Business Case Study: Coca-Cola's Global Strategy in the African Market

This case study examines Coca-Cola's significant investment and expansion strategy in Africa. The analysis begins by exploring the reasons behind Coca-Cola's strong commitment to the African market, despite its classification as a developing economy. It delves into the unique resources and capabilities that Coca-Cola possesses, such as its established brand reputation, financial resources, and distribution networks, which provide it with a competitive edge. The study also addresses the drawbacks of such large-scale commitments, including political instability, infrastructure limitations, and potential criticisms from stakeholders regarding health and environmental concerns. Furthermore, the case evaluates the validity of criticisms from both US and African stakeholders, considering issues such as health impacts and competition with local businesses. Overall, the study offers a comprehensive assessment of Coca-Cola's strategic approach to the African market, its challenges, and its potential for future growth.

Global Economy

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Why is Coca-Cola so interested in Africa, which is typically regarded as part of the base of
the global economic pyramid?................................................................................................3
What unique resources and capabilities does Coca-Cola have that will help it compete well in
Africa?....................................................................................................................................4
What are the drawbacks of making such large scale commitments to Africa?......................5
Do stakeholders in the United States and Africa who criticize Coca-Cola have a reasonable
case against it?........................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
In the year 1929, Coca-Cola started their operations in Africa with which they gained
significant growth and reputation. With the latest and emerging economies there is tremendous
opportunity for the company to expand their operations so that they can enhance their
profitability (Chang, 2016). Inspite of the fact that the countries in Africa is considered to be the
poorest countries but even then the continent is believed to have a potential market for the
businesses as they can easily expand the market share. The investment decisions that are taken
by Coca-Cola in a new market include a significant amount of investment in Africa with the help
of which they can efficiently improve their market share by taking a competitive edge over
others. Also this enables the company to attract new investors that can enable the companies to
grab the opportunities. This report focuses upon the questions such as why the company Coca-
Cola has interested in Africa, their unique resources and capabilities along with various
challenges that they will be facing. Apart from this the opinion of the stakeholders are also
discussed.
MAIN BODY
Why is Coca-Cola so interested in Africa, which is typically regarded as part of the base of the
global economic pyramid?
Among all the other emerging countries Africa is one of the major markets that has been
emerging and has demand for the products of Coca-Cola in spite of the fact that the continent is
considered to poorest countries, their per capita GDP is much greater than that of China. The aim
of the company is to enhance their investment by surfing new market that has possibility of
prospective benefits and Africa is considered to be a prominent market for investing as the
country has potential in contributing to the success of the company (Bonsu, Brefo-Manuh and
Kyeremateng, 2016). Various reasons due to which the Coca-Cola is interested in Africa are
given below:
 The per capita income of the people in Africa is expected to increase in future due to
which it is expected that the company can efficiently increase their market share. With
increase in the per capita income the disposable income of the people of the country
which will also increase and this attracts the company to invest in Africa.

 The growth of the country has highly been affected by the political turbulence as it
hinders the investors to invest in the companies operating in the country, but the
improved political situation offers opportunities to the companies as Coca Cola to
increase their investment and focus on expanding their economic base. This is because
with lesser political interference the company can efficiently undertake their operations
such as they can easily take various expansion decisions, investment decisions etc. so that
they can make their goods available even in the villages of Africa.
 Political stability will also facilitate the company by offering various advantages and
benefits such as the distributors, wholesalers and retailers will be provided protection
from any kind of losses so that they can be motivated to carry on their operations. This
will enable Coca-Cola to have better distribution channel for each and every corner of the
nation (Monteiro, Gomes and Cannon, 2019).
 Africa is not involved in any civil war which will makes the operation of the Coca-Cola
less disruptive and open up the opportunity to elevate their sales. The population of
Africa consist of more of young generation people both in rural and urban areas which
ensure that the product of the company will be sold by attracting them towards the
offering of the Coca-Cola.
 The government is also focusing upon the development of the infrastructure which leads
to better roads and better connectivity of all the small villages with major cities. This will
ensure the company that they have their product within each and every part of the
country. With this the Coca Cola can increase their sales as with this their product will be
available to all (Forsgren, 2017).
What unique resources and capabilities does Coca-Cola have that will help it compete well in
Africa?
The company has been operating on international level due to which they have better
reputation and with the help of this they can easily attract the investors to invest in the company
and in their projects. The Coca-Cola has significant amount of resources for operating in Africa
even if they have to face competition with the local manufacture and other international products
such as Pepsi. The CEO of the company stated that out of the total budget that the company has
planned to invest $27 billion to boost the company out of which they will invest $12 billion in
Africa. This will enable them in improving their existing operation and to expand their

operations by improving their strategies (Kovács and Kot, 2016). The investment so made by the
Coca-Cola reflects that they have potential of taking competitive edge over others in a
considerable time period. With the help of this investment the mangers of the company can
emphasise on the distribution system within the country, the relations with the local vendors by
providing various resources that can help them in making sales. The company can provide free
refrigerators to the dealers, crates and the shelves in which they can keep the stock safe and even
the transportation with which they can ensure availability of the goods in each and every corner
of the country. Coca-Cola is the largest private employer in Africa which has been offering large
number of employment to the people due to which they get significant advantage as with this
they can improve the image of the company among the residents and the government. The
differentiation in the products of the company enables them in creating dominance across the
globe since the time they have entered in the country. Due to this they have major share over
Pepsi in the country and even the local beverage manufacturer in the country. This reflects that
the company has ability and potential in creating influence over their customer and competitors
with their strategies, actions and policies etc. The aggressive promotional campaign such as
street-to-street augmented campaign for creating awareness has increased the level of
consumption of their products in Africa, thus making the major market share holding of the
company in the segment (Spring, 2017). In addition to this the lessons from the operations of the
US enables the company in making better and unique plans such as they offers small corner
stores owners delivery, direct coaching and credit to their distributors and the retailers with the
help of which they can easily cater their customers and to manage their resources as well as
operations such as ways to save electricity, buying shops and stores etc. This enables them to
elevate their sales and relations with their distributors making their supply chain strong.
What are the drawbacks of making such large scale commitments to Africa?
The company has various plan to invest in a large amount so that they a increase the
market of the company globally and to ensure this they have focussed upon Africa as well as the
market has potential to meet up with the requirement of the company (Gertner and Rifkin, 2018).
But even after the larger commitment made by the company they have various issues that they
will face and which can affect the strategic plans of the company. The major drawback or the
concerns that the company has to emphasis upon is the distribution channel and the stability
within the politics as these two factors has direct and greater impact on the operations of the

company. Due to political stability the concern that arises before the company is that the trends
in Africa cannot be predicted and this has direct influence on the operations of the company as it
can emerge as a challenge before them. In addition to this, the situation of war within the country
can severely affect the investment so made by them in Africa and it can ineffectively affect the
operations of Coca-Cola. The infrastructure within the continent has been developing but only to
a limited extend due to which the planning and the operations of the company may fail as lack of
infrastructure in some parts of the continent will affect the ability of the company in
accomplishing their goals and objective (Mazibuko and Govender, 2017). Coca-Cola will face
criticism in Africa from different part of the continent due to the problems that they have faced
in US such as the product that are offered by the company leads to obesity. This can severely
affect the image of the organisation as well as loss of investment with decrease in the number of
sales which is due to the concern of obesity, the people will reduce the consumption of the
beverages offered by the company.
Do stakeholders in the United States and Africa who criticize Coca-Cola have a reasonable case
against it?
The stakeholders of the organisation plays crucial role in the growth and success of the
organisation as support the organisation in accomplishing their goals. The criticism of Coca Cola
in US has a reasonable case and this has affected the company on a greater extent. The sales of
the company in United States have been declining and this has impact on operations of Coca
Cola in other countries. The claims so demanded by the stakeholders of Coca Cola in US against
the epidemic of obesity have impacted their profitability and sales. The company was accused
for contributing in the epidemic by offering the product that is not good for health. The impact of
this incident is high on the company and it can be treated as a wakeup call for Coca-Cola to
make necessary changes in their strategies as with the help of which they can bring such product
which do not harm the body to a greater extent. The strategies that can be adopted by the Coca-
Cola can be introduction of the diet coke, soft drinks with lesser calories. Also they can
emphasize on banning of advertising of their products among youth (Adogame, 2016).
The criticism that was faced by Coca Cola from their stakeholders in Africa was related to
depletion of the freshwater within the nation, expensive refrigeration which has adverse
environmental impact, stiff competition for the local soft drinks manufacturer cannot be
considered to reasonable case because the product that company offers are not out of necessary

consumption but are alternate consumption which are purchased by the consumers on their own
as per their taste and preference. Apart from this, the refrigerator that are provided by the Coca-
Cola to their distributors and retailers are environment friendly as well as cheap for them so that
they can perform their operation efficiently, whereas the level of competition among Coca-Cola
and local manufacturer cannot be criticized as competition is necessary for the development of
the economy and market practice. In this the one who perform better will survive so is done by
Coca-Cola by offering reliable, trustworthy and healthy product to the customer in comparatively
lower rates.
CONCLUSION
On the basis of this report it is concluded the Coca-Cola health a significant level of interest
in expanding its business in Africa by increasing the level of investment with the aim of
improving its market share and thus the profitability of the organisation. With the help of case
study it is identified that Africa has the potential for Coca-Cola to expand its market because of
political stability, developing infrastructure, no involvement of the continent in the Civil War
etc. Also the unique resources and capabilities of Coca-Cola enable them to improve their image
and economic base in Africa due to their potential market. From this various drawbacks that are
identified have impact on the operations and investment of the company because for the
unpredictable trends due to political stability no strategy can be formulated by the company
which can affect their operations adversely, also the development of infrastructure in specific
areas that will affect the sales of the company. It is also concluded that criticism can lead to
severe destruction to the image of the organisation as the criticism of the US leads to production
in sales of Coca-Cola globally.

REFERENCES
Books and Journal
Adogame, A. ed., 2016. The Public Face of African New Religious Movements in Diaspora:
Imagining the Religious ‘Other’. Routledge.
Bonsu, C.A., Brefo-Manuh, A.B. and Kyeremateng, G., 2016. Product Traceability and
Identification: An Examination of Its Effectiveness at the Coca-Cola Company of
Ghana Limited, Kumasi, Ghana, West Africa. Science Journal of Business and
Management, 4(2), p.51.
Chang, G., 2016. Disposable domestics: Immigrant women workers in the global economy.
Haymarket Books.
Forsgren, M., 2017. Theories of the multinational firm: A multidimensional creature in the
global economy. Edward Elgar Publishing.
Gertner, D. and Rifkin, L., 2018. Coca‐Cola and the Fight against the Global Obesity
Epidemic. Thunderbird International Business Review, 60(2), pp.161-173.
Kovács, G. and Kot, S., 2016. New logistics and production trends as the effect of global
economy changes. Polish Journal of Management Studies, 14.
Mazibuko, J.V. and Govender, K.K., 2017. Exploring workplace diversity and organisational
effectiveness: A South African exploratory case study. SA Journal of Human Resource
Management, 15, p.10.
Monteiro, C.A., Gomes, F.S. and Cannon, G., 2019. Weaning Africans off Coca-Cola.
Spring, J., 2017. The intersection of cultures: Multicultural education in the United States and the
global economy. Routledge.