Question

II. TMA Topic and requirements

The global trade environment and the dynamics of competition among organizations are the most important topics for understanding and practicing management in today’s markets. The focus of this TMA is to select an example of a successful global organization/brand and discuss the factors that had led to its success along with the challenges that it faces in operating globally.

1. Essay Paper (50 marks out of 100) (1500 words)

Your answer should be in the form of an essay. The essay should be well organized, that is, it has an introduction (2.5 marks), body and conclusion (2.5 marks). The introduction should introduce the topic.

In the body paragraphs, the following points should be discussed:

1. Name the global brand/organization and briefly describe its products, markets and activities.
2. What does it mean to be a global organization? Why is your chosen organization global?
3. Discuss the main success factors of the global brand. What is the marketing strategy, competitors and competitive advantage?
4. Discuss the concept of globalization vs. customization and the measures taken by the global brand to recognize that offerings and communication should be adapted to local preferences and conditions. Support your answer with solid examples.
5. Discuss the main challenges faced by the global organization in brand building such as positioning, communication, environmental change, product life cycle, brand equity, market share, consumer behavior, etc...(10 marks)
6. Discuss the organization’s future plans, expansions and diversification.

Answer 1

Introduction:

  

    Global trade involves the import of export of goods and services between international borders. International trade between different countries is an important factor in raising living standards, providing employment and enabling consumers to enjoy a greater variety of goods.

    World exports of goods and services have increased to $2.34 trillion ($23,400 billion) in 2016.

      The pattern of world trade. Trade is the exchange of goods and services between countries. Goods bought into a country are called imports, and those sold to another country are called exports. Developed countries have a greater share of global trade than developing countries

Synopsis:

Lets us briefly discuss about the following topics as follows,

• Trade can have both positive and negative effects on the environment.
• Consequences from climate change can disrupt trade.
• How can policymakers optimally combine trade and the environment policies?
• THE SUCCESS STORY OF COCA-COLA COMPANY.
• HISTORY OF COCA-COLA.
• Coca Cola Important Stats 2017.
• Major competitors of Coca Cola Company.
• Conlusion.

Trade can have both positive and negative effects on the environment

Economic growth resulting from trade expansion can have an obvious direct impact on the environment by increasing pollution or degrading natural resources. In addition, trade liberalisation may lead to specialisation in pollution-intensive activities in some countries if environmental policy stringency differs across countries – the so-called pollution haven hypothesis.

However, increased trade can in turn, by supporting economic growth, development, and social welfare, contribute to a greater capacity to manage the environment more effectively. More importantly, open markets can improve access to new technologies that make local production processes more efficient by diminishing the use of inputs such as energy, water, and other environmentally harmful substances.

Similarly, trade and investment liberalisation can provide firms with incentives to adopt more stringent environmental standards. As a country becomes more integrated within the world economy, its export sector becomes more exposed to environmental requirements imposed by the leading importers. Changes needed to meet these requirements, in turn, flow backwards along the supply chain, stimulating the use of cleaner production processes and technologies.

Consequences from climate change can disrupt trade

Direct consequences of climate change on trade could come from more frequent extreme weather events and rising sea levels. Supply, transport and distribution chains infrastructure are likely to become more vulnerable to disruptions due to climate change. Maritime shipping, which accounts for around 80% of global trade by volume, could experience negative consequences, for instance from more frequent port closures due to extreme events. More importantly, climate change is expected to decrease the productivity of all production factors (i.e. labor, capital and land), which will ultimately result in output losses and a decrease in the volume of global trade.

At the same time, there could also be positive economic impacts on maritime shipping through the potential further opening of Arctic shipping routes, albeit at the cost of environmental degradation.

How can policymakers optimally combine trade and the environment policies?

Effective environmental policies and institutional frameworks are needed at the local, regional, national, and international levels. The impact of trade liberalisation on a country’s welfare depends on whether appropriate environmental policies are in place within the country in question (e.g. correctly pricing exhaustible environmental resources). Stringent environmental policies are compatible with an open trade regime as they create markets for environmental goods that can subsequently be exported to countries that follow suit on environmental strandards – the so-called first-mover advantage. This is especially true for complex technologies such as renewable energies.

Countries have undertaken a number of environment-related efforts under the World Trade Organization (WTO) framework including negotiating tariff reductions in environmental goods and services, seeking more clarity on the relationship between existing WTO rules and specific trade obligations in multilateral environmental agreements, and seeking disciplines on fisheries subsidies. In this way, the WTO is building a multilateral framework for international trade that also discourages any misguided temptation to engage in a “race to the bottom”.

The inclusion of environmental provisions in bilateral and regional trade agreements has also helped harmonise environmental regulations between developed and developing countries. More advanced economies can provide resources and institutions for capacity building, and can encourage less-developed partners to strengthen environmental regulations. The OECD has addressed many issues on trade and environment such as environment and regional trade agreements (RTAs) the drivers of environmental provisions in RTAs, as well as the stringency of environmental policies as a driver for trade in goods in environmental goods and services. We are also currently developing a set of policy indicators on trade and environment to help monitor progress towards more policy coherence, and to identify policy priorities at the intersection of trade and environment.

Lets us see a globally successful company as a example.

“Coke” is a registered trademark (term of reference/ shorthand for the product “Coca-Cola”). Coca Cola is the company name. It is also a trademark, as is Coke. The latter is not a generic term; it is a registered trademark of the Coca Cola Company.

THE SUCCESS STORY OF COCA-COLA COMPANY

We all know what is coca-cola and how much familiar we are with the term. 95% of the time whenever we have a soft drink outside, it is of this Beverage Company. It became so much popularised in the late 20th Century that it ruled the Global Market for decades before the invention of software giants and online product based companies. But do you know how it all started, and it was never that what it meant to be? You have seen the success of this company but never looked back at its history. So, sit with patience and go through this interesting blog if you want to know the exciting story of this Softdrink Giant.

HISTORY OF COCA-COLA

‘Coca-cola’ – the term comes from two of its original ingredients used to prepare it in the late 19th Century, which are: coca leaves, and kola nuts (a source of caffeine). It was originally intended as a patent medicine by John Stith Pemberton from Columbus, Georgia and sold the product as a Medicinal Beverage. Coca-cola was first sold at Jacob’s Pharmacy in Atlanta, Georgia, on May 8, 1886, where it was initially sold for five cents a glass. During that time it was believed in the United States that carbonated water was good for the health and Pemberton claimed his new drink to be a cure for many diseases, including morphine addiction, indigestion, nerve disorders, headaches, and impotence. Pemberton’s bookkeeper Frank M. Robinson was credited naming the products and creating its logo. John left Robinson to make, promote, as well as sell Coca-Cola on his own.

In 1889, American Businessman Asa Griggs Candler purchased the Coca-cola formula and brand from Pemberton’s heirs with the intent to advertise and sell it as a Beverage to regular customers. In 1892, the Coca-cola company was formally founded in Atlanta by Candler. Under Mr Candler’s leadership, distribution of Coca-Cola expanded to soda fountains beyond Atlanta. By 1895, Coca-cola was being sold in every state in the union. Coca-Cola’s first ad read “Coca Cola. Delicious! Refreshing! Exhilarating! Invigorating!” As of 1948, Coca-Cola had claimed about 60% of the Market Share. In 1919, the company was sold to Ernest Woodruff’s Trust Company of Georgia. By 1984, The Coca-Cola Company’s Market share decreased to 21.8% due to new competitors, namely Pepsi, being released.

The 10 business decisions over the last 130 years which transformed Coca-cola from a start-up beverage served in a small Atlanta Pharmacy to one of the world’s most recognizable brands:

· 1886 – 1940s: Coke for a Nickel

Coca-cola’s earliest leaders believed that their product should be affordable and available everywhere. To achieve this, the company held the price of coke to Five cents – or one nickel – for almost 70 years. Despite the impact of two world wars and the Great Depression, the company insisted that the trial and acceptance of its product could best be maximized by making Coca-cola a beverage affordable to everyone. This steady price contributed to increasing consumer demand for the product, which in turn caused bottlers to buy more syrup to produce the product.

· 1894: Invention of the Sample Coupon

Despite being a great-tasting product, Coca-Cola’s existence was unknown to many consumers outside the South-eastern United States. To address this Asa G. Candler, who purchased the recipe for Coca-Cola from inventor John Pemberton in 1888, started giving away free sample coupons to anyone who would try a sip of a Coke. From 1894 through 1913, more than 8.5 million sample coupons were redeemed for a free Coca-Cola. And by this time one out of every nine Americans had tried Coca-Cola.

· 1899: Birth of the Coca-Cola System

As the beverage industry underwent an era of immense change and competition in the late 1800s, Candler focused on expanding distribution. By selling the rights to bottle Coca-Cola more broadly, he aimed to create nationwide demand for his product. In 1899, Candler sold the bottling rights for Coca-Cola to three enterprising businessmen Benjamin F. Thomas, Joseph B. Whitehead and John Lupton in Chattanooga, Tennessee for just $1, forming what today is known as the Coca-Cola system. A franchise partnership between the Coca-Cola company and more than 250 bottlers worldwide, this system has extended Coca-Cola’s reach far beyond what Candler ever imagined – now with sales in more than 200 countries.

· 1915: Launch of the Iconic ‘Contour’ Bottle

Almost immediately after its launch, Coca-Cola faced an enormous number of “lookalikes” attempting to imitate its success. To confront this, Coca-Cola challenged glass companies to create a new bottle design that was so distinct that it could be recognised when broken on the ground or by touch in the dark. In 1915, inspired by the shape of the cocoa pod, the Root Glass Company created what is now known as the contour bottle to distinguish Coke from its peers. Now more than 100 years old, the contour bottle has become a celebrated and instantly recognizable icon around the world.

· The 1940s: Coca-Cola During Wartime

During World War II, Coca-Cola President Robert Woodruff believed that every American serviceman and woman should have a Coke at their disposal for five cents, no matter where they were or the cost to the company. A group of employees known as Technical Observers were dispatched with the American army to set up, supervise and monitor the operations of bottling units that would distribute Coca-Cola to U.S. Troops abroad. Woodruff’s vision during this critical period in American history helped establish Coke as a global corporation by introducing the product to different markets. In addition to its global impact, this act instilled a level of brand loyalty among troops and families within America whose love and support for the product lasted for generations.

· Diversification: Minute Maid, Sprite, TaB and Fresca

The purchase of The Minute Maid Corporation in 1960 marked the company’s first venture outside of carbonated beverages. At the time of this purchase, Minute Maid accounted for a third of the sales in the juice category in the United States and had developed a reputation for the quality of its product. This investment was a key step for Coca-Cola expanding and diversifying its portfolio in the years to follow. Following the successful acquisition of Minute Maid, over the next few years, Coca-Cola introduced Sprite, the company’s first lemon-lime drink; TaB, its first diet drink; and Fresca, a sugar-free citrus drink. Since then, The Coca-Cola Company has grown to offer more than 3,800 drinks across a wide range of categories. In 2015 alone, the company launched more than 600 new products.

· 1982: Diet Coke

In the late 1970s, Coca-Cola began developing a new drink that would reignite cola sales and satisfy an increasing appetite from consumers for low-calorie drinks. In 1982, to great Fanfare, the Company introduced Diet Coke as the first extension of the Coca-Cola trademark. Although there were initial concerns that a new diet drink would diminish the trademark, within a year of Diet Coke’s launch, it became the nation’s top sugar-free beverage. The introduction of Diet Coke was an important milestone for the company because it started a new period that prompted the company to take risks in introducing unique new drinks to meet customers’ changing needs.

· 1985: New Coke

In an attempt to revitalize the Cola market in 1985, The Coca-Cola Company removed its Flagship product from the market to introduce New Coke, marking the first formula change in 99 years. Although the introduction of New Coke was first deemed as the business blunder of the century, some analysts considered it to be an accidental stroke of Marketing genius. Amid negative media coverage, protests, letters, phone calls and consumers trying to fill their cabinets with as much original Coke as possible, an emotional connection was discovered between the Coca-Cola brand and its consumers. Announcing the return of the original Coke formula at a press conference, Don Keough, then president and Chief operating officer stated, “The passion for original Coke was something that caught the company by surprise.” After the restoration of the original formula to Coca-Cola Classic, it re-emerged as the leading soft drink in America.

· Late 1990s-early 2000s: Becoming a Total Beverage Company

In the late 1990s, Coca-Cola began talking about a transformation from being predominately a sparkling beverage company to becoming a ‘total beverage company’. A number of early product launches quickly captured the growing consumer market for non-carbonated drinks, especially in the U.S. market. Dasani launched as the company’s primary U.S. water brand in 1999 followed by the launch of Simply juices in 2001, Gold Peak teas in 2006 and the acquisition of vitamin-water and smartwater in 2007. Today, each of these brands rank among the company’s 21 brands that each generate more than $1 billion in retail sales annually.

· Now and into the Future: Keeping Up with Consumer Trends

Today, as consumers continue to demand new and exciting beverage choices around the world, the company is finding new ways to tap into growing trends by taking ownership positions in fast-growing beverage brands. In 2007, Coca-Cola North America launched its Venturing and Emerging Brands(VEB) unit to seek out and identify the next generation of billion-dollar brands that the company can add to its portfolio. VEB acts as a part venture capitalist and part brand incubator that has acquired or invested in brands that include Honest Tea, Zico, Suja and Core Power.

Coca Cola Important Stats 2017:

Net Operating Revenue : 35.41 Billion dollars

Gross Profits : 22.15 Billion USD

Operating Income :  7.5 Billion USD

Advertising expenses: 3.95 Billion US dollars

Number of Employees: 61800 (12400 employed in US)

Major competitors of Coca Cola Company: –

1. Pepsico

2. Dr Pepper Snapple

3. Red Bull

4. Nestle

5. Parle

CONCLUSION

Outside the United States, the company also has continued to acquire or invest in brands that respond to the explosion of beverage choices now available to consumers worldwide. Recently announced global acquisitions or investments have included AdeS, brand in Latin America; Chi Limited, a successful West African producer of dairy and juice beverages; and China Culliangwang, a maker of plant-based protein drinks made from high-quality agricultural sources.