INITIAL REPORT

SIP Company Name: Coca Cola

Faculty Guide: Dr Kishore Bhanushali
Submitted By,
Rashid Siddiqui
PG19062
Section – A

OVERVIEW OF COMPANY

1) 3CET.
THE COMPANY:
The Coca-Cola Company is an American multinational beverage corporation
headquartered in Atlanta, Georgia. The Coca-Cola Company has interests in the
manufacturing, retailing and marketing of non-alcoholic beverage concentrates and
syrups

Coca-Cola first began selling Coca-Cola in 1886, when Dr John S Pemberton

charged customers just five cents a bottle. Since then they become the world’s
leading soft drinks manufacturer with more than 700,000 employees and 500 brands.

HCCB (Hindustan Coca Cola Beverages) – a company started in 1997 with the
simple aim of making beverages for the India of the 21st century. Two decades later,
we are one of India’s top FMCG companies. Only because fellow Indians, who have
faith in the quality and purity of our products, pick our beverages, 477 times per
second.
HCCB has 18 bottling plants in India, according to a report by The Economic Times.
However, including its external bottling partners, Coca-Cola has over 55
manufacturing units in India

Product Portfolio:
1)Sparkling drinks

We are a leader in the sparkling drinks category, which is the foundation of our
business.
Our portfolio of sparkling soft drinks includes The Coca-Cola Company
brands: Coca-Cola, Coca-Cola light, Coca-Cola Zero, Coca-Cola Zero Decaf, Fanta,
Fanta Light, Sprite, Sprite Zero and Schweppes mixers.
2) Still drinks

We produce and distribute an increasingly wide variety of still drinks, from juices to
energy drinks, sports drinks and ready-to-drink coffee.
With our sparkling and soft drinks portfolio we offer a unique combination in the
bottling landscape. This supports consumer choice and makes us a strong partner
for our customers. Our range of still drinks includes juices and fruit-based drinks,
energy drinks, sports drinks and ready-to-drink coffee.

Juice and juice drinks

We offer a range of fruit and fruit-based drinks in a variety of flavours and convenient
packages, providing people with multiple options to match their individual
preferences. Fruit juices and fruit drinks provide vitamins and nutrition as well as the
liquid needed to remain hydrated and sustain a healthy, well-balanced lifestyle.

Our portfolio of fruit drinks - which come mainly from juice concentrate - includes
Amita and Frulite

Energy drinks

Energy drinks remain a highly dynamic segment. They provide an energy boost for
those heading out for the evening, in the middle of a busy day or simply when people
are feeling tired.

Monster was launched in Greece in 2010. With its wide variety of flavours and
association with athletes, musicians and fans, Monster is way more than just an
energy drink.

Sports drinks

Sports drinks help to support performance in sports and other physical activities.
They are specially designed to ensure proper hydration and to provide
carbohydrates and mineral salts to replace those lost during sport or other intense
physical activity.

Powerade is the isotonic sports drink of our portfolio, quenching thirst and
replenishing minerals and carbohydrates for the athletes at the biggest sports events
worldwide.

3) Water

We offer a range of water products for different occasions, providing our consumers
with the daily refreshment and hydration they need, to lead a healthy and well-
balanced lifestyle.
We have developed AVRA Natural Mineral Water range, which holds a special place
in Greek people’s hearts, for the past 29 years. Distinguished for its excellent quality
and taste, this 100% natural mineral water comes from the Achaean Mountains and
is bottled at our facilities in Aeghio, according to the highest quality standards and
without any further processing.

In 2005 we introduced AVRA BLOOM, the first natural mineral water especially
designed for children. AVRA Active Cap was launched a year later, introducing an
ergonomic bottle that fits perfectly in the hand and has a practical cap ideal for easy
transportation and an active lifestyle.

In 2014 we launched the innovative Eco-Flex 500ml and 1,5l PET bottles with 24%
less plastic (PET), which significantly contribute to the reduction of CO2 emissions
and volume of plastic and recycling.

In 2017 we proceeded with another significant investment of 8 million Euros. The

investment concerns the addition of a new sophisticated line that promotes the
overall reduction in plastics in Coca-Cola Hellenic packaging. The line allows the use
of lightweight PET in all packages of Avra Natural Mineral Water family and in
particular, a 27% reduction in Avra Bloom and 18% in Avra Active Cup.

4) Premium spirits

Our diverse and extensive portfolio includes premium spirits which we distribute,
complementing our core alcohol-free drinks brands and allowing us to reach more
consumers.

Our complete product range includes the distribution of premium spirits from:

 Edrington (Famous Grouse, Macallan, Highland Park, Brugal, Snow Leopard)

 Brown-Forman (Jack Daniel’s FOB, Woodford Reserve, Finlandia, El Jimador,

Herradura, Chambord)

 Gruppo Campari (Campari, Aperol, Bankes, Cinzano Gran Sec, Bulldog)

 Isidoros Arvanitis (Plomari Ouzo, Adolo, Matarelli Ouzo, Dekaraki & Mastiha
M DRY)

5) Snacks

Our diverse portfolio includes Tsakiris potato snacks, the first Greek crisps brand
with a wide range of all-time favourites and innovative flavours and combinations

Tsakiris addresses the nutritional needs of Greek consumers of all ages. The brand
consistently invests in innovative and quality snacks that have a strong Greek
identity through its selection of raw materials, adhering to international production
standards.
Distribution Network:
HCCB is one of India’s largest FMCG companies and it therefore has certain
consumption points (retail outlets/restaurants etc) in areas that have intermittent or
no power supply. Standard visi-coolers, that all of us are familiar with, took a lot of
time to chill products (because of intermittent electricity) and also, when the lights
went off, they wouldn’t retain the chill, either.

In such a situation, bottles of your favourite beverages could not be chilled. There
was a dire need for coolers that could retain cooling in the absence of continuous
power supply.

The HCCB team worked with suppliers and the global R&D teams of The Coca-Cola
Company, and developed a chest cooler with eutectic solutions that was able to
retain the chilling for up to 12 hours with a serving temperature of less than 10°C.

Close to 60,000 units of these coolers have already made their way into the market
and are used to distribute your favourite products. This helped HCCB to cater to
more consumers, who needed our juices, water, dairy or sparkling products.

The 2nd chilling equipment that had to be conceptualised differently so that they
could help distribute HCCB products was the localisation of the fountain dispenser.

HCCB and Coca-Cola India collaborated with one of its Mumbai-based suppliers -
Western Refrigeration - and soon came up with a localised solution. It was almost at
par in terms of functionality and better in terms of performance in comparison to the
internationally-made equipment. The Company was also able to save 35-40% in
terms of CapEx (Capital Expenditure) investment in buying the equipment. As a
result of this ingenuity, the number of fountain equipment placed by HCCB, has
doubled in the span of the last three years, as compared to the last 10 years.

PROCING:
Due to the availability of wide range products, the pricing is done according to the
market and geographic segment. Each sub-brand of coca cola has different pricing
strategy. Their pricing strategy is based on the competitors pricing, Pepsi is the
direct competitor to coke. Beverage market is said to be a oligopoly market (few
sellers and large buyers), hence they form into cartel contract to ensure a mutual
balance in pricing between the sellers.

PROMOTION STRATEGIES:
Coca cola adopts various advertising and promotional strategies to create an
increased demand in the market by associating with life style and behaviour and
mainly targeting value-based advertising. You are more likely to see a coke ad
individualised for a particular festival or in with a general positive message.

Coca cola uses CSR as its marketing tool to gain emotional benefits in consumers
mind. The current promotions through CSR include “Support my school” campaign
with NDTV. It has many brand ambassadors like Shahrukh khan, Hrithik Roshan,
South Indian Actor Vijay and Trisha, Ghambir, Aamir khan etc and has signed
contract recently with Imran khan.

It allows price discounts and allowances to distributors and retailers and uses
various types of sales promotions in order to push more products into the market. It
employs both push strategy through promotions and pull strategy through
advertisements and campaigns.

Market Structure of Coca Cola Company:

Oligopoly is defined as an industry in which there are a few firms. By a few it is
meant that the number of firms should be sufficiently small for there to be conscious
interdependence, with each firm aware that its future prospects depend not only on
its own policies, but also those of its rivals. Firms in oligopoly can use either high-
price strategy or low-price strategy to maximize their profit. An industry is defined as
a group of firms where the firm’s products are close substitutes for one another, that
is have a high and positive cross elasticity of demand.

Coca cola and Pepsi are one of the leading competitors in an oligopoly market. But
in Sri Lanka in addition to those two companies’ elephant house’s Kiik cola too plays
a major role in production of cola beverages. They sell the homogeneous product so
they can control over price but they will consider their action when they would like to
change the price of their goods. ‘Homogeneous goods’ are goods which either
physically identical or are viewed as identical in the eyes of the customers are known
as Homogeneous goods. Since the customer can’t differentiate one product from the
other it becomes very difficult for a seller to compete on the benefits. The
homogeneous goods are perfect substitutes for each other and are generally sold in
perfect competition. The seller competes on either price or availability. In perfect
competition many buyers and many sellers are present so the profit margins are very
less. Price is the most important factor along which the firms producing
homogeneous goods compete. For homogeneous goods the process costing is an
allocation system companies use to allocate cost. It is easier to use and flexible as it
is based on process.

For example, in commodities market vegetables, fruits, grains, oil, metals and
energy goods are homogeneous goods. The buyers purchase doesn’t depend much
upon the product as all are similar but more on the price. So, if you are going to
purchase 1kg of tomato than wherever you may buy it from, it will serve the same
purpose.

So in this instance they usually change the price of their goods according to kinked
demand curve. They are using cut-throat competition to attract more potential
customer.
Normally, these three firms will use low-price strategy at the same time to maximize
the market profits. Especially when summer holidays arrive, both of the firms will use
cut-throat price competition to increase their sales so as to increase their profit.
Game theory is applied to be a market share. A game theory is a pricing policy and it
helps a firm to enhance profit. The best example that we can take is what happened
in 2013. According to the article, Coke-Cola decided to cut its prices of the 200ml
bottle from Rs.10 to Rs.8. This reduction in price would affect their sales
tremendously as this segment mostly caters to the rural areas (as mentioned in the
article) where people have a lower disposable income, hence making it an extremely
price elastic segment. Suggesting that a change in price can lead to a significantly
larger change in quantity demanded. A rise in demand can help Coke achieve large-
scale production and consequently lower average total costs in the long run due to
benefits of economies of scale.

In 2013 Coke-Cola introduced it`s affordable pricing strategy in which it drastically

reduced its prices to Rs.5. Pepsi was forced to follow as it would lose a massive
portion of the market share, being a close substitute. But these two firms couldn`t
sustain the market at such low prices and both withdrew from this lower pricing
strategy. Since then (for 5 years) the prices have remained stable at Rs.10. Price
rigidity in oligopolistic firms can be explained through the Kinked Demand Curve
model. The kinked demand curve represents how the pricing behaviour for each firm
is strategic.

Firms in this market structure majorly resort to non-price competitive measures as

their marginal costs can fluctuate and still result in the same market price. The
marginal cost of production depends on the amount of money firms allocate to
research & development and advertising. This is done in an effort to differentiate the
goods and minimize the cross-price elasticity of demand as much as possible. Coke
has reduced its price and this would lead to an expansion in its demand in the short
term, as currently it is cheaper than Pepsi in this segment. This would lead to an
increase in Coke’s market share. The longer Pepsi allows Coke to have an edge
over itself in terms of market price the more consumers it would lose in the long
term. This may be because consumers who shift from Pepsi to Coke due to lower
prices, might develop a taste for the latter product and even if Pepsi decides to
reduce it’s price the consumers it lost in the initial case might not shift back.

Rival firm PepsiCo may be compelled to reduce its price to a minimum of Rs. 8 in
order to maintain its market share. Changing the price is one of the last measures
firms resort to as it can lead to harmful repercussions for all the firms in the industry,
such as price wars. Which is when companies continuously reduce their prices to
destabilize their competition.

A reduction in market price in an oligopolistic market structure is always beneficial for

the consumers as it provides them with a variety of cheaper close substitutes. The
only stakeholder with a negative impact would be the firms, as lower prices would
mean a lower margin of profitability. The role of non-price competition is essential in
this case as it can provide consumers with information about alternate products. Also
advertising can increase competition between firms and contribute in decreasing
their monopoly power. Although there are some drawbacks for advertising such as it
increases the cost of production thus resulting in higher prices for consumers. It
creates needs that consumers would not otherwise have, resulting in a waste of
resources. Successful advertising can lead to increase in monopoly power of a firm.

There are high barriers to enter this market. Coca cola and Pepsi have signed a
cartel contract. The two firms will become a cartel to avoid other firm to enter this
market because it will decrease their economic profit. Cartel is a small number of
firms acting together to limit cost, raise price and increase profit. Neither coca cola
nor Pepsi or elephant house exit from this market, another firm will become a
monopoly. The soft drink price will become higher.

MARKET SHARE:
In India, the brand is still insignificant after being around for more than a decade. In
the 130-billion juices market, Coca-Cola has a 31.4% market share, with Parle Agro
having a 22.5% share and PepsiCo 17.4%

Processes:
HCCB’s factories are the source of the consistent great taste you have been
enjoying for decades now. These factories ensure the quality and consistency in the
beverages you consume. And because this is a huge responsibility, the factories are
set up with the utmost care and precaution with a lot of planning put behind the
setting up.

The factories are planned and set up keeping an end-to-end balance in mind. It
begins right from the demand, transportation and distribution to the procurement,
storage, manufacturing and supply.

Before a factory is set up, thorough research and assessment of the area is done.
This involves checking the availability of resources like land, water, labour among
other factors.

The Planning Process:

Planning is done in order to ensure there is minimum disruption and maximum

optimisation of resources. The factories are set up with complete adherence to
government laws to protect the resources and the people in the vicinity.

The process of setting up factories is uniform everywhere and meets certain key
criteria:

Infrastructure Optimisation:

Utilising the existing assets and resources to the best possible ability

Common Infrastructure Planning:

Increasing the capacity by using the best and most advanced scientific tools and
technology

Optimum Cost:

To do all this while leveraging the scale at the best possible cost.

The Execution Process:

It is not just the setting up of the factory that is done in a sustainable manner. The
operations at the manufacturing plant too, are carried out in a way to ensure
sustainability. There are constant innovations at the factories to save and utilise
resources better.

Some of the best examples of these sustainable innovations are such:

Light weighting:

One of the most prominent and recognised initiatives by HCCB, light weighting is an
effort to reduce the Polyethylene Terephthalate (PET) content used in the packages.

ErgoBloc:

Everything from the cleaning of the preform, to its shaping into the bottle, and finally
the filling of the beverage, happens in the ErgoBloc. As a result, the technology
helped save a lot of time, energy and resources.

Solar-Powered factories:

Several of Hindustan Coca-Cola’s factories are solar powered. The setting up of

such factories reduces the use of fossil fuels and increases the use of sustainable
sources of energy.

The Social Impact:

Since the factories are also a source of employment and opportunity for those living
around them, their setting up additionally involves understanding the needs of the
people in the surrounding area, eventually helping them live a better lifestyle. This
setup has a strong positive impact on the society and communities in the areas close
by as well.

HCCB understands the most pressing needs of the area and community as well as
the issues hampering the quality of life. It then does an assessment and helps
provide basic facilities like sanitation services, potable water, education, and skill
building to help the community, especially women, earn a livelihood through different
means.

HCCB factories employ thousands of people, complies completely with the

government norms and social rights, and even tries to go beyond, to achieve more
than what is promised. They contribute to several stakeholders across sectors like
farming, supplying, manufacturing, retail, and transportation among others.

Process checks that ensure the quality for your drinks

From packaging and bottling to beverage-level quality checks, HCCB follows a

comprehensive process that involves minimal human intervention through its
production procedure.

Here are five key in-process quality checks across different lines that you as a
consumer must know about.

Bottle Inspectors - Online quality inspection processes include the scrutiny of

cleaned glass bottles for any damage and foreign matter, which is done with
Electronic Bottle Inspection technology. After the cleaning of the glass bottles, these
instruments are placed to detect breakage or foreign matter in the bottles without
human intervention. This electronic inspection technology rules out virtually any
possibility of foreign matter, of any kind, being present in a bottle.

Filled Bottle Inspection Technology- Filled Bottle Inspection technology measures

and ensures the uniformity of net content (liquid) in all bottles through a liquid height
parameter. Next, it checks for the closure condition –ensuring the cap is placed
properly.

COBRIX Analyser -The COBRIX analyser ensures the same quantity of solid
(sugar) and CO2 level in all the thousands of bottles which are packaged every day,
and also ensures that the quantity levels are maintained within specification limits. If
you are sugar conscious, this process acts as the guarantor.

Flow Diverter Valve- In case of juice production, the Flow Diverter Valve ensures
that the hot fill product (juice) is pasteurised at a pre-set temperature. If the beverage
happens to go below the desired temperature, it is not passed on to the filler and is
sent for re-pasteurisation. Hence, nothing but the best quality is packaged for you.

Interlocks -Several robust interlocks are placed in the processing and

manufacturing line to ensure that the product quality criteria are met at every step. If
at any stage the criteria are not met, the interlocks get applied so that the process is
halted immediately. One critical interlock is placed in the date-coding machine, which
pauses the process instantly on recording any aberrations in it. The interlock is
applied to ensure the process halts immediately.

Clearly, multiple process checks ensure nothing can go wrong for your favourite
drinks.

The Customers:
Targeting:
Segmentation enables Brands to define the appropriate products for different kind of
customers. Coca Cola doesn’t target a specific segment but adapt its marketing
strategy by developing new products.

Age: Generally, Coke does not have a specific target and is addressed to everyone.

But the main consumers are 12-30 years old people; even if there is no specific
product or communication for less than 12 or more than 30, the brand succeed in
reaching them, through partnerships for example (restaurants, fast foods such as
McDonald’s…), or thanks to its value among consumers. So, the core target
audience of Coca Cola is youngster or youth. Their targeting is not based on gender
but the results show that both genders like this product and use it (almost 50/50).

Finally, Coca Cola consider each customer as a target and a potential consumer. All
age groups are being targeted but the most potential is the age group from 18-25
that covers around 40% of total age segments.

Life style: no life style targeted but more and more busy life style and mobile
generation (youth) are considered to be the most important part of Coke’s
consumers.

Occupation: no occupation targeted but consumers are mainly students and family-
oriented people

Nature: fun, joy, entertainment loving…

Customer’s Media Habits

There are some habits which are given as follow:

 The young target audience of the brand loves media exposure

 generation & social media is part of daily life

 Connected people; they like innovations, they like being surprised.

Positioning:

Coca Cola has strategically positioned itself within the world soft drink market. It
faces a vital question: does it have to keep the same positioning or to adapt
according to the 200 countries where the brand sells its products. The brand has
understood this principle while ago: “think global, act local”. Coca is thus willing to
keep the same core product which is coke, but it adapts the offer to local needs.

They use strategic positioning in order to have the same image all around the world,
which is a success because it is perceived today as a part of daily life everywhere.
This perception of the brand by the consumer leads to a high degree of loyalty and
makes the purchasing decision more automatic. Coca Cola has been successful by
using Unique Selling preposition as “Live the coke side of life”, related to joy and
happiness.
Consumers basically associate this brand with these emotions. When the name of
Coke is mentioned, the first thing that comes into mind is fun and entertainment.

THE COMPETITION:
DIRECT COMPETITORS:
1) Pepsi:
Without a doubt one of the strongest coca cola competitors is Pepsi. One of the
reasons these brands fight tooth and nail is because both of them are very strong in
their distribution and have excellent marketing and sales policies. As a result, you
will find that the maximum market share is of these 2 brands – be it any country.

2)Red Bull:
Red Bull gives you wings, quite literally!! Red Bull is one of the strongest growing
energy drink/sports drinks and is amongst the strongest direct coca cola competitors
in terms of brand valuation. The popularity of Red Bull is because of a wide adoption
in the pub culture where Red Bull can be mixed in various drinks. Its taste is stronger
and loved by Red Bull drinkers.
Red Bull is another brand which is known for its strong distribution channel. It was
one of the first entrants to popularize energy drinks to such a massive audience
(Gatorade is targeted towards sports whereas Red bull is targeted towards the
masses). Interestingly, amongst the top 6 direct competitors of Coca-Cola, Red bull
is the only one not manufactured by Coca-Cola or Pepsi. It is owned by an Australian
company Red Bull GmbH.

3)Diet Coke/Diet Pepsi:

The diet soft drink market is fast rising, especially with at least a 1000 videos and
blog articles bombarding people about the sugar content in traditional soft drinks
such as Coca-Cola and Pepsi. As a result, Diet Coke and Diet Pepsi both are being
replaced and being consumed instead of regular coke and Pepsi.

If we had to rank further, Diet coke will rank much higher than Diet Pepsi in terms
of market penetration and in terms of Brand valuation as well.

4)Fanta:

Again, a sub-brand of the Coca-Cola company and one of the most widely loved
fruit-flavoured carbonated drink. If you want a break from cola’s which are black
coloured, you would do well with the various tastes of Fanta. In fact, Fanta has close
to 100 flavour’s being used across various countries.
Fanta is also known for a differentiated marketing message in each of the countries
which it operates in. But the target message is always towards “freshness”

5)Sprite:

Sprite originally started as a competitor to 7 up but it has ended up being a large

market share holder of soft drinks market and although it is from the house of Coca-
Cola, it is one of the strong coca cola competitors in the market. Sprite’s clear
formula has helped the brand amass an excellent fan following and it has captured
the market which previously belonged to Limca or 7 Up.

There are at least 20 variations of sprite and the soft drink is a hit with the teenagers.
Sprite majorly targets the youth and talks of being a brand with a no bullshit – clear
message. This is obviously a pun because Sprite is a soft drink which is clear in
colour and is transparent in nature. It is the 5th strongest direct coca cola, competitor

6)Gatorade:

Gatorade uses Science to come up with its various formulae and targets mainly
sports and athletes for its drink. It has various nutrients, each of which can be
applied to different sports activities – such as drinking before the game, drinking
within the game or drinking after it. Calories, proteins, and various nutritional value
facts are included in the packaging of the product so that the athlete has a complete
knowledge of what he is drinking.

Gatorade is the 6th highest ranked brand in the soft drink market and hence is a
competitor for coca cola especially in the calorie conscious and energy desiring
sports market. If you want to be lean and fit, it is much more likely that you will opt for
Gatorade instead of something like Coke or Pepsi.

7) Dr Pepper (Dr Pepper Snapple):

The 7th coca cola competitor is another one in this list which is not from the house of
Coca-Cola or Pepsi. Dr Pepper Snapple Group has a combination of some well-
known brands such as 7 up and RC Cola. Amongst these, the flagship product which
is the strongest coca cola competitor is Dr Pepper itself.

Dr Pepper comes in various flavours and in fact, is known and loved for its unique
taste. The brand is distributed in many countries but has a major market
penetration in the US, from where it derives its brand valuation. It is also known for
its smart marketing and use of slogans, due to which it has survived and thrived for
long against the likes of Coca-Cola and Pepsi.

8) Mountain dew:
Mountain dew is a clear carbonated drink from the house of PepsiCo. Mountain dew
is known for its clear beverage worldwide but it also has a line up known as
Kickstart.

Between mountain dew and kickstart, the brand has 40 flavours in the market, all of
them lined up for competition against the standard colas. Mountain dew lags behind
Sprite because of the massive distribution advantage which sprite has being from the
house of coca cola.

There are many other direct competitors of coca cola and the list is endless. There
are many regional players as well. However, besides the direct coca cola
competitors, we would also like to include 3 indirect and equally strong coca cola
competitors. They are as follows

Indirect coca cola competitors:

1) Lipton:
Most prominently known for its green tea and various flavours of tea, Lipton is the
number one competitor for coca cola brand especially in tea drinking nations like UK,
India, China, and others. As people are getting more health conscious, they are
turning towards the tea providers which are brands such as Lipton. Lipton has its
own café’s as well to fulfil the demand of its target markets.

2) Nescafe:

Some people love tea and others love Coffee. The USA itself is a major coffee
drinking nation and so are many others. And in Coffee, the one brand which has the
top mindshare is Nescafe. Nescafe is without a doubt a very strong coca cola
competitor because of its superb taste and fantastic distribution.

Nescafe is a product from the brand Nestle. Nestle is known for various brands
like Maggi, cerelac, various breakfast cereals and whatnot. As a result, Nescafe has
a distribution setup which is even larger than Coca-Cola because of the simple
reason that Nescafe is also sold in medical shops besides being sold in groceries or
other markets.

3) Tropicana:

Would you like to replace your carbonated beverage with Juice so that you can be
healthier and have a drink which is far less in sugar and has a lot of natural elements
to boost your immune system? I am sure you would prefer one above the other. This
is what is happening in the market and hence Tropicana’s range of natural juices is
strong rising as a go-to drink for people who don’t want caffeinated or carbonated
beverages.
Although preservatives are used in Tropicana as well, the marketing has been done
beautifully and many of their drinks actually taste like the fruit they stand for. In fact,
this author favorite beverage is the mixed fruit drink from Tropicana. Because it is
unique and has such a large flavour base, Tropicana is one of the strongest indirect
coca cola competitors in the market.

The environment:

Business Environment

The business environment of the company is distributed in the Micro & Macro
Analysis Micro environment is the environment of the business in which factors are
directly relating to the performance of the business & effect on the factors can
change the strategic performance of an organisation whereas the Marco
environment is the business environment in which factors are relating to the external
environment of the businesses & the strategic impact of the environmental issues o
the business policies can be ascertained in the terms of the
political,economical,social,technological,environmenrtal & legal factors affecting to
the level of the business environment.

Micro Environment

This is the term of the business environment in which all the internal factors which
are having a direct & close impact on the performance level of the business are
clubbed. They are as under –

Customers – They are the resources of the business operations in the lacking of the
customers no business can be effectively run & operated in an international market.
Every business is forming its strategy for the development of the customers in the
emergent market. The idea of the Coca Cola company is of the same in the order to
develop & expand their brand status in the Global market For doing the same activity
they are applying all the marketing promotion & communication techniques in the
business for constructing their growth strategy of the business In the last five years
they have setted a large customer base in the local,regional,national & the
international markets. They have deserved appreciation of the customer
development continuously at the rapid rate of increase in the year 2005 by 32%,2006
49.3%,2007 52.4% in the first three years – in the year of 2008 there was a serious
destruction of the business they have observed in their target market segmentation
which has started improvements from the last year (King,2009)
Employee – The company has having a big number of employees in the business in
the relation to the wide turnover of the business However, serious credit crunch in
the market in the year of 2008 has serious affected the productivity level of the
company due to the lowering of the capability level of the business which has
resulted in the reduction of employees in due course of the retrenchment. The up
gradation of the employee position has been started from the year of the year of
2009 as the recover stage has begun.

Media – This is the technique used in the business for the purpose of consumer
development in the local, regional, national & international market of the business
the company is using an imperative technique of the consumer development through
consumer programmes, advertising & publicity, sales promotions, public relations,
direct marketing.

Shareholders – These are the owners of the company who have the right of stake in
the business, they are holding their powers of the control & management & decision-
making. They have right to attend annual general meetings of the company with the
right to receive share in the profits of the company in the terms of the dividend.
Warren Buffet is the owner of the company who has put the participative
management style which suits for the strategic planning & decision-making in the
business.

Suppliers – These are the persons who are supplying raw materials to the company
for the purpose of the building & maintaining the strategy of the production of the
company Suppliers are the effective sources of the production which are promoting
the sales activity with the appreciating in the quality of the production of the company
Supplier strategy control is the aim of every business activity, as they are regularly
supplying an effective goods & services in the order to increase the turnover of the
company They are supplying their goods & services on the basis of the credit
periods issued to the company. Limit of the period of the credit is ascertained by the
company based on the financial position & market performance. Suppliers are
deciding the credit period in the terms of the days which are binding on the company
& it is therefore an effective supplier control policy in the business is always playing a
dynamic role in the strategic management of the company. Coca Cola company is
having a good base of the suppliers which is providing the timely regular supply in
the business in the order to execute the effective production strategy Their suppliers
in Uk are scattered in the different areas like Bermingham,Bavon,Brighten,
Manchester & other regional areas which are giving the continuous flow of the supply
of the raw materials in the order to maintain the productivity control in the business
One of the supplier namely Divine Grace has developed contract of the monthly
supply of the 22 million ton of the Glass with the approval of the credit period of 15
days.

Market Competitors – Market Rivalry is an effective source of the improvement of

the performance of the company in which concentration is given on the business
development in the order to increase the sales turnover, profitability level, service
efficiency, market opportunities with the maintaining of the scope of the business.
When 2 or more competitors in the same area of activity are trying to dominate the
level of the efficiency & effectiveness of the each other that is known as the Market
Competition. Every company has to develop imperative strategy of the market
development & product development in the order to maintain the stability & status in
the competitive environment of the business Market competition is helping to
improve the level of activity & superiority in the business along with the measuring of
the performance Coca Cola products are competing a tuff rivalry in the Market with
Pepsi,Mirinda,Limca, 7 Up who are trying to dominate each other’s in an
international business environment. At present Coca Cola is having 2nd rank of the
performance of the cold drinks in an international market.

Macro Environment

This is the term of the business environment in which focus is given on all of the
external factors in the business environment & their strategic impact on the level of
the performance of the business Following are the external environmental factors –

Political – These are the factors in an external environment of the business which
can be impacted in the terms of the Government policy, Import Export Regulations ,
government intervention, taxation laws, human resource training & development in
the business Political issues can be severely impacting the company organisation in
the term of affecting on the policy regulations of the company & how the scope of the
activity can be focused. For the Coca Cola the political environment of the corporate
is remain continuously feasible import & export regulation in the UK,USA & Asian
countries has supported the business for the promotion & development of the
business in an international market. They are receiving the regular support from the
Governmental & Non-governmental associations for the counselling of their
management issues on the political background

Economical – Economic issues are those which can be the interest rates, rate of
inflation, economic development rate, foreign exchange rates which have the close
impact on the business policy development They are proving an economic status of
the company in the national as well as an international market. When the rates of the
interest on the bank loans are lower giving opportunity of investment to the
shareholders of the business in this period the rate of capitalisation increases. When
the foreign exchange rates are higher given the exposure for exports which can be
increases the national income of the country The Coca Cola has experienced a
serious shock of the deterioration of the performance level in the year 2008 due to
the serious credit crunch in the market they had loosed their potential liquidity status
of the business in this period which they had ascertained during the rapid
development of the business in the last 3 years with the effect from the year 2005
However, in the year 2009 they had experienced a recovery position in the business
which had improved their status from the stage of the credit crunch, import export
regulations & the rate of the economic development of the UK have a supportive
focus to the expansion & development of the company in Europe.

Social – These are the factors which are relating to the changing demand & supply
conditions of the business in due course of the alterations in habits, likes,
preferences opinions of the people which are impacting through the alterations of the
manners, fashions, styles. The factors are having a direct impact on the scope of the
business as the business growth is depended sensibly on these potential factors of
the environment. It is the responsibility of the management of the business to always
prefer an ideal policy of the business development at the stake of the social changes
in the business environment. The changes in the habits of the people are always
making changes in the sales turnover of the company, in the year of 2008 this impact
was focused with the low level of income in the society.
THE TECHNOLOGY:
Several factories at HCCB use Ergo Bloc-a small idea that has made a big change at
our factories. This technology has helped save electricity and water, while increasing
speed and maximising output.
Earlier, the process required the blown PET bottles to be conveyed through long air
rails which involved consumption of electricity. Also, the filled bottles were warmed
with hot water spray thus consuming a good amount of water.
But with Ergo Bloc technology, the bottles do not have to be passed through the air
conveying rails, and within a block, they reach the filling machine. Subsequently, the
filling happens at a much higher temperature (15-17 degrees Celsius) than the
earlier process. Thus, the product warming process has been eliminated, which
saves a good amount of water.
At Hindustan Coca-Cola Beverages, we understand the importance of saving our
resources today and consider ourselves responsible for shaping tomorrow. After all,
a stitch in time saves nine!
The Perfect Bottles for Your Favourite Beverages
Ever wondered about the stringent processes behind the making of the PET bottles
that contain your favourite drinks? It is actually a very intriguing journey and a
thorough procedure.
A series of processes, which have been perfected across decades, go into the
making of every PET bottle at the HCCB factories, which is then filled with different
beverages like Maaza, Sprite, Minute Maid and others. Here is how it happens:
Resin Drying: At first, the PET resin is properly dried to attain the optimum utility
and appearance of the bottle. Then the PET pellets are heated to the optimum drying
temperature, which is a prerequisite for good drying. This is due to the PET
polymer's high propensity to absorb moisture from the environment. Higher the
drying temperature, the more quickly and thoroughly the PET dries. Efficient drying
thus prepares the PET pellets to achieve the characteristics required for use.
Injection Moulding Process: Next, the pellets undergo a plastic injection moulding
process, which produces countless high-quality parts with great accuracy and high
speed. Plastic material in the form of granules is then melted until soft enough to be
injected under pressure to fill a mould. As a result, the bottle shape is replicated in
every unit. Material for the part is fed into a heated barrel, mixed and forced into a
mould cavity, where it cools and hardens to the configuration of the cavity. After this,
the pre-form comes to the Hindustan Coca-Cola factory.
PET Blowing Process: The final step of the process involves the use of the blow-
moulding machine. In this machine, the pre-forms are initially heated to make them
malleable and are then blown with high-pressure air in a mould to give them the
desired shape.
After the completion of this process, the bottles come and are filled with various
beverages after various quality checks.

2) SWOT ANALYSIS:

Strengths in the SWOT of Coca Cola

Brand Equity – Interbrand in 2011 awarded Coca cola with the highest brand equity
award. Coca cola with its vast global presence and unique brand identity is definitely
one of the costliest brands with the highest brand equity.
Company valuation – One of the most valuable companies in the world, Coca cola
is valued around 79.2 billion dollars. This valuation includes the brand value, the
numerous factories and assets spread out across the world and the complete
operations cost and profit of Coca cola.
Vast global presence – Coca cola is present in 200 countries across the world.
Chances are, any country that you go to, you will find coca cola present in that
market. This vast global presence of coca cola has also contributed to the building of
the mammoth brand name.
Largest market share – There are only 2 Big competitors in the beverage segment
– Pepsi and Coca cola. Out of these 2, coca cola is the clear winner and hence has
the largest market share. Amongst all beverages, Coke, Thums up, Sprite, Diet coke,
Fanta, Limca and Maaza are the growth drivers for Coca Cola.
Fantastic marketing strategies – Coca cola unlike Pepsi always tries to win
peoples heart. Where Pepsi’s target is continuously changing, and is targeted
towards youngsters, Coca cola targets people of all ages. The targeting is also done
by celebrities who are well liked – for example – Amitabh Bacchan, Sachin tendulkar,
Aishwarya Rai, Aamir Khan etc
Customer Loyalty – With such strong products, it is natural that Coca cola has a lot
of customer loyalty. The products mentioned above like Coca cola and Fanta have a
huge fan following. People will prefer these soft drinks over others. Because of the
good taste of Coca cola, finding substitutes becomes difficult for the customer.
Distribution network – Coca cola has the largest distribution network because of
the demand in the market for its products. On the other hand, due to this successful
distribution network, Coca cola has been able to command such a high market
presence.

Weaknesses in the SWOT of coca cola

1. Competition with Pepsi – Pepsi is a thorn in the flesh for Coca cola. Coca
cola would have been the clear market leader had it not been for Pepsi. The
competition in these two brands is immense and we don’t think Pepsi will give up so
easily.
2. Product Diversification is low – Where Pepsi has made a smart move and
diversified into the snacks segment with products like Lays and Kurkure, Coca cola
is missing from that segment. The segment is also a good revenue driver for Pepsi
and had Coca cola been present in this segment, these products would have been
an additional revenue driver for the company.
3. Absence in health beverages – If you watch the news, you would know that
obesity is a major problem affecting people nowadays. The business environment is
changing and people are taking measures to ensure that they are not obese.
Carbonated beverages are one of the major reasons for fat intake and Coca cola is
the largest manufacturer of Carbonated beverages. The inference is that the
consumption of beverages in developed countries might go down as people will
prefer a healthy alternative.
4. Water management – Coca cola has faced flak in the past due to its water
management issues. Several groups have raised lawsuits in the name of Coca cola
because of their vast consumption of water even in water scarce regions. At the
same time, people have also blamed Coca cola for mixing pesticides in the water to
clear contaminants. Thus water management needs to be better for Coca cola.

Opportunities in the SWOT of coca cola

1. Diversification – Diversification in the health and food business will improve
the offerings of Coca cola to their customers. This will also ensure that they get
better revenue from existing customers by cross selling their products. The supply
chain which is distributing their beverages can also distribute these snacks thereby
sharing the load of Supply chain costs.
2. Developing nations – Although developed nations have a high presence of
Coca cola, these countries are slowly moving towards healthy beverages. However,
developing countries are still being introduced to the delight of carbonated drinks and
soft drinks. Countries like India which are developing and have a hot summer, find
the consumption of cold drinks almost doubled during summers. Thus, the higher
consumption in developing environments can be a good opportunity to capitalize for
Coca cola.
3. Packaged drinking water – With hygiene becoming a major factor in the
consumption of water, Packaged drinking water has found its way into peoples mind.
Coca cola has a presence in the packed drinking water segment though Kinley.
Although Kinleys expansion is slow as of now, Kinley has a huge potential of
expansion. Thus, Coca cola as a company should focus on the expansion of Kinley
as a brand and take it up to Bisleri ‘s level of trust.
4. Supply chain improvement – Supply chain can be a major cost sink hole
with the transportation costs always rising. Coca cola’s complete business is based
on transportation and distribution. There will always be possible improvements in this
area. Thus Coca cola should keep strict watch on its Supply chain and keep
improving to bring the cost down.
5. Market the lesser selling products – In the product portfolio of Coca cola,
there are several products which have not found acceptance in the market. Coca
Cola needs to concentrate on the marketing of these products as well. It is
understood that Coca cola has made several expenses to launch these products.
Thus, the marketing and subsequent rise of sale of these products will help revenue
of Coca cola.

Threats in the SWOT of coca cola

1. Raw material sourcing – Water is the only threat to Coca cola. The
weakness of Coca cola was the suspected use of pesticides or vast consumption of
water. However, the threat here is that water scarcity is on the rise. With the climate
changing, and regions of various countries facing scarcity of water, sooner or later
someone might raise fingers on beverage companies. Thus, Water sourcing is an
axe which can fall anytime on the head of Coca cola. If water is limited or rationed,
Coca cola can experience a major downfall in their revenue and capacity of
distribution. The same can affect its arch rival Pepsi as well.
2. Indirect competitors – Coffee chains like Starbucks, Café coffee day, Costa
coffee are on the rise. These chains offer a healthy competition to Coca colas
carbonated drinks. They might not be a big competition for Coke, but they do give a
dent to its beverage market. Similarly, health drinks like Real and Tropicana as well
as energy drinks like Red bull and Gatorade are stealing away the market share
indirectly.