Coca Cola’s corporate governance strategy

Even though there are many product divisions with many problems, the Coca Cola company manages to solve those problems by thinking and making decisions together as a corporation. Coca Cola’s many products for diverse people are derived from the divisions’ same R&D, and controls by headquarters’ effective expertise. By coordinating with the divisions, the Coca Cola company controls its related products. Muhtar Kant, CEO of the company, is known for his expertise in managing Coca Cola companies around the North-Asia, Eurasia, and the Middle East Group from 2005 until early 2006. He manages the operations across the country, and diverse geographic regions coupled with his science degree in Economics from Hull University, England, and a master of science degree in administrative sciences from London City University. Muhtar Kant’s corporation with Atul Signh, CEO of the Coca Cola company in India is remarkable. Back to a few years ago, the Coca Cola company in India was not a success. But with its emphasize on the strategic planning, human resources and marketing to develop corporation between divisions, Coca Cola’s ROI and the return of the customers’ loyalty became high.

For those first days, Coca Cola’s divisions in India were not strategically and financially under controlled. According to the Indian Janta Party’s Foreign Exchange Regulation Act, the Coca Cola Company was demanded to give up forty percent of the company’s holdings and reveal its secret formula. Coca Cola left India for a while; however, it started establishing the company in India again, in 1993, with the financial control, by investing over one billion dollars. Strategically, Coca Cola controlled producing Indian customers-friendly soft drinks such as Thumps UP, Limca, Maaza, Citra, and Gold Spot. Coca Cola used the local products, local employees, and local R & D while cooperating with every division. Coca Cola’s market in India created jobs for people in India. Coca Cola, moreover, marketed in India emphasizing the target areas — rural areas, lower class areas, and upper class areas by innovating diverse bottles of coke. Its’ corporation with Indian culture, to some extent, created the life and work sustainability of India’s employees.

Coca Coal cooperated not only with employees in India but also with India Government, and local communities for the environmental changes. Overall, the Coca Cola company crossing the borders to reach to its customers with the corporate governance strategy became the noticeable triumph among the divisions.

Coca Cola’s trust with other companies

Coca Cola’s alliance with the Walt Disney, based on the trust,  has been for 47 years. Among the obvious outcomes from their relationship, in 2002, Coca Cola company’s DASANI water bottles were featured at the Walt Disney’s parks and resorts. DASANI were also served on the Walt Disney cruise lines, and became the sponsor of the Walt Disney’s World Marathon. Moreover, DASANI expanded its media across the Walt Disney’s media properties such as ABC -TV, ESPN, and Lifetime. By having trust each other, both the Walt Disney and Coca Cola expanded their markets and relationship by approaching an opportunity maximization management strategy.

By knowing the opportunity — Indonesia’s bottled water market — the seventh largest in the world, Coca Cola created 50:50 joint venture with the Nestle S.A  to gain 65% majority share in Indonesia. Coca Cola also noticed the threats of its market in Japan which are the Japanese people’s greater concerns about the general diet. Thus, the Coca Cola company extended its joint venture with Nestle again to explore the tea market in Japan and launched Sokenbicha (“SO-can-BEE-cha”) , unsweetened tea especially for Japanese young women.

With cooperative strategies, it is obvious to see Coca Cola’s trust with other companies plays a vital role in managing a risky economy of scope in the 21st century.

Does Coca Cola believe “Two heads are better than one”?

Acquisition and Merger is the most popular strategy that every company holds tight during the global economic crisis. Coca Cola started to think of acquiring Huiyan juice in Hong Kong, in order to be more diversified  and to increase its market power. Coca Cola’s CEO — Mr. Kent said, “This acquisition will deliver value to our shareholders and provide a unique opportunity to strengthen our business in China, especially since the juice segment is so dynamic and fast growing in China. It is also further evidence of our deep commitment to China and to providing Chinese consumers with the beverage choices that meet their needs.”(http://www.thecoca_colacompany.com/presscenter/nr-2008093-tccc-huiyan-juice-grp-tender-offer.html).With full of expectation, Coca Cola in 2009 attempted to acquire Huiyan Juice. However, Coca Cola was rejected by Chinese Anti-Monopoly Law. On the other hand, it was rejected as China did not want Coke to dominate its market power in China. Some people, in fact, thought that China revenged back Coca Cola as once U.S. rejected China’s attempt to acquire UNOCAL – Union Oil Company of California.  However, Coca Cola continued its acquisition journey. In 2010, Coca Cola acquired the bottling operations in Norway and Sweden successfully.

Still in the same year, Coca Cola acquired Nidan Juice Market in Russia which controls 16.9 percent of the Russia juice market. With that acquisition, Coca Cola increased its market power and created more brand names for its not only Russian customers but also its worldwide customers. Coca Cola, however, started to fail its expectation to profit 1 billion. Instead of the expected amount, Coca Cola profited only 450$ million as of Nidan’s debt. At last, Coca Cola made the acquisition win-win situation by paying some of Nidan’s debt. Therefore, no matter how demographics and laws are on its way, Coca Cola always makes sure its three stakeholders are happy and satisfied by horizontal acquisitions, vertical acquisitions, and related acquisitions.