Changing Business Environment of

Coca-Cola over the Past Five Years

ORGANIZATION DESCRIPTION AND BACKGROUND

SOME FACTS
Founded: 1886
Headquarters: Atlanta, Georgia, USA
Chairman and CEO: Muhtar Kent
Revenue: USD 31.0 Billion (FY 2009)
Employees: 92,400 (Oct 2009)
Operations: 200 Countries
http://en.wikipedia.org/wiki/The_Coca-Cola_Company

CORPORATE VISION & MISSION

Vision
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 people's
desires and needs.
Partners: Nurture a winning network of customers and suppliers, together we create mutual, enduring
value.a
Planet: Be a responsible citizen that makes a difference by helping build and support sustainable
communities.
Profit: Maximize long-term return to shareowners while being mindful of our overall responsibilities.
Productivity: Be a highly effective, lean and fast-moving organization

Mission
To refresh the world...
To inspire moments of optimism and happiness...
To create value and make a difference.
http://www.thecoca-colacompany.com/ourcompany/mission_vision_values.html
DESCRIPTION
The journey of Coca-Cola started when the syrup of Coca-Cola was mixed with soda. It was done in a
pharmacy in Atlanta, USA. Even today, the company I headquartered in Atlanta. Thus the company began
as a soda fountain beverage selling firm. It sold a glass of drink for five cents. The initial progress of the
company was quite remarkable, but only when a solid and strong bottling system developed could it
emerge as one of the largest corporations as of today.
Coca-Cola functions as a franchised distribution system. Thus the company only produces the syrup and
it is then sold off to thousands of bottlers around the world. As per the annual report of 2005, the
company operates in more than 200 countries. The beverages which bear the trademarks or licenses of
Coca-Cola account to almost 1.5 billion. It was declared that Coca-Cola became the first brand in United
Kingdom to cross 1 billion in yearly grocery sales in the year 2010.
Coca-Cola today is the world's most popular brand. The annual company report of 2006 stated that the
second most recognized expression in the world after 'OK' is Coca-Cola. The strength of the company lies
in it branding. Coca-Cola's branding strategy lies on three A's- availability, acceptability and
affordability. The company competes not only to every carbonated or soft drink available in the world
but even considers water as its competitor. For it, every product that has a share in human liquid
consumption is its rival.
At present Coca-Cola serves almost one billion servings per day. That means every second 12500 bottles
are being consumed. The company was able to achieve this only because they made use of the most
finest and innovative technologies available. During these 125 years of existence, the company has gone
through different strategic paradigm shifts that involve financial re-engineering to debts on offload
bottling and from product expansion to progress through distribution.
http://en.wikipedia.org/wiki/The_Coca-Cola_Company
http://www.brandingstrategyinsider.com/2007/04/brand_spotlight.html
http://www.thecoca-colacompany.com/ourcompany/historybottling.html
http://www.scribd.com/doc/14306067/Coca-Cola

Business Environment
The business environment of an organization is situational. That means every organization have a
unique environment of its own. Due to this fact, the external factors influencing the company would also
be different. The systems model of an organization and its environment views the organization as an
open system. This model advocates that there are two ways in which an organization communicates
with its environment. It acquires inputs/ resources from the environment, transforms it into finished
product/services and distributes the outputs back. These outputs are meant to meet the needs of
customers (Figure 1.1).
Environment Organization Environment
Money
Machinery
People
Technology
Materials
Conversion
Goods
Services
Information
Waste
Figure 1.1: Systems Model
John Kew, John Stredwick, (2005), Business environment: managing in a strategic context, CIPD
Publishing

Analyzing the environment

It is not a difficult task for the organization to analyze the task environment as they will have good
knowledge about their customers, suppliers etc. But analyzing the general environment is more
complex. The different factors in the general environment will have to be first identified.
One of the most popular tools for analysis is PEST. This method segregates the environment into four
components:
Political/legal
Economic
Socio-cultural
Technological
PEST analysis was later modified into PESTLE analysis. This was done by splitting the political and legal
factors as well as by adding a new factor i.e. environment. The major reason behind this addition was
the increasing concern over global warming and other ecological issues.
By the year 2000, another method was introduced which was named STEEPLE. This method have a new
factor i.e. ethics. This factor was added due to the growing awareness about corporate social
responsibility and business ethics.
John Kew, John Stredwick, (2005), Business environment: managing in a strategic context, CIPD
Publishing

Analysis of the environment of Coca-Cola

Social Factors:
Over the past 5 years the numbers of people who are conscious about their health have increased
exponentially. This is especially true in USA where more and more people are practicing healthier
lifestyles. Researches indicate that soda and other sweetened drinks are the chief calorie sources in the
diet of an American. Due to this fact, doctors and nutritionists advice people to reduce the daily
consumption of drinks like Coca-Cola since they can be harmful to their health. In USA, drinks like Coca-
Cola and Pepsi were found to be the main reason for obesity among young children and women. Studies
have also revealed that regular intake of Coke and the like products reduce the absorption of minerals
like Calcium, Magnesium, Ascorbic acid, Riboflavin and Vitamin A. Thus the company is facing a setback
from the home country itself. In 2005, many lawyers and environmentalists charged a lawsuit against
Coca-Cola and other soft drinks industry for excessive selling of their brands in schools.
Coca-Cola also faced much resistance from the Eastern countries where there was a high consumption of
tea and other milk fermented drinks. So the company in 2010 introduced a new drink named Sprite Tea
which was a mix of sprite and tea. Before that in 2008, it launched a tea brand named Yuang Ye and
Jackie Chan was the brand ambassador of the product. This was launched in China and other eastern
countries. In 2004, the company also launched a wellness drink in Japan for women.
Apart from that there are number of social ventures into which the company is into. It is providing
resources like books and scholarships to needy children. Apart from that it has introduced a program in
Pakistan that is into providing basic education to children. In 2004, the company donated 50,000 to
SOS Kinderdorf, a children's charity organization in Austria. A sum of 1 million USD was also donated for
awareness against HIV/AIDS in 2007.
www.thecoca-colacompany.com/.../10.../Coca-Cola_10-K_Item_01a&b.pdf
http://www.virtualvender.coca-cola.com/ft/index.jsp
www.thecoca-colacompany.com/.../eu_business_social_review2005.pdf
www.thecoca-colacompany.com/.../2007-2008_sustainability_review.pdf
http://blog.7xpub.com/2010/02/heaven-earth.html
http://www.docshare.com/doc/8487/An-Analysis-of-The-Coca-Cola-Companys-Markets

Technological Factors
Coca-Cola is always a pioneer institution in bringing out innovative technologies.
In 2007, it came up with a new technology that would help customers to have ice-chilled coke wherever
they want. This technology will work in such a way that when the cap of the bottle is opened, the
mechanism inside will make ice out of the drink inside. The company also introduced this technology in
2008 with a new product called Sprite Super Chilled.
In the same year, the company announced to use coolers and vending machines free of HFC in the
venues of 2008 Olympic Games to show its commitment towards environment protection. The company
developed this technology together with Green Peace.
In the year 2009, the company introduced another technology into their vending machines. These
Freestyle machines will be having touch screens and the customer can mix up to a variety of 100 drinks
at a single time. Popsci.com has named this as the "Most Advanced Soda Fountain Ever".
In 2009 itself the company introduced bottles which are partially made from plants and hence can be
recycled completely. This bottle also has a reduced carbon emission when compared with ordinary
plastic bottles.
The company has also introduced innovative technologies in the entertainment field. In 2006, the
company installed Dhoom 2-Juke boxes in and around Delhi (India). A limited series of Coke bottles
were then brought into the market whose labels contained specific codes. When these labels are swiped
into the Juke boxes, the customers could see the exclusive visuals of Dhoom 2 movie.
http://www.techdigest.tv/2007/09/new_technology_1.html
http://www.associatedcontent.com/article/1973430/cocacola_meets_technology_touch_screen.html
www.greenpeace.org/.../en/news/.../coca-cola-to-champion-our-cool/
http://www.greentechnolog.com/2009/09/cocacolas_new_plant_bottle.html
http://www.coca-colaindia.com/media/media_news_releases_detail.aspx?id=189

Economic Factors:
The company went through a major economic phase in the past five years.
The income tax payment has increased from 1.5 billion USD in 2006 to 1.9 billion USD in 2007. But the
capital expenditures have also increased from 1.4 billion USD in 2006 to 2 billion USD in 2008. Still the
company managed to have revenue of 31.9 billion USD in 2008.
The above graph shows the fluctuations in the stock prices of Coke from September 2009 to February
2010.
In 2008, the world faced the global economic crunch and this naturally had an impact on the company.
The main reason for this was that 75% of company's sales is derived outside of North America.
But, reports revealed that the company was not much affected by the economic downturn. The first
quarterly results of 2009 showed that the sales have increased by 2 percent in USA and by 3 percent
around the world. This was because the company positioned it well in the international markets.
The company also had a remarkable increase in business in India. In 2009, the company's business
increased by 31 percent in this country despite the various environmental protests against it. But the
final quarter results of 2009 showed a decrease of 18 percent in the company's profit worldwide.
In 2010, the company registered revenue of 7.53 billion US dollars in the first quarter. This shows that
the company expects to have a bright year ahead.
http://www.theepochtimes.com/n2/content/view/16128/
http://www.msnbc.msn.com/id/29161172/
http://www.wikinvest.com/stock/Coca-Cola_Company_(KO)
http://equityclock.com/pictures/CocaColaEnterprisesInc.TechnicalAnalysis_3A38/image_thumb_3.png

Environmental Factors:
The company has been accused of a number of environmental issues around the world.
In India, Coca-Cola has been nicknamed even as 'Killer Coke' in certain areas. It was feared that Coke
contains hazardous levels of pesticides that could cause numerous health issues. A study conducted by
Centre for Science and Environment (CSE), New Delhi, revealed that Coke and Pepsi contains toxins like
lindane, DDT, malathion etc. These pesticides if consumed could even result in Cancer or irreparable
damage to immune system. CSE also found that the Coke that is sold in India contained 30 times the
permitted level of pesticide residues as per European Union regulations.
1n 2005, the Kerala State government banned the production and selling of Coke but it was overturned
by the state high court in the same year itself.
The company was also blamed for over use of water resources and thus depleting the ground water
table. The 16$ bottling plant in Kerala was shut down in 2004 due to severe decay in both quantity and
quality of water in the surrounding areas. The plant there uses almost 900,000 litres of water every year
for its purposes. According to the renowned environmentalist Vandana Shiva, it takes almost 9 litres of
water to produce one litre of Coca-Cola. In the holy city of Varanasi, India, the Coca-Cola plant near the
Ganges has been accused for emitting waste water which contained toxins into the river. The packaging
of the bottles has also been a cause of concern to the public and alleges to have serious environment
impact. The company still claims to be environmental friendly in all its ventures. The Coca-Cola
environmental foundation is said to be actively participating in environment issues like waste
management, recycling etc.
http://en.wikipedia.org/wiki/Criticism_of_Coca-Cola
http://www.thecoca-colacompany.com/citizenship/foundation_local.html
http://en.wikipedia.org/wiki/File:CocaColaIndia.gif

Political Factors:
As far as the political factors are concerned, they affect the company in meager way. It is because the
governmental activity which is the major part of political environment has a little impact over the
company.
Over the recent years the company met with a lot of protests in India and Middle East. Still it was able to
outrival PepsiCo by a small percent. In the last century there have been issues in Israel regarding the
construction of a plant over there. The company was accused of boycotting Israel in order to appease the
Arab League. These still had an impact over the market of Middle East.
The environmental laws have some impact over Coke and other companies operating in the same
industry. Over the past two years, the government of India has introduced some modifications to the
existing laws that are likely to affect Coke. But the company is introducing changes in the plants as well
as implementing proper wastage handling system and this would reduce the impact of these laws.
Tax system in India is a little complicated because it involves a variety of regulations. The license needs
to be updated every time the production capacity is increased. This can pose certain problems to the
company.
http://en.wikipedia.org/wiki/The_Coca-Cola_Company

Ethical factors:
The Coca-Cola Company has been involved into a number of ethical issues over the past. The major
controversies include those like violation of human rights and following unethical business practices.
The company has been charged of monopolistic and other discriminatory practices which affected its
goodwill.
In 2005, the European Union found that the company's business methods suppressed competition and
hence the company had to end its dealings with bars and shops for stocking its drinks. In the same year
itself, Coca-Cola Export Corporation was charged a fine of 68 million dollars for unfair commercial
practices.
In the early 2000s the company was also criticized for racial discrimination in its US offices and had to
pay a hefty fine of 192.5 million dollars.
The company is also involved in a number of cases related to environmental degradation, ground water
depletion, overuse of pesticides etc. in India. This had affected the reputation of Coca-Cola in India in a
major way.
http://www.thecoca-colacompany.com/citizenship/foundation_local.html
http://en.wikipedia.org/wiki/Criticism_of_Coca-Cola

Conclusion
To summarize it can be said that Coca-Cola Company has gone through a number of challenging
situations in the past five years. The major challenge was the protests from the environmentalists for
exploiting the resources. The company has tackled this issue to an extend by agreeing to the demands of
the protesters and the governments. But it should put in more effort to get back the reputation it had in
third world countries. Innovative technologies that are eco-friendly must be introduced.
The company is now into more and more green initiatives which are a very positive sign. If such efforts
continue, it would undoubtedly be the most reputed and recognized brand in the world.