INTRODUCTION
The goal of this report presentation will involve a foreign market that Coca Cola Company overall entry strategy into a foreign market that includes attention to the company’s social, political, cultural and economic environment in the North Korean region – the proposed country which the company is not currently operating in along with its mode of entry, organizational structural arrangement and organizational structural arrangement and organizational strategies the company should advance, including potential alliances with local firms and discussion of the ethical, negotiation, leadership and management challenges associated with useful recommendations. The analysis should demonstrate application of relevant theory and integrate the readings and cases in the context of the actions of a specific firm. Moreover, the Coca-Cola Company exists to benefit and refresh everyone it touches, emerged in the year 1886, Coca Cola Company is the world’s leading manufacturer, marketer and distributor of nonalcoholic beverage concentrates and syrups that is used to produce beverage brands as the company’s headquarters are in Atlanta having a total of 200 countries involving its respected local operations around the world.
BODY
Dealing with North Korea is like golf; one never stops concentrating. However, it’s not as tough as it looks. North Koreans, if presented with a good faith, legitimate and credible business proposal, will pull out the stops to deliver. It’s very much in their interest when they are feeling boxed in, blocked here and blocked there, in efforts to engage in international business deals that do not have “other” applications. North Korea, with its back up against the wall, has been able to survive, and at times thrive, with virtually zero assistance from international financial institutions such as the World Bank and Asian Development Bank and others. North Korea is still there, digging ever-deeper into whatever resourcefulness it has, and continuing with grim, teeth-clenched determination to get out of its difficulty, come what may. North Korea is singularly ill-suited to policy by sound-bite, it is arguably the business community that is making real, tangible and largely unreported progress with North Korea, and a country that itself has been and is making real, tangible efforts to “engage.” It is indeed ironic that in this climate maybe the international business community could actually teach the politicians a few things about how to “deal with the North.”
Coca Cola Company can engage with the help of its bottling partners to focus on its entry in North Korea with the maximizing value through a balanced price and volume approach and on integrating the company’s operations into a single unit and enhance and develop more on its marketing strategies and segmentation with useful integration of its management approaches in order to be successful in the upcoming endeavors to enter into the North Korean market to realize business objectives and values and promote better customer relationship management which is essential to fulfill a good vision in the future and be able to satisfy North Korean’s need for an absolute drink taste as well as to communicate properly to the market status for the needed development of the company in the said country since the company has generated good operating revenues as Coca Cola continued to outpace the cola soft-drink category, achieving increases in sales and market shares worldwide with strong business performance by its top management. The Company’s new marketing platform, Coca-Cola “Real,” will probably help in enhancing the image of the brand, notably among teens and young adults in North Korea through reinforcing an honest, genuine connection to the consumers and the partnership of other sectors in North Korea will provide better market opportunities for Coke to be successful in their entry and be able to gain share and strong delivery with its coke products and that Cola can create enthusiasm for their bottling partners and retailers by customizing flavors and packaging with the brand maintaining its price premium relative to the category and competitive brands.
Good marketing structure and positioning is crucial for the pursuance of the company’s North Korean entry as well as the application and realization of a strategic marketing planning and the development of quality assurance management to support and give its best regarding their industry and operations and that the company should remain well-positioned to satisfy customers’ needs and continue experience strong growth through expanded distribution and through new products such as Minute Maid Lemonade and Swerve that was created for the education channel. Coca Cola may emphasize their operating segment to work with its bottling partners to execute package and price strategies that strengthen their financial results, deliver value for customers and provide consumers with choices that meet their needs within the proposed country. The Coca Cola Company can greatly integrate possible needed steps for the creation of effective organizational structure responsive to the needs of the North Korean customers as the structure better reflects the way beverage choices are made, unifies their procurement and supply chain systems to increase efficiency and eliminate redundancies and links the company’s go-to-market activities with those of their bottling partners so that Coke’s system can deliver value-added services to the North Korean customers faster and effectively and helping such divisions to produce real benefits such as the lowering of its system costs, better bottler and customer alignment and increase the ability to provide consumers with good business value and ethics.
The new thaw is relations between North Korea and the Coke Company is stirring interest in the global business community. In the past few months North Korea has emerged from decades of isolation – slowly opening itself to foreign influences and business executives hope foreign investors. Global investors were looking at the crowds also with a more commercial eye and that North Korean is one of the last untapped markets in the world. The opportunities to invest at this point are wide open because there’s not much in there. There are very few foreign companies, which are operating. They have a relatively large population of approximately 25 million people, and an economy which is not developed at all. In terms of investment opportunities, it’s white page waiting to be written. This Coca Cola commercial jingle heard on televisions and radios throughout South Korea could soon be heard in the North as well. Following the inter-Korea summit last June, Coca Cola – that icon of Western capitalism – delivered a symbolic truckload of the fizzy drink to North Korea. Coca Cola like to be early entrants into any developing economy, because they are always looking for new opportunities for growth. They are looking for opportunities for manufacture in the area of consumer goods operate in a very competitive way. It’s very likely that if a Coca cola went into North Korea, a Pepsi would follow, that’s the competitive set of large multinationals. Despite the North’s new open attitude, the company is aware of the many obstacles to entering the North Korean market. Just like pioneers crossing the American Continent, there’s no law, there’s no infrastructure, there are no banks, there are no lawyers and there are no accountants. However, there is a very, a very large, very hostile bureaucracy that is going to have to be dealt with. Coca-Cola, one of the classic symbols of American consumerism can be a success factor in North Korea after the United States lifted most trading sanctions on the isolated Communist state. The move means North Korea could become the newest front in the world cola war. Coke’s arch-rival Pepsi says it is also preparing a campaign plan for the sale of its products in the North. However, Pepsi played down suggestions that it might lose out by failing to match Coke’s initiative in entering the market so soon. Coke’s move into North Korea is still limited. Mr. Lo stressed that the company would not directly be doing business with North Korea. Coca-Cola’s external affairs director in Seoul, John Gustaveson, said the company had no plans as yet for establishing bottling plants or any other investments in the North. He added that Coke drinks would only be sold in hotels and restaurants catering to foreign visitors. The move is being seen as another example of easing tensions on the Korean peninsula but economists say the moribund North Korean economy will have to change dramatically if trade is to become at all profitable. For years the North has been suffering the effects of a protracted famine caused by a combination of bad weather and mismanagement.
The Coca-Cola Company’s labor relations practices are among the best on the planet and we are continuously working to improve them. The Coca-Cola system is one of the most highly unionized multinational corporations in the world, with more than 30 percent of employees belonging to unions. The Coca-Cola Company’s environmental practices are among the best on the planet and we are continuously working to improve them. The Coca-Cola Quality System is a worldwide initiative involving every aspect of our business. Everyone who works for or with Coca-Cola is empowered and expected to maintain the highest standards of quality in products, processes and relationships. We are never content to let our standards become static. The Coca-Cola Quality System mandates in-depth self-assessment throughout our operations, by all our business units. This enables us to raise our standards even higher. In our ingredient evaluation laboratories, for example, we perform precise analyses of fruit juices and other ingredients sent to us by our suppliers, to ensure and to improve product quality. Our processes, too, undergo constant scrutiny, to safe-guard the water we use in our products and the packaging that carries them to our consumers. We inform and educate our business partners about our standards, so that they meet the highest quality requirements. Under the Coca-Cola Quality System, quality is our highest business objective and our enduring obligation.
The Coca-Cola Company is on a journey. It is a bold journey, inspired by our simple desire for sustainable growth, and fueled by our deep conviction that collectively we can create anything we desire. The goals are simple: They will reinvigorate growth for their Company and will inspire people. Likewise, their entry strategy is simple: Coca Cola will accomplish our goals by building a portfolio of branded beverages, anchored within our brand name and icon and by enabling superior market execution globally and locally aligning and leveraging the power of our global network that will be propelled by unleashing the collective genius of the organization that will make sustainable growth a reality in the North because it is in the company’s nature to innovate, create and excel to all countries in the world as possible. The company will have to demonstrate substantial progress in developing their North Korean business model in order for its management to positively drive reliable operating outcomes in the region through combining their progress within these years within its brand extensions and new products and benefits of their new North Korean operating framework. Thus, the company’s success in controlling the growth of operating expenses also strengthens their confidence about their dream for a nice business entry for a better business performance in terms of their cost control efforts for growth in operating expense that can give the company the needed flexibility in dealing with the challenging operating dynamics in the future years respectively.
The company have to work hard to generate pricing growth and achieve operating expense savings and be effective in North Korea and stabilize their performance for the proper handling of their target markets as Coca Cola will have to continue planning out for useful strategies and management approaches and be able to overcome consumer and market trends impacting the business, including weak retail trends in some markets, health concerns and the continued growth of deep discount retailers and designing and implementing operating and sales initiatives in place to meet the needs of consumers and their North Korean customers that will have to include new marketing approaches for hard discounters, country specific brand and product innovation plans as well as organizational initiatives that will strengthen efficiency and ability to serve loyal and valued customers in the North.
Business Outlook
It is undeniably true that Coca Cola does not provide direct employee benefits for its “system,” like indirect, workforce. It is also true that its distributors, canners, and bottlers have some degree of operational autonomy, even though Coke has extensive ownership interests in many of its bottlers and canners. However, even if Coke cannot provide coverage directly, it can require coverage as part of its exclusive licensing agreements with major suppliers, bottlers, canners and distributors.
It already micromanages some operating procedures through its licensing agreements, it will necessarily have to permit operating margins for its affiliates that might require Coke to sell its syrup on slightly better terms. Coke system is not readily available, most of the affiliates provide relatively good wages within the formal economy and labor turnover is presumably much less than in the informal sector. The Coca-Cola system is one of the most diverse organizations with a rich mosaic of talented colleagues who bring a variety of intellectual, professional, ethnic and cultural perspectives to our enterprise. They reflect the nations, cultures and languages of the world. Our policy is to foster an inclusive environment that encourages all employees to develop and perform to their fullest potential. The company can apply their recent corporate strategy in North Korea since; it has been one of overcharging bottlers and canners for cola concentrate and strong-arming high-priced acquisitions of weaker bottlers. North Korea has enacted several revisions and passed updated or new laws in several phases, a positive sign that it recognizes a legal system must evolve with internationalization and with technological advances. Recent developments included reinforcement of intellectual property laws and bolstering of mechanisms for third-country arbitration/dispute resolution mechanisms, including provisions for foreigners to act as arbitrators.
North Korea offers a considerable array of tax breaks, exemptions and incentives to foreign investors in certain areas of industry and commerce. It is actively seeking to issue exclusive licenses to a foreign law firm and a foreign accounting firm. One of North Korea’s great challenges has been simply that of getting the message across and communicating to foreign countries what legal framework exists and what investment opportunities are available. Coca cola is popular in the international market due to its in-depth knowledge of marketing strategies and local community that could best serve in North Korea. Coca cola’s better understanding of the local communities and the market makes the company to remain in the top position in the global market for soft drinks and its readiness to spend heavily on the marketing effort helps the company compete and win over the market of soft drinks worldwide. Coca cola believes that the heart and soul of their enterprise has always been the customers. It will be using excellent marketing strategies and became top in soft drink and beverages industry in North Korea and around the global thirsty market. Coca cola’s focus on brand management, worldwide coverage and intense distribution and advertising makes it the worlds most leading and profitable soft drink company. “Marketing is a social and managerial process by which individual and groups obtain what they need and want through creating and exchanging product and value with others”. (Kotler, Brown, Adam and Armstrong 2001, p.25) In short marketing is the delivering of customer value and satisfaction at a profit. Coca Cola Company can have the best-managed and exclusive marketing research operation units in North Korea that will make the Company the best marketer in beverages industry.
According to Kotler and Armstrong (2001) 9th edition “the most basic concept underlying marketing is that of human needs. These human needs are states of deprivation which include physical needs, social needs and individual needs. These needs were not invented by the marketers but are the basic part of human makeup.” (Kotler-Armstrong, 2001 p.67) Coca Cola Company manufactures and promotes soft drinks and beverages so it has wide variety of market available to it. The following three markets can be best applied by the Coca Cola Company in its purpose of having a successful and steady entrance to the North Korean region.
Mass market:
In mass market the seller mass-produces, mass distributes and mass promotes one product to the buyers and hoping it would appeal to everyone. Lowest costs, lowest price and large potential market are the main characteristic of mass market.
Product variety market:
In product variety market seller produces more than one product that have different features, styles, quality and sizes and Coca cola can produce several soft drink packages in different sizes and containers that can be designed exclusively for variety of North Korean buyers as the taste of buyer’s changes over time.
Target market:
The company identifies market segments and selects one or more of them and develops products and marketing mixes tailored to each as Coca cola produces soft drinks for the sugared-cola segment, the diet segment, the no caffeine segment and the non coke segment.
Market competition
Coca Cola Company uses market leaders’ strategies to meet with its competitors because in the world of soft drinks and beverages, Coca cola enjoys the top position around the world, but like other companies it also faces stiff competition in the market. Coca cola’s focus on brand management and intensive distribution and advertising its product makes it the leading and most profitable soft drink company. Coca cola can segment its market on Geographical and Demographical basis and in geographical segmentation Coca cola runs on a national and international basis as Coca cola leads because of its deep insight of various marketing and leadership strategies. In demographic segmentation Coca cola can concentrate on different age of people especially youth group and promotes its product accordingly to the North Korean market and select the right segment that have the right size and growth characteristics for the North Korean people and targets segments with large current sales, a high growth rate and a high profit margin. It target calorie conscious people by offering diet coke and target those who claim the drink to be undrinkable by offering caffeine free diet coke, the target involves the communities as well.
“The way the product is defined by consumers on important attributes; the place the product occupies in consumer’s minds relative to competing products”. (Philip Kotler, 2001). Coca cola hold special position in the mind of people of different age group. It has become a trend among young generation to satisfy thirst only by Coca cola due to the tremendous marketing efforts and takes care of customer having different taste by providing them variety of product. Then, Coca cola holds the top position in soft drink and beverages industry unless a dominant firm enjoys a legal monopoly its life is not altogether easy as other firms keeps challenging its strength for its weakness. It can easily miss its position. It can be said that Coca cola is a king of soft drinks and that no one can dare to challenge it having a broad knowledge in business and marketing.
RECOMMENDATION
In accordance to entry process for North Korea, I would recommend the following strategies for Coca-cola products respectively:
Dog Strategy
Coca cola can basically invest in North Korea in order for them to earn market share in the region for growth and stability and to keep competitive advantage in its desired context for the business
Star Strategy
The investment of their sales and profits for future growth of the region’s cultural as well as political considerations that is needed for the company to remain stable in the foreign market and gain support from the customers in the country
Cash Cow Strategy
The using of profits to finance new products and management growth for the purpose of doing business in North Korea
Customer Relationship Strategy
This is crucial for Coca cola business to prosper in a country where business is controlled by the power of its authorities and that customer relationship needs to be managed well and that providing customers in the North Korean region something that they wanted and needed to satisfy themselves.
The Development of strong market segmentation
The company needs market segmentation because buyer’s taste, wants, needs and preferences in North Korea differ from one another and that by means of segmenting the market, customer can be served much better effectively and efficiently.
Geographical – knowing appropriate locations for the business in order to keep track of the principles for the business and achieve the mission to go beyond the vision.
Demographic – knowing the cultural traits and characteristics of the North Korean people and investigating their tastes in terms of drinks and beverages so that Coca Cola Company will know how to adopt to certain changes in its products, operations and industry management to really cater the needs of the people trusting their business ways.
Psychographics – having a pattern or illustration with regards to the opinion and views of the North Korean’s so that the company could easily fit in to the type of culture and lifestyle they have.
Behavioral – evaluating the behavior aspects of the business sectors, the possible partners, dealers, retailers, employees and to the customers as well for the company to have a good business ground in the region.
The strengthening of Coca-Cola Company in different aspects to control all aspects of their company on a world scale as the Coca-Cola Company deals solely with the selling of its brand name and by performing administrative and coordinating activities in North Korea. The involvement of continuous product research and development as well as manufacturing and sales value to the bottlers situated in the country. Henceforth, Coca Cola is consumed depending on factors such as culture, climate and tastes resulting into individual company needs to adopt their own management approaches to push the sales of Coca-Cola and its respected products in the region. This means that market knowledge is important in trying to gain market share for a possible success of entry in North Korea and that to achieve this greater market share, new product development needs to be concentrated on extending the product range beyond carbonated drinks and other products.
These products are intended to satisfy the needs of each individual market segment and will certainly vary from region to region, at some point in the future; consumer culture will be homogenous to such degree as differences between markets will show preferences for different products that comes from something as basic as climate, result of complex social and or religious reasons – Coca-Cola knows this and the company know that the diversity of the human race should not be compromised for their own financial gain, “dividing a market in to direct groups of buyers who might require separate marketing mixes; the process of classifying customers into groups with different needs, characteristics and behavior” (Kotler, 2001 p. 46).
BIBLIOGRAPHY
Kotler, P. and Armstrong, G. (2001). “Principles of Marketing” (9th Ed.). Prentice-Hall India
Kotler, P., Brown, L., Adam, S., Armstrong, G., (2001) “Marketing” (5th Edition) Pearson Education Australia
COCA COLA COMPANY LTD Website
URL: http://www2.coca-cola.com/ourcompany/index.html
www.cocacola.com
McColl-Kennedy, J., Kiel, G., (2000) “Marketing: A Strategic Approach” Nelson Thomas Learning, Australia.
Credit:ivythesis.typepad.com
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