The Coca Cola Company embodies American ingenuity and capitalism. Since its inception in 1887, Coca Cola has provided happiness and prosperity to the world. Now, 125 years later, the Coca Cola Company has over 100,000 employees and nearly 3500 soft drink brands (1).
What has made the Coca Cola Company so unique is its brand image. The Coca Cola brand is very important to the overall business success of the company. This brand has become a sustainable competitive advantage for the company over the past 100 years. This brand image and its value in the consumers mind have propelled the Coca Cola Company as well. As such, my strategic plan will focus on primarily on leveraging this brand for the benefit of both shareholders and consumers alike. The tactics that will be outlined below will also follow this strategy with very little deviations. Below is Chart 1, which indicates market share percentages of the top carbonated drink producers (2). As the chart depicts, Coca-Cola products comprise a very large portion of the overall market. Chart 2, located directly below the Chart 1 also provides market share insights with respect to Coca-Cola and Pepsi products only. As is depicted from both charts, Coca-Cola is a market leader. Our strategic plan intends to keep the company in this position heading forward as competition for consumer's dollars becomes fiercer.
Another opportunity to leverage the company's brand images is that of bottled water. A very contentious issue arising in the United States and abroad is that of health care. More individuals across the world are living longer and more productive lives. As such, many older consumers are concerned with their health. Coke is global brand, but the implications of this health issue have global reach. Europe, the United States, and Japan all have aging populations. All three have a demographic concerned with their health and living longer. As such they are looking for healthy alternatives that can meet their daily consumption needs. As such, my strategy also intends to focus on the international component and capitalize on global trends. Below is an excert from the United States Census Bureau outlining the current age epedimic America will face in the future (3).
"In all of the projection series, the future age structure of the population will be older than it is now. In the middle series, the median age of the population will steadily increase from 34.0 in 1994 to 35.5 in 2000, peak at 39.1 in 2035, then decrease slightly to 39.0 by 2050. This increasing median age is driven by the aging of the population born during the Baby Boom after World War II (1946 to 1964). About 30% of the population in 1994 were born during the Baby Boom. As this population ages, the median age will rise. People born during the Baby Boom will be between 36 and 54 years old at the turn of the century."
To capitalize on this new health consumer, bottled water and other health beverages will have a profound impact on the market share gains heading into the future. Below is Chart 3, outlining bottled water consumption in the United States. As you can see, consumption levels overall have remained stagnant, however, the consumption of bottle water has eroded market share of carbonated drinks. Our strategic plan will focus on this trend by implementing strategies to help capture market share in this burgeoning category.
Finally, another competitive advantage that will be utilized throughout the duration of this strategic plan is Coca-Cola's ability to generate earning and profits without a corresponding increase in capital expenditures. For example, many businesses, in particular, utilities must spend enormous sums of money to provide services to their consumers. If an electric company wants to expand its reach to another demographic area, it must spend a corresponding amount on cables, generators, maintenance personnel, customer service representatives and much more. Companies such as Microsoft, IBM, and Coca Cola do not have this problem as their products do not require large sum of capital expenditures to generate profits every year. In Microsoft's case, the company spends incrementally on upgrades and enhancements. Once the product (Windows 8) is complete, all that is needed is the materials cost to provide the service. Such is the case with IBM as the software initially will cost large sums of money, but it can be resold for many years into the future without large expenditures. Coke has this luxury as well with over 1.7 Billion servings being sold worldwide. Strength inherent in the company's business practices is that of economies of scale. I would leverage this strength to achieve economies of scale with the various facilities within the global economy. Economies of scale are accomplished in companies with a wide array of potential distribution networks. With many distribution networks, companies can produce and ship products more cheaply on a per unit basis. As such, companies with economies of scale have a distinct competitive advantage relative to their peers. It is this economy of scale that allow capital expenditures to be minimal compared with competitors. The company also has a centralized platform utilized by all employees but it can be accessed from any location with an internet connection. This increase efficiency reduces carrying costs associated with inventory while also providing better customer service by reducing errors. Further, economies of scale provide a means to distribute the product anywhere, thus expanding the faculties' presence within the market. Thus to generate new sales, as stated earlier, Coke does not need to increase spending correspondingly to capture those sales like a utility or other industrial company would.
Vision- The vision for both the company and the strategic plan will be identical. The vision attempts to incorporate all stakeholders involved in a manner that is beneficial for the company and society as a whole. As such, the vision incorporates the 6 P's- People, Product, Partners, Planet, Profit, and Productivity (4).
1) People: Be a great place to work where people are inspired to be the best they can be.
2) Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and satisfy people's desires and needs.
3) Partners: Nurture a winning network of customers and suppliers, together we create mutual, enduring value.
4) Planet: Be a responsible citizen that makes a difference by helping build and support sustainable communities.
5) Profit: Maximize long-term return to shareowners while being mindful of our overall responsibilities.
6) Productivity: Be a highly effective, lean and fast-moving organization.
Mission- The mission, much like the vision also attempts to align the company's strategic objectives with those of the stakeholders involved.
The mission of this strategic plan and of the company is to create value for both the company and its consumers by delivering quality beverage products everyday and to do so in an innovative manner.
1) Leadership: The courage to shape a better future
2) Collaboration: Leverage collective genius
3) Integrity: Be real
4) Accountability: If it is to be, it's up to me
5) Passion: Committed in heart and mind
6) Diversity: As inclusive as our brands
7) Quality: What we do, we do well
Superior and well-educated staff, employees, and management
Creative company members combined with a cooperative, free flowing work environment
Small Size of individual facilities which allows for flexibility, efficiency, quick decision making, and the ability to quickly adapt to market needs
High-quality product at an affordable price
Experienced staff who understand the market and how to leverage technology to benefit health conscious customers
Extensive network and contacts within the industry
Economies of Scale
Very strong brand awareness
Large organization with many layers
Limited financial resources
Lower pay relative to peers within the industry
Small percentage of the overall budget is allocated to health related endeavors
Many consumers are unaware of potential services offered in regards to health, which allows for growth
Possible good review and improvement of lackluster facilities
Leveraging technology to automate processes, provide security, provide quicker service, and provide more efficient operations
Ability to develop long-term relationships with customers thus generating a favorable view of the company
Possible negative reviews of products
Changing consumer sentiments
High interest rates on bonds which could stifle expansion plans
Further lack of funding on the part of the market
Increased costs associated with service
Employee strike as a result of lack of wage increases
Return on equity,
Return on assets
Cost per serving
1% increase in profit
Trucks in on time,
Product is ubiquitous,
Year to year improvement in all metrics
Quality Management programs
Time to destination
Reach destination in less that allotted time 75% of the time