Term Paper: History of Coca-Cola Company (Coke)

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[. . .] There was also no reported harassment of Americans during the disturbances that took place in October 2001. Travelers should avoid travel to areas bordering Afghanistan and Iraq.

Competitive Analysis of Market in Iran

Although it might not accord with American perceptions of life in Tehran, soft drinks are in fact very popular in this conservative Muslim country. However, in the absence of large U.S. And European soft drink companies the market for sodas is highly fragmented. There is also a robust market in juices and the "re-emergence of an almost static bottled water market" as well as a growing interest on the part of a number of companies in selling non-alcoholic beer.

The company's ability to expand its presence into Iraq, while very difficult in some ways, in other ways may well be easier than its recent attempts to expand in Belgium and other Western Europe countries, where the American company has met considerable resistance from government officials seeking to limit the market share that the company may grab through its long-standing policy of dealing with rivals by buying them out.

This vigilance on the part of regulators was seen in May 1999 when Coca-Cola was blocked from acquiring the soft drink brands owned by Cadbury Schweppes - another company facing accusations of monopolistic practices.

Cadbury Schweppes is to keep control of its soft drinks brands in most of Europe instead of selling them to Coca-Cola, following concerns about delays in winning approval from European regulators.

Under the original £1.14bn deal, announced in December last year, Coca-Cola was to buy all of Cadbury's drink brands except those in the U.S., France and South Africa.

Cadbury has now abandoned plans to sell the brands in another 20 European markets, fearful that such a move would be blocked by competition watchdogs.

The countries where Cadbury Schweppes will now retain control include Belgium, Norway, Spain, Switzerland, The Netherlands and Germany which was reportedly ready to reject the plan later this week.

Coca-Cola met the same reception in 1997 when it tried to buy Orangina, a fizzy fruit drink produced by the French firm Pernod Ricard. But having failed once, the company tried again a year later in a slightly altered form. Coca-Cola divisions in Europe seem to acknowledge that they may well have to settle for less than a full share in the products that they wish to buy. It is unlikely to face such opposition in Iran.

The company must also be careful not to risk the contamination problems that it has had in overseas plants in Europe. In the spring of 1999 a number of bottles of Coke products would be found to be contaminated with dioxin, prompting a 9-day ban on all Coke products and a loss of trust in the product that still continues to some degree.

The company's short-term as well as long-term prospects in Belgium were hurt by what the public perceived as its refusal to deal openly with the problem when it made the all-too-typical corporate philosophy of sticking its head in the sand and hoping that the public would consider no news to be good news. The Belgian national government exploited the problem for its own ends, worsening the company's position:

It is a topsy-turvy world when the Belgian government, routed at the polls after its disastrous handling of dioxin food contamination, can scold the world's most successful brand for lousy public relations. But so it is: the Coca-Cola Co. was on the defensive last week after its miserly flow of information helped prolong a Belgian ban on its most popular products. Belgian Minister of Health Luc Van den Bossche was still maintaining at week's end that the company had not provided "a satisfactory and conclusive explanation" for a mysterious spate of what some were calling "Coca colic."

The problems stemmed from early June 1999, when "42 school children in the northern town of Bornem complained of nausea, headaches and stomach cramps after drinking Coke." The following day, June 10, the company recalled 2.5 million bottles that had come from its plant in nearby Antwerp "citing "a quality issue where you have an off odor or taste," in the words of a Coke spokeswoman."

Adoption of Current Domestic Marketing Strategies

While the Coca Cola Company might well use some of the marketing strategies that it has in the United States, it might be wiser to consider some strategies that it has recently employed to break into new markets. For example, it might use its strategy in China - a market it entered on a large scale just recently - as a model for winning over a population very different in its tastes and beliefs than Americans.

It should probably consider if not outright purchase of local firms than joint ventures with them:

Coca-Cola's long-term strategies of localizing production and building infrastructure through partnerships with the Chinese government and domestic companies have allowed it to establish nationwide operations and generate a strong market presence. Coca-Cola products currently account for 35% of China's carbonated beverage market and generate annual sales of up to $1.2 billion, according to press reports. The company has earned a gross profit in China each year since 1990.

Conclusion: Future

The Coca-Cola Company is blessed with one of the best-know trademarks in the world. The red swoosh across its bottles and cans signifies a sense of American fashionableness that even now - in a world in which American economic as well as political power is often looked at as far less than fully beneficent - is usually greeted warmly. And yet the company's future success in Iraq is certainly not guaranteed. It's future in the country in the short-term is likely to meet with continued failure. However, with a changing political climate it may well find Iranian doors opening to it. The company faces substantial challenges to cracking one of the very few markets that it does not yet command.


Encyclopedia Britannica

Pendergrast, M. (2000). For God, country and Coca-Cola. New York: Basic Books. http://www.imes.co.uk/pages/iransd.html http://news.bbc.co.uk/hi/english/business/the_company_file/newsid_351000/351871.stm http://www.time.com/time/magazine/international/article/0,9171,1107,00.html http://www.chinabusinessreview.com/0107/weisert.html



http://www2.coca-cola.com/ourcompany/aroundworld.html http://www.mind-advertising.com/us/coke_us.htm http://news.bbc.co.uk/hi/english/entertainment/film/newsid_1588000/1588261.stm http://www.iranian.com/News/July98/wsj2.html www.softdrink.ca/tp100t1e.htm [END OF PREVIEW]

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