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Johnson and Scholes defined strategy as the direction and scope of an organisation over the long-term which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations. Therefore simply put strategy can be said to be a plan of action designed to achieve a particular goal.
Definition of Corporation
Wikipedia defined corporation as an institution that is granted a charter recognising it as a separate legal entity having its own privileges, and liabilities distinct from those of its members. The coca-cola company is an example of a corporation. Just like banks and even large retail stores like Tesco and ASDA.
Corporate strategy would therefore be defined as the strategy as adopted by a particular corporation as bases for operation. For example Tesco strategy might be different from ASDA strategy just like Pepsi may have a different strategy from coca-cola as a company.
The Strategy of the Coca-Cola Company
The company's strategy is geared towards what elements will drive its success in the future. This success is not just growth but sustainable growth. That is meeting short-term commitments while investing to meet long-term goals. To achieve this, the company tries to integrate its mission, vision and values into their strategy. The coca-cola company is building their fundamental strength in marketing and innovation, driving increased efficiency and effectiveness in interactions with existing systems and also generally new energy through core brands that focus on health and overall wellness. The company is poised in capturing the opportunity in so many ways for example;
As the world's largest distributor of non-alcoholic beverages, the company maintains a trusted local presence in all the communities they serve, constantly looking ahead to envisage what the communities may need and gathering resources to support them.
Being the world's most recognised family of brands, coca-cola delivers over 3,300 beverages to more than 200 countries around the globe, including soft drinks, juice and juice drinks, sports drinks, water and even coffee to energize, relax, nourish, hydrate and enjoy.
Again the company's annual marketing budget has been increased reasonably, launched many new products and developed a model to help retail customers maximise their sales while continued efforts are made for the next one, five, ten and many more years ahead in business. Therefore coca-cola needs very highly skilled ambitious, experienced professionals who think entrepreneurially and thrive on team work.
The company's mission declares its purpose as a company and serves as the standard against which they weigh and measure their actions and decisions. Thus;
To refresh the world...
To inspire moments of optimism and happiness...
To create value and make a difference.
The coca-cola company is fulfilling one of its missions of refreshing the world. As can be seen above, coca-cola, being the world's most recognised family of brands delivers over 3,300 beverages to more than 200 countries around the globe. There brand includes soft drinks, juice and juice drinks, sport drinks, water, coffee and milk. This means that as it is the company is already serving more than three-quarter the countries of the world with their diverse brands as mentioned above. This statistics means that about three in every four people will enjoy a coca-cola product in a day as a form of nourishment or energizer etc. For instance everybody wants coke to chill out after a hard or exhausting activity. This is equally felt with the so much presence and popularity of the brands among peoples today. More so, owing to the demand of the coca-cola family of brands many people around the world are happy to be associated with the company either as a partner, distributor or consumer etc, thereby giving people the optimism to succeed. People are happy to sell coca-cola brands because they feel sure that it makes good business. For example hardly do you walk into a restaurant or grocery store which do not stock or sell one or more variety of the coca-cola brand, including the corner shops and road side kiosks.
Again the company is making a difference in so many ways including the way they operate and also products for instance, in terms of operation coca-cola products are often thought by many people to be produced and distributed around the world by a single company. However in reality this portfolio of more than 3,300 beverages is produced by a vibrant and active business system that are in operation in more than 200 countries around the world. Together with the coca-cola company and more than 300 coca-cola bottlers this system allows for the manufacture and distribution of products to customers and consumers around the world. In terms of product the coca-cola brands are unique in style and taste as people who drink coca-cola soft drink for instance know and will recognise its unique taste even if it comes in a different container.
The coca-cola vision serves as the frame work for its road map and guides every aspect of the business by describing what is needed to be accomplished in order to continue achieving sustainable and quality growth. The coca-cola vision is categorised into six areas thus;
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 to create mutual and 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 overall responsibilities
Productivities: Be a highly effective, lean and fast-moving organisation.
With regards to the people, the company is fulfilling and achieving its vision of inspiring people to be their best. For instance the company has always needed highly skilled and equally ambitious individuals who think entrepreneurially and the personal story of these individuals around the world testify to their satisfaction and inspiration working for coca-cola. Looking through the employee profile of the coca-cola company it can be seen that many who joined were inspired by the company's enviable history and success. Most employees have achieved their dreams by working for coca-cola and therefore are happy with themselves. In the area of portfolio, being the world's most recognised family of brands with a delivery of over 3,300 beverages to more than 200 countries around the world including soft drinks, juice and juice drinks, sports drinks, water, coffee and milk etc, it becomes an overwhelming fact that the above vision has already been achieved as part of the Coca-Cola strategy.
The relationship between Coca-Cola and its partners is such that the Coca-Cola branded beverage products are manufactured, sold and distributed by independently owned and managed bottling partners. These products are equally made available to consumers throughout the world through a network of these bottling partners, distributors, wholesalers and retailers. Today Coca-Cola boasts of the world's largest beverage distribution system and this is a very important aspect of its vision which is part of the company's overall corporate strategy.
When it comes to the planet the company's vision of being a responsible citizen that makes a difference by helping build and support sustainable communities is well demonstrated. As part of its corporate strategy the Coca-Cola company maintains a trusted local presence in every community it serves and operates, always looking ahead to discover what these communities may need and gathering resources to help and support them. As such the Coca-Cola Company is committed to the needs of the people in the communities in which they do business.
Together with its bottling partners the company collaborated with the United Nations Development Programme, Global Water challenge, Play Pumps International, CARE, Ocean Conservancy and others to protect watersheds and support initiatives that bring clean water and sanitation to more than 250 projects in 70 countries example the Coca-Cola company and its partners, CARE Kenya and the millennium water alliance are piloting a program that provides safe and portable water to primary schools in Western Kenya. One of the largest collaborations is with the United states Agency for international Development and its bottling partners. Again in 2005 Coca-Cola and partners formed the water and Development Alliance to protect and improve the sustainability of watersheds, increase access to water in 22 countries in Africa, Asia, Latin America and the Middle East. Since inception there has been a combined investment of $28.1million. The company's project in Angola helped construct community water taps stands, providing 41,200 people with access to an improved water supply.
Profit-wise, looking at the financial position of the company, the consolidated balance sheet as of December 31, 2009 compared to that of December 31, 2008 reveals the following;
An increase in net assets of $1,873million.
An increase in cash, cash equivalent and short-term investments of $4,450.
An increase in long-term debt of $2,278.
In terms of productivity the company remains a giant in the global beverage industry with the Coca-Cola trade mark brands accounting for approximately 51%, 51% and 53% of worldwide unit case volume for 2009, 2008 and 2007 respectively. In 2009 concentrate sales outside the United States represented approximately 78% of the company's worldwide concentrate sales with most sales in Mexico, China, Brazil and Japan.
The company's values serve as a compass for actions and describe how it behaves in the world. These values are reflected in these aspects as;
Leadership- The courage to shape a better future: As already seen above the company is a world leader in the beverage industry having the best distribution network and the most recognised portfolio of brands. Coca-Cola is also among the ten world's most powerful brands according to the business journal, the only Brand in the group from the beverage industry.
Collaboration- Leverage collective genius: The Coca-Cola group is simply a group of dedicated individuals who are the very best in what they do.
Integrity- Be Real: The Company normally comes down to the level of the communities in which they do business as they believe it is the best way to foster genuine sustainability.
Accountability- If it is to be, it's up to me: The Company takes total responsibility to render accounts as at when necessary.
Passion- Committed in heart and mind: The Coca-Cola Company is emotionally attached to its commitment to the people, the consumers and all their partners alike.
Quality- What we do we do well. The company believes that whatever that is worth doing is worth doing well. No wonder the taste of their products are unrivalled.
CHANGES IN INTERNAL AND EXTERNAL ENVIROMENT THAT HAVE INFLUENCED THE CURRENT COCA-COLA STRATEGY
Strategy in Action
Corporate Strategy Model
The strategic position is about the impact of the environment, in this case on The Coca-Cola Company. First we will distinguish between internal and external environments. While the former has to do with the concerns and factors within the organisation, the later has to do with factors outside of the organisation. We will adopt the PESTEL frame work to identify the external environment.
Political: The success of the company depends on the one hand on its ability to ability to grow business in developing and emerging markets, which in turn depends on economic and political conditions in those markets. For instance due to product price, limited purchasing power and cultural differences, there can be no assurance that products will be accepted in any emerging market. Therefore if the company is unable to expand operations in these markets, growth rate could be negatively affected.
Economic: Unfavourable economic and political conditions in international markets could hurt the business. In 2009 alone operations outside the US accounted for nearly 74% of net operating sales of the company. Political conditions including civil unrest and governmental changes could undermine consumer confidence and reduce the consumers' purchasing power, thereby reducing demands for the products. Also general economic conditions in a major market such as the recession could affect the business negatively.
Social: Change in consumers' media preferences, such as the shift from the traditional mass media to the internet may undermine the effectiveness of advertising campaigns in reaching consumers and may increase market costs.
Technological: The Coca- Cola Company relies on the information technology networks and systems, including the internet to process, transmit and store information. Security breaches of this infrastructure can create system disruptions; therefore, there is the challenge of marching up with recent technologies to counter such threats.
The internal changes could be continuous and daily struggle to devise new ways of creating and sharing beverages to energize and nourish the consumers.
However, the company may have devised and identified four strategic priorities designed to create long-term sustainable growth for the company and the Coca-Cola system and also value for share owners. These strategic priorities are;
Driving global beverage leadership.
Leveraging balanced geographic portfolio and
Leading the Coca-Cola system for growth.
Therefore in order to enable the entire Coca-Cola system to deliver on these strategic priorities, the company seeks to enhance its core capabilities of;
The company has market investments designed to enhance consumer awareness of and increase consumer preference for any of the brands. This will ensure long-term growth in unit case volume, per capita consumption and share of global non-alcoholic beverage sales. Also the company has disciplined marketing strategies that focus on driving volume in emerging markets, increasing value in developing markets while growing profits in the most developed markets.
The Coca-Cola system has millions of consumers around the world who sell or serve products directly to consumers and providing solutions to grow their beverage businesses. Through customer leadership initiatives the company completely dedicates itself into retail customers'' businesses while developing strategies for better execution during sales.
The Coca-Cola company continues to build and improve its franchise leadership capabilities to give the company and its bottling partners the ability to grow together through shared values aligned incentives and a sense of urgency and flexibility that supports consumers' ever-changing needs and wants.
The Coca-Cola Company is one of the world's most powerful Brands. This report has been conducted to explore the very important aspects of its global strategy and determine the challenges and solutions, if any, that were applied to tackle the situation at the time. Though not very comprehensive it serves as a base for further research on the said theme.
Wikipedia- The free encyclopaedia
The business journal