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International Business Environment: Coca-Cola Company

Introduction

A firm’s international business environment, commonly abbreviated as IBE, is a crucial multidimensional component of multinational corporations. It encompasses four major aspects: the socio-cultural, geographic, economic, technological, political environment of a company. According to Grgić (2020), the global business environment allows companies to expand their operations and increase their consumer base. The paper provides a comprehensive analysis of the IBE of the Coca-Cola Company by highlighting major strategies employed under the aforementioned facets.

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History, Principle Products and Services, Market Share, Geographical Locations and Major Competitors

History

Coca-Cola Company is a multi-billion-dollar company that started by selling a cough syrup developed by Dr. John Styth Pemberton in 1886. The syrup named coke was the only product sold at that time. A successful businessman by the denomination Assa Griggs later acquired the enterprise, and, according to Brondoni (2020), he is credited with the organization’s current status. He is the one who instigated or launched the product to the marketplace as a carbonated soft drink and concealed the formula for its production to push for market dominance.

Currently, the organization operates a worldwide franchised administering structure. The company is the sole owner of Coca-Cola Refreshments, its anchor bottler in North America (Brondoni, 2020). It is headquartered in Atlanta, Georgia, situated in the United States, and has over 700,000 employees working in over 185 nations globally (Grgić, 2020). Coca-Cola runs in six primary business segments: Africa, Asia, Middle East, European Union, Latin America, and North America.

Principle Products and Services

The organization’s main commodities are soft drinks, including Coca-Cola, Sprite, Fanta, Schweppes, and Appletiser. Other products include water and hydration (Dasani, Smart Water, Powerade, and Vitamin Water), juices, dairy, and plant-based drinks (Minute Maid, Innocent, Simply, and Fair Life) (“The Coca-Cola system,” 2020). The enterprise also manufactures coffees (Georgia and Costa Coffee) and teas (Peace Tea, Gold Peak, Fuze Tea, and Honest). The Coca-Cola Company is an integral player in the world when it comes to the beverage industry.

Market Share

Coca-Cola is a primary international competitor in the beverage industrial sector. According to Bedford (2020), its global market share totaled approximately 43.7% in 2019. Its global market share is around 60% (Alahi & Bass, 2018). The organization’s international net operating revenue in 2019 added up to $37.266 million (Alahi & Bass, 2018). Furthermore, according to Bedford (2020), its North American revenue share, as per the 2019 statistics, is 31.9%. Bedford (2020) further indicates that during the 2019 financial period, the enterprise recorded an 8% sales volume growth for carbonated soft drinks within the Asian Pacific region. The business has continually been ranked among the topmost soft drink brands globally.

Geographical Locations

The organization’s structure of operation incorporates six major geographic functioning groupings: Asia Pacific, North America, Latin America, Africa, the Middle East, and Europe. Its reporting system also encompasses the non-geographic divisions of the Bottling Investment Group and Global ventures. Its crown jewel marketplace (North America) accounts for approximately $300 billion of its revenue and consists of more than 300 million consumers (“The Coca-Cola Company,” 2020). The Latin American domain comprises over 650 million customers, thirty-nine marketplaces, and around $90 billion in retail value. Africa, Middle East, and Europe section incorporate 2.2 billion clients, one-hundred-and-thirty markets, and a $260 billion retail value (“The Coca-Cola Company,” 2020). On the other hand, the Asia Pacific part contains thirty-two marketplaces and more than 450 million customers. This region accounts for $350 billion of the firm’s retail value (“The Coca-Cola Company,” 2020). The above statistics provides a summary of the geographical division of Coca-Cola’s marketplace.

Major Competitors

Various players have cropped to try and cut Coca-Cola’s dominance in the beverage industry throughout its existence. Its major competitor is Pepsi, which, according to Brondoni (2020), is considered the biggest, toughest, and most significant competitor of Coca-Cola. Pepsi competes with Coca-Cola across several categories: soda beverages, bottled water, and energy drinks. Another corrival is Red Bull whose competition is limited to energy drinks only. Dr. Pepper Snapple is also another competitor of Coca-Cola in soft drinks, teas, water, and juices. Furthermore, Nestle Global contends with Coca-Cola with regards to bottled water. Parle, an Indian beverage brand, is also a primary Coca-Cola rival for the bottled water and juices market share.

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Leadership and Management Philosophies

Laissez-Faire Leadership Style

This style involves delegating responsibilities and jobs to followers while engaging them with minimal or no supervision. At Coca-Cola Company, the management leverages this approach’s benefits by letting their employees work with no or minimized supervision. The company applies this strategy in cases where workers meet their Key Performance Indicators (KPIs). The organization’s management also applies this strategy to spur workforce creativity (Raziq et al., 2018). The managers allow them to think of ideas beneficial to the company while offering the needed support.

Autocratic Leadership Style

This management approach emphasizes leaders being strict and keeping a close grip over their juniors. They ensure all the laid down rules and regulations regarding each employee’s roles are strictly followed. Since the management focuses on having a strong and well-defined professional association with the employees, it applies this strategy to a minimal extent.

Democratic Style of Leadership

This style involves leaders delegating their power in the decision-making process to their team members by championing their needs and ensuring equality is promoted and practiced. The essence of this strategy is to ensure the group members agree on any matter concerning them. At Coca-Cola, the management fosters this style because of numerous benefits. For instance, according to Raziq et al. (2018), this approach is crucial in improving employees’ morale, enhancing productivity, and increasing the sense of belonging.

Human Resource Management Policies, Recent Labor Disputes, Use of the Local Area Labor and Recruitment Strategies

Human Resource Management Policies

Some of the HR procedures and policies adopted by Coca-Cola include at-will employment, leave and time off benefits, as well as discipline and performance.

At-Will Employment

At-will employment is based on the notion that a company can terminate a worker for any reason provided that it is legal, at any period, or for no apparent motive without incurring any lawful liability. An employee also has the right to quit a job for a rational or no reason without lawful consequences. The firm can also make adjustments to the employment terms with no repercussions or notice. However, this practice has its exemptions, for instance, implied contract, agreement of fair dealing and good faith, and promissory estoppel. Coca-Cola has integrated this policy into its HRM procedures. It ensures that all lawful and genuine considerations are observed to avert legitimate reverberations whenever an employment agreement is terminated.

Leave and Time Off Benefits

Whenever employees are going through tough times, such as losing a loved one, they must be given time off. This statute further indicates that whenever employees want to leave the workplace within the working hours for a valid reason, they should be allowed. This policy lays down terms of holidays, sick leaves, and bereavement leaves. Coca-Cola grants its employees 20-30 days off annually. This policy ensures that its employees can get time to relax and re-energize. Workers are also permitted to leave the workplace for legitimate reasons, for instance, when sick.

Conduct, Punctuality and Attendance of the Employees

Policies designed for the aforementioned purpose is essential in fostering and maintaining a good relationship amongst employees and enhancing ethics and moral character. The attendance and punctuality procedures aim to minimize absenteeism and promptness. Coca-Cola considers all these policies as essential factors that encourage good relations with its employees. It has a strict attendance policy that emphasizes elements such as work-life balance and overtime reduction strategies.

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Discipline and Performance

These policies are held in high regard as they provide a framework on how employees carry themselves around within a company. Coca-Cola has a comprehensive code of conduct documentation for its employees. The conduct code emphasizes accountability, social responsibility (caring for the community), fair dealings both internally and externally, and the need for the entire workforce to safeguard its assets through record keeping.

Recent Labor Disputes

In mid-2019, hundreds of Coca-Cola employees in its Mexico City branch and Mexico’s state initiated a vigorous stroke against the pro-company union and cross-border operation. This industrial action was based on the notion that the management coerced the firm’s employees to commit to an agreement that would see their food vouchers and paid vacations sliced to eradicate commissions. This strategy would impact a third of the employees’ income (Lazar & Sanchez, 2019). The organization’s leadership unit used the authoritarian style to approach the issue; this strategy was perceived as a way of discriminating against its employees.

Use of Local Area Labor Market

Coca-Cola strives to ensure that it employs a significant number of people from its operating region. This guarantees that it promotes job creation while simultaneously fostering its corporate social responsibility to the local area/market.

Recruitment Strategies

The Coca-Cola Company uses the following approaches to ensure they enrol top talents:

  • Developing job adverts that are catchy and attractive to appeal to potential talents.
  • A well-developed online website for acquiring its pool of talents.
  • Internship programs, which allows the enterprise to train and retain the best performing interns permanently.
  • Sponsoring events like career fairs in schools, colleges, and universities, to market itself among potential recruits as the ideal workplace.
  • Internal considerations, where it gives its existing employees a chance to apply and be considered for vacant positions within the organization.

Organizational Design and Marketing Strategies

Organizational Design

The Coca-Cola Company is run through a perpendicular hierarchy; this approach allows the top-management to make critical business decisions. Other decisions concerning the daily firm activities are made by the mid-level administration unit (Serodio et al., 2018). The organization uses a decentralized governance system to oversee various company operations. This is a leadership strategy whereby the head office provides general guidance and support to its global divisions. The Chief Executive Officer makes all pertinent decisions. Below is the organizational structure/design for Coca-Cola Company:

Organizational structure/design for Coca-Cola Company
Fig. 1: organizational structure/design for Coca-Cola Company (“The Coca-Cola Company,” 2020)

Marketing Strategies

A Marketing strategy represents the roadmap to which the organization bases its business sustainability while considering the long-term advantages and its competitors in the marketplace. The above-mentioned approach is meant to put the company ahead of its rivals with regard to brand growth and profit generation. Coca-Cola has made significant advances in singly dominating the beverage market through its Coke brand (Abbasi, 2017). The enterprise uses the following marketing strategies:

Market Segmentation

This is a strategic procedure meant to maximize sales and resulting profits through the market division based on buyers’ volume and proportions. Coca-Cola uses this method to categorize its marketplace into three major domains: advanced markets, evolving markets, and emerging markets. In the developed markets, the organization centers on making profits by providing premium goods as well as minute packages (Abbasi, 2017). Within the advancing marketplaces, the enterprise aims to attain a balance between increasing its sales and accruing profits. Additionally, the company centers its business operations on sales instead of profits within the emerging markets.

Increasing Procedure Efficiency

An organization with significant operational efficiency levels typically invests minimal time in its manufacturing procedures without compromising the quality of its outputs. Coca-Cola takes initiatives to ensure that its processes are restructured and irrelevant areas declared redundant. For instance, 100% of the electricity used to power its production procedure in Austria is derived from renewable sources; this is done to improve its energy efficiency (Alahi & Bass, 2018). Its current practices aim to minimize emissions, water consumption, and waste. The organization uses an energy management system to perform a comprehensive evaluation of its energy and resource consumptions. The overall objective of this mechanism is to lower its carbon footprint.

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Marketing Positioning and Targeting

  • Target market: Coca-Cola’s intended market centers primarily in the 15-35 age grouping; this includes teenagers and youths. The company has robust popularity among female and male customers. The organization’s commodities are not intended for a particular consumer class due to their affordable price range.
  • Product: The organization’s product portfolio is wide, consisting of 500 still and sparkling brands. Coca-Cola offers around 3800 beverage options. Its dominant commodity, Coca Cola, is among the most valuable and recognized brands globally. Some of the organization’s common brands include Diet Coke, Sprite, Fanta, Coca Cola Zero, Minute Maid, Powerade, Coca, and Cola Life.
  • Place: The company has a broad beverage distribution network; its commodities are sold in over two-hundred nations across six major operating areas. Conventionally, the organization depends on its bottling partners for its products’ distribution and packaging. The company’s bottling associates produce and disperse the ultimate branded drinks to vending partners and clients such as grocery stores and convenience stores, who sell later sell them to customers.
  • Promotion: The company invests significantly in advertising to trigger higher revenues and sales. For instance, in 2016, the firm’s marketing expense totaled to $4 billion; this value increased considerably to $4.1 billion in 2018 (Bedford, 2020). It uses both contemporary and conventional channels for marketing its products and brands. Apart from outdoor and TV ad campaigns, the enterprise disseminates ads throughout social media and the Internet (Lacy-Nichols et al., 2020). Furthermore, Coca-Cola invests substantially in sustainability and CSR practices.
  • Price: The prices of Coca-Cola products are neither too high nor too low; its pricing approach aims to prompt brand loyalty. The cost of the company’s products decreases with the increase in a product’s package.

How Coca-Cola Manages Culture and Ethical Issues Throughout the World

Cultural Issues

In all of its undertakings, the Coca-Cola Company always considers the individuals’ cultural aspects within a country or region in which it operates. According to Abbasi (2017), the organization develops carefully crafted campaigns relatable to the target market. In its global campaign, “Reasons to Believe,” Coca-Cola developed different ads in various nations such as Kenya, Netherlands, the USA, and India (Grgić, 2020). The purpose was to showcase the diversity of cultures and to foster the adaptability of the campaign with regard to relaying different messages with similar goals.

Ethical Issues

The organization has initially been implicated in ethical cases such as racial discrimination, environmental pollution, and inflated earnings. For instance, in 1999, over 1000 African-American workers sued the enterprise for racial inequity – they were given minimal compensation for similar work done by other racial groups (“Coca-Cola lawsuit,” n.d.). The aforementioned moral stance damaged the establishment’s reputation. To remedy this issue, Coca-Cola decided to form a diversity council to prevent the issue’s reoccurrence and made a $192 million settlement for the lawsuit (“Coca-Cola lawsuit,” n.d.). It has also faced numerous allegations regarding its water consumption levels, especially at its plant in India (Le et al., 2017). To counter this problem, the organization decided to develop a target of achieving water neutrality and ensuring every drop of water is replenished by 2020.

Recent/Ongoing Strategies Related to Global Operations at Coca-Cola

The company recently publicized its strategic plan to rearrange and enhance its system’s capacity to implement its “Beverages for Life Strategy” with a drinks portfolio positioned to steer growth in the ever-evolving market. Coca-Cola is currently establishing a networked international organization by integrating scale power with comprehensive knowledge deemed essential to enhance its success (“The Coca-Cola Company,” 2020). The firm intends to develop new operating divisions on local and regional undertakings while will function closely with five promotional group management teams. The above-mentioned framework will be reinforced by the enterprise’s recently established innovation “Platform Services,” to offer worldwide services and improved adroitness all through a significant capabilities range. Coca-Cola’s portfolio rationalization procedure will trigger a geared assemblage of local, regional, and global brands with the prospective for additional development.

E-commerce Initiatives

To keep up with growing e-commerce trends, the Coca-Cola system opted to prioritize package options to enhance their products’ suitability for online sales. The organization also initiated approaches aimed to boost digital imagery investments, piloting digitally-supported fulfillment frameworks and increase in-app visibility. Coca-Cola’s bottlers are also venturing into digital B2B solutions to handle consumers’ orders and deliveries (“Three ways Coca-Cola,” 2020). For instance, over 8000 outlets in the U.S were included in the MyCoke digital ordering platform during 2020 second quarter (“Three ways Coca-Cola,” 2020). Furthermore, the corporation is also exploiting the D2C (direct-to-consumer) selling approach’s efficacy by enlarging their online platforms such as En Tu Hogar (“Three ways Coca-Cola,” 2020). These strategies have been instrumental in increasing its brand presence within the visual aisle and promoting impulse buying through personalized offers, social business solutions, and beverage-and-food bundles, thereby enhancing its growth.

Political Environment and Its Effect on Export/Import of Coca-Cola Products

Political factors play a crucial role in ascertaining the aspects that impact Coca-Cola’s long-term profitability in international markets. Trade barriers impact the company’s operations by triggering a constrained choice of commodities, thereby forcing consumers to pay significantly high prices for inferior quality goods. Trade blocks have also been instrumental in facilitating free trade between nations closer to the U.S geographically. This, according to Hannan (2016), leads to increased competition, scale economies, high growth, increased export potential, and reduced prices. Regional agreements such as Transatlantic Trade and Investment Partnership (TTIP) and Trans-Pacific Partnership (TPP) have greatly impacted Coca-Cola’s global business operations by minimizing tariffs and business impediments as well as developing a common marketplace or free trade region (Hannan, 2016). These treaties also have consequential effects on local bottling partners in relation to jobs and prices.

Conclusion

From the analysis above, it is evident that multinational corporations’ success, for instance, The Coca-Cola Company, relies on various factors, including the underlying political conditions of international marketplaces and marketing approaches. These organizations have to develop quality products and services, be conversant about the different cultural aspects, and adopt the best marketing and human resource strategies to enhance their competitive edge. These companies should be flexible, and they must develop strategies that aim to increase their revenues and profitability within the marketplace. Therefore, it is recommended that these businesses, in our case, The Coca Cola Company, strive to develop new ways of harnessing their market share, staying ahead of the competition, and improving their operational efficiency.

References

Abbasi, H. (2017). Marketing strategies of Coke: An overview. KAAV International Journal of Economics, Commerce & Business Management, 4, 194-199.

Alahi, A., & Bass, E. (2018). Coca-Cola’s future growth strategy: Diversification? [Unpublished master’s thesis]. University of Nebraska.

Bedford, E. (2020). Coca-Cola Company: Statistics & facts. Statista.

Brondoni, S. M. (2020). Shareowners, stakeholders & the global oversize economy: The Coca-Cola Company case. Symphonya Emerging Issues in Management, 1, 16-27.

Coca-Cola lawsuit (re racial discrimination in USA) (n.d.). Business & Human Rights Resource Center.

Hannan, S. A. (2016). The Impact of trade agreements: New approach, new insights. International Monetary Fund.

Grgić, J. (2020). Coca-Cola internationalization strategies [Unpublished doctoral dissertation]. University of Zagreb.

Lacy-Nichols, J., Scrinis, G., & Carey, R. (2020). The evolution of Coca-Cola Australia’s soft drink reformulation strategy 2003–2017: A thematic analysis of corporate documents. Food Policy, 90(C), 101793.

Lazar, S., & Sanchez, A. (2019). Understanding labour politics in an age of precarity. Dialectical Anthropology, 43(1), 3-14.

Le, A., Jiang, J., Sandor, M., Stashick, M., & Zhang, L. (2017). Business ethics: The Coca-Cola Company. Simon Fraser University Undergraduate Journal of Philosophy, 1(1), 35-45.

Raziq, M. M., Borini, F. M., Malik, O. F., Ahmad, M., & Shabaz, M. (2018). Leadership styles, goal clarity, and project success: Evidence from project-based organizations in Pakistan. Leadership & Organization Development Journal, 39(2), 309–323.

Scheufele, P. (2017). Assessment of the Coca-Cola Company’s HR-processes in regard of current trends.

Serôdio, P. M., McKee, M., & Stuckler, D. (2018). Coca-Cola – a model of transparency in research partnerships? A network analysis of Coca-Cola’s research funding (2008–2016). Public Health Nutrition, 21(9), 1594-1607.

The Coca-Cola Company announces strategic steps to reorganize its business for future growth (2020). Business Wire.

The Coca-Cola system (2020). The Coca-Cola Company.

Three ways Coca-Cola is embarrassing the pandemic-fueled eCommerce revolution (2020).

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