What Made Coca Cola Achieve Superior Performance

Coca Cola has been runing in the industry since 1886 and is continue taking industry at this day of the month. As the universe ‘s largest drink company today, Coca Cola has concern operation to more than 200 states found in Eurasia, Africa, Europe, North America, Latin America, and the Pacific, selling a portfolio of 500 trade names and 3300 drink merchandises.

In 2009, Coca Cola ranked 26th in the BW 50 and bagged the acknowledgment holding the best trade name name by the Interbrand. Commenter of the BW 50 particularly mentioned that Coca Cola has triumphed over hard times because of its advanced spirit. In peculiar, the company ‘s advanced scheme involves continuing the company ‘s values that made Coca Cola remarkable and that is by taking its trade name image of wholesomeness and household and friends and using the values in a new class. Furthermore, surveies have shown that companies that invested in inventions during recessions have recorded the biggest leap in net incomes. The advanced spirit of Coca Cola is one of the cardinal factors that contributed for the company ‘s superior public presentation, that is, its invention scheme gave the company the competitory advantage over its rivals. A competitory advantage is something that provides incremental value when compared to other offerings, wherein value is the perceptual experience of how much the purchaser benefitted beyond what was being paid in the merchandise. In order to make value, the four P ‘s of selling ( that constitute the selling mix ) – merchandise, monetary value, topographic point, publicity – have to be observed and practiced efficaciously.

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Dwyer and Tanner ( 2006 ) assert that invention can be in the signifier of advanced selling scheme, advanced fabrication processes or advanced corporate construction. Besides, companies that display the advanced spirit were found to hold a corporate civilization that supported invention. Such a civilization is dominated by a desire for the company to turn, to better and to take advantage of all possible chances. That is, advanced companies tend to concentrate on chance hazard ( Dwyer & A ; Tanner 2006 ) .

With respects to Coca Cola ‘s scheme, the invention comes in the signifier of advanced selling scheme – encompassing the values that made it celebrated.

Furthermore, surveies have systematically shown that cardinal factors contribute to the likeliness of success of a company. One factor is vision, or the grade to which the development squad portions a vision of what the new development undertaking is supposed to carry through. Another factor is a structured new merchandise development procedure. Finally, holding a long term position is another of import feature. In many ways, these factors may be features of an advanced civilization. As Peter Drucker ( 1985 ) wrote, “ When all is said and done, what invention requires is difficult, focused, purposeful work. ”

The literature besides points five cardinal constituents of success ; viz. close ties to chiseled market that lead to a merchandise advantage ; extremely incorporate and market-oriented company ; competitory advantages in engineering and production, strong selling proficiency, and strong fiscal support.

First, if the company has near ties to chiseled market, so it is able to expect client demands, making a merchandise advantage. In this instance, merchandise advantage is the dominant factor in success ( Cooper and Kleinschmidt 1987 ) . Second, there must be close coordination between all who participate in the new merchandise development procedure. A market-oriented company selects its marks more sagely and offers a merchandise mix better matched to client penchants. Third, the company must hold competitory advantage engineering and production capableness, with which the new merchandise is a good tantrum. These first three factors should ensue in a merchandise or service that is alone and delivers superior benefits.

The 4th component is that the company must hold a strong selling proficiencyaˆ¦The last but indispensable constituent is that the company must hold strong fiscal support for its merchandise launch and must take advantage of the selling proficiencyaˆ¦These factors were identified in surveies affecting touchable merchandises and services. In add-on, it helps to take a market with a high growing rate ( Dwyer and Tanner 2006 ) .

Coca Cola ‘s focal point on drink creative activity and selling enables the company to understand and run into the diverse and ever-changing drink demands and desires of the consumers from all over the Earth.

The magnitude of Coca Cola ‘s advertisement and distribution system enabled the company to easy market new non-alcoholic drinks every bit good as mineral H2O. Because of this, despite continuously altering consumer gustatory sensation and penchant, Coca Cola maintained its competitory advantage and king of beasts ‘s portion in the industry. Furthermore, Coca Cola marketing runs such as “ It ‘s the Real Thing ” , “ The Pause the Refreshes ” , “ Thingss Go Better with Coke ” and the latest “ Happiness ” have further enticed more consumers to seek the company ‘s merchandises. In consequence of the strong selling proficiency, the company has become a planetary merchandising company with approximately 1.6 billion helpings of merchandises being consumed every twenty-four hours.

Coca Cola growing scheme in three ways/directions during 1996 olympic games:

Emotional stigmatization, the chief thought was to allow consumers see the experience alternatively of merchandise. Main focal point was made on acknowledgment of universe ‘s diverseness and individualism, and makes connexion trade name ‘s nucleus ingredient. Company made it obvious to consumers that it recognizes its planetary position.

Artworks: Coca Cola bottles were used as canvas by 53 creative persons from different states to show their spirit, cultural values, imposts and traditions. Some of the graphicss were so successful that were put on lasting show at theWorld of coca Cola in las Vega.

Merely In Time advertisement: during the Olympic games company ran 88 different Television commercials for 17 yearss. Each commercial was devoted to a peculiar subject of the Games and was ne’er repeated. This is a really good illustration of planetary advertisement run, as the advertisments ran at the same time in 135 states.

“ aˆ¦Another manner Coca-Cola tackled this scheme was through art. With Coca-Cola bottles as the canvas, creative persons from 53 different states created plants of art utilizing local stuffs while capturing the spirit of their native traditions and civilizations. Among the plants, a six-foot-tall reproduction of Stonehenge from England and a ten-foot bottle made of Calamus rotang, wood and grass from the Philippines. The graphics received astonishing reappraisals as many of the bottles went on universe circuit. Some of the bottles have even been put on lasting show at the sWorld of Coca-Cola in Las Vegas to show the planetary power of the Coca-Cola Company that parallels with the international Olympic Gamesaˆ¦The 3rd manner the company embarked upon this planetary growing scheme was with “ Just In Time ” advertisement. Coke screened 88 separate telecasting commercials, and over the 17 yearss of the Olympic Games, none of them was repeated. Each topographic point was besides carefully bought to aim that peculiar plan ‘s specific audience. The 17 commercials, one for each twenty-four hours of the Games, reflected the subject of the twenty-four hours and the latest Olympic intelligence to the 135 states the advertizement ran. These three planetary growing schemes proved really successful for Coca-Cola. ” ( hypertext transfer protocol: //www.unc.edu/~jdee/creativestrategy.html )

Further, utilizing the societal media, Coca Cola have invested on archives that collect advertisement every bit good as selling stuffs. The archives document the traversing point between the company ‘s merchandises and its consumers. It contains advertisement and selling stuffs from the newspapers, magazines, wireless, advertizements and commercials and besides photo aggregation that depicts international and domestic distribution of Coca Cola ‘s merchandises. Web logs are so created that promotes the company with focal point on heritage and pop civilization. Through this resource, the company is able to acquire new information from the followings of societal media. In this manner, the company is larning new thoughts helpful for future schemes. An illustration of this is the “ Fan-based ” scheme of Coca Cola, as cited from a literature:

“ aˆ¦Coca-Cola used the fan-based scheme in an effort to distinguish itself from traditional Olympic advertisement, which used jocks. The “ For the Fans ” run went into action with a series of ads having existent exposure of fans imbibing Coke at Olympic Games from 1928 onward. The first two commercials aired during the hebdomad of March 6, 1996 and featured black and white exposures from old Olympics demoing fans in Switzerland keeping Coca-Cola bottles. In the following measure, Coke focused on a series of ads foregrounding existent life narratives about how Coke has made a difference to immature draw a bead oning jocks. Finally, for the 3rd measure, Coke used commercials, print ads, and postings that addressed whether the enthusiasm of the fans makes a existent difference to the result of the clean event. The reply was resoundingly yes. ” ( hypertext transfer protocol: //www.unc.edu/~jdee/creativestrategy.html )

Harmonizing to Dwyer and Tanner ( 2006 ) acquisition is when we connect new information to what we already know. Learning organisation is one that systematically creates and refines its capablenesss by linking new information and accomplishments to cognize and remembers requisite for future success. Organizational acquisition is the procedure of developing new cognition that has the possible to act upon behaviour. Learning facilitates behavior alteration that leads to better public presentation. Many executive have said that the lone truly sustainable competitory advantage is to be able to larn faster than competition, a contention supported by research.

Furthermore, the company ‘s competitory advantages are explored in the followers: purchaser bargaining power, supplier dickering power, barriers to entry, strength of competition and menace of replacement.

Among the clients of Coca Cola, the eating houses have the largest bargaining power. Coca Cola earns the largest net income borders from the big purchase volume made by authorised bottlers on its dressed ores, in which the bottled drinks are so passed on the clients ( eating house ironss ) . The overall bargaining powers of the purchasers have given Coca Cola an norm of 28 % runing border.

In footings of natural stuffs, Coca Cola established a good bargaining power with its providers. The company ‘s fiscal state of affairs, for example, high and stable gross net income border of 65 % indicates that there is low hazard for the bargaining power of the providers to impact Coca Cola ‘s profitableness. Besides, high gaining per capita of the company ‘s employees reveals that the company has comparatively low sensitiveness to labour costs alterations.

The company has established exceeding web of distribution system throughout the Earth that enables the company to bask economic systems of graduated table, and therefore a singular competitory advantage that created barriers for new entrants to take part in the industry. Besides, the company ‘s strong trade name and big graduated table advertisement provided the company a barrier to competition.

Further, the company ‘s strong trade names have reduced competition in the consumer basic sector.

Disruptive Innovation Theory:

Among the companies supplying goods and services to consumers around the Earth, merely 10 % are able to keep and prolong a degree of growing that is acceptable for the stockholders, while the remainder of the 90 % are non able to. Though these 90 % have been using the best schemes to do the concern survive like investings on technological inventions, mindful of healthy competition and clients ‘ feedback, these attempts are non plenty. The demands of long-run sustainable success non merely include the right normal schemes but besides riotous schemes in invention. The nucleus rule of riotous invention theory is that the invention made by companies tends to hold a faster gait that the alterations in the clients ‘ lives. Hence, to keep growing, a company must non merely create inventions but besides must be able to retain its nucleus offerings and should ever go on to pattern sustainable invention

In the instance of Coca Cola, though the company has been runing for rather a long clip already, and can really be considered as a really old company in the industry, it continues to keep a big portion in the industry and even spread out its market. The ground is that though Coca Cola adapts inventions, it is still able to encompass the values that made Coca Cola remarkable in the first topographic point. In peculiar, the company preserved its trade name image of wholesomeness and household and friends and continuously using the trade name image to new classs.

Innovation Index

One index that Coca Cola engages in inventions is the Innovation Index published by the UTEK Corporation. The latest Strategos/wRatings Innovation Index consequence of the UTEK Corporation confirms that Coca Cola continues to be advanced, with index mark of 78.04 and leads the ranking of invention public presentation of nutrient and drink companies. The SW Innovation Index is based on end-consumers ‘ feedbacks on the touchable benefits that they have obtained for the companies ‘ merchandises.

Corporate Sustainability

In footings of corporate sustainability, Coca Cola initiated its “ Commitment 2020 ” program. The program outlines Coca Cola ‘s ends for the following 10 old ages which include minimisation of H2O use, decrease of C footmark by 15 % , retrieval of 100 % of the packaging and increase run on recycling. The company besides plans to utilize local resources and pledge to extinguish potent nursery gases called HFCs ( or hydroflourocarbons ) by 2015.

Literature positions Corporate sustainability as:

“ aˆ¦a new and germinating corporate direction paradigm. The term paradigm is used intentionally, in that corporate sustainability is an alternate to the traditional growing and profit-maximization modelaˆ¦it recognizes that corporate growing and profitableness are of import and re requires the company to pattern the ends of the society, particularly those associating to sustainable development like economic development, protection of the environment, societal justness, and equityaˆ¦the construct borrows elements from four more established constructs: sustainable development ; corporate societal duty ; stakeholder theory ; corporate answerability theory. ..Sustainable development demand for economic growing with environmental protection and societal equity to run into the demands of present coevalss without compromising the ability of future coevalss to run into their needsaˆ¦ corporate societal duty trades with the function of concern in society with the premiss that corporate directors have an ethical duty to see and turn to the demands of society, non merely to move entirely in the involvements of the stockholders or their ain self-interestaˆ¦Stakeholder theory asserts that the stronger the company ‘s relationships are with other external parties, the easier it will be to run into your corporate concern aims ; the worse your relationships, the harder it will be. Strong relationships with stakeholders are those based on trust, regard, and cooperationaˆ¦ is corporate answerability is the legal or ethical duty to supply an history or calculation of the actions for which the company is held responsible ( www.sunstar.com.ph ) ” .

The 2020 Vision of Coca Cola maintains that the company will ‘double its planetary helpings per twenty-four hours to 3 billion from 1.6 billion and will duplicate system gross and better borders ‘ . If this is pulled-off as planned, along with their dividend payout and stock redemptions, it will make solid stockholder returns over a 10 twelvemonth period.

In 2009, Coca Cola publicized its new plastic bottle made partly from workss. The PlantBottle is a to the full reclaimable bottle and is made from a combination of petroleum-based stuffs and plant-based stuffs. In this case, Coca Cola have made an advanced merchandise. Quoting from the company ‘s web site:

“ The Coca-Cola Company – the first company to present a drink bottle made with recycled plastic – has been focused on guaranting the sustainability of its packaging for decennaries. It has put resources behind making packaging that is reclaimable and puting in recycling substructure to guarantee that its bundles are collected, recycled, and re-used. Earlier this twelvemonth, the Company opened the universe ‘s largest plastic bottle-to-bottle recycling works in Spartanburg, S.C. The works will bring forth about 100 million lbs of recycled PET plastic for reuse each twelvemonth – the equivalent of about 2 billion 20-ounce Coca-Cola bottles. These attempts are all focused on assisting “ near the cringle ” on packaging usage and bring forth genuinely sustainable bundles for consumers ( www.thecoca-colacompany.com. ) . ”

Fiscal Performance

As one of the well-known companies worldwide, Coca Cola presently is merchandising at a sensible value. At the terminal of 2009, the company has published an 8.7 gross growing, gaining growing of 11 % , and hard currency flow growing of 11 % . The mean one-year dividend of the company is $ 1.76 but come ining 2010, the dividend yields 3.26 % with a 3-year dividend growing of 10 % .

Coca Cola showed singular public presentation over the decennaries. The company ‘s fiscal public presentations over the old ages are reflected in the tabular array below:





Gross Growth $ B





Net incomes Growth $ B





Cash Flow Growth $ B





Dividend Growth

Dividend $





Yield %





The fiscal wellness of the company is outstanding. Coca Cola ‘s net net income border is at 22 % at the terminal of 2009, which is higher as compared to its rivals like PepsiCo ( with merely 14 % net net income border ) .

Analysts and investors besides considered the hard currency flow as the life blood of any concern. Cash flow is used as a nucleus index of a house ‘s fiscal wellness and viability and it is considered as a good gage to rapidly judge a house ‘s fiscal public presentation. As an index, a negative hard currency flow, on one manus, indicates that the house is financially troubled. No house can maintain on operating if hard currency flow is negative. On the other manus, positive hard currency flow, when hard currency is increasing, indicates that the house is financially healthy ( at least for the period ) and can be able to pay its measures. In relation to this, Coca Cola ‘s hard currency flow exhibits a growing of 11 % , from $ 7.571 billion in 1998 to $ 8.186 billion in 1999.

In footings of dividend growing, the company has recorded additions in dividends for old ages in a row that made Coca Cola to be among the top in the list of dividend blue blood. The current company ‘s stock outputs 3.28 % . The company ‘s dividend has besides increased by 7.3 % . Furthermore, the company ‘s payout ratio is presently at 56 % .

Furthermore, Coca Cola has a long-run debt-equity ratio of 0.20 while the current debt-equity ratio is 1.3

So, in footings of fiscal conditions, Coca Cola is financially healthy showing a reasonably good dividend growing. The company has the highest net income borders in the nutrient and drink industry, diversified trade names, a strong trade name, utmost international exposure, and a solid growing. The company ‘s price-earning ratio is besides playing a small above 18, which is non bad.

Further, the company has concrete gross, net incomes, and hard currency flow growing. The stock offers an above norm dividend output, and has been diligently increasing dividends over the past 48 old ages. This is the type of company that merely works, period. You do n’t necessitate one million millions of dollars in reinvested research and development to sell more Coke, and the merchandises do n’t acquire replaced overnight.

The Return Driven Strategic Framework

The Return Strategy Model is based on three dimensions of public presentation viz. superior and sustainable return on investing, growing while keeping superior return on investing, and superior entire stockholder return. The theoretical account serves as the basicss of concern schemes. It is the consequence of uniting extended research and existent universe applications of great corporate public presentations over 10 old ages or more. The scheme examines the commonalties in concern schemes that have resulted to superior public presentation.

Using the Return Driven Strategic model in measuring Coca Cola ‘s public presentation, the undermentioned points are highlighted so as to demo that the company has so demonstrated superior public presentation. First, the company continuously introduce its offerings to better fulfill the demands of its clients, in which innovate is defined as ‘changing ‘ the company ‘s merchandise to better fulfill the demands of the targeted consumers. This is done through re-examination of their offerings, alteration of the bing 1s and development of new merchandises that are perceived to better fulfill the unmet demands of the clients. Coca Cola continuously change its offerings since the company believes that by making so, they are making more value for the clients with the awaited superior return on investing from the invention. The value is of making an rational and emotional connexion between the consumers and the company ‘s offerings.

Another drive factor for Coca Cola ‘s superior public presentation is its strong committedness to and train for doing stockholder value by concentrating on return on invested capital. The company maintains ends, inducements and public presentation steps that are decidedly in line with a sustainable return on investing. The Coca-Cola has been profiled as a company that has used Economic Value Added to make stockholder value. In fact, Coke ‘s value-creating concern schemes have increased stockholder value. Furthermore, Coca Cola have accomplished superior returns every bit good as growing without go againsting any ethical parametric quantities of the community where its concerns are runing.


In today ‘s planetary, intensively interrelated concern environment, a major challenge faced by concern organisations is how to maximise stockholder value and prolong growing, while at the same clip making economic value for all.

For the taking Coca Cola Company the attainment of superior public presentation is a tough enterprise and it requires combinations of schemes. The singular scheme of Coca Cola is its invention scheme that enables the about 100 twelvemonth old concern excels and grows despite tough market force per unit areas.

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