Managing Innovation in Business: A Case Study of Coca-Cola Company

This report examines the innovation strategies employed by Coca-Cola Company, a global leader in the beverage industry. It analyzes the organization's history of innovation, its current performance and capabilities, and the industry trends that influence its strategic decisions. The report highlights Coca-Cola's strengths, weaknesses, opportunities, and threats, and explores how the company has adapted to changing consumer tastes and health concerns. It also discusses the importance of sustainability and the role of innovation in achieving long-term growth.

Managing innovation in Business
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Executive Summary
Coca-cola Company is the manufacturer, marketer, retailer of nonalcoholic beverages and
syrups. The American corporation is best known for its brand coca-cola, and its share is traded in
public since 1920s. The company has nearly 300 bottling partners worldwide. In 2010, it was
first brand to achieve £ 1 billion in annual UK grocery sale. Coca-cola Company has number of
product, which include, fruit juices, smoothes, coconut water drinks and organic tea.
Problems due to change in customer tastes and shift from drinking sugary drinks the sales
thrashed by 11% in the year 2017. This changes in consumer behavior, lead Coca-cola to bring
out innovative drinks for health conscious customers of UK.
Solution using Innovation
To maintain the business and regain the lost sale, the company not only made changes in the
ingredient and formulated line-extension policy by launching, Diet-coke, but also went for
acquisitions of other companies. Thus apart from carbonated drink the company now has
Sobenbicha, Ice Dew, Green Cola, Diet Coke, Innocent, Dobry, Vio and many more in their
product portfolio.
Customers for coca-cola are both young and old. However, due to increased health awareness
campaign and government health policies the consumer behavior changed. People shifted from
sugary drinks to other healthy drinks, which are more fruit, based.
Diversification in its product and business strategies gave Coca-cola Company a competitive
advantage.
Coca-cola dominates the carbonated market with a market share of nearly 48%. The global
market is estimated at 341.6 billion U.S. dollars. The net operating revenue of Coca-cola until
2017 was 41.86 billion US dollars in United States alone. The four main brands, which drive
growth for the company, now, are Diet Coke, Sprite and Fanta, apart from the classic coke.
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Table of Contents
Introduction......................................................................................................................................4
The Organization and Industry Overview.......................................................................................5
Conclusion.....................................................................................................................................13
Reference List................................................................................................................................14
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Introduction
Innovation in business is required to improve the quality and productivity of the organization.
Innovation means to introduce new objectives in the business strategies. It is required to make an
increase in efficiency. These kinds of innovation develop market demands among the consumers.
This kind of new ideas has impact on the minds of the consumers to use the products. As it is a
creative process, it includes a new brand value. The profitability of the organization also depends
on how the innovation brings positive impacts on the consumers.
In this report it is noticed how the innovation brings impacts on the business structure of the
organization. Cocacola is the chosen organization for this report. Since 1886, this company has
been one of the reputed carbonated soft drinks enterprises quenching the thirst of thousands. In
this report it is analyzed what are the needs of innovation for this organization to keep the brand
value intact (Albert et al., 2014). Innovations taken by the organization are in different sectors
like marketing, system, product and sustainability of the enterprise.
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The Organization and Industry Overview
The organization and its innovation history: It is one of the well known organizations that
develop innovative ideas breaking through the conventional strategies of existing enterprises. It
is a globally acclaimed organization, which always tries to connect with the consumer through
creative storytelling and marketing strategies. The companies, which are the major competitors
for Coca-cola are Britvic, Red Bull, FeverTree Drinks, Monster Beverage Corporation. For
the centuries it is believed that Coca-cola is the company famous for carbonated drinks, but the
company takes innovation in making different products other than carbonated drinks. The
success of the organizations lies on the factor how it makes products for each segment of the
society.
Apart from carbonated drinks, the organization makes drinks of different kinds like Sobenbicha,
Ice Dew, Green Cola, Diet Coke, Innocent, Dobry, Vio and many more. All these products are
soft drinks, but the organization takes innovation in the ingredients of the products. Through
VIO, it enters into dairy market. Green Cola and Diet Coke have been thought of for the health
conscious section of the customers (Hansen, 2016). Whereas products like Dobry, Rani,
Sobenbicha have been the flavored drinks popular among the people of all ages.
In terms of marketing, the organization takes a wide range of innovation. It takes strategies to
reach out each segment of the market. In Denmark, it develops an ambient installation for color
blindness to convey the message about the happiness of life. Similarly, it launches a bottle of
shooting stars in Israel. The bottle has 3d shaped star shaped caps with transmitters. When a
consumer opens the cap, a WIFI signal has been sent to the drones flying 1000 feet in air,
launching a firework in the shape of shooting star. In the similar way in the busy subways of
Stockholm, the organization installed a kiosk to welcome the commuters with emoticons through
face recognition technology. In all these strategies the organization thinks of connecting with the
consumer in an innovative manner to bring happiness in regular life (Kotabe and Murray, 2018).
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Figure 1: Denmark’s ambient installation
(Source: Kotabe and Murray, 2018)
The growth table of the organization has been analyzed critically to understand, how the
organization takes innovation in sectors like sustainability, products, marketing to grab attention
of the consumers.
Table 1: of growth of the organization
(Source: Dividendgrowthinvestingandretirement.com, 2018)
In this table it is noticed how the organization has grown for last few decades. For this
organization, growth is a discipline. In year 2013 beverage-soft drinks it is noticed how the sales
have fallen down from 1739 to 8.52. So it depends on the requirements of the consumers, the
sales rate fluctuates. But the dividend yield by the company has increased each year, there has
been no drop down in the percentage. The main objective of the organization is to align the
products according to the tastes and needs of the consumers. The growth of this enterprise is
“consumer-centric”, where it is thought about the value more than volume. Through the brand
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products, the organization maintains the quality and accelerates the profit margins. It is mainly
the innovation that the organization takes for the growth purpose.
The thought that can be analyzed as the main reason for taking such innovation in the business
strategies is to think about the consumer’s requirements first. With the products innovation like
green coke or ginger coke, the organization thinks that it can relate recent health issues globally.
Apart from this it is all about how well the organization connects with the consumers. The
innovative strategies increase productivity of the organization after analyzing the existing
competition in the market. With a proper market research the organization can easily connect
with the consumers according to the needs.
The organizations existing Innovation Performance and Capabilities: it is one of the common
names in the household due to its innovative collection of products. Though it is a nonalcoholic
beverage influences the taste buds of the consumers globally. Coca-cola has been one of the
major brands due to the constant innovation. The consumers who have got the unusual taste of
this drink never change the brands. The financial growth of the organization is due to the
effortless marketing strategies taken. This drink is available in 200 countries, so the global
presence has made this organization to retain the brand value. The consumer can get the taste of
Coca-cola anywhere making it one of the largest selling drinks.
Strengths
In the beverage industry, Coca-cola and Pepsi are the two largest competitors. The drinks which
are the growth drivers of the organization are Maaza, Fanta, Limca, Diet Coke and many more.
This organization has a definite target audience across all ages. It promotes the product through
the celebrities, adding more brand value the products. The customer loyalty has been one of the
major reasons to keep the value of the products intact. The brand value has to be kept flawless
because it is thought that the customer’s engagement with the product is possible due to the
innovation taken (Renz and Vogel, 2016). The taste of these products is hard to replace with any
other beverages. As it is a globally acclaimed product, it has a wide network of distribution. The
high demands of the products are dependent on how the organization has built trust with the
consumers.
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Weakness
Pepsi has invested in other products also, but Coca-cola has made up its brand value in this
sector. It has concentrated all its products in this particular sector. Coca-cola in the recent days
has thought about the real time issues like sugar, obesity. It is believed the main reason of the
obesity is the intake of carbonated beverages. Coca-cola has been one of the leading companies
of these beverages. Therefore, the company takes the initiative to bring products like Diet Coke,
Green coke. The zero sugar level of the products helps the health conscious organization to take
use this product. In the similar way, the organization has initiated the clear water projects by
introducing mineral water products like Dasani, Smartwater, Dasani plus, and vitaminwater zero.
This initiative has been taken by the largest beverage leading company to use the purest form of
the water. Through the social media campaigning it is noticed how diet coke has been one of the
widely used beverages by the consumers on 2013 (Dekhil et al., 2017).
Table 2: Social media survey
(Source: Dobrin and Dobrin, 2018)
Opportunities
Diversification has been one of the major objectives of the food business. Coca-cola has taken
diversities in innovation. Due to the wide range of products, the products of this company can be
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available across the world. The supply chain of the organization is high due to higher demands
among the consumers about the products. The products of the organization are trying to expand
in the developing countries. So the consumption of the products in these companies is dependent
on how the organization is promoting about the products through innovation. The organization
can think about the strategies to improve the supply chain. As it is a globally acclaimed
beverage, the products have to be distributed and transported in the demanding areas (Harvey et
al., 2018). Due to its constant expansion in this sector, the company should take proper look after
the cost of the products. There are products in the company which have lesser market value. The
organization should take necessary steps to re-launch the products among the consumers
according to the needs.
Threats
Water scarcity has become a global issue. It is suspected that the organization uses pesticides in
the products. But coca-cola has somehow been proved clear in such suspicion. In near future, one
can blame on these beverage industries for using large content of water (Jacobson, 2017). If the
water scarcity happens, it can be a huge drawback for the organization. Like health or energy
drinks, coca-cola has also started producing products in this sector. Not only carbonated drinks,
but it has expanded its industry in dairy products, juices and mineral waters. The success of the
organization depends on how well it has taken marketing strategies. For organization like, Coca
cola, it is all about innovative market strategies or advertisements which make the organization
globally accepted.
Table 3: Water use in coca cola
(Source: edie.net, 2018)
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The sustainability report of Coca-cola shows that 10% of water efficiency has been improved by
using only 2.03 litres water per litre. By 2020, it is believed to use only 1.7litres water, making
25% improvement from 2010.
The Industry in 2018: according to the business report of Coca-cola company, 2017 it is
believed that food and beverage industries soon reach different level. This market segment
includes different types of food and beverages items. In recent times it is noticed that the
manufactures are inclined in using natural constituents for the products. With the globalization,
different kinds of diseases have been noticed among the consumers. With the market survey
made in the year 2014, it is noticed that the food and beverage industry has taken a positive
growth (Wood, 2018). Obesity has been one of the major issues. There are consumers who are
health concern, therefore using natural ingredients in products has increased the sales of such
products. In this industry, it is noticed that the manufactures have stopped using artificial flavors
in the products. The consumers are the highest stakeholders of this industry, so the health of the
consumers is a major concern.
Table 4: Sales volume of Coca cola
(Source: Sales volume growth of Coca Cola Company's beverages worldwide in 2017,
2018)
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Reasons in raising the industry: Respective organizations take marketing strategies based on
demands. The investors have to make a market research properly before investing in this
particular sector. Before making decisions, it is necessary to analyze the market constraints
properly. For the organization like Coca-cola it is necessary to understand the needs of the
consumers properly before taking necessary decisions (Jensen and White, 2018). It is only Asia
Pacific, where the sales volumes of Coca-cola has increased by 2.5%. The global or local data
analysis can be dependent on different parameters. The taste of the consumers is changing every
day, this industry has to perform according to the change in the tastes.
Table 5: Coca cola use survey
Source: Roy Morgan, 2018
In this figure it is notices how cocacola has done a survey in the year 2015 to think about how
the sugary drinks are affecting the health. This survey of 7 days shows how the cola has been
well accepted by the people in Australia, Indonesia and New Zealand. Though there is a
controversy about the nutritional values of soft drinks, but this drink has been one of the famous
among the consumers. To perform according to the tastes of the consumers, the industry needs
innovation in business strategies. This industry is comparatively competitive in nature as
compared to other existing industries (Moresi et al., 2017). So any esteemed organization has to
develop such strategies that can bring changes in future planning. Usually with the high demands
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of the products, the organization compromises with the quality of the products. So before taking
such decisions, any organization has to analyze what are the market requirements. It is also
necessary to expand the market globally to bring a change in perspective about the product’s
quality (Gattoma, 2017). The market trends can be studied on different parameters like
demography, cultural context, competitive landscapes, as well as the segmentation. It is believed
that the market grows on analyzing different constraints existing in the industry. With the
cultural context, any organization can easily understand the requirements of particular region.
The market segmentation helps in breaking down the market in sub markets.
Through such segmentation it can be easily understood the reasons of growth of any
organization. Competitive landscape gives an organization an overall representation of the
required needs of the consumers. An organization can also predict the market shares in the
industry. This shows how the industry invests in the global economy. Certain strategies are taken
for the better developments of the organization. Coca-cola has engaged in a direct marketing
with the consumers by taking such strategies which will influence the consumers to use the
products (Goodier, 2015). The installation of kiosk, or ambient advertisements, or digital
campaign of this organization has made this organization to take such creative innovations for
reaching out larger section of the market.
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Conclusion
In this organization it is noticed that innovation has been taken strategically. Coca-cola has been
the leading organization in beverage industries because it has made the products for each section
of the society. By taking such innovative strategies it is a strong step for reaching out larger
section of the society. It has taken campaign on happiness, and how this campaign brings
positive changes in the target audience. This kind of communicative strategy has made the
organization developed in the third world countries. In the developing countries the products of
Coca-cola are welcomed wholeheartedly as it cost effective and brand value.
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