enterprise, Coca-Colas main objective is to make profit. Therefore, we can talk about Companys official mission statement - The Coca-Cola Company exists to benefit and refresh everyone it touches as just a part of its advertisement campaign. At the same time, on todays market of soft drinks, it is impossible for the company to remain competitive, for as long as it does not continuously strive to improve the quality of its products. Therefore, even though that Coca-Colas primary concern is maintaining its dominance on soft drinks market, Companys managers do realize that this cannot be achieved with the mean of pushing smaller competitors out of business alone.
This is why Company has an extensive history of its top officials trying to improve drinks quality and taste. Even though that many of these attempts had failed, they point out to the fact that Coca-Cola views the principle of commercial flexibility from strategic perspective. We can say that Companys vision of its commercial prospects is based upon promoting brand loyalty among customers and upon perfecting its ability to adjust business philosophy when needed, in order to correspond to the changing demands of market. Although Coca-Cola has traditionally been associated with commercial conservatism, this is actually is not quite the case. Just as its main competitor PepsiCo, Company continuously invests increasing amounts of money on various sociological surveys, which are meant to give Coca-Colas managers an insight on what needs to be done to boost sales. However, unlike PepsiCo, Coca-Cola has failed to realize the importance of psychological factor, when it comes to advertising, early enough.
This is why Company often relies on implementing its competitors business approaches that proved to be effective. The fact that Coca-Cola Corporation has grown too large decreases the negative impact of wrong commercial initiatives being implemented, on the part of Companys officials, such as improving Coca-Colas taste in 1985. However, at the same time, this often prevents Company from realizing new business opportunities. (2) Traditionally, Coca-Cola has been focused on making its drinks appealing to the wide range of consumers. Nevertheless, in recent times, Company began to pay more attention to design products that would satisfy the demand of specific markets. For example, Coca-Cola Diet is meant to appeal to older people, who are concerned about gaining an excessive weight. At the same time, Coca-Cola also tries to establish itself on the sport drinks market with the mean of its Powered beverage, which is meant to satisfy the needs of physically active people.
However, it is only in recent years that Coca-Cola Corporation embarked on diversification of its products, which explains why it still largely depends on the sales of carbonated drinks, such as Coca-Cola Classic and Coke Diet. The article PepsiCo/Coca-Cola Market Value: Diversification is the Key to Pole Position, which can be found on the site of Business Review Online, leaves no doubt that Coca-Cola falls far behind its main competitor, when it comes to implementing innovative commercial ideas: PepsiCo currently generates about 23 % of its worldwide profit from carbonated soft drinks, thanks in part to its popular juice and snack brands, while Coca Cola generates about 85 % of its profit from its carbonated brands such as Coca Cola and Diet Coke. This over reliance might explain why for the fiscal year ended December 2004, PepsiCo recorded revenues of $ 29. 3 billion, an increase of 8. 5 % over 2004. In comparison Coca Cola's revenues only grew by 4. 4 % over 2003 (BRO). It appears that Coca-Colas top managers do realize that, in order for the Company to be able to effectively address competitive challenges, it needs to diversify the range of its products even further.
More and more people in Western countries are becoming health conscious, which will inevitably reduce the popularity of carbonated drinks in the future. In 2003, Coca-Cola introduced its new subsidiary brand name Minute Made, which offers a wide variety of juices. However, Coca-Cola does not lead the way, when it comes to adjusting its commercial philosophy to objective reality. It always follows the footsteps of PepsiCo, which is the reason why Companys commercial effectiveness is much lower, in comparison to its main rival. Coca-Colas profit-making activity is based on the principle of franchising. Company sells drinks concentrate to the local franchise operators, which mix this concentrate with the water, carbonate the mixture, and bottle it for the distribution.
This allows Company to concentrate on dealing with global commercial challenges, without having to invest much into supervising. Coca-Cola grants exclusive territorial rights to franchisers, which guarantees the effectiveness of quality control. In recent years, Company has been continuously lowering the qualification requirements for the potential franchise operators. For example, in Indonesia, the bulk of Coca-Cola sales are done through small franchise operators, which company refers to as Area Marketing Contractors. The article Area Marketing Contractors, which is available at the site of Cola Bottling. Com, shows that Coca-cola increasingly relies on small business owners to insure good sales ratio in Third World countries: Coca-Cola believes that the cooperation with the small and medium scale industry will continue to evolve, because it offers mutual benefits and creates wide-job opportunities.
Coca-Cola fully realizes the significant contribution it plays in job creation. Until now, 80 % of its product sales are done by almost 500 thousands of retailers, 90 % of whom are categorized as small businesses with less than five employees. One AMC, for example, usually employs three staff members (salesman, helper and administrator) (Cola Bottling). Coca-Colas managers understand that Companys products needs to be continuously promoted, in order to maintain its appeal. This is an essential part of Coca-Colas advertisement strategy. This strategy's main goal is to make Companys drinks universally appealing to the people who live in different countries and belong to different social strata.
While in U. S. Coca-Cola strives to strengthen its reputation as innovative company, its promotion techniques abroad are based on entirely different principles. For example, in order to attract American consumers, Coca-Cola often gives away glasses or clothing items with its brand name on it.
It also donates money to various charity funds, while using it as a part of advertising. However, in foreign countries, Company tries to capitalize on the fact that Coca-Cola is associated with American values. This alone adds a very strong appeal to the line of Companys products. In America, Company strives to achieve a greater level of franchise saturation. This is being done with the mean of offering stores and restaurants owners different bonuses, if they decide to make Coca-Cola their exclusive supplier of soft drinks. In foreign countries, Company simply pursues an expansion policy, which is usually accompanied with pushing smaller competitors out of business.
For example, in 2006, Coca-Cola has purchased the largest producer of soft drinks in Ukraine - Sandra Corporation. This will allow Company to enjoy almost a full monopoly on Ukrainian market of soft drinks, without having to invest additional funds into establishing brand loyalty. In fierce competition with Pepsi, it is very important for Coca-Cola to come up with proper pricing policy. So far, this policy can be referred to as being very effective. Company relies on penetration pricing, as part of its commercial strategy. This means that, very often Company intentionally lowers the price for its drinks to attract potential retailers.
Once the brand loyalty is being established, Coca-Cola begins to slowly raise the price for its products. This approach is specifically suited for Coca-Cola, because its sheer size allows Company to sacrifice short-term profits for the sake of insuring its presence on the market of soft drinks in the future. (3) Tony Burton's article International Survey Shows That Coca-Cola and McDonalds are Teenagers Favorite Brands, provides us with an insight on the main principles of Coca-Colas international marketing strategy: One of the key issues for international marketers today is whether multi-national brands can feasibly target similar consumers with the same brand proposition in multiple markets. Their objective is to build international brand properties and at the same time make their multi-national advertising and marketing campaigns as cost-effective as possible (Burton). Coca-Colas line of products has traditionally been associated with high quality. However, this often proves as not being enough, when it comes to gaining customers loyalty. On international market, Company strives to make customers associate Coca-Cola products with a distinctive lifestyle.
In recent years, Coca-Cola was being preoccupied with targeting young consumers. What differs Coca-Colas methods of increasing the popularity of its products among teenagers from the methods of competitors, is that Coca-Colas advertisement utilizes universally recognized values. For example, in Europe, 90 % of Coca Colas TV ads depict Coca-Cola being consumed by exclusively young people, while they engage in various sporting activities. The ideals of beauty and health are the same, throughout the world, which is why Coca-Cola does not need to consider peoples ethnic affiliation, when promoting its products. This allows company to save a considerable amount of money on advertisement, because it does not have to be produced on individual basis, which varies from country to country.
Coca-Cola is a transnational corporation, in the true sense of this word. We can say that it represents the cross-cultural values of Globalization process. While being associated with American lifestyle, this Company is an integral part of socio-political reality in many places abroad. This is why signing commercial agreements with Company in foreign countries, often involve the presence of these countries top officials. Coca-Cola has always been the Olympic Movements biggest sponsor, since the end of WWII, and it is going to be the case in foreseeable future. The staff report The Real Thing: Coca-Cola Extends Sponsorship of Olympic Games Through 2020, which is available at Brandweek.
Com, emphasizes Coca-Colas commitment to playing an important role on international arena, because in 2005 Company extended its partnership with International Olympic Committee for another 15 years: This latest renewal of the most-enduring partnership in the history of the Olympic Games begins in 2009 and lengthens the role of Coke as Official Soft Drink of the Olympic Games through 2020 (Brandweek). Coca-Cola has long ago ceased to be just a producer of soft drinks. Today, Company actively lobbies its political agenda in many different countries; therefore, we cannot refer to it as just a commercial institution. (4) Even though that manufactures of soft drinks do not rely on utilization of informational technology, as much as other types of businesses, this commonly accepted notion began to transform in recent years. What proves the validity of this statement the best is an example of Coca-Cola Corporation, which now actively engages in promoting and selling its products through Internet.
The article Coca-Cola Creates Cocacolastore. com leaves no doubt that the importance of e-commerce, as an integral part of Companys business activity, is going to grow in the future: The Coca-Cola Co. , Atlanta, will create cocacolastore. com, an online shop designed to expand Coca-Cola's distribution of branded merchandise. Accessible through Coca-Cola's homepage, web the new store is expected to open by early summer. The site will feature Coca-Cola brand products from clothing to cookware to collectibles (Direct Newsline). Nowadays, it is impossible to imagine a successful commercial enterprise, without being closely linked to digital technologies.
Coca-Cola Corporation realized this early enough, even though that PepsiCo was much ahead of Coca-Cola, in this respect. Ever since 1997, Company began to explore the promotion prospects, related to informational technologies. Just like its main competitor, Coca-Cola promotes its products through Internet. This comes in the form of pop-up banners and various giveaway campaigns, which require individual to get online, in order to participate. For example, anyone who buys bottle of Coca-Cola, can find a digital code on the inside of the cap. This code can be entered in at Companys web site and partake in wining different prizes.
Even as recent back as 3 years ago, Coca-Cola was only resorting to online promotion from time to time. Nowadays, the situation changed drastically. In fact, the online promotion became Companys priority. Coca-Colas officials increasingly rely on modern informational technologies, when it comes to targeting specific markets, because these markets are also being affected by the latest scientific breakthroughs. (5) American society is becoming increasingly multicultural, which also affects businesses across the country. Coca-Cola Corporation is not the exception. In recent years, the celebration of diversity is being promoted by the hawks of political correctness as important part of running a commercial enterprise.
This is despite the fact that it is well known fact that enforcing diversity actually comes at the expense of reducing companys commercial effectiveness. In 2000, Coca-Cola Corporation agreed to pay $ 192. 5 million to settle a racial discrimination suit by Black workers. Even though that there was absolutely no credible evidence presented to support the claims of Black workers, during the court hearing, Coca-Cola decided to simply pay to the extortionists. The article Coca-Cola Agrees To Pay Black Workers $ 192. 5 Million In Discrimination Settlement, which can be found on the site of Look Smart. Com, proves that celebration of diversity will inevitably lead to problems in the future, after being accepted by commercial institution as its official policy: The lawsuit claimed Coca-Cola discriminated against salaried Black employees in pay, promotions and evaluations. The company denied the claims.
The settlement covers salaried Black employees in the United States who worked for Coca-Cola between April 1995 and June 2000. Coca-Cola also will pay $ 20 million in attorneys fees (Look Smart. Com). We can say that nowadays, Coca-Cola Corporation does not only strive to benefit its employees and owners, but also numerous lawyers, who have nothing to do with the company and who often are being paid as much as $ 500 an hour. Thus, we can refer to Coca-Cola as truly progressive company, which cherishes the ideals of multiculturalism. Today, it became very fashionable to contemplate on the subject of ethics and environmental concern, in the context of commercial activity.
However, it appears that wishful thinking has nothing in common with objective reality. The only reason why Coca-Cola tries to establish its reputation as environmentally friendly company within U. S. , is because of numerous rules and regulations. We need to understand that this is not the result of Companys officials being good-natured individuals, as we are being told. It is simply because Coca-Cola is afraid of becoming the object of extortion, on the part of environmental groups. For example, in India, Company is not concerned about environmental matters at all, because countrys officials are being simply bribed.
In her article Economics or Ethics? , Sarah Cairns says: In India, Coke draws 500, 000 litres of water a day from ground water resources in a country already known for its water shortages. The Corporate Accountability International organization states that the companys bottling operations in Southern India are diverting potable (drinking) water from local residents to the production of Coca Cola soft drinks (Cairns). However, if commercial institutions began to think about protecting environment as their priority, the worlds economy will simply cease to exist, as we know it. The reason why Coca-Cola Corporation remains competitive is that its top managers do not really believe in ethics, which can be associated with political correctness. Bibliography: Area Marketing Contractors. 2007. Cola Bottling.
Com. Retrieved September 1, 2007 from web cola bottling. co. id / eng /our business / index . php?
act = a mc Burton, T. International Survey Shows That Coca-Cola and McDonald's are Teenagers' Favorite Brands. February 8, 1999. Find Articles. Com. Retrieved September 1, 2007 from web Coca-Cola Creates Cocacolastore.
com. April 10, 2000. Direct Newsline. Retrieved September 1, 2007 from web Coca-Cola Agrees To Pay Black Workers $ 192. 5 Million In Discrimination Settlement.
December 4, 2000. Find Articles. Com. Retrieved September 1, 2007 from web Cairns, S. Economics or Ethics? . October 5, 2005.
Killer Coke. Org. Retrieved September 1, 2007 from web PepsiCo/Coca-Cola Market Value: Diversification is the Key to Pole Position. December 14, 2005. Business Review Online.
Retrieved September 1, 2007 from web The Real Thing: Coca-Cola Extends Sponsorship of Olympic Games Through 2020. August 1, 2005. Brandweek. Retrieved September 1, 2007 from web Abstract: This paper analyses Coca-Cola Corporation from economical, social and ethical perspectives.
Outline: Mission statement, vision, and goals Marketing plan International marketing Integration of e-commerce Societal dimensions
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Research essay sample on Coca Cola A Multinational Corporation
