influence of covid 19 pandemic and digital transformation tendency on the companys international business strategy 9

1.2 Products and services portfolio Coca-Cola owns and market numerous valuable nonalcoholic beverage brands, including the following: ¢ Sparkling soft drinks: Coca-Cola, Diet Coke/Coca-

VNU UNIVERSITY OF

ECONOMICS & BUSINESS

Faculty of International Business & Economics

COURSE:

INTERNATIONAL BUSINESS

(INE 2028 E*)

FINAL ASSIGNMENT

Instructor: Nguyen Thi Thanh Mai Name of student: Nguyen Thuy Hang Date of birth: 17/12/2001

Student ID: 19051459

Hanoi, 2021

CONTENT PART 1 ESSAY 1

PART 2 CASE STUDY ANALYSIS 2

1 Introduction of Coca- Cola 2

1.1L A brief introduction of Coca Cola’s history 2

1.2 Products and services portfolio 3

nN International Business Strategy 4

21, Entry market strategy in Viet Nam 4

2.1.1 Features of the Vietnamese market 4

2.1.2 Consumption trends of Vietnamese people 4

2.1.3 Coca-Cola's method of entering the Vietnamese market 4

2.2 Global marketing strategy 6

2.2.1 Appropriate product strategy 6

2.2.1.1 Consistent product quality assurance across all countries 6

2.2.1.2 Adjust products to suit the market and consumer tastes 6

2.2.1.3 Product design 7

2.2.2 Price strategy 7

2.2.3 Extensive product distribution system 7

2.2.4 Promotion strategy 8

3 Influence of Covid-19 Pandemic and digital transformation tendency on the company’s international business strategy 9

4, Conclusion 9

PART 3 COURSE REFLECTION 10

PART 1 ESSAY

As our world has become more globalized and digitalized, will national differences decline as the roadblock to international business management, or will they continue to

be major barriers? Defense your answer and provide some examples of multinational companies management practice

Answer:

We have been moving away from a world in which national economies were relatively self-contained entities, isolated from each other by barriers to cross-border trade and investment; by distance, time zones, and language; and by national differences in government regulation, culture, and business systems And we are moving toward a world

in which barriers to cross-border trade and investment are declining; perceived distance is shrinking due to advances in transportation and telecommunications technology; material culture is starting to look similar the world over; and national economies are merging into

an interdependent, integrated global economic system However, I believe that national differences is still major barriers that multinational companies need to face

The argument I mention is “Culture is a major roadblock to international business management which development of technology can not interfere”

According to Hofstede and Namenwirth and Weber, culture as a system of values and norms that are shared among a group of people and that when taken of together constitute

a design for living By values we mean abstract ideas about what a group believes to be good, right, and desirable such as individual freedom, democracy, truth, justice, honesty, loyalty, social obligations, collective responsibility, the role of women, love, sex, marriage, Put differently values are shared assumptions about how things ought to be (Mead, 1994) By norms, we mean the social rules and guidelines that prescribe appropriate behavior in particular situations that is included folkways and mores The French nation can be thought of as the political embodiment of French culture, the nation of Canada has

at least three cultures—an Anglo culture, a French-speaking “Quebecois” culture, and a Native American culture Similarly, many African nations have important cultural differences between tribal groups, as exhibited in the early 1990s when Rwanda dissolved into a bloody civil war between two tribes, the Tutsis and Hutus Africa is not alone in this regard India is composed of many distinct cultural groups Culture includes of religion, political philosophy, social structure, language, education and economic philosophy Thus, the customs and culture of a country have been deeply ingrained in the mind and formed tens of thousands of years ago Each country has its own cultural identity, which becomes their reason for living Therefore, no matter how much technology develops, these lifestyles and cultures cannot be changed This will always be the problem that multinational companies, when wanting to penetrate the market of a certain country, need to truly understand the culture and identity of that nation to be successful

For example:

- Gerber is a baby food owned by Nestle, they are the pioneers to enter the African market, this brand uses the same packaging as in the US (picture of a cute baby above) label) After a period of not selling the product, they discovered that companies in

Africa frequently use the image of the label as what is in the packaging for a reason that most Africans cannot read

- Parket Pen in Mexico When Parker entered the market for ballpoint pens in Mexico, their advertisement read "It won't leak in your pocket and embarrass you" tangled) However, Mexicans think that "embarrass" (trouble) means (embarazar), so the ad is understood as "It won't leak in your pocket and make you pregnant" your pocket, but

it also makes you pregnant.” These are prime examples of companies not taking their language learning seriously in the markets they want to expand into It only takes a few minutes for translation experts to spot these blunders But wait, Parker still didn't realize his mistake Continuing in the South American market, they released a pen called "The Jotter" and here people pronounce the word "jockstrap" (a kind of supportive underwear for boys) (advertisingvietnam, 2019)

Many multinational companies have had problems expanding their brands in the world because they have not focused on research to understand the culture of the new market This has caused some brands to fail, lose millions of dollars, and with it, start over from zero But most of all, those blunders are insulting to consumers

PART 2 CASE STUDY ANALYSIS

1 Introduction of Coca- Cola

Tử A brief introduction of Coca Cola’s history

The name Coca-Cola beverage is almost considered a symbol of the United States, not only in the US but almost in 200 countries around the world

The product that has given the world its best-known taste was born in Atlanta, Georgia, on May 8, 1886 Dr John Stith Pemberton, a local pharmacist, produced the syrup for Coca-Cola, and carried a jug of the new product down the street to Jacobs’ Pharmacy, where it was sampled, pronounced "excellent" and placed on sale for five cents a glass as a soda fountain drink Carbonated water was teamed with the new syrup

to produce a drink that was at once "Delicious and Refreshing," a theme that continues

to echo today wherever Coca-Cola is enjoyed (CocaCola, n.d.)

1891: Realizing the great potential of Coca-Cola, Asa G.Candler decided to buy back the formula as well as the entire ownership of Coca-Cola for $ 2,300

1892: Candler and other collaborators established a joint stock company to produce syrups in Georgia and named it "The Coca-Cola Company” Since then, the Coca-Cola logo has appeared all over the United States with a massive advertising campaign 1893: The Coca-Cola brand was first registered for industrial property rights at the

US Palant office

1897: Coca-Cola begins to be introduced to several cities in Canada and Honolulu Candler signed the contract with investors, he turned Coca-Cola from nothing to become the "national soul, national drug" beverage of the United States

1906: Coca-Cola expands into foreign markets by building its first overseas bottling plant in Havana, Cuba

1915: A special and unique outstanding Coca-Cola bottle was born by the design of the Root cup company This type of bottle is designed based on the curve of a Coke bean

1916: to avoid counterfeiting of this water, Candler patented this particular bottle and is used to this day

1919: Candler's heirs sell the Coca-Cola company to Ernest Woodruff, an Atlanta banker, for $25 million Four years later, Ernest Woodfuff's son, Robert Woodruff, was elected executive chairman of the company, beginning six decades of leadership and taking the Coca-Cola company to new heights that no other person could have dreamed

of (CocaCola, n.d.)

After witnessing the changes and success of this famous beverage, in 1955, Robert Woodruff retired Both Candler and Woodruff are remembered as key witnesses in the early adulthood of the Coca-Cola company After Woodruff's departure, Coca-Cola began another phase of investing in manufacturing new products, new businesses and entry into new markets, different needs in different markets and cultures

1.2 Products and services portfolio

Coca-Cola owns and market numerous valuable nonalcoholic beverage brands, including the following:

¢ Sparkling soft drinks: Coca-Cola, Diet Coke/Coca-Cola Light, Coca-Cola Zero Sugar, Fanta, Fresca, Schweppes, Sprite, Thums Up

¢ Water, enhanced water and sports drinks: Aquarius, Ciel, Dasani, glacéau smart water, glacéau vitamin water, Ice Dew, [ LOHAS, Powerade, Topo Chico

¢ Juice, dairy and plant-based beverages: AdeS, Del Valle, fairlife, innocent, Minute Maid, Minute Maid Pulpy, Simply, ZICO

5 Tea and coffee: Ayataka, Costa, dogadan, FUZE TEA, Georgia, Gold Peak, HONEST TEA, Kochakaden (CocaCola, 2020)

After more than 100 years of establishment and development, Coca-Cola has been present in more than 200 countries worldwide Coca-Cola operates in 6 regions: North America; Latin America; Europe; Eurasia; Asia Pacific; Africa In Asia, Coca-Cola operates in 6 regions: China; India; Japan; Philippines; South Pacific and Korea; West and South East Asia

2 International Business Strategy

21 Entry market strategy in Viet Nam

2.1.1, Features of the Vietnamese market

After more than 20 years of building an open economy, Vietnam has become a potential market for foreign investors The strength of the Vietnamese market is: a large population, the proportion of the population under the age of 30 accounts for 65%, in addition, Vietnam is also recognized by the world as a market with high safety, high growth rate economic growth for many years at a high level in the region Moreover, Vietnam is a peaceful, politically stable country with one of the lowest labor costs in the world All of the above factors are favorable for Vietnam in attracting foreign investment

2.1.2 Consumption trends of Vietnamese people

Vietnamese consumers are realizing that health is an essential part of their lives and a top priority for their product choices If in the past, the needs of Vietnamese consumers only stopped at enough food and clothing, now what they care about is the food and drink they buy that have enough nutritional ingredients, guaranteed to be safe, quality or not Today's consumers have more and more choices, food safety becomes a consideration in purchasing decisions, especially food and beverages

With high quality products confirmed by world consumers like Coca-Cola, penetrating the Vietnamese market is not too difficult Moreover, the outstanding advantage

of Vietnam is that it is a densely populated country with a high proportion of young population, and these are the best customers, most suitable for traditional Coca-Cola products Vietnamese people often have the habit of buying drinks at the market shops, small stalls near home or on the road, so Coca-Cola has built a nationwide distribution system to bring products to consumers

2.1.3 Coca-Cola's method of entering the Vietnamese market

The Coca-Cola brand represents the most successful beverage product in American history Famous for its symbol of trust, originality and inherent refreshment, when entering the Vietnamese market, Coca-Cola still knows how to adapt harmoniously with local consumers through respecting the traditional cultural values of the Vietnamese people

Indochina and Vinafimex

Indochina and Chuong Duong Beverage

Company

Da Nang Beverage Company

Sources: vnexpress COM, cocacolavietnam.com

In the Vietnamese market, Coca-Cola has been present in the South since the 1960s and the products consumed in the market are all imported products By 1975, after the Vietnam War, the company ceased operations When the US government lifted the embargo against Vietnam, with Vietnam's open door policy and the company's market analysis, Coca-Cola decided to re-enter Vietnam With a large population of which 65% are under the age of 30, Vietnam is an attractive market for the Coca-Cola company Coca-Cola came back in February 1994 At this time, Vietnam does not allow the establishment of a 100% foreign owned enterprise, so the only way to be able to operate in the Vietnamese market is to associate do business with a company Moreover, after a long time coming back to the market in Vietnam, in order to avoid risks and take advantage of the strengths of domestic partners, the choice of operation in the form of a joint venture of Coca-Cola is completely reasonable

For the Vietnamese market, although investing in the form of a joint venture, with the motto that they do not want to be shared power in management as well as decision power

in the implementation of the strategy, so from the very beginning, Coca -cola had intended

to establish a 100% foreign owned enterprise In the first time, although the business was not profitable, Coca-Cola Vietnam still actively sponsored Vietnamese sports activities with billions VND, despite fierce opposition from Vietnamese partners In addition, Coca- Cola is also down the selling price of the product is more than 20%, a can of Coca-Cola in the US is about 10,500 VND, while in Vietnam it is only about 5,000 - 6,000 VND As a result, the Vietnamese partners could not cover the losses and were forced to sell all of their capital to Coca-Cola Thus, Coca-Cola has completed the transformation become a company with 100% foreign capital

When Coca-Cola entered Vietnam, Coca-Cola's rival Pepsi was present in the Vietnamese market a few years ago and has built a strong position for itself Therefore, just entering the Vietnamese market, Coca-Cola has opened a series of promotions with discounts, free trials This strategy has two effects:

Firstly, creating a buzz for the company, marking the company's presence in the market, attracting the attention of consumers Second, to eliminate weak competitors, to make it easier to dominate the market Domestic beverage companies with a small scale in the form of a production complex, with a small amount of capital, cannot compete with a powerful leading corporation in the world with huge financial strength like Coca-Cola cola Soon the

Some competitors in the Vietnamese market had to close down, some changed their business direction to avoid direct confrontation (such as Tribeco's switch to producing fruit-based beverages) And in Vietnam, only Coca-Cola and Pepsi remain in the carbonated beverage market

Over 15 years of operation in the Vietnamese market, Coca-Cola has made great contributions to community development and is the leading beverage company in Vietnam

5

The presence of the company is increasingly confirmed through advertising and communication activities along with the development of community relations through sponsorship activities for educational programs, improving people's lives people such as disaster relief, job support for women,

Thus, it can be seen that factors such as politics and law greatly affect the choice of Coca-Cola's method of market penetration For example, in China, the political and legal system is strict, so the form of entry is joint ventures with local companies

2.2 Global marketing strategy

Products of international companies, in order to be accepted, must necessarily adapt to the diverse cultural environments of countries, especially at the global level When penetrating into different markets, the cultural factor is the first factor that businesses need

to pay attention to, because it greatly determines the habits, tastes and behaviors of consumers Due to the difference of cultures, businesses must set up an appropriate marketing strategy, and at the same time must choose a method to penetrate that market correctly reasonable Vietnam and China are two countries with many cultural similarities such as feudal views on respecting men and women, or the tendency to prefer to buy cheap and good quality products this is completely opposite of people Japanese consumers, they always demand high quality goods even though the price is more expensive Therefore,

in each Coca-Cola market, there are strategic steps suitable for consumers

2.2.1, Appropriate product strategy

2.2.1.1 Consistent product quality assurance across all countries

Quality is always stable in each can of Coca-Cola Wherever it does business, Coca- Cola not only strictly adheres to strictly adhere to local regulations on food processing and packaging, but also adheres to its strict standards for product quality Therefore, whether produced in Japan, the US or in Vietnam, consumers around the world can enjoy Coca- Cola cans with completely the same taste Coca Cola has a large product portfolio with 500 diverse brands It offers almost 3,900 drink options

2.2.1.2 Adjust products to suit the market and consumer tastes

Although the company's main products are carbonated soft drinks (branded Coca-Cola

or Coke account for the largest proportion) and these products are almost unchanged when entering other markets However, depending on the specific case, the company also has some product adjustments to suit each market

In the Japanese market, with an aging population, the number of people under the age

of 30 is decreasing and lower than the number of people over 50 years old, traditional Coca- Cola products may not be suitable for Japanese consumers Therefore, one of Coca-Cola's big challenges is finding new products that are suitable for aging customers Coca-Cola made immediate adjustments to be able to grow in this market The company focuses on producing products that increase energy or benefit consumers' health Therefore, the main product in this market is not Coca-Cola but tea and coffee In short, although the company's

products are of globalized standards, there are appropriate adjustments depending on the conditions in each market

2.2.1.3 Product design

In terms of product design, Coca-Cola is contained in aluminum cans or in glass bottles, with a bright red label on the outside with two words Coca-Cola capitalized at a 45-degree angle With its bright red color and with its white curves, Coca-Cola has succeeded in attracting and attracting customers and always diversified products

Coca-Cola products, when entering the Japanese market, must also change the phrase

"Diet Coke" on the package to "Coke light" to emphasize "standard waist", because Japanese girls have a general mentality that they do not like everyone knows they are on a diet Because Japanese women believe that dieting is synonymous with illness, sickness and thus it will be difficult to get married Therefore, the phrase "Coke light" is very suitable for the Japanese people's desire to fight fat, lightness, good looks and "standard waist" 2.2.2 Price strategy

Aan of Coca-Cola produced anywhere follows a certain standard and has a very high degree of uniformity, but the price is not the same everywhere When penetrating the Vietnamese and Chinese markets with a very large market size, people's incomes in these countries are low For this reason, Coca-Cola has undervalued about 20-25% below its price

in the US market It can be seen that Coca-Cola has adjusted the price of its product to match the income of people in that market

When entering the Japanese market, the price of Coca-Cola is equivalent to the US market Another reason is understandable, because in Japan people's income and standard

of living are very high

It can be concluded that the price of Coca-Cola products adjusts depending on the market, specifically based on the average income of consumers All of these adjustments serve to develop the market and keep Coca-Cola's market share

2.2.3 Extensive product distribution system

Coca Cola is present in more than 200 countries and territories With more than 135 years in business, Coca-Cola has a wide distribution network around the world

Distribution is an extremely important stage in the marketing cycle, it has a decisive influence on the success or failure of the product When a company enters a new market, building a complete distribution channel is probably half of the success For Coca-Cola, when entering foreign markets, the company does not build a completely new distribution system, but uses existing distribution channels and adds its own distributors Building a new distribution channel will take a lot of time and cost, while if used good available channels will be easier to dominate and bring products to consumers

In the Japanese market, Coca-Cola has used vending machines and combined with supermarkets across the country to distribute its products

In the Vietnamese market, through an extensive distribution system of coffee shops, mobile beverage carts, and retail and wholesale distribution agents, Coca-Cola brings its products around the country The distribution division of Coca-Cola 1s like a giant root with countless small, spreading branches The efficient distribution system created market share and stimulated demand and created great efficiency for Coca-Cola The company's products have been present in supermarkets, agents, grocery stores, small shops from the city to the countryside, from the main road to the nooks and crannies

To ensure the distribution of products, in China the company has established a distribution network through agents In order to bring the products to the distributors, in each city, with an average population of about | million people, the company has a sales center These sales centers are owned by bottling plants Distributors of Coca-Cola products are often business partners in the tobacco and alcohol sectors, some are just privatized state- owned distribution enterprises, and there are also distributors private distribution Five largest independent bottling partners: Coca-Cola FEMSA, S.A.B de C.V; Coca- Cola European Partners plc; Coca-Cola HBC AG; Arca Continental, S.A.B de C.V; Swire Beverages (Annual Report 2019)

2.2.4 Promotion strategy

Coca-Cola is the gold standard in advertising and branding Coca Cola's promotion strategy focuses on active marketing through advertising campaigns using communication channels such as television, online advertising, print press, sponsorship, etc Coca-Cola sponsors important events like American Idol, BET Network, NASCAR, NBA, NCAA, Olympic Games, FIFA World Cup,

Coca-Cola also broadcasts television commercials in many national languages around the world At the same time, started the “Taste the Feeling” campaign in India in March

2016, with the intention of reminding people of the joy and happiness that Coke brings to their lives

Coca-Cola has evolved into a mass-market product that 1s expected to be available anytime, anywhere And Coca Cola pioneered and created advertising campaigns associated with Vietnamese cultural identity

Advertising campaigns and image building associated with Vietnamese traditions and customs make Coca-Cola no longer a drink that brings mere refreshment but also a messenger of cultural values characteristics of the Vietnamese people It is no coincidence that the Coca-Cola brand wants to be associated with Vietnamese consumers when it comes

to the traditional Tet holiday