Mid term assignment international business management topic coca cola case discussion questions

Established more than 136 years, “The Coca-Cola Company is the world’s largest beverage company.Coca-Cola own or license and market more than 500 nonalcoholic beverage brands, primarily

MID-TERM ASSIGNMENT International Business Management

TOPIC: COCA COLA - CASE DISCUSSION QUESTIONS

Course code: 221.MGT1111E.B13E

Lecturer: Dr Nguyen Tran Le

Students:

1 Dang Quang Hoang Anh - 185081569

2 Phan Vo Khanh Uyen - 205141058

3 Truong Boi Ngoc - 205141927

4 Nguyen Le Kim Ngan - 205140141

5 Hoang Bao Ngoc - 205081616

6 Tran Dang Khoa - 205140484

7 Nguyen Le Thao Vy - 205140649

TABLE OF CONTENTS

I Introduction of Coca-Cola and Coca-Cola in China 2

1 Introduction of Coca-Cola: Established year, headquarter, branches 2

2 Beverage market in China 4

2.1 Beverage trade and production in China 4

2.2 China’s beverage consumption 4

3 A brief of Coca-Cola’ presence in the Chinese market 5

II Coca-Cola' target and Strategy 6

III Coca-Cola International Business Strategy 9

1 PEST analysis of Coca-Cola in China 9

1.1 Political Factor 9

1.2 Economic Factor 9

1.3 Social Factor 10

1.4 Technology 10

2 Market Research Addresses the Emerging Market Political Environment 11

3 Coca-cola’ Entry Mode in China 12

3.1 The franchising entry mode 12

3.2 Joint venture entry mode 13

4 International Business Strategy 13

4.1 Transnational strategies of coca cola in China: 13

4.2 Communications Strategy 14

IV The lesson of international business strategy in the case of: Coca-cola in Belgium 16

1 Overview of Belgium Consumer Culture 16

2 Production And Distribution Failures 17

3 Strategic Failures 18

4 What we can learn from Coca-cola’s failure? 18

5 In Conlusion: 19

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I Introduction of Coca-Cola and Coca-Cola in China

1 Introduction of Coca-Cola: Established year, headquarter, branches.

On May 8, 1886, Dr John Pemberton served the world’s first Coca-Cola at Jacobs' Pharmacy inAtlanta, Ga From that one iconic drink, they’ve evolved into a total beverage company Established more than 136 years, “The Coca-Cola Company is the world’s largest beverage company.Coca-Cola own or license and market more than 500 nonalcoholic beverage brands, primarily sparklingbeverages but also a variety of still beverages such as waters, enhanced waters, juices and juice drinks,ready-to-drink teas and coffees, and energy and sports drinks

Cola owns and markets four of the world’s top five nonalcoholic sparkling beverage brands: Cola, Diet Coke, Fanta and Sprite Finished beverage products bearing their rademarks, sold in theUnited States since 1886, are now sold in more than 200 countries and cooperation with 200+ bottlingcompanies

Coca-Coca-Cola makes branded beverage products available to consumers throughout the world through theirnetwork of Company-owned or -controlled bottling and distribution operations as well as independentbottling partners, distributors, wholesalers and retailers — the world’s largest beverage distributionsystem

Beverages bearing trademarks owned by or licensed to us account for 2.1 billion of the approximately 60billion beverage servings of all types consumed worldwide every day

Their goal is to use Company’s assets —brands, financial strength, unrivaled distribution system, globalreach, and the talent and strong commitment of their management and associates — to become morecompetitive and to accelerate growth in a manner that creates value for their shareowners

*The largest advertising budget among the competitors

Advertising expenses accounted for 11.2% of total revenue last year ( 2021 ) In 2017, The Coca-ColaCompany was the largest advertiser in the beverage industry in the world

*The Coca-Cola Company and its competitors’ advertising expenses 2015-2017 (in US$ billions)

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*The company’s large advertising budget provides competitive advantages such as:

 helping to introduce new products to the market;

 promoting the brand;

 informing consumers about the product’s features;

 communicating the brand’s message to the public;

 increasing sales

In addition, the company’s total marketing expenses reached US$6.2 billion (or 17.5% of total revenue in2017), generating US$35.410 billion in revenue It is one of the largest marketing budgets in the beverageindustry

With its largest advertising budget and strong marketing capabilities The Coca-Cola Company is able toattract more customers and generate higher sales than most of its rivals

- Campaign “Holidays are coming” (1995 - present)

Opening with the jingle of sleigh bells and a sparkling Coca-Cola truck, “Holidays are coming” hasbecome a symbol of Christmas celebration for millions of people around the world Although before that

in 1930, Coca-Cola had launched the first Christmas ad, but it did not seem to create the expected effect

It wasn't until 1995 that the campaign "Holidays are coming" really created a successful connectionbetween the brand and this important occasion For many of us, snowfall scenes, funny sounds andexcited children receiving Christmas gifts have created the immortal spirit of the holiday, in which theimage of a familiar Coca-Cola can is indispensable belong

- Campaign ‘’Taste the feeling - Avicii vs Conrad Sewell'' ( 2016)

Merging with Avicii is a famous musician, singer, and producer The product has reached widely,attracting more than 41 million views on Youtube Emphasize brand identity and deliver refreshingmessages all day long and encourage users to always create new sensations

- Campaign “Uplifted Alex” (2017)

As the third advertisement in the 2018 World Cup series of campaigns, “Uplifted Alex” marks the firstappearance of Alex Hunter, Coca-Cola's virtual football ambassador The investment in a fictional videogame character demonstrated Coca-Cola's foray into various areas of advertising, as well as an

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opportunity to promote its new product CocaCola Zero Sugar released in Times Square (New York) the first place to place interactive 3D electronic advertising signs.

-2 Beverage market in China

2.1 Beverage trade and production in China

The Chinese marketplace is pretty numerous and may be taken into consideration as a surprisingly cleanmarketplace because of extraordinary training of human beings with extraordinary earnings levels This is

a marketplace characterised with the aid of using the life of products of such extraordinary specs andfirst-class that the fees of products can vary China is a huge marketplace, attracting a huge variety ofhuman beings companies, overseas funding businesses with extraordinary enterprise paperwork howeveradditionally fierce opposition among home establishments and overseas firms

With the biggest international populace and growing buying energy of a substantial segment of themiddle-elegance withinside the ultimate 3 decades, China has grow to be the biggest tender drinkmarketplace on each a extent and price basis

According to a Frost & Sullivan report, the size of China’s soft drink retail market in 2019 was RMB991.4bn (US$142bn), with a compound annual growth rate of 5.9% from 2014 to 2019 While the market

is expected to reach RMB1,323bn (US$190bn) in 2024, the CAGR is expected to remain at 5.9%.Bottled water has witnessed the highest growth rates in terms of consumption in China in recent years InChina, the average annual consumption of bottled water has increased from 41 liters in 2014 to 59 liters

in 2019 Rising incomes also increase thirst for bottled water

In addition to water, carbonated beverages and ready-to-drink beverages, functional and energy drinkshave registered huge growth rates in China in recent years This category includes drinks enriched withvitamins and minerals, sports and energy drinks, in addition to wellness drinks and nutraceuticals TheChinese market is full of more than hundreds of different brands offering these products Many of thesehave been developed to provide specific medical or health benefits, such as acting as energy boosters,improving digestion, enhancing immunity, or promoting heart health

2.2 China’s beverage consumption

Chinese consumers prefer imported products, especially high-tech ones Although Chinese consumersattach great importance to domestic products, imported goods are still preferred and chosen to buy

In short, as a populous country in the world with an annual economic growth rate of 10%, China is adynamic economic environment that is attracting foreign investors

Women make up the majority of the low-alcohol beverage market in China, according to the “She –Economics” study The reason is because, this drink helps them relieve stress and pressure but does notaffect their image of elegant, modern and independent women

Teas in China are witnessing a "rejuvenation" New packaging, innovative flavors have succeeded inattracting young consumers Designing special services for young customers so that they can expresstheir values, attitudes and lifestyle is the success of Chinese tea brands

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Chinese consumers are increasingly health conscious Half of consumers consider carbonated soft drinks

as just a snack, in which a high proportion of carbonated soft drink consumers (67%) expressed a desire

to purchase diet or low-calorie drinks and 75% want to buy drinks with natural ingredients The lack ofproduct launches with natural or dietetic or low-calorie claims now creates an opportunity for naturallycarbonated soft drinks to fill the void in the market

China has a 'fan economy' that mainly takes place on social media with a younger generation market.Beverage brands have begun to realize the value of social media marketing to communicate directly withthis demographic Online campaigns that primarily involve promoting a beverage experience or invitingconsumers to participate in the company's process

3 A brief of Coca-Cola’ presence in the Chinese market

Coca-Cola is currently a well-known beverage for everyone and is offered in the majority of nationsworldwide China in particular is one of the largest markets, therefore Coca-Cola cannot avoid itsattention Additionally, Coca-Cola has made investments in China for a considerable amount of time,debuting in 1979

Since 1920, Coca-Cola has been making inroads into the Chinese market under the name "Coca-cola,"but this name is roughly translated as "kekekengla" in Chinese, which refers to "tadpole." Because ofthese problems, Coca-Cola was unable to enter the Chinese market at this period

The Chinese government announced an open-door policy to allow international commerce andinvestment in its economic restructuring in 1978 Coca-Cola is aiming to break into the Chinese market.Following the normalization of diplomatic relations between the two nations in 1979, Coca-Cola wasamong the first American businesses to set up operations in China It is the first multinational consumerbrand to take advantage of the open door policy's opportunities

Coca-Cola returned to China in 1979 and currently has 45 factories operating across the country,employing over 47,000 people The greatest research and development facility is located in Shanghai

"China is our third-largest market by volume, and Coca-Colaremain upbeat about the potential for

growth throughout the market Over the past few years, China's consumer market has undergone significant structural change and Coca-Colahave continued to invest and adapt to ensure Coca-Colaare best serving our consumers and customers in a fast-changing market" Muhtar Kent, chairman and CEO

of the Coca-Cola Company said Data from Coca-Cola indicate that since 2008, revenues have ranked asthe company's third-largest worldwide

The business inaugurated its 45th Chinese production base in the province of Hebei in August 2015 Inaddition to the prior US$9 billion investment made in China between 1979 and 2015, it formally heraldsthe start of the $4 billion strategy

The tallest Coca-Cola bottling facility in central China opened its doors in Trng Sa, Hunan Province, inApril 2017

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The largest driver of that increase in 2019 was Coca-operations Cola's in China, which had double-digitgrowth for the third year in a row Coca-Cola is present in China for economic potential in thepharmaceutical, dairy, and other areas.

II Coca-Cola' target and Strategy

Coca-Cola Purpose

TO REFRESH THE WORLD MAKE THE DIFFERENCE

Coca-Cola Vision

LOVED BRANDS, DONE SUSTAINABLY, FOR A BETTER SHARED FUTURE

Coca-Cola makes brands and products that people love, while building a more sustainable future for theirbusiness and for the planet Coca-Cola does all of this while staying true to Coca-Cola purpose: to refreshthe world and make a difference

Picture shows: The Coca-Cola Company’s billion-dollar brands

No other business in the beverage industry owns as many billion-dollar brands as The Coca-Cola Company What does a diversified portfolio provide for the company? First, The Coca Cola Company depends less on one or two of its beverages to generate the majority of its revenue Second, with so manybeverage drinks in so many flavors, the business can satisfy every consumer’s needs and tastes Third, if the demand for one of the company’s beverages falls sharply (as it is now with Coca-Cola) the business can rely on other beverages to generate higher sales

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Few of The Coca Cola Company’s rivals can enjoy such a diversified brand portfolio, which provides strong competitive advantage over the rivals.

Figure shows: Companies ranking value market cap ( 2022 )

The Coca-Cola Company is the largest non-alcoholic beverage company in the world It serves 2.1 billion

or 3.5% of the total 60 billion beverage servings of all types consumed worldwide every day The company owns, distributes and sells over 500 various non-alcoholic beverage brands in over 200 countries

Only PepsiCo and Nestlé can compare to The Coca-Cola Company’s sheer size and the market share inthe non-alcoholic beverage segment Being large and having dominant market share has a few advantagesover competitors

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Since September 2009 until now, with a compound growth rate of 11% from $95.9B Now the market capitalization of Çoca-cola has reached $278.28B and is the largest beverage company on the world

Figure shows: Earnings history for Coca-Cola from 2009 to 2022

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- Global Unit Case Volume Grew 4%

- Net Revenues Grew 10%; Organic Revenues (Non-GAAP) Grew 16%

- Operating Income Grew 7%; Comparable Currency Neutral Operating Income (Non-GAAP) Grew 18%

- Operating Margin Was 27.9% Versus 28.9% in the Prior Year; Comparable Operating Margin GAAP) Was 29.5% Versus 30.0% in the Prior Year

(Non EPS Grew 14% to $0.65; Comparable EPS (Non(Non GAAP) Grew 7% to $0.69

III Coca-Cola International Business Strategy

1 PEST analysis of Coca-Cola in China

1.1 Political Factor

The Third Plenary Session of the Eleventh Central Committee of the Communist Party of China,convened on December 18, 1978, prioritized economic construction and initiated the reform and opening-

up That month, some other important events were also taking place

When China and the U.S completed negotiations for establishing diplomatic relations at the BeijingHotel on December 13, 1978, Coca-Cola was also in cooperation talks with COFCO in the same hotel.Three days later, China and the U.S issued the joint communique on the establishment of theirdiplomatic relations, declaring mutual recognition and formal establishment of diplomatic relations onJanuary 1, 1979 Coca-Cola, which entered China’s mainland market on December 19 that year, becamethe first foreign enterprise to do so after the nation initiated reform and opening-up

According to the agreement between Coca-Cola and COFCO, the U.S adopted a compensation trademodel or other payment ways to provide Coca-Cola canning and bottling equipment in China’s majorcities and tourist regions, and set up filling plants in China in order to begin sales Before the Coca-ColaChina bottling plant was established, sales were arranged by COFCO on consignment According to theCOFCO arrangement, the first consignment of 3,000 boxes of Coca-Cola was shipped to Beijing fromHong Kong at the end of 1979 under the assistance of NG Fung Hong

China’s GDP growth in 2018 was relatively stable, indicating that China’s consumer demand is stillincreasing “Coca-Cola has heartfelt support for the government’s tax and fee reduction policies, andhave more confidence.”

1.2 Economic Factor

Despite its closed-market policy in the past, China is now the second largest economy in the world interms of nominal GDP, thanks to its smooth economic reforms The country has moved from a centrallyplanned to a free-market economy, raising GDP by an average of 10% per year

Coca-Cola has invested US $13 billion in China, established 45 factories and directly employed about45,000 people Its revenue in China in the first half of 2018 exceeded RMB 20 billion (US $292.4million)

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The beverage market in China is one of the fastest growing markets in the Chinese food industry.

According to Jihong He, the Chairman of China’s food circulation association, the beverage market in

China will become the biggest worldwide by 2015 In this period Chinese beverage manufacturesproduced an output of 64.766 tons of beverage From 2001-2014, the average growth rate of theproduction of beverages in China is about 13% The potential of this industry is also shown in the factthat in 2012, a Chinese person consumed 96 liters of beverages on average, whereas an Americanconsumed approximately 263 liters

The revenue rate in the beverage industry in China is currently more than 30% However, it is a highlycompetitive market with new trends, and a resulting challenge is a relatively low level of loyalty towardsbeverage brands This is why firms are investing heavily in new strategies to cultivate brand loyalty.Coca-Cola holds a market-share of about 16 %, which is slowly decreasing The American beveragepowerhouse has to deal with ever-changing consumer preferences in the Chinese beverage market.1.3 Social Factor

As living standards have improved in China, beverage consumption has changed Consumers aresearching for a greater diversity of products, and further, have become more and more discerning.Because of several scandals in China’s food and beverage industry, consumers’ top priority in this sector

is confidence about the product’s safety and integrity Moreover, there is a trend towards healthy living isgoing on

China is the most populated country in the world, with a population of over 1.4 billion, so it is an idealmarket for all companies producing consumer products The latest five-year plan of the Chinesegovernment, by 2020, also assumes a significant increase in the living standards of the Chinese, whosemiddle class is constantly growing More and more citizens are pulling away from the status that allowsthem to be more consumerist, the literacy rate in China is 96.4% As well as impressive progress inliteracy rate, the country has made staggering progress in reducing poverty Over the last 5 years, thecountry has lifted 68 million people out of poverty

The largest age group in China is between 30 and 32 years old, which together make up over 80 millioncitizens These are people working in a market that is open to the world and increasingly smugglesWestern culture and views into Chinese society Young people are becoming increasingly open to Westerninfluences

18.5 million+ people’s lives improved through access to safe drinking water, sanitation and hygiene since2010

Coca-Cola programs focus on improving community access to water and sanitation, while promotingimproved hygiene behaviors to make positive impacts on health and development

1.4 Technology

In 2016, Coca-Cola’s two bottling partners, COFCO and Taikoo, were restructured

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With the rapid development of the business, Yunnan Taikoo Coca-Cola Beverage Co., Ltd moved to anew location in June 2018, and increased its production capacity At the same time, the new plant won theLEED (Leadership in Energy and Environmental Design) certification for its role in energy conservationand environmental protection Photovoltaic power generation equipment is installed on the roof of themain factory building and special glass with a two-way heat insulation function is used on the wall of theoffice building Seventy-five percent of the factory buildings’ roofs are made of highly reflectivematerial, the production and storage areas are illuminated by natural light and the intelligent lightingsystem is automatically activated when the illumination brightness is insufficient.

The Coca Cola company has always been experimenting in its product line It invites consumers to playgames online and associate with the Coca Cola products It uses social networking technology to stayyoung, fresh and current The company provides freestyle dispenser which allows consumers to create itsown beverage in various combinations through computer like interface It also saves data for marketresearch which will be further used by the company to understand the taste and preference of theconsumers

With the development of the Internet and digital technologies in China over the last 10 years, Coca-Colanow uses AI systems to understand local consumers and analyze their purchase behaviors

2 Market Research Addresses the Emerging Market Political Environment

Introduce.

Coca-Cola saw itself as a major player in the United States' effort to defeat communism on a worldwidescale after the war Coke should have been one of the last brands to be accepted back into China, given itshistory and how the country viewed the beverage from the 1950s to the 1970s In 1979, Coca-Colareturned to the Chinese market after being absent for more than 35 years

Research

Coke's success can be attributed in part to the transfer of its expertise in government relations to China.Peter Lee, a chemical engineer who Austin had invited to Beijing, conducted negotiations with COFCO,the state-owned company in charge of food and drink, in December 1978

Through their agreement, a joint venture bottling factory will be built in Beijing, and Coca-Cola will bepermitted to market to tourists

The agreement provides Chinese officials with two direct advantages: access to foreign technology andforeign exchange

The deal's main advocate was Tong Zhiguang, a Chinese official who first worked at COFCO and thenthe China Liaison Office in Washington

Tong was impressed by the company's quality control and management practices despite not liking theflavor of Coke

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