The Coca-Cola Company: Business model and implementation in China

Thèmes abordés

Coca cola china emerging market

Résumé du document

The Coca-Cola Company is one of the largest producers of soft drinks and syrups, as well as the world's biggest producer of juice and juice-related products in over 200 countries. Coca Cola has around 93,000 employees and sells over 3,300 beverages. It has six operating segments: Eurasia, Africa, North America, Europe, Latin America, Pacific and bottling investments. One of its biggest segments of revenue is earned via its bottling operations. The original Coke formula was invented in 1886 in Georgia by the Eagle Drug and Chemical Company by a chemist named John Pemberton.

The original purpose behind Coca Cola's consumption was the belief that carbonated water was good for one's health reinforced by Pemberton's claims that Coca-Cola was able cure some diseases. The two key ingredients was also the reason for Coca Cola's name: coca leaf (cocaine) and kola nut (caffeine), the ‘k' was changed to ‘c' for marketing purposes.

Organization of the Coca Cola business and its diversity: Coca Cola Company is devised of two main parts: Coca Cola System and The Coca-Cola Company. The Coca-Cola Company's main focus is the production of syrups and marketing of the brands and trademarks, while Coca-Cola bottling partners produce and package the beverages and then distributes them to their retail and wholesale customers. Coca Cola Company works with over 300 bottling partners that range from big to small privately and publicly traded businesses worldwide.

Diversity of products and geographical strengths:
Coca-Cola's strategy is to utilize its brands, distribution system, and financial strength to achieve long-term sustainable growth. Coca Cola offers a variety of products from carbonated drinks to tea and water. Coca Cola's most profitable region is North America. During the current crisis, while economies are slowing down around the world, most markedly in North America, Coca-Cola is likely to offset specific region weakness with strengths in other geographies.

Coca-Cola's strategy is to utilize its brands, distribution system, and financial strength to achieve long-term sustainable growth. The Coke system incorporates 900 plants, 500,000 trucks, 10 million cold drink vending machines, and a $50 billion supply chain across over 200 countries with product availability in 20 million outlets.

Tags: The Coca-Cola Company,Coca Cola System,Eagle Drug and Chemical Company, beverage industry

Extraits

[...] Concerning the middle and long terms, the company wants to have a business model innovation. It can be done by three different ways: Business model innovation based on actor Business model innovation based on actor change refers identifying new value actors, especially new customers, and introducing them into the focal firm's value network. The fact that customers stay away from value network can be caused by technical, economic, cultural and institutional reasons. Accordingly there are different solutions. (Bower and Christensen, 1995; Christensen 2003). [...]

[...] The soft-drink giant already operates 39 plants in China. It opened three new plants in Jiangxi Province, Hubei Province and Xinjiang Uygur Autonomous Region last year. Also, it now has two factories under construction, including the largest one in Henan and the other in Inner Mongolia Autonomous Region. Statistics from the company showed its investment in the new plant in Hubei Province has reached 600 million Yuan, while the cost of the two-phase project in Jiangxi Province added up to 250 million Yuan. [...]

[...] Finally, Coca Cola is consistently improving the environmental effects of their process which is in tune with the times. Corporate and governance strategy Corporate strategy The industry is shifting away from carbonated soft drinks and more towards still beverages because consumers are looking for healthier alternatives. Coca-Cola will probably continue to focus on beverage purchases and partnerships, particularly outside the U.S. Coke has gained exclusive rights of the distribution of Evian bottled water in the U.S. and Canada and Rockstar energy drinks in most of the U.S. [...]

[...] So, beverage companies have to understand the tastes of people born in the 1980s and 1990s which are very different from the previous generation. Living standard of ordinary people in China is rising, but many people find themselves with illness as they become successful: higher blood pressure, diabetes . So today, people are paying more and more attention to their health. Also quality of lifestyle is increasing as the increasing of purchasing power and education level, and there is a decline in poverty (per capita income was $6,500 which is one of the highest in Asia in 2009). [...]

[...] For example Coca Cola will be inspected and supervised regularly to make sure that it meets the environmental standards in its industrial operations. Hofstede Analysis The Chinese analysis shows that the Chinese culture is a long-term oriented culture which is true for all Asian cultures. This dimension indicates a society's time perspective and an attitude to never give up in every situation. This point could be interesting because Coca-Cola is related to the Sport and effort. It's also a good point because if you take a place in this society you can stay easily on the market. [...]