Chapter 12 The Strategy of International Business
Coca Cola, the iconic American soda maker, has long been among the most international of enterprises. The company made its first move outside the United States in 1902, when it entered Cuba. By 1929, Coke was marketed in 76 countries around the world. In World War II, Coke struck a deal to supply the U.S. military with Coca Cola, wherever in the world it went. During this era, the company built 63 bottling plants around the world. Its global push continued after the war, fueled in part by the belief that the U.S. market would eventually reach maturity and by the perception that huge growth opportunities lay overseas. Today more than 59,000 of the company's 71,000 employees are located in 200 countries outside of the United States, and over 70 percent of Coke's case volume is in international markets.
Until the 1980s, Coke's strategy was one of considerable localization. Local operations were granted a high degree of independence to manage their own operations as they saw fit. This all changed in the 1980s and 1990s under the leadership of Roberto Goizueta, a talented Cuba immigrant who became the CEO of Coke in 1981.
Goizueta placed renewed emphasis on Coke's flagship brands, which were extended with the introduction of Diet Coke, Cherry Coke, and the like. His prime belief was that the main difference between the United States and international markets was the lower level of penetration in the latter, where consumption per capita of colas was only 10 to 15 percent of U.S. consumption.
Goizueta pushed Coke to become a global company, centralizing a great deal of management and marketing activities at the corporate headquarters in Atlanta, focusing on core brands, and taking equity stakes in foreign bottlers so the company could exert more strategic control over them. This one-size-fits-all strategy was built around standardization and the...