FREE ESSAY ON COCA COLA SWOT

COCA COLA SWOT

History
It is rare to find any staple of American life that has its roots in the preceding
century. This is one facet of the Coca-Cola Company that makes it very interesting. From
its very meager beginnings, to a multinational fortune five hundred company that has the
distinction to serve over one billion people in the course of a day. Dr. John Stith
Pemberton founded the Coca-Cola Company in 1886. The first batch was mixed in a three
legged brass kettle in his back yard. He then distributed it at the local pharmacy. That
first year sales of Coke averaged nine drinks a day, and grossed $50. Since it actually
cost $70 to produce the entire supply of product for that year money was actually lost.
Confectioner Joseph Biedenharm first bottled Coke in the summer of 1894. This
complemented the fountain soda production of that year. This contributed to the spread of
the popularity of the product that was consumed in every state and territory of the
United States in 1895. Expansion was quick to follow to keep pace with growing demands
for Coke. Its interesting to note that this growth was under direction of Asa G. Candler
who purchaed Coca-Cola Corporation in its entirety for the sum of $2,300. It was also
under his direction that the unique contoured bottle was developed. This has remained a
distinct feature of this product and effectively separated it from its lesser
competitors. A few years later in 1919 the Company was again sold. However, by this time
it was sold for the very sizable sum of $25 million. 
The buyer, banker Ernest Woodruff and a group of investors decided that this was a prime
time to bring the company public. The initial offering was $40 per share and if the
dividends were 
reinvested, one share of stock today would be worth a very respectable $6.7 million. This
can be marked as the point where Coke became a financially viable company. An investment
in Coke is a solid one, and does not appear to be a high-risk company. Another point of
note is that historically, Coke has paid a dividend four times a year since 1920. This is
only a year after the initial stock offering. Coke stock has also split ten times in its
lifetime. Although there is no formula for determining when Coke will allow their stock
to split the proof that it does is very evident.
Even the United States government has sponsored Coke. During World War II, Coke dedicated
itself to get every man in uniform a Coke for five cents no matter what the cost.
Concurrently the United States government ordered three million bottles of Coke and the
equipment to bottle, wash, and refill each of those bottles twice monthly. This is a
similar strategy to the one that Gillette used in providing samples to the United States
army and then having it followed by a very substantial order. 
The 1960's are the next dates of notice. This is when the Coca-Cola Corporation made one
of their largest acquisitions. Minute Maid Company are producers of high quality fruit
juices and complemented the Coke family of products very nicely. Today Minute Maid is the
largest producer of concentrate orange juice in the world. The Sixties were also the time
when the metal cans that were shipped to the troops in Korea were available on the
shelves of your local grocery store. This was the birth of the can of soda.
Life has not always been clear sailing for coke. During the mid 1980's, Coke decided that
it needed a more modern flavor, New Coke was born. The product flopped due to a public
out cry and out pouring of loyalty to the beverage that had become an American
institution. The result of this was a return to the original formula. Coca-Cola Classic
was born. Cherry Coke was also introduced at this time. The health conscience Eighties
also brought about another revolution in the soft drink industry. Suddenly a large
segment of the market segment that previously drank soda with a high sugar content wanted
a drink with the same taste but not the same sugar content. Thus, Diet Coke became
another staple beverage of the American people. This willingness to change is a factor
that will keep Coca-Cola viable and in touch with the people. The bright history that has
preceded Coke's success is nothing but the tip of iceberg, the best days for this company
are yet to come.
Facts:
? Dr. John Stith Pemberton first introduced Coca-Cola in 1886.
? Atlanta Georgia was the Birth City of this company.
? Coke was first sold from a jug for five cents a glass at the local Pharmacy.
? Asa G. Candler bought Coke-Cola for $2,300 in 1891.
? In 1895 Coke is consumed in every state and territory of the U.S.
? Canada and Mexico were added to the Coke market in 1898.
? Coke implements a regional bottling system to supply its growing market.
? The distinctive contoured bottle is introduced as a Coke trademark in 1915.
? Ernest Woodruff and some investors purchased Coke for $25 million.
? Coke's stock was first offered to the public at $40 a share.
? One share purchased then would now be worth $6.7 million if dividends were reinvested.

? The company's stock ticker symbol is ko.
? Coke's foreign division is a subsidiary called The Coca-Cola Export Corporation.
? Coke carries $3.3 million in net debt.
? This company currently posts a profit of $3.53 Billion in net profit.
? Coca-Cola is a proud sponsor of the Olympic games.
? Coke sells 1 billion servings of product per day. Up from 9 per day when the company
was founded.
? The company's current chairman is M. Douglas Ivester.
? He is the tenth chairman of the board in the company's history.
? Coke offers $1.9 million in scholarships to graduating high school students.
? Coke employs 30,000 people in its facilities worldwide.
? The Coca-Cola Company offers a full range of benefits to their employees, including a
tuition aid program.
? Coke's company web site can be found at www.coke.com .
? Stock can be directly purchased form the Coca-Cola if the buyer has a preexisting hold
in the company.
? The Company pays dividends four times a year: April 1, July 1, October 1, and December
15.
? The Company has paid quarterly dividends since 1920.
? Stock of the Coca-Cola Company has split 10 times since 1919.
? The Company's most recent stock split was a two-for-one split in May of 1996.
? Coca-Cola Corporation also owns Minute Maid Corporation.
? Ten strategically aligned business partners of the Coca-Cola Company bottle Coke. They
are the anchor bottlers. 
? Anchor bottlers are a group of select companies throughout the Coca-Cola bottler
system.
? The Coke bottlers are also traded independently from the parent company.
? Coca-Cola recently acquired the Cadbury-Schweppes Co.
? Coke pulled its add dollars from the World Wrestling Federation, due to its violent
content.
? Coke has produced 27 different varieties of soft drinks in its history.
? Coke's subsidiaries produce over 160 different brands of soft drinks for other
companies.
? Coke's Minute Maid Corp. is the world's leading marketer of premium fruit juices and
juice drinks.
? Coke invests greatly in advertising. Their slogans include Coke is it and It's the real
thing.
Problem
The problem is to develop a three-year strategic plan for Gillette Co.
SWOT
Strengths:
By far one of Coca-Cola's largest strengths is their strong advertising campaign. In
1998, Coke had the most recognized trademark in the world (Ivester). The catchy slogans
that they roll out every few years consistently become a household commonality. When the
average American hears the phrase it's the real thing they automatically think Coca-Cola.
Also during the Christmas season Coke's clever ads with the polar bears needn't even be
identified specifically as a Coke commercial in order for the viewer to recognize the
product.
Advertising alone doesn't make a company product. Production also plays a large part in
Coca-Cola's strategy. Their product is produced by ten bottling subsidiaries that are
totally controlled by Coke (Ivester). All ten of these bottles are publicly traded
independently of Coca-Cola. Coke also licenses local bottlers to produce their product.
Coke utilizes this method in order to maintain their public image as local company in
contrast with their global reality (Coke web site). Actually 70% of Coca-Cola's business
comes form outside the United States. 
Due to the vastness of Coke's worldwide empire the consistency that they maintain is
nothing short of a minor miracle. After all, with one billion servings sold a day that's
a lot of volume of soda per year to produce, distribute, and sell.
Coca-Cola's management structure is divided into five geographic groups plus the Minute
Maid group. This diversity of the management structure allows each group to tightly
control all of the functional areas. With an operation of this size this system is of
great value. If the corporate structure was that of a single head overseeing the entire
operation it is conceivable that the head would lose touch with the arms. 
Weaknesses: 
The way we see it, we would much rather manage a business in nearly 200 countries than
try to build a business in nearly 200 countries (Ivestor). This statement was included as
part of a letter to the share holders in Coca-Cola Co. In recent years, due to the
changing global economies Coke has taken a less aggressive stand in the market place.
Despite this stance, Coke stock and market share has continued to rise. A company should
always remain dedicated to building a better business. This is the promise that a company
makes to its stockholders everyday. They promise to do the best that they can to increase
the profits of their business. Coca-Cola really needs to reconsider the impact of this
statement and re-evaluate its goals for the future.
Although Coca-Cola's decentralized management structure can be a strength, it can also be
a weakness. The company currently does not set common corporate goals. Instead, each
management region sets it own goals. In the more economically developed countries this
systems works very well. In economically challenged regions where Coke is not established
as a daily staple, Coca-Cola needs to change its internal management structure in order
to deal with this problem. Perhaps a company wide common goal of supporting the regions
where this problem exists with more resources from the other regions and from corporate
headquarters. 
Another slight problem that exists in the Coca-Cola empire is the relationship that Coke
has with their independent bottlers. The contract with the bottlers is under constant
negotiations. This has led to some tension in the past. Granted that Coke has a vested
interest in the bottlers and the product that they produce
Coca-Cola posts a very sizable net profit this year, nearly $3.5 billion. In light of
this it seems strange that such a cash rich company should carry $2.2 million in long
term debt. The advantages of carrying this debt for tax purposes do not out weigh the
advantages of having a company that is totally debt free. 
Opportunities:
The possible opportunities available to Coca-Cola are limitless due to their strong
market position and the healthy profits that they consistently turn. Coke has begun to
realize that they are capable of expanding into other markets besides that of the soft
drink. This is the focus of the Minute Maid group. The worldwide juice beverage business
is growing, with sales of more than $40 billion annually. The destination of The Minute
Maid Company is to be The Coca-Cola Company of juices, worldwide, and capture category
growth with global brands, premium products and a superior business system (Ivestor).
This is a very good opportunity for Coke to move into the next millennium where consumers
are becoming more heath conscious.
European markets also offer tremendous potential for growth. One statistic underscores
our enormous opportunity in this group: On average, each of the 866 million consumers in
the 49 countries of the Greater Europe group drinks our products less than twice a week.
We've set an aggressive goal of reaching a per capita of 200 within the next decade
(Ivestor). In this case the lack of a strong customer base is actually a great
opportunity. Coke has realized that they are deficient in this area and are taking the
appropriate step to attempt to secure for them a place in this market. Similar to the
place they hold in the United States and other regions of the world as well.
Strategically speaking this is a good idea, and Coke knows from prior experience in their
113-year history how to break into a new market.
China and the Far East also show a very large potential for growth. China is currently
the world's most populous country. By default China is also the largest consumer of food
and beverage. This plays very nicely into Coke's attempts to gain market shares in this
region.  With 60 percent of the world's population, this group has a huge opportunity to
increase per capita consumption of our products. Of the 3.6 billion potential consumers
here, each is currently drinking less than one serving of our products every two weeks on
average (Ivestor). 
Threats:
One of the largest threats that is facing Coca-Cola today is the regional economy in some
of the geographic areas in which the company operates. Coke has voiced concerns that the
down turn in these economies has had a negative effect on their business in the last
year. Coke holds the position that it is a long-term company and that this is just a
temporary downturn. This could have a negative effect on the company if this so-called
temporary downturn turns into a regional recession.
People today are attempting to live a healthier life style than their parents did in the
past. One of the first things that people tend to cut out of their diet are complex
sugars such as those found in the high fructose corn syrup. In order for Coke to stay
viable they are again going to need to develop a new product that would both address the
health concerns of the people and also maintain the taste and texture of the original
Coke. A flaw in this plan could be the lost faith that the American public has in Coke
after the New Coke product flop of the mid 80's. The facts remain though that eventually
the consumers will turn from this old product that is high in sugar and promotes tooth
decay to a healthier alternative.
In Belgium after an incident where a bottler used the wrong type of carbon dioxide to
bottle the product all Coca-Cola was removed from the shelves pursuant of a government
ban enacted by the Minister of Health. The carbon dioxide that was used was mixed with a
fungicide and was meant to treat wooden pallets against mildew. A hundred or so people
were rendered sick by this mistake, 
mostly small children. The product was also removed from the shelves in the Netherlands,
and France. Coke has taken steps to try to win back their customers. Some of these steps
include trying to assure the people in the European market place that the bottling plant
in question was thoroughly cleaned and tested, and also that the tainted product was
destroyed. Coke needs to strongly assure the Belgium people that their product is safe,
and also take steps to make sure that an incident like this has no chance what so ever of
happening again.
Competition:
Coke does hold a majority of the market share in the soft drink industry. Pepsi
Corporation is attempting to cut into this lead. They are doing this through a very
aggressive marketing campaign that is targeted mainly at the younger 13-25 year old
demographic. Pepsi's plan is not to make customers out of Coke drinkers but is to make
new customers out of people who currently don't have a cola preference. Pepsi is also
attempting to match Coca-Cola country for country in a global battle for control.
The generic soda products that many stores seem to have are digging a small hole in
Coca-Colas profits. These stores' strategies are to offer a similar product of similar
quality at a much lower cost.
Sometimes the cost is less than half that of brand name colas such as Coke. This is a
marketing strategy known as market penetration. This strategy allows a product at a lower
price to reach a larger market due to its lower cost. Fortunately these generic store
brands do not have the brand recognition that Coke has, therefore these generic brands
should not be a very serious threat to the overall stability of the Coca-Cola empire. But
this issue is also one that Coke would be wise to watch just so they don't get taken by
surprise if there happens to be a swing in the markets to these generic brands.
The Minute Maid group has its own competition that is unique to their particular market.
The new players in this game are the Florida Orange Growers Co-op. This is a group of
growers that are collaborating in an effort to produce a very high quality juice for a
competitive price. The grass roots promotions that this group is using appeals directly
to the heartland of this country. And is stealing market share in the orange juice
industry by the month. Coke should attempt to counteract this by either launching its own
grass roots ad campaign such as it uses to sell Classic Coke or possibly talk to the
growers and work a deal with the that allows then higher profits and more credit. 
Recommendations:
As mentioned before Coca-Cola is a very cash rich company that carries very little debt
and turns a very sizable net profit. Currently Coke has limited itself to the beverage
industry. This in the past has been a very safe move that has been good for Coke. However
the face of the global economy is changing on a grand scale. If Coke were to found a
venture capital group to invest in new ideas and companies that show extraordinary
potential for growth. Coke could staff this small group with the best business and
technical minds that it can find. Coke would be well served to follow the guidelines on
diversification set out in the book Management by Dr. Zivic. This book has a section that
covers in great detail the reason why a company should diversify and how such a plan
could be implemented. The New division could share the management infrastructure of
Coca-Cola and their financial resources. In return by investing in the newest
technologies and ideas this new division would have the potential to become even larger
than its soft drink counterpart. The justification for this is that gaining market share
in the soft drink is very difficult. Conversely, in high technology fields gaining market
share is as simple as having the best product. 
Coke would be well served to invest in an idea similar to this. All of the components are
there for them to become a major player in the high technology field. The only piece of
the puzzle that they are missing is the foresight to diversify into such an area. In the
interest of credibility Coke would be wise to name this group something not identifiable
with the parent company. 
On the soft drink side of the business Coke should continue along the road to success
that they started on over 100 years ago. It has been successful to this point and appears
that it will remain successful well into the future. Places where it may be better to
modify this plan to sell more products are in the European and Asian markets. Currently
this plan is not selling as much product as it is in other sections of the world. A
solution to this could be to research what the consumer wants in these regions and then
act on this research to give the consumer exactly what they want.
Alternatives:
Recovering natural disasters have always sponsored a time of community and kinship from
among those affected. Many large companies such as Philip Morris spend a good deal of
money assisting in any way that they can when a situation like this happens. If a company
was to put together a natural disaster recovery team to go in and aid in the recovery of
the affected people, Coke may be able to change their image from corporate giant into a
carrying member of the global community. The key for this program is for it to be truly
sincere, not a publicity stunt. This could be accomplished by Coke showing up and helping
in a very big way, but not advertising that they did assist. They could even downplay
their involvement. The more modest the company is about their involvement the more
positively responsive people will be toward Coke.
The way that this team would operate is that when a natural disaster occurs the team
would mobilize three large cargo planes that would be filled with construction equipment,
emergency medical supplies and food. When the team arrives at their destination they
would unload and setup camp. They would then assist in any capacity that is required of
them and they are equipped to handle. The initial capital expense for such a project
would be very high. But the potential public relations benefits that would result are
immeasurable. 
Another plan that could improve Coke's market position over the next three years is if
they were to reorganize their global management structure. Coke's large size can be a
burden when they are attempting to sell products to many very different demographics of
individuals. If the company's bulk was divided by regions empowered to make major market
and production decisions without the consent of the corporate headquarters. This would
push each region to be more aggressive in their attempt to manage their regions. Dr.
Zivic covers global management in detail in the book Management. Coke needs to realize
that the face of their market is bound to change. They need to make absolutely sure that
their management matches their market.
References
www.coke.com (1998). The Coca-Cola company website.
Ivester, M. Douglas. (1998). Gillette company annual Report.
Zivic, Louis.(1998). Management, Primus publishing.
www.cnn.com (1999) Coke faces problems in Belgium.