Coca-Cola Company Term Paper

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Coca-Cola Company Executive Summary

The following are 'snapshots' of current conditions at what is arguably world's largest producer of soft drinks.

Strategic planning and development

While Coke has been the generic word for 'brown soft drink' for decades, it has lots market share, calling for strategic plans to win it back. In fact, market development is a big feature of Coke's planning this holiday season. To do that, it plans to "spend an extra $350 million to $400 million on marketing and advertising worldwide" (Leith, 2004) with $100 million of that in North America; that may be necessary to spend that much to overcome the weak U.S. soft drink market and Coke is willing to do it. Despite the global nature of Coke's business, and the fact that North America (U.S., Canada) comprises only about 30% of the company's business overall, it is considered "critical" (Leith, 2004)

Economic planning and forecasting

Economic forecasting at Coke is also targeted on North America. In response to several factors -- higher prices for raw materials such as aluminum cans and plastic bottles, for example -- it is altering its projections for income (see income section, below) and using a program of moderate price increases (Leith, 2004) to attempt to balance its expenditures in general, and in the attempt to regain market share noted above. In fact, it is likely that, in addition to raw materials and marketing expenses, Coke will have additional expenses arising from some ethics issues, which will be mentioned later.

Global marketing

The biggest failure in Coke's global marketing strategies was underestimating the growth in the 'fizzy water' market (Howard, 2004). It is now in a game of catch-up, but its name brand recognition in the world's largest emerging market, China, should help it overcome this weakness of planning, as long as it pays better attention to what is demanded globally. With 70% of its market in nations other than the U.S., it is essential for Coke to properly assess both the taste preferences of the markets and the sorts of promotion those markets respond to best.

Ethics and social responsibility

One place Coke's ethics and social responsibilities problems have come home to roost is in employee morale and loyalty. By surveying its employees recently, the company discovered that "lack of trust" and "overall low morale inside the company" exceeded the expectation of senior management. In addition, Coke had shifted a great deal of expense from corporate to its independent bottlers (a move that has had an effect on its distribution system, to be addressed later). In addition, the company admitted in interviews to having "shortchanged its brands in terms of marketing and innovation" (Sellers, 2004). It is now attempting to address these issues, in addition to addressing the question of minority hiring. Between 2000 and 2002, Coke had spent more than $200 million to settle racial and gender discrimination suits, and was under court supervision to come up with a better system for hiring minorities and also promoting minorities into executive positions. Coke's progress is being handled by two business executives, two lawyers and three former civil rights officials (AP Online, 2004). It is likely that Coke has gotten the affirmative action message and will continue to improve in this area.

The company might have a bigger problem remaining, however, which is part of its culture and its distribution system. Dubious billing arrangement, in which hundreds of the company's vendors engaged, is problematical both inside the company and in terms of public relations impact when such things become common knowledge. The practice is represented by a vendor adding two cents for labor to the price of postage when the vendor bills Coke. This is a drain on Coke's profits, naturally, but it is also a matter of ethics. Coke has an obligation to avoid 'graft' situations or unfair billing and the like in order to keep its prices reflective of the value of the product for customer's benefits. At times, Coke has simply accepted this 'sloppiness' so it could get on with other matters (Edwards, 2004). However, in the current ethics climate, it has decided the better course would be to keep all areas of business out of compromising conditions and will…[continue]

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