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The Coca-Cola Company: Business model and implementation in China

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  1. Introduction
  2. Organization of the Coca Cola business and its diversity
    1. Organization
    2. Diversity of products and geographical strengths
    3. Marketing actions and image of Coca-Cola
  3. Corporate and governance strategy
    1. Corporate strategy
    2. Governance strategy
  4. The Chinese beverage market
    1. PESTEL
    2. Hofstede Analysis
    3. Challenges of doing ethical business in China
  5. The company implementation
    1. The strategy of Coca-Cola in China
    2. Coca Cola's investment plan
    3. The future short , middle and long term developments

The Coca-Cola Company is one of the largest producers of soft drinks and syrups, as well as the world's biggest producer of juice and juice-related products in over 200 countries. Coca Cola has around 93,000 employees and sells over 3,300 beverages. It has six operating segments: Eurasia, Africa, North America, Europe, Latin America, Pacific and bottling investments. One of its biggest segments of revenue is earned via its bottling operations. The original Coke formula was invented in 1886 in Georgia by the Eagle Drug and Chemical Company by a chemist named John Pemberton.

The original purpose behind Coca Cola's consumption was the belief that carbonated water was good for one's health reinforced by Pemberton's claims that Coca-Cola was able cure some diseases. The two key ingredients was also the reason for Coca Cola's name: coca leaf (cocaine) and kola nut (caffeine), the ?k' was changed to ?c' for marketing purposes.

Organization of the Coca Cola business and its diversity: Coca Cola Company is devised of two main parts: Coca Cola System and The Coca-Cola Company. The Coca-Cola Company's main focus is the production of syrups and marketing of the brands and trademarks, while Coca-Cola bottling partners produce and package the beverages and then distributes them to their retail and wholesale customers. Coca Cola Company works with over 300 bottling partners that range from big to small privately and publicly traded businesses worldwide.

Diversity of products and geographical strengths:
Coca-Cola's strategy is to utilize its brands, distribution system, and financial strength to achieve long-term sustainable growth. Coca Cola offers a variety of products from carbonated drinks to tea and water. Coca Cola's most profitable region is North America. During the current crisis, while economies are slowing down around the world, most markedly in North America, Coca-Cola is likely to offset specific region weakness with strengths in other geographies.

Coca-Cola's strategy is to utilize its brands, distribution system, and financial strength to achieve long-term sustainable growth. The Coke system incorporates 900 plants, 500,000 trucks, 10 million cold drink vending machines, and a $50 billion supply chain across over 200 countries with product availability in 20 million outlets.

Tags: The Coca-Cola Company,Coca Cola System,Eagle Drug and Chemical Company, beverage industry

[...] Legal aspect There is an increasing importance of anti-monopoly law (acquisition of Huiyuan by Coca-Cola failed) and the reporting and the accounting standards. Hence, there is a lack of modern financial reporting and on top of that, there is a small group of certified accounting professionals. On the other hand, there is a facilitation of FDI that allows clear and fast procedures and processes for foreign investments. But the Chinese government makes the beverage market very attractive to venture capitalists (for example, French company Danone with Chinese company Wahaha). [...]

[...] Challenges of doing ethical business in China The People's Republic of China (PRC) is one of the fastest growing economies in history and the largest recipient of foreign direct investment in the world. An increasing number of companies are moving production processes to China to take advantage of generous tax incentives, high productivity rates, and cheap labor. Companies capitalize on the fact that they need only pay workers in China the same amount annually what they would have to pay workers monthly in the US. [...]

[...] It can be done in three different ways: Business model innovation based on actor Business model innovation based on actor change refers to identifying new value actors, especially new customers, and introducing them into the focal firm's value network. The reason behind customers staying away from value network can be attributed to technical, economic, cultural and institutional factors. Accordingly, there are different solutions. (Bower and Christensen, 1995; Christensen 2003). Business model innovation based on relation change Business model innovation based on relation change refers to providing new products or services for existing customers and helping them capture new values. [...]

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