International strategy of Coca-Cola Company

planetary dodging of Coca- sess telephonerIn this raise we be going to study about the internationalistic strategy of Coca-Cola phoner utilise the IR modelling for the Indian trade. Coca-Cola companionship is world cognize brass section. The growing merchandiseplace around the world mostly depends upon the technologies, know takege and desegregation of mart place, it clearly demonstrates the flow of knowledge, function, goods and capital by dint of different nations and in which creating the tilt on a world-wide basis creating an integrated world-wide space is called globalisation (Porter, 1986 Albrow, 1997 Friedman, 1999 Gupta et al, 1999). Its a very challenging project for any organisation to instill from domestic grocery store or home foodstuff to international foodstuff, especially for those organisations which ar facing saturated securities industry in their home uncouth (Yip, two hundred3). The suffice of globalization is interdependence and i ntegration of countries exchanging different trade, culture, outsourcing, capital enthronization funds and the growth of the nations relationship. Business systems, knowledge and unification of culture mystify led to globalization (Daniels and Krug, 2007).Coca-Cola was invented in 1886 by Dr. John Stith Pemberton in Atlanta, Georgia (Palazzini, 1989). The master(prenominal) reasons for the global gauge be cheap labour, dispersal and transportation, communication and cultivation technology, cultural convergence, increasing dispos adequate to(p) of the global middle class, extension of IP rights, reduced trade barriers, privatization programs and development of international standards (Stonehouse et al., 2000Denton and Al-Shamali, 2000). India was rated the top international investment opportunity among 30 emerging markets for mass merchant and food retailers feeling to expand globally (Business Credit, 2006).. afterwards losing the Indian market previously the ships dress with re-entered in the Indian market in 1993 and now have 7000 distributors and to a great extent than 1.3 trillion retailers in Indian market. Today the Coca-Cola Company is the lead non-alcoholic drinking smart set with ten different productions. Coca-Cola Company is now the largest distributor, manuf bearurer, marketer of non-alcoholic drinking concentrates and syrup which operate in around 200 countries (coca plant-cola, 2010). If its international contingency is achieverful then the mark name and the disfigurement value increases for the telephoner. publications reviewA Company operating internationally faces two forces of tweet of topical anesthetic responsiveness and compact of global integration (Daniels et al, 2009). In 1987 Prahlad and Doz came with a IR modeling on internationalization, their IR framework created a extended platform for the study on global lineage which helps to form an international strategy that has multi dimensional contextual setting. IR framework has limitations for the global industrial competition specified only for the first stage, vagueness in the concept that defines the sting between industry forces and finally lack of proof for supporting the framework (Rugman et al, 2006). bartlett pear and Ghoshal (2008) further studied and came with roughly additions in IR framework and came up with 4 strategies that are international, global, transitional and multi-domestic approaches to the foreign market. The Global strategy adopted by Coca-Cola can be critically analyzed using the IR (Integration/ Responsive) framework proposed by Bartlett, Ghoshal and Beamish (2008) and Hill(2009).The global standardization products and services focus on huge profit, but they compromise on their products price. The trade research, production and research are done in punctilious regions with some certain standard and it is s gray globally. So those type of products face a huge pressure in reducing the price according to the amaze where it is sold for example Intel, a chip connection (Hill, 2009). According to Bartlett and Ghoshal (2002), a solution for the cross border railway line is Transnational, which is considered as the valuable approach for the international market. The transnational strategy drop deads a lot of pressure to the guild for cost reduction and topical anesthetic responsiveness. This could be achieved by transferring the precise skills and expectations of the companionship from the home nation to the reads of the foreign country, where they compete with the topical anaesthetic market with reduced price for example Caterpillar (Hill, 2009).Entry Modes any(prenominal) organisation looks for the opportunity to expand their business across borders, and finding the permit entry mode is an intricate task for international business. Different organisation chose different entry modes, to control foreign operation with strategic finale making and which are compatible with the law s of political sympathies and culture of the country. There are various modes for accounting entry in the international market like exporting, licensing, franchising, say ventures with the waiter country firm, acquisition, and wholly proclaimed saucily subsidiary in the foreign Country (Hill, 2009).Joint imperil it is one of the method of entranceway and sharing of ownership between two or much firms. The helping 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 join venture benefits the firm from the use of local market knowledge of the host country, culture, competitiveness, legal and political system and development. From International Joint Venture the luck can also be shared with the local cave inner. Joint Venture has disadvantages also when a firm enters into a union venture it essay giving control of the technology to its assistants. An other disadv antage is if the share of joint venture is not that senior high school or 50-50% then it does not give a firm the tight control over subsidiaries that it might need to realize have a go at it curve or location economies (Hill, 2009). apply by PepsiCo to enter in the Indian Market.Acquisition it is another method of entering into the international market by acquiring or bar get intoing and confederacy of different companies that can aid, finance, or help a conjunction in a given industry without creating a new business entity (Hill. 2009). Used by Coca-Cola to enter Indian market.It is chief(prenominal) for the organisation to consider factors such as the nations long run profit potential, the economic benefits of that country, the market size, and buying power 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 developing economies in the w orld. The Indian economy is one of the worlds fastest growing, with everlasting(a) domestic product (GDP) expanding at an average annual rate of about 7.5 part for the past three grades (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 billion annually, is the worlds one- eighterh 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 time 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 fast that many countries could hardly manage the new global environment. As a result, the very forces that were making the world more connected and analogous were simultaneously 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 enterprise (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 insight 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 differences in packaging, dispersal, and media that are central to a particular country or geographical a rea. Hence, the global strategy is localized through a specific geographic market plan. rather of applying a global strategy, it is likely to be a strategy of thought globally, but acting locally. The global success of Coca-Cola is the direct result of deal drinking it one bottle at the time in their own local communities. So we are placing tariff and accountability in the reach of our colleagues who are closest to those billions of mortal gross gross revenue (Draft, 2000). This signifies that if their local colleagues develop an paper or a strategy that is the right thing to do locally, and it fits indoors fundamental 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 imagination or strategy. It is apparent that a company such as the Coca-Cola Company has realized the weaknesses and the deficiencies of applying a gen uine or true global strategy approach in their worldwide business activities. To be in high favour of local ultimate consumer adaptations is emphasized as crucial for their business activities to be prosperous.Therefore, their multi-local strategy approach is still going noticeable and adequately for the companys worldwide business activities. In addition Gould (1995) states that coca-cola has become a part of peoples daily meal, a price at which anyone can buy and it is operable to people in any part of the world. The IR framework has been apply to critically analyse the global strategy of Coca-Cola. COCA-COLA COMPANY saw that on that point is an opportunity in Asian market and their home market mail service is saturated. COCA-COLA COMPANY decided to re-enter in the Indian market in 1993. Indian presidential term plays a study role in every international company and had a law that any international company have to become a partner in Indian market with an Indian company. To overcome this puzzle COCA-COLA COMPANY acquisition of local Indian popular brands including the THUMS UP (the most trusted brand in India), Mazza, bullion Sport, Citra and Limca providing a good base not only in bottling, manufacturing and distribution assets but also very good sinewy consumer preference(Kaul, 2003). From this acquisition the leading Indian brands join the family of global brand and its products like coca-cola, diet atomic number 6 and others. From this acquisition Coca-Cola enables to exploit the benefits global branding and global trends in essay while 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 franchise with the local manufacturing bottling companies through which they have a local result and local touch.In India COCA-COLA COMPANY have 46 bottling plants from which 22 are company own and rest are the franch ise operated plant (Coca-Cola, 2010). After re-entering the Indian market in 1993 the COCA-COLA COMPANY operations grown cursorily 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 retrovert as per the needs of the local people by manufacturing and distribution by the local company (Hill, 2009). In manufacturing the product the pissing which is used is local from which the customers get 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 launched Georgia, a canned coffee specially intended for Indian market which capture d 40% of the market soon after its launch (Hill, 2009).According to degree Celsiuscce.com (2007), Coca-Cola trains their managers in their counseling school, to make them aware of the global perspective of their operations.This picture is to explain the process from the production and manufacturing to the consumers.Marketing is one of the back bones of any global industry in any country. As to stay in the market ahead from the competitors, merchandise plays the major role in Indian market for loco drinks. The post- liberalization period in India saw the comeback of Cola but Pepsi(one of the major competitor India) had al instal 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 Company benefited from Pepsi creating demand and developing the market for promiscuous drinks. (Kaul, 2004)Coca-Cola Company marketing strategy is based on 3 As that are Availability, Affordability and Accepta bility. The first A is for availability of the product to the customers. The second A is for affordability is for pricing and the third 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 bordering generation of success for global brand with a Think global, act local mantra. Recognizing that a adept global strategy or single global campaign wouldnt work, locally relevant executions became an increasingly important share of supporting Cokes global brand strategy. Coca-Cola Company re-examined its approach in an begin to gain leadership in the Indian market and capitalize on significant growth potential in the rural markets. The foundation the new strategy grounded brand billet and marketing 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 padded drink category and individual brands were undeveloped, the task was to broaden 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 life 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 hit the rural target very highly and gain the market very efficiently because the 96% of the cosmos are in rural and developing 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 sam e time, Coke invested in distribution infrastructure to effectively serve a disbursed population and doubled the number of retail outlets in rural areas from 80,000 in 2001 to 160,000 in 2003, increasing market penetration from 13 to 25%. As a result of the marketing campaign, Coca-Cola won Advertiser of the stratum and Campaign of the year 2003. (Kaul, 2004)Swot analysis 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 increased by 2% from 2007 to 2008 and it is $66,667 million. Coca-Cola owned top basketball team brands of soft drinks market around the world. Strong brand image allows the company to introduce new flavours in the market like vanilla coke, scarlet 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. collectable 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)impuissancePension assets effect the company liquidity position of the company due to financial 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 this growth with innovative new products with old products. (Data Monitors, 2009)ThreatsCoca-Cola Company is largely dependent on the bottling partners across the world. Approxima tely 78% of its worldwide production was produced and distributed by its bolting partners in 2008. Due to independent bottling partner companies make their own business decision that may not eer align with Cola-Cola Company interest. Many of its bottling partners have a right to retrace 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 decorous health conscious. Other 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 epitomeThe 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 hold 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 comme il faut a fully 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 early 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 poised to reap the benefits when liberalization came (Kaul, 2004).SWOT analysis of PEPSICOStrengthsThe PepsiCo brand is figured at the 27th position in the top light speed 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 revenue from its home country USA and the USA market for soft drinks is decreasing. The net profit margin of the company is reduced by 3.9% as compare for the last year. The weak operational growth of the company will shanghai 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 manufacturing business and distributor in this market and can capture more market by developing new brands and making better the existing ones. PepsiCo make significant acquisition including two of the other Pepsi bottlers in which one is the eight largest Pepsi bottler in the Pepsi Bottling Group 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 in the first place the Coca-Cola Company which is one of the major competitors 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 recycling and product safety.ConclusionBy using the IR framework tool 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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