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International Business of Coca-Cola in South Africa Table of Contents Contents INTRODUCTION A BRIEF HISTORY OF COCA-COLA PRODUCTS: COMPETITORS THREATS

FROM COMPETITORS MACRO ENVIRONMENT ISSUES MICRO ENVIRONMENT ISSUES COMPANY ISSUES MARKETING MIX Page No. 01 01 02 02 02 02 06 07 11

CONCLUSION
RECOMMENDATIONS BIBLIOGRAPHY

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INTRODUCTION While local market becomes grown-up a lot of businesses begin to enlarge the procedures to another country to attain enlargement. New technology, improved habits of message as well as earlier convey has bowed the globe keen on a worldwide community, creation of global market more availability, as well as business to pursue a worldwide situation obtain the payback of augment in brand consciousness as well as cost efficiency. Coca-Cola Company first started its business in 1929 in the South Africa. The sector in which Coca Cola run its operation is food and beverage sector of the economy of South Africa. A BRIEF HISTORY OF COCA-COLA Coca-Cola Corporation, recognized in 1886, is a youthful business through the standard of the Coca Cola scheme. Up till now every of its franchise has a burly inheritance in the civilization of Coca-Cola which is the base for this corporation. The Coca-Cola Corporation traces beginning of it to 1886, at what time an Atlanta pharmacist, Dr. John Pemberton, started to create Coca-Cola syrup for auction in fountain food and drink. On the other hand the bottling selling started in 1899 at what time two Chattanooga businesspersons, Benjamin F. Thomas as well as Joseph B. Whitehead, tenable the elite human rights to bottle in addition to sell Coca-Cola for the majority of the United States as of the CocaCola corporation. The bottling system of Coca-Cola sustained to function as autonomous, limited business awaiting the early on 1980s at what time bottling franchise started to merge. The corporation obtainable the store to the community on November 21, 1986, at a split adjusted prices of $5.50 a share. On a yearly base, in 1986whole component case sale were 880,000. In December 1991, an amalgamation flanked by Coca-Cola enterprise as well as the Johnston Coca-Cola Group of Bottling, Inc. shaped a large, strong corporation, once more serving speed up bottler consolidations. As fraction of the amalgamation the superior organization side of

Johnston unspecified accountability to manage the corporation, as well as started a theatrical, winning reformation in 1992.

PRODUCTS: Dissimilar brand of the Coca Cola Corporation is existed, that are at present in utilize throughout the globe. Coca cola not merely deal in the effervescent food and drink but also another drink. Main brand of coca cola are Coke, Sprite, Fanta, Diet coke, and Coke classic. COMPETITORS PEPSI is the main competitor of Coca cola. All the peoples know that all the products that provide soft drink as well as water, coffee, are treated as the competitors of coca cola. THREATS FROM COMPETITORS Threat is well intended. Cost is the main risk. At what time cost go sure further than the precise cost whether come downward otherwise go upper its belongings the use of soft drink. As at what time the cost go privileged people leave for the alternate of coke for example Pepsi. MACRO ENVIRONMENT ISSUES Economic environment In the South African Economy the food and beverage industry is considered as the major part of that economy. About 6.6% (R 27 billion) of the GDP (gross domestic product) of the South Africa is contributed by this sector of the economy. According to the statistics of the South Africa (2006) it provides employment to more than 211500 people in the South Africa.

(a) Market size About 30% of the market share of the industry in the economy is represented by the beverage industry components. The components are divided into non- alcoholic and alcoholic products of beverage. The spirits products, wine, beer and others are mainly covered by the Alcoholic products of beverages. Their contribution to the total is about 80.6% of the total products of the beverage components. The soft drinks, mages and the juice are mainly covered by the NonAlcoholic products of beverages. Their contribution to the total GDP is about 19.4% in the division of the beverages.

(b) Foreign trade The Export, Import and the Trade Balance will be discussed in the area of the foreign trade.

(i) Exports The export of South Africa is about more than R2525 billion in term of the value of the product of the beverage of the products (2006). The South Africa is considered as the export oriented country as it has a potential growth to export and is able to maintain the continuous growth. The South Africa is also considered as the important country in comparison with the other country of

the continent of Africa.

(ii) Imports To maintain the increasing, new and potential demand of the African customers the South Africa is also keen to import different types of products as required by the customers for catering the increased demand of the customers that the African customers are sough ting. As a result the import of the South Africa is increased to more than R3818 billion in the beverage and food industry. The production of the fats, animals oils, the preservation for the meat and the processing of the those items the soft drinks and the product of grain mill etc are mainly the imported products in the South Africa.

(iii) Trade Balance The South Africa is not self dependent enough although it has an exceeding export over the import in the monetary value. The factors affecting to the negative balance of trade can be decomposed into following factors.

The vigor of the currency of the South Africa is considered to be strength and it also tends to be in favor of the import of cheaper and it also makes the exports of the South Africa less competitive in the world market. As the South Africa is competing with the countries having the higher level of import tariffs and are subsidizing their import in the foreign country are the other factors leading to the negative trade balance of the South Africa. The poor performance of the country in the export is also caused by the lack of the export culture and is cited as one of the major contributing factors. (c) Prices The continuous inflation of the food and commodity price in the market suggest that the price are becoming more and more expensive and less affordable to the general people of the South Africa in the early years. While the companies of the commodities and foods are also trying to charge a premium price for their products and services. The higher price of the products and services are also the major drivers of the profit and the revenues of the companies and also drives the value of the shareholders of the company.

SOCIAL (a) Unemployment In the South African economy the Mergers and Acquisition have a significant effect and the major part of the economy is driven by this activities. Such activities also have a negative influence on the society. Sometime the Merger and Acquisition lead to the early retirement of the worker and it ultimately deteriorate the poverty and unemployment of the country. However as the Merger and Acquisition lead to the losses of the jobs sometimes it does not become harmful to the workers rather becomes helpful to the workers.

(b) Skills Development The major challenge that is faced by the economy of the South Africa is considered as the shortage of the skill development and it is recommended that the skill of the workers should be increased. To facilitate this SETA (Sector Education and Training Authorities) was established by the South African government.

(c) Religion There exist a number of religions in the continent of the South Africa. There are Hindu, Muslim and Christian in the continent. About 80 % of the people of the South Africa are under the Christianity and it is the dominant religions. About 15 percent are Muslim and 12 percent are Hindu. The Alcoholic drinks are not allowed in some number of the beliefs of the religions such the Muslim. So this perception does not encourage the Muslims to take the alcoholic drinks such types of beverage. So in the consumption of the alcoholic beverage food products the religions is a major fact.

(d) HIV/AIDS According to the report published by the UNAIDS (2006) about 5.5 million of the people in the South Africa were infected with the AIDS/HIV virus. However people living with the HIV\AIDS are supplied with the nutritional food such as the garlic, carrot and beetroot etc and are advised to take more and more such type of food. As a result the demands for the vegetable products become increased.

Political environment The Depart of the Health Works and the Codex Alimentations are the two organizations under the South Africa is a member with the FLAG (food legislation advisory group). The members of the industry should be complied with the Hazard Analysis of Critical Control Points) HACCP, International Standardization Organization (ISO) and the Statistical Process Control (SPC) the standards of which are accepted internationally.

Technological environment The interest of the food industry in the South Africa is represented by the SAAFST (South African Association for the food science and technology) and it is considered as the pioneer for constructing the FACS (Food Advisory Consumer Service).

The analysis of the external environment is not considered as the true reflection of the competitive environment though it is considered important in realizing the profile of the food and beverage. The competitive environment in the South Africa in term of the food and beverage industry will be discussed in the next section. MICRO ENVIRONMENT ISSUES The intensity of the competition of the food and beverage industry will be discussed in this section. To conduct this analysis the five forces tools will be used to perform this analysis. The

five forces are the bargaining power of suppliers, bargaining power of buyers, barriers to entry, rivalry among the existing firm and threats of new substitutes. Intensity of rivalry (a) Industry growth Over the years the beverage and the food industry is experiencing a significant growth in term in term with the other industry. However such a tremendous growth in the demand is seemed to be caused by the high rates of population growth in 2005 of 9.3 percent from the population of 1999.

(b) Concentration The beverage industry in the South Africa has been experiencing a significant growth. The products of these companies are distributed throughout the ABI (amalgamated beverage industries) that is considered as the system of the Coca-Cola in the South Africa. So the concentration of this industry is seemed to be somewhat less.

Threat of entry (a) Access to suppliers The food and beverage industry of the South Africa have a huge opportunity of conducting the backward integration. This backward integration facilitated the firm to enlarge their operation of the production capacity in term of the raw materials supply. (b) Access to distribution channels The beverage and food industry of the South Africa is also having an opportunity of the forward integration. The forward integration facilitates the industry to manage the distribution channels and increases the sales volume. In this regard the Tiger Brand is a major company in this regard.

(c) Government policy The industry of the food and beverage industry are being threatened by different policies of the government against the steps of the industry. Due to the legislation of the government in 2006 of BEE the policy adopted by the government can induce the new potential companies to enter into the food and beverage industry.

Bargaining power of customers The individual customers are the major buyers of the beverage and food industry expressed by Pearce and Robinson. According to the Table 2.1 about 3700 retail stores were used for distributing the beverage and food products across the market.

Bargaining power of suppliers As diverse economic sectors the agriculture is considered as the major. The diversity of the agriculture is represented by different industries that are conducting the processing of food in the South Africa and considering this the bargaining power of the suppliers is considered to be somewhat strong.

Threat of substitution The higher the numbers of the substitute products the higher the opportunities for choosing the alternatives products in term of the products in the industry. According to the Business Monitor International (2006) although there are a large number of close substitutes of the products in the south Africa then the carbonates is still remaining as the long way ahead while the other categories of the products are still having a lot of competition in the industry.

COMPANY ISSUES Coca cola being major producer of the world of non-alcoholic beverages is surely well conscious of worldwide advertising. It runs in two hundred states as well as is one of the most familiar brands all through entire globe. It has distorted it worldwide marketing policy as of many times in previous 15 years. In 1996 it took on consistency policy as well as was extremely unbending concerning it. The business required to get similar flavor of coke to each and every one countries crossways the globe at the same time as observance every rudiments of marketing mix similar, as CEO of coke so as to moment, Roberto Goizueta supposed, The label international as well as local no long relate(Press release, 1996). Coca cola accepted an exclusive policy, in this latest policy local marketer were directed through the marketer shape head office in 2002. The new policy was a fewer unbending as well as modified shape of standardization policy. Beneath this policy coca cola completed small change in marketing mix for each state like in a number of countries it use sugar as well as in a number of country it utilized corn syrup. This policy is at present in utilizing through coke as well as is showing to a great deal additional winning then preceding strategy. It reserved branding of coke other than allowable others rudiments product, cost, post as well as endorsement modify consistent with the local marketplace.

As the Coca-Cola is the marketing company so al the processes are seemed to design for identifying and recognizing the requirements of the consumers and developing the appropriate program of marketing. So it considered to be crucial to emphasize on the local customers. However the brand and the sales are promoted by the specific African communication with the customers.

Competitive advantage of coca cola The advantages are taken by the companies over the major rivals in term of the production marketing and other overhead cost by providing the customers superior value in term of the major rivals. The major competitive advantage of the Coca-Cola over the major competitor of the PEPSI is caused by the following reasons:

STRONG BRANDNAME: The Coca-Cola has established itself as a strong brand by conducting its business strategies worldwide especially the major competitors like the PEPSI. As for example it became as the global brand name which renowned to about 90 percent of the world people.

STRONG MARKETING STRATEGIE: The marketing strategy adopted by the Coca-Cola is very strong. The major focus of the Coca-Cola is on the all of the customers like the matured customers, youngsters, children and it strategies induce all the targeted people of the customers.

NEW PRODUCT INNOVATIONS: Over the time the Coca-Cola is adopting the new strategies of innovating the products itself by providing the new tastes to the customers. Keeping pace with the people demand that they are being more and more conscious about the health the Coca-Cola is designing its new offerings such as the OASIS, DIET COKE and the FRUITOPIA and so on.

BOTTELING SYSTEM: The unique bottling system of the Coca-Cola is facilitating the company to enjoy a great competitive advantage over its major rivals. The bottle companies have the right to sell the Coca-Cola all over world. As result it facilitates the company to expand it operation worldwide and acts as the major promotion of the company.

Standardization Vs Adaption Corporations using consistency plan to utilize central organization system, they utilize similar mix of marketing plan that they are utilizing in local countries. It guides to attain better economies of scale through discounting during mass purchase as well as with distribution a number of activities similar to product growth as well as advertising. In adaption policy a modified mix of marketing is shaped for each nation as well as area. To follow this policy might price more than consistency but it provides the advantage of customer variety.

Current organizational structure

Entry mode The entry mode of the Coca-Cola involves the planning of the future organizational growth, the existing Coca-Cola franchisees performance, market attractiveness, the invitation of the CocaCola by acquiring the franchising in that country, the sales volume, and the entering in the foreign market. The entry of the Coca-Cola facilitated it to further expand its market share worldwide and ensure its better profitability exploiting the competitive advantage over the rivals. An immediate reaction is expected by the parent company when the franchise offer is extended to the CocaCola Sabco and in this case the opportunity might be offered to the organization of the bottling companies elsewhere in consideration of the service provided by them.

Performance The performance of the company can be decomposed on the statistics provided by it expressing that it has about 235 food and beverage offerings amounting to total of about 10 billion unit. It represents the 77 per capita offerings to the world population.

According to the economic analysis conducted by the University of the South Africas Bureau of the market research on favor of the Coca-Cola identified that if any one job is created in the system of the Coca-Cola the other 10 jobs are created in the outside of the system. This is conducted by the products offered or sold by the Coca-Cola or by the procurement of the companies with products and services. Thus the Coca-Cola in the South Africa is contributing the economy of the country greatly and the also the sectors of the motor vehicles, electricity, business services, general trade, agriculture, chemical and packaging sectors.

MARKETING MIX Product Range

The total variety of Coca Cola Corporation in South Africa includes some products. This country produces Coca-Cola, Fanta, Sprite, Sparletta, Hawa, Poms, Splash, Play, Bibo, Miami, Milo PRICE STRATEGY Promotion of Trade Coca Cola Corporation gives inducement to middle-men otherwise sellers in method so as to they recommend them at no cost sample as well as free unfilled bottle, through this the retailer as well as middle-man drive the goods in the marketplace. Seen as sold It does agreement by means of a shop-keepers as well as shops to restricted sale in the shops. The shops are described as main accounts in the local words. As well as coke as well spend serious financial plan on the shops as well as recommend them sample freely as well as without charge bottle with sometimes money incentive.

Dissimilar Price in Different Seasons Occasionally Coca Cola Corporation alters the goods price consistent with the seasons. Summer is invented to be a fine period for drink business in South Africa. Consequently in winter it reduces the price to uphold the sale as well as proceeds. STRATEGIES OF PROMOTION Getting shelves They obtains otherwise buy shelve in large departmental shops as well as exhibit the goods in that shelf in that method which demonstrate the goods more obvious in addition to additional gorgeous for the customers. Position of Eye Catching Salesmanship of the coca cola Corporation positions the freezer as well as the goods in positions of eye-catching. Usually they stay the freezer close to the entry of the shops. Promotion of Sale Corporation as well does sponsorship by means of dissimilar university as well as cafes of the school with sponsor the sport proceedings as well as additional extra prospectus behavior for receiving market share. UTC Scheme It means beneath the crown system, coca cola frequently do this kind of system as well as it offers extremely useful prize in it. For example one time they propose bike, caps, TV set, money prize etc.

DISTRIBUTION CHANNELS The full range of the distribution channels are used by the Coca-Cola system in Africa. The traditional model of supplying the large outlets such as the universities, hotels, and grocery stores and the institutions delivering trucks etc. are used by the Coca-Cola system in the most

developed and urban part of the continent. The system of Coca-Cola has followed a approach of manual delivery that works with the scale of the small distributor for delivering the products and services to the small scale retailers in the highly areas of populated regions especially for the great proportion of the its customers in the East Africa where they are considered as the most small close corner store, bars, and one person kiosks.

SALES PROMOTION ACTIVITIES Coca-Cola Cricket Cricket the mainly required gone; wristwatch & cooperated sport in South Africa .the sport of cricket has been possess by diverse variety in the business for the endorsement of their goods above a stage of occasion. It has series as of tobacco to fats to contact business to stores to airlines & recently to the drink business. The rivalry has befallen tougher & tougher as the occasion has growth. Coca-Cola indicates a support concord by eight of South Africa state cricket players. Coca-Cola recognize the detail that cricket is an extremely burly part by which it can arrive at it customers & ample advanced in the prospect and started a huge crusade on mass media screening every these cricket celebrity supporting & praise Coca-Cola product. The Coca-Cola corporation industrial three TV profitable & four shrine ads by the player & run them on the nationwide web labor through diverse cricket games. These brave ladders in use by the Coca-Cola advertising part celebrated them lots of acknowledgements crossways the panel. Coca-Cola Concerts Abrar-ul-haqs separate way, lines & songs have completed him an immediate strike with the lots in South Africa. His massive status in the state & overseas is sustained by Coca-Colas promise to as long as well & fun-filled leisure for the infancy of South Africa. The TVC movement alert on the frantic existence of a pop celebrity who establish break & release during Coca-Cola in little instants that he had to himself through a recital. Coca-Colas product spot of as long as cavernous along stimulant for the corpse, heart & wits were imprison precisely in the TVC & portray rightly how the slurp totals the instant for Abrar. Coca-Cola Food Mela Through a wet of food, amusing & awards to be winning, the Coca-Cola food mela luxury the public of South Africa, to a cheerful food carnival include of 50 caf, extend absent every more the active Urbanas chart. The support adage the eager relatives & associates like the flimsiness at the caf; every stoutly maintenance the Coca-Cola uniqueness. Coca-Cola February Festival Inside February the month of February the commons & horticulture ability in South Africa chosen Coca-Cola the bureaucrat subsidize of the February festival .Coca-Cola other to the festival ambiance by building the carnival gratis to come in & beautify every major streets in South Africa by illumined kites. Coca-Cola as well crowded a recital of burst idol Abrar-ul-haq, had kids procession & seized the Coca-Cola kite rapid finals through the February carnival. Nowadays anywhere there is February here is Coca-Cola, it has been unfeasible to imagine February with no Coca-Cola. Coca-Cola give the extra uplifting taste to the insignia of February by addition extra existence to the carnival, generous the customer a sole practice which they had not at all taste by. Coca-Cola Shopping Festival

Coca-Cola massed The Coca-Cola Shopping fiesta South Africa initial shopping carnival, a booming winner by enticing reductions, survive tune, huge awards & flames plant. Freedom advertising Gulberg was a hive of bustle through the weeklong shopping show. The in augural occasion establish so accepted that it is currently place to suit a yearly match. Coca-Cola Pet Promotion Inside 1996, Coca-Cola commenced 1.5 liter favorite curve pot for the primary occasion in South Africa. Aiming home wives & relations residence, Coca-Colas 1.5 liter favorite pot, take the attention & gain impetus by a movement endorse the sole wrapping and its frequent customer profits .A luxury for the relatives, Coca-Colas favorite was obtainable during a price-off endorsement that supposed to exit away & obtain several. Coca-Cola Ramzan Campaign An extremely particular time for the public of South Africa Carnivals adage a new really particular Coca-Colas advertising, advertising the trendy 1.5 liter favorite pot & the 1 liter jug by great priceoff advertising.

CONCLUSION
The history of the Coca-Cola Company is considered to be very rich across the world. With the rapid growth the Coca-Cola Company possesses a strong competitive position. Both the macro environment and micro environment are congenial for Coca Cola in South Africa. With a view to developing its strategies and penetrating the market the company should use its internal strength to capture the market share. To perform this company mainly emphasizes on the products of water and juice, maintaining the cook flavor by introduction of the different cook flavor for raising the health awareness. On the other hand to ensure the better profitability the companies may acquire the other company, the major competitors or perform innovative branding and strategies of innovative marketing by performing aggressive marketing strategies that will ensure the profitability of the firm.

RECOMMENDATIONS To facilitate the customers of the company the company should emphasis on the improvement of the infrastructure on providing them better quality. The Coca-Cola Company should emphasis on the local demand of the customers as the customers of the South Africa are keener to drink little bit sweeter cola drink. In the rural areas the marketing team may increase the availability of the cook to ensure the profitability. The old people should be focused on by them. Because the young generation are more and more interested in drinking smaller bottles of Coca-Cola so in consideration of such kind of the customers the company should introduce the half litter of the bottle.

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