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CONTENTS
Serial No.
1 2 3 4 5 6 7 8 9
Topic
INTRODUCTION INDUSTRY PROFILE COCA-COLA COMPANY GLOBAL MARKET SHARE OF COCA-COLA POTERS FIVE FORCES SWOT ANALYSIS OF COCA COLA PESTEL ANALYSIS SWOT ANALYSIS OF MAIN COMPETITOR (PESPICO) CONCLUSION
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3 5 7 8 9 15 24 33 37
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INTRODUCTON
Research is a human activity based on intellectual investigation and is aimed at discovering, interpreting, and revising human knowledge on different aspects of the world.
MARKETING RESEARCH:Marketing research is the function that links the consumer, customer and public to the marketer through information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. Marketing research specifies the information required to address these issues, designs the methods for collecting information, manages and implements the data collection process, analyzes and communicates the findings and their implications.
-Palmer (2000)
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INTRODUCTION TO COCA-COLA
Coca-Cola, the product that has given the world its best-known taste was born in Atlanta, Georgia, on May 8, 1886. Coca-Cola Company is the worlds leading manufacturer, marketer and distributor of non-alcoholic beverage concentrates and syrups, used to produce nearly 400 beverage brands. It sells beverage concentrates and syrups to bottling and canning operators, distributors, fountain retailers and fountain wholesalers. The Companys beverage products comprises of bottled and canned soft drinks as well as concentrates, syrups and not-ready-to-drink powder products. In addition to this, it also produces and markets sports drinks, tea and coffee. The Coca- Cola Company began building its global network in the 1920s. Now operating in more than 200 countries and producing nearly 400 brands, the Coca-Cola system has successfully applied a simple formula on a global scale: Provide a moment of refreshment for a small amount of money- a billion times a day.
The Coca-Cola Company and its network of bottlers comprise the most sophisticated and pervasive production and distribution system in the world. More than anything, that system is dedicated to people working long and hard to sell the products manufactured by the Company. This unique worldwide system has made The Coca-Cola Company the worlds premier soft-drink enterprise. From Boston to Beijing, from Montreal to Moscow, Coca-Cola, more than any other consumer product, has brought pleasure to thirsty consumers around the globe. For more than 115 years, Coca-Cola has created a special moment of pleasure for hundreds of millions of people every day. The Company aims at increasing shareowner value over time. It accomplishes this by working with its business partners to deliver satisfaction and value to consumers through a worldwide system of superior brands and services, thus increasing brand equity on a global basis. They aim at managing their business well with people who are strongly committed to the Company values and culture and providing an appropriately controlled environment, to meet business goals and objectives. The associates of this Company jointly take responsibility to ensure compliance with the framework of policies and protect the Companys assets and resources whilst limiting business risks.
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INDUSTRY PROFILE
A BRIEF INSIGHT - BEVERAGE INDUSTRY IN INDIA
In India, beverages form an important part of the lives of people. It is an industry, in which the players constantly innovate, in order to come up with better products to gain more consumers and satisfy the existing consumers.
BEVERAGES
ALCOHOLIC
NONALCOHOLIC
CARBONATED
NONCARBONATED
COLA
NON-COLA
NON-COLA
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If the behavioural patterns of consumers in India are closely noticed, it could be observed that consumers perceive beverages in two different ways i.e. beverages are a luxury and that beverages have to be consumed occasionally. These two perceptions are the biggest challenges faced by the beverage industry. In order to leverage the beverage industry, it is important to address this issue so as to encourage regular consumption as well as and to make the industry more affordable. Four strong strategic elements to increase consumption of the products of the beverage industry in India are: The quality and the consistency of beverages needs to be enhanced so that consumers are satisfied and they enjoy consuming beverages. The credibility and trust needs to be built so that there is a very strong and safe feeling that the consumers have while consuming the beverages. Consumer education is a must to bring out benefits of beverage consumption whether in terms of health, taste, relaxation, stimulation, refreshment, wellbeing or prestige relevant to the category. Communication should be relevant and trendy so that consumers are able to find an appeal to go out, purchase and consume. The beverage market has still to achieve greater penetration and also a wider spread of distribution. It is important to look at the entire beverage market, as a big opportunity, for brand and sales growth in turn to add up to the overall growth of the food and beverage industry in the economy.
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As an industry which has strong backward and forward linkages, our operations catalysis growth in demand for products like glass, plastic, refrigeration, transportation, and Industrial and agricultural products. Our operations also lead to incremental growth for enterprises engaged in post-production activities like merchandising, marketing and sales. In addition, we share best practices and technological advancements with our suppliers, vendors and allied industries which often lead to improvement in the overall standards of quality across industries. The Coca-Cola Company has always placed high value on good citizenship. Our basic proposition entails that our Company's business should refresh the market; enrich the workplace; protect and preserve the environment; and strengthen the community. We leverage our unique strengths to actively support and respond to local needs -- be it the need for education, health, water or nutrition. We have used our distribution network for disaster relief, our marketing prowess to raise awareness on issues such as PET recycling, and our presence in communities to improve access to education and potable water. The Coca-Cola India Foundation is now taking forward in the community at large, projects and programs of social relevance to carry forward the message of inclusive growth and development. For more details on activities of the Coca-Cola India Foundation, please visit the website of the Coca-Cola India Foundation, www.anandana.org.
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According to Beverage Digest's 2008 report on carbonated soft drinks, PepsiCo's U.S. market share has increased to 30.8%, while the Coca-Cola Company's has decreased to 42.7% due to Pepsi marketing schemes still the higher large gap between the market share can be attributed to the fact that Coca-Cola took advantage of Pepsi entering the market late and has set up its bottler's and distribution network especially in developed markets. "The Coca-Cola Company" is the largest soft drink company in the world. Every year 800,000,000 servings of just "Coca-Cola" are sold in the United States alone. Bottling plants with some exceptions are locally owned and operated by independent business people who are native to the nations in which they are located. Coca-Cola manufactures, distributes and markets non-alcoholic beverage concentrates and syrups, including fountain syrups. It supplies concentrates and beverage bases used to make the products and provides management assistance to help it's bottler's ensure the profitable growth of their business. This has put Pepsi at a significant disadvantage compared to US market. Overall, CocaCola continues to outsell Pepsi in almost all areas of the world. However, exceptions include India, Saudi Arabia and Pakistan. By most accounts, Coca-Cola was India's leading soft drink until 1977 when it left India after a new government ordered, The Coca-Cola Company to turn over its secret formula for Coke and dilute its stake in its Indian unit as required by the Foreign Exchange Regulation Act (FERA).
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In 1988, PepsiCo gained entry to India by creating a joint venture with the Punjab government-owned Punjab Agro Industrial Corporation (PAIC) and Voltas India Limited. This joint venture marketed and sold Lehar Pepsi until 1991 when the use of foreign brands was allowed. PepsiCo bought out its partners and ended the joint venture in 1994. In 1993, The Coca-Cola Company returned in pursuance of India's Liberalization policy. In 2005, The Coca-Cola Company and PepsiCo together held 95% market share of soft-drink sales in India. Coca-Cola India's market share was 52.5%. In Russia, Pepsi initially had a larger market share than Coke but it was undercut once the Cold War ended. In 1972, Pepsi Co Company struck a barter agreement with the government of the Soviet Union, in which Pepsi Co was granted exportation and Western marketing rights to Stolichnaya vodka in exchange for importation and Soviet marketing of Pepsi-Cola. This exchange led to Pepsi-Cola being the first foreign product sanctioned for sale in the U.S.S.R. Pepsi, as one of the first American products in the Soviet Union, became a symbol of that relationship and the Soviet policy. Brand name loyalty is another competitive pressure. The Brand Keys Customer Loyalty Leaders Survey (2004) shows the brands with the greatest customer loyalty in all industries. Diet Pepsi ranked 17th and Diet Coke ranked 36th as having the most loyal customers to their brands. The new competition between rival sellers is to create new varieties of soft drinks, such as vanilla and cherry, in order to increase sales and getting new customers. Pepsi is however trying to counter this by competing more aggressively in the emerging economies where the dominance of Coke is not as pronounced, with the growth in emerging markets significantly expected to exceed the developed markets, rivalry in international market is going to be more pronounced. Pepsi advertisements often focused on celebrities, choosing Pepsi over Coke, supporting Pepsi's positioning as "The Choice of a New Generation." In 1975, Pepsi began showing people doing blind taste tests called Pepsi Challenge in which they preferred one product over the other. Pepsi started hiring more popular spokespersons to promote their products.
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In the late 1990s, Pepsi launched its most successful long-term strategy of the Cola Wars, Pepsi Stuff. Consumers were invited to "Drink Pepsi, Get Stuff" and collect Pepsi Points on billions of packages and cups. They could redeem the points for free Pepsi lifestyle merchandise. After researching and testing the program for over two years to ensure that it resonated with consumers, Pepsi launched Pepsi Stuff, which was an instant success. Tens of millions consumers participated. Pepsi outperformed Coke during the summer of the Atlanta Olympics, held at Coke's hometown where Coke was the lead sponsor for the Games. Due to its success, the program was expanded to include Mountain Dew into Pepsi's international markets worldwide. The company continued to run the program for many years, continually innovating with new features each year. Coca-Cola and Pepsi engaged in a "cyber-war" with the re-introduction of Pepsi Stuff in 2005 & Coca-Cola retaliated with Coke Rewards. This cola war has now concluded, with Pepsi Stuff ending its services and Coke Rewards still offering prizes on their website. Both were loyalty programs that give away prizes and product to consumers after collecting bottle caps and 12 or 24 pack box tops, then submitting codes online for a certain number of points. However, Pepsi's online partnership with Amazon allowed consumers to buy various products with their "Pepsi Points", such as mp3 downloads. Both Coca-Cola and coke previously had a partnership with the iTunes Store.
POTENTIAL ENTRANTS:
New entrants are not a strong competitive pressure for the soft drink industry. Coca-Cola and Pepsi Co dominate the industry with their strong brand name and great distribution channels. In addition, the soft-drink industry is fully saturated and growth is small. This makes it very difficult for new, unknown entrants to start competing against the existing firms. Another barrier to entry is the high fixed costs for warehouses, trucks, and labour, and economies of scale. New entrants cannot compete in price without economies of scale. These high capital requirements and market saturation make it extremely difficult for companies to enter the soft drink industry therefore new entrants are not a strong competitive force.
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Capital requirements for producing, promoting, and establishing a new soft drink traditionally have been viewed as extremely high. According to industry experts, this makes the likelihood of potential entry by new players quite low, except perhaps in much localized situations that matter little to Coke or Pepsi. Yet, while this view may reflect conventional wisdom, some industry observers question whether a new time is coming, with 'new age' beverages selling to well-informed and health-informed and healthconscious consumers. This issue was beginning to grab the attention of both Coke and Pepsi in the summer of 1992, when they both were not able to explain a drop in their June 1992 sales.
SUBSTITUTES:
Numerous beverages are available as substitutes for soft drinks. Citrus beverages and fruit juices are the more popular substitutes. Availability of shelf space in retail stores as well as advertising and promotion traditionally has had a significant effect on beverage purchasing behaviour. Overall total liquid consumption in the United States in 1991 included Coca-Cola's 10% share of all liquid consumption. For years the story in the non-alcoholic sector centred on the power struggle between Coke and Pepsi. But as the pop fight has topped out, the industry's giants have begun relying on new product flavours and looking to noncarbonated beverages for growth. Substitute products are those competitors that are not in the soft drink industry. Such substitutes for Coca-Cola products are bottled water, sports drinks, coffee, and tea, juices etc. Bottled water and sports drinks are increasingly popular with the trend to be a more health conscious consumer. There are progressively more varieties in the water and sports drinks that appeal to different consumer's tastes, but also appear healthier than soft drinks. In addition, coffee and tea are competitive substitutes because they provide caffeine. The consumers who purchase a lot of soft drinks may substitute coffee if they want to keep the caffeine and lose the sugar and carbonation.
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Blended coffees are also becoming popular with the increasing number of Starbucks, Barista and CCD stores that offer many different flavours to appeal to all consumer markets. It is also cheap for consumers to switch to these substitutes making the threat of substitute products very strong (Datamonitor, 2005). The growth rate has been recently criticized due to the market saturation of soft drinks. Datamonitor (2005) stated, Looking ahead, despite solid growth in consumption, the global soft drinks market is expected to slightly decelerate, reflecting stagnation of market prices. The change attributed to the other growing sectors of the non-alcoholic industry including tea & coffee is 11.8% and bottled water is 9.3%. Sports drinks and energy drinks are also expected to increase in growth as competitors start adopting new product lines. Profitability in the soft drink industry will remain rather solid, but market saturation has caused analysts to suspect a slight deceleration of growth in the industry (2005). Because of this, soft drink leaders are establishing themselves in alternative markets such as the snack, confections, bottled water, and sports drinks industries. In order for soft drink companies to continue to grow and increase profits they will need to diversify their product offerings. So in order to compete with the substitutes industry, coca-cola has diversified from just carbonated drink industry to other substitute and so have other brands like Pepsi, Dr pepper/Snapple.
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as a restraint of free trade. Jimmy Carter, a Coke fan, changed that by signing legislation to allow soft-drink companies to own bottling companies or territories, plus upholding the territorial integrity of soft-drink franchises, shortly before he left office. Also, the three most important channels for soft drinks are supermarkets, fountain sales, and vending. In 1987, supermarkets accounted for about 40% of total U.S. soft drink industry sales, fountain sales represented about 25%, and vending accounted for approximately 13%. Other retailers represent the remaining percentage. While both Coca-Cola and Pepsi distribute their bottled soft drinks through a network of bottling companies, Coca-Cola uses its own network of wholesalers for their fountain syrup distribution, and Pepsi distributes its fountain syrup through its bottlers.
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Negative Publicity. World's leading brand. Decline in cash from Large scale of operations. Operating Activities. Robust revenue growth in 3 Sluggish Performance in segments. North America. SWOT ANALYSIS THREATS
STRENGTHES
WEAKNESS
OPPORTUNITIES
.
Fig 2.1 SWOT ANALYSIS OF COCA-COLA
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Strong brands allow the company to introduce brand extensions such as Vanilla Coke, Cherry Coke and Coke with Lemon. Over the years, the company has made large investments in brand promotions. Consequently, Coca-cola is one of the best recognized global brands. The companys strong brand value facilitates customer recall and allows Coca-Cola to penetrate new markets and consolidate existing ones.
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Together, the three segments of Latin America, East, South Asia and Pacific Rim bottling investments, accounted for 34.8% of total revenues during fiscal 2006. Robust
revenues growth rates in these segments contributed to top-line growth for Coca-Cola during 2006.
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In North America the sale of unit cases did not record any growth. Unit case retail volume in North America decreased 1% primarily due to weak sparkling beverage trends in the second half of 2006 and decline in the warehouse-delivered water and juice businesses. Moreover, the company also expects performance in North America to be weak during 2007. Sluggish performance in North America could impact the companys future growth prospects and prevent Coca-Cola from recording a more robust top-line growth.
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OPPORTUNITIES ACQUISITIONS
During 2006, its acquisitions included Kerry Beverages, (KBL), which was subsequently, reappointed Coca-Cola China Industries (CCCIL). Coca-Cola acquired a controlling shareholding in KBL, its bottling joint venture with the Kerry Group, in Hong Kong. The acquisition extended Coca-Colas control over manufacturing and distribution joint ventures in nine Chinese provinces. In Germany the company acquired Apollinaris which sells sparkling and still mineral water. Coca-Cola has also acquired a 100% interest in TJC Holdings, a bottling company in South Africa. Coca-Cola also made acquisitions in Australia and New Zealand during 2006. These acquisitions strengthened Coca-Colas international operations. These also give Coca- Cola an opportunity for growth, through new product launch or greater penetration of existing markets. Stronger international operations increase the companys capacity to penetrate international markets and also gives it an opportunity to diversity its revenue stream. On 25 February 2010, Coco cola confirms to acquire the Coca cola enterprises (CCE) one the biggest bottler in North America. This strategy of coca cola strengthens its operations internationally.
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In terms of value, the bottled water market is forecast to reach $19.3 billion by the end of 2010. In the bottled water market, the revenue of flavoured water (water-based, slightly sweetened refreshment drink) segment is growing by about $10 billion annually. The companys Dasani brand water is the third best-selling bottled water in the US. Coca-Cola could leverage its strong position in the bottled water segment to take advantage of growing demand for flavoured water.
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In many of the countries in which Coca-Cola operates, including the US, PepsiCo is one of the companys primary competitors. Other significant competitors include Nestle, Cadbury Schweppes, Groupe DANONE and Kraft Foods. Competitive factors impacting the companys business include pricing, advertising, sales promotion programs, product innovation, and brand and trademark development and protection. Intense competition could impact Coca-Colas market share and revenue growth rates.
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Recent Scenario
During recent times, Coca Cola India has faced its fair share of problems. On August 5th 2003, The Centre for Science and Environment (CSE), an activist group in India focused on environmental sustainability issues (specifically the effects of industrialization and economic growth) issued a press release stating: "12 major cold drink brands sold in and around Delhi contain a deadly cocktail of pesticide residues". According to tests conducted by the Pollution Monitoring Laboratory (PML) of the CSE from April to August, three samples of twelve PepsiCo and Coca-Cola brands from across the city were found to contain pesticide residues surpassing global standards by 30-36 times. This had an adverse impact on the sales of Coca Cola, with a drop of almost 30-40%1 in only two weeks on the heels of a 75% five-year growth trajectory. Many leading clubs, retailers, restaurants, and college campuses across the country had stopped selling CocaCola. This threatened the newly achieved leadership attained over Pepsi due to a successful marketing campaign. But this was not the end of Coca Colas troubles. There was widespread discontent around many of their plants. For example, in Plachimada, Kerala, the communities in and around the Coca Cola plant blamed the factory for their water problems. Due to this, the local Panchayat decided not to renew the license issued to Coca Cola to protect public interest". The company has also been accused of illegally occupying a portion of the village property resources in Mehdiganj, near Varanasi. However, there are certain positives as well, with a 22 percent increase in its unit case volume last quarter.
Economic Analysis:
The Indian economy sustained the global economic slowdown in the previous year and has shown a tremendous economic growth. It showed 8.6% of growth in the last quarter of 2009-10 as compared to 5.8% same time in the previous year. It has emerged as an attractive economy to invest in as many opportunities has been recognized.
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Economic growth
India is ranked second in economic growth, just behind China. Analysts have said that India will be the third biggest economy of the world in the coming year behind China and USA. With economic growth many opportunities have been seen, which have attracted many foreign investor to the company. Coca cola India returned to the country in 1993, despite few problems in the start they have emerged as the king of soft drink industry in India. The strong economic growth of India has resulted in coca cola to invest heavily in sales and distributive channels. It has introduced two new products, Nimbu Fresh and an energy drink Burn. Coca cola registered 22% growth in their unit case volume in the second quarter (AprilJune). It is the 16th consecutive quarter of such growth out of which 13 are double digit. Coca cola Indias growth is in contrast to its overall performance, the beverage king reported a growth of just 5% (worldwide) in the same quarter.
Inflationary effects
Inflation is one of the main problems that Indian economy has been facing for a year now. Rising prices in the food and other products doesnt only effect the consumers it also has an adverse effect on a company. The inflation rate for the year 2009 was recorded to be 11.49%. As prices have gone up in India for various products, especially oil, there has been uncertainty in decision making of almost every company. Coca cola India has also been affected by the same; it has been forced to think about their input costs, as they have been rising due to inflation. Their expenditure has been rising, with more costs in salaries, distribution channels and other operating costs. Beverage industry being price competitive market, they have not revised their product prices.
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Exchange rate
The exchange rate of rupee to US Dollar has been stable but in the previous months the rate has had a tumultuous period. Exchange rate determines at what price will the company export its products and import whatever is required by it. The previous year, the rate of rupee to USD touched 44, on an average it has been around 47, so the exports earned less and the imports cost more. Therefore, coca cola India had to bear some low profitable times. However, in the present scenario rates have reached a stable level and exports are on an increasing trend.
Social Analysis
Coca- Cola returned to India in 1993 after a 16 year hiatus, amidst competition from Leher Pepsi which had the advantage of entering the country 7 years earlier. Initially, it struggled to find acceptance as there were already other brands such as Parles Thums Up which existed in the market. Coca-Cola had earlier focussed more on the American way of life in their advertising campaigns, which the Indian consumers could not identify with. Also, they did not focus on competition from other alternatives such as lemonade, Lassi etc. These products had been around for centuries, and were also cheaper alternatives to Coca-Cola. However, things were brought under control when Thums Up was bought over by Coca Cola, and more attention was paid by the company on their marketing mix. With the lowering of their prices by almost 15-20%, introduction of newer products which appealed to the Indian tastes, more investment in market research and focussing on the target group of 18-24 year olds, they were able to increase their market share and build brand loyalty. Coca Cola today, has made significant investments to build its business in India. It has also generated employment for almost 1,25,000 people in related industry through its procurement, supply and distribution cycles. The soft drink industry today is growing steadily due to the booming economy, strengthened middle class and low per capita consumption. With the increase in health Page 27 of 37
consciousness among the urban consumers, the company has introduced newer products such as Diet Coke, which contain lesser calories than ordinary Coca Cola. This is also responsible for the company shifting focus from carbonated drinks to Fruit Drinks / Juices and bottled water. The rural market had also been identified by Coca-Cola India as an attractive target, with almost 70% of the countrys population. The company has recorded significant growth in recent years Coca Cola India has also taken many initiatives as a responsible corporate citizen, by tying up with many NGOs such as BAIF (or Bharatiya Agro Industries Foundation), SOS Childrens Villages and Save the Children. It has also taken initiatives to promote education in rural areas.
Technological Analysis
Coca-Cola has started operations of its R&D facility in India, with the view of localizing its product portfolio. The major focus would be on non carbonated drinks and flavours. The companys R&D team has already rolled out drinks such as Maaza aam panna and also a Maaza mango milk drink, and is exploring options to enter new categories in India such as juices in localised flavours, energy drinks, sports drinks and flavoured water. These initiatives are being taken by the company to further expand their product portfolio. With the increasing importance of 360 degree media tools and overall ad spend on social media sets likely to grow by almost 44%, Coca-Cola has increased ad spend on the internet. Case in point is the recent 2009 Sprite campaign, which was first launched on the internet.
Environmental Analysis
Coca Cola has earned a title of environment friendly company and Coca Cola India too has followed in the footsteps. Coca Cola Indias Corporate Social Responsibility (CSR), is an initiative that prioritizes many social and environmental issues; one of them being water conservation. They support many community based rainwater harvesting projects and help lending conservation education.
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The company has made sure that the following ideas are considered during their operations: 1. Environmental due diligence before acquiring land 2. Environmental impact assessment before commencing project 3. Ground water and environment survey before selecting the site 4. Ban on purchasing CFC emitting refrigerating equipment 5. Waste water treatment facilities 6. Compliance with all regulatory environmental requirements 7. Energy conservation programs By following these guidelines Coca-Cola India has helped the environment with consistent profits and success. They seek to provide leadership in three different areas, these are as follows: 1. Water efficiency and water quality 2. Energy efficiency 3. Eliminating or minimizing solid waste.
Though being an environmental friendly company, Coca Cola India had to face its share of controversies. On 4th February, 2003, Centre of Science and Environment in India, released a report based on experiment done by Pollution Monitoring Laboratory. In the experiment, they tested 17 packaged drinking water brands and found that, Coca Colas Kinley has 15 times more pesticide residual levels than the stipulated norms, Bisleri had 59 times and Aquaplus had 109 times.
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The main law governing the food safety is the 1954 Prevention of food alteration act, which stated that pesticides should not be present in any food item but did not have law against pesticides being present in soft drinks. However, the Food Processing Order 1955 stated that the main ingredient used in soft drinks must be potable water but the Bureau of Indian Standards had no prescribed standards for pesticides in water. But later it was found that BIS had stated that pesticides should not be present or it should not exceed 0.001 part per million. Further, the health ministry of India admitted that there were lapses in PFA regarding carbonated drinks.
Legal Analysis
As the Indian consumer is getting more educated, the government is also paying special attention to consumer laws. In the past, there were not so many laws protecting the benefits to the consumer but now every business has to go by the law and fix their operations, strategies so as to satisfy their consumers, and employees. Keeping in mind the consumer laws, employment laws, antitrust law, discrimination laws etc. a business should plan out everything.
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Consumer Laws
In the present scenario, consumer is the king, if a product is defective, not meeting the stated standards a consumer can complain against the manufacturer. Complaining and getting the verdict the court has made very fast and efficient as government of India has installed new consumers courts. Their main job is to see that the consumer benefits are being met or not. When producing their beverages, Coca Cola India has to make sure that they have written price, manufacturing date, expiry date, batch no, nutritional facts are written on the packed product.
Employment Laws
Ministry of Labour makes the laws for proper employment in the country. They have stipulated norms on employing people from the country and getting expatriates in the company as well. India has strict laws against employing child labour. Being a male dominated society, the ministry has made sure that female employees are treated with respect and given equal importance at the work place. Every field of work has got its own wage, these are to meet the norms and laws set by the labour ministry. When employing anyone, coca cola India cannot discriminate on social, regional or any racists basis. If it is found that the company has been violating the law, it has to face strict action and fines.
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The Prevention of Food Adulteration Act, 1954. The Fruit Products Order, 1955. The Meat Food Products Order, 1973. The Vegetable Oil Products (Control) Order, 1947. The Edible Oils Packaging (Regulation) Order, 1998. The Solvent Extracted Oil, De oiled Meal, and Edible Flour (Control) Order, 1967. The Milk and Milk Products Order, 1992. Essential Commodities Act, 1955 relating to food.
From now on, the act establishes a regulatory body, the Food Safety and Standards Authority of India. Anything that coca cola makes, have to make accordingly to the laws. They have to check the weight, volume and ingredients of the product. The export or the import of the products by the company has to meet the quality standards stipulated by the law.
Anti-trust law
The Competition Commission of India was made under the Indian Competition Act 2002, Monopolies Restrictive and Trade Practices Act 1969 was replaced by it. This committee looks after all the issues regarding unethical means of doing business, competition issues and any dispute between two different business entities. CLG competition and anti trust practices are as follows:
Representing clients before the MRTP Commission in monopolistic and restrictive trade practices and unfair trade practices matters. Legal Advice and sophisticated insight into the international best practices on competition law. Consultancy services on specific issues - supply and distribution, pricing and marketing, promotional materials, mergers, acquisitions, amalgamation, licensing, joint operation and research, joint buying, dominant-firm status etc.
Competition Audit and Due Diligence for developing appropriate guidelines for employees, distributors, agents, franchisees etc. Legal Due Diligence on anti-competition, unfair and restrictive market practices. Drafting claims, counter-claims, replies, rejoinders, representations etc. on Competition Law and related legal issues.
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Strategic policing on anti-competition market practices and trends. Policy due diligence for mergers, acquisitions, joint ventures with appropriate antitrust safeguard measures and policy.
All these laws help Coca Cola India to maintain its own brand and values. Any other business trying to copy the brand of coca cola will face the strict action against itself. These laws help every business to compete in a fair environment. As it is known that the coca cola and Pepsi are the fiercest rivals in the beverage industry, the CCI makes sure that either of them does not indulge in unfair means to make profits and hurt each others business.
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STRENGTHES
Product diversity. Extensive distribution channel. Successful marketing and advertising campaigns.
WEAKNESS
Low pricing. Much weaker brand awareness and market share in the world beverage market compared to Coca-Cola. SWOT ANALYSIS
OPPORTUNITIES
Growing beverages and snacks consumption in emerging markets (especially BRIC).
THREATS
Changes in consumer tastes. Water scarcity.
Strengths
CSR. The firm recognizes its role in a society and engages in education,
recycling, water usage reduction, obesity fighting and other projects through PepsiCo Foundation, thus increasing its brand awareness and customer loyalty.
billion spent on advertising over 2012 resulted in PepsiCos growing market share over its main competitors, including Coca Cola Company, which spent even more on advertising.
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Weaknesses
Low pricing. PepsiCo usually prices its products lower than its competitors.
Low price is associated with low quality and PepsiCo products are usually perceived as ones.
Weak brand awareness. The Coca Cola has the largest share market of
beverages in the world and much stronger brand awareness than Pepsi, placing it at competitive disadvantage.
Too low net profit margin. PepsiCos net profit margin is 9.7% compared to
Coca Colas 18.55% and Nestls 11%.
Opportunities
Growing beverages and snacks consumption in emerging markets. PepsiCo has made large investments in BRIC countries to expand its
market share as these countries represent the fastest growing food and beverages markets in the world. If PepsiCo is successful it will increase its revenues and global market share significantly. In addition, it will be able to rely less on US market.
expected to grow both in US (PepsiCos largest bottled water market) and the rest of the world.
has in growing its revenue selling snacks as this market is also expected to grow.
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Threats
Water scarcity. Water is becoming scarcer around the world and increases in
both cost and criticism for PepsiCo over the large amounts of water used for production.
decreasing over the past few years and may continue to decrease due to higher water and other raw material costs.
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CONCLUSION
The company should make hindrance free arrangement for its customers/retailers to make any feedback or suggestions as and when they feel. The company should focus to bring some more flavors like health drinks and other low-calorie offerings. Coca-Cola India can also introduce some fruit based drinks, as it has already entered the energy drink arena with Burn. Coca-Colas distribution channel is mostly through retail. Whereas the competitors also concentrates more on the multiplexes, pubs and restaurants. Coca-Cola should try to increase their distribution in these areas. The company must keep a watch on its primary competitors in market in order to be able to compete with them. The company should use new attractive system of word of mouth advertisement to keep alive the general awareness in the whole market as a whole. The company should be always in a position to receive continuous feedback and suggestions from its customers/ consumers as well as from the market and try to solve it without any delay to establish its own good credibility. A strong watch should be kept on distributors so that the goodwill of the BRAND doesnt get affected.
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