Coca-Cola Company Analysis Report: International Business Strategies

This report provides a comprehensive analysis of the Coca-Cola Company, examining its strategic approaches to open innovation, internationalization, localization, and competitive advantage. The analysis utilizes Porter's Diamond Model to assess the company's external competitive environment, considering factor endowments, related industries, demand conditions, and strategic rivalry. The report also delves into the significance of internationalization and localization, exploring the company's organizational purpose, corporate profitability, and social responsibility. Furthermore, the study discusses the benefits and limitations of Coca-Cola's strategies. The report concludes with personal reflections on the learning experience, providing a holistic view of the company's global business practices and strategic decision-making processes.

RUNNING HEAD: COCA-COLA COMPANY ANALYSIS
Coca-Cola Company analysis
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1COCA-COLA COMPANY ANALYSIS
Executive Summary:
Coca-Cola Company is the manufacturer of soft drinks. This paper will analysis the Coca-
Cola Company. The company analysis will help the business organisation to identify its
opportunities to flourish. The analysis will be done through open innovation, closed
innovation, the diamond model of Porter, the significance of internationalisation and
localisation, porter’s generic strategies model, organisational purpose, corporate social
responsibility and corporate profitability will be discussed in this paper to analyse the
multinational company, named Coca-Cola Company.

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Table of Contents
Introduction:...............................................................................................................................3
Question one: Open Innovation and internationalisation...........................................................3
Porter’s Diamond Model:...........................................................................................................3
Factor endowment:.................................................................................................................4
Related and supporting industries:.........................................................................................4
Demand conditions:...............................................................................................................4
Strategy, structure and rivalry:...............................................................................................5
Government:...........................................................................................................................5
Chance:...................................................................................................................................6
Question two: Internationalisation, Localisation and Competitiveness.....................................7
The demand for internationalisation:.....................................................................................7
The demand for localisation:..................................................................................................8
Porter’s generic strategies model:..........................................................................................9
Question three: Organisational purpose, profitability, and social responsibility:....................11
Organisational purpose:.......................................................................................................11
Corporate profitability:.........................................................................................................11
Corporate social responsibility:............................................................................................12
Question four: Personal reflections on learning:......................................................................13
References:...............................................................................................................................15

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4COCA-COLA COMPANY ANALYSIS
Introduction:
Coca-Cola Company, which is a USA based multinational business organisation, is the
producer, retailer and seller of non-alcoholic soft beverage. In 1886, this company was
established by pharmacist John Smith Pemberton (Coca-colacompany.com 2019).
Headquarter of this company is in Atlanta, Georgia. This paper will analyse the international
corporate strategies followed by the Coca-Cola Company. Open innovation,
internationalisation, localisation, competitiveness, organisational purpose, profitability, social
responsibility, benefits and limitations of the Coca-Cola business organisation will be
discussed in this paper.
Question one: Open Innovation and internationalisation
According to the Open Innovation model, developed by Dr Henry Chesbrough, every
firm should utilise not only internal and external paths to market but also internal ideas and
external ideas to improve their technologies (Gehani 2016). According to closed innovation
concept, every firm must control and secure every intellectual property, which is developed
internally, before the launch of a new product in the market. Every year, Coca-Cola Company
innovates and launch new products like Coca-Cola Ginger, distribution, a new program, and
equipment (The Coca-Cola Company 2019). The company launched several innovations like
mobile Coca-Cola vending machine, ice-cold Coca-Cola, Arctic coke coolers, Fuze tea, Costa
coffee, the Accelerator program.
Porter’s Diamond Model:
Porter’s Diamond Model will help the company to identify the related and supporting
industries of the Coca-Cola Company. Porter’s Diamond Model, formed by Michael Porter,
is used to analyse the external competitive environment. Through this model, Coca-Cola can

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detect the strength and competitive industries. In this model, there are four factors, which are
firm strategy and rivalry, factor input conditions, demand situations, related and supporting
industries. There are two other factors like government policy and chance, which creates its
impact on Porter’s Diamond Model (Rivas 2015).
Factor endowment:
Factor endowment is the primary determinant of production. Industrial output, trade
and policy of company are affected by the factor endowment of a country. Evaluating the
factor endowments of the USA will identify several factors. Individual specialised skills and
natural resources are the comparative advantages of this country. Technology intensive
products in net export is another factor endowment for this country. The advanced technology
of this country creates a repercussion on the production and trade of the Coca-Cola Company.
Higher import ratio, such as import, is higher than export by 30% is another factor
endowment (Rudra, Alkon and Joshi 2018).
Related and supporting industries:
For a company, Related and supporting industries are essential because it helps the
company to drive its success. The presence of a sufficient amount of suppliers and related
industries within a country creates a significant impact on the growth of the Coca-Cola
Company. This company can use skilled labour from the USA (Harding 2017). Coca-Cola
Company will properly use these skilled labours form the USA. The application of modern
technologies in the USA will be beneficial for the company (The Coca-Cola Company 2019).
Demand conditions:
Demand conditions of Porter’s Diamond Model identify the market size, demand of
the products, growth rate, and sophistication. The scale of economies, home market size and
transportation cost are connected. The producers of the Coca-Cola Company are interested in

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choosing a location with low transportation cost. The extensive market of the USA is
beneficial for the company because, from this specific geographic location, the Coca-Cola
Company serves the extensive market of the USA (Foster 2014). The vast home market, the
demand for production are essential for this company. Home market needs are essential for
the Coca-Cola Company’s success.
Strategy, structure and rivalry:
Strategy, structure and rivalry is the broad component of Porter’s Diamond Model.
This element refers to the way the company regulated and managed their targets and the
structure of domestic rivalry. Domestic rivalry encourages the company to develop its ability
to compete in the international market. In an intense domestic competition, the survivor
company forced to adopt new cost-saving technologies, become the most efficient firm, and
reduce product development time. Domestic competition is beneficial for the company
because it motivates the company to use the latest technologies to reduce the production cost
and influence the employees to perform better. Nowadays, business is changing dramatically.
As a result of this, the domestic competition has been increasing continuously. Several
companies are growing in this beverage sector due to easy technological changes (Jayalath et
al. 2015). There are several companies, which are growing in the domestic market, and the
domestic rivalry has been enhancing. The well-known international challenger of the Coca-
Cola Company is the Pepsi Company (Baah and Bohaker 2015). The management of Coca-
Cola Company has to overcome these rivalries and to do that this company has to adopt new
technologies and manage the company efficiently.
Government:
The four main factors of Porter’s Diamond Model are affected by the policies taken by
the government. The policies taken by the government can influence the business of Coca-
Cola Company within the borders. The USA Government construct infrastructures like

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healthcare, roads, airports, education and energy as a resource and other environmental
factors of production. The government of the USA are implementing anti-soda tax. Soda
giants like Coca-Cola Company and PepsiCo are forced to change its soda productions to
follow the government policies. The Coca-Cola Company are abiding the U.S Generally
Accepted Accounting Principles (US GAPP). The Coca-Cola Company developed political
engagement policy to fulfil the requirements of the USA Government.
Chance:
Random events can increase domestic competition. The impact of random events or
chances on significant companies is enormous. Coming up with a new concept is the positive
impact of chance. Those international companies are successful, who can utilise the chances
efficiently. Coca-Cola Company is a successful international organisation, are flourishing
because of the appropriate utilisation of chances. These two variables, like ‘government
policies’ and ‘chances’, can be marked as external variables (Allen 2015). To continue its
flourishing business, the management team of the Coca-Cola business organisation has to
manage these variables.
The approach of the Coca-Cola Company, is one of the largest soda-giant in the soft
beverage sector, can be identified through the Porter’s Diamond Model. The rationale for
using Porter’s diamond model will be discussed here. This model explains why some
industries like Coca-Cola and Unilever in some countries are extensively developed and
competitive in comparison to industries, which located in elsewhere in this world. This model
includes all the advantages from the specific location. This model can identify the location
advantage. With the help of this model business organisation can evaluate a foreign market
before creating the FDI decision. Porter’s diamond model will help a business organisation to
identify the competitive advantages of a country. The business organisation can get an idea

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about open innovation, which will help the company to develop open innovation to attract the
new consumer.
Question two: Internationalisation, Localisation and Competitiveness
Internationalisation, localisation will identify the positive and negative impacts of
internationalisation and localisation on the Coca-Cola Company.
The demand for internationalisation:
The term internationalisation is used to describe the change of international politics,
social, economic environments. The improvement of technologies guide the business
organisation in a situation, wherewith the use of technologies, the world market has changed
in to the small market. These business organisations can reach millions of customers
throughout the world with the help of internet and fast telecommunication services. The
world has been changing, and the international market has been continuously evolving. Every
business organisations have to fulfil the demand of internationalisation to enhance the market
share. The demand of the international market is creating a significant impact on these
business organisation. The development of the international market has some positive and
negative impacts on the business organisation. Positive impacts of internationalisation are the
economies of scale and scope. Through internationalisation, Coca-Cola Company can utilise
the low labour in the production. The expanded market can be beneficial for the company.
The brand reputation of Coca-Cola Company helps the company to capture the expanded
international market (The Coca-Cola Company 2019). The internationalisation procedure
helps the Coca-Cola Company to enhance its knowledge about international business.
Product development, operational flexibility and stabilities are the positive impacts of the
internationalisation process. Increasing participation in the global market through
internationalisation will help the Coca-Cola Company to raise its global market share. The

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producer of Coca-Cola Company can monitor the improvements and competition in the
international market (Van Tulder 2015). The relationship between producer and consumer is
improved through the Internationalisation procedure. Long term commitment is developed
between the consumers and the Coca-Cola Company through the internationalisation process.
There are several negative impacts of internationalisation procedure on the Coca-Cola
Company. The negative impacts of internationalisation procedure can be categorised in to
three parts, which are economic risks, political risks and market risks. Doing international
business can create economic risk for the company (Shenkar, Luo and Chi 2014). There is a
chance of loss because of the exchange rate of several currencies from many countries.
Inflation in the international market, credit risks and the risk of transport of products and raw
materials are the negative impacts of internationalisation. The political situation and changing
the policy of foreign governments, and laws can enhance the difficulties for the international
company like Coca-Cola Company for expanding its business in the international market.
Misunderstanding of potential market and products can create market risk for the Coca-Cola
Company. These are the negative impacts of internationalisation procedure. With the use of
porter's diamond model, a business organisation can identify the competitive advantages of a
nation. A business organisation can utilise this model to identify the new venture for
expansion.
The demand for localisation:
The term localisation can be referred to as the procedure of managing the business in
local areas rather than global contexts. There are some pros and cons of the localisation
procedure. The advantages of localisation can be described based on several factors. In the
local area, the reputation of the company and its products create a decisive impact on the
business of Coca Cola Company. The company can utilise skilled labours for the production
process. The local supply of skilled labours can attract business organisation to develop its

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firm in the local area. Development of specific facilities in the local area by the government
can be beneficial for the company. The particular local employee helps the company to
curtail its production cost. Through the localisation process, the company can improve the
quality of production with the help of appropriate credit, quality materials, research facilities
and sufficient labours.
There are several negative impacts of localisation procedure. The location of a
particular industry in a specific local area can enhance dependency. A situation like war and
natural calamity can affect the company’s business. Following the localisation procedure can
create some social problem like trikes, congestion, and accident for the company. The
production of the company can be affected because of social problems. In the localisation
process, the company has to face the problem of limited employment. The company cannot
recruit the most eligible candidate as an employee. The insufficiency of eligible candidates
can affect the quality and quantity of production.
Demand for competitiveness:
In a market, the demands of a product can be substituted with other products.
Competitive demand refers that in a situation where a potential consumer can choose between
two competing products and as an outcome, get the same level of satisfaction. For example, it
can be said that the Coca-Cola Company can generate extra benefits from a market where the
demand for Coca-Cola’s product is very high. The consumers will be agreed to pay a higher
price for the product. This situation will be beneficial for a business organisation. However,
the intense competition between the seller will reduce the amount of the product. For
example, the product price will be low in a market where both the Coca-Cola Company and
Pepsi are doing its business.

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Porter’s generic strategies model:
Porter's generic strategies model has four basic strategic options, which are cost leadership,
differentiation, cost focus, and differentiation focus (Salavou 2015). These four primary ways
will support business organisations to accomplish sustainable advantage according to Porter.
The concept of cost leadership means business organisations provide reasonable valve at a
lower price. By improving operational efficiency continuously, a business organisation can
do this. Differentiation means that business organisations provide better benefits than other
companies. The business organisation has to deliver unique or a better quality product to
achieve differentiation. Cost Focus means the leader of the business organisation is interested
in having a cost advantage in the targeted segment. Differentiation focus refers to when a
business organisation interested to gain differentiation in the targeted segment.
The rationale for using Porter’s generic model will be discussed here. As this strategy
help a business organisation to achieve competitive advantages, it can be followed by the
small and medium business organisation to accomplish competitive business advantages. The
implication of both Porter’s diamond model and Porter’s generic strategies will provide an
idea about the country and the company. Porter’s diamond model will help the Coca-Cola
Company to achieve global competitive advantages by understanding the specific resources
of the country. With the help of this model, the Coca-Cola Company will detect the
connection between the particular sources of a nation and a business organisation. Porter’s
generic strategies will help the Coca-Cola Company to identify the appropriate strategy for
the company, which will help this business organisation to beat its competitors.
Coca-Cola Company should adopt internationalisation procedure in order to enhance
is corporate profitability through product differentiation. A brand, which is defined by a
name, term, and sign, helps the consumer to identify the products of the specific business
organisation and to differentiate the products from other products of business organisation