Case Discussion Questions Coca Cola
1. Why do you think that Roberto Goizueta switched from a strategy that emphasized localization towards one that emphasized global standardization? What were the benefits of such a strategy?
Roberto Goizueta, a Cuba immigrant who became the CEO of Coke in 1981, switched from a strategy that emphasized localization ( which focuses on increasing profitability by customizing the firm’s goods so that they provide a good match to tastes and preferences in different national markets)to one that emphasized global standardization ( which focuses on increasing profitability by reaping the cost reductions that come from economies of scale, learning effects and location economies); he believed that the main difference between the United States and international markets was the lower level of penetration in the latter, where consumption per capita was only 10 to 15 percent of US consumption. Thus, he made Coke become a global company, centralizing a great deal of management and marketing activities at the corporate headquarters in Atlanta, he focused on core brands and took equity stakes. By doing this, he thought that he could have more strategic control over the headquarters. By extending the business, the company has the opportunity to gain big profits and to be a market leader, in this case of Coca-Cola. This strategy was built about standardization and realization of economies of scale, by using the same advertising messages to all over the world.
2. What were the limitations of Goizueta’s strategy that persuaded his successor, Daft, to shift away from it? What was Daft trying to achieve? Daft’s strategy also did not produce the desired results. Why do you think this was the case?
Douglas Ivester, the successor of Roberto Goizueta, adopted the same ‘one-size-fits-all’ strategy, which by the late of 1990s was falling as the nimble local competitors began to halt the growth of Cokes’ engine. The Coke was failing to hit...
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