Coca Cola Case Study
Coca-Cola
Managing Resource Constraints in China
Background
China is a major and expanding market for Coca-Cola. Surging sales in emerging markets like China and India have been credited for Coke’s best sales growth for almost nine years with sales rising 19% from 2007 (The Times, 2007).
According to President of Coca-Cola China, Doug Jackson, the company currently counts China as it’s fourth-largest market in terms of revenue, although it is expected to overtake Brazil to become its third-largest in two years and the second-largest within five years (China Daily, 2007). Having invested $1.25bn since entering the country in 1979 (BBC News, 2007), Coca-Cola now have 36 bottling plants and plan
‘significant investment in infrastructure’ over the next year according to Jackson
(China Daily, 2007).
However, Coca-Cola faces a significant obstacle in its quest for growth in this emerging market. The country suffers from uneven distribution of water reserves and exceptionally low water resources per capita, just one quarter of the world average.
Four hundred of the six hundred largest cities face water shortages (OECD, 2007).
Water is a global challenge for Coca-Cola. The company have reported water quantity and quality as a material risk to its business since 2003 (Business for Social
Responsibility, 2008) and have faced this issue before.
Notably, their bottling plant in Kerala, India, lost its license to operate in 2004 when the company was accused of using an unfair proportion of the local community’s natural water reserves (The Guardian, 2003).
Coca-Cola subsequently went to the High Court to have the decision overruled, but as David Cox of Coca-Cola Asia said; “the issues undoubtedly had a short-term significant impact on sales” (Ethical Corporation, 2003)
This clearly demonstrated the potential pitfalls associated with taking a short-term view during business planning, rather than examining the issues that contribute to long-term business success. In this case,
Managing Resource Constraints in China
Background
China is a major and expanding market for Coca-Cola. Surging sales in emerging markets like China and India have been credited for Coke’s best sales growth for almost nine years with sales rising 19% from 2007 (The Times, 2007).
According to President of Coca-Cola China, Doug Jackson, the company currently counts China as it’s fourth-largest market in terms of revenue, although it is expected to overtake Brazil to become its third-largest in two years and the second-largest within five years (China Daily, 2007). Having invested $1.25bn since entering the country in 1979 (BBC News, 2007), Coca-Cola now have 36 bottling plants and plan
‘significant investment in infrastructure’ over the next year according to Jackson
(China Daily, 2007).
However, Coca-Cola faces a significant obstacle in its quest for growth in this emerging market. The country suffers from uneven distribution of water reserves and exceptionally low water resources per capita, just one quarter of the world average.
Four hundred of the six hundred largest cities face water shortages (OECD, 2007).
Water is a global challenge for Coca-Cola. The company have reported water quantity and quality as a material risk to its business since 2003 (Business for Social
Responsibility, 2008) and have faced this issue before.
Notably, their bottling plant in Kerala, India, lost its license to operate in 2004 when the company was accused of using an unfair proportion of the local community’s natural water reserves (The Guardian, 2003).
Coca-Cola subsequently went to the High Court to have the decision overruled, but as David Cox of Coca-Cola Asia said; “the issues undoubtedly had a short-term significant impact on sales” (Ethical Corporation, 2003)
This clearly demonstrated the potential pitfalls associated with taking a short-term view during business planning, rather than examining the issues that contribute to long-term business success. In this case,