Report on Coca-Cola's Globalization and Business Environment Analysis

This report provides a comprehensive analysis of Coca-Cola's global business environment. It begins with an introduction to Coca-Cola and its globalization strategies, highlighting factors such as improvements in transportation, freedoms of trade, and labor availability. The report then delves into the political and economic systems affecting the USA, including discussions on political climate, foreign direct investment, and economic indicators. It also examines the cultural factors impacting the company, such as organizational hierarchy and negotiating styles. Furthermore, the report explores the impact of free trade, including the fears of job loss and changes under the Trump administration, as well as the effects of protectionism. Finally, it addresses ethical issues, such as inflated earnings related to channel stuffing, and concludes with recommendations.

GLOBAL BUSINESS ENVIRONMENT 0
GLOBAL BUSINESS ENVIRONMENT
System04121
4/4/2020

GLOBAL BUSINESS ENVIRONMENT 1
Contents
Introduction................................................................................................................................2
3 reasons for Coca Cola’s globalization are the following........................................................2
Theme 2: political and economic system..................................................................................2
Political factors affecting the USA............................................................................................2
Africa, and many more emerged...............................................................................................3
Economic factors affecting the USA..........................................................................................3
Theme 3: culture that impact the company in USA...................................................................4
Hierarchy in the organization.............................................................................................4
Differences in negotiating styles........................................................................................4
Importance of culture.................................................................................................................5
Impact of Free trade...................................................................................................................6
Fears of Job Loss................................................................................................................6
Changes under the Trump Administration.........................................................................6
Coke Free trade..........................................................................................................................7
Impact of Protectionism.............................................................................................................8
Ethical issues..............................................................................................................................8
Inflated Earnings Related to Channel Stuffing..................................................................8
Recommendations:...................................................................................................................11
Conclusion................................................................................................................................11

GLOBAL BUSINESS ENVIRONMENT 2

GLOBAL BUSINESS ENVIRONMENT 3
Introduction
Coca Cola is the world's growing soda business that offering customers more than 500
products. It involves Fanta, Coca Cola Nil, PowerAde, and Minute Maid (The Coca-Cola
Group, 2010). Coca-Cola Cola is the world's leading business. The organization primarily
focuses on healthy society environmental conservation and strong economic growth
(Saphiere, 2011).
3 reasons for Coca Cola’s globalization are the following
Improvements in transportation - The rate of freight shipping between countries has declined
with the larger container ships. Scale reductions mean that prices can be that per element in
greater sizes. Improvements in transport often require goods and people to fly faster.
Freedoms of trade - Organizations such as the World Trade Organization (WTO) are
encouraging free trade among countries to help eliminate barriers between countries.
Labour availability and skills - Countries like India have lower labour costs and therefore
higher capacity rates (around a third those of UK). The reduced Labor costs and lower
regulatory limits in LEDCs could be used by Labor-intensifying sectors, including fashion
(Fahy, 2012).
Theme 2: political and economic system
Political factors affecting the USA
The United States is the world's second biggest nation. The President is the country's chief
and is chosen for a period of four years. Typically, US elections are seen as equal and open.

GLOBAL BUSINESS ENVIRONMENT 4
The nation has a healthy political climate, given the recent difficulties. It also has an immense
impact on other countries around the world's international dynamics. However, some of the
US's interventionist initiatives in certain areas of the world risk foreign condemnation.
The USA is a significant foreign investment destination (FDI) with a secure political climate,
sophisticated systems and technology. Consequently, for many international corporations, the
country has long been the first option for foreign direct investment. Yet as candidates for
foreign direct investment, countries such as China, India, Brazil, Turkey, Nigeria, South
Africa, and many more emerged (Logsdon, and Wood, 2015).
Economic factors affecting the USA
The economic situation for the nation is the next item to be dealt with in PESTEL analysis of
the USA. In terms of estimated GDP, the US is the world's biggest economy. This is a nation
from which companies such as Coca Cola, McDonald's, Starbucks, Windows, Samsung,
Twitter, Googles, etc. form and drive the world's socio-economic talks. The recession of
2009, though, had a significant effect on the US economy. Many businesses closed, with
unemployment growing alarmingly (Louhiala-Salminen and Kankaanranta, 2011).
In recent years, trends have improved. In 2015, unemployment declined and in 2016 wages
increased (Amadeo, 2017). It should be remembered, however, that in the USA research is
not easy, relative to China, India, and Mexico in particular. Cheap labor has become an
opportunity for many American firms to outsource much of their companies worldwide.
The global economy is evolving quite rapidly, a problem for the United States. The nation is
undeniably an economic powerhouse and a global king. However, by 2050, the gross national

GLOBAL BUSINESS ENVIRONMENT 5
product by buying power parity may prove to be the threat highest in the world (Martin,
2017).
It should be noted, as stock markets have already fallen dramatically, that the US economy
may drop into recession by the end of 2019. Many experts claim that the trade war between
the US and China, the US-Iran standoff, the Brexit and the economic instability across the
world will bring on a slowdown in several other countries as well as in the USA.
Theme 3: culture that impact the company in USA
Hierarchy in the organization
In certain countries, decisions of senior officers are difficult to challenge or express opinions
which vary from the rest (Scott, 2012).
Attitudes depend on social inclusion or on a country's fundamental principles. The definition
is now being extended to the workforce in places like America where reverence for seniors
and people in leadership roles is profoundly rooted in the members of community. It helps to
identify duties and function in the organization and those with senior management roles
demand a higher degree of formality and consideration from junior employees (Rycroft,
Nicoll, Aplin, and Harrison, 2012).
In the Scandinavian nations, though, the condition is different. For eg, in Norway, social
equity is underlined, such that the organizational structure is flat. Cooperation between all
teams and casual contact are usual in the workplace setting (White, 2011).
Differences in negotiating styles
Negotiation is a big foreign business aspect. The way people act, interact, and learn is
affected by culture. The way they communicate represents these characteristics. It is

GLOBAL BUSINESS ENVIRONMENT 6
necessary for businesses to consider cultural differences in business dealings and to find ways
of barriering the differences.
It should be closely investigated how one talks during negotiations. Israelis and the Americas
are rather straightforward, and you know directly whether or not the agreement has been
accepted. Some communities like Latin Americans are really sentimental. At the other side,
most Asians prefer to inhibit feelings and to formalize issues (Hannula, & Pirttimaki, 2013).
The same societies are quite distinct in their treatment of contracts. Americans want any
description of the contract as they want to foresee future situations and eventualities. This
arrangement refers to a contract. Anything negotiated and agreed during the talks will also be
stated in the arrangement. In the other side, the Chinese choose a contract only because the
signing of an agreement is a connection to the business partner for them.
Importance of culture
Culture plays a significant role in foreign business as it identifies a community of people of
society's views, principles, actions, practices, and attitudes. The actions of people in the
society are fundamentally culture. Cultural characteristics often represent the behaviour
observed that is passed on from one Participant to the next. Social order, vocabulary and faith
are several essential components of society. Foreigners who wish to start up their own
company and prosper will know about community and the local economy (Vogel, 2018).
Culture does not only involve conducting business in another nation but, for instance,
complexities occur inside an enterprise. Managers now require unique skills to address such
complexities. Awareness of history, language variations and management abilities are
important for progress. Such problems also contribute to a stronger discussion for a
organization or international workers (Lu, Chen, Fuhrman, and Sun, 2017).

GLOBAL BUSINESS ENVIRONMENT 7
Everyone's benefits and drawbacks. The potential company successes must rely heavily upon
managers 'willingness to adapt to cultural problems and their effect on World Company.
Impact of Free trade
Fears of Job Loss
The US population has been complaining for decades against open trade deals leading to a
feared employment reduction in inexpensive labor-powered foreign nations. However, open
trade supporters argue that current international deals from both sides would strengthen. The
WTO acknowledges that open trade often leads in employment reductions. Roberto Azevêdo,
WTO Director-General, said during the 2017 World Economic Forum in Davos, Switzerland:
The remaining eight would not be reduced due to migration, they are losing because of
emerging technology, creativity and improved production. "'Migration has a reduction of 2
out of 10 workers.'
While Azevêdo claimed that 80 per cent of the world's job losses were attributed to certain
causes, the director of the world's biggest free-trade promoter admitted that 20 per cent of the
world's job losses was induced by free trade. That will definitely be a good statement against,
not for, free trade. And, the New York Times editor Paul Krugman claims that free trade
deals with countries such as Korea and Colombia are not 'work initiatives (Schmidhein and
Timberlake, 2009).
Changes under the Trump Administration
In his bid to block US inclusion in NAFTA, nominee Donald Trump vowed. As President
Trump has signed a new three-Country Deal in order to amend NAFTA and confirmed
NAFTA's USMCA Compromise in October 2018. The success of this current deal in
alleviating those effects of unrestricted free exchange is yet to be seen.

GLOBAL BUSINESS ENVIRONMENT 8
Coke Free trade
When they agreed to embrace the free market economies, the writers of the free trade
agreements which opened the borders between Europe and North America probably did not
think about their impact on pop drinkers.
However, those who can't survive without the fizzy stuff experienced fresh tastes, as trading
barriers collapsed and national Coca Cola varieties started to cross boundaries.
The US Free Trade Agreement (NAFTA), for example, has allowed stores in Latin
communities to cancel orders for US coke and exchange it with Mexican coke, which is now
legally importable.
The explanation is that, rather than the maize syrup that goes into US coke and renders it,
according to the amateurs, the finest cola in the country, the southern versión of the border is
sweetened with cane sugar (Cuervo‐Cazurra, 2011)
But Coke's dilemma is NAFTA: imports are all over the board and they can only try to
discourses distributers of goods from Mexico to sell their own brand in Latin communities.
Cause has been the last issue of US magazine liberal Purpose.
To British consumers, coke's many flavors are becoming particularly significant. Many small
British stores consider it less costly, for instance, to spit UK Diet Coke into Coca-Cola Sweet,
its mainland relative.

GLOBAL BUSINESS ENVIRONMENT 9
Impact of Protectionism
Over the long run the market is damaged by trade protectionism. Industries in the sector do
not need to develop without rivalry. Finally, the domestic output is that in quality and cost
more than that generated by international rivals.
The loss in U.S. productivity stems from work outsourcing. The United States 'decades of
non-investment in schooling also lost demand. For high-tech, electronics and research, this is
particularly valid. Enhanced companies open different opportunities for their goods to offer.
It is projected that the Peterson Center for International Economics would raise US sales by
US$ 500 billion by the removal of all trade barriers (Nwanji, and Howell, 2007)
Increasing US protectionism would slow down global activity further. That will contribute to
more, not fewer, dismissals. Other nations would do the same if the United States seals its
doors. This growing trigger the 12 million American employees who owe their employment
to exports to be fired. It reduces or eliminates tariffs and quotas between trading partners.
The North American Free Trade Deal is the biggest framework. It's about Mexico, Canada
and the United States. There should have been a bigger Trans-Pacific Partnership.
Nonetheless, President Trump removed from this deal the United States.10 As a result, the
other involved nations have committed among themselves. It succeeds NAFTA as the world's
biggest trade deal once China wants to join them.
Ethical issues
Inflated Earnings Related to Channel Stuffing
In comparison, the firm was suspected of performing channel stuffing with the other legal
dilemmas posed by Coca-Cola. In this textbook, the method of "path packing," normally

GLOBAL BUSINESS ENVIRONMENT 10
before the end of a year, is "excessive delivery of additional product to wholesalers and
distributors" (Ferrell, 2008). The usage of channel stuffing is dishonest and is utilized by a
business to raise revenue and profits. The selling is taken as factor as a corporation sends a
goods to a seller. However, if a corporation engages in channel loading, it considers the
transaction and the inventory can typically be returned or deposited. It sends its store outlet
More sales from their financial statements and misinforms customers will profit the company
from channel filling. Throughout the case of Coca Cola, they have been warning Japanese
boaters of bringing additional focus to dishonestly inflate their earnings from 1997 to 1999.
Even though Coca-Cola removed the allegation, the SEK claimed that channel reinforcement
took place. To exchange for increased cash, the firm forced boots men to buy more focus.
Coca-Cola told the SEC that it will not be interested in potential platform stuffing. By the
moment, the organization has formed an department for ethics and enforcement that verifies
every financial quarter that compensation or expanded special credits have not been adjusted.
Coca-Cola decided to aim to reduce foreign bottlers 'concentrate material. While they have
addressed the issue with the SEC, Coca-Cola continues to face litigation in Japan, North
America, Europe and South Africa against shareholders of channel stuffing (Muhammad, M.Z.,
Char, bin Yasoa, and Hassan, 2010)
CSR of COCA COLA
Categories of CSR
activities
Coca Cola Performance
Educating and
empowering
workers
Coca Cola is listed in 26 lists during 2012-2013, including the
world's twenty-five best global employment compiled in 2013

GLOBAL BUSINESS ENVIRONMENT 11
Labor and human
rights
The Ethics Line platform gives members the chance to privately and
openly disclose alleged infringement of a company policy, human
standards or other infringement.
Health and safety Among the 400 latest drink brands launched in 2013, 100 are
calorie elimination, minimal or no.
The incidence rate of loss of time declined to a low of 1.9 in 2013,
accordance with the Coca Cola Workplace Protection Regulation
Environment
a) energy
consumption water
consumption
Energy efficiency improved by 20% compared to 2004
Coca Cola revealed that it will regulate water consumption by
2020. By 2020. The organization has replenished its finished drinks
by approximate 68 percent in 2013 and return to societies and
nature around 108.5 billion liters of water.
Other initiatives
PlantBottle Processing is an innovative project to produce partly
plant-based plastic bottles.
Coca Cola does not sell its goods to children under the age of 12
years in the light of its attempts to encourage responsible marketing.
Consequently, the organization will not purchase advertising
targeted specifically at the population with over 35% children under