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Trace History and major Milestone for Coca-Cola Coca Cola is known as soft drink of the world (Bell, 2004). It was invest by Dr John Pemberton, who was a pharmacist in Atlanta. The drink did not have bubbles at that time and started selling at soda fountains. The first slogan for the new drink was Delicious and refreshing The company has been hugely successful over the last century and has become an icon of American culture. Coca Cola is not involved in all the processes that see its products go to the hands of consumers. According to the company website, Coca Cola has entered into partnership with bottlers around the world. The website says, Our Company manufactures and sells concentrates, beverage bases and syrups to bottling operations, owns the brands and is responsible for consumer brand marketing initiatives. Our bottling partners manufacture, package, merchandise and distribute the final branded beverages to our customers and vending partners, who then sell our products to consumers. The company posted revenues of US$ 35 billion and net income of US$ 11.8 billion in 2010. Total number of employees on payrolls of the company during the period was 139,600 and the company sells its products in more than 200 countries (Form 10K: The Coca Cola Company, 2010). History Coca-Cola : The Product. Coca-Cola history began in the Atlanta, Georgia area in 1886 thanks to a pharmacist named Dr. John S. Pemberton. Years earlier, in 1863, Pemberton had developed a beverage called Pembertons French Wine Coca which was likely a spinoff of European coca wine, and was commonly used as a nerve tonic, stimulant and headache remedy. However, in 1886 prohibition kicked in and Pemberton was forced to change the formula which he did by sweetening it with sugar instead of wine. His flavored syrup was blended with carbonated water at a local pharmacy, and the result was a beverage that those who sampled it deemed as excellent, and decided it should be sold. Pembertons partner and bookkeeper, Frank M. Robinson came up with the name Coca-Cola, and also designed the distinct script of the name that is still trademarked and used to this day. At that time, Coca-Cola began to be sold from soda fountains in the Atlanta area for 5 cents a glass. Sales in the first year averaged nine glasses a day. Pemberton ran the first newspaper advertisement in Coca-Cola History in May of that year, and he claimed it as a cure for a variety of diseases.

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Coca-Cola : The Company Coca Cola history does not come without some drama. By the time Pemberton passed away in 1888, there were three versions of Coke being sold. A businessman by the name of Asa Griggs Chandler had purchased the rights to produce Coca-Cola, as had a group of four other businessmen, and Pembertons son Charley was also producing his own version. Since Pemberton stated that the other manufacturers could use the formula but that his son had the rights the Coca-Cola name, Chandler attempted to sell his product under different names, but with little success. This led Chandler to seek legal claim to both the name and formula and take full control of the market. In 1891, he was eventually able to purchase the sole rights for a price of $2,300, and along with Frank Robinson and two other partners proceeded to incorporate the name The Coca-Cola Company which remains the current corporation. Chandler quickly expanded the distribution of Coca-Cola soda fountains beyond the Atlanta area, and in 1894 Coke began to be bottled. A Mississippi merchant named Joseph Biedenham was the first to do it when he installed bottling machinery on his soda fountain. Then in 1899, three Tennessee businessmen purchased the exclusive Coca-Cola bottling rights for the tiny sum of one dollar, and developed the bottling system that would eventually take Coca-Cola global. Chandler was a keen marketer, and Coca-Cola history is shaped by his marketing strategies. He believed strongly in advertising which he used to a great extent. They also distributed thousands of coupons good for a free sample, produced all sorts of souvenir products with the Coca-Cola branding, and in 1916 developed the famous Coca-Cola bottle, which has become one of the most well known packages for any product ever. Business boomed and it wasnt long before there were syrup manufacturing plants in Dallas, Chicago and Los Angeles, and the success of Coca-Cola would never slow down, before entering the scene in Europe by way of France in 1919. In 1919 an investor group led by Atlanta banker Ernest Woodruff purchased The Coca-Cola Company from Chandlers group for $25 million after which they re-incorporated, went public and sold half a million shares for $40 a pop.

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Mergers and Acquisition: The Coca-Cola Company has made 131 acquisitions while taking stakes in 69 companies. The Coca-Cola Company has 75 divestitures during this period. Year 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 1982 1981 Total Acquisitions 0 1 2 2 7 28 1 3 2 3 5 8 4 12 2 3 3 5 4 3 1 5 3 3 2 3 7 4 1 0 2 2 131 Stakes 2 1 0 3 2 1 2 1 1 1 1 2 1 7 19 9 4 4 1 1 0 0 0 0 2 2 1 0 1 0 0 0 69 Divestitures 0 3 1 1 3 2 2 2 5 2 1 4 2 7 8 3 3 2 1 1 2 0 2 4 4 4 2 1 1 1 1 0 75

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Coco-Cola Acquired Minute-Maid in 1960 Minute Maid Company claims to be the world's leading marketer of juices and juice drinks. It Acquired Indian Cola Brand Thums Up in 1993 and Barqs in 1995. In 2001, it acquired the Odwalla brand of fruit juices, smoothies and bars for $181 million. In 2007, it acquired Fuze Beverage from founder Lance Collins and Castanea Partners for an estimated $250 million. The company's 2009 bid to buy a Chinese juice maker ended when China rejected its $4.2 billion bid for the Huiyuan Juice Group on the grounds that it would be a virtual monopoly. Nationalism was also thought to be a reason for aborting the deal. In 2007 it acquired Energy Brands Inc. in 2008 there were 2 acquisition by the company Carlsberg A/S, three Scandinavian soft drinks and water brands and Bavaria SA, Agua Brisa bottled water business and assets Non Beverage: In 1982 Coca-cola tried to enter into new segment of filmmaking. It made its only non-beverage acquisition, when it purchased Columbia Pictures for $692 million. It sold the movie studio to Sony for $1.5 billion in 1989.

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2. Elaborate on Coca-Cola Resources today and how it has leverage its resources for global market leadership in soft drinks and diversification The Resource Based View explains how a companys resources drive its performance in a dynamic competitive environment. Coca Colas resources include Bottling plants, Tangible Resources , Natural Water resources which is required to make Coke it uses about 300 billion liters of water annually. And other ingredients used for manufacturing other products such as sugar, vanilla, citrius, coffee and other ingredients. Intangible -Brand Image and Reputation, Bottling plant, Franchising agreements and varying levels of ownership in bottlers operations. Strategic alliances like Joint Ventures with suppliers, Mergers and Acquisitions. Supplier and distribution network. Company has leveraged its resources over 125 years to build its peak and create a sustainable competitive advantage. Company has used its resources in all the three direction, Geographical, Horizontal and Vertical. It has been Concentrated on its core business and have not diversified much and stayed closed to its common thread. Coca-cola has utilized its resources in proper direction leading to product development variation and innovation and diversified its product portfolio and entered into new markets. Proper leveraging of resources has led Coco-cola to build a diversified product portfolio of 3500 products and its offering in 206 countries. In fact, during the entire 1900s, Coca Cola pursued the growth strategy and expanded their operations all across the globe. In 1906, Cuba, Canada and Panama became the first three countries outside the US to bottle Coca Cola. In 1912, Bottling operations are started in the Philippines, the Companys first expansion into Asia. Thereafter, it entered the European markets in France. Later on, over the mid 1900s, CocaCola entered into Australia, Austria, Norway and South Africa. Hungary, Yugoslavia and Poland and many other countries. Thus, the company expanded geographically in 200 countries by leveraging its resources to its benefit. As far as leveraging resources through diversification is considered, Coca Cola expanded its product portfolio to include energy drinks, juices, sports drinks and others. This horizontal expansion through innovating and developing newer products, the company explored its resource potential to provide a competitive advantage to the company.

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3 Analyze Industry Attractiveness Potters Five Forces Model Competition The largest competitor for Coca Cola is Pepsi Co. They compete in almost all the markets worldwide. Coca Cola has higher sales worldwide, though Pepsi Co dominates the US market. There are other players in various beverages category, but none of them as large as Coca Cola or Pepsi Co. The new competition in the industry is to increase the product portfolio and introduce new variants of carbonated drinks and non-carbonated drinks. Most of the strengths and weaknesses of Pepsico are similar to those of Coca Cola. Pepsico enjoys good brand value as well as economies of scale. At the same time, it also has come under criticism for health and environmental issues. While Coca Cola operates almost exclusively in beverages segment, Pepsico derive a big share of total revenues from non-beverages category such as chips and oats. This can potentially provide opportunities to Pepsico to take advantages of synergy among various products. While Coca Cola is enjoyed by people from various age groups, Pepsico mainly targets young people. Threat of new Entrants Threat of new entrants is very low in this industry and the following factors are responsible: -Brand name: It has taken these companies decades to build their brand and its not easy for a new company to emulate that. -Distribution channel: The two existing companies have wide distribution channel across the world and its difficult to match up to that. -Huge initial investment: The high cost of setting up manufacturing plants, transportation Channel and distribution channel is a big barrier for new entrants. -Economies of scale: Both the existing companies enjoy large economies of scale that help in keeping the costs down. A new entrant would not be able to match the cost of the biggies and would be forced out of the business. Threat of substitute products
The threat of substitution is high for soft drink industry with products like bottled water, juices, tea and coffee readily available. To take care of this, The Coca Cola Company has increased its presence in these sectors as well. For people who take soft drinks for its caffeine, tea and coffee can be easy substitutes. In some cases, alcoholic beverages such as beer can be a substitute as well. It costs nothing for a customer to substitute a soft drink with another drink and hence there is a high threat of substitution. Many people are moving towards healthier drinks and substituting soft drinks with juices etc.

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Bargaining power of Supplier Supplier power is low in case of Coca Cola. Following are the suppliers for the company: -Raw materials such as sugar and water are standard and the suppliers can be easily replaced without any problems. -Bottling equipment manufacturers are suppliers for Coca Cola since the company owns stake in many bottling units. These equipments can be supplied by many companies and hence they have low bargaining power. -Other factors such as labor, power etc would not be a problem for the company.
For all the inputs, Coca Cola has higher bargaining power since it enjoys economies of scale and orders in huge quantities from the suppliers.

Bargaining Power of Buyer

In case of The Coca Cola Company, the bottling units are the buyers since the company sells the syrup to them and rest of the activities are undertaken by them independently. But the company owns many of the bottling plants and in such a case, buyers are the retail outlets.

-Bottling partners have low degree of bargaining power with Coca Cola. Though the company is dependent on bottlers for selling their product to the end consumers, they can replace the bottling partners. To start the business, the bottling company has to invest a lot and this creates a lock in for them, reducing their power. - The power of mass retailers is moderate. On one hand, the brand of Coca Cola is very strong and the retailers have to store the product to satisfy the customers. On the other hand, the retailers can switch to other drinks without any cost and stop storing the products of Coca Cola

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4 Why has Coca-Cola Dependent on Global market rather than U.S markets? Coca Cola Dependency on Global Market is since 1996 after the change in strategic action by its CEO Roberto Goizueta. When domestic markets become mature many companies start to expand their operations to other countries to achieve growth. New technologies, better ways of communication and faster transport has turned this world into a global village, making international markets more accessible, and businesses pursuing a global position get the benefits of increase in brand awareness and cost effectiveness. All these developments created a new concept global marketing. Global marketing cover two main strategies for promoting products across country, Standardization Companies using standardization strategy use centralized management system, they use same marketing mix plan which they are using in home country. This leads to achieve2 greater economies of scale by discounts through bulk purchases and by sharing some functions like product development and marketing. Adoption In this strategy a customized marketing mix is created for every country and region. Following this strategy may cost more than standardization but it gives the benefit of consumer diversity. Coca Colas Global Marketing Strategy Coca cola, being the worlds largest manufacturer of non-alcoholic beverages, is certainly well aware of global marketing. It operates in 200 countries and is one of the most recognizable brands throughout whole world. Coca cola has changed it global marketing strategy from times to times in last 15 years. In 1996 coke adopted standardization strategy and was very rigid about it. The company wanted to take same flavour of coke to all countries across the world while keeping all elements of marketing mix same, as cokes CEO that time, Roberto Goizueta said, The labels international anddomesticno longer apply. In those times cokes strategy was represented by tagline think global, act global. Goizuetas strategy proved successful for the time being as coke earned 67% of its total revenues and 77% of its total profit outside North America. But soon due to currency crisis in Asian countries led this strategy to failure and when Daft took charge of the company in the end of 1999, its stock had gone down to one third of its value. After facing the loss of around $70 billion Daft decided to change strategy in completely opposite way. He said that, no one drinks globally. Local people get thirsty and they but a local made cola (Press release, 1999) but unfortunately for coca cola this strategy didnt proved much successful. After 2 years of repeating mantra of think local, act local, marketing was once again took over by head office in Atlanta in 2002.In 2002 coca cola adopted a unique strategy, in this new strategy local marketers were guided by the marketers form head office. This new strategy was a less rigid and customized form of standardization strategy. Under this strategy coke made little changes in market mix for every country like in some countries it used sugar and in some countries it used corn syrup, it also dropped its universal tag line life tastes good in many countries and replaced it with more local tag lines. This strategy is still in use by coke and is proving to much more successful than previous strategies. It kept cokes branding but allowed others elements product, price, placement and promotion customize according to the local market.
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In 2011, Coca cola share worldwide sales volume rose 6 percent in the quarter. Coke's volume rose 8 percent in North America, 5 percent in Latin America, 2 percent in Europe, 14 percent in the Eurasia and Africa segment, and 1 percent in the Pacific region. However, one dark spot was China, where volume fell 3 percent, due in part to a tough comparison with a year-earlier period that saw a 29 percent increase. Coke also said it was not uncommon to see swings in quarterly sales trends in China, due to the change in timing of the lunar New Year. Excluding the Dr Pepper brands, organic volume rose 3 percent in North America, acceleration from 2 percent gains in the third and second quarters. Excluding the new brands, volume of carbonated drinks rose 3 percent worldwide. The flagship Coca-Cola brand saw volume rise 4 percent, driven by gains of 37 percent in Russia, 20 percent in Turkey and 10 percent in India. Volume for beverages such as PowerAde sports drink, Minute Maid juice and vitaminwater rose 9 percent, with gains of 7 percent in North America and 11 percent internationally. However Coca cola has American Promise of 2020 to increase market share in America.

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5 What are Threats to Coca-cola sustainable competitive advantage? Coca-Colas most profitable product, Coke, and its other sweetened carbonated beverages. The risk is that as people become more health conscience, they will drink less of a product that contains empty calories, or calories without much health benefit, and replace this consumption with juice, bottled water, and sports drinks, which currently account for a smaller percentage of Coca-Colas revenues. However, Coca-Cola is addressing this risk (which today is primarily in developed countries) by rolling out Coca-Cola Zero, which has (according to reviews) the taste of Coke without any calories. Coca-Colas expansion into juices, sports drinks, and bottled water should also dampen the effect of an increasingly health conscience customer base. To date, sales of Coke are still holding up well in North America and Europe, and over the next twenty years most of Coca-Colas growth will be in emerging markets, where Coca-Cola classic should continue to sell well. The economics of the most likely substitutes (juice, water, and energy drinks) are similar to that of sweetened carbonated beverages. Moreover, the customers and distribution channels are the same, as are the margins. This means that Coca-Cola has a good chance of following any substitution to these types of beverages and still maintains its high return on capital. Demand for Coca-Colas products has historically remained fairly stable through the economic cycle, even during severe recessions. The largest risk is from changing consumer preferences, i.e Threat of Substitutes. This risk is most prevalent in developed countries such as North America and the European Union, which collectively account for 39% of revenues. During 2008, North American case volume and revenue have fallen 1%, whereas in Europe case volume has risen 3%. Over Q1 2009, volume in North America and Europe both fell by 2%. Total company case volume in 2008 has increased 5%, and if international growth continues to make up for the declines in North America, this substitution to healthier beverages should not impact profitability. Since the increased attention consumers are paying to health has been going on for several years, and case volume has still been growing, this risk is probably manageable. The risk of competition from private label products is minor, as they do not have the scale to even come close to Coca-Colas level of marketing. Private label products have been around for decades, and yet Coca-Colas volume growth is still strong. Overall, I believe that Coca-Colas competitive advantage will be sustainable well into the future, and that the industry dynamics will remain stable.

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6 Strategic Challenges and Recommendations Ans. Challenges for competitive success within the soft drink industry branch from the trends of the macro environment. Primarily, constant product innovation is imperative. A company must be able to recognize consumer wants and needs, while maintaining the ability to adjust with the changing market. They must keep up with the changing trends. Another key factor is the size of the organization, especially in terms of market share. Large distributors have the ability to negotiate with stadiums, universities and school systems, making them the exclusive supplier for a specified period of time. Additionally, they have the ability to commit to mass purchases that significantly lower their costs. They must implement effective distribution channels to remain competitive. Taste of the product is also a key factor for success. Furthermore, established brand loyalty is a large aspect of the soft drink industry. Many consumers of carbonated beverages are extremely dedicated to a particular product, and rarely purchase other varieties. This stresses the importance of developing and maintaining a superior brand image. Price, however, is also a key factor because consumers without a strong brand preference will select the product with the most competitive price. Finally, global expansion is a vital factor in the success of a company within the soft drink industry. The United States has reached relative market saturation, requiring movement into the global industry to maintain growth. Recommendations: Looking towards the future, the most important recommendation to Coca-Cola is continuing product innovation and expansion of their product line. The soft-drinks industry is fully saturated with competitors. Also, the industry is no longer expanding, and market share is actually decreasing as more consumers are looking to healthier options. By continually introducing new products, Coca-Cola will be able to increase their profits and allow the company to continue to grow. Also, having a diverse product line will make the corporation very stable, which is appealing to investors and creditors. A second recommendation would be to sustain or increase the global market share. Coca-Cola is very well-established globally, and is the global soft-drinks leader. This is very important to sustain because it is the source of the majority of their profits. If they lose global market share, their profits will decline dramatically. A final recommendation for Coca-Cola is to maintain and try to increase their brand loyalty. Diet Coke has the second highest brand loyalty of all the soft-drink competitors brands, and solid advertising campaigns will help maintain the brand loyalty. They can also strive to obtain higher brand loyalty in all other brands, not solely Diet Coke. The brand loyalty is important because it will allow Coca-Cola to sustain profits and maintain their market share.
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