International Business: Project Report

On

Coca Cola Baverage Pakistan

1 Department Of Business Administration

BZU Bahadur Campus Layyah.
 Submitted To:

Mam Aqsa Hashmi

Submitted by

M.Irfan (12)
M.Irfan(13)
M.RASHID (30)
M.Sajjad (21)
Abdul Rasheed (05)

Subject:
International Business

BZU Bahadur Campus Layyah

2 Department Of Business Administration

BZU Bahadur Campus Layyah.
 ACKNOWLEDGMENT

We are thankful to the ALLAH ALMIGHTY, we have accomplished our Task. We

would like to thank all of the people who directly or indirectly helped us to achieve
this Target.
Special Thanks to:

Mam Aqsa Hashmi

This Report fabricates its foundation on numerous discussions among the panel
(Group Members). Our conspirators encouraging ideas and strengthening of our
thoughts are reflected in this comprehensive Report.
All the stuff regarding this report has been explained marvelously and carefully. This
write up is being demonstrated in easy mode which is understandable by the reader. It
will provide the intramural and threshold aura to read and it will cover all the
requisites and proviso about the topic under discussion. One of the aesthetic and
charming characteristics of this speculation is this, that it is easygoing and genial.

3 Department Of Business Administration

BZU Bahadur Campus Layyah.
 ABSTRACT

This report delves into the role of International business activities for the coca cola co.
and the promotion of organization, globalization, role of other departments in this
process, internal & external support of different institution department in this process.
The verdict about Coca-Colas marketing department process may facilitate policy
makers, employment agencies, organization to ascertain and over and above existing
cooperations the genteel maneuver to improve the overall performance of the
company, not only in Pakistan but also in all parts of the world.

4 Department Of Business Administration

BZU Bahadur Campus Layyah.
 Contents

Executive Summary................................................................................................................................ 6
Introduction ............................................................................................................................................ 7
The Coca-Cola Story .............................................................................................................................. 8
New Coke to the Present ........................................................................................................................ 9
Coca Cola in Pakistan .......................................................................................................................... 10
Departmentalization ............................................................................................................................. 11
Mission, Vision & Values ..................................................................................................................... 12
Sponsorship ........................................................................................................................................... 14
Marketing Involvement ........................................................................................................................ 14
International Business Barriers faced by Coca Cola ......................................................................... 12
Business Strategy .................................................................................................................................. 16
SWOT .................................................................................................................................................... 18
Product Life Cycle Analysis................................................................................................................. 23
PEST ANALYSIS ................................................................................................................................. 24
International Elements Effects on Business Activities ...................................................................... 25
Current Strategies Regarding International Operations .................................................................. 26
Problems being faced by Coca Cola .................................................................................................... 27
Recommendations................................................................................................................................. 29
Summary of the Articles ...................................................................................................................... 32

5 Department Of Business Administration

BZU Bahadur Campus Layyah.
 Executive Summary

This scope of this report is to discuss the international marketing mix of Coca Cola,
which is one of the biggest brands in the world. The debate between the global
standardization and local adaptation of the marketing mix has been going on for more
than four decades without a resolution and globalization trends starting in the early
1980s has further fueled the debate .This has led the global companies to make the
critical trade-off decision between economies of scale resulting from standardization
and the cultural prerequisite of local adaptation. This essay looks at how one of the
most successful brands, Coca Cola manages their marketing mix in a global context to
get an insight into this debate.
The Coca-Cola Company focuses on the non-alcoholic beverage market, producing a
range of drinks around the world. It is the worlds leading manufacturer, marketer and
distributor of non-alcoholic beverages, primarily carbonated soft drinks. The company
is active in more than 200 countries, with the help of directly controlled subsidiaries,
partnerships and franchising, thus making it a truly global company. The company
sells over six million beverages every day. The financial situation
of Coca-Cola can be commented by looking at the companys annual reports. For the
year ended December 2014, the company generated revenues of $21,962 million, an
increase of 4.4% on the previous year. The distribution of this revenue under the five
business units is: North America 30.1%; Africa 3.9%; Asia 24%; Eurasia 31.2% and
Middle East 9.7%). The companys leading brands are Coca-Cola, Diet Coke, Sprite
and Fanta.
Coca-colas headquarter is in USA and there are more than 200 countries in which it
is acting as a host company. In Pakistan there are 8 plants and over 1800 employees, 8
plants are functional and three plants in Lahore, Gujranwala and RahimyarKhan have
achieved the Quality system award.
Coca-cola with its 450 brands is claiming to be the worlds best non-alcoholic
beverage maker and is yet proving his claim by having 63% share in the world market
and they are fulfilling their promise to maintain a standard and proving to become a
quality symbol and their aim is to serve the nation by making only non-alcoholic
drinks and to give the world a cool and fresh treat.

6 Department Of Business Administration

BZU Bahadur Campus Layyah.
 Introduction
Coca-Cola (also known as Coke) is a popular carbonated soft drink sold in stores,
restaurants and vending machines in over two hundred countries. It is produced by
The Coca-Cola Company, which is also occasionally referred to as Coca-Cola or
Coke. It is one of the worlds most recognizable and widely sold commercial brands.
Coke's major rival is Pepsi. Although Coke has been the target of urban legends
decrying the drink for its supposedly copious amounts of acid, or the "life-
threatening" effects of its carbonated water but still it is the most in-style soft
drink.About its safety and the ethics of the company that produces it, it is widely
accepted as the most dominant soft drink in the world today.
Originally intended as a patent medicine when it was invented in the late 19th
century, Coca-Cola was bought out by shrewd businessman Asa Griggs Candler,
whose aggressive marketing tactics led Coke to its dominance of the world soft drink
market throughout the 20th century. Although faced with accusations of perverse
side-effects on the health of consumers and monopolistic practices by its producing
company, Coca-Cola has remained a popular soft drink well into the first decade of
the 21st century.
Brands
Globally, the Coca-Cola Company owns or licenses nearly 450 brands in the
nonalcoholic beverage business. Many of those brands are considered among the
worlds most valuable. Some of these include:
- Carbonated soft drinks
Such as Coca-Cola, Diet Coke, Fanta,Sprite and Fresca
- Juices and juice drinks
Such as Minute Maid, Qoo, Fruitopia, Maaza and Bibo
- Sports drinks
Such as PowerAde and Aquarius
- Water products
Such as Ceil, Dasani and Bonaqua
- Teas
Such as Sokenbicha and Marocha
- Coffee
Such as Georgiacoffee, the best-selling, noncarbonated beverage in Japan.
7 Department Of Business Administration
BZU Bahadur Campus Layyah.
The Coca-Cola Story
Coca-Cola was invented by John S. Pemberton in 1886 in Columbus, Georgia,
originally as a coca-wine called Pemberton's French Wine Coca. It was initially sold
as a patent medicine for five cents a glass at soda fountains, which were popular in
America at the time thanks to a belief that carbonated water was good for the health.
It was re-launched as a soft drink to counter Prohibition.
The first sales were made at Jacob's Pharmacy in Atlanta, Georgia on May 8, 1886,
and for the first eight months only thirteen drinks were sold each day. Pemberton then
ran the first advertisement for the beverage on May 29 of the same year in the Atlanta
Journal. Asa Griggs Candler bought out Pemberton and his partners in 1887 and
began aggressively marketing the product the efficacy of this concerted advertising
campaign would not be realized until much later. By the time of its 50th anniversary,
the drink had reached the status of a national symbol. Coca-Cola was sold in bottles
for the first time on March 12, 1894 and cans of Coke first appeared in 1955.
In 1894 the company started to sell their product coke in bottles which was a strategy
of the company to be recognized well in the International market. Their strategy
worked and the bottled form of coke was successfully recognized all over the world in
the beginning of 1896. Now a days Coca Cola is the most famous and highly
consumed brand in all over the world.

When the United States entered World War II, Coke was provided free to American
soldiers, as a patriotic drink. The popularity of the drink exploded in the wake of
8 Department Of Business Administration
BZU Bahadur Campus Layyah.
World War II as American soldiers returned home, more grateful than ever to partake
of a beverage that had become synonymous with the American way of life.
New Coke to the Present
In 1985, Coca-Cola, amid much publicity, attempted to change the formula of
the drink. Some authorities believe that New Coke, as the reformulated drink was
called, was invented specifically to respond to its commercial competitor, Pepsi.
Double-blind taste tests indicated that most consumers preferred the taste of Pepsi
(which has more lemon oil, less orange oil, and uses vanillin rather than vanilla) to
Coke. New Coke was reformulated in a way that emulated Pepsi. Follow-up taste tests
revealed that most consumers preferred the taste of New Coke to both Coke and
Pepsi. The reformulation was led by the then-CEO of the company, Roberto Goizueta,
and the President Don Keough..
The new Coca-Cola formula subsequently caused a public backlash. Gay
Mullins, from Seattle, Washington, USA, founded the Old Coke Drinkers of America
organization, which attempted to sue the company, and lobbied for the formula of Old
Coke to be released into the public domain. This and other protests caused the
company to return to the old formula under the name Coca-Cola Classic on July 10,
1985. The company was later accused of performing this volte-face as an elaborate
reuse to introduce a new product while reviving interest in the original. The company
president responded to the accusation by declaring: "We are not that stupid, or that
smart."
The Coca-Cola Company is the world's largest consumer of natural vanilla
extract. When New Coke was introduced in 1985, the economy of Madagascar
crashed vanilla being a prime export and recovered only after New Coke
flopped, since New Coke used vanillin, a less-expensive synthetic substitute.
Purchases of vanilla more than halved during this period.
Meanwhile, the market share for New Coke had dwindled (decrease) to only 3% by
1986. The company renamed the product "Coke II" in 1992 (not to be confused with
"Coke C2", a reduced-sugar cola launched by Coca-Cola in 2004). However, sales
falloff caused a severe cutback in distribution. By 1998, it was sold in only a few
places in the Midwestern U.S.

9 Department Of Business Administration

BZU Bahadur Campus Layyah.
 COCA-COLA IN PAKISTAN
Introduction
The Coca-Cola Company is a global company with some of the world's most
widely recognized brands,
Soon after the countrys independence in 1947, Coca-Cola came to
Pakistan in 1953. Like in every other country where it operates, the beverages are
produced locally, providing Employment to Pakistani citizens, and the product
range and marketing reflects Pakistani tastes and lifestyle.
After the introduction of Coca-Cola, Fanta was introduced in 1965, Sprite was introdu
ced in 1972, and after a gap of 30 years, Diet
Coke and Fanta Lemon were introduced in 2001.
Currently, Coca-Cola beverages are produced and sold in Pakistan via thecompanys
own bottling plants which operate under Coca-Cola Beverages Pakistan Ltd. (C
BPL).
The beverages are produced locally, employing Pakistani citizens. And their
product range and marketing reflects Pakistani tastes and lifestyles, and they are
deeply involved in the life of the local communities in which they operate
COCA COLA FDIS For Multan Plant:
At the event of inauguration of Multan plant worth $70 million, chairman
Iecek Coca-Cola Pakistan pledged more investments for Pakistan.
The Coca-Cola Beverages Pakistan Limiteds parent company in Turkey is planning
rapid expansions in Pakistan and declared that there was a requirement for increase in
production capacity and thats why they opened the plant in Multan.
Chairman of Coca-Cola Iecek (CCI), Tuncay zilhan addressed the
inauguration ceremony and said that they would join hands with Pakistans
government to contribute positively to the economy of Pakistan and expressed high
hopes for Pakistans economy to grow in the future.
zilhan said that realizing the potential of lively people, talented workforce
and promising youth of Pakistan, Coca-Cola has planned to invest $200 million in the
next 3 years in Pakistan, including $379 million on manufacturing facilities, it had
earlier announced 3 manufacturing plants in Karachi, Multan and Islamabad in 2011.
The total investments of $500 million has been put in Pakistan ever since the
company believed in the country and commenced their operations 10 years ago.
The high rise in consumer demand of the beverages including Coke, Diet Coke,
Sprite,Sprite Zero, Fanta, Rani and Kinley will be served and meet by the new plant.
The inauguration of the bottling plant was done by Finance Minister, Ishaq Dar. The
area of the plant is over 120, 000 square meters and 2,500 or over job opportunities
will be generated by the company directly and indirectly.

10 Department Of Business Administration

BZU Bahadur Campus Layyah.
Coca-Colas spokesman Fahad Qadir said that the bottling plant has been set up in
Multan keeping in mind that it would not only cater 60% of Punjab but also Karachi
will be served by the Multans plant.
CCBPL has 35% market share second to PepsiCo in Pakistan.
Departmentalization
On the basis of functional approach the Coca Cola Company is divided into
different departments. Grouping of employees is done on the basis of their common
skills and work activities. Such kind of approach helps the company in solving their
problems and it also make the less the need of training the employees specially. The
general manger is head of all the departments all the department have to report to the
general manager in the Coca Cola Company. There are five major departments in the
company which are as follow:
Production Department
Industrial Relations Department
Sales and Marketing Department
Human Capital Department
Finance Department

Production Department: This department looks around all the production of the
company. All plants in the country are in under its control.
Industrial Relation Department: This department deals with the problems of the
employees. The department listen the problems of the employees and send them to the
high authorities for settling them up and stop them from becoming a hurdle in the
work progress of the company.
Sales and Marketing department: This department makes sure that the product is
easily available in the market for the customers to buy and deals with the issues of
advertisement, promotion, and distribution of the product.
Human Capital Department: This department takes care of the efficient workers of
the company, they select some efficient workers of in the company recommend their
names for promotion in job so that the workers remain happy and dont leave the
company. Management level employees are dealt by the department.
Finance Department: The department is concerned with cost and price of the
products produced by the company. It also tackles with import related issues of the

11 Department Of Business Administration

BZU Bahadur Campus Layyah.
company. Finance department is assisted by the sales and marketing department in
making invoices and payroll entries.

Mission, Vision & Values

The world is changing all around us. To continue to thrive as a business over
the next ten years and beyond, we must look ahead, understand the trends and forces
that will shape our business in the future and move swiftly to prepare for what's to
come. We must get ready for tomorrow today. That's what our 2020 Vision is all
about. It creates a long-term destination for our business and provides us with a "Road
map" for winning together with our bottling partners.
Our Mission
Our Road map starts with our mission, which is enduring. It declares our purpose as a
Company and serves as the standard against which we weigh our actions and
decisions.
To refresh the world...
To inspire moments of optimism and happiness...
To create value and make a difference
Our Vision
Our vision serves as the framework for our Road map and guides every aspect of our
business by describing what we need to accomplish in order to continue achieving
sustainable, quality growth.
People: Be a great place to work where people are inspired to be the best they
can be
Portfolio: Bring to the world a portfolio of quality beverage brands that
anticipate and satisfy peoples desires and needs
Partners: Nurture a winning network of customers and suppliers, together we
create mutual, enduring value
Planet: Be a responsible citizen that makes a difference by helping build and
support sustainable communities
Profit: Maximize long-term return to share owners while being mindful of our
overall responsibilities
Productivity: Be a highly effective, lean and fast-moving organization

12 Department Of Business Administration

BZU Bahadur Campus Layyah.
Our Winning Culture
Our Winning Culture defines the attitudes and behaviors that will be required of us to
make our 2020 Vision a reality.
Live Our Values
Our values serve as a compass for our actions and describe how we behave in the
world.
Leadership: The courage to shape a better future
Collaboration: Leverage collective genius
Integrity: Be real
Accountability: If it is to be, its up to me
Passion: Committed in heart and mind
Diversity: As inclusive as our brands
Quality: What we do, we do well
Focus on the Market
Focus on needs of our consumers, customers and franchise partners
Get out into the market and listen, observe and learn
Possess a world view
Focus on execution in the marketplace every day
Be insatiably curious
Work Smart
Act with urgency
Remain responsive to change
Have the courage to change course when needed
Remain constructively discontent
Work efficiently
Act Like Owners
Be accountable for our actions and in actions
Steward system assets and focus on building value
Reward our people for taking risks and finding better ways to solve problems
Learn from our outcomes -- what worked and what didnt
Be the Brand
Inspire creativity, passion, optimism and fun

13 Department Of Business Administration

BZU Bahadur Campus Layyah.
Employment/Economic Impact
In Pakistan it employs 1,800 people.It has invested over $500 million.

Sponsorships
Coca-Cola is the official soft drink of many collegiate football teams throughout the
nation, partly due to Coca-Cola providing those schools with upgraded athletic
facilities in exchange for Coca-Cola's sponsorship. This is especially prevalent at the
high school level, which is more dependent on such contracts due to tighter budgets.
Coca-Cola was one of the official sponsors of the 1996 Cricket World Cup held in
Pakistan. Coca Cola sponsors most of the Big events in Pakistan. The Company
sponsors Pakistan's leading pop group and organizes concerts throughout the country
for teenagers and underprivileged children.
Marketing Involvement
Coca-Cola Corporation is a multinational organization. And it is indulged in
the international marketing .The brands and basic strategies are made in the home
country but the local strategies are defined in the host countries. Also the 4Ps are
made according to the demographics and taste of the people of the host country.
In Pakistan the Coca-Cola Company maps the strategies and the brands by looking
into the environment in which it is working. The brands are produced locally. And the
product, price promotion and placement are planned with respect to the controllable
variables and uncontrollable variables.

International Business Barrier Face for Coca Cola

Uncontrollable Elements
Whenever any business start operating in two or more than two countries, it
come across some of the problems which are beyond the control of business , like
legal restraints, government controls, weather, consumer behavior, economic
conditions of the host country, social and cultural factors, geography & infrastructure,
channel of distribution available, level of technology and competitive forces. These
problems are different in all the countries in which business starts its operations. So
business has to design a separate framework for each country to overcome these

14 Department Of Business Administration

BZU Bahadur Campus Layyah.
problems. Coke is one of the oldest companies which are in international business;
they have a vast experience of controlling these elements. They heavily rely on
research to overcome these problems.
Legal and Political Problems
They perform thorough study of legal and political problems to decide to enter
into any country. They track the previous record of the ruling party and policies.
They also keep in mind the attitude of other opposition parties about foreign
companies. If any problem arises regarding political or legal issues, they dont
sacrifice their policies and secrecies.
Social and Cultural Factors
Social and Cultural factors have a very vital impact on the business in the host
country. Although this is the most difficult task to understand the culture of the host
country but business has to do reasonable care to understand this problem.
Coke performs research to understand these issues and design their strategies
accordingly. They design their products, prices, place, promotion and customer
service according to the culture of the country. There are few brands of Coke
available in Pakistan. This is because of cultural differences that they cannot
introduce all the brands in all the countries.
Economic factors
Different counties have different economic conditions at a time so Coke
designs different strategies to handle these conditions. As Coke is one of the largest
businesses in the world, they have a strong financial background to overcome these
economic problems. In host countries they change their prices, investment and
penetration strategies to overcome economic factors.
Competitive Forces
Whenever any business enters into any other country they face competition
with some local and international brands. Coke Combat this problem with their
quality commitment and continuously providing its customers with quality product,
services and entertainment.

15 Department Of Business Administration

BZU Bahadur Campus Layyah.
 Business Strategy
Diverse structure, management attitude, and behavior encounter in
international business, they are behaviors encountered in international business, and
there is considerable latitude in the ways business is conducted. Coca-Cola Company
had taken into the consideration these facts that a certain amount of cultural shock
occurs when differences in contract level, communications emphasis, tempo, and
formality of foreign business are encountered. Ethical standards are likely to be
different as well as negotiation emphasis.
`Coca Cola Company determines the prominence of status and position
combine to influence the authority structure of business. It adopts low value that they
could take the suggestion of his employees to make a right decision at a right time,
which could deal with of the customer; also they could take the suggestion of his
customers about its taste, branding and other related features which could enhance its
efficiency of sales and promotion.
As its business grows and professional management develops, there is shift
towards decentralized management decision management. They are making their
decisions either in committees or meeting. Committee may operate on a centralized or
decentralized basis, but the concept of committee management implies something
quite different from individualized functioning.
Coca Cola Company is doing its business all over the world they hire locals
wherever they do business and take their suggestions in designing their strategies.
Because company is very much well aware of the fact that local know their social
culture very well and help company to design effective and efficient strategies.
Coca cola make Target Market for going international:
o Upper upper class
o Upper middle class
o Upper lower class
o Middle upper class
o Middle middle class
o Middle lower class
They mainly emphasize on students and teenagers, they gain their attraction by
indulging into the activities like:

16 Department Of Business Administration

BZU Bahadur Campus Layyah.
 Becoming a partner at the national events.
Promoting new age music and hiring pop stars into their
promotion campaigns.
The company is sponsoring the coke studio for reviving the
Pakistani music.
Customer Market
Demographic Factors
People of all ages and gender use Coca-Cola. Educated people belonging to
upper and middle-income groups also commonly use Coca-Cola. Major emphasis of
Coca-Cola is to attract teenagers.
Life Style Pattern
The Taste and quality conscious people Drink Coca-Cola brands especially
Coca-Cola. Diet Coca-Cola offered by Company is Very popular among diabetic
patients.
Positioning
For over 50 years Coca-Cola Corporation has maintained a tradition of
producing only the Quality drinking beverages. That is why it continues to be a
familiar and trusted household name in Pakistan. Today, Coca-Colas lives up to its
well earned reputation as market leader by insuring that consumers get the best
carbonating drink. The best of nature, technology and human resource have together
contributed to Coca-Colas reputation for unparalleled quality- a standard now
recognized internationally. Above all, the entire process is overseen by a professional
management and trained workforce.

17 Department Of Business Administration

BZU Bahadur Campus Layyah.
SWOT
Strengths:
Worlds Leading Brand

Coca-Cola has strong brand recognition across the globe. The company has a leading
brand value and a strong brand portfolio. Business-Week and Inter-brand, a branding
consultancy, recognize. Coca-Cola as one of the leading brands in their top 100 global
brands ranking in 2014.The Business Week-Inter-brand valued Coca-Cola at $67,000
million in 2006. Coca-Cola ranks well ahead of its close competitor Pepsi which has a
ranking of 22 having a brand value of $12,690 million Furthermore; Coca-Cola owns
a large portfolio of product brands. The company owns four of the top five soft drink
brands in the world: Coca-Cola, Diet Coke, Sprite and Fanta .

Large Scale Of Operations

With revenues in excess of $24 billion Coca-Cola has a large scale of operation.
Coca-Cola is the largest manufacturer, distributor and marketer of non-alcoholic
beverage concentrates and syrups in the world. Coco-Cola is selling trademarked
beverage products since the year 1886 in the US. The company currently sells its
products in more than 200 countries. Of the approximately 52 billion beverage
servings of all types consumed worldwide every day, beverages bearing trademarks
owned by or licensed to Coca-Cola account for more than 1.4 billion.

The companys operations are supported by a strong infrastructure across the world.
Coca-Cola owns and operates 32 principal beverage concentrates and/or syrup
manufacturing plants located throughout the world.

In addition, it owns or has interest in 37 operations with 95 principal beverage

bottling and canning plants located outside the US. The company also owns bottled
water production and still beverage facilities as well as a facility that manufactures
juice concentrates. The companys large scale of operation allows it to feed upcoming
markets with relative ease and enhances its revenue generation capacity.

18 Department Of Business Administration

BZU Bahadur Campus Layyah.
 Robust Revenue Growth In 3 Segments

Coca-Colas revenues recorded a double digit growth, in three operating segments.

These three segments are Latin America, East, South Asia, and Pacific Rim and
Bottling investments. Revenues from Latin America grew by 20.4% during fiscal
2006, over 2005. During the same period, revenues from East, South Asia, and
Pacific Rim grew by 10.6% while revenues from the bottling investments segment by
19.9%.

Weakness:

Negative Publicity

The Coca-Cola Company has been involved in a number of controversies and lawsuits
related to its relationship with human rights violations and other perceived unethical
practices. There have been continuing criticisms regarding the Coca-Cola Company's
relation to the Middle East and U.S. foreign policy. The company received negative
publicity in Pakistan. The Company was accused by the Centre for Science and
Environment (CSE) of selling products containing pesticide residues. Coca-Cola
products sold in and around the Asian capital region contained a hazardous pesticide
residue.

Sluggish Performance In North America

Coca-Colas performance in North America was far from robust. North America is
Coca-Colas core market generating about 30% of total revenues during fiscal 2006.
Therefore, a strong performance in North America is important for the company.
In North America the sale of unit cases did not record any growth. Unit case retail
volume in North America decreased 1% primarily due to weak sparkling beverage
trends in the second half of 2006 and decline in the warehouse-delivered water and
juice businesses. Moreover, the company also expects performance in North America
to be weak during 2007. Sluggish performance in North America could impact the
companys future growth prospects and prevent Coca-Cola from recording a more
robust top-line growth.

19 Department Of Business Administration

BZU Bahadur Campus Layyah.
 Decline In Cash From Operating Activities

The companys cash flow from operating activities declined during fiscal 2006. Cash
flows from operating activities decreased 7% in 2006 compared to 2005. Net cash
provided by operating activities reached $5,957 million in 2006, from $6,423 million
in 2005. Coca-Colas cash flows from operating activities in 2006 also decreased
compared with 2005 as a result of a contribution of approximately $216 million to a
tax-qualified trust to fund retiree medical benefits.
The decrease was also the result of certain marketing accruals recorded in
2005.Decline in cash from operating activities reduces availability of funds for the
companys investing and financing activities, which, in turn, increases the companys
exposure to debt markets and fluctuating interest rates.

Opportunities:
Acquisitions
During 2006, its acquisitions included Kerry Beverages, (KBL), which was subsequently,
reappointed Coca-Cola China Industries (CCCIL). Coca-Cola acquired a controlling
shareholding in KBL, its bottling joint venture with the Kerry Group, in Hong Kong.
The acquisition extended Coca-Colas control over manufacturing and distribution joint
ventures in nine Chinese provinces.

In Germany the company acquired Apollinaris which sells sparkling and still mineral water.
Coca-Cola has also acquired a 100% interest in TJC Holdings, a bottling company in South

Africa. Coca-Cola also made acquisitions in Australia and New Zealand during 2006. These
acquisitions strengthened Coca-Colas international operations.

These also give Coca- Cola an opportunity for growth, through new product launch or greater
penetration of existing markets. Stronger international operations increase the companys
capacity to penetrate international markets and also gives it an opportunity to diversity its
revenue stream. On 25 February 2010, Coco cola confirms to acquire the Coca cola
enterprises (CCE) one the biggest bottler in North America. This strategy of coca cola
strengthens its operations internationally.

20 Department Of Business Administration

BZU Bahadur Campus Layyah.
 Growing Bottled Water Market

Bottled water is one of the fastest-growing segments in the worlds food and beverage
market owing to increasing health concerns. The market for bottled water in the US generated
revenues of about $15.6 billion in 2006.

Market consumption volumes were estimated to be 30 billion litres in 2006. The market's
consumption volume is expected to rise to 38.6 billion units by the end of 2010. This
represents a CAGR of 6.9% during 2005-2010.

In terms of value, the bottled water market is forecast to reach $19.3 billion by the end of
2010. In the bottled water market, the revenue of flavoured water (water-based, slightly
sweetened refreshment drink) segment is growing by about $10 billion annually. The
companys Dasani brand water is the third best-selling bottled water in the US. Coca-Cola
could leverage its strong position in the bottled water segment to take advantage of growing
demand for flavoured water.

Growing Hispanic Population In U.S

Hispanics are growing rapidly both in number and economic power. As a result, they
have become more important to marketers than ever before. In 2006, about 11.6
million US households were estimated to be Hispanic. This translates into a Hispanic
population of about 42 million.

The US Census estimates that by 2020, the Hispanic population will reach 60 million
or almost 18% of the total US population. The economic influence of Hispanics is
growing even faster than their population. Nielsen Media Research estimates that the
buying power of Hispanics will exceed $1 trillion by 2008- a 55% increase over 2003
levels.

Coca-Cola has extensive operations and an extensive product portfolio in the US. The
company can benefit from an expanding Hispanic population in the US, which would
translate into higher consumption of Coca-Cola products and higher revenues for the
company.

21 Department Of Business Administration

BZU Bahadur Campus Layyah.
Threats:
Intense Competition

Coca-Cola competes in the non-alcoholic beverages segment of the commercial beverages

industry. The company faces intense competition in various markets from regional as well as
global players. Also, the company faces competition from various non-alcoholic sparkling
beverages including juices and nectars and fruit drinks. In many of the countries in which
Coca-Cola operates, including the US, PepsiCo is one of the companys primary competitors.
Other significant competitors include Nestle, Cadbury Schweppes, Groupe DANONE and
Kraft Foods.

Competitive factors impacting the companys business include pricing, advertising, sales
promotion programs, product innovation, and brand and trademark development and
protection. Intense competition could impact Coca-Colas market share and revenue growth
rates.

Dependence On Bottling Partners

Coca-Cola generates most of its revenues by selling concentrates and syrups to bottlers in
whom it doesnt have any ownership interest or in which it has no controlling ownership
interest. Approximately, 83% of its worldwide unit case volumes were produced and
distributed by bottling partners in which the company did not have any controlling interests.
As independent companies, its bottling partners, some of whom are publicly traded
companies, make their own business decisions that may not always be in line with the
companys interests. In addition, many of its bottling partners have the right to manufacture or
distribute their own products or certain products of other beverage companies.

If Coca-Cola is unable to provide an appropriate mix of incentives to its bottling

partners, then the partners may take actions that, while maximizing their own short-term
profits, may be detrimental to Coca-Cola. These bottlers may devote more resources to
business opportunities or products other than those beneficial for Coca-Cola. Such actions
could, in the long run, have an adverse effect on Coca-Colas profitability.
In addition, loss of one or more of its major customers by any one of its major bottling
partners could indirectly affect Coca-Colas business results. Such dependence on third
parties is a weak link in Coca-Colas operations and increases the companys business risks.

22 Department Of Business Administration

BZU Bahadur Campus Layyah.
Sluggish Growth of Carbonated Beverages

US consumers have started to look for greater variety in their drinks and are
becoming increasingly health conscious. This has led to a decrease in the
consumption of carbonated and other sweetened beverages in the US. The US
carbonated soft drinks market generated total revenues of $63.9 billion in 2005, this
representing a compound annual growth rate (CAGR) of only 0.2% for the five-year
period spanning 2001-2005. The performance of the market is forecast to decelerate,
with an anticipated compound annual rate of change (CAGR) of -0.3% for the five-
year period 2005-2010 expected to drive the market to a value of $62.9 billion by the
end of 2010.

Moreover in the recent years, beverage companies such as Coca-Cola have

been criticized for selling carbonated beverages with high amounts of sugar and
unacceptable levels of dangerous chemical content, and have been implicated for
facilitating poor diet and increasing childhood obesity. Moreover, the US is the
companys core market. Coca-Cola already expects its performance in the region to
be sluggish during 2007. Coca-Colas revenues could be adversely affected by a
slowdown in the US carbonated beverage market.

Product Life Cycle

O LA
CAC
CO

INTRODUCTORY GROWTH MATURITY DECLINE

23 Department Of Business Administration

BZU Bahadur Campus Layyah.
Coca-cola is in a stage of growth according to a product life cycle analysis. It is recovering its
market share very quickly which it had lost in previous years although there is good
competition in market but it is still recovering and enjoying healthy profits. There are no
barriers for new entrants, and many companies are entering in this industry because of healthy
growth
PEST on Coca Cola Beverages Pakistan Ltd

Political
Coca-Cola management is not happy with the Govt. tax laws. As company is
offering different products like Coke, sprite, Fanta and they have to import Different
concentrate for each product so this factor in the end causing Coca Cola to pay heavy
taxes. Last government was giving rebate to Coca Cola but the present government is
not giving any kind of rebate
Economical
The fluctuations in Pakistan economy also effect Coke market position.
Because of high inflation and low purchasing power Coke is unable to capture many
potential customers of the large Pakistani population who have to struggle hard to
make both ends meet rather than afford the luxury of drinking Coke as often as they
would like to. The current interest rate is very high and this is really affecting Coca
Cola because they are doing business on credit this factor in the end increase there
cost.
Social
Coke a customer oriented company, always takes steps for the welfare of its
consumers. It also helps the needy and knowledge seeking people with fewer
resources by providing them books, scholarships & opportunities to work. It has
launched a program in Gujranwala and Rahim Yar Khan where it provides basic
education to children. It has also launched programs to increase awareness about the
conservation of water & natural resources, climate changes, waste environment
education & recyclable products.

24 Department Of Business Administration

BZU Bahadur Campus Layyah.
Technology
The new methods of filling the bottles, the refrigeration methods, the
disposable bottles, the PET bottles all made so many changes in the beverage
industry. Coke is adopting all the new technologies available. Coke is providing
refrigerators, visichest coolers and many more for keeping the bottles chilled, as they
claim in the subcontinent "thanda matlab Coca Cola". Coca Cola Company got the
technology of dispensers so they give Coke to people that is as fresh from the
fountain. Coca Cola Company has opted the technology for the usage of PET bottles.
Coca Cola Company is producing new packaging sizes with differentiated packaging
with the help of new technology everyday.
Recommendation
Coca Cola should have an agreement with the government to give tax
relaxation on their concentrates. This will reduce the cost of the products resulting
increase in the market share. This leverage will allow Coca Cola to increase
investment in Pakistan.
International Elements Effects on International Business Activates

Post 9/11 Effects

After 9/11 incident Coca-cola suffered a loss due to boycott of religious
activists at a larger scale. The market share and market value was dropped down to
several points .Price competition was started after this incident. Due to sanctions
imposed on India after May5, 1995 taxes were to be paid in high amount thus
increasing the cost of production and price offered to consumers and decreasing the
buying powers of customers. So any of the activists behavior can cause decline in the
production and sale of coke and other cold beverage company.

Intellectual Property Rights

Coke is one of the biggest brands in the world, and its brand value is
approximately 4 billion $. It is said that the most common word to speak in this world
is OK and after this the second most common in this whole world is COKE.
Sometimes different people and organizations used their names to make money, in the
form of fake bottling.

25 Department Of Business Administration

BZU Bahadur Campus Layyah.
 The main threat to the company is the production of fake bottles. Fake bottling
is growing day by day. Fake bottles problem for a company comes under the act of
unfair practices. In a black marketing aspect whole sellers and retailer could take the
fake bottles at a low price for selling at the price of original bottles which could be
harm full for the health of consumers. Coca Cola Company could create a check and
balance to meet the need of time, which in turn could help to increase its market
share. It already had made several steps to prevent fake bottling and production of
fake coke but due to mushrooming industry the laws and management of the
corporation is failed to stop this industry from flourishing. The government is also not
of great help to the company in solving this main issue.
Current Strategies Regarding International Operations
One of the reasons of losing their market share in India in last few years was their
quality. In India they were operating as franchisee but now Company has acquired
most of the plants except from Deli and Rujan plant now they are very much
conscious about their quality standards and the quality of other two is being controlled
by Coca Cola Exports Corporation.
Another reason was that their backup was not as strong as Pepsi. They were
not getting any kind of help regarding financial problems, management problems
from Coca Cola International. But now most of the plants are under the control of
Company itself and Coke International is also very keen to raise its market share in
India so they are fully supporting Coca Cola Beverages India and Coca Cola Exports
Corporation India.
In Indiatheir main focus is on standardized products as Coca Cola, Sprite, Fanta, and
they are going to launch some of new products in next 2 or 3 years.

Adaption and cultural borrowing

Adaption is a key concept in international marketing, and willing to adapt is a
crucial attitude .Adaptation, or at least accommodation, is required on small matters
as well as large ones. Coca-Cola Company recognizes the need of affirmative action,
that is, open tolerance of concept different and equal. Coca-Cola company feels
that essential to effective to Adaption is awareness of its own culture and recognize
that differences in others can cause anxiety, frustration and misunderstanding of the
host intention .The self reference criterion (SRC) is specially operative in business
26 Department Of Business Administration
BZU Bahadur Campus Layyah.
custom but Coca-Cola company could not indulge its own (SRC) in others culture it
try to adopt the strategies of the host countries where they are doing business around
the world ,it reduce the (SRC) to lower the barriers of cultural differences . Coca-Cola
Company develops an understanding and willingness to accommodate the
differences that exists. Company is doing a successful business internationally since
1953.
And operating in a home country for more than 50 years it have set up its strategies to
meet the needs of required customer in every way possible where it is doing business
it aware of the possibility of cultural differences and the probable differences,
consequences of failure to adapt, or accommodate, the seemingly and less variety of
customs must be assessed.
Coca-Cola Company business customs includes imperatives and adiaphora.
Cultural imperatives are the business customs and exceptions that must be met and
conformed to or avoided if relationship is to be successful. Company knows the best
how to do the business at their best. Human relation, friend ships and or attaining the
level of trust are right tricks to do a business in a home country as well as in a host
country. They that there is no substitute for establishing friend ship in some cultures
before effective business negotiation can begin.
Company motivate their local agents to make more sales and the friendship helps
establish the right relationship with end users that to more sales over a longer period
of time.
Culture adiaphora relates to the area of behavior or to customs that cultural
aliens may wish to conform or to participate in but that are not required.
They have adapted their company culture according to the external environment as
they are indulge in many community programs such as scholarship and school
funding programs and they have borrow the culture of Indians. Theyhire local
employees and plan according to the local environment
Problems Being Faced By Coca-Cola Company
There are some problems being faced by a company which affects its business
strategies. It is difficult to know where to begin and isolate the events which shape the
business environment.

27 Department Of Business Administration

BZU Bahadur Campus Layyah.
Distribution
Coca-Cola Company is facing a problem of distribution, as distributors are
expecting more from coco cola to provide an extra distribution channels which could
help them to spread their products at large .Coca-cola products are some where not
available in rural area due to inefficient distribution system.
Investment
Coca-Cola Company is now facing a problem regarding investment, like
investment in distribution system, to make it efficient. They need investment to
encourage retailers to provide space to their products, in the form of providing
coolers. Company is not in a situation to provide it to all its retailing stores while its
competitor provides it to its distributors to promote his products in the market which
is their competitive edge to increase it s share in the market. It creates an attraction to
its distributors to take its products more to take incentives of special discounts
provided by the company to its distributors, wholesaler, and retailers. This is a
relatively a long term process to penetrate in the market and gain market share.
Brand Awareness
Having low promotional strategies that most of their customers are unaware of
their brands mostly they mix their brands with Pepsi, they feel that Sprit and Fanta are
the brands of Pepsi but in actual these are the brands of Coca-Cola Company they are
facing these problems due to having low promotional strategy so that the unaware of
its brands.
Low value of share
Coca-Cola company having a share of about 27% which is lower than its
competitors i.e. Pepsi having market share of 68% involve in more promotional
strategies as compared to Coca-Cola.

Fake Bottling
Fake bottling in India is one of the major problems being faced by the
company. This problem not only affects the sale volume and profit margins but also
brand value and loyalty of the customers. The profitability which company gain,
ultimately that part of gain goes to fake bottle producers, who running their business
in the name of company

28 Department Of Business Administration

BZU Bahadur Campus Layyah.
 Recommendations for More Improving Coca Cola International
Business Activities
Distribution
Products of the company must be physically transported from its warehouse where the
products are needed. Company must add value to its products that eventually bought
by individuals in order to create a viable value chain model to create a relationship
of distribution management and select other facilitating organizations as a member of
value chain .so the distributors within a marketing mix is getting the product to its
target Market .the most important activity in getting the coco cola company products
to the target market is arranging for its sales and transfer of a product to its final
customer by assuming its financial risks. for ultimate selling company try to carry out
the functions in exchange for the order and payment from the customer by providing
more easily available products at a required place.Company try to carry out the
functions in exchange for the order and payment form the customer by providing
more easily available products at required places.
Companies try to hire Agent middle man who works as their own to distribute its
products at various locations.
As the middle man could not be disinter mediate from the process although some of
unnecessary or redundant functions which cause the lost of financial resources.
Company create assortment and storing products can be shifted from one party to
another in order to increase efficiency.
Designing Distribution Channel
Specify role of distribution.
Select the distribution channel
Determine the intensity of distribution
Choose specific channel members
Market Segmentation
With different wants, buying preferences or product use behavior relatively
minor and benefits sought by the customer can be satisfied with single marketing mix
.as a result segments must be targeted individually and alternative marketing mix is
required.
The process of market segmentation

29 Department Of Business Administration

BZU Bahadur Campus Layyah.
 Identify the current and potential wants that exist within a market
Identify characteristics that distinguish among the segments
Determine the size of segment and how well they are being satisfied

New Product Development

To achieve strong sale and healthy profits company should have an explicit
strategy with respect to developing and evaluating new products. This could also help
it to defend its market share. Stages in product development, which could enhance
business activities.
Gathering new product ideas
Screening of ideas
Business analysis
Prototype development
Market test.
Commercialization.

Dispose of Used Products

Consumers desire for convenience in the form of throw away containers
conflict with their stated desire for clean environment .some discard packages wind
up little ,other add to solid waste in landfills. So the coco cola company recycles its
disposable bottles and cans to recycle so the cost of production could be minimized to
deal with other financial resources.
Promotional Programs
Promotion, in some where it takes, is an attempt to influence so the company
could hold a defined marketing promotional mix so that the consumer could be aware
of its brand at large. They adopt the strategy by the following methods:
Personal selling.
Advertising.
Sale promotion.
Public relations.
Company sells its products by creating an attraction for the customers by adopting
these strategies.

30 Department Of Business Administration

BZU Bahadur Campus Layyah.
Formation of Website
Web ushered in another level of networking of marketers. E-information form
of networking involves creating a corporate website and posting information on it
.Firms are able to make vast amount of information available on their website .The
information ranges from product description and invitations to suppliers to submit bits
on planned purchases to product operation instruction and information about
contracting sale personnel. So the coco Cola Company must be create its website that
the ultimate customer could know about the product available in the market .They
must create a web sit which could fall in the categories of
Background and general information
Current business operations
Links
Attraction and entertainment features
Contact point
The impacts of internet marketing create an opportunity to increase its wellbeing in
the market place so opportunity of dealing in a host country as well as in the
international marketing could increase.

Establishing the Budget

Once the promotional budget has been established, it must be allocate among the
various activities comprising the overall promotional program .One method that the
coco cola company use to extend their budget cooperative corporative ads which is a
joint effort two or more firms intended to benefit each of the participant. So the
company could use any of the two strategies of corporative ads i.e. vertical and
horizontal. In vertical corporative ads Coco cola Company could share the cost of ads
with the retailers or by giving a special discount to the retailers, to encourage the
retailer advertise?.

31 Department Of Business Administration

BZU Bahadur Campus Layyah.