Coca Cola Strategic Man

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Updated: Jul 27, 2019
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Coca Cola Strategic Man essay

The Coca-Cola company is a global company that operates in more than 200 countries, selling 400 different brands of nonalcoholic beverages, and 2,800 products available (Britannica, 2018). The company began in May 1886, and has continued for a long time through times of war, peace, and economic turmoil. It was founded in 1892 as an American corporation that sold syrup and concentrate for their sweetened and carbonated beverage that became a cultural institution in the United States (Britannica, 2018). In the late 1990’s, Coca-Cola was one of the most impressive companies in the world, with a mastery of brand building, advertisement, and strategic management.

The Drink itself was originated in 1886 when an Atlanta pharmacists by the name of John S. Pemberton, made it as a tonic for most common ailments (Cantwell, 2015). It was based off cocaine from the coca leaf, along with caffeine from the kola nut. Cocaine was of course removed in the year of 1903, and Pemberton continued to sell his syrup (Britannica, 2018). With advertising and strategic management, the drink became extremely successful. In 1891 the business was secured by a different owner named Asa Griggs Candler, who was also an Atlanta based pharmacist (Cantwell, 2015). He quired it for a total of $2,300, and in 1893 the trademark of Coca-Cola was in the U.S. Patent office (Britannica, 2018). Under this new leadership, sales rose dramatically from around 9,000 gallons of syrup in 1890, to 370,877 gallons in 1900. They established manufacturing plants in Dallas, Los Angeles, and Philadelphia to do this, and it was sold in all U.S. states (Britannica, 2018). The company was sold again in 1919 for $25 million to investors led by Atlanta businessman Ernest Woodruff (Britannica, 2018). His son became president and chairman for more than three decades where the company continued to grow. Now the company has one of the most pervasive and sophisticated production and distribution systems in the market.

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The Philosophy of Coca-Cola as a company is based around increasing CSR from within, and generally being a positive business entity through having their values embedded in their company culture. Coca-Cola believes in stakeholder engagement, which would improve relations with anyone who is directly affected by Coca-Cola. Overall they strive to act on their mission of refreshing the world, inspiring moments of optimism and happiness, and to create value and make a difference.

Mission and Vision Statement

Leaders should emphasize the current mission statement to employees, which clarifies the purpose and primary, measurable objectives of the organization (Hawthorne, 2018). A mission statement is meant for employees and leaders of the organization. Strategic plans involve crafting the mission statement to reflect a new direction of the organization (Hawthorne, 2018). When creating mission and vision statements, highlighting the benefits of the change help employees and the public buy into the change. Like mission statements, vision statements help to describe the organization’s purpose. Vision statements also include the organization values. Vision statements give direction for employee behavior and helps provide inspiration. Strategic plans may require a marketing strategy, which could include the vision statement to also help inspire consumers to work with the organization.

The mission statement of Coca-Cola is “To refresh the world, to inspire moments of optimism and happiness, and to create value and make a difference” (Coca-Cola, n.d.). For Coca-Cola to achieve their mission, they need to address their vison which serves as a framework for them to accomplish sustainable and quality growth. Elements of this framework are people, portfolio, partners, planet, profit, and productivity (Coca-Cola, n.d.).

“People: Inspiring each other to be the best we can be by providing a great place to work

Portfolio: Offering the world a brands that anticipate and satisfy people’s desires and needs

Partners: Nurturing a winning network of partners and building mutual loyalty

Planet: Being a responsible global citizen that makes a difference by helping to build and support sustainable communities

Profit: Maximizing long-term return to shareholders, while being mindful of our overall responsibilities

Productivity: Being a highly effective, lean and fast-moving organization.” (Coca-Cola, 2018)

The company does a decent job at following through with their mission, since they do definitely create value and make a difference. They do not however have a tight grasp on other parts of their mission statement such as their mission to refresh the world, and to inspire moments of optimism and happiness. Although the company does carry out their statements, they have room to improve. Ethical violations by Coca-Cola, such as the massive use of nonrenewable resources (MacDonald, 2018), is an indicator of the gap in the company’s actions in congruence with their statements.

External Environment Analysis

In the environment in which Coca-Cola is in, many external factors deeply affect the company. External environmental factors such as water scarcity, and Coca-Cola’s massive consumption of water, is an example of a CSR threat. A model used to examine industry economics and industry attractiveness is Michal Porters Five Force Model (Porter, 1980). Porter discusses five key forces that will determine industry profitability: competitive rival sellers within the industry, new entrants to the industry, and substitute suppliers, buyers, and products. The greater the opportunity for superior performance by firms within the industry, the weaker the forces (Porter, 1980). Companies that are able to satisfy key success factors usually achieve better financial performance. Threats of substitute products are a notorious conflict Coca-Cola consistently has to combat, with many people not able to differentiate between Coca-Cola and pepsi in a blind taste test (valuationacademy, 2018)

Threats of new entrants/ potential competitors inflict pressure onto Coca-Cola. Barriers to enter the industry are relatively low and with consumers not having to pay a switching cost, competitors can easily steal clientele. Luckily Coca-Cola’s customers have stayed loyal to the brand as they see Coca-Cola as more than another soft drink on the market (valuationacademy, 2018). This gives validity porters force of rivalry among existing firms, with the additional competition of other large carbonated beverages such as Dr. Pepper. Other forces such as the bargaining power of buyers and suppliers inflicts low levels of pressure on Coca-Cola (valuationacademy, 2018). Overall Porter’s Five Forces offer more of a threat than an opportunity.

Innovation and engagement in their industry marketing on a global scale has worked very well. Being a successful company on a global scale has helped Coca-Cola’s outreach immensely, and constitutes a dramatic portion of where profits come from. “In the early 1900’s, Coca-Cola started to globalize. Bottling plants were initially built in Cuba and Panama as the US military spread to these regions, causing a rise in demand for the Coca-Cola brand. These plants proved to be successful, reducing shipping and delivery costs typical in these regions. Soon after, additional bottling plants opened in Hawaii, Puerto Rico, and the Philippines. These efforts launched Coca-Cola’s investment in testing foreign markets for future expansion opportunities. By 1926, Coca- Cola had established foreign relationships and plants around the world in support of its newly created center of global operations” (Foster, 2008). Porters Five Forces plays a big role in the globalization of. Operating out of a global setting dramatically increases threats to the company due to increased competition, but also offers the crucial opportunity of expanding market share.

Internal Company Analysis (SWOT)

An internal company analysis of strengths and weaknesses is important for managerial purposes. Coca-Cola is an extremely strong company in todays global market, valued around 79.96 billion dollars (Statista, 2018). This valuation includes the brand value, the complete operations cost and profit of Coca-Cola, and the many factories and general assets spread out across the world. Another major internal strength of Coca-Cola their presence in over 200 countries across the world. Chances are, any country that you go to, you will find Coca-Cola present in that market. This vast global presence of Coca-Cola has also contributed to the building of the mammoth brand name. Internally, they have a diverse portfolio of drinks that they offer. Amongst all beverages, Coke, Thums up, Sprite, Diet coke, Fanta, Limca and Maaza are the growth drivers for Coca-Cola. In 2011, Coca-Cola was awarded with the highest brand equity award. With its vast global presence and unique brand identity is definitely one of the costliest brands with the highest brand equity With such brand equity, it is natural that it has a lot of customer loyalty. Product substitutes are difficult for the customer to find since there is little competition. Coca-Cola unlike Pepsi always tries to win peoples heart. Where Pepsi’s target is continuously changing, and is targeted towards youngsters, Coca-Cola targets people of all ages. A major internal strength of Coca-Cola is its large distribution network. With this successful distribution network, Coca-Cola has been able to command such a high market share.

There are many weaknesses evident in Coca-Cola as well. Although the offerings of Coca-Cola have a high product divarication when compared to companies with high points of parity, Coca-Cola has failed to branch out into different markets other than the beverage market. For example, Pepsi has made a move and diversified into the snack market with products such as Lays and Kurkure. Coca-Cola is excluding itself from that segment entirely, and therefore missing out on potential profitable business. Within their lack of product variation is the lack of healthy alternatives. In todays age, obesity is a major problem affecting people, and is highly discussed. Carbonated beverages are one of the major reasons for fat intake and Coca-Cola is the largest manufacturer of Carbonated beverages. With the public being prone to question the legitimacy and level of CSR, having a lack of differentiation that can and has caused friction between the public and Coca-Cola. Another issue with their CSR is their massive use of water consumption, and its negative P.R. relation. The media has exposed the company in the past due to its water management issues. Additionally, groups have raised lawsuits in the name of Coca-Cola because of their large consumption of water. This is done even in water scarce regions. People have even blamed Coca-Cola for adding pesticides in the water to clear contaminants. Therefore water management needs to be properly handled for Coca-Cola.

Additionally opportunities and threats go hand in hand, especially when operating out of a global market. As discussed with Porters Five Forces, threats from competition are drastically increased. Opportunities however arise from the larger market share potential from a larger market size.

Coca-Cola Strategy

Coca-Cola incorporates several business level strategies for its local and international operations. A prominent strategy used by Coca-Cola is differentiation. “Differentiation is found in each and every aspect of its business operations. For example, it uses unique marketing campaigns, labeling, bottle shapes, and advanced plant and machineries to manufacture the top quality beverage products” (Paperdue, 2017). Differentiation in Flavors are introduced all year round in order to give customers the option to change and taste the endless possibilities to improve their already favorite drink (The Coca-Cola Company, 2013). This results in much higher satisfaction rates in consumers, and therefore increased profitability.

Corporate level strategies are also used, such as growth. Growth is a broad term that can be further understood by “it aims to target new consumers, introduce new products, or enter new geographical locations, it pursues a horizontal growth strategy. On the other hand, if it invests in its own supply chain as a part of cost-leadership strategy, it is basically focusing on vertical growth” (Paperdue, 2017). Another corporate level strategy is stability. Now even though Coca-Cola emphasizes in growth, sometimes when times get rough and the economy is low, Coca-Cola has to slow down or even stop growing in order to secure its survival incase times get worst (Paperdue, 2017). “Therefore, it either proceeds with an extra care or completely stops at the current position and focuses on its quality control marketing efforts, supply chain, and R&D” (Paperdue, 2017).

Business Ethics

Coca-Cola is an extremely large company and are therefore extremely likely to be subjected to a higher level of scrutiny. Because of this, as a company they are quick to address issues of CSR or general ethical situations that pertain to their company in any way. Coca-Cola has faced many issues with the media, including scrutiny in the past for their massive use of water in manufacturing. The company has established a mission and vison statement that have deep elements of ethics embedded into it. They further promote and educate a very defined “company culture”, that has high levels of ethic. Having ethics transferred to the employee level through the medium of a company culture is a great way to integrate ethics on a large scale. This allows the entire company to be accountable on educated ethical issues, and improves the level to which employees will use ethics in their general decision making. Coca-Cola uses internal social practices and external environmental practices to establish a use of ethics, which greatly affects stake holders of the company.

Organizational Culture

Coca-Cola’s organizational culture is evident in human and workplace rights, the company’s history, its charitable foundations, innovation and leadership, and stakeholder engagement. The company incorporates its mission statement into organizational culture as a whole. They use positive stories and examples as a way to educate on how to be not only a model worker, but a model citizen. Many times organizational culture is overlooked in smaller companies, but it is essential to create and manage it in large companies. A well created and managed organizational structure can dramatically help avoid negative PR, which will save financial resources for the company to use in other ways.


Coca-Cola is a huge company with considerable financial footprint. Yahoo Finance notes the company’s 2017 net revenue at 35.4 billion dollars, and a net income at 1.2 billion dollars (Yahoo, 2017). A small percentage of companies have figures this high, and to further understand the financial status of Coca-Cola a financial ratio analysis would expose valuable information to a CFO. The financial analysis should incorporate the ROA, ROS, ROE, Debt to Equity, Stock price, Net Revenue, and Net Income values for recent years in the company. ROE is the return on equity, which is an indicator of how effectively the company is using its base of equity or capital. ROA expresses the return on assets in a given time period, which is more reliable of a metric since it is based on assets rather than equity in the company. The ROS ratio expresses a return on sales and calculates how efficiently a company is generating profits from its top-line revenue. Debt to Equity ratios are calculated by dividing total liabilities by total shareholder equity. This ratio gives insight into the financial leverage and is also referred as a risk or gearing ratio. Stock prices are a great indicator of a company’s standing, and stock price is determined by supply and demand in the market. Net revenue is a pertinent piece of information since it is how much of a profit did the company make before subtracting expenses. After subtracting total expenses from total revenues, what is left is net income. These metrics are used to compare against each other from previous periods.

Below in figure 1, there is a financial ratio analysis, with the elements as discussed above. It is of note that the stock price of Coca-Cola has increased from 2014-2017. Net income, ROE, and ROA has taken dramatic falls in value from 2016-2017. Based off of this spike, it is clear that Coca-Cola is facing somewhat difficult times as of recent. The financial ratio analysis used and shown in Figure 1 is based off of Figures 2 and 3, which are the balance sheet and income statement from appendix A. What this information would mean to a CEO or CFO versus a shareholder or stakeholder depends on what job the person had. An internal chief financial or executive officer will have much greater use of the elements in a financial ratio analysis than a shareholder or stakeholder. However, a shareholder or stakeholder can find much value and use in what the stock price is valued at, they just wont have such an internal influence as the CEO or CFO.

Figure 1 : Coca-Colas financial analysis chart

Year 2017 2016 2015 2014
ROA 1.38 7.12 8 7.57
ROS 21 20.6 19.7 21.1
ROE 6.76 28.21 28.59 23.41
Debt to Equity 1.64 1.28 1.1 0.62
Stock price 45 39.4 39.5 37.61
Net Revenue $35,410,000,000 $41,863,000,000 $44,294,000,000 $45,998,000,000
Net Income $1,248,000,000 $6,527,000,000 $7,351,000,000 $7,098,000,000

Conclusion / Recommendations

Despite the fact that financially Coca-Cola is not at its financial peak, and may be facing financial hardships as evident in their dramatic net income value drop recently, being a CEO or Stockholder of the company is still a good idea. Stock has actually increased despite the recent drop in net income.

Recommendations can be made to improve Coca-Cola’s finances. Since net revenue decreased, they should increase global advertising to increase sales. Metrics can be used to test the effectiveness of increased global advertising. Additionally, they should also further develop their CSR as a preventative measure for negative PR. A possible metric used to monitor this would be the standard deviation in scandalous reports from the media. It would also be recommended to Coca-Cola to maintain the large current amounts of effort in its various company elements is crucial for maintaining the longevity of the company.

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Coca Cola Strategic Man. (2019, Jul 27). Retrieved from