Political & Macro Environment Impact

OnCoca Cola

International Management Assignment 01

Introduce by John Pemberton in 1886 @ Atlanta

world’s largest beverage company selling more than 1.7 billion beverage servings each day

Operational Reach 200+ countries by 2012

Coca-Cola currently offers nearly 600 brands in over 200 countries

or territories

Company Associates with 90500 workers in plants

Hard Fact’s about coke…

Invest millions of dollars for enhancing human life around the

globe through CSR project.

2010 2013 2017

$0.90$1.04

$1.35

Global Beverage Market

Global Beverage Market USD Billion

CAGR 4.6%

Coke47%

Pepsi21%

Cadbury8%

Others24%

Non-Alcoholic Beverages - Market Share %

Current trends in the Beverage Industry

The beverage industry experienced a CAGR of 2.5% up to 2009

Bottle water to continue the soft drink market with a projected growth rate of 5.4%

Ready to drink tea and Asian specialty will be the fastest growing soft drink segments with an expected growth rate of 9% and 14%

Global Energy drinks markets has surged by 14% growth in 2011 . Current average growth rate is 10% Z

Global Beverages Market

Beverages Market in Sri Lanka

Coke; 40%

CCS, 43%

Pepsi; 10%

Others; 7%

Non-Alcoholic Beverages - Market Share In Srilanka %

Coke CCC Pepsi Others

Current trends in the Local Beverage Industry

• Fresh Fruit juice and Herbal Drinks has seen a significant growth rate of 20% in 2012

• Gradual decline in carbonated drinks consumption

• Volatility in the Supply Chain with higher input costs for key commodities.

• Increased number of innovative products introduced to the market . In 2012 only, 20 new products have entered the Sri Lankan Market

The Food and Beverage industry is a very important sector of Sri Lankan economy as it contributes around 10% of the GDP.

PESTEL Analysis

Tax policies -import and excise dutiesTrade restrictions Environmental policies and lawsInfluence derived from the FDA (Food and Drug Admin)

Standards imposed by the stateGlobal Political issues

PESTEL – Political Factors

Rupee depreciationIncreased trade deficitFluctuating Interest Rates – changed 6 times (Oct’11 –Jul’13)

Fluctuating Inflation rates – 9.8% (Jan’13)Hike in freight and import taxes - Special Commodity Levy Amendments Effective From Aug’13

PESTEL – Economic Factors

Shift towards in healthier life stylesIncreased aging population worldwideAlcohol content – (Rumor amongst ethnic groups) Pressure from social groups – Use local productsHigh Calorie content

PESTEL – Social Factors

Source – Company Corresponding data

Technology gap – shrink caffeine, phosphoric acid levelsCoca Cola Sri Lanka yet to launch Earth Friendly Bottling TechnologyTraditional Bottle crates usedAbsence of vendor machines in Sri LankaDependency in Sole Bottling Partner Technology in Sri Lanka

PESTEL – Technological Factors

Water UsageMaterial used for packaging / distributionThe contents of coke- (Eg –Pesticides in the Coke ingredients in India)

Improper Waste Management

PESTEL – Environmental Factors

Adhering to the local / International lawsAdvertising and labelling related laws - RecentHighly volatile legal environment - locallyLegal issues -environmental and health concerns

PESTEL – Legal Factors

SWOT Analysis

•Significant focus on carbonated drinks•No Clear Diversification•Many brands with insignificant amount of revenues•High debt levels

•Changes in consumer preferences•Water Scarcity in the world•Legal requirements to disclose negative information on labels•Inflation of the economies – appreciation of the dollar value

•Bottled water consumption growth•Increasing demand for healthy beverages – Diet Coke•Growth through acquisitions•New emerging markets (BRIC) attracted by more consumption

•Leader in the beverage market •Successful Marketing Campaigns•Brand Reputation and Customer Loyalty•Extensive distribution channels•Bargaining power over supplier•Effective CSR

Key Drivers

Government Taxes and Duty Tariffs

Influences from other Higher Authorities – FDA/SLICA/Health Ministry

Consumer Behavior/Perception Change – More Health conscious of life styles

Local & Global technology advancement

More recyclable – More Efficiency – Minimize environment pollution

Volatile market condition – Competition/localism

Negative Publicity

Operation Strategy

Strengthen Distribution. Self Entrepreneurship More Distribution

Strengthen BTL Activity Visibility Shop branding Coolers and Crate Display Bill Boards/Dealer Boards

Training & Development Skill development

Financial Strategy Marketing Strategy

Economies of Scale Higher Market Share Different Packaging

Experience curve benefit Developed know how Supply Chain Benefits

Advance Technology Latest Machine Enhance Productivity

Shopper Engagement Tactful Media Campaign Consumer Activation

Marketing Differentiation Segmentation Product Portfolio

CSR against Negative

Key Strategies

Water Stewardship in Africa

Sustainable Packaging & Recycling

Energy Conservation & Climate Change

Diverse & Inclusive Culture

Product Portfolio & Well Being

Global CSR Projects

CSR Project in Srilanka

‘Say We Care’ – is and Coca-Cola Employee volunteerism project

Some Completed project are,Play area in the Maharagama Cancer hospital

Renovations to the Ranaviru Sevana / Ragama Hospital

Sanitation facilities to Schools

Mahamaya Girls' School in Hikkaduwa, reconstructed complete

by Coca-Cola with an investment of Rs. 50 million.

(Reference: Daily FT, March 26, 2013)

Recommendation

Market Penetration Further Development of Distribution SKU Development (PET)

Market Development Further Development of Distribution SKU Development (PET)

Product Development Low Calorie products Organic Drinks Low Sugar Products Energy Drink

Diversification Step in to Water Industry