Question

What are the specific examples of both CSAs and FSAs (so, what are the CSAs and FSAs) that spurred The Coca-Cola Company's Internationalization process? (Internationalization process = licensing, exporting, local packaging/assembly, foreign direct investment (FDI))

Please talk about/elaborate on the CSAs and FSAs in detail. Feel free to cite any source used.

Answer 1

Introduction and Coca-Cola Company’s overview

According to a report by United State Securities and Exchange Commission(2006) the Coca-Cola Company was established in Atlanta, Georgia, in the year1886. The company is considered to be the world number one non-alcoholicbeverages company, leading in manufacturing, marketing and distribution of itsproduct (concentrate and syrups). Concentrates and syrups are being sold out tobottling companies for final dilutions and packaging to consumers, Coca-ColaCompany produces a wide range of about 500 different beverage brands across

the world. In the late 1920’s the company begins

its journey for globalisation andpresently operating in more than 200 countries following a simple global

formula “Provide a moment of refreshment for a small amount of money – a million times a day”

Global Strategy of Coca-Cola

A simple strategy of 3 A’s, i.e. acceptability, affordability and availability have contributed towards the success of coca cola besides the other factor. According to Gould (1995), coca-cola has become a part of people’s daily meal, a price at which anyone can buy and it is available to people in any part of the world. As per Palazzini (1989), since its launch in 1885 in Atlanta, Georgia in USA, it has become America’s most popular drink sold all over the world and Coke is most successful among the wide range of soft drink products available. Coca-cola enters all the markets rich and poor (Rodrigues, 2009). The IR framework has been used to critically analyse the global strategy of Coca-Cola.

Coca-cola has been successful in the global market because it follows the local strategies and is able to deliver as per the needs of the local people (Hill, 2009). Also coca-cola adopted the standardisation strategy to produce and sell its standardised products globally (Rodrigues, 2009). The company have an approach where in, their business does not get influenced by the area of sales. To globalise further they also created a post of Chief Learning Officer (CLO), who will be responsible for the global development of the company and acquiring the human talent, while also focusing on exploiting the knowledgebase resources that is available in the company (Rodrigues, 2009).

With Globalisation Coca-cola also learned the importance of labelling on cans, for instance when Coca-Cola was introduced in China, since it was not possible to translate Coca-Cola to Mandarin, the vendors used Mandarin characters to phonetically spell sound Coca-cola which actually meant “bite the wax tadpole”. To deal with this problem Coca-Cola selected the characters that meant “may the mouth rejoice” and added that to the title of Coca-Cola (Rodrigues, 2009). Rodrigues (2009), states that Coca-Cola pursues the global strategy of producing diverse products as per the local culture. For instance in Asian countries people prefer sweeter coke. Also Coca-Cola launched Georgia, a canned coffee specially intended for Japanese market which captured 40% of the market soon after its launch (Hill, 2009). According to Cokecce.com (2007), Coca-Cola trains their managers in their management school, to make them aware of the global perspective of their operations.

The impact of international business environment on Coca-Cola Company:

As studied in 2007 (ElAmin) Coca-Cola Company being on a multinationalmanufacturing business environment with high valuable brand, high marketdevelopment and vast scope for product development on an internationallevel the company own its national and international operations in an

extensive economic segment. This makes the level of company’s turnover aswell as the profitability margins proportionate to the company’s expansion and development in the outskirts market. Wide brand expansion is one of thecompany’s main objectives which is maintain through producing over 260million bottles of different sizes. Aside from the upper mentioned Coca-Colaproduct, the company owns Schweppes in the Great Britain name andproduces it in different flavors so also other products, which include CapriSun, Friutiser, monster Appletiser and some sparkling fruit juices.

Factors affecting Globalization

A later study (Jeffrey, 2003) shows that fluctuations of monetary capitalexchange between countries: This has to do with the policies and regulationconcerning transfer of funds between different countries, with this barriersin some countries it makes transactions unattractive in the region but withfree movement of funds like in the 90’s huge amount of funds enter United Kingdom form the United State of America.This is what is known as deregulation, which is also a factor that affectsglobalization. Its started in the UK in the 80’s when many policies and rules regarding foreign business ownership where removed and privatization tookplace, this prompt foreign investors to carry out their businesses across theworld. A clear example is the one that took place in the UK, many of theirutilities which used to be own by the government are now owned by localand foreign investors.

Extent of Globalization on Coca-Cola Company

According to Coca-Cola Company’s report (2006)The name Coca-Cola is oneof the must popular brands in the world and the company is ranked thelargest company in beverages industry today. This is so because the Coca-Cola Company continuer to gain growth due to the prompt expanding acrossthe world, the Company operate presently in more than 200 countries with 84,000 suppliers this makes 70% of the company’s turn over to be from otherforeign country.This is possible due to globalization; John Pemberton founds the company inthe 1880’s in United State of America with a good reputation of consistencyand high quality, in the early stage storekeepers requested for an attractivepackage with brand recognition. The Coca-Cola Company focus and meetsthose requests with a brand name Coca-Cola and a red and white attractive package with a uniform taste of product across the country, this becamesome of the foundation strategy of the company.Globalization in Coca-Cola Company started in the 1900’s when bottlingplants where built in Panama and Cuba as military spread through thoseregions, this spread prompt the rise in demand of the product. These plantsreduced the shipping cost of the product in these regions, the success of theseplants swift the Company to build many more across which includes Hawaii,Puerto Rico and Philippines. By the year 1926 the Company established astrong foreign relationship with other countries around the world this gavethe company a chance to continue on its quest of rapid expansion and massproduction of its product across the world by the use of local branches andlocal partnerships. This expansion continue to take place for severalcenturies until the end of World war II and Cold war that is when thecompany was marked as a accurate global corporation.

Challenges faced by Coca-Cola Company on Globalization.

The road to success has never been smooth and easy. For Coca-Cola Companythe phrase seems perfectly matched, the Company faced a lot of challenges insome countries as it was trying to globalize. Some countries prohibited theused of Coca-Cola products with the assertion that the products are healththreatening and cheering obesity, which are two major concern for peoplenowadays. Aside from these assertions so many suits had been filed againstthe Coca-Cola Company with the allegation of “child labour sweatshops” other countries suits the Company for being selective in providing healthcareto their workers. Another major challenged faced by the Company was the

infiltration of the beverages market by other strong Companies such as Pepsiand co

as analysed by the company’s sustainability report(http://www.coca-colacompany.com/sustainability/global-challenges.html).However, upon the above mentioned challenges, the Coca-Cola Companyremain strong and overcome the obstacles by focusing on its mission toprovide good quality, satisfying and refreshing products to their customers.The Coca-Cola Company uses a strategy of uniform tastes, which is beenachieved by ensuring strict control of recipes and facilities. This strategyreally helps the Company in overcoming some of the challenges and theCompany’s number one goal to be the number one beverages company in the world.

Conclusion

The international strategy of Coca-Cola is effective and efficient across the world which has brought huge success for the company. They have done their detailed study before venturing into new countries which has brought them success after venturing into the markets, by changing the formula for their drinks and having a celebrity as brand ambassador for that country. CRS report produced every year by Coca-Cola runs a regular quality checks and meets the international standard. The diverse range of products produced by Coca-Cola has kept competitors at bay. Moreover, Coca-Cola can further improve its global business by foreseeing any future changes in culture, technology or environment globally.