Multinational Company Analysis: Coca-Cola Ltd
Prepared by (Student’s Name)
Table of Contents
31.0 Introduction and Background
32.0 Financial Analysis
3.0 Key Success Factors ………………………………………………………………… 4
54.0 CSR Activities
75.0 Theoratical Underpinings and Government Policy
96.0 Rivalry and Demand Factors
107.0 Lessons of International Managers
Introduction & Company Background
The Coca-Cola Company is associated with the production,supplying, and marketing of non-alcoholic soft beverages as well as syrups to distinct markets across the globe. The firm owns more than 400 set of brands that include both diet-based and light beverages, water product, as well as sports and energy-related drinks. It distributes and sells finished beverage products that are branded with its overall patent; Coca-Cola to more than 200 countries across the globe. Some of its popular markets include; Africa, EU-Latin, and North America as well as the Middle East. It is critical to notes that the operations of the firm revolve around all sectors the soft drink industry making it the second largest player in the immediate world of functional drinks and Asian specialty drinks.
The emphasis of this paper is on assessing the underlying conditions of the Coca-Cola Company as well as the beverage industry for which it operates, company strategies adopted over time; competition; government policies and after that, provide essential lessons learned for use by international managers.
Financial Analysis of the Firm
By the end of the trade year 2006, the company had attained a revenue turnover of more than $24B with most of it being realized in markets outside the local US market. In fact, analysts indicate that the shift of garnering, even more, revenues from foreign-based markets is likely to be upheld into the future. The firm’s recent growth is based on formulating brand extensions as well as an expanding distribution network. Notwithstanding, at a global perspective; the stagnation witnessed in the selling of its carbonates has continued to affect the overall growth of the entity as a whole. The continual slow growth of these carbonates has resulted to potential investors having an entirely different perception of the future financial growth of the body.
In regards to its overall geographical presence, the firm is deemed to be the best in the world because it has been able to accomplish enormous levels of penetration and recognition. In fact, it can be successfully ascertained that international foreign distributions covered more than 70% of today’s sales revenues. The firm’s immediate organizational structure is based on the geographical segment that has been renamed to fit in with the company’s overall goals and objectives.
Company’s Key Success Factors
There are a significant number of success factors that the firm enjoys in its quest of remaining the world largest non-alcoholic drinks distributor. These factors are discussed as follows;
Product innovation: remains high with the company considering that it engages in consistent research and development aimed at recognizing consumer immediate tastes and preferences while at the same making sure to adjust its operations to the ever-changing market conditions.
Size: the management board of the firm has consideration for aspects related to the maintaining of a global operations and attaining the recognition of a leading producer of soft drinks in the market. Additionally, the company has achieved global market penetration dictating a significant percentage of consumers in the world. The firm has further enjoyed a 73% of global sales in the year 2006 with a 74% of the operating income within the same year.
Global Presence: the company provides a carbonated soft drink that can be bought from various vending machines, restaurants, and stores in more than 200 nations. The marketing tactics and expansion mechanism employed by the company has enabled it to attain the dominance of the soft drink industry in the 20th century.
Licensed Bottling Activity: the bottling structure of the organization has provided opportunities for extenbsive growth in the beverage market across the globe. Nonetheless, such an advantage has helped the company serve a relatively large geographical area. The enterprises that execute such activities for the firm focus on the mixture with sweeteners and filtered water that can be later used in the acts of selling the product in vending machines and retail shops.
High Utilization of Fixed Assets: can be perceived within the bottling system that is readily applied by the firm in order to allow it conduct operations on an enormous scale as it observes the local approach. However, the bottling businesses are locally owned and functioned by automatic features.
CSR Activities of Coca-Cola
Corporate governance is the primary activity applied by the company for the purpose of expanding the market base. It is however applied based on the ethical concerns elaborating on a series of ideologies that exist in the society. Additionally, the concept of corporate governance implemented by the industry entails the various rights and responsibilities of a specific personality that exists within a given society (Dinnie, 2011). Regarding the aspects of the implementation process of corporate governance, the company is notably committed to formulating the exact facets of management team that seeks to see through the future interests of distinct stakeholders. In the same way, it is explored as a target of reinforcing the activities of the board and management accountability that will further assist in developing subsequent trust in the firm in comparison to other notable operations (Idowu, 2016). It is important to note that in most cases Coca-Cola Company executes its elections that are deemed viable to provide a firsthand priority to the shareholders in order to administer their specific interests with the company after a specific time and, also it is focused on the aspects related to the success of the business and the financial gains that come with it altogether (Kwon, 2008). Of particular interest to note, the firm’s immediate board of directors possesses the capability of coming up with influential decisions concerning the Company except for specific matters that are reserved or delegated to different personnel at hand.
The board is, however; expected to go ahead and recruit personnel that are set to be tasked with the responsibility of supervising and assessing top-level management team of the firm in a much efficient and effective manner. These personnel are deemed to be an important lot since they are intedependnet in their quest to find out whether management is executing duties and respoisbilities in a way that would eventually result to meeting of company’s overall buiness objective while still ensuring to minimise the possibility of conflicts of interest. In addition to this, the firm’s immediate board of directors have managed to come up with a distinct set of governance frameworks that will assists in bringing about uniformity for management teams across the (Cardena, 2014). for most cases, such frameworks set for all managers of the firm across the globe are set to define the manner for which such activities as determining qualified personnel; selection of directors and board committee structure should be conducted at all times thus preventing possible dilemma that might be brought about as a result of using different policies altogether (Idowu, 2009). Certainly, a section of additional stipulations presented greatly involves; the performance assessments as well as the properly-prepared management duties to the firm as a whole. Even so, the management team of the firm certainly possess the authority to go on with assessments of the overall growth and developments in matters related to corporate governance and those other procedural processess that are deemed to be appropriate and directed towards efficient management of the entity as a whole.
Current research relating to the firm postulate that it is positioned as a leading supplier of soft drinks when taking into the immediate tastes and preferences of their customers worldwide while still ensuring to formulate a substantial number of mergers with other international firms in order to accomplish its overall business objectives (Mullerat, 2010).
Consequently, some section of the CSR activities related to this company is directed to such important areas as employees, shareholders, profits and the globe as a whole. It is crucial to note that the public expects that the firm is able to treat, compensate and provide their respective employees with a fair environment in order to guarantee them of brand reputation. This is in fact so, since more than 90% of raw materials needed for efficient production operations by the emanates from the immediate surrounding communities that is present in each and every of the production facilities across the world. In relation to its immediate partners, it is seen that the company still strives to operate under an proficient and resourceful relation with the larger number of its existing employees that form a significant part of its stakeholders. Taking a look into its portfolio, it is expected to provide quality beverages products that will be sold affordably to the surrounding communities upon where it operates (Ross Brennan, 2007). The growth and development attributed to the existing production chain is set to assist in the achieving of a significant level of competitive advantage possible competition within the same sector like Pepsi. In essence, it can be ascertained that the corporate social responsibility activities that relate to the firm is focused on the attaining of a rather maximised level of profits at hand. The level of commitment for which the firm practices on the existing planet is deemed to be executed under a comprehensive objective that is aligned with overall goals of the firm’s underlying daily activities. In this regard, the company prefers to be perceived as being a responsible corporate that helps in bringing about a difference by way of engaging activities of upholding, building; and maintaining a sustainable community development especially where production processes are conducted (Hamilton & Webster, 2012).
Keystones Applied by Coca-Cola
The government for the host nation upon where Coca-cola operates; provides a series of regulations that any MNC should implement in the course of executing its mandate within the region. The provided set of rules is focused on the aspects of economic development. The firm sources an enormous segment of its supplies used in the manufacture of products from the surrounding communities (Cialdini, 2009). As a result of this, it deems to focus a section of its overall commitments towards such activities as water preservation hence perceived to be centred on the immediate management procedures of the underlying forests and devising important ways of harvesting rain to be used later. In equal measure to the aforementioned commitment, it has made sure to formulate such initiatives as providing communities with drinking water in Maharashtra. In addition to this, the ability to provide clean drinking water to the surrounding communities seeks to limit possibility of diseases that may be detrimental to human life.
Subsequently, it is committed in the reduction of energy consumption and the emissions of the GHG’s. This is done through promoting activities related to refrigeration that seeks to improve the standards of living for the public ( Reimann, 2012). It also provides employment opportunities to the individuals within the communities that match with the expected level of qualifications required and the form of product that the company offers within the global market at large (Wood et al., 2007). To the host country, it seeks to gain from an increase in the level of income generations through taxation activities while contributing a large section of employment opportunities from the plant. It further develops programs that puts forward publicly of performance information posted by the firm in previous operational periods. Most notably, it seeks to formulate and implement sustainability reports that could later be used by interested stakeholders to make assessments of the firm’s immediate commitments and what it does different from its competitors in the course of production. Recently, the firm came up with a perspective of issues that affect the business and involved stakeholders as well as the immediate efforts made by the management team in order to address them efficiently (Dinwoodie & Janis, 2008).
A perfect example can noted in an earthquake that happened recently whereby the firm further forged forces with other entities both within and without the industry sector to avail immediate aid to the affected communities (Idowu & Filho, 2008). To get in line with the modern call for social interaction, it can be ascertained that the firm’s sustainability goals is set to address issues related to water, women, and wellbeing of the surrounding communities upon where it operates. It vehemently seeks to steer integration and interaction of local communities in regards to its responsibilities that is focused on helping with the attainment of the 2020 vision. Recently, it re-launched a campaign that sought to reassess its commitment to sustainability of its activities focus on issues related to waste recycling with the eventual goal being to give back to the community as much as possible in order to avoid possible exploitation of activities. taking a look at its sustainability efforts, the firm has made sure that it has set mechanisms in place to empower more than 5M women by the end of 2020 (Staff, 2016). Water being an important commodity in human life, the firm has made stringent efforts to sensitize the surrounding communities of the need and importance of rain harvesting and storage for future use.
Rivalry and Demand Factors
Coca-Cola has been involved in a series of battles with Pepsi that provides frequent fluctuations on the market share. On the contrary, the giant company is struggling with a per-capita consumption level for most of its product that have continued to hit a multi-decade low. In relation to competition, the company has ensured to diversify most of its businesses outside the carbonated beverage (Berr, 2015). The management of the company has further considered the production of the product as a moderate income generating venture as compared to the other products in line. The year 2015 has been regarded to as a transitional year as plans were laid out to streamline the workers to a significantly lower number in order for the company to successfully cut down on its overall costs. In regards to demand factors, the firm is currently experiencing a weak demand for most of its carbonated drinks as compared to the non-carbonated drinks; with the latter experience tremendous level of growth (Bhasin, 2011).
Lessons to International Business Managers
One of the major lessons learned lies with the fact that interpersonal communication in the workplace results to almost instant success since management are positioned in a fair position to assess the characters of their employees. From the discussion above, it has been learned that the nature of the host country should also be considered prior to setting base. Notably, it is also fair that management team possess the ability to describe the relationships that exist between the organization’s own strengths in relation to its immediate rivals (Verbeke, 2013). Such applications are also in connection with the competitiveness of the host country.
Consequently, managers should have the capability to identify the firm’s ideal market, make locations of the adequate and suitable sources of raw materials and labor. Failure to adhere to this concept, then the application of high productivity costs will definitely result a downfall on the demand levels of the product and an adverse shift in the sales at the international market (Riad Ajami, 2014).
To sum up the discussion above, it can be noted that Coca-Cola Company has made stringent efforts that has been solely focused on efficient CSR-related activities in order to penetrate different international beverage markets. Despite the fact that its products have continued to face a significant hit in their respective demand, still the firm has set aside distinct market strategies that is focused on reviving demand. To cushion itself from unnecessary competition, the firm has engaged in product diversification strategies to such products as water in order to uphold its revenue stream. It also forms one of the MNC in the world that has been committed to influence its activities on an efficient corporate governance platform.
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