The International Strategy Of Coca Cola Company Marketing Essay

The International Strategy Of Coca Cola go with merchandise EssayIn this essay we argon going to study roughly the multinational strategy of Coca-Cola caller-out using the IR framework for the Indian commercialise. Coca-Cola fraternity is realness kn throw goernance. The growing grocery round the orbit mostly depends upon the technologies, knowledge and consolidation of commercialise, it clearly demonstrates the flow of knowledge, services, goods and capital d atomic number 53 assorted nations and in which creating the competition on a knowledge domain-wide basis creating an merged spherical space is called world-wideization (Porter, 1986 Albrow, 1997 Friedman, 1999 Gupta et al, 1999). Its a real challenging undertaking for any organisation to move from national merchandise or floor food commercialise to world(prenominal) trade, especially for those organisations which are facing saturated securities industry in their firm ground (Yip, 2003). Th e process of generalization is interdependence and integration of countries exchanging assorted trade, culture, outsourcing, capital investment and the issue of the nations relationship. Business systems, knowledge and mating of culture hire led to orbiculateization (Daniels and Krug, 2007).Coca-Cola was invented in 1886 by Dr. buns Stith Pemberton in Atlanta, Georgia (Palazzini, 1989). The main reasons for the global danger are bargain-priced labour, distri exactlyion and transportation, communication and information technology, cultural convergence, increasing disposable of the global middle class, extension of IP rights, reduced trade barriers, privatization programs and development of transnational standards (Stonehouse et al., 2000Denton and Al-Shamali, 2000). India was rated the top international investment hazard among 30 emerging grocerys for plenty merchant and food retailers looking to expand globally (Business acknowledgement, 2006).. After losing the India n market previously the friendship re- placeed in the Indian market in 1993 and now get hold of 7000 distri andors and much than 1.3 million retailers in Indian market. at once the Coca-Cola order is the leading non-alcoholic beverage ships friendship with ten different products. Coca-Cola Company is now the largest distributor, manufacturer, marketer of non-alcoholic beverage concentrates and syrup which operate in around 200 countries (coca- locoweed, 2010). If its international proceed is achieverful then the soilmark construct and the dishonor value increases for the company.Literature reviewA Company in operation(p) internationally faces twain forces of pressure of topical anesthetic responsiveness and pressure of global integration (Daniels et al, 2009). In 1987 Prahlad and Doz came with a IR framework on internationalization, their IR framework created a big platform for the study on global concern which helps to form an international strategy that has multi d imensional contextual setting. IR framework has limitations for the global industrial competition specified only for the beginning(a) stage, vagueness in the concept that defines the bond between industry forces and finally want of proof for supporting the framework (Rugman et al, 2006). Bartlett and Ghoshal (2008) further studied and came with few additions in IR framework and came up with 4 strategies that are international, global, transitional and multi-domestic startes to the strange market. The Global Strategy adopted by Coca-Cola plunder be critically analyzed using the IR (Integration/ Responsive) framework proposed by Bartlett, Ghoshal and twinkly (2008) and Hill(2009).Figure 1 IR- FrameworkThe global standardization products and services way on immense profit, but they compromise on their products price. The market research, outturn and research are done in precise regions with some definite standard and it is interchange globally. So those type of products fa ce a huge pressure in reducing the price according to the place where it is sold for example Intel, a chip company (Hill, 2009). According to Bartlett and Ghoshal (2002), a solution for the cross b tramp trade is international, which is considered as the important suit for the international market. The transnational strategy gives a lot of pressure to the company for cost reduction and topical anaesthetic responsiveness. This could be achieved by transferring the precise skills and expectations of the company from the radical country to the require of the foreign country, where they compete with the topical anesthetic market with reduced price for example Caterpillar (Hill, 2009).Entry ModesEvery organisation looks for the opportunity to expand their line of products across borders, and finding the appropriate unveiling mode is an intricate task for international business. Different organisation chose different entry modes, to control foreign operation with strategic conc lusion devising and which are compatible with the laws of governance and culture of the country. There are unlike modes for entering in the international market like exporting, licensing, franchising, pin ventures with the legion country firm, learning, and wholly owned spic-and-span-fangled subsidiary in the foreign Country (Hill, 2009).Joint Venture it is one of the method of entering and take-out of self-possession between two or more(prenominal) firms. The portionage of the ownership varies according to the organisations. The firms holding studyity of share will have a tight control on the strategy (Hill, 2009). International joint venture benefits the firm from the use of local market knowledge of the host country, culture, competitiveness, ratified and political system and development. From International Joint Venture the risk mint as rise up as be shared with the local partner. Joint Venture has disadvantages to a fault when a firm enters into a joint ventur e it risk bountiful control of the technology to its partners. A nonher disadvantage is if the share of joint venture is not that high or 50-50% then it does not give a firm the tight control over subsidiaries that it might need to actualise experience curve or location economies (Hill, 2009). Used by PepsiCo to enter in the Indian Market.Acquisition it is an early(a) method of entering into the international market by acquiring or buying and combination of different companies that chamberpot aid, finance, or help a company in a given industry without creating a unseasoned business entity (Hill. 2009). Used by Coca-Cola to enter Indian market.It is important for the organisation to consider factors such as the nations long run profit potential, the economic benefits of that country, the market size, and purchasing powerfulness of consumers and customers which is linked to the economic growth rate when entering in the market (Hill, 2009).Global Strategy of COCA-COLA(Zhang, 2010) Indian market is one of the study evolution economies in the world. The Indian economy is one of the worlds unwaveringest growing, with gross domestic product (GDP) expanding at an average annual rate of about 7.5 percent for the past three years (Choi, 2006 The Economist, 2006) and the retail market expanding 10 percent on average (Business Credit, 2006) (anon). The Indian retail market, an estimated $250 one thousand million per year, is the worlds eighth largest market and is projected to grow by more than 7 percent annually (Embassy of India, 2007-Cited in Halepete, 2008). The Coca-Cola Company is mentioned as a global company with global products and global activities. In 1980 the company was moving towards centralised control. At that condemnation the motive of the company are to be global in order to expand geographical wise into many of the countries in which the company does business today. In 1990 the world began to start smaller and smaller as a town for the global companies. Globalisation forced changes to appear so speedy that many countries could hardly manage the new global environment. As a result, the very forces that were making the world more connected and homogeneous were at the same time triggering and preservation of unique culture identity. The world is demanding greater flexibility, responsiveness, local sensitivity, nimbleness, speed, transparency and local sensitivity had become essential to success (Draft, 2000). Coca-Cola Company sees itself not as a global organization, but as a multi-local initiative (Svensson, 2001).Coca-Cola Company historical strength came from operating as a multi-local business that for a very long time relies mostly on the cortical potential of local bottling partners. Thats why the global strategy of coca-cola allows its business in more than 200 countries to act according for local laws, local culture, and local needs and so on. Coca-Cola pursues an assumed global strategy, allowing for differe nces in packaging, dispersal, and media that are important to a particular country or geographical area. Hence, the global strategy is localize through and through a specific geographic trade plan. Instead of applying a global strategy, it is likely to be a strategy of thinking globally, but acting locally. The global success of Coca-Cola is the direct result of people inebriation it one nursing bottle at the time in their own local communities. So we are placing responsibility and accountability in the hands of our colleagues who are closest to those billions of individual sales (Draft, 2000). This signifies that if their local colleagues develop an idea or a strategy that is the right thing to do locally, and it fits within native values, policies, and standards of integrity and quality of the Coca-Cola Company, then they have the authority and responsibility to do so. At the same time, they will be accountable for the outcomes of the idea or strategy. It is apparent that a company such as the Coca-Cola Company has realize the weaknesses and the deficiencies of applying a genuine or true global strategy approach in their worldwide business activities. To be in high party favor of local ultimate consumer adaptations is emphasized as crucial for their business activities to be prosperous.Therefore, their multi-local strategy approach is s work on going strong and adequately for the companys worldwide business activities. In addition Gould (1995) states that coca-cola has become a part of peoples chance(a) meal, a price at which anyone can buy and it is available to people in any part of the world. The IR framework has been used to critically analyse the global strategy of Coca-Cola. COCA-COLA connection saw that there is an opportunity in Asian market and their home market situation is saturated. COCA-COLA COMPANY decided to re-enter in the Indian market in 1993. Indian government plays a major role in every international company and had a law that a ny international company have to become a partner in Indian market with an Indian company. To overcome this problem COCA-COLA COMPANY achievement of local Indian common rats including the THUMS UP (the most trusted tarnish in India), Mazza, Gold Sport, Citra and Limca providing a good base not only in bottling, manufacturing and distribution assets but also very good strong consumer preference(Kaul, 2003). From this encyclopedism the leading Indian brands join the family of global brand and its products like coca-cola, diet snow and others. From this acquisition Coca-Cola enables to exploit the benefits global branding and global trends in taste bit also tapping in other domestic markets (Lane, 1998). Coca-Cola adopted the standardisation strategy to produce and sell its standardised products globally (Rodrigues, 2009). Coca-Cola Company do prerogative with the local manufacturing bottling companies through which they have a local response and local touch.In India COCA-COLA COMPANY have 46 bottling plants from which 22 are company own and rest are the franchise operated plant (Coca-Cola, 2010). After re-entering the Indian market in 1993 the COCA-COLA COMPANY operations grown rapidly through a model that supports local business which includes over 1.3 million retailers and over 7000 distributors across the country. Coca-cola has been successful in the global market as well as Indian market because it follows the local strategies and is able to deliver as per the needs of the local people by manufacturing and distribution by the local company (Hill, 2009). In manufacturing the product the water which is used is local from which the customers seize the local taste. The company have an approach where in, their business does not get influenced by the area of sales. Rodrigues (2009), states that Coca-Cola pursues the global strategy of producing diverse products as per the local culture. For instance in India people prefer sweeter coke. Also Coca-Cola laun ched Georgia, a tinned coffee specially intended for Indian market which captured 40% of the market soon after its launch (Hill, 2009).According to Cokecce.com (2007), Coca-Cola trains their managers in their management school, to get them aware of the global perspective of their operations.Figure 2 IR-FrameworkAdapted from (Bartlett, Ghoshal and smiling(prenominal) (2008) and Hill(2009))Manufacturing Distribution ProcessThis picture is to explain the process from the doing and manufacturing to the consumers.merchandising is one of the back bones of any global industry in any country. As to stay in the market ahead from the competitors, trade plays the major role in Indian market for around the bend drinkings. The post- loosening period in India saw the comeback of Cola but Pepsi(one of the major competitor India) had already beaten Coca-Cola to the punch, creatively entering the market in the 1980s in advance of the liberalization by the way of joint venture. Coca-Cola Comp any benefited from Pepsi creating demand and growing the market for soft drinks. (Kaul, 2004)Coca-Cola Company marketing strategy is based on 3 As that are Availability, Affordability and Acceptability. The initial A is for availability of the product to the customers. The second A is for affordability is for pricing and the ternary A is for acceptability which stands convincing the customer to buy the product.In 2001 Coca-Cola chief operating officer Douglas Daft set the new direction for next generation of success for global brand with a Think global, act local mantra. Recognizing that a single global strategy or single global play wouldnt work, locally relevant executions became an increasingly important element of supporting Cokes global brand strategy. Coca-Cola Company re-examined its approach in an attempt to gain lead in the Indian market and capitalize on meaningful growth potential in the rude markets. The foundation the new strategy grounded brand positioning and m arketing communications in consumer insight, acknowledging that urban versus rural India were two distinct markets on a variety of important dimensions. (Kaul, 2004) In rural market, where both the soft drink household and individual brands were undeveloped, the task was to unfold the brand positioning while in urban markets, with higher category and brand development, the task was to broaden the brand positioning while in urban markets, with higher category and brand development, the task to narrow the brand positioning focusing on differentiation through offering unique and compelling value. (Kaul, 2004)Coca-Cola used two different marketing strategies for each urban and rural market. The first marketing brio ho to aisi means life as it should be for urban market and the other was thanda matlab coca cola which means cool or cold is coca cola which mantrap the rural target very highly and gain the market very efficiently because the 96% of the population are in rural and devel op cities. Coca-Cola Company reduced its rate for the rural market by providing 200ml bottle so that those customers and consumers whose wages are not so high can also have it. (Kaul, 2004) At the same time, Coke invested in distribution infrastructure to effectively serve a disbursed population and doubled the numerate of retail outlets in rural areas from 80,000 in 2001 to 160,000 in 2003, increasing market pe fireration from 13 to 25%. As a result of the marketing campaign, Coca-Cola won Advertiser of the year and Campaign of the year 2003. (Kaul, 2004)Swot depth psychology of Coca-Cola CompanyStrengthsThe brand image of coca-cola is very strong around the world and have a strong brand portfolio. Cola-cola brand value was increase by 2% from 2007 to 2008 and it is $66,667 million. Coca-Cola owned top five brands of soft drinks market around the world. Strong brand image allows the company to introduce new flavours in the market like vanilla coke, cherry coke and coke with lemon. The companys strong brand image facilitates customers recall and allows company to penetrate new markets while holding the old ones. Coca-cola Company offers more than 3000 products across the world. Coca-cola Company is running business in more than 200 countries in the world which provide it a strong global image. Due to the strong business model across the world company is able to generate significant cash flows up to $50 million a day. (Data Monitors, 2009)Weakness grant assets effect the company liquidity position of the company due to fiscal market volatility. Coca-cola Company is very mature having significantly more pensioners than active participating members. (Data Monitors, 2009)OpportunityGlobally the non alcoholic ready to drink market is increasing by 6% every year for the next 12 years. (Data monitors, 2009). This project growth is due to the increase in middle-class consumers and fast growing urban societies expected to form in the future. The company can capture t his growth with innovative new products with old products. (Data Monitors, 2009)ThreatsCoca-Cola Company is more often than not dependent on the bottling partners across the world. Approximately 78% of its worldwide production was produced and appointd by its bolting partners in 2008. Due to independent bottling partner companies make their own business decision that may not always align with Cola-Cola Company interest. Many of its bottling partners have a right to manufacture or distribute certain products of other beverage companies. In soft drink market there is intense competition and one of the major global competitors of Coca-Cola Company is PepsiCo. Competitive factors impacting companys business include advertising, product innovation, sales promotion programs, brand and trademark development and pricing. Decline in the market share of the home country which means the consumers have started to look for greater variety in their drinks and are becoming wellness conscious. O ther major threat for the soft drink companies is reducing level of water for which the government and WHO is forcing the companies to reduce the level of water used in manufacturing the products. (Data Monitors, 2009)Competitor AnalysisThe one of the major competitor in India and in global market is Pepsi. Pepsi entered in the India market in 1980s through joint venture. As early as 1985, Pepsi tried to gain entry into India and finally succeeded with Pepsi foods limited project in 1988 as a joint venture of PepsiCo, Punjab government owned Punjab agro industrial corporation (PAIC) and Voltas India limited (Singh, 1997). Pepsi was marketed and sold to Lehar Pepsi until 1991 when the use of foreign brands was allowed under the new economic policy and Pepsi ultimately bought out its partners becoming a full owned subsidiary and ending the joint venture relationship in 1994. While the joint venture was only marginally successful in its own right, it allowed Pepsi to gain precious earl y experience with the Indian market and also served as an introduction of the Pepsi brand to the Indian market and also served as an introduction of the Pepsi brand to the Indian consumer such that it was well self-contained to reap the benefits when liberalization came (Kaul, 2004).SWOT analysis of PEPSICOStrengthsThe PepsiCo brand is figured at the 27th position in the top 100 global brand rankings of Business Week. The brand value of PepsiCo is $13,249 million in 2008. PepsiCo owns 18 mega brands which are recognise globally and generate annual sales of $1 billion each. In some countries PepsiCo is allowed to manufacture, sell and distribute soft drink products other than PepsiCo, including Dr Pepper and Squirt. PepsiCo have a strong manufacturing and distribution channel having 591 facilities till the end of 2008 and half of it is in USA and Canada. (Data Monitors, 2008)WeaknessThe company operates 74.4% of its tax income from its home country USA and the USA market for soft d rinks is decreasing. The net profit margin of the company is reduced by 3.9% as canvas for the last year. The weak operational growth of the company will repair its future growth plan and can affect the investor confidence. (Data Monitors, 2008)OpportunitiesBottled water is one the fastest growing market globally. PepsiCo has the leading manufacturer and distributor in this market and can capture more market by developing new brands and making better the existing ones. PepsiCo made significant acquisition including two of the other Pepsi bottlers in which one is the eight largest Pepsi bottler in the Pepsi Bottling collection from which they are reducing the partners power slowly. (Data Monitors, 2008)ThreatsPepsiCo is facing problem in the home country from where the company is generating the maximum revenue. The consumers are becoming more health conscious. The company is facing intense competition from its competitors mainly the Coca-Cola Company which is one of the major comp etitors globally. Competitive factors impacting companys business include advertising, product innovation, sales promotion programs, brand and trademark development and pricing. There are new laws from government and World Health Organisation(WHO) to reduce the usage for water in the manufacturing and for labelling, employment, and cycle and product safety.ConclusionBy using the IR framework hawkshaw it is evident that Coca-Cola is a global company and doing business in more than 200 countries with a global strategy and a local response. It entered in Indian market due to saturation in the home country market and the growing economies of India. Coca-Cola Company entered the Indian market by acquisition entry method by acquiring Local soft drinks brand like Thumsup, Limca from which gain knowledge about the country soft drink market. The company captured the Indian market majorly through marketing and targeting the rural market which contains the 96% of the population. The company use three A strategy to be to gain more market share. 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