The Coca-Cola Company is the leading marketer, manufacturer, and retailer of non-alcoholic beverages with over 500 brands in more than 200 countries (Elmore, 2014). Since 1889, the Coca-Cola Company has had a licensed distribution system producing concentrated syrup, which is sold to different bottlers across the globe (Elmore, 2014).
The company headquartered in Atlanta, Georgia, owns the company's anchor bottler, Coca-Cola Refreshments, in North America. For over ten decades, the Coca-Cola Company has maintained its position as a leader in the soft drinks segment. The current paper will discuss the Coca-Cola Company and will focus on the leadership, competitors, and three issues facing the company.
Dating back to 1886, the Cola-Cola Company has had a long history since way back when John Pemberton made Coca-Cola syrup in the back yard of his home and sold the drink at a pharmacy. In 1887, John Pemberton, the founder of Coca-Cola, sold the company to Asa Chandelier, a chemist (Elmore, 2014). After that, through marketing and aggressive advertisement Chandelier transformed the company into an international enterprise.
The company only manufactured one brand at that time, which was Coca-Cola. The enterprise now produces more than 400 brands across 200 nations. In the past, the company sold beverages in glasses (Elmore, 2014). Nevertheless, two lawyers acquired permission to sell the drink in bottles, which marked the commencement of bottled Coca-Cola beverages across the globe.
The corporation put up a competition for Coca-Cola bottle designs, whereby an Indiana Company attained the manufacturing tender of a Coca-Cola bottle. The Indiana Company manufactured decent and unique looking bottles, hence convincing the Coca-Cola enterprise to start cooperation. Unique bottles could be recognized in the dark, isolating the Coca-Cola Company from other beverage enterprises and making it easy for consumers to identify the product (Lopez, 2013). In 1919, the enterprise changed ownership when the company was sold to Ernest Woodruff (Hays, 2005). Later, in 1923 the company's CEO position was given to Robert Woodruff's son (Elmore, 2014).
In 1928, Robert, a smart businessperson, introduced the Coca-Cola brand to the world Olympic Games. Besides, Robert pioneered Coca-Cola beverage packaging so that it could be carried in six-pack packages. The Olympic Games marketed Coca-Cola, thus receiving worldwide publicity, and the company expanded its distribution to various countries, persecuting two lines: in the US and outside the US (Hays, 2005).
When the American government entered World War II, the Coca-Cola Company under Woodruff's leadership received another global boost when he offered the company for sale at a lesser cost to the military. Many consumers had the chance to taste the drink, hence placing Coca-Cola at a higher rank as compared to its position before World War II (Pendergrast, 2013).
The company then ventured into juices and drinks. When the company bought the Minute Maid juice manufacturing company, it marked the beginning of juice market (Pendergrast, 2013). In 1970, the company spread its marketing to India, being licensed as the only beverage company there (Elmore, 2014). The company again shifted the leadership to Roberto Goizueta in the 1980s, thus moving it to a new level (Pendergrast, 2013).
Consumers were careful about their weight at the time, which presented a great opportunity realized by Roberto when he introduced Diet Coke. The beverage was received warmly by customers. Then, Coca-Colas bottling operation was consolidated under the brand of Coca-Cola Enterprises Inc., thus creating a solid distribution base for the company (Hays, 2005). The company has expanded tremendously since its establishment and is also aware of the needs of communities in which it has set up its commercial activities. It has grown from a backyard manufacturing to the world's most favorite beverage company.
Mission and Vision
Coca-Cola Co. faces significant challenges from all over the globe. With respect to competitors and manufacturing, there are some new brands threatening Coca-Cola. The company's mission is to dominate the business over the next ten years and beyond that time. The organization focuses on understanding forces and trends that will help its activities in the future and works to tackle coming challenges (Hays, 2005). Therefore, this goal is present in the companys 2020 vision. It creates a lasting target for the enterprise and offers the company a roadmap for winning together with other bottling partners.
The primary goal for the Coca-Cola Company is to strive worldwide as a business that conducts its operations ethically and responsibly and to increase justifiable growth to operate in the new generation market (Elmore, 2014). Through these objectives, the company forms the foundation for enterprises in the decision-making process. The objectives help the Coca-Cola Company to accomplish its goals and make new drinks (Hays, 2005).
The company can continue planning for the future with the aid of targets. The Coca-Cola Company can find new ways of commercializing its products all over the world. For instance, supporting and helping local communities financially can assist the company with creating more business opportunities and increasing profit.
For a company to execute effective leadership, it would require relentless, tireless, and strategic thinking (Maak & Pless, 2006). The leadership should attract and employ individuals capable of leading and creating a dynamic environment. Effective interaction among stakeholders and consumers is essential. Through executing proper communication, aligning the company system, and formulating a clear and compelling vision, Coca-Cola has realized effective leadership. It is impossible to expand without implementing the company's vision; however, execution minus vision is impossible (Aaker & Joachimsthaler, 2012).
For Coca-Cola to capture new opportunities, it will need both vision and implementation through the business and its partners. Thus, helping the enterprise and its bottling partners can realize the future direction of the industry (Maak & Pless, 2006). The company's vision is focused on capturing exceptional opportunities emerging in the future across the market of global non-alcoholic beverage production. The vision of the company is to harness the latest innovations, new beverage requirements, and new wealth to speed up and produce the world's respected consumer goods system.
Coca-Colas leadership has created a compelling and clear vision for the company and works to inspire their employees to achieve that vision (Hays, 2005). Besides, it is essential for the company's employees and the bottling system leadership to be united behind the vision.
Muhtar Kent is the current CEO and Chairman of the Board of the Coca-Cola enterprise. In 1978, Mr. Kent joined the Coca-Cola Company in Atlanta and held a variety of operation roles and marketing during his regime (Elmore, 2014). Mr. Kent was then appointed General Manager of Coca-Cola Enterprise Central Asia and Turkey in 1985. After that, he served as Senior Deputy CEO Coca-Cola International and President of Coca-Cola Companys East Central Europe Division from 1989 to1995 with accountability for 23 nations (Elmore, 2014).
Through 1995 and 1998, Mr. Kent served as Coca-Cola Amatil-Europe Managing Director with the responsibility for bottling operations in 12 countries. The task of the company's president is to create a climate of success for employees and encourage them to realize the vision created for the enterprise. Thus, this is a true essence of leadership. Nonetheless, execution is an essential goal as well (Aaker & Joachimsthaler, 2012).
Implementation of the vision of the Coca-Cola enterprise involves focusing on three core competencies of franchise leadership that includes working with the company's 300 bottling partners across the globe to generate greater system configuration (Lopez, 2013). Besides, it concerns commercial leadership that encompasses every strategic action taken by more than 20 million retail customers who sell Coca-Cola brands across the globe every day. Moreover, it entails consumer marketing, which generates a connection and emotional bonding with clients.
The ultimate competition that the Coca-Cola firm faces comes from rival sellers within the soft drinks industry. In the beverage industry, Cadbury Schweppes, PepsiCo, and Coca-Cola are the greatest rivals since they are all established worldwide, which creates a considerable amount of competition (Pendergrast, 2013). In turn, smaller companies, including the National Beverage Company and Cott Corporation, hold the remaining market share (Aaker & Joachimsthaler, 2012). All five enterprises make a portion of their profits outside of the US. Although Coca-Cola, Sprite, Fanta, and Diet Coke are among the top five soft drinks owned by Coca-Cola, they had lower sales than PepsiCo in 2005 (Elmore, 2014).
In the global market, Coca-Cola has higher sales than PepsiCo; however, PepsiCo is the major competitor of Coca-Cola and they both have been in a power struggle for decades. Besides, since 1999 Coca-Cola has dominated in the industry with a market share of 53% as compared to Pepsi with 12% of the market share (Elmore, 2014).
The Coca-Cola Company's share in the market has shrunk to 42.7% because of Pepsi's marketing schemes, whereas PepsiCo's market share has increased to 30.8% (Pendergrast, 2013). A large gap in the market shares is caused by the fact that Coca-Cola has exploited Pepsi's late market entry and the enterprise has set up its bottling and distribution network mostly in developed markets. The Coca-Cola Company is the primary soft drink manufacturer in the world. In the US alone, 800 million servings of Coca-Cola are sold yearly (Aaker & Joachimsthaler, 2012).
Bottling plants are locally operated and owned by independent business people who are residents of countries where they are located. Coca-Cola manufactures goods and distributes non-alcoholic beverage syrups and concentrates such as fountain syrups (Hays, 2005). Coca-Cola manufacturers supply beverages and concentrates that aid in making products and offer management assistance to help bottlers ensure commercial growth of their organizations. Thus, putting Pepsi at a substantial hindrance has promoted the company in the US market. Moreover, Coca-Cola continues to outperform Pepsi in at least every area of the globe other than Pakistan, Saudi Arabia, and India (Elmore, 2014).
In 1977, Coca-Cola left India despite being India leading carbonated drink manufacturer at the time. The reason was the fact that the ruling government ordered the Coca-Cola enterprise to turn over its secret formula of making Coke and dilute the company's stake in its Indian unit as obligated by the Foreign Exchange Regulation Act (FERA).
In 1988, PepsiCo expanded its territory to India and created a joint venture with the Volts India Limited and the Punjab government. This joint venture sold and marketed Lehar Pepsi until 1991 when the application of foreign brands was allowed. In 1994, PepsiCo acquired its partners and concluded the joint venture. The Coca-Cola Corporation returned to the market under the Indias Liberalization policy in 1993 (Lopez, 2013). In 2005, PepsiCo and Coca-Cola Company together seized 95% sales of the soft drink market share in India. Then, the Coca Colas market share was 52.5% (Lopez, 2013).
Initially, Pepsi had a higher market share as compared to Coke in Russia although it was weakened after the end of the Cold War. In 1972, PepsiCo struck a negotiable agreement with the state of the Soviet Union (Maak & Pless, 2006). Thus, PepsiCo was granted the rights of export and Western marketing of Stolichnaya vodka in exchange for the Soviet marketing and import of Pepsi-Cola (Hays, 2005). Pepsi-Cola became the first foreign product sanctioned for trade in the USSR because of the exchange. Among the initial American products in the Soviet Union, Pepsi became the symbol of that relationship and the Soviet policy.
Another competitive pressure for Coca Cola is the brand loyalty. Coke ranks 36th and Diet Pepsi ranks 17th with regard to having faithful consumers of their brands. The latest competition among rivals is to create new varieties of soft drinks like cherry and vanilla to acquire new customers and escalate sales. However, Pepsi has been working towards countering competition more aggressively in developing economies where the dominance of Coke is not as pronounced as in developed countries. The emerging markets growth is expected to outgrow developed markets.
The international market rivalry is supposed to be more distinct. In 1975, Pepsi started displaying individuals doing blind taste tests known as Pepsi challenge whereby they preferred one product to the other (Elmore, 2014). Pepsi advertisements focus on celebrities choosing Pepsi over Coke and positioning Pepsi as the Choice of New Generation (Lopez, 2013). Pepsi hires famous spokespersons to aid in promoting its products.
Pepsi launched the companys most successful long-term strategy of the Cola Wars, Pepsi Stuff, in the later years of the 1990s. Consumers were requested to drink Pepsi, get Stuff, and collect Pepsi Points for cups and billions of packages. Consumers would convert points to get free Pepsi lifestyle products (Hays, 2005).
For more than two years, Pepsi ensured that the program resonated with consumers after testing and researching, hence marking the birth of Pepsi Stuff, which became successful instantly, encouraging participation of millions of users. During the summer of the Atlanta Olympics held in the Coke's hometown, Pepsi beat Coke, yet Coke was the lead sponsor of the games (Lopez, 2013). The performance was successful, leading to expansion of Mountain Dew into Pepsi's international markets. The company has continued to run the program for years, frequently inventing new features.
In 2005, Pepsi and Coca-Cola engaged in the cyber war with the re-introduction of Pepsi Stuff, whereas Coca-Cola hit back with Coke Rewards. This Cola war has already ended although Pepsi Stuff concluded its services and with Coke Rewards still offering prizes on their website (Hays, 2005). Pepsi Stuff and Coke Rewards are both loyalty programs that offered products and prices to consumers after collecting 12/24 pack box tops and bottle caps and submitting codes online for a given number of points.
Besides, Pepsi's online program in collaboration with Amazon permitted customers to purchase various products using their Pepsi Points. For instance, these products incuded mp3 downloads (Pendergrast, 2013). Nevertheless, Coke and Coca-Cola had a partnership with the iTunes Store initially.
Challenges Currently Facing the Company
True sustainability requires looking beyond the concerns of the company and considering the connection with the globe at large. It includes observation of the company's role in addressing global issues that are beyond the company. The three issues include health and wellness trend, declining sales volume in the soft drink sector, and increased competition from PepsiCo. However, recommendations are provided to turn these challenges into opportunities.
Increased Competition from PepsiCo
Increased rivalry from PepsiCo is yet another issue facing Coca-Cola. Over the years, Coca-Cola and PepsiCo have waged the Cola War. In December of 2006, PepsiCo took over market capitalization and replaced Coca-Cola, while also expanding its product mix to include food, mainly healthy food. Coca-Cola is valued at $97.9 billion after PepsiCo that is valued at $98.4 billion (Elmore, 2014). Until 2010, PepsiCo had a higher gross profit than Coca-Cola by $8.8 billion. PepsiCo has invested more capital in development of and research on the beverage. Moreover, PepsiCo remains the main competitor for Coca-Cola (Hays, 2005).
Health and Wellness Trend
Another issue facing Coca-Cola is the wellness and health trend. Health and wellness remain a significant trend throughout the beverage market in the world. Daily consumption of sweetened soft drinks intensifies the risk of becoming obese. However, diet soft drink is a substitute of a healthier soft drink. Overweight kids are being discouraged from consuming diet soft drinks because they lack nutritive value, which is slumping Cokes sales (Hays, 2005). Adults concerned about diabetes would replace high-calories soft drink with low-calorie juice or water. The majority of individuals consuming soft drinks change their consumption to healthier products with reduced side effects.
Declining Sales Volume in the Soft Drink Sector
Another issue currently facing Coca-Cola is a decreasing sales volume in the soft drink sector. In the US market, which is a major Coca-Cola market, the volume sale of carbonated soft drinks reduced by more than 8% in five years continuously from 2005-2009. In 2005, the drop was at 0.2%, in 2006 at 0.6%, in 2007 at 2.3%, in 2008 at 3%, and in 2009 at 2.1% (Hays, 2005). The possibility of the continuous decline is real.
Since PepsiCo has horizontally expanded, Coca-Cola should grow vertically. In PepsiCo, 37% of products are beverages. Therefore, Coca-Cola should focus on beverages and drinks-related businesses, for instance, bottling, glass and tin can recycling, and sugar plantation activities. Environmental change is rapid nowadays (Aaker & Joachimsthaler, 2012). Therefore, Coca-Cola should watch out for any new trends and position itself strategically to keep its competitive advantage.
In the area of health and wellness, Coca-Cola should provide industry leadership. The company should manufacture different varieties of products for various market segments. In areas with lots of infants, Coca-Cola should emphasize on marketing water and tea beverage with lower sugar and sodium (Maak & Pless, 2006). In areas with teenagers, Coca-Cola should produce organic beverages apart from energy drinks and sports drinks.
If Coca-Cola's focus remains mainly on carbonated soft drinks, it might lose or weaken the market dominance in the beverage industry. Coca-Cola can instead focus on energy drinks, noncarbonated beverages, and bottled water. In 2010, energy drinks experienced 10% growth as the energy drinks shot up by about 50% in 2006 (Hays, 2005). The new generation of health conscious customers will focus mostly on healthy drinks and energy drinks; therefore, Coca-Cola should concentrate on manufacturing such beverages.
The Coca-Cola Company is without a doubt the leading beverage manufacturer in the market. Since 1889, the Coca-Cola Company has operated a licensed distribution system. The company has a diverse history dating from 1886 when John Pemberton made the Coca-Cola syrup in his backyard and sold it at the friend's pharmacy. The companys guidance has shifted several times until under the leadership of Roberto Goizueta in the 1980s the corporation expanded internationally. The company's mission and vision aid in building the enterprise at a new level of marketing. With the help of objectives, the Coca-Cola Company can achieve its goals for future growth. Effective communication between shareholders and customers is vital.
Coca-Cola establishment also needs strategic thinking and relentless and tireless leadership to be effective. The leadership helps in attracting and retaining capable individuals willing to lead and create a dynamic environment. However, Coca-Cola has experienced the greatest competition among existing organizations within the industry. Among competitors, including Cott Corporation and National Beverage Company, PepsiCo is the biggest competitor of Coca-Cola Company.
The two corporations have been in a power struggle for years. The company's sustainability requires going beyond the concerns of the company and stablishing connection with the world. For instance, such issues include perception of the company's role in tackling global issues such as increased competition from PepsiCo, health and wellness trend, and a declining sales volume in the soft drink sector.
Besides, Coca-Cola should watch out for new trends with a view to positioning the company strategically and maintaining its competitive advantage. In addition to sports drinks and energy drinks, Coca-Cola should produce organic beverages and focus on providing beverages such as energy drinks and healthy beverages to meet the new generations needs and, respectively, to aid in solving the above mentioned issues.