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The Coca-Cola Company in Sub-Saharan Africa

This is a research of international business activities of Coca-Cola Company in Sub- Saharan Africa. Coca-Cola Company is a multinational company with its origin in Atlanta, Georgia. It was invented by Doctor John Pemberton in May 1896. Today, it’s the world’s leading beverage company in the world. Along with Coca-Cola, it has around 500 brands of beverages offered as refreshments. The company also leads in the supply of sparkling beverages, juice drinks, and ready teas and coffees. Its products are enjoyed in over 200 countries with an approximate daily serving of over 1.6 billion. The company makes and sells concentrates to licensed Coca-Cola bottlers. The bottlers then mix the concentrates with water and sweeteners and sell the finished product to retail outlets in bottles and cans (McKay & Betsy 2009, p. 61).

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The company has well established itself all over the world. The company is always focused on initiating procedures and projects aimed at conserving resources, protecting the environment and economic developments of the countries in which they operate. The Coca-Cola Company first ventured into Africa in 1928 South Africa. It gradually increased its operation incontinent. Today it operates in all countries on the continent. It has over 60,000 employees who directly or indirectly work under it (Pendergrast 2000 p.41-47).

The coca-cola company and its systems are the largest manufacturer and distributor of soft drinks and beverages in the continent. The company has segmented the market into four business units in the continent. These segments are South Africa, Nigeria, East, and central Africa, and northwest Africa. The segments are further subdivided based on the market value. The five top markets are South Africa, Nigeria, Egypt, Morocco, and Kenya respectively. To conquer the beverage market, the company has developed more than 80 brands of beverages and serves more than 925 million customers. To effectively cater to this extensive market, the company has established 37 bottlers, who run 161 bottling processes. This enables the company to serve more than 900,000 retailers across the continent (Friedman 1996 pp.241-245).

To be able to compete favorably and outdo its competitors, the company has always conducted its business responsibly and ethically. The company has always put into consideration the interest of their customers first by realizing that the sustainability of their business is always directly related to the health of their customers.

The company has realigned its business model to cater to the interests of the business, society, and the environment at large. The company is doing this by providing the necessary tools and empowering its human resources to increase the efficiency and effectiveness of their productivity. Due to its production scale, the company can enjoy economies of scale in all fields. They can research the market trends and make the necessary adjustments to capture the market. The company has well laid down marketing strategies. They have segmented the market in such a manner that they can supply their products all over the market. This is achieved through their market outlets. They have also used the strategy of product differentiation. The companies’ products are differentiated from their competitors in terms of blending, branding, and packaging. Coca-cola products are well known for their selective and high-quality blending accompanied by attractive and distinct packaging. This gives them a competitive hand over their competitors (Harford & Tim 2007, p. 159).

The company continues to experience unfavorable environmental factors that affect its operations. These factors include economical, technological, political, legal, demographic, and social trends. Africa continent is characterized by abject poverty. Most of the population lives below the poverty line. Their economies are dependent on foreign aid. They view the company’s products as more of a luxury than a necessity. The company has managed to overcome this problem by use of extensive promotion and creating awareness of the importance of their beverages on the human diet. Most African countries have unstable governments. Their political institutions are usually very weak. Civil wars and coups are the order of the day. These activities distort peace resulting in the collapse of businesses. Some countries have very poor legal mechanisms as far as business is concerned. Long bureaucracies and a lot of legislation inhibit business growth. These countries’ taxation procedures are poor, laws governing labor policies are not well defined such that they tend to oppress the employer.

Due to high levels of poverty in these economies, environmental management is not well addressed. These economies deal with primary production and hence depend heavily on direct natural resources for their survival. This leads to wanton destruction of the environment. They also lack the necessary resources to rehabilitate the environment. The company also encounters problems related to social rigidity to change. Most communities in these countries still cling to traditional beliefs and culture. They perceive change as a way of losing identity and hence cling to their traditional beverages (Chatterji & Toffel 2007, p. 68).

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The Coca-Cola Company has faced challenges in this market in terms of competition. There has been an upsurge of small firms producing soft drinks. A good case is in Kenya. In 2008, a giant Kenyan Company, the East African Breweries Limited launched a non-alcoholic soft drink with the name Alvaro. This Malt-based non-alcoholic drink was a big success in the Kenyan market. Due to the famous East African Breweries beer brand Tusker, commanding a large market in East and Central Africa they had no problem introducing their soft drink in this market. The beverage was a warm welcome to people who do not consume alcohol as a substitute for Coca-Cola products. The Coca-Cola Company through its technological advantage launched a similar drink called Novida. The company embarked on a 50 million shilling promotion of the Novida drink. Posters were paintings of the drink were put everywhere to create awareness to the public of the new drink. Despite these occasional challenges, Coca-Cola remains the largest producer of soft drinks in the region (Asongu, 2007 pp.112-114).

The Coca-Cola Company has been at the forefront in helping solve social and economic problems in these countries in a bid to create a good business environment. Africa contains most of the world’s poorest nations. They face acute water shortages and basic sanitation. A large number of people lack quality drinking water, and its shortages continue to increase. In a bid to penetrate the market well and foster a sense of social responsibility towards the growth and development of these economies, the Coca-Cola Company through a joint investment program with United States Agency for International Development (USAID) has launched a $ 7 million joint investment in 2007. The investment was to fund nine water projects in Sub-Saharan Africa. The projects were to be located in Mozambique, Kenya, Nigeria, Uganda, Angola, Tanzania, Ghana, Ethiopia, and Ivory Coast. Still, in partnership with USAID, the Coca-Cola Company has supported other water projects in Bolivia, Mali, Malawi, Uganda, and South Africa. The effort of initiating these projects was to provide local solutions to the water crises as well as enhancing the business partnership with these economies. Besides the provision of water, the company has been involved in sensitizing people on the need to conserve the environment. In Malawi for example, the community around Mt. Mulanje has not only benefited from the provision of clean drinking water but also with soil conservation. Through closer interaction of the company with the residents, while carrying out these projects, people get aware of the company’s products and their salient features, and there transforms to increased sales (Daniels & Sullivan. 2007, pp. 189-192).

The Company through the Coca-Cola Africa Foundation has been a contributor to programs aimed at increasing the overall welfare of the people. The company is committed to poverty eradication projects by bringing more women to business. They have established manual distribution centers from where their products are distributed. The company has increased the ownership of these centers by women through the provision of finance and entrepreneurial development. Empowering women financially in this region will accelerate wealth creation, reduce unemployment and uplift the living standards of these people. Women and children comprise the company’s largest market and hence empowering them economically to increase their sales. Through this initiative, the company can increase its sales and penetrate those hard-to-reach markets in rural areas (Travis, 2007 p. 189).

Reference List

Asongu, J. J. (2007). “The Legitimacy of Strategic Corporate Social Responsibility as a Marketing Tool.” Journal of Business and Public Policy, Volume 1, No 1.

Chatterji, A. K, Levine, D. I, & Toffel, M. W. (2007). “Do Corporate Social Responsibility Ratings Predict Corporate Social Performance?” Corporate Social Responsibility Initiative, Working Paper No. 33.

Daniels, L, & Sullivan, D. L., 2007, International Business: environment and operations (11th edition). New York: Prentice Hall.

Friedman, M.,1996, “The Social Responsibility of Business is to Increase Profits,” in Rae, S.B. and Wong, K. (Eds), Beyond Integrity: A Judeo-Christian Approach. Grand Rapids, MI: Zondervan Publishing House.

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Harford, T., 2007. “The Mystery of the 5-Cent Coca-Cola: Why it’s so hard for companies to raise prices. Web.

McKay, B., 2009. “Coke to Omit ‘Classic’ The Wall Street Journal. Web.

Pendergrast, M., 2000, For God, Country and Coca-Cola. New York: Basic Books.

Travis, T., 2007, Doing Business Anywhere: The Essential Guide to Going Global. Hoboken: John Wiley&Sons.

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