The Coca-Cola Company
By: kyliesow • Case Study • 4,557 Words • May 10, 2011 • 1,850 Views
The Coca-Cola Company
The Coca-Cola Company is the world's leading manufacturer, marketer and distributor of non-alcoholic beverage concentrates and syrups. Along with Coca Cola, the world's best known brand, The Coca Cola Company markets four of the world's top-five soft drink brands, including Diet Coke, Fanta and Sprite. Throughout the world, no other brand is an immediately recognizable as Coca Cola. With operations in more than 200 countries, a diverse workforce comprised of more than 200 different nationalities, communicating in more than 100 different languages, The Coca Cola Company is part of the fabric of life in each of the communities they serve throughout the world. It operates as a local business partner, providing quality in the marketplace, enhancing the workplace, preserving the environment and strengthening the community.
Coca-Cola is the most popular and biggest-selling soft drink in history, as well as the best-known product in the world. Coca-Cola was invented in May 1886 by Dr. John Pemberton in Atlanta, Georgia. The name 'Coca-Cola' was suggested by Dr. Pemberton's bookkeeper, Frank Mason Robinson. He kept the name Coca-Cola in the flowing script that is famous today. Coca-Cola was first sold at a soda fountain by mixing Coca-Cola syrup with carbonated soda in Jacob's Pharmacy in Atlanta by Willis Venable. During the first year, sales of Coca-Cola averaged nine drinks a day, adding up to total sales for that year of $50. Since the year's expenses were just over $70, Dr. Pemberton took a rate of more than one billion drinks per day.
In 1893, Coca Cola was registered in the United States and then further investment was put into it to expand the business. To handle the enormous capacity of its business, the Coca Cola Company has divided up into six operating units: Middle and Far East Groups, Europe, The Latin America Group, The North America, The Africa Group and The Minute Maid Company. The Head Quarters is situated in the United States. The country that I'm going to be concentrating on is the United Kingdom and how the company works in the U.K.
Porter's Model Applied For Coca Cola
1) Competitive Rivalry (Low)
Rivalry among competitors is often the strongest of the five competitive forces, but can vary widely among industries. If the competitive force is weak, companies may be able to raise prices, provide fewer products for the price, and earn more profits. If competition is intense, it may be necessary to enhance product offerings to keep customers, and prices may fall below break-even levels
* The market can be considered a duopoly between Pepsi and Coca Cola, which are the strongest and hold something like 80% of the market. * Coke is targeting and achieving international growth.
* However Coca Cola holds two of the top-three soft drinks in the market.
2) Bargaining Power of suppliers (high)
Any business requires inputs labour, parts, raw materials, and services. The cost of company inputs can have a significant effect on its profitability. Whether the strength of suppliers represents a weak or a strong force hinges on the amount of bargaining power they can exert and, ultimately, on how they can influence the terms and conditions of transactions in their favour. Suppliers would prefer to sell to customers at the highest price possible or provide customers with no more services than necessary. If the force is weak, then customers may be able to negotiate a favourable business deal for themselves. Conversely, if the force is strong, then customers are in a weak position and may have to pay a higher price or accept a lower level of quality or service. *Few bottlers supply bottles to Coca-Cola and its competitors in the industry. Suppliers have the choice not to supply bottles to Coca-Cola. It is not easy for Coca-Cola to find new suppliers, as there are not many bottling companies in the industry.
3) Bargaining Power of buyers (Medium)
The power of buyers describes the effect that customers have on the profitability of suppliers business. The transaction between the seller and the buyer creates value for both parties. But if buyers (who may be distributors, consumers, or other manufacturers) have more economic power, suppliers¦ ability to capture a high proportion of the value created will decrease, and they will earn lower profits
* Principal sale channels can be divided into supermarkets, national mass merchandising chains, fountain sales, vending machines and gas stations. * Channels like vending machines, gas stations and super markets have low bargaining power, mostly because there are few substitutes. * Other