Coca-Cola Risk Management Plan Proposal
The final project for team B focuses on a risk management plan for the Coca-Cola Company. The Coca-Cola Company took shape in 1886 and remains an international leader in beverage manufacturing and distribution with the company’s background beginning this plan proposal. Risk identification plays a major role in Coke’s continued success with an explanation of the importance of correct identification as well as a list of risks facing the company continuing this summary. A discussion follows regarding the importance of accurate and balanced methods of risks measurement and continues into risk management techniques that include auditing and hedging. This proposal continues with an emphasis on the benefits of a good risk management plan contributing to the stability and long-term success for Coke. Insurance aspects continue this plan with consideration of employee insurance plans and reinsuring with insurance. Recommendations with regard to hedging through futures and forward contracts as well as insurance products conclude this plan proposal. Background Information
The origin of Coca-Cola dates back to 1886, when a pharmacist in Atlanta named John Pemberton took his curiosity to create a drink by using a caramel colored liquid and mixing it with carbonated water. After creating the drink, he had customers of Jacob’s Pharmacy taste it with a unanimous agreement that this drink would become something special. Pemberton’s bookkeeper, Frank Robinson, penned the name Coca-Cola, writing the logo in his script handwriting, the same logo used today (The Coca-Cola Company, 2011). Asa Chandler bought the rights to Coca-Cola using his business background to elevate the success of Coca-Cola over the years to follow. By 1895, Chandler stated that this drink had reached every state in the United States. Coca-Cola’s success grew throughout the years when Robert Woodruff bought the rights to the company in 1923, and expanded into the international market. By introducing new innovated marketing techniques, he spread Coca-Cola to the Olympics and continued to expand on the contour bottle shape and the Coca-Cola six-packs. Woodruff made Coca-Cola’s name spread throughout the world (The Coca-Cola Company, 2011).
From what started as a drink sold for five cents and growing into one of the most recognized brands in the world, today Coca-Cola provides around 500 different brands throughout the world. Working to provide local communities a drink that fits their liking with regard to what and how consumed Coca-Cola remains one of the largest beverage companies, boasting 1.7 billion drinks served every day. Risk identification aids this successful company in risk management plans. Risk Identification
To continue as a dominant leader in the industry, Coca-Cola must identify any risks that the company may face, whether it is a decision leading to something beneficial or a major concern. Risk Identification defined as the process of determining what possible risks exist that may affect a decision or projects of the company (Merna & Al-Thani, 2008). The process of risk identification also includes determining the impact of each decision on different areas of the company, whether it is in the objective that may include risk, or a risk that may affect the cost of a project. With regard to Coca-Cola, the company also continues to put out new products and new marketing strategies. For instance, in 1985 Coca-Cola made a major mistake in trying to rebrand the drink to New Coke (Ross, 2005). The decision was a huge catastrophe and led the company to return to the old branding. At the time of that decision to rebrand, it would have been imperative for Coca-Cola to look at the decision and consider risks involved with such a drastic move. Attempting to identify all possible risks may have led Coca-Cola to realize the risks was in lack of consideration for the...