"Coca-Cola's Effort to Refresh the Whole World"
People know Coca-Cola as a global Brand. However, when the company entered the Indian market in the mid-1990s, it was the company’s second try. Coca-Cola had operated there from 1950 until1977, when it left with other Western firms in reaction to a law requiring foreign business to have Indian partners. A decade and a half later, the government relaxed restrictions on foreign companies, and the enormous population and economic growth lured Coca-Cola back. Now India has become one of the company’s top 10 market.
Coca-Cola reentered India by purchasing the brands and distribution system of an Indian soft-drink company. Despite this advantage, the return brought challenges. Employee turnover was high until Coca-Cola improved hiring and training. To build stronger business relations, it identified local sources for its materials and invested in farms selling key ingredients. It learned about its customers- for example, that young Indians are heavy users of mobile devices and that the small stores where most people shop have poor electric service and need help keeping drinks cold. The solution: company-provided, solar powered coolers. Other problems have been more difficult to solve. Farmers are pushing back against efforts to open a new bottling plant. They also grumble that Coke is using too much water, causing shortages. Indeed, the water supply in India has decrease dramatically, although the farmers themselves may be contributing to the problem. Whatever the cause, the government is restricting water use and the location of bottling plants.
Coca-Cola’s CEO, Muhtar Kent, is well prepared to lead his company in facing these challenges. Kent has a global perspective from his childhood as the son of a Turkish diplomat. Besides living in Sweden, Iran, Poland, Thailand, and the United States, Kent lived two years in New Delhi, India, when his father was posted there. He saw India as a beautiful and exciting- but also complex and challenging-place. Later, as a manager, he learned that doing business there requires flexibility. Just as the company has been creative and adapting its distribution to the needs of Indian’s small merchants, advertising combines corporate-wide themes with locally tailored messages. In a recent television ad, Indian movies stars present a story of young people experiencing moments of joy; Coke’s “Open Happiness” theme is about a universal emotion.
Efforts such as these have helped to make Coca-Cola the world’s largest beverage company. Headquartered in Atlanta, Georgia, it sells products in more than 200 countries. Along with its signature cola, the company sells more than 3,500 products, including such brands as Dasani, Minute Maid, Powerade, Sprite, and Vitaminwater. Because of Coke’s global presence, the company has a global perspective on social responsibility. It identifies the needs of the communities where it operates and the actions that will benefit both company and those communities. For example, by extending electric power grids into Indian Villages. It makes life more comfortable while making easier for stores to sell cold soft drinks. By addressing climate change, it is also addressing drought and the disruptions to its supply of sugar beets and sugar cane that are caused by changes to regional weather patterns. The company is especially concerned about water conservation. In India, it intends to conserve water, locate plants only where there is sufficient water, and provide more support to local communities. Other efforts at sustainability include recycling of plastics and reduction of carbon emission.
These efforts preserve Coca-Cola’s standing as a respected brand and a multimillion-dollar business. The global scope is essential, as North American consumers have increasingly cut back on soda consumption. Coca-Cola’s fastest growth has come from international markets, especially China and India. Today, if a consumer “opens happiness” in a bottle of Coke, he or she could be anywhere in the world.
1. Based on the description in the case, is Coca-Cola Company a domestic, international, multinational, or transnational organization? Why?
2. How can an understanding of Indi’s culture help a Coca-Cola manager succeed there?
3. Besides the measures described, what else can Coca-Cola do to maintain ethical conduct in the countries where it operates?