Business Cola Wars the Product Thesis

Excerpt from Thesis :

Increasing their product lines with good products will increase their sales around the world.

The biggest threat that Coca-Cola faces is the intense competition that exists within the industry. Coca-Cola has three main competitors, these being: PepsiCo, Cadbury Schweppes, and the Cott Corporation. All of these companies have products that compete with Coca-Cola products around the world. The competition between Coca-Cola and Pepsi has dominated the industry for more than a century. Both companies have participated in fierce marketing campaigns along with much sponsorship. Trying to stay a step ahead of Pepsi has been a long concern for the Coca-Cola Company and doesn't seem to be letting up anytime soon.

In the financial analysis, I compared Coca-Cola with their three main competitors in the areas of Return on Assets (ROA), Current Ratio, and Debt to Asset Ratio and Inventory Turnover from 2006 to 2008. In looking at the ROA ratio (Ex.1), it can be seen that Coca-Cola's return on assets has remained relatively steady over the three-year period. Pepsi's ROA dropped slightly over the three-year period, while both Cadbury Schweppes and Cott dropped dramatically.

In looking at the current ratios of the four companies (Ex. 2), Coca-Cola's ratio has increased slightly over the three-year period. Pepsi's current ratio was steady the first two years of the period but then dropped slightly in 2008. Cadbury Schweppes ratio remained constant over the three-year period while the Cott Corp decreased slightly in the last year.

Ex. 3 shows the debt to asset ratios for all four companies. Coca-Cola's debt to asset ratio increased from 2006 to 2007 and then remained steady in 2008. Pepsi's ratio was steady in 2006 and 2007 and then increased in 2008. The debt to asset ratio for Cadbury Schweppes decreased from 2006 to 2007 but then rebounded nicely in 2008. The Cott Corporation's level was steady in 2006 and 2007 and then increased slightly in 2008.

The Inventory Turnover ratios for all four companies can be seen in Ex. 4. Coca-Cola's ratio dropped from 2006 to 2007 and then remained steady. Pepsi's inventory turnover ratio dropped from 2006 to 2007 and then remained steady in 2008. Cadbury Schweppes ratio dropped drastically from 2006 to 2007 and then rebounded slightly in 2008. The Cott Corporation's ratio remained steady over the entire three-year period showing their stability.

After looking at all three analysis surrounding Coca-Cola and the soft drink industry there are several recommendations that can be made. An immediate concern that Coca-Cola is facing is the ever growing concern with nutrition and healthy eating. Because of this push there has been a concern raised that soft drinks are unhealthy and not good for you. This thinking has caused some downfall in the sales of carbonated soft drinks. A recommendation for Coca-Cola would be to focus their immediate attention on their non-carbonated product lines. These would include juices, teas and sports drinks. Taking advantage of the ever growing market for sport industry is a great way for Coca-Cola to promote their sport drink line. Acquiring sponsorships in the sports arena will allow them to increase the promotion of their products through various mass medias.

In the short-term I would recommend that Coca-Cola focus maintaining the good relationships that they have with their bottler, suppliers and retailers. Their unique bottling system is a great asset to the success of their company as a whole. This system allows them to manage their business world wide in a very efficient manner. Each bottler has the responsibility of promoting and marketing their own strategies in order to increase sales in their region. They are also allowed to promote new products within their region with Coca-Cola's approval. In the short-term it is also important for Coca-Cola to maintain along with increasing their partnerships with famous restaurant chains around the world. This allows them to capitalize on more sales and great advertising. It is also important that they continue to keep a close eye on their biggest competitor in Pepsi. Pepsi is currently their biggest threat and thus warrants constant attention.

In the long-term, Coca-Cola needs to focus on regaining the trust of their employees along with increasing what they refer to as their bench strength. They also need to focus on the long-term push towards developing health products. The new overall push to get and stay healthier can be seen everywhere. The mass media and various consumer organizations are constantly informing the public that carbonated beverages are bad. There is an especially large campaign going on surrounding children and their health habits. Coca-Cola needs to take advantage of this trend by creating and promoting health drinks for kids. They have already begun to work on this concept with the release of a new healthy drink called "Kuhh" in Korea. Since the product was successful, their total sales increased and the image of Coca-Cola increased tremendously. They also released a new healthy drink, known as "Clear Day," which is a green tea drink. It was a big hit and increased sales immensely. Coca-Cola needs to run with this idea and work on developing new healthy drinks, especially those designed for children, around the world (the Chronicle of Coca-Cola, 2009).

A last recommendation that I have is for Coca-Cola to continue to invest money along with donations in order to better their overall image of a company that cares. They currently have an image of being one of the largest and best companies in the world. But their image is not always reflective of this around the world. Consumers have proven over time that those companies that make them feel special are those companies that do well. Consumer want to feel that they company cares about them and really wants to know what they want and what they need. Coca-Cola has done that in many of their markets across the globe, but need to work on the rest in order to gain as much market share as they can. Happy customers promote bigger sales and bigger profits.

Appendix

Ex.1

Ex.2

Ex. 3

Ex. 4

References

Five Competitive Forces model Porter. (2009). Retrieved from Value-Based Management Web

site: http://www.valuebasedmanagement.net/methods_porter_five_forces.html

Interview with Coke CEO Isdell. (2004). Retrieved August 6, 2009, from Beverage Digest Web

site: http://www.beverage-digest.com/editorial/041008.php

North American Industry Classification System (NAICS). (2008). Retrieved from U.S. Census

Bureau August 6, 2009, from Web site:

http://www.census.gov/epcd/naics02/naicod02.htm

Soft Drinks & Diet Soft Drinks. (2009). Retrieved from American…

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