Karachi University: Title: Management Report Topic: Coca Cola Beverages Pakistan LTD
Karachi University: Title: Management Report Topic: Coca Cola Beverages Pakistan LTD
Karachi University: Title: Management Report Topic: Coca Cola Beverages Pakistan LTD
ADAMSON INSTITUTE
PREPARED BY: HITESH KUMAR
SEAT NO: A-13032002
DATE OF SUBMISSION: 30-07-2014
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TABLE OF CONTENTS
Acknowledgement...3
Executive Summary.4
Introduction.7
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S.W.O.T Analysis..17
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15
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Conclusion.29
ACKNOWLEDGEMENT:
I, Hitesh Kumar whole heartedly dedicate this report to my teacher who extended great help not only
for the preparation of this report but also taught us the fundamentals of Management as well as its
application in the real world.
EXECUTIVE SUMMARY:
The aim of this report is to discuss all the Management processes practiced and applied in Coca Cola
Pakistan Ltd. This report emphasizes on the fundamentals of Planning, Organizing, Leading &
Controlling. The info provided in this report is not fictitious but is clearly based on facts and figures
provided by the Coca Cola employees and derived through our visits to Coca Cola factory at D-51 Site,
Karachi and research from multiple websites.
Source: http://inventors.about.com/od/cstartinventions/a/coca_cola.htm
INTRODUCTION:
Founded in 1886 the coca-cola company is the worlds leading manufacturer marketer and distributor of
nonalcoholic beverage concentrates and syrups. The companys corporate headquarters are in Atlanta with
local operations in over 200 countries around the world. Although Coca-cola was first created in the United
States, it quickly became popular wherever it went. Our first international bottling plants opened in 1906 in
Canada, Cuba and Panama, soon followed by many more. Today, Coca-cola has a portfolio of more than
3000 beverages. Coca-cola has 92,400 employees world wide but in Pakistan there are nearly 5,000
employees working. More than 70% of outside the U.S but the real reason Coca-cola is a truly global
company that meets the varied taste preference of consumers everywhere. Cokes bottling partners are local
companies so they are rooted in their communities, thinking and acting locally. They are employers,
purchasers of local goods and services, good neighbors and of course producers of the world's most popular
beverages. Now the Coke beverages are sold and liked in every part of the world. Coca-Cola Beverages
Pakistan is one of the largest multinationals in Pakistan, engaged in the manufacturing and marketing of
worlds leading beverage brands. Coca Cola is a company committed to continually earning and protecting a
very special relationship with its customers - a relationship built on value and trust. It is a company of brands
- brands people have come to know, believe in, and depend upon and a company of individuals - dedicated to
providing superior products and shareholder return to people all over the world.
INTERNAL ENVIRONMENT:
The internal business environment and its influence is that which is to some extent within the businesss
control the main attributes in the internal environment include efficiency in the production process,
through management skill and effective communication channels. To effectively control and monitor the
internal businesss operations and readily act upon any factors, which cause inefficiencies in any phase of
the production and consumer process.
EXTERNAL ENVIRONMENT:
The external business environment and its influence are usually powerful forces that can affect a whole
industry and in fact, a whole economy. Changes in the external environment will create opportunities or
threats in the market place coca cola must be aware off. Fluctuations in the economy changing customer
attitudes and values and demographic patterns heavily influence the success of coca colas products on the
market and reception they receive from the consumer. The External environment has 2 components which
are Specific & General environments.
I
SPECIFIC ENVIRONMENT:
CUSTOMERS:
The Coca Cola company has Youth as its main customers, the motive of the company is to increase sales
volume among the young generation as Coke is sweeter than Pepsi and liked but now Coke is satisfying
different target markets including people of all ages, races etc. Cokes products are purchased by almost
every class in Pakistan as it does not have expensive drinks and offered in different volumes. Coke has
also dominated its existence in the Hotel & Restaurant market as it has customers like Regent Plaza, Avari
Towers, Arizona Grill, Copper Kettle etc are maintaining their brand loyalty with Coca Cola.
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COMPETITORS:
All over the world Cokes biggest competitor is none other than Pepsi. The competition between the
companies has been neck to neck as both of them keep on trying to outplay each other in terms of pricing,
promoting & packaging. As Pakistans economy has suffered from global recession, the competition has
become tougher. In Pakistan Pepsi is leading the market with 52% and Coke is climbing up to the 40%
mark however globally this situation is reverse.
C
PRESSURE GROUPS:
In recent years ISO certifications has influenced all the companies operating in Pakistan as Coke is in the
Fast Moving Consumer Goods (FMCG) business and is mainly manufacturing and bottling a soft drink
that is used by everyone, certain policies were implemented that increased the cost as Coke believes that
Compliance to international standards on quality, environment and social accountability has been
universally recognized as one of the key strategic elements of product competitiveness in both domestic
and international markets, along with price and delivery factors. Quality is the pre-requisite for successful
market access and for achieving continued customer satisfaction. Not to forget the Governmental policies
also affect Coke in many ways as each year Budget is announced with taxes rates shooting up that
decreases the profit margin.
D
SUPPLIERS:
Suppliers always play an important role in any companys operation. Suppliers provide resources and raw
material that company requires to produce the goods and services. Coke company suppliers in Pakistan
vary with respect to the raw material they provide. Following is a brief list of different suppliers of coke.
Balochistan Glass Limited provides glass bottles of all sizes that are used in bottling.
Plato Bag Limited provides pet bottles with the labels. Labels are designed by the Packages Ltd.
Saharan Mills Limited provides the quality sugar in hygienic packets.
Vanillin Intercool Pakistan provides the machinery such as Visio coolers and chest coolers for the
chilled coco-cola.
II
GENERAL ENVIRONMENT:
The Coca Cola Beverages Pakistan limited has a very strong potential in the future as Pakistani population
is increasing and there is a shift in the consumer perception of its conservatism and the stigma, which was
attached to it as an American product, is losing its effect. Increase in the level of inflation is a major
concern for the company as the purchasing power of the people is eroding day by day. As there is an
increase in the dual career families and women has started working in the offices with a great enthusiasm
so it can be a capitalizing point for the company. The legal/political environment does have much effect
on this company. As there has been a continuous change in the governments and the policies related to the
duties and taxation so it is relatively less immune to changes in this sectors of the environment. The
General environment includes the following factors:
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In Pakistan, Political & Legal conditions have become very uncertain as constant Political instability does
affect the company in terms of building new relationships with new Governments and also the Legal
system impacts us as new laws are amended that are not business friendly at times.
B
SOCIO-CULTURAL CONDITIONS:
Coke is very careful in implementing its promotional campaigns as Social and Cultural environment in
Pakistan is very conservative and negative at times.
i
SOCIAL FACTORS:
Include the customer family, small groups and status. The consumption power of people has fallen but
still Coke has maintained stability.
ii
CULTURAL FACTORS:
Pakistani culture has affected the Coke purchasing massively. In recent days, events and festivals like
Basant, weddings, parties etc are an important part of our culture in which the sales of Coke go very high
as soft drinks are purchased in bulk.
C
ECONOMIC CONDITIONS:
As the global economy has reshaped and affected the Pakistani market also as poverty and inflation has
increased giving birth to various issues which has negative affect on the common man and almost each
business has suffered in 2008 & 2009. Coke has also strived the recession era. The sales volume fell by
22%.
D
TECHNOLOGICAL CHANGES:
Technological changes can affect any huge business like Coke therefore it has diversified it technology as
the world is getting more advanced. Coke uses latest technology in its production process which results in
increase of production throughout Pakistan. At the upper Management level advanced software programs
are bought, for Accounts department QuickBooks latest accounting software is purchased, advanced
security systems are setup with 24 X 7 vigilance and cameras are installed in each office to monitor the
activities of all employees. In short, Coke has reshaped itself with the changing technologies.
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STRENGHTS:
Strengths are basically the powerful side of the company. These are the favourable factors of a company,
which might help it to avoid the threats present in the environment and can also be used to improve upon
their own weaknesses.
I
POPULARITY:
Coca-cola is an extremely recognized company as its popularity is one of its superior strengths that are
virtually incomparable. Coke is known very well worldwide as its branding is obvious and easily
differentiated on logos shown on t-shirts, caps, hoardings, advertisements & TV programs.
II
BRANDING:
Most people buy Coke only because it is widely accepted and they feel like they are part of something so
big and unifying. If you speak the word coca cola, it would definitely be recognized all around the
world.
III
AVAILABILITY OF FINANCE:
Money is a major factor and strength of a company. Coca-cola deals with massive amounts money all
year.
IV
CUSTOMER LOYALTY:
Another factor of strength is very important is customer loyalty. Seventy percent {70%} profit comes
from 20%of loyal customer.
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WORKING STRUCTURE:
Coca colas organizational structure is of International standards, hence there are clear cut and well
defined policies, procedures, rules and regulations that have to be followed under all circumstances hence
the working style is highly professional and discipline is maintained at every level of the organization.
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The fixed time of delivery of Coke to retailers, shopkeepers etc punctuality is maintained which gives
Coke an edge over all its competitors.
VII
These all are Cokes strengths which gives it an edge over its competitors. Coca-Cola bottle shape is so
unique and stylish than even if the name is rubbed off people will still easily identify that its Coca-Cola
bottle. Same is the case with its symbol and name which cannot be imitated and are so well known.
VIII
Coke being one of the biggest multi-national companies and by being in business for more than 100 years,
have developed huge asset base which include hundreds of manufacturing Plants in more than 150
countries. It also has skilled and educated labor that is regarded as one of its positive points. It has also a
very comprehensive human resource management system with very good training programs in the country
of the employees and also arranges the training in foreign countries for top management.
WEAKNESS:
Coca cola is a very successful company that has few weaknesses.
I
Many drinks that they produce are extremely popular such as coke and sprite are popular in Pakistan
while few are unpopular, the demand and supply of few products like Minute Maid has not pleased the
Management.
II
WORD OF MOUTH :
Word of mouth is another weakness of a company. It is something that is very hard to control. Everyone
have different opinions and you can try to eliminate/sway their negative views.
III
LIMITATION OF RESOURCES:
This is the biggest weakness of Coke. In worse situations requests for finance from the CCI (Coca-Cola
International) based in USA is observed along with aid from the HQ in Lahore. Currently Coke is unable
to supply as many freezers, coolers, finance sign and electronic bill boards as shopkeepers demand as
does Pepsi which is the major reason why Coke sales falls.
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IV
NON-AVAILABILITY:
Coke is not available in small towns and in rural areas reason being that the distribution channel of Coke
is not large and is not extended owing to limitations of resources and lack of proper infrastructure.
V
The organizational structure of Coke is too formal (being supervised by CCI) so the lengthy processes of
decision making and implementation through hierarchy system i-e follow order from CEO to downwards)
have to be followed and employees in Pakistan even (GM) is not allowed to take decisions to change even
smallest of things like (Instruction on bottle) on their own. Many brilliant ideas for improvement and
boost sales remain locked up in employees brain as they are not allowed to work at their own free will.
OPPORTUNITIES:
Opportunities are the external factors for the company which could benefit the company if they are
capitalised by using the strengths of the business. In the economy of Pakistan Coke is working on the
following opportunities of which it can take Advantage of:
I
OPEN MARKET:
It has many successful brands that it should continue to exploit and pursue. Coke currently holds about
36% market share in Pakistan. Pepsi leads by holding 54% of market share, 10% to other small beverages
e.g. RC- cola, Makka-Cola, Pak-Cola etc. therefore there is a vast opportunity for Coke to capture 70%
market share as 54% belongs to Pepsi and 10% to others.
II
EXPANSION OF INFRASTRUCTURE:
Coca-Cola with International standards can increase its market share many folds with little efforts.
Increasing the distributing channels and infrastructure to ensure availability in small towns and areas.
Line extension like Fanta, Coke, and Sprite in different flavors. Launch a new product it can do it
successfully as it is a well established company and has already positioned itself in customers mind (as
those who provide the ultimate taste and quality) so they are bound to try their new products as well.
III
Until now the consumers have shown interest in the products introduced by Coke and have accepted with
open arms the good quality products brought by Coke in Pakistan. This shows that Pakistani market is
ripe for other products also and a little market penetration can increase the sales.
THREATS:
Threats are also external factors which can have a negative impact on the companys performance. These
threats are to avoid by using the Strengths.
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COMPETITION:
Competition is an opportunity and a threat at the same time. If Coke, with its capabilities handles its
competitors with right strategies then this will be an opportunity for the company, but if the competitor is
fast to take action and has a knowledge of the weaknesses of Coke it can pose a great threat for it and its
success. Pepsi is giving Coca Cola a great competition in soft drink industry all over the globe and is the
major Threat to Coke and its products.
II
NEW ENTRANTS:
New entrants like Pak Cola that can exploit anti Jewish and anti war sentiments, provoke nationalism
sell at low prices and can be a source of threat for Coke in future once they fully launch their products in
Pakistani market so coke management has to look out for them over the time.
II
NESTLE PRODUCTS:
Juices, Milo, drinks, etc as well as Shezan products Squashes, Tetra pack juices are also sort of a threat
but not the direct threat for Coke because they provoke health consciousness and physical fitness
.Although Coke has converted its attack on health issues by offering Diet Coke yet the threat isnt
over .However Coca-Cola can effectively counter their threats at any time by launching even more
products.
III
The Coca-Cola management is not happy with the Govt. tax laws and policies. Being a Multinational with
whole plants in 10 cities it is under heavy tax. Imposition so much so that on single bottle revenue. It has
to pay as much as Rs2.97/-as tax to the government with the consequent result that Coca-Cola is the first
beverage and 2nd highest tax paying company in Pakistan. It pays 33% on its total revenues.
IV
The political and economic instability has caused changes in the policies almost every year due to
frequent the changes in the governments. Another problem which the companies face are the terrorists
attacks, strikes and off-days which costs the companies additional costs and halt in the production
activities. Thus, it is one of the factors about which Coke can do very little about. The poor performance
of the stock exchange due to the instability has caused Coke a lot of decrease in its share prices ad capital
erosion and several losses on its investment.
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ORGANIZATIONAL STRUCTURE:
The Organizational structure of the business is simple, solid and timeless. When it brings refreshment,
value, joy and fun to its stakeholders, then Coke successfully nurture and protect its brands, particularly
Coca-Cola. That is the key to fulfilling the ultimate obligation to provide consistently attractive returns to
the owners of the business. Coke Pakistan has a huge structure. It has multiple plants, distribution houses
and offices all over Pakistan, lets take the Karachi office, here Coke has an enormous plant and complete
office @ D-51 S.I.T.E and a distribution house near the plant. Both offices bear nearly 2,000 employees.
Organizational hierarchy of Coke main departments are as follows:
Sales Executives
Chairman
Vice Chairman
Board of Directors
Directors
General Manager
Marketing Supervisors
Marketing Executives
IT Manager
Production Manager
Network Manager
Plant Manager
Plant Supervisors
Workers
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IT
HR/IR
I
MARKETING DEPARTMENT:
The Coca Cola marketing department develops core strategies for company brands to ensure that all
communication is consistent in every market with this cohesive effort, the Coca-Cola system maximizes
its resources for market leadership and profitable growth. The marketing departments are responsible for
marketing, advertising and promoting the products. If all these departments perform their duty firmly then
the objectives of the Coca-Cola Company will meet.
II
FINANCE DEPARTMENT:
The finance department of the Coca Cola Company is responsible for financial record keeping. This
involves keeping records of money received and paid out. The financial records will be used to produce
the annual reports for the shareholders so that they can see the company performance. The Finance
department is also responsible for the management accounts of the business like marketing etc. The CocaCola Company finance department is also responsible for making budget of the company and for each
department like marketing department or research and development department. They will also be
involved in the planning process like taking major decisions.
III
PACKAGING DEPARTMENT:
The packaging department of Coca-Cola Company is responsible for the packaging of the products. They
have to make the packaging attractive so that the product meets the eyes of the consumers. Bringing new
products package is their responsibility. It works with the companies bottling partners to produce an
attractive combination.
IV
SALES DEPARTMENT:
The sales department of the Coca Cola Company is to coordinate the selling program. They also have to
make the distribution methods, etc. Also, decide how much to sell and how much to store in the
warehouse and to choose the transporting method which is the most cost efficient and the quickest way.
V
This department has their budget given by the finance department and their responsibility is to investigate
new products. They work closely with marketing by looking at marketing research findings. They have to
bring new products in the market for the change because the consumer cannot stick with the same old
products. If necessary then they also have to improve the quality of the products. The Coca-Cola
Company research department has done a lot of research and recently they have launched many new
products.
VI
ADMINISTRATION DEPARTMENT:
This department is essential for keeping the business going. They act as a help support of the company, it
is not the central purpose the business but every business organization would need this department. Most
businesses rely on administration to be organized. They deal with enquiries, give messages produce
documents and give information to any customer. The complaints that this department will get would be
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transferred to the research and development department to make the product better or fix the problem that
the consumer is having. These departments are the most important department of The Coca-Cola
Company because they helps the company to meets the objectives of The Coca-Cola Company i.e.
surviving, customer satisfaction and make more profits. As I said that the help desk department satisfies
the customer by providing the information they needs and taking the complaints and passing to the
research and development departments who improves the products.
VII
IT department handles all the Network, Systems, Servers & Employees workstations support,
maintenance and software programs in use. Coke management emphasizes on paper less environment and
mostly co-ordinate via emails. To keep the office linked up with other cities is also the responsibility of
the IT deptt.
VIII
HR/IR department hires and fires people. Coke believes that skilled labor is an asset and to extract the top
working class from the city is the prime activity of this department.
SPAN OF CONTROL:
The span of control is low as there are 3-5 employees reporting to their managers. This low structure is
due to the fact that organization is a vertical and different people have different works to do so. It is also
difficult to control more than five people and still manage the resources and people in an effective manner
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CONCLUSION:
We have concluded from this detailed report that despite the fact Coca-cola currently occupies the
market leadership position overall but it does not guarantee that the company will sustain its position in
the future as well. In Pakistan as compared to Pepsi, Coca-Cola has less number of consumers as Pepsis
market share in Pakistan is approximately 58% where as coke market share is hovering about 32%, hence
the conclusion is that Coca-Cola must enhance factors such as relationship marketing, innovation and
technology specially in Pakistan to attain market leader position in this region as well.
Coca-Cola no doubt come the heart beat of Pakistanis. Coca-Cola is one of the leaders in sponsoring the
most important, thrilling events. E.g. Cricket matches, concerts and many other social occasions. Event at
the present they are organizing a Basant festival for which they busily organizing stuff.
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