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Nicole Montanaro
February 8, 2013
Business Strategy
Case Study
Coca-Cola Case Analysis
a. Introduction
The Alternative Beverage Industry is an important part of a company’s beverage line-up of
brands since the mid-2000s due to having premium prices and high profit margins. This
increasing demand for alternative beverage made companies enter the market by the expanding
new energy drinks, vitamin drinks, and sports drinks such as RedBull, Rockstar, Hansen Natural
Corporation, Living Essentials, Coca-Cola, Pepsi, and Energy brands. Brands began to expand
their product line by adding numerous flavors to customer preferences and making new
relaxation drinks that were designed to have a calming effect and decrease insomnia. According
to the case study in the text, due to the economic downturn in 2009, sales of the alternative
beverage industry declined with sports drinks at 12.3 percent, flavored water by 12.3 percent,
and energy drinks only increased by 0.2 percent.
The Coca-Cola Company 31 billion in sales is the world’s leading manufacturer, marketer
and distributor being the most valuable brand to customers. Coco-Cola also has a line of different
refreshment products such as Fanta, Sprite, and Diet Coke that have been ranked top five bestselling non-alcoholic beverages world-wide in 2009. Although, Coco-cola is a successful
company, there market share is segmented between their top competitor Pepsi Co, Hansen
Natural Company, RedBull, Gatorade and other beverage companies. They started a new line of
vitamin water to gain a new market and began to build market share in foreign companies such
as South Africa, France, South Korea, Japan, Sweden, etc.
Overlooking the Case Study of the competition in energy, sports drinks, and vitaminenhanced beverages, Coca-Cola had several ways to analyze their business strategy in the
beverage market. The structure analyses that are most important in this case are these three
analytic tools: the mission statement, the five forces analysis, and
b. Course Analytic Tool #1: Mission Statement
a) The structure of Coca-Colas mission statement is to differentiate itself in the refreshment
market from its competitors. They use their strengths of being world’s leading
manufacturer, marketer and distributor to be the top provider of soft drinks in restaurants,
convenient stores, and super markets.
i.
Identify the company’s products or services- Clear
 Coca Cola sells a wide variety of soda refreshment such as Sprite,
Fanta, Diet coke, Coke Zero, Mello Yello, and Fresca
 They have also expanded lines of other beverages such as Dasani,
PowerAde, Vitamin Water, Smart Water, Minute Maid, Fuze, Simply
Orange, and Honest Tea.
 They have also entered the energy drink market with their product
NOS Energy.
ii. Specify the buyer’s needs it seeks to satisfy- Clear
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
iii.
iv.
v.
vi.
Coca Cola seeks to satisfy its customers with its refreshing taste, to
inspire happiness when drinking their product, and create value of
their brand over their competitors.
Identify the customer groups or markets it is endeavoring to serve- Clear
 The customers Coca-Cola is striving to serve customers all over the
world and dominate the refreshment market.
Specify its approach to pleasing customers: Clear
 Coca-Cola creates value with their drinks in making a difference in
the world one Coke at a time
 They show this through advertisement of people enjoying their
products.
Give the company its own identity- Clear
 Coca Cola brand is a differentiated taste that will refresh their
customers worldwide.
Competitive advantage
 Coca-Cola clearly addresses the five questions needed in a mission
statement.
 They are focusing on giving their customers a refreshing taste and
making a positive influence from it.
 They focus to distinctive their products to be the leading refreshment
provider in the beverage industry.
c. Course Analytic Tool #2: Five Forces Analysis of the Beverage Industry
a. Threat Of New Entrants- Low to Medium
 Difficult for consumers to switch to different brands due to companies
being in the markets for years
 Loyal customers to certain brands due to taste preferences.
 Low capital requirements to new companies.
 Difficulty to get Retail shelf space away from other leading brands at
convenience store, supermarkets, restaurant, etc.
 Leading companies have higher profits to do more adverting than new
entrant brands.
b. Threat of Substitutes- Medium to High
 There is a wide variety of refreshment to choose from depending on the
consumer’s preference when thirsty such as water, soft drinks, energy
drinks, juices, coffee, etc.
 Price can be a factor when choosing a beverage.
c. Threat of Buyers- Low
 Consumer buy products with how they value the taste compared with the
price.
 Large retailers can sell their products lower price due to wholesale costs
 Consumers are now being more health conscience and are switching to
healthier beverages
d. Threat of Suppliers- Low to Medium
 Ingredients for soft drinks are low cost
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 Large Companies can decrease their ingredient cost by buying in bulk to
high demand which small firms cannot.
e. Threat of Competitors- Medium to high
 Due to high competition of different types of refreshments, companies
have to share the market share
 Large companies, such as Coca-Cola and Pepsi, have high market share
due to loyal customers and will be difficult to steal to new refreshment
brands.
 Large companies have high profits and can be more flexible on price than
under develop brands.
4. Course Analytic Tool #3: Key Success Factors
1. The Coca-Cola company has a line of brands for customers to choose from
a. This give customers a taste preference of what type of soft drink to choose from such
as Diet Coke, Sprite, Fanta, Vitamin water, Fuze, etc.
b. Has a superior firm size and brand capabilities
c. Assess specific impact on the subject company Coca-Cola
I. Coca-Cola was ranked among the five best selling nonalcoholic beverages in
2009 which its brands Coca-Cola, Diet Coke, Fanta, and Sprite.
II. The strength of Coca-Cola as a company aided in gaining distribution for new
beverages and the profits to market them such as Dasani for water, PowerAde
for sports drinks, Fuze for vitamin enhanced beverages, and Nestea for tea.
d. Pepsi sharing the market share with Coke
I. PepsiCo in 2009, Pepsi Co has a worldwide market share of 26.5 percent
compared to Coca-Cola being 11.5 percent
II. Coca-Cola is dominating the Asia-Pacific market of 13.7 percent with Pepsi
Co 12.4 percent
e. Coca Cola energy drink, NOS Energy, competing with the leading energy drink brand
Red Bull.
I. Even though Coca-Cola has a higher market share worldwide, Red bull energy
drinks have 40 percent of the market just from their one energy drink brand in
2009
II. Coca Colas brand of energy drinks are increasing in sales and increased by 4
percent compared to Red bull that sales are steadily decreasing.
2. Strong network of whole sale distributors
a. Coca-Cola has a massive global distribution system that includes independent bottlers,
bottlers partially owned by Coca-Cola, and company owned bottlers
b. Build market share in new country markets introducing new product lines that fit that
target market in Asia, Europe, South America, Australia, and Africa.
c. Coca-Cola distribution system
i. In 2009, Coca cola introduced glaceau vitamin water in South Africa, France,
South Korea, Japan, Belgium, Portugal, Hong Kong, China, and Sweden
ii. Launched a drink in 2009 called Cascal in India which is a fermented fruit
drink that burns energy
d. Pepsi Co distribution
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i. Pepsi Co sold its brands in more than 200 countries including the product lines
of Mountain Dew, Pepsi, Lipton, Aquafina, etc.
ii. PepsiCo has also linked with energy drink companies, Rock Star, to increase
their profit
e. Hansen Natural Corporation distribution channel
i. In 2009, monster energy drink, which is now Coca-Colas company, had a
market share of 27 percent compared to Red Bull which is 40 percent
ii. Coca-Cola distributes Monster energy drinks in Great Britain, France, Belgium,
Nederland’s, Luxembourg, and Monaco.
d. Implications for competitive advantage : Strong brand portfolio
a. Based on this tool, which company, if any, has a sustainable competitive
advantage, and if so, what is it?
 Coca-Cola has a competitive advantage by its diverse product line giving
customers more options to choose from based on taste preference. This
includes carbonated soft drinks, juices, bottled water, teas, energy drinks,
and vitamin drinks.
b. If the subject company has a competitive advantage, what could it possibly due
to sustain it? If your company does not have a sustainable competitive advantage,
what could it possibly due to build one? Coca-Cola has a competitive advantage and
to sustain it, they must add more to their product line or increase advertising for those
products.
5. Financial Analysis
1. Element #1 of financial analysis Using CAGR
i. Application to the industry
1. Using CAGR, all companies have increase their percentages from year 2007 to
2009
2. Increase in demand which increase in sales. Also Brands are adding new
product lines to new markets to increase profits
ii. Application to the Coca-Cola Company
1. CAGAR= 3.6299% increase for Coca-Cola
2. Coca Cola added a new line of products in 2009, one being Vitamin water
which increased their sales and joined the vitamin supplement market.
iii. Application to PepsiCo
1. CAGAR= 4.6519% increase for PepsiCo
2. Pepsi expanded its line of alternative drinks in 2009 with the launch of Charge,
an energy drink, and Defend, a drink full of antioxidants. In addition PepsiCo
joined an agreement with Rockstar energy.
iv. Application to Hansen Natural Corporation
1. CAGAR= 12.9783% increase for Hansen Natural Corporation
2. In 2009, Monster added a new lineup of drinks such as Monster Energy,
X-presso monster hammer, nitrous monster energy, monster hitman energy
shooter, Hansen energy pro, and lost energy.
2. Element #2 of financial analysis making an Income Statement
i. Application to the industry
1. Using the Income statement to compare companies net income
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2. using the income statement tom looks at companies expenses
ii. Application to The Coca-Cola Company
1. Achieved a net income of 6,824,000 in 2009
2. Build market share centered on new product development and the introduction
of existing brands into new country markets.
iii. Application to Pepsi Co
1. Achieved a net income of 5,979,000 in 2009
2. Pepsi is the leading alternative beverage market with Gatorade having a 75
percent market share of the 1.57 billion sports drink market
iv. Application to Hansen Natural Corporation
1. Achieved a net income of 208,716
2. In 2009, Monster was the second best-selling energy drink in the United States
and the company’s revenues and net earnings had grown to more than 1.3 billion
and 208 million respectively.
3. Implications for competitive advantage
i. Based on this tool, which company, if any, has a sustainable competitive
advantage, and if so, what is it? The advantages that Coca-Cola has is
bottling their own products decrease its operating expense as shown in the
income statement.
ii. ii. If The Coca-Cola Company has a competitive advantage, what could it
possibly due to sustain it? If The Coca-Cola Company does not have a
sustainable competitive advantage, what could it possibly due to build
one? Coca-Cola should still bottle their products which is a competitive
advantage which Pepsi doesn’t do.
6. Key Strategic Issue Facing The Coca-Cola Company: Coca-Colas creating new lines of
product can cannibalize their existing products due to similar taste and cost.
i. Coca-Cola promotes a new line of Coke Zero, a no calorie carb drink, which decreases
Coca-Colas own sales of regular coke and diet coke
ii. Need to promote Coca Cola products that are low in revenue such as Fuze or NOS
energy drink
7. Alternatives
a. Coca cola needs to spend money on advertising their low revenue product lines instead
of making a new product for the beverage market
i. Coca Cola needs to make their other product lines stronger and more noticed in
the market to their consumers.
ii. Alternative advantages
1. Increasing in advertising through the media for the low revenue
products to get these brands will be more noticed to the consumers and
will increase profits.
2. Coca Cola can make relationships with restaurants and convenience
store to get their products on the shelves and more seen to the public.
iii. Alternative disadvantages
1. Advertising their product lines can cannibalize their sales of their other
products
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2. Advertising strategy isn’t be a success and didn’t reach their target
market Coca Cola was achieving for so it can create a loss
b. Coca Cola can do special promotions and coupons for their new or developing
products to increase market share against their competitors
i. This to attract both new customers and other brands loyal customers to their
brands such competitors like Pepsi, Redbull, Hansen Natural Corporation, etc.
ii. Alternative advantages
1. In 2009, PepsiCo own 26.5 percent of the market share worldwide so
offering discounts or coupons can attract customers to try Coca Cola
brands
2. RedBull is the number 1 distributor of energy drinks with a 40 percent
market share in 2009. If coca cola offered promotions on their lowered
brand such as NOS energy, they can attract customer by price since the
taste of RedBull is a aspect that keeps their loyal customers.
iii. Alternative disadvantage
1. Coupons could make sales decrease or can increase sales
2. Other companies could be using discount or special rebates as well.
8. Recommendation
a. Identification of alternative from above list as the recommended course of action: Coca Cola
can do special promotions and coupons for their new or developing products
i. to increase market share against their competitors
ii. To steal loyal customers from other companies to like their product more due to taste
preference and price
b. Strategic objective #1 to measure success/failure of recommendation presented using SMART
objective criteria:
 S= Improve sales by 5 percent within six months by having issued coupons at
supermarkets and convenient stores.
 M= Record sales increase every 6 months with a new coupon or promotion
strategy
 A= This goal is attainable knowing that Coca cola will still be increasing their
sales through their loyal customers
 R= This is a short term goal of 6 months and a year to analyze if the sales
promotion strategies are successful in gaining new customers
 T= Time is 6 months and a year.
c. Financial objective #1 to measure success/failure of recommendation Presented using SMART
objective criteria:
 S= Looking at the Income statement to see if operating or revenues have
increased
 M= Record sales increase every 6 months with a new coupon or promotion
strategy
 A= This goal is attainable knowing that Coca cola will still be increasing their
sales by their loyal customers and gaining new customer my using discount on
their products
 R= This is a short term goal of 6 months and a year to analyze if the sales
promotion strategies are increasing Coca Colas net income
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
T= Time is 6 months and a year.
9. Action Plan/Implementation (see the first three paragraphs on page 4)
a. Achieving recommendation advantage #1
i. Action item #1 to achieve advantage #1 with specific quantified data
b. Achieving recommendation advantage #2
i. Action item #1 to achieve advantage #2 with specific quantified data
c. Overcoming recommendation disadvantage #1
i. Action item #1 to overcome disadvantage #1 with specific quantified data
d. Overcoming recommendation disadvantage #2
i. Action item #1 to overcome disadvantage #1 with specific quantified data
e. Achieving strategic objective #1
i. Action item #1 to achieve strategic objective #1 with specific quantified data
f. Achieving financial objective #1
i. Action item #1 to achieve financial objective #1 with specific quantified data
10. Tool-based tables & charts (on separate pages at the end of the paper)
a. Place any tables & charts necessary for the proper use of a tool her
Financial Analysis
CAGAR= (FV/PV) ^1/n-1
1. Coca-Cola CAGAR for years 2007-2009
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

FV= 30,990,000
PV=29,857,000
N=2
CAGAR= (30,990/29,857)½-1
CAGAR= (1.03794755)½-1
CAGAR= 3.6299% increase for Coca-Cola
2. PepsiCo CAGAR for years 2007-2009
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FV= 43,232,000
PV=39,474,000
N=2
CAGAR= (43,232/39,474)½-1
CAGAR= (1.09520191)½-1
CAGAR= 4.6519% increase for PepsiCo
2. Hansen Natural Corporation CAGAR for years 2007-2009
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FV= 1,309,335
PV=1,025,795
N=2
CAGAR= (1,309,335/1,025,795)½-1
CAGAR= (1.27641)½-1
CAGAR= 12.9783% increase for Hansen Natural Corporation
Income Statements
Hansen 2009 Income Statement (in thousands)
Net Sales
Gross Profit
Operating Income
Net Income
$1,143,299
612,316
337,309
$208,716
PepsiCo 2009 Income Statement (in millions)
Net Revenue
Cost of sales
Selling, general and administrative expenses
Amortization of intangible assets
Operating Profit
Bottling equity income
Interest expense
Interest income
Income before income taxes
Provision for income taxes
Net Income
$43,232
20,099
15,026
63
8,044
365
(397)
67
8,079
2,100
5,979
Coca Cola 2009 Income Statement (in millions)
Net Revenue
Cost of sales
Gross Profit
$30,990
11,088
19,902
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Selling, general and administrative expenses
Other operating charges
Operating Income
Interest expense
Interest income
Equity income (loss)-net
Other income (loss)-net
Income before income taxes
Income taxes
Consolidated Net Income
Less: Net income attributable to noncontrolling interest
Net Income
11,358
313
8,231
355
249
781
40
8,946
2,040
6,906
82
$6,824