The Coca-Cola Company is the largest global beverage company that manufacturers,distributes and markets non alcoholic bevereges and syrus in the world forming the largest co-operation in the United States.The company manufactures over 400 brands in a number of over 300 countries worldwide.The company’s growth to a multinational company was induces by its progree in bottling technology that made their operations efficient and allso ensured product quality.The continous political changes enabled it to open up into new market that places it is posotion today supported by technology that led to the global economy(http://www.thecoca-colacompany.com/ourcompany/historybottling.html ).The company’s bottling system is a relective of the communities in which they operate in as the company’s brands normally appreciates the local identity and tries to meet the demands of the local markets.
The benefits of Coke going Globally
The technological progress in bottling is what enables the Coke Comapany to grow steadly and later to the rest of the world in an aim to experience the benefits of going globally.Some of the benefits that coke earned from going globally include; The company was able to exhaust its production capacity meaning that it was able to operate at its optimum production capacity because of the increased market size,given that its the market size which determines the scale of production.It also had benefitts of high profits that were earned from the foreighn countries other than the United Stated,on the assumption that its fixed costs were covered effectively in increasing the profit margin.The Coca Cola Company had diversified its risk of market failure in sense that different markets normally have different market elasticities and for that matter a fail in one market does not affect the company operations like in the case when it was to operate only in the United States thus its a form of risk management.The global operations of the Coca Cola company provided a avenue for the company to take advantage of the booming markets abroad given the uniquness of its products and the management received mixed signals from these abroad markets that gave them new challenges which enabled new ideas pertaining to marketing techniques which can as well be applied in the domestic market.For the Coca Cola company going globally is also sharpened its competitive edge in it trying to meet the international standard thus a local and an international hero.
How was this global approach mirrored in Coke’s organizational structure
When a company grows in size and especially when it extends to many foreighn markets,it find it right to adapt an organisational structure that is likely to handle the complex situation that arise, and in this case an attempt to decentralize decision making.The global approch changed the Coca Cola Company organizational structure in the sense that the organisational structure changed with hierarchical to hub based organisation model in that the decisions were made at the place where work was done,where the hubs can organize themselves without an approval from the the central hub.A central hub was only to adress an issue which is beyond the reach of these workplace hubs.Therefore decisions were made by people at the work place in order to avoid the long chain of command and its disadvantage of delay in decision making.The advantages of this structure is that decisions are make faster,more persons are likely to participate in decision making,there is a closer supervision,employees feel less alienated and in general in provides a lot of flexibility(http://www.imics.com/Benefitofgoingglo.htm).
Why has Coke now decided to go local
The Coca cola company has decided to go local because of the normal business cycle that always any business follows during its life and this is better explained by the changing patterns between the economies of scale and the desiecomomies of scale.When a business starts its growth is always slow which laiter accelarates in growth which signify the economies of scale until when it reaches an optimum and then afterwards after the optimum level of growth the business starts deccelerating which is sigfied by the economies of scale,therefore the withdraw of cocacola from the global market is that its in its desieconomies of scale state thus trying to go to the drawing board on checking on what went wrong.It may come back to the global market as either a new company or reformed Coke Company(http://www.emu.edu.tr/tanova/IHRM/OrganizationalStructure.ppt.).
What effect might this new local strategy have on Coke’s organization
The local Strategy is likely to affect the Coca Cola Company’s organisation by it detatching it from the foreghn market and changing the organisation structure to some kind of a herenchical organisation structure which means that its decision making will be centralized.There focus will only be on the local market meaning that observations of the international market pattern will never be of their concern but rather meeting the demand of the local people in first observing their desires and culture in developing products,thus lose of the international bearing.
Why has McDonald’s persisted with a global approach
McDonald’s persistence to global approach is due to the benefits of global markets that include the enjoyment of the large market,evenly spread fixed costs over a large output,increase competitiveness on trying to survive the in the world market and it posses a variety of challenges that enhance technological development.The Cocacola Company is likely exhaust its capacity of production givem its advanced technology in bottling.
What risks does McDonald’s face with this strategy
The risks that come with going global of the Coca Cola company is the Vulnerability of the company to the effects of political and economic changes in some countries of the world.Despite its good business the company is likely to meet political challenges that include the imposing of unreasonable tax on its products in the international market in the process of those foreighn economies trying to protect their domestic companies from foreighn competition for self sustainability strategies.The Coca cola company also runs a risk of it being mismanged on it going global in the sense that it will loose close supervision and most likely new objectives are to come in which are certain to conflict with the original objectives of the company thus loosing direction.
Conclusion.The coca cola issue of going local is some kind of strategy of it trying to come back into the global market and it happened because its growth went beyond the optimum level,which increased its costs compared to its revenue which is an incentive of it going to the drawing board in the local market for a new rise because if it find a new booming market again abroad it can not restrain itself to the local market unless it changes to non profit maximixinng firm of which is not the case.
International Markting Interface Inc website,Benefits of Going Global ,Retrieved from
The Cocacola comapany website,The history of Bottling,retrieved from the World wwide web;http://www.thecoca-colacompany.com/ourcompany/historybottling.html on 17th May 2008.
Emu Website; http://www.emu.edu.tr/tanova/IHRM/OrganizationalStructure.ppt.