Write a 4 pages case analysis that addresses the questions at the end
of the case. Include at least five credible sources to support your
position.
Be sure to demonstrate you have examined the case from multiple
perspectives.
Coca-Cola Case Study Analysis
Coca-Cola, the iconic American soda maker, has long been among the most international of
enterprises. The company made its first move outside the United States in 1902, when it
entered Cuba. By 1929, Coke was marketed in 76 countries. In World War II, Coca-Cola
struck a deal to supply the U.S. military with Coca-Cola wherever in the world it went.
During this era, the company built 63 bottling plants around the world. Its global push
continued after the war, fueled in part by the belief that the U.S. market would eventually
reach maturity and by the perception that huge growth opportunities lay overseas. Today
more than 59,000 of the company’s 71,000 employees are located in 200 countries outside
of the United States, and over 70 percent of Coca-Cola’s case volume is in international
markets.
Until the 1980s, Coca-Cola’s strategy was one of considerable localization. Local operations
were granted a high degree of independence to manage their own operations. This all
changed in the 1980s and 1990s under the leadership of Roberto Goizueta, a talented Cuban
immigrant who became the CEO in 1981. Goizueta placed renewed emphasis on the
company’s flagship brands, which were extended with the introduction of Diet Coke, Cherry
Coke, and the like. His prime belief was that the main difference between the United States
and international markets was the lower level of penetration in the latter, where consumption
per capita of colas was only 10 to 15 percent of the U.S. figure. Goizueta pushed Coca-Cola
to become a global company, centralizing a great deal of management and marketing
activities at the corporate headquarters in Atlanta, focusing on core brands, and taking equity
stakes in foreign bottlers so that the company could exert more strategic control over them.
This one-size-fits- all strategy was built around standardization and the realization of
economies of scale by, for example, using the same advertising message worldwide.
Goizueta’s global strategy was adopted by his successor, Douglas Ivester, but by the late
1990s the drive to- ward a one-size-fits-all strategy was running out of steam, as smaller
more nimble local competitors marketing lo- cal beverages began to halt the Coke growth
engine. With Coca-Cola failing to hit its financial targets for the first time in a generation,
Ivester resigned in 2000 and was replaced by Douglas Daft. Daft instituted a 180-degree
shift in strategy. Daft’s belief was that Coca- Cola needed to put more power back in the
hands of local country managers. He thought that strategy, product development, and
marketing should be tailored to local needs. He laid off 6,000 employees, many of them in
Atlanta, and granted country managers much greater autonomy. In a striking move for a
marketing company, he announced the company would stop making global advertisements,
and he placed advertising budgets and control over creative content back in the hands of
country managers. Ivester’s move was in part influenced by the experience of Coca-Cola in
Japan, the company’s second most profitable market, where the best-selling Coca-Cola
product is not a carbonated beverage, but a canned cold coffee drink, Georgia, that is sold in
vend- ing machines. The Japanese experience seemed to signal that products should be
customized to local tastes and preferences, and that Coca-Cola would do well to decentralize more decision-making authority to local managers.
However, the shift toward localization didn’t produce the growth that had been expected,
and by 2002 the pendulum was swinging back toward more central coordination, with
Atlanta exercising oversight over marketing and product development in different nations.
But this time it was not the one-size-fits-all ethos of the Goizueta era. Under the leadership
of Neville Isdell, who became CEO in March 2004 and retired in July 2008, Coca-Cola
reviewed and guided local marketing and product development but adopted the belief that
strategy, including pricing, product offerings, and marketing message, should be varied from
market to market to match local conditions. Isdell’s position represented a midpoint between
the strategy of Goizueta and that of Daft. Moreover, Isdell stressed the importance of
leveraging good ideas across nations. An example is Georgia coffee.
Having seen the success of this beverage in Japan, in October 2007 Coca-Cola entered into a
strategic alliance with Illycaffe, one of Italy’s premier coffee makers, to build a global
franchise for canned or bottled cold coffee beverages. Similarly, in 2003 the Coca-Cola
subsidiary in China developed a low-cost noncarbonated orange-based drink that rapidly
became one of the best- selling drinks in that nation. Seeing the potential of the drink, CocaCola rolled it out in other Asian countries. It has been a huge hit in Thailand, where it was
launched in 2005, and seems to be gaining traction in India, where it was launched in 2007.
Case Discussion Questions
1. Why do you think that Roberto Goizueta switched from a strategy that
emphasized localization toward one that empathized global standardization?
What were the benefits of such a strategy?
2. What were the limitations of Goizueta’s strategy that persuaded his successor,
Daft, to shift away from it? What was Daft trying to achieve? Daft’s strategy
also did not produce the desired results. Why do you think this was the case?
3. How would you characterize the strategy pursued by Coca-Cola under Isdell’s
leadership? What is the enterprise trying to do? How is this different from the
strategies of both Goizueta and Daft? What are the benefits? What are the
potential costs and risk?
4. What does the evolution of Coca-Cola’s strategy tell you about the convergence
of consumer tastes and preference in today’s global economy?
