From Liability to Responsibility: The Coca-Cola Company
B. Frijters 296962 V. Menzel 302785 D. Bachrach 302148 Group number 7
Global or local? The Coca Cola Company goes glocal! Ever since the Coca Cola company was established in 1886 in the United States, it has been getting hold of many foreign markets. Nowadays, it only produces concentrates, bases and syrups, which are locally made to actual beverages by owned or licensed bottlers, which adhere to local needs. The Coca Cola Company pursues a two tier strategy. A global strategy is executed for its international products: Coca Cola, Fanta and Sprite, these products are more of less the same across the world. Whereas a glocal strategy is used for the regional products, these may be products produced only in specific areas. Also marketing is carried out this way: the main marketing idea is communicated, by the head quarter, to regional offices who in turn adapt it to local demands. When doing business abroad companies face many differences. Since the Coca Cola Company operates in more 200 countries, if faces quite some challenges. This is illustrated by general examples and by specifically comparing, the situation in the United States, as the headquarter, and China, as a host country, over the period 1995-2008. The significance of internationalization, in this case doing business in more than 200 countries is has been analyzed by two complementing indices. The Transnationality index (TNI) measures how much of a company’s assets, sales and employment is situated outside the host country. The CCC scores high on this index compared to similar MNE’s. The scores for CCC fluctuate over the period 1995-2008 however a strong increasing trend is visible. The network spread index (NSI) complements the TNI index by analyzing whether activities are located in several or many countries. Here, the CCC scores rather low. Taking these two indices together it means that the CCC incurs most of its sales outside its home country as well as it holds it assets and employs most of its workers abroad. However they are clustered, resulting in low spread. In conducting business all around the world, the CCC mainly faces risks evolving from the distance with regard to the large differences in institutions and culture. The mainly evident when it tries to acquire new subsidiaries and enter new markets. In the attempt to reduce or eliminate the risk, the company takes responsibility to solve these problems. Several important risks for the CCC are: water scarcity, health issues such as obesity and diabetics and aspects influencing its brand name such as weak enforcement of regulations on trademarks and copyright protection. Despite the fact that the Coca-Cola Company is situated upstream the Global Value Chain it still spreads its power throughout the rest of the value chain by having a core position and a strong brand. Also contributing to this strong position is the internal alignment of the distinct departments that all seem to take an active approach towards CSR. However, the external stakeholders like NGOs are still approached in a reactive way, especially concerning the ecology and human rights NGOs. For example, the Company is currently involved in a clash with a Chinese NGO on poor working conditions in one of its bottling partners. In order to align other issues the Manifesto of Growth was established in 2004, formulating an extensive and specific vision and mission for the near future. Within this framework the Coca-Cola Company increasingly cooperates with NGOs in several key issue areas. For the company to take on even more responsibility, we advice to become an industry leader in Fair Trade soft drinks.
1. INTRODUCTION 2. THE COCA-COLA COMPANY 2.1 GENERIC BUSINESS STRATEGY 2.2 INSTITUTIONAL IMPACT 2.3 DEVELOPMENTS 2.3.1 FINANCIAL DEVELOPMENTS 2.3.2 INTERNATIONALIZATION DEVELOPMENTS 2.3.3 CSR DEVELOPMENTS 2.4 TRANSNATIONAL INDEX AND NATIONAL...