Coca-Cola: International Business Strategy for Globalization

International Trade & Academic Research Conference (ITARC ), 7 – 8th November, 2012, London.UK.
The Business & Management Review, Vol.3 Number 1, November 2012
155
COCA-COLA: International Business Strategy for Globalization
Michael Ba Banutu-Gomez
William G. Rohrer College of Business, Rowan University, USA
Key Words
International Differentiation Strategy, Global Strategy, International Marketing Strategy, Culture in
International Marketing Strategy, Coca-Cola Strategy, International Distribution Strategy, Choosing
Distributors and Channels, The Challenge of Distribution, Hidden Costs And Gains In Distribution,
International Collaborative Strategy, International Labor Relations and Management Strategy, and
International Diversification Strategy.
Abstract
The purpose of this research was to analysis the efficiency of global strategies. This paper identified six key strategies
necessary for firms to be successful when expanding globally. These strategies include differentiation, marketing,
distribution, collaborative strategies, labor and management strategies, and diversification. Within this analysis, we
chose to focus on the Coca-Cola Company because they have proven successful in their international operations and
are one of the most recognized brands in the world. We performed an in-depth review of how effectively or
ineffectively Coca-Cola has used each of the six strategies. The paper focused on Coca-Cola's operations in the United
States, China, Belarus, Peru, and Morocco. The author used electronic journals from the various countries to
determine how effective Coca-Cola was in these countries. The paper revealed that Coca-Cola was very successful in
implementing strategies regardless of the country. However, the author learned that Coca-Cola did not effectively
utilize all of the strategies in each country.
Introduction
CEOs and top management teams of large corporations, particularly in North America, Europe,
and Japan, acknowledge that globalization is the most critical challenge they face today. They are also
aware that it has become tougher during the past decade to identify internationalization strategies as well
as with whom to do business (Krishna, 2005).
Entering into a foreign market is like discovering new territory for business owners. Foreign
countries have different laws, economies, business strategies and currency. Cultural differences can also
impede a country's success. Though every business should anticipate a huge learning curve, entering a
foreign market can be easier with the adoption of a few strategies (Krishna, 2005). Entering into a foreign
market could require changing your product to suit the new market's tastes and preferences. Though you
may know how to issue surveys and offer samples in your base country, the foreign market might have a
different protocol. Multinational companies need to know which stores are best suited for their products,
what features the audience values and at what price to set their products. SakOnkvisit and John J. Shaw
mention in their book, “International Marketing Analysis and Strategy” how McDonalds had to alter its
menu offerings to accommodate different cultures. In India for example, beef is removed from dishes due
to the country's religious beliefs.
For this report, we decided to discuss the international strategies of a company that sells more
than 400 brands in 200 countries. Coca-Cola’s international success has helped it become one of the most
recognized brands in the world. Coca-Cola has been expanding internationally throughout the last fifty
years and positioned itself better than any other soda in the beverage industry (Sivny, 2007).The following
sections in this paper outline the strategies that Coca-Cola has initiated in different countries of the world.
USA, China, Peru, Belarus and Morocco were chosen to illustrate and compare the differences and
similarities the company uses to compete and do business in those countries.

International Trade & Academic Research Conference (ITARC ), 7 – 8th November, 2012, London.UK.
The Business & Management Review, Vol.3 Number 1, November 2012
156
International Differentiation Strategy
Differentiation strategy is defined as a marketing technique used by a manufacturer to establish a
strong identity in a specific market. It also may be referred to as segmentation strategy. Using this
strategy, a manufacturer will introduce different varieties of the same basic product under the same name
into a particular product category and thus cover the range of products available in that category. There
are several ways a firm can differentiate its’ products. We focused on two aspects of this; branding and
cost leadership. The American Marketing Association defines a brand as a "name, term, sign, symbol or
design, or a combination of them intended to identify the goods and services of one seller or group of
sellers and to differentiate them from those of other sellers. The objectives of successful branding include;
delivering the message clearly, confirming your company’s credibility, connecting to your target
prospects emotionally, motivating the buyer, and establishing user loyalty. For example, a soda company
that offers a regular soda, a diet soda, a decaffeinated soda, and a diet-decaffeinated soda all under the
same brand name is using a differentiation strategy. Each type of soda is directed at a different segment of
the soda market, and the full line of products available will help to establish the company's name in the
soda category (Lake, 2010).
Another aspect of the differentiation strategy is cost leadership. With this strategy, the objective is
to become the lowest-cost producer in the industry. Many market segments in the industry emphasize
minimizing costs. If the achieved selling price can at least equal the average for the market, then the
lowest-cost producer will enjoy the best profits. Coca-Cola has used both branding and cost leadership
strategies to expand its products in the United States and abroad. Coca-Cola has differentiated itself in
the United States by successfully positioning itself as an American icon. To many Americans, it is seen as
“patriotic, traditional, friendly, and American" (Slater, 2000, p. 202). Coupled with its advertising slogan,
“Always Coca-Cola,” the patriotic images reinforced with the feeling that it has been around forever, has
helped Coca-Cola maintain its brand loyalty since 1886. In fact, Coca-Cola has done such a good job at
differentiating itself from other brands it has reached a status seldom known to most brands -- people
actually collect Coca-Cola brand items. Anything Coca-Cola related “from its merchandising products
such as bottles and coolers to traditional and familiar advertising items such as signs and print
advertisements; from point-of-purchase items such as trays and calendars to complimentary novelties
such as toys and bookmarks” is collected by brand loyal consumers (Slater, 2000, p. 203).
Despite its successful marketing over the past six decades, Coca-Cola is not the dominate cola
brand in America. Americans still predominately prefer Pepsi over Coke. Coca-Cola is aware of this and
realizes that it can only grow its brand domestically through defensive strategies in which it retains its
existing consumers and maintains their purchasing frequency (Slater, 2000, p.202). This may lead Coca-
Cola to considering a different brand image. Many retailers and industry specialist consider Coca-Cola's
branding "outdated." In a recent BusinessWeek article, “Coca-Cola; A Powerful Brand,” Coca-Cola was
criticized for maintaining its "Norman Rockwell era ads." Though Coca-Cola has gained much
appreciation for being the classic American beverage, many believe that Coca-Cola has alienated a
younger audience (Foust and Bynes, 2004). This has many people wondering if Coca-cola will be able to
keep pace with Pepsi who has used younger spokes people, like Britney Spears, who appeal to the
younger generation.
Coca-cola has also experienced some difficulty with branding its different products. In the 1980s,
Coca-Cola tried to introduce a new recipe for its original products. The flavor greatly changed the taste
that people had grown to love. Coca-Cola did try to make the best of the situation, though. They were able
to attract new customers with the new taste, but alienated their original customers who found the flavor
foul. Coca-Cola's solution was to create two separate products. The original flavor was deemed classic
Coca-Cola while the new flavor went by New Coke. This plan worked for several years, but New Coke
was eventually phased out (Walsh, 2003).
With Coca-Cola’s success in the United States, the company decided to expand operations
worldwide. Coca-Cola is the most recognizable trademark on the planet, which is known to 94% of the

International Trade & Academic Research Conference (ITARC ), 7 – 8th November, 2012, London.UK.
The Business & Management Review, Vol.3 Number 1, November 2012
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world population (Вакансии, 2010). The Coca-Cola Company heavily invests not only in the brand
recognition, but also in quality of its products, sustainability and charity sponsorship. Coca-Cola implied
branding and cost leadership strategies in many of the countries it entered. Branding in China is a
challenge for western firms. Linguistics in Chinese can affect brand sound and brand meaning, and also
affect consumer perception and brand identity. When Coca-Cola first entered the Chinese market in 1928,
they had no official representation of their name in Mandarin Chinese (Alon, I.et al., n.a). They needed to
find four characters whose pronunciations approximated the sound of the brand without producing a
nonsensical or adverse meaning when strung together as a written phrase. Since Coca-Cola entered the
mainland China market, it used a revised name, which appealed more to the ideographic sense than the
original English sound.
The same problem also occurred when Coca-Cola first entered the Hong Kong and Shanghai
markets. The Cantonese based brand name chosen emulated the original English sound translated to
“pleasant to mouth and wax” in Mandarin. (Alon, I.et al., n.a). Ideally, this was not the message Coca-
Cola wanted to convey. The company changed the name and symbols similar to how they changed them
in China. In Belarus, the branding strategy focuses on the quality of the product. The Coca-Cola Company
in Belarus focused on guaranteeing the highest quality of its products. Coca-Cola has its own accredited
laboratory where ingredients and raw materials are rigorously tested. Product compliance with the world
quality standards is also ensured due to additional (History, n.d.).
Coca Cola’s one method of differentiation in Peru is their quality that goes together with strong
branding. This branding differentiation can be attributed to their long history and prevalence in Peru.
Coca Cola’s strong brand and name originate from 1936, when they were first introduced in Peru.
Their quality and brand recognition in Peru is recognized not just because of their products and
long history but also because of their employment excellence. Recognition is a strategic way to better a
brand’s reputation, which assists Coca Cola to differentiate their company name and help them become a
leader in a foreign market like Peru. In 2008, Coca-Cola was certified as Good Employers Association
Founder due to their quality and qualifications to determined set of standards (The Coca-Cola Company,
2008). The soft drink industry is one of the most dynamic in Morocco, where the industry has grown
consistently in the past 50 years, and continues to break new barriers (Soft Drinks, 2010).
Because of this, Coca-Cola has used both a branding and cost leadership strategy in Morocco. The
designation Coca-Cola gave to the Moroccan market segment included metropolitan areas and large
towns, represented 52 percent of the country population. This segment sought social bonding as
marketing technique and used inspirational messages to celebrate social meetings. “Dayman Coca-Cola"
which translates to “always Coca-Cola” in Arabic was a successful and relevant tagline for Coca-Cola.
Coca-Cola in Morocco is believed to be the first brand to offer advertising targeted at the smaller, rural
towns which constitutes 48 percent of the Moroccan market (EuroMonitor, 2010). Coca-Cola went after
that objective and was successful in its branding strategy. Additionally, with an average coke costing 2.5
Dirham (3 cents), the company was affordable for everybody.
As seen in examples from the United States, China, Belarus, Peru, and Morocco, Coca-Cola was
very effective with implementing new products. By using differentiation strategies such as branding and
cost leadership, Coca-Cola was able to make its brands stand out from its competitors by focusing on
image, quality, and being affordable. Because of these strategies, Coca-Cola was able to create a niche that
allowed it compete with local and global brands. This is how Coca-Cola has distinguished itself and has
allowed itself to grow its profits exponentially.
International Marketing Strategy
This section concentrates on marketing strategies in international business and ways Coca-Cola
has established these strategies around the world. First, one must understand that globalization has
become a trend in response to nontariff trades and the growth of elimination of barriers, which has helped

International Trade & Academic Research Conference (ITARC ), 7 – 8th November, 2012, London.UK.
The Business & Management Review, Vol.3 Number 1, November 2012
158
the marketing of international brands. Second, due to globalization, competition has increased
internationally and to remain competitive firms are expanding geographically by joining ventures with
other companies or through acquisitions in foreign markets. Therefore an emphasis on marketing must be
present (Douglas, Craig, &Nijssen, 2001).
International marketing strategy can be defined in many ways. International marketing strategy
is the manner in which an organization performs based on a predetermined set of activities in order to
plan, promote, price and distribute a good or service for a profit to consumers in various locations
(Cateora & Graham, 2007, p.9). Van Mesdag also describes international marketing as a company having
a marketing strategy in different markets depending on the market characteristics (Van Mesdag, 2000,
p.75).
International marketing strategy is an important part strategic planning and consequently should
be an area of study according to The Journal of International Marketing. This strategy is a significant factor
in the performance of a global company because an effective marketing strategy for international
companies can represent a competitive advantage and therefore global executives need to recognize the
importance level regardless if a global or customized marketing strategy is practiced. Furthermore, the
marketing mix affecting markets abroad the most should be studied to comprehend how foreign markets
function with different marketing strategies (Albaum & Tse, 2001).
Global vs. International Marketing Strategy
When discussing international marketing it is important to point out the difference that may exist
between international and global marketing. Global marketing can be characterized by an overall outlook
of the market as a whole where there is a standardized manner to sell a product or service in all places
(Bennett & Blythe, 2002, p.6). According to Chung, standardization as a form of marketing strategy refers
to the similarity of a set of practices implemented in the home and other foreign markets. Standardization
strategy’s main elements are political-legal, economic, competitive, cultural, and consumer, environments.
Also, the same research states that this strategy is most likely to be implemented if there are similarities in
the elements of the home and foreign country (Chung, 2003). Another concept Chung provides explains
that a firm with a strong level of standardization enjoys a high level of control within the organization.
This control is the level of decision making executed by the home office. At the same time, when
standardization applies, global image and product offering are two strong factors a firm seems to rely on.
Conversely, international marketing relates more to different target markets and their differences
rather than looking at it as one single market and foresees the possibility to implement a localization
strategy rather than standardization, as the global marketing would pursue. The findings of Van
Heerden & Barter suggest that “marketers cannot assume homogeneity of cultures across the globe and it
is surmised that there are not similarities and congruencies among the cultures within and between
countries” (2008). Therefore, the importance of establishing localization and adaptation is relevant to the
marketing strategy of any international company. In China for example, Coca-Cola has taken up the
“think local, act local” approach and it seems to be pretty effective since Coca-Cola has gained eight
percent increase in Asia-Pacific in 2000.In addition, Coca-Cola has given local managers control over
advertising operations, which is pretty impressive. Coca-Cola has included everything from Chinese
zodiac animals to Spring Festival couplets in its television commercials (Weisert, D., 2001).
Another example is Peru, Coca-Cola’s ability to succeed is due to their marketing strategy to not
try to present itself as “an American company that happens to be in Peru, but as a company of Peruvians
that has its headquarters in the United States." This strategy allows Coca-Cola to attain the trust of the
Peruvian Population as a global company (Salas). Another marketing strategy for Coca-Cola in Peru is
their decision to increase the penetration of their marketing efforts to everywhere they can, from corner
stores to major sporting events. Coca-Cola also knew that the way to compete was to attach the soft drink
to all types of meals and even participate in co-branding by promoting itself with other brands (Salas).
One more marketing strategy Coca-Cola employs in Peru involves their social responsibility. Not only