By: Holly Green, Ashley Parker and Sasiya Supprakit

History of Coca-Cola

History of Coca-Cola

Coca-Cola distributed over 5 billion bottles of Coca-Cola to American troops

Case Introduction
Putting cold bottles on shelves is the best marketing we can do, we dont have to ask ourselves if our product will sell, only, how do we get it to the consumer?

Case Introduction

Entered China in 1920 Exited China in 1948 Re-Entered 1979 with the Open Door Policy

Case preview

Re-Enter or Not that is the question?

External Environmental Analysis

PESTELI Analysis Five-Forces Model

PESTELI Analysis
1. Political
Communist government forbade FDI Bottling plants were nationalized 1978, Open Door policy

2. Economic
China is a large market for long-term investment Coca-Cola agreed to build bottling plants and be taken over by the government

PESTELI Analysis
3. Sociocultural
Localization Language barriers and cultural differences Red-canned Dragon for the Chinese New Year

4.Technological
Importing supplies and built bottling plants

PESTELI Analysis
5. Environmental
Bottling plants created pollution to the environment

6. Legal
Correlated with political system Restricted policies on foreign companies

7. International
Aggressive in expanding globally Plants in Japan, India, Thailand, etc.

Five-Forces Model
1. Power of Buyers
Chinese consumers prefer noncarbonated beverages Strong power of buyers

2. Power of Suppliers
Attempted to get local suppliers Trained Chong Fu Industrial Group

3. Rivalry

Few rivals due to the restricted policies

Five-Forces Model
4. Threats of New Entrants
High legal requirements for new entrants Takes time to build connection with the government

5. Substitutes
No substitute in the Chinese market during that time

6. Complementary
Music, art, sports are together with Coca-Cola Sponsored first Asian Cup and FIFA

Internal Environmental Analysis

Internal Factors
VRINE Analysis Michael Porters VCA

Internal Environmental Factors

Exclusive Contracts Financial Resources Market Share Brand Awareness Operational Efficiency Access to resources Position on the experience curve

VRINE Analysis
Is it valuable?
Allows for product differentiation

Is it rare?
Resources are not accessible to competitors

Is it inimitable?
Is not easily copied or replicated

Is it non-substitutable?
Equivalent resources are not readily available to competitors

Is it exploitable?
Aids in creating a competitive advantage

Value Chain Analysis

Primary Key Activities
Research & Development
Alternative non-carbonated beverages

Production/Operations/Manufacturing
High technology process

Marketing & Sales

Advertised before introducing products

Post-Sales & Service

Created relationships with the people

Value Chain Analysis

Secondary Key Activities
Management Infrastructure
High quality management

Human Resource Management

Best suppliers

Information Technology and Information Systems

Utilized technology in bottling plants

Materials Management
Inbound logistics, purchasing function, and outbound logistics in sync

Strategies
Corporate Strategy
Localization

Business Strategy
High effectiveness and competitive position

Functional Strategy
New brand to support product development

Strengths
Equity and recognition-logo is recognized worldwide Image-dragon advertisements Product Diversification-soft drinks, non carbonated drinks, water, juices, and sport drinks Not only sold in grocery stores, but food retailersincrease market equity

Weaknesses
Credit rating Customer concentrationweak in China
potential customers are located in the West where Coca-Cola has yet to reach because of the failing infrastructure of rural China

Opportunities
Expanding the non-carbonated and bottled water industries-gain larger profits Importance of health Finding a way to expanding westward

Threats
Commodity price growth-prices are increasing, Coca-Cola is not a necessity Image perception- not always positive Domestic issue for local businesses-worry the Chinese government Chinese government- unstable environment
threat that they will change their mind about foreign companies and remove Coca-Cola from their country

Problems and Issues

Chinese Government Culture Suppliers Infrastructure

Problem Identification
Chinese Government
Closed borders in 1948
Remained closed until 1978

Many rules and regulations

Culture
Chinese preferred non-carbonated beverages Language
Needed to keep identity
Coca Cola cannot be translated

Problem Identification
Suppliers
Did not meet company standards

Infrastructure
Difficult to distribute outside major cities Especially in the west

Discussion of Solutions
Chinese Government
Follow the rules
Waited until the borders reopened Did everything the government asked

Culture
Created Tian Yu Di
Fruit juices, ready-to-drink teas

Settled on Ko Kou Ko Le^

to permit the mouth to be able to rejoice

Discussion of Solutions
Suppliers
Gave technical training to local companies

Infrastructure
Created new distribution system specially for China

What would we have done differently?

Coca-Cola only had two choices
Wait until government reopened borders Not re-enter China at all

Made the right decision

In 2008, China had 2nd highest unit case volume for the past five years (19%)

Learning Insights

Specializing Marketing

Moral
Patience
Cooperate with the Chinese Government Waiting to Re-opening Dealing with poor info structure from developing country

Update
Main sponsor 2008 Olympics Moved into Western China

More than 30% of Coca-Colas sales are in China

Update
27% of Coca-Cola workforce and bottling investments are in the Pacific.

simple vs. complex industry

Update
More 30% Coca-Colas sales in China 2006 2008