Coca-Cola Case Study
Coca-Cola was moved out together with other firms when the Chinese Communist Party. Later it moved back to China after 1979 but the brand was almost not known and it would take more time to rebuild the brand name. It, however, rebuilt its brand profile in the 1980s and the 1990s. A myriad of changes in the market, however, eroded the competitive advantage of Coca-Cola in China due to changes in preferences leading to the rethinking of strategies. Coca-Cola anchor bottle strategy was later implemented and at the end of 1990.it started posting notable accomplishments’. It also faced some competitors such as Pepsi and other healthy drink competitors.
Porter’s Five Forces,
1. Competitive rivalry: Coca-Cola faces an environment with more competitive products in China compared to the other markets as that of America.
2. Threats of substitutes: There are substitute products available in the Chinese market but are not in the American environment. The threats can be seen by the entry of health drinks competitor’s.
3. The threat of new entry: – The attractive markets attract new entrants who in turn may increase competition.
4. Supplier power:- Assessment of the ease of supplier’s influence on the supply price.it differs in Coca-Cola compared to that of the competitors
5. Buyer power:- the buyers in China are able to respond to healthy drink competitor and hence affect their buying power.
There are corporate partnership strategies in the Chinese beverage industry development and most of them are rooted in the desire to fend off competition and meet the changing demand of consumers. To achieve the desire has to be achieved an in-house ‘healthy’ beverages new line has to be created organically to win new customers to the iconic brand as well as retaining the current ones. Time is also needed as a very valuable commodity when competition intensifies.
China’s Antimonopoly law
The antimonopoly law is used by China to prevent larger foreign companies from dominating the Chinese market. The law was used to terminate the merger and acquisition of Huiyuan a Chinese company that Coca-Cola wanted to acquire Huiyuan to be able to expand in-house development to have a competitive edge. The law is used to govern market power exerted against retailers to lead to anti-competitive behavior leading to higher consumer prices through added pressure on SME juice.
Coca-Cola needs a SWOT Analysis to determine its strengths, weaknesses, opportunities, and threats so as to make strategies to help the organization achieve its goals. The company never backed away and therefore invested US$2 billion in 2009 exceeding the amount it had previously invested during the initial entry. A US $ 90 million was included in the investment for R & D in Shanghai with an aim of providing new products for the growing consumers’ class in China. The company also successfully acquired Culiangwang billing it as a means of ‘refreshing’ the portfolio of the soft drinks products.
The Chinese market may be tough for Coca-Cola but with a good SWOT Analysis where appropriate the company can develop strategies on how to wisely invest in the Chinese market and achieve its goals. Investment in China has grown considerably and its market share also goes on growing.