Strategic Management Case Study

Coca-Cola Co.
Presented by: Carter Vaillancourt,
Megan Land, and Emily Michaud
UMFK, 2013

Overview
1. Company Overview
A brief history about Coca Cola
Existing Mission and Vision Statement
Existing Objectives and Strategies
New Mission and Vision Statement
2. External Audit
Industry Analysis
Current Opportunities and Threats
CPM Matrix
EFE Matrix
3. Internal Assessment
Organizational Structure
Strengths and Weaknesses
Financial Condition
IFE Matrix

4. Strategy Formation
SWOT matrix
Space Matrix
BCG Matrix
Grand Strategy Matrix
Matrix Analysis
QSPM Matrix
5. Strategic Plan for the Future
Strategies
6. Implementation
EPS/EBIT
Projected Financials
7. Evaluation
Balanced Score Card
8. Coca-Cola Update

The Coca-Cola Bottle from the
Beginning, to Present


1886-
1892
1893-
1904
1905-
1918
1919-
1940
1941-
1959
1960-
1981
1982-
1890
1990-
1999
In 1886 is when
Atlanta pharmacist
created the first
Coca-Cola mixture
out various
ingredients,
where he
then put it
up for sale
for 5 cents
a glass
1984 is when
Joseph Biedenharn
was hired to be
the first to
put the
Coca Cola
in bottles

Due to
beverage
companies
copying Coca-
Cola they
began to
manufacture
the contour
bottle in 1916
In the 1928 Olympics
located in
Amsterdam, Coca-
Cola traveled
with the
team and
began
global
expansion
In 1943, during WWII
General Eisenhower
requested 10
bottle plants
to be shipped
to them
overseas,
which then
created an
overseas business.
After 70 years, Coca-Cola
added new flavors:
Fanta, originally
developed in the
1940s and
introduced in
the 1950s;
Sprite followed
in 1961, with
TAB in 1963
and Fresca in 1966
In 1985, was
the release of a
new taste for
Coca-Cola, the
first change in
formulation in
99 years. It
wasnt long
until they
changed to
their original
New beverages
joined the
Company's
line-up,
including
Powerade
sports drink,
Qoo
children's
fruit drink
and Dasani
bottled
water
Revenue and Cash Flow Growth 2005-2010

Existing Vision Statement
Our vision serves as a framework for our Roadmap and guides
every aspect of our business by describing what we need to
accomplish in order to continue achieving sustainable, quality
growth.
People: Be a great place to work where people are inspired to
be the best they can be.
Portfolio: Bring to the world a portfolio beverage brands that
anticipate and satisfy peoples desires and needs.
Partners: Nurture a winning network of customers and
suppliers, together we create mutual, enduring value.
Planet: Be a responsible citizen that makes a difference by
helping build and support sustainable communities.
Profit: Maximize long-term return to shareholders while being
mindful of our overall responsibilities.
Productivity: be a highly effective, lean and fast-moving
organization


Existing Mission Statement
Our Roadmap starts with out mission,
which is enduring. It declares our
purpose as a company and serves as
the standard against which we weigh
our actions and decisions.
To refresh the world
To inspire moments of optimism and
happiness
To create value and make a difference.

Existing Growth Strategy


Driving global beverage leadership
Accelerate innovation
Leverage our balanced geographic
portfolio


Proposed Vision Statement
Coca-Colas vision is to
inspire moments of
happiness while
refreshing the world.

Proposed Mission Statement
With six main operating segments in North America,
Latin America, Europe, Eurasia, Africa, the Pacific,(3)
and bottling investments, Coca-Cola is dedicated to
being a highly effective refreshments and fast-moving
organization. (5) Our mission is to bring consumers
quality refreshments that anticipate and satisfy their
desires and needs. (1)(2). As a company we strive to be
responsible citizens by helping to rebuild and support
sustainable communities (8), while maximizing long-
term return to shareowners (6). Through modern
technology (4) and inspiring employees to be the best
they can be (9) we know we can continue to provide the
best products on the market.
1. Customers
2. Products or Services
3. Markets
4. Technology
5. Concern for Survival
6. Philosophy
7. Self-Concept
8. Concern for Public Image
9. Concern for Employees

External Audit

Industry Market Analysis


0
10
20
30
40
50
60
70
Coca Cola Pepsi Cola Nestle Dr. Pepper Snapple
Stock Price 2010
Coca Cola
Pepsi Cola
Nestle
Dr. Pepper Snapple


1) Spurring demand for energy drinks, especially in the US where
estimates show about 2 billion.
2) Approximately 85% of the companys unit case volume is delivered
in recyclable bottles and cans, and the company targets to recover
at least 50% of the equivalent bottles and cans sold worldwide.
3) Bottled water drinking has increased 11%.
4) European and China market show large potential to grow by an
estimated amount of 7%.
5) Has the option, but no obligation, to assist bottlers with
promotional and marketing activities ($5 billion in 2010).
6) 55 billion beverage servings are consumed worldwide each day
7) Global beverage industry is expected to grow from a valued $1.4
trillion in 2008, to $1.6 trillion by 2013.
8) India currently only consumes 11 8oz servings of Coca Cola per
person per year.
9) The non-alcoholic ready to drink(NARTD) beverage industry is
expected to grow by 50 billion unit cases by 2020.

Opportunities

Threats
1) Increasing preference for non carbonated healthy drinks. The Coca Cola soda saw a 5%
volume declines respectively in the carbonated soda brands category.
2) With rising obesity rates of 35.7% for adults and 17% for youth in the U.S. alone,
health concerns may cause reduced consumption of sugar sweetened beverages,
impacting profitability.
3) Water is the main and most significant ingredient in beverages, quality and abundance
of water is scarce worldwide, where 70% is used for agriculture and irrigation.
4) With $24.5 billion in net operating revenue generated from international markets, and
operating in over 200 countries, unstable economic conditions in foreign countries can
dramatically decrease revenues.
5) The primary beverage of Coca Cola is sparkling beverages, the most popular drinks
consumed worldwide, in their respective order, are water, tea, and beer.
6) Changes in currency rates. Coca-cola uses 74 functional currencies in 2010.
7) In 2010 had approximately 18,600 associates represented by labor unions.
8) PEP operating income and revenues both exceeded KO's by .85 Billion and 7.67 Billion
respectively. They are strong competitors in the market
9) PepsiCo dominated North America with sales of US $22billion,while Coca-Cola only
had about US $7billion.
KO NSRGY PEP
Critical Success factors Weights Rating Weighted Score Rating Weighted Score Rating Weighted Score
0.0 to 1.0 1 to 4 1 to 4 1 to 4
Advertising 0.08 4 0.32 3 0.24 4 0.32
Product Quality 0.12 4 0.48 3 0.36 3 0.36
Price Competitiveness 0.10 4 0.4 3 0.3 4 0.4
Finanical Position 0.10 3 0.30 4 0.40 3 0.30
Customer Loyalty 0.14 4 0.56 3 0.42 4 0.56
Global Expansion 0.11 4 0.44 3 0.33 3 0.33
Market Share 0.07 3 0.21 4 0.28 3 0.21
Organization Structure 0.06 4 0.24 3 0.18 3 0.18
Customer Service 0.08 4 0.32 3 0.24 3 0.24
Production Capacity 0.10 4 0.40 3 0.30 4 0.40
Employee Dedication 0.04 3 0.12 4 0.16 3 0.12
Totals 1.00
3.79 3.21 3.42

CPM
Key External Factors Weights Rating Weighted Score
0.0 to 1.0 1 to 4
Opportunities
This is spurring demand for energy drinks, especially in the US which
according to the latest industry estimates is about 2 billion 0.06 4 0.24
Approximately 85% of the companys unit case volume is delivered in
recyclable bottles and cans, and the company targets to recover at least
50% of the equivalent bottles and cans sold worldwide 0.04 3 0.12
Bottled water drinking has increased 11%. 0.04 2 0.08
European and China market show large potential to grow, growing into
these divisions more will help the revenue sales 0.04 2 0.08
Has the option, but no obligation, to assist bottlers with promotional and
marketing activities ($5 billion in 2010). 0.05 2 0.1
55 billion beverage servings are consumed worldwide each day 0.06 3 0.18
Global beverage industry is expected to grow from a valued $1.4 trillion
in 2008, to $1.6 trillion by 2013 0.05 3 0.15
India currently only consumes 11 8oz servings of KO per person per year 0.04 2 0.08
The non-alcoholic ready to drink(NARTD) beverage industry is expected
to grow by 50 billion unit cases by 2020 0.05 3 0.15
Threats 0
Increasing preference for non carbonated healthy drinks. The Coca Cola
soda saw a 5% volume declines respectively in the carbonated soda
brands category 0.06 3 0.18
With rising obesity rates of 35.7% for adults and 17% for youth in the U.S.
alone, health concerns may cause reduced consumption of sugar
sweetened beverages, impacting profitability. 0.06 2 0.12
Water is the main and most significant ingredient in beverages, quality
and abundance of water is scarce worldwide, where 70% is used for
agriculture and irrigation 0.09 2 0.18
With $24.5 billion in net operating revenue generated from international
markets, and operating in over 200 countries, unstable economic
conditions in foreign countries can dramatically decrease revenues 0.07 3 0.21
The primary beverage of Coca Cola is sparkling beverages, the most
popular drinks consumed worldwide, in their respective order, are water,
tea, and beer 0.07 4 0.28
Changes in currency rates. Coca-cola uses 74 functional currencies in
2010 0.04 2 0.08
In 2010 had approximately 18,600 associates represented by labor
unions 0.05 2 0.1
PEP operating income and revenues both exceeded KO's by .85 Billion
and 7.67 Billion respectively. They are strong competitors in the market 0.05 4 0.2
PepsiCo dominated North America with sales of US $22billion,while
Coca-Cola only had about US $7billion 0.08 4 0.32
Totals 1 2.85
EFE

Internal Audit

Financial Information
Income Statement


Financial Information
Balance Sheet (1)


Financial Information
Balance Sheet (2)




Coca-Cola Worth Analysis for 2010 (in
millions)


Shareholder's equity - Goodwill - Intangibles 4,094
Net Income * 5 59,045
(Stock Price/EPS) * NI 71,177
# of Shares Out * Stock Price 71,225
Four Method Average 51,385

Ratio Analysis
Ratio (2010) Coca-Cola Pepsi Nestle
Liquidity Ratios
Current 1.17 1.11 1.29
Quick 1.02 0.89 1.03
Leverage Ratios
Debt to total assets 0.57 0.68 0.44
Debt to equity 1.35 2.19 0.78
Long-term debt to equity 0.45 0.94 0.12
Times-interest-earned ratio 20.43 9.23 41.25
Activity Ratios
Fixed Assets Turnover 2.38 3.03 5.12
Total Assets Turnover 0.48 0.85 0.98
Inventory Turnover 13.25 17.15 13.84
Profitability Ratios
Gross Profit Margin % 63.86 54.05 58.21
EBT Margin % 40.56 14.23 34.69
Net Profit Margin % 33.63 10.93 31.2
Return on total assets % 19.42 11.7 27.56
Return on Stockholder's equity % 38.09 33.27 49.17
Price-earnings ratio 6.03 15.35 5.43
Growth Ratios
Sales Growth (5-years) 8.74% 12.18% 3.80%
Net Income Growth (5-years Average) 19.37% 9.16% 32.08%
Earnings per share Growth (5-year Average) 19.92% 10.35% 37.77%

Strengths
1) With revenues of $35,119,000 million, Coca-Cola is one of the
largest beverage manufacturers globally.
2) Coca-Cola owns four of the worlds top five nonalcoholic sparkling
beverage brands including Coca-Cola, Diet Coke, Sprite and Fanta.
3) Sold 25.5 billion cases of products in 2010
4) Accounted for 51% of U.S. unit case volume, and 50% of non-U.S.
case volume for 2010
5) Has ownership interest in its bottling/distributing partners; 23% in
Coca-Cola Hellenic, 32% in Coca-Cola FEMSA, and 30% in Coca-Cola
Amatil.
6) Acquired Coca-Cola Enterprises, Inc., one of the major bottlers for
Coca-Cola in North America which had $3.6 billion in revenues
7) In Eurasia and Africa, unit case volume increased 12% in 2010
8) Coca-Cola has more than 500 brands and 3,500 beverages and
products.
9) Coca-Cola sells 1.7 Billion servings of beverages per day in over
200 countries.
10) Coca-Cola generated 9.5 billion in cash from operations in 2010, up
16% over 2009.


Weaknesses
1) Weak performance in Europe achieving a 0% growth in 2010
2) Does not hold number 1 spot for either the water brand or the
leading sports drink
3) Currently does not hold a snacks segment, where Pepsi Co. has a
food division which creates for 60% of their total revenue.
4) Does not perform best in North America, only accounting for 31.7%
in total revenue in 2010
5) Has a high number of current liabilities accounting for 18,508
million
6) Acquiring Coca-Cola Enterprises (CCE) resulted in assuming
additional $7.9 billion in debt
7) Operating income for Europe operations decreased by $50 million
in 2010
8) Interest expense increased $378 million mainly due to premiums
paid on repurchasing long term debt
9) Common Stock Market Prices decreased between the first and
second quarter in 2010 from $52.23 and $49.47
10) Other operating expenses grew to $5,959 million in 2010 from
$5,699 million in 2009

Key Internal Factors Weights Rating Weighted Score
0.0 to 1.0 1, 2, 3 or 4
Internal Strengths 3 or 4
With revenues of $35,119,000 million, Coca-Cola is one of the largest
beverage manufacturers globally 0.07 4 0.28
Coca-Cola owns four of the worlds top five nonalcoholic sparkling beverage
brands including Coca-Cola, Diet Coke, Sprite and Fanta 0.08 4 0.32
Sold 25.5 billion cases of products in 2010 0.07 3 0.21
Accounted for 51% of U.S. unit case volume, and 50% of non-U.S. case
volume for 2010 0.06 3 0.18
Has ownership interest in its bottling/distributing partners; 23% in Coca-
Cola Hellenic, 32% in Coca-Cola FEMSA, and 30% in Coca-Cola Amatil 0.05 3 0.15
Acquired Coca-Cola Enterprises, Inc., one of the major bottlers for Coca-Cola
in North America which had $3.6 billion in revenues 0.09 4 0.36
In Eurasia and Africa, unit case volume increased 12% in 2010 0.04 3 0.12
Coca-Cola has more than 500 brands and 3,500 beverages and products 0.06 4 0.24
Coca-Cola sells 1.7 Billion servings of beverages per day in over 200
countries 0.05 3 0.15
Coca-Cola generated 8.5 billion in cash from operations in 2010, up 16%
over 2009 0.06 3 0.18
Internal Weaknesses 1 or 2
Weak performance in Europe achieving a 0% growth in 2010 0.02 1 0.02
Does not hold number 1 spot for either the water brand or the leading
sports drink 0.06 2 0.12
Currently does not hold a snacks segment, where Pepsi Co. has a food
division which creates for 60% of their total revenue 0.07 1 0.07
Does not perform best in North America, only accounting for 31.7% in total
revenue in 2010 0.03 1 0.03
Has a high number of current liabilities accounting for 18,508 million 0.02 2 0.04
Acquiring Coca-Cola Enterprises (CCE) resulted in assuming additional $7.9
billion in debt 0.07 1 0.07
Operating income for Europe operations decreased by $50 million in 2010 0.03 1 0.03
Interest expense increased $378 million mainly due to premiums paid on
repurchasing long term debt 0.03 2 0.06
Common Stock Market Prices decreased between the first and second
quarter in 2010 from $52.23 and $49.47 0.02 2 0.04
Other operating expenses grew to $5,959 million in 2010 from $ 5,699
million in 2009 0.02 2 0.04
Totals 1 2.71

IFE

Strategy Formation

SWOT Matrix
Strengths
Weaknesses
Opportunities
Threats
1. Diversify beverage line by offering
alcoholic beverages. (S1, S8, S9, T5)
2. Increase R&D spending to research
production methods to ensure that
we are utilizing resources in the most
efficient manner. (S1, S10, T3)
1.Create a lower calorie sports drink line to
promote healthy drinking habits while still
providing the essential electrolyte balance.
(W2, W4, T1, T2)
2. Diversify products by entering the
healthy snack/snack food market. (W3, T2)
1. Create a line of energy drinks to meet a
growing demand of those products. (S8,
S9, S10, O1, O9)
2. Increase marketing in Latin America.
(S8, S9, S10, O6, O7, O9)
1. Increase sports drink product
sales through sponsorship of
collegiate sports. (W2, W4, O1, O6,
O9)
2. Increase marketing in Europe.
(W1, O4, O6)
3. Take advantage of the increasing
demand for bottled water by
creating flavored water drops. (W2,
O3, O6, O9)
ST
ST
WO
WT

Space Matrix
Financial Strength Ratings
1 Cash Flow 5.0
2
Price Earnings
Ratio 3.0
3 Earnings per Share 5.0
4 Working Capital 7.0
5 Liquidity 6.0
6 Net Income 6.0
7 Return on Assets 4.0
Financial Strength Average 5.14
Industry
Strength Rating
1 Profit Potential 6.0
2 Financial Stability 7.0
3
Resource
Utilization 4.0
4
Productivity, Capacity
utilization 4.0
5 Market Entry 6.0
6 Growth Potential 3.0
7 Extent Leveraged 2.0
Industry Strength Average 4.6
Environmental
Stability Rating
1
Rate of
Inflation -5.0
2
Barriers to Enter
the Market -4.0
3
Competitive
pressure -2.0
4
Price
Elasticity -4.0
5
Demand
Variability -4.0
6
Price Range of Competing
Products -4.0
7
Ease of Exit from
Market -6.0
Environmental
Stability Average -4.14
Competitive
Advantage Rating
1 Market Share -1.0
2
Product
Quality -3.0
3
Customer
Loyalty -2.0
4
Capacity
Utilization -2.0
5
Technologically
Advanced -3.0
6
Global
Expansion -1.0
7
Product Life
Cycle -3.0
Competitive
Advantage Average -2.14
FS
C
S
ES
IS
-1 -2 -3 -4 -5 -6 6 5 4 3 2 1
Conservative
Aggressive
Competitive
Defensive
1
2
3
4
5
6
-
6
-
5
-
4
-
3
-
2
-
1
X Coordinate 2.43
Y Coordinate 1.00

BCG Matrix
Segments Revenue %rev profit %pft Relative Market Share Industry Growth Rate (%)
North America $11,205.00 39.45% $1,520.00 15.31% 1.00 4.40%
Pacific $5,271.00 18.56% $2,048.00 20.63% 1.00 5.60%
Europe $5,249.00 18.48% $2,976.00 29.97% 1.00 5.30%
Latin America $4,121.00 14.51% $2,405.00 24.22% 1.00 6.00%
Eurasia & Africa $2,556.00 9.00% $980.00 9.87% 1.00 6.50%
Total $28,402.00 100.00% $9,929.00 100.00%

BCG Continued

Grand Strategy Matrix
Rapid Market Growth














Weak Competitve
Position

Strong Competitive
Position


















Slow Market Growth
Quadrant II
1. Market development
2. Market penetration
3. Product development
4. Horizontal integration
5. Divestiture
6. Liquidation
Quadrant III
1. Retrenchment
2. Related diversification
3. Unrelated diversification
4. Divestiture
5. Liquidation
Quadrant IV
1. Related diversification
2. Unrelated diversification
3. Joint ventures
Quadrant I
1. Market development
2. Market penetration
3. Product development
4. Forward integration
5. Backward integration
6. Horizontal integration
7. Related diversification

Matrix Analysis
Alternative Strategies IE SPACE GRAND BCG COUNT
Forward Integration x x X 3
Backward Integration x x X 3
Horizontal Integration x x X 3
Market Penetration x x X 3
Market Development x x X 3
Product Development x x X 3
Related Diversification x x 2
Unrelated Diversification x 1
Retrenchment
Divestiture
Liquidation

Strategy Evaluation
Integration Strategies
We have integrated into many suppliers prior to 2010
We recently purchased CCE which helps integrate our
bottling and marketing
Product and Market Development
We are highly established worldwide prior to 2010
Market Penetration
We are currently in 200 different countries prior to
2010
Unrelated or Related Diversification
We dont offer a food segment (Unrelated)
None of our main competitors offer an alcoholic
beverage (Related)





Quantitative Strategic Planning Matrix-QSPM
Create a lower
calorie sports
drink line/
while still
providing
essential
electrolyte
balance.
Diversify
products by
entering the
healthy
snack/snack
food market.
Diversify
beverage line
by offering
alcoholic
beverages.

Key factors
Weigh
t AS TAS AS TAS AS TAS
External 1 to 4 1 to 4 1 to 4
Opportunities
1. There is spurring demand for energy drinks, especially in the US which according to the latest industry estimates is about 2 billion 0.06 4 0.24
2. Approximately 85% of the companys unit case volume is delivered in recyclable bottles and cans, and the company targets to recover at least
50% of the equivalent bottles and cans sold worldwide. 0.04
3. Bottled water drinking has increased 11%. 0.04
4. European and China market show large potential to grow, growing into these divisions more will help the revenue sales. 0.04 3 0.12
5. Has the option, but no obligation, to assist bottlers with promotional and marketing activities ($5 billion in 2010). 0.05 2 0.1 3 0.15
6. 55 billion beverage servings are consumed worldwide each day 0.06 4 0.24 4 0.24
7. Global beverage industry is expected to grow from a valued $1.4 trillion in 2008, to $1.6 trillion by 2013. 0.05 4 0.2 4 0.2
8. India currently only consumes 11 8oz servings of KO per person per year. 0.04 2 0.08 3 0.12 2 0.08
9. The non-alcoholic ready to drink(NARTD) beverage industry is expected to grow by 50 billion unit cases by 2020. 0.05 4 0.2
Threats
1. Increasing preference for non carbonated healthy drinks. The Coca Cola soda saw a 5% volume declines respectively in the carbonated soda
brands category. 0.06 2 0.12
2. With rising obesity rates of 35.7% for adults and 17% for youth in the U.S. alone, health concerns may cause reduced consumption of sugar
sweetened beverages, impacting profitability. 0.06 2 0.12 4 0.24
3. Water is the main and most significant ingredient in beverages, quality and abundance of water is scarce worldwide, where 70% is used for
agriculture and irrigation. 0.09 1 0.09 4 0.36 1 0.09
4. With $24.5 billion in net operating revenue generated from international markets, and operating in over 200 countries, unstable economic
conditions in foreign countries can dramatically decrease revenues. 0.07
5. The primary beverage of Coca Cola is sparkling beverages, the most popular drinks consumed worldwide, in their respective order, are water,
tea, and beer. 0.07 4 0.28
6. Changes in currency rates. Coca-cola uses 74 functional currencies in 2010. 0.04
7. In 2010 had approximately 18,600 associates represented by labor unions 0.05
8. PEP operating income and revenues both exceeded KO's by .85 Billion and 7.67 Billion respectively. They are strong competitors in the market 0.05 1 0.05 4 0.2 2 0.1
9. PepsiCo dominated North America with sales of US $22billion,while Coca-Cola only had about US $7billion. 0.08 1 0.08 4 0.32 2 0.16
total should be 1.0 1

QSPM
Strengt
hs
1. With revenues of $35,119,000 million, Coca-Cola is one of the largest beverage manufacturers globally. 0.07 1 0.07 4 0.28 2 0.14
2. Coca-Cola owns four of the worlds top five nonalcoholic sparkling beverage brands including Coca-Cola, Diet Coke, Sprite and Fanta. 0.08 2 0.16
3. Sold 25.5 billion cases of products in 2010 0.07 2 0.14 3 0.21
4. Accounted for 51% of U.S. unit case volume, and 50% of non-U.S. case volume for 2010 0.06 2 0.12 3 0.18
5. Has ownership interest in its bottling/distributing partners; 23% in Coca-Cola Hellenic, 32% in Coca-Cola FEMSA, and 30% in Coca-Cola
Amatil. 0.05
6. Acquired Coca-Cola Enterprises, Inc., one of the major bottlers for Coca-Cola in North America which had $3.6 billion in revenues 0.09
7. In Eurasia and Africa, unit case volume increased 12% in 2010 0.04
8. Coca-Cola has more than 500 brands and 3,500 beverages and products. 0.06 3 0.18 4 0.24
9. Coca-Cola sells 1.7 Billion servings of beverages per day in over 200 countries. 0.05 3 0.15 3 0.15
10. Coca-Cola generaged 8.5 billion in cash from operations in 2010, up 16% over 2009. 0.06 2 0.12 4 0.24 2 0.12
Weaknesses
1. Weak performance in Europe achieving a 0% growth in 2010. 0.02 3 0.06
2. Does not hold number 1 spot for either the water brand or the leading sports drink. 0.06 3 0.18
3. Currently does not hold a snacks segment, where Pepsi Co. has a food division which creates for 60% of their total revenue. 0.07 4 0.28
4. Does not perform best in North America, only accounting for 31.7% in total revenue in 2010. 0.03 3 0.09 2 0.06
5. Has a high number of current liabilities accounting for 18,508 million 0.02
6. Acquiring Coca-Cola Enterprises (CCE) resulted in assuming additional $7.9 billion in debt 0.07
7. Operating income for Europe operations decreased by $50 million in 2010 0.03
8. Interest expense increased $378 million mainly due to premiums paid on repurchasing long term debt 0.03
9. Common Stock Market Prices decreased between the first and second quarter in 2010 from $52.23 and $49.47. 0.02
10. Other operating expenses grew to $5,959 million in 2010 from $ 5,699 million in 2009. 0.02

total
should
be 1.0 1

2.28 2.25 2.82
Create a
lower
calorie
sports
drink line/
while still
providing
essential
electrolyte
balance.
Diversify
products
by
entering
the
healthy
snack/sna
ck food
market.
Diversify
beverage
line by
offering
alcoholic
beverages
.
QSPM (2)

Strategic Fit
Competitive Risks
Pepsi Co. and Nestle currently have market
share in the Food Industry
Funding Aggressive Growth
Market Capitalization of 190 billion
Current Assets exceed current liabilities by
over 3 billion
Strong Brand Utilization
Moving into the food industry and having
very strong customer loyalty, customers
will be drawn to new products





Kellogg Company
Currently located in 180 different
countries
Sales totaled 12.4 billion in 2010
Includes brands such as: Special K,
Cheez-It, Pringles, Keebler, Austin,
Famous Amos, and Townhouse
Crackers
Food Consumer Products Industry
Kellogg's is ranked number 2, behind
Pepsi Co. and ahead of General Mills

3-Year Goals
In 3 Years
- Acquire ownership of Kellogg
Company by the end of 2013
- Expand Healthy Food choices through
acquisition
Year 1: Begin Acquisition Process with Kellogg
Company
Year 2: Attain Ownership of Kellogg Company
Year 3: Begin Marketing and Sales with Kellogg
Company

Strategic Implementation
Kelloggs Worth Analysis for 2010 (in
millions)
Shareholder's equity - Goodwill -
Intangibles

(2,930)
Net Income * 5

6,235
(Stock Price/EPS) * NI

17,849
# of Shares Out * Stock Price

17,868
Four Method Average

9,755

Kellogg Company Net Worth Analysis

EPS/EBIT
Capital Needed

6,000,000,000
EBIT Range $7 bil. - $15 bil.
Interest Rate 4%
Tax Rate 16%
Stock Price (Dec. 31, 2010-year
end) 30.86
Current Shares Outstanding (Basic) 2,308,000,000
CS Shares needed

194,426,442
Assumptions
Common Stock Financing
Recession Normal Boom
EBIT 7,000,000,000 10,000,000,000 15,000,000,000
Interest - - -
EBT 7,000,000,000 10,000,000,000 15,000,000,000
Taxes 2,030,000,000 2,900,000,000 4,350,000,000
EAT 4,970,000,000 7,100,000,000 10,650,000,000
# of Shares 2,502,426,442 2,502,426,442 2,502,426,442
EPS 1.99 2.84 4.26
Debt Financing
Recession Normal Boom
EBIT 7,000,000,000 10,000,000,000 15,000,000,000
Interest

240,000,000

240,000,000

240,000,000
EBT 6,760,000,000 9,760,000,000 14,760,000,000
Taxes 1,960,400,000 2,830,400,000 4,280,400,000
EAT 4,799,600,000 6,929,600,000 10,479,600,000
# of Shares 2,308,000,000 2,308,000,000 2,308,000,000
EPS 2.08 3.00 4.54
Stock needed

5,400,000,000
Debt needed

600,000,000
Interest

24,000,000
CS shares needed

174,983,798
Assumptions
Stock needed

600,000,000
Debt needed

5,400,000,000
Interest

216,000,000
CS shares needed

19,442,644
90% Stock - 10% Debt Financing
Recession Normal Boom
EBIT 7,000,000,000

10,000,000,000 15,000,000,000
Interest

24,000,000

24,000,000

24,000,000
EBT 6,976,000,000 9,976,000,000 14,976,000,000
Taxes 2,023,040,000 2,893,040,000 4,343,040,000
EAT 4,952,960,000 7,082,960,000 10,632,960,000
# of Shares 2,482,983,798 2,482,983,798 2,482,983,798
EPS 1.99 2.85 4.28
10% Stock - 90% Debt Financing
Recession Normal Boom
EBIT 7,000,000,000

10,000,000,000 15,000,000,000
Interest

216,000,000

216,000,000

216,000,000
EBT 6,784,000,000 9,784,000,000 14,784,000,000
Taxes 1,967,360,000 2,837,360,000 4,287,360,000
EAT 4,816,640,000 6,946,640,000 10,496,640,000
# of Shares 2,327,442,644 2,327,442,644 2,327,442,644
EPS 2.07 2.98 4.51

EPS/EBIT Continued

Projected Financial Assumptions
Capital needed 10,000,000,000
Debt needed 6,000,000,000
Cash Used 4,000,000,000
Interest (estimate) 4%
Tax Rate 16%
Stock Price (Dec. 31, 2010 - year end) 30.86
Additional Interest 240,000,000
Dividends Paid $1.83 per share 4,223,640,000
Kellogg's pays off own liabilities
Kellogg's shareholders are paid off


Projected Financials
Income Statement
Projected Income Statement (in millions) 2009 2010 2011
Total Revenue 30,990 35,119 52,784 15% increase, plus Kelloggs 12,397
Cost of Revenue 11,088 12,693 21,324 % of revenue, plus Kelloggs 7,108
Gross Profit 19,902 22,426 31,460
Operating Expenses - - -
Research and Development - - -
Selling General & Administrative 11,671 13,977 17,276 Add Kelloggs 3,299
Nonrecurring - - -
Others - - -
Total Operating Expenses - - -
Operating Income or Loss 8,231 8,449 14,184
Income from Continuing Operations - - -
Total Other Income/Expense Net 289 5,502 6,052 10% increase
EBIT 9,301 14,976 20,236
Interest Expense 355 733 1,221 Add Kelloggs 248, add 240 from financing
Income Before Tax 8,946 14,243 19,015
Income Tax Expense 2,040 2,384 3,042 16% tax rate
Consolidated Net Income 6,906 11,859 15,973
Less: Non-Controlling Interests 82 50 50 Same
Net Income 6,824 11,809 15,923
Basic EPS 2.95 5.12 6.90
Diluted EPS 2.93 5.06 6.82
Basic Average Shares Outstanding 2,314 2,308 2,308 Same
Diluted Average Shares Outstanding 2,329 2,333 2,333 Same
Dividends Per Share 1.64 1.76 1.83


Projected Financials Balance
Sheet (1)
Projected Balance Sheet (in millions)
ASSETS
Current Assets
Cash & Cash Equivalents 6,959 8,379 4,379 Decrease by $4 billion for funds
Short-term Investments 2,192 2,820 3,666 30% increase
Net Receivables 3,758 4,430 5,316 20% increase
Inventory 2,354 2,650 4,236 20% increase, plus Kelloggs 1,056
Other Current Assets 2,226 3,162 4,336 30% increase, plus Kelloggs 225
Total Current Assets 17,551 21,579 21,933
Long-term Investments 6,755 7,585 9,861 30% increase
Property Plant & Equipment 9,561 14,727 21,537 25% increase, plus Kelloggs 3,128
Goodwill 4,224 11,665 15,876 5% increase, plus Kelloggs 3,628
Intangible Assets 8,604 15,244 18,696 10% increase, plus Kelloggs 1,456
Accumulated Amortization - - -
Other Assets 1,976 2,121 2,989
7% increase like previous year, add Kelloggs
720
Deferred Long-term Asset Charges - - -
Total Assets 48,671 72,921 90,892

Projected Financials Balance Sheet (2)
LIABILITIES
Current Liabilities
Accounts Payable 6,921 9,132 10,045 10% increase
Short-term Debt 6,800 9,376 11,176 Add 30% of $6 billion from financing
Other Current Liabilities - - -
Total Current Liabilities 13,721 18,508 21,221
Long-term Debt 5,059 14,041 18,241 Add 70% of $6 billion from financing
Other Liabilities 2,965 4,794 5,033 5% increase
Deferred Long-term 1,580 4,261 4,261 Same
Liability Charges - - -
Minority Interest 547 314 314 Same
Negative Goodwill - - -
Total Liabilities 23,872 41,918 49,070
STOCKHOLDERS' EQUITY
Misc. Stock Opt Warrants - - -
Redeemable Pref. Stock - - -
Preferred Stock - - -
Common Stock 880 880 880
Retained Earnings 41,537 49,278 60,977
Increases from Net Income, Dividends paid
out
Treasury Stock (25,398) (27,762) (27,762) Same
Capital Surplus 8,537 10,057 10,057 Same
Other Stockholders' Equity (757) (1,450) (1,450) Same
Total Stockholders' Equity 24,799 31,003 41,822
Total Liabilities and Stockholders' Equity 48,671 72,921 90,892


Coca-Cola's Projected Ratios 2010 v. 2011 2010 2011
Current Ratio 1.17 0.97
Quick Ratio 1.02 0.83
Debt to Total Assets 0.57 0.54
Debt to Equity 1.35 1.17
Times Interest Earned 20.43 16.57
Fixed Asset Turnover 2.38 2.45
Total Asset Turnover 0.48 0.58
Inventory Turnover 13.25 12.46
Gross Profit Margin % 63.86 59.60
Return on Stockholders' Equity % 38.09 38.07
Projected Financial Ratios


Strategic Evaluation


Balanced Scorecard
Area of Objectives Measure or Target
Time
Expectation
Primary
Responsibility
Customers
1 Brand Identity Industry reports/Market Cap. Yearly Marketing Officer
2 Satisfaction Customer Survey Yearly Marketing Officer
Employees
1 Employee Moral Survey Yearly People Officer
2 Service Training # of seminars Yearly
Administrative
Officer
Operations
1 Diversify product
line Acquire Kelloggs Company Yearly
Administrative
Officer
Business Ethics
1 Ethics Training # of ethics training sessions Yearly People Officer
2 Recycling Recycle 50% of total wastes
Financial
1 Revenues Increase by 50% each year Yearly Financial Officer
2 Ratio Analysis
Better than
competitors/industry Avg. Yearly Financial Officer


Update

Update
Currently serving 3,500 products
worldwide
Global volume growth in the first quarter
of 2013 was 4%
On Earth Day Coca Cola donated more
than 55,000 recycling bins to parks,
schools, colleges, and homes in a 115
communities across the US
63,290,877 likes on Facebook
Coca Cola Rewards program is now
offered







Stock Performance