The CocaCola Company

1
The Coca-Cola Company

• Presented by Chris Howe,
• Belinda Ho, and Steven Johnson
• BUSA 499 Strategic Management
• May 13th, 2008

2
Outline of Presentation

• Coca-Colas background
• Coca-Colas current problems
• Our best alternative strategy
• Implementation
• Forecasted growth and financials
• Exit strategy

3
Coca-Colas Background

• Manufacture, distribute, and market nonalcoholic
  beverage concentrates
• Worldwide operations
• 130B Market Cap, 90,000 employees
• Famous for their product brands Coca-Cola, Diet
  Coke, Sprite, Fanta.

4
Coca-Colas Challenges

• Saturated US market
• Need new emerging markets to expand growth
• High global and intense competition in the
  beverage industry

5
Alternative Strategies

• Coke Rum complementary products with
  alcoholic drinks
• All natural and healthy drinks
• Improve efficiency of current processes
• Reducing energy and corn/sugar consumption
• Become a leader in environmental movement more
  bottling/recycling

6
Best Alternative Strategy

• Expand market share in China (especially to rural
  areas)
• Why China?
• 20 customers untapped, equates to 260 million
  people, equates to Japan (times 2!) country
• Growing economy, as people get richer, can now
  afford CC, and new potential customers are a new
  market share we should grab/take advantage of
• CC has good reputation there, Chinese respect,
  loyal to the brand, admire American culture and
  goods
• How?
• Stimulate demand
• Increase supply

7
Implementation Strategy

• Stimulate demand
• Leverage brand name through intensive
  country-wide marketing campaign
• Innovation matching with localization of products
• Chinese herbal medicine catering to local tastes,
  new target market
• Chinese-style drinks matching new markets
• Provide scholarships to schools to help build
  brand loyalty
• Sponsorship of local events to build brand and
  develop goodwill

8
Implementation Strategy

• Increase supply
• Increase bottling facilities
• Build new bottling facilities
• Increase production at current bottling
  facilities
• Conduct joint ventures with new facilities
• Increase distribution to underdeveloped markets
• Target rural areas, which equate to 20 of
  Chinas population and still remain untapped
• Increase transportation of products to rural
  areas
• Improve infrastructure, logistics

9
Bottler Locations in China (2000)
10
Population Density Map
11
Forecasted Growth

• Additional expected revenues 1.5 per year
• Corporate tax rate in China 25
• Leads to a decrease in CCs overall tax rate to
  35 in the EVA analysis.
• Results in 8.8 increase in Firm Value over 10
  years

12
Exit Strategy

• Monitor demand in China for three years
• If demand and revenues continue to increase, and
  current production becomes maxed out, build new
  bottling facilities where needed
• If demand and revenues do not increase, do not
  build a new bottling facility
• Reduce marketing campaign
• Continue sponsorships and scholarships to retain
  goodwill

13
Questions?