Coca Cola and strategy into Viet Nam RTD
Coca Cola and strategy into Viet Nam RTD (Ready to drink) tea marketHoang K. Nguyen
This paper is introduced and review the whole picture of Coca Cola Company and the entry of them into Viet Nam RTD tea market. The main purpose of the project is to use and extract data, information to build a reentry strategy for Coca Cola Company to RTD tea market. To achieve the objective, I use data and graphs such as Coca Cola Annual Report, Beverage Industry Report (2017), Google Trends, Coca Cola Viet Nam Report, Coca Cola Viet Nam Infographic. I analyzed the company overview information, built SWOT analysis and made research regarding to Viet Nam RTD Market to design the reentry strategy for the firm.
Keywords: RTD tea, Coca Cola, Viet Nam, SWOT, PESTLE.
Contents TOC o “1-3” h z u Abstract PAGEREF _Toc525774096 h 2Contents PAGEREF _Toc525774097 h 3Company Overview PAGEREF _Toc525774098 h 4Company Design and Structure PAGEREF _Toc525774099 h 5Strategies and tactics PAGEREF _Toc525774100 h 6Leadership styles PAGEREF _Toc525774101 h 6Management styles PAGEREF _Toc525774102 h 7SWOT Analysis PAGEREF _Toc525774103 h 8Viet Nam Market PAGEREF _Toc525774104 h 9PESTLE analysis PAGEREF _Toc525774105 h 9Viet Nam RTD tea market PAGEREF _Toc525774106 h 12Conclusion PAGEREF _Toc525774107 h 13References PAGEREF _Toc525774108 h 14Tables PAGEREF _Toc525774109 h 15Figures PAGEREF _Toc525774110 h 16
Company OverviewCoca Cola is an American Corporation manufacturing, selling and marketing nonalcoholic beverage and syrups. Their number one sparkling beverage (Coke) was founded in 1886 by Dr. John S. Pemberton and the company was bought by Atlanta business man Asa G. Candler two years after. The headquarters of Coca Cola is locating at Atlanta, Georgia, US and according to Beverage Industry (2017), Coca Cola is the largest beverage (Non-Alcoholic) company in the world. Nowadays, Coca Cola has its business operated on more than two hundred countries and they are one of the most popular brands in the world.
Company Name The Coca-Cola Company
Atlanta, Georgia, U.S
Revenue (2017) 35,410 million USD
CEO James Quincey
Competitors PepsiCo Inc., Nestlé S.A., Unilever Group, …
Table SEQ Table * ARABIC 1. Company Overview
Mission: Coca Cola ‘s mission is:
To refresh the world in mind, body and spirit
To inspire moments of optimism and happiness through our brands and actions
To create value and make a difference. (The Coca-Cola Company, 2018).
Vision: To achieve our mission, we have developed a set of goals, which we will work with our bottlers to deliver:
People: Inspiring each other to be the best we can be by providing a great place to work
Portfolio: Offering the world a portfolio of drinks brands that anticipate and satisfy people’s desires and needs
Partners: Nurturing a winning network of partners and building mutual loyalty
Planet: Being a responsible global citizen that makes a difference by helping to build and support sustainable communities
Profit: Maximizing long-term return to shareholders, while being mindful of our overall responsibilities
Productivity: Being a highly effective, lean and fast-moving organization. (The Coca-Cola Company, 2018).
Coca Cola creates the chain of values, which help guide their actions and behaviors:
Leadership: The courage to shape a better future
Collaboration: Leverage collective genius
Integrity: Be real
Accountability: If it is to be, it’s up to me
Passion: Committed in heart and mind
Diversity: As inclusive as our brands
Quality: What we do, we do well. (The Coca-Cola Company, 2018)
Coca Cola claims that the world is changing every day, in order to develop the business, the firm must always look ahead, change themselves to response the trends and the forces of the market. Besides the missions, visions, the firm also sets the goals to achieve in the future. They create seven sustainable targets to the year of 2020:
Agriculture: Having a sustainable source for the agricultural ingredients
Climate Protection: Reduce the proportion of carbon about 25%.
Giving back: One percent of the operating income will be given back annually.
Human ; Workplace: Achieve 98 percent compliance with independent franchise bottling partners and 95% compliance with Supplier Guiding Principles (SGP)
Packaging ; Recycling: Recycle 75% of the bottles and cans
Return an amount of water to communities and nature equal to the water the firm uses in beverages and production.
Improve the water efficiency in manufacturing by 25%
Women’s Economic Empowerment: Five million women across global value are given the economic empowerment.
Company Design and StructureAccording to Gilhuly (2014), Coca Cola had a centralize system control. After the international expansion, they adapt the decentralize system which gives more authority of decision making to the Division Managers. Operating system are divided into geographical regions (Africa, Asia, Middle East, …). Each Division also have departments of:
This new system helps the managers in local market have more power in decision making, which will respond quickly to the change of demands and the Board of Director will have more time to focus on long term planning for the corporation.
Figure SEQ Figure * ARABIC 1. Company structure. Retrieved from:
Coca Cola has a complex organization structure. Their target is to become a global brand and they have reached to more than 200 countries on the world, they also have six geographic market segments which six operating division for each of this area. Every country they entered has an office which will represent for Coca Cola and manage the business of the market. The head office will give the directions for each division which also has marketing manager, public director, finance manager, … Because of the complexity and tall hierarchy, all the geographical division need to communicate with the highest level to get designations. However, the division managers still get the power to make decisions relating to market they involve in.
Strategies and tacticsCoca-Cola Company is the multinational company and aims to be the well-known brand in the world. Having many markets equals to the complexity of control system, products and strategies in each country they involve in. Main strategies of Coca Cola Company are:
Product differentiation: They have a long list of different products from water to beverage. Besides, they also buy or own many brands that can be competitor in the market such as Sprite, Fanta, Powerade, … With the wide range of products makes customers have many selections and sometimes they do not know that they are buying products from Coca Cola. This generates more revenue and reduce the pressure of competition.
Localized Strategies: Coca Cola will have representative office for each market. These offices have tight connection with suppliers, partners, grocery stores, street vendors or movie theaters so that they can provide, marketing and approach to the customers as soon as possible. This strategy also helps them get the prejudice from customers with the familiarity of the brand and products.
Customer preferences: “What people want is at the heart of our strategy to succeed” – CEO James Quincey (2018). Focusing on the partiality of customers are what makes Coca Cola successful. Company has products meeting the trend of demand in every market quickly, this also helps them to have products competing with competitors in other industry. For example, Coca Cola introduced Dasani (Bottled water) in 1999 to compete with Aquafina of PepsiCo.
Leadership stylesThree core leadership styles of Coca Cola are:
Consumer marketing. This type of leadership makes the bond between company and consumers tighter. Through the localized strategy, Coca Cola has set up a huge network and connection with partners, suppliers and bottlers all over the world. Based on this foundation, the firm creates marketing campaigns which improve brand awareness for brand and products.
Commercial leadership. Having millions of consumers around the world purchasing and selling products means that Coca Cola must understand and enhance customers’ needs. Giving right products with exactly packaging and accurate promotion will better the value of customers and company.
Franchise leadership. The Coca Cola Company shares the values, connections and flexible supports with 300 bottling partners around the world. The success of partners are also the important components of the company. (Shetty, 2011).
This style improves the team work by giving the power and responsibility to make decisions. Managers will get a lot of feedbacks regarding to their work and decrease the pressure on them if the decisions go wrong. Productivity might be improved because of the happiness of employees.
This style saves lots of time for management because quick decisions could be made under pressure of time. The firm rarely applies autocratic style because they believe that if leaders make all decisions by their own without enough information, it could harm the business.
Laissez-faire management style
Coca Cola Company has used this style for a long time. The management assigns the directions, works, tasks to the followers which are usually key employees, this leads to high efficiency and effectiveness in the business.
Employees can present the ideas however all the decisions are made by executives or managers. This style has advantages and disadvantages. In the upper hand, staffs are encouraged to provide ideas and they will feel the importance of their job. The step back of this style is time because it must go through the system to get the final decisions at the end.
Three objects of team work activities in Coca Cola are:
Increasing teamwork means improve the speed and smooth of the operation.
Five objectives of employee engagement styles are conducted by Coca Cola:
Delivery of the hard stuff is simply not enough
Acknowledge this to workforce
Engage every employee in 16 days
Everyone is involved in the management style which is consistent with missions, vision and values
Identifying individuals which are talented, potential through business operation so that they could be internal supervisor, controller to create behavioral standards. (The Coca Cola Company)
SWOT AnalysisCoca Cola Company is an enormous company with diversity of products and great structure to manage and develop the business. Besides opportunities and strengths, there are weaknesses and threats that company need to improve and deal with.
Biggest Market share in beverage industry. In 2017, Coca Cola was the one dominant in the non-alcoholic industry with 35.410 billion USD. This gives company many advantages such as economies of scale, wide customers network, market power.
Diversification of products. With more than five hundred different brands which are distributed to seven beverage categories (Carbonated Soft Drinks, Bottled Water, Juice ; Juice Drinks, Sports Drinks, Tea ; Coffee, Energy Drinks ; Shots, Alternative Drinks), and brands that worth more than 1 billion dollars (Coca-Cola, Sprite, Fanta, Coca-Cola Zero, …). This is a huge lead for Coca Cola comparing to other competitors such as Pepsi with only 56 brands or Nestlé S.A with 10 brands.
Global presence and customer loyalty. With 200 markets across the world, any where you go you can see the image of Coca Cola appearing. This is the reason Coca Cola has a huge number of loyal customers to consume products every year.
Marketing. Coca Cola always has an intelligent and fantastic marketing campaign which aims to customers at all ages. The advantages in market shares and distribution network also enhance the campaign tremendously.
The rise of Pepsi. Pepsi has always been the biggest competitor of Coca Cola for many years.
Health Beverages. The trend is changing with many people care about the nutrition and choose healthy food for themselves. Products such as Coke is decreasing while Coca Cola is the largest manufacturer, however they still not have the brand suiting for the needs of customers right now.
Water consumption. Many lawsuits have been raised against Coca Cola regarding to the water usage of company in manufacturing over the years.
Diversification advantages. With the big potential and capital, Coca Cola can create or buy new brands. Health beverages will be a target and future market for them to enter and generate revenue.
Developing market. Developing countries such as Viet Nam, India, … are having a significantly increase in beverages demand which creates the opportunity for Coca Cola develop business there.
Supply chain. With great distribution, transportation and controlling system, Coca Cola always has the advantages in deliver products to customers anywhere in the world. This will help them have opportunity to approach new customers and release new products without perturbation.
Ingredients sourcing. In the goals of company for 2020 have a goal for sustainable source of material. The mainly threat is the water scarcity and shortage of ingredients that manufacture products of company.
New competitors. Starbucks, Café coffee are rising with preference of healthy products. Red bull and Gatorade are dominating the market share in energy drink.
Viet Nam MarketPESTLE analysisPolitic
Full name: Socialist Republic of Viet Nam
Government type: Communist
Capital: Ha NoiIndependent day: September 2nd, 1945
The Politic system of Viet Nam is stable.
Economy type: Mixed
GDP: $220.4 Billion USD (2017)
Inflation rate: 3.5%
Import: $211.1 Billion USD (China, South Kore, Japan, …)
Export: $214 Billion USD (US, China, Japan, …)
GDP by section: Agriculture (15.3%), Industry (33.3%), Service (41.3%)
The stabilization of politic and low inflation rate are two good factors to do business. Doing business relating to service will meet lots of pressure because of many competitors.
Population: 96,160,163 (2017)
Urban: 35.9% (2018)
Buying trend: Foreign Merchandise Preference
Religion: Buddhist, Catholic, Hoa Hao
Population of Viet Nam is a young population, which provides quality labors. Buying trend of Vietnamese consolidates the business of foreign corporations and increases FDI.
Internet users: 52.7% (2017)
Infrastructure for technology: Poor
Technology in Viet Nam does not meet the demand of many international projects. The Government had to canceled civilian nuclear energy development program in 2016.
Law system: Civil law
Low barriers for FDI and foreign organizations
Agricultural Land: 34.8%
Natural Hazards: Typhoon, floods
Natural Resources: Phosphates, coal, rare earth elements, …
Coca Cola products appeared at Viet Nam market in 1960, and they started Coca Cola Viet Nam Company in 1994. Realizing the rise in beverage market in Vietnam, Coca Cola invested 200 million dollars into Viet Nam market by buying thirty percent of Vinafimex (A food and beverage company in Viet Nam) in 1995, set up two subsidiaries in Da Nang city. However, the demand of nonalcoholic beverages started to decrease significantly in 2004, which made Coca Cola has lost more than 160 million USD (3,768 billion Viet Nam dongs) in 2012 (Coca Cola Viet Nam Reports).
03756025Figure SEQ Figure * ARABIC 2. Vietnam Beverage Demand. Retrieved from: https://trends.google.com/trends/explore?date=2004-09-23%202018-09-23;geo=VN;q=n%C6%B0%E1%BB%9Bc%20ng%E1%BB%8Dt
Figure SEQ Figure * ARABIC 2. Vietnam Beverage Demand. Retrieved from: https://trends.google.com/trends/explore?date=2004-09-23%202018-09-23;geo=VN;q=n%C6%B0%E1%BB%9Bc%20ng%E1%BB%8Dt
101600825500 left1931670Figure SEQ Figure * ARABIC 3. Market share of Viet Nam Beverage Market (2016). Retrieved from: https://www.slideshare.net/TranMinhHai2/coca-cola-and-pepsi-in-vietnam-and-india-market00Figure SEQ Figure * ARABIC 3. Market share of Viet Nam Beverage Market (2016). Retrieved from: https://www.slideshare.net/TranMinhHai2/coca-cola-and-pepsi-in-vietnam-and-india-marketThe significant drop in 2004 and unstable situation of the demand happened because Vietnamese people consider health as priority in life. In 2004, there are information about Coke causing diabetes, obesity, and decrease health which creates questions about the nutrition of non-alcoholic beverage. As the results, the demand of beverages dropped, and many new types of drinks appeared in the market by domestic company as well as foreigner firm. Coca Cola was suffered from this and business went down for several years. However, after 2012, Coca Cola returned to invest 300 million USD into Viet Nam market and for the first time after 20 years, they got profit of 15 million dollars (357 billion Viet Nam Dongs) in 2014. Since then, Coca Cola has developed and become the leader of the beverage market in Viet Nam in 2016 with 41.3 percent market shares. However, many doubted that the period of losses of Coca Cola is hiding the evidences of tax frauds.
center6834Figure SEQ Figure * ARABIC 4. Viet Nam Coca Cola Company Revenue. Retrieved from: http://cafef.vn/doanh-nghiep/bieu-do-nay-cho-thay-20-nam-o-viet-nam-coca-cola-lam-an-tot-nhu-the-nao-20151207163048942.chn
00Figure SEQ Figure * ARABIC 4. Viet Nam Coca Cola Company Revenue. Retrieved from: http://cafef.vn/doanh-nghiep/bieu-do-nay-cho-thay-20-nam-o-viet-nam-coca-cola-lam-an-tot-nhu-the-nao-20151207163048942.chn
Coca Cola applied the same organization structure into Vietnam. The head office in Viet Nam also has five departments such as Finance, Human Resource, Marketing, Innovation and Planning. This structure gives the Director of Coca Cola Vietnam has power to make decisions which respond quickly to the change of demand. Coca Cola also adapted their strategy into Viet Nam market which are:
Product differentiation: With different twelve brands of beverage from water to energy drinks, they are competing in almost beverage industries in Viet Nam.
Localized Strategies: They have researched carefully the Vietnam market. They tried to put the image of the brands everywhere by sponsoring a lot of competition, work with suppliers and partners in markets to have a strong distribution network so that their products can be appeared every where in country even the countryside or mountain region.
Customer preferences: Coca Cola focused absolutely on the preferences of Vietnamese customers such as providing products relate to tea, healthy water, less sugar coca cola, packaging with cultural image of Vietnam.
Values of company are brought into the market which guide the company do the right things in Viet Nam market. In recruitment and training, all the employees must believe and do their jobs based on the chain values of company. They believe in native workers and that is why 99 percent of employees are Vietnamese, beside creating jobs, Coca Cola also invests in social programs which supply 3 million liters clean waters for 540,000 people in the country side. They also have training programs to improve knowledge, skills for women workers, local employees to get the best human resources (Coca Cola Viet Nam Infographic, 2016).
Viet Nam RTD tea marketCoca Cola may have the largest market share of beverage market in Viet Nam, however there are new trends in the preferences of customers in Viet Nam which is called RTD (Ready to drink) tea or noncarbonated soft drink market. The main reasons behind the rising of RTD tea industry which worth two billion USD come from the consumption cultural of Vietnamese customers:
47244058674000Health. It is a culture in Viet Nam to live as long as possible, that is why eating and drinking healthy food and water are very important to them. Tea from beginning is consider as one of the healthiest and most popular by Vietnamese. The tea demand has been increased since 2004 which Coca Cola Company had an eye on it but their actions for this section were performed poorly. Only one brand and two types of RTD tea are created by Coca Cola and they do not have much attention which makes them loose market share into other company in this industry.
4953001270Figure SEQ Figure * ARABIC 5. Tea Demand in Viet Nam. Retrieved from:
00Figure SEQ Figure * ARABIC 5. Tea Demand in Viet Nam. Retrieved from:
Hobby. Drinking tea to purify the body has been in the mind of Vietnamese from the past. With modern life, people usually do not have enough time to make tea at home so that the RTD – Ready to drink tea comes up to meet the demand of consumers.
left36703000These two cultural characters of Vietnamese consumers have made a big strike into the weakness of Coca Cola Company which have been mentioned above in this paper, Health Beverage. Coca Cola Company seems to be very slow in making new products relating to Health Beverages and if they do, it seems to be a small action. Coca Cola has failed in this section which is now dominant by Tan Hiep Phat Company, Pepsico Suntory and Universal Robina (URC).
left595630Figure SEQ Figure * ARABIC 6. Beverages market. Retrieved from https://cafeland.vn/doanh-nhan/doanh-nhan/chiec-banh-thi-truong-nuoc-giai-khat-cua-tan-hiep-phat-14453.html0Figure SEQ Figure * ARABIC 6. Beverages market. Retrieved from https://cafeland.vn/doanh-nhan/doanh-nhan/chiec-banh-thi-truong-nuoc-giai-khat-cua-tan-hiep-phat-14453.htmlThe trend is switching, new competitors are rising, and market share is in danger. Milk tea has grown quickly from 2014 to 2018, with different tastes and choices and this is the solution for Coca Cola. Only one RTD milk tea products released this year and with the power, potential, distribution network and marketing, Coca Cola can create a product which could help them compete in RTD tea market.
0000 First, Coca Cola must create a good quality RTD milk tea product which have enough power to compete with other brands in RTD tea market. The RTD milk tea must meet the preferences of customers which is the heart of strategy that Coca Cola has done very well for 20 years in Viet Nam.
left835025Figure SEQ Figure * ARABIC 7. Milk tea demand in Viet Nam. Retrieved from: https://trends.google.com/trends/explore?date=2004-09-23%202018-09-23;geo=VN;q=Tr%C3%A0%20s%E1%BB%AFa
00Figure SEQ Figure * ARABIC 7. Milk tea demand in Viet Nam. Retrieved from: https://trends.google.com/trends/explore?date=2004-09-23%202018-09-23;geo=VN;q=Tr%C3%A0%20s%E1%BB%AFa
Second, using the strengths in marketing and distribution network to promote and deliver the products into every store, small markets, coffeeshops. Using localized strategy to create a strong advertisement, connection with partners and customers.
Third, relying on the loyalty of customers to build the strong consumption for products.
Finally, always renew products to meet the new trends of RTD tea market.
Those steps based on strengths and opportunities of Coca Cola which helps them comeback in the RTD tea market.
ConclusionCoca-Cola Company is one of the biggest global brands with more than one century operation. Company has strong vision, missions and values consider as foundation for them to become the leader of the industry. The structure of company is mixed between centralization and decentralization that help lower grade managers have more power to make decisions, besides this speed up the response of company to the trend of markets. Their strategies for the international expansion are product differentiation, localized strategy and customer preferences. They have strengths in the diversity of products, distribution network, good marketing strategy with brand recognition, however the firm has problem with the source of ingredients, water consumption, health beverage while many new stronger competitors are raising.
Viet Nam with good political status and low inflation rate is a good place to do business. Coca Cola entered Viet Nam in 1994 by acquisition with big scale entry and massive speed. Company had suffered the lost from 1994 to 2012, however the board of director kept investing in Viet Nam market and then finally got first profit in 2013. In 2016, Coca Cola has the largest market share in Viet Nam Beverage market with 41.3%, company also focus to the core values to develop human resources and social responsibility in local area.
Viet Nam RTD (Ready to drink) tea market is a potential market worth two billion dollars and accounts nearly 37% of beverage market. However, Coca Cola has failed to entry this industry, their weakness at health beverage has made them loose the market share to other competitors. In order to reentry, they must choose to create RTD milk tea products which still now does not have many competitors. With strong marketing campaign and distribution network, Coca Cola can meet the demand of consumers regarding to milk tea, this can take them back to RTD tea market.
ReferencesBeverage Industry (2017). Retrieved September 19, 2018 from: https://www.bevindustry.com/top-100-beverage-companies-2017-chart
CIA Factbook – Viet Nam. Retrieved September 21, 2018 from: https://www.cia.gov/library/publications/the-world-factbook/geos/vm.html
Coca-Cola Viet Nam: (2018). Infographic. Retrieved September 22, 2018 from: https://www.cocacolavietnam.com/content/dam/journey/vn/vi/private/infographics/Coca-Cola-Vietnam-2016-VNM-infographic.jpg
Gilhuly, J. (2014). Coca-Cola Organizational Complexity. Retrieved September 19, 2018 from: http://juliegilhuly.wordpress.com/2014/03/01/coca-cola-organizational-complexity/Shetty, N. (2011). Leadership Style at Coca-Cola Company. Retrieved September 20, 2018 from: http://www.managementparadise.com/forums/foundation-human-skills-f-h-s/221096-leadership-style-coca-cola-company.html#post453091
The Coca-Cola Company: (2018). Mission, Vision ; Values. Retrieved September 18, 2018 from: https://www.coca-cola.co.uk/about-us/mission-vision-and-values
The Coca-Cola Company: (2017). Annual Review. Retrieved September 18, 2018 from: https://www.coca-colacompany.com/content/dam/journey/us/en/private/fileassets/pdf/2018/TCCCAR17.pdf
The Coca-Cola Company: (2018). Sustainability Goals. Retrieved September 18, 2018 from: https://www.coca-colacompany.com/stories/2020-sustainability-goals
The Coca-Cola Company: (2018). History. Retrieved September 18, 2018 from: https://www.worldofcoca-cola.com/about-us/coca-cola-history/
Company Name The Coca-Cola Company
Atlanta, Georgia, U.S
Revenue (2017) 35,410 million USD
CEO James Quincey
Competitors PepsiCo Inc., Nestlé S.A., Unilever Group, …
Figure 1. Company structure. Retrieved from:
Viet Nam Beverage Demand
Figure 2. Vietnam Beverage Demand. Retrieved from: https://trends.google.com/trends/explore?date=2004-09-23%202018-09-23;geo=VN;q=n%C6%B0%E1%BB%9Bc%20ng%E1%BB%8Dt
Market shares of Beverages Companies in Viet Nam
Figure SEQ Figure * ARABIC 3. Market share of Viet Nam Beverage Market (2016). Retrieved from: https://www.slideshare.net/TranMinhHai2/coca-cola-and-pepsi-in-vietnam-and-india-marketleft19812000Coca Cola Viet Nam Revenue ; Profit
Figure 4. Viet Nam Coca Cola Company Revenue. Retrieved from: http://cafef.vn/doanh-nghiep/bieu-do-nay-cho-thay-20-nam-o-viet-nam-coca-cola-lam-an-tot-nhu-the-nao-20151207163048942.chnleft20574000Tea Demand
Figure 5. Tea Demand in Viet Nam. Retrieved from: https://trends.google.com/trends/explore?q=%2Fm%2F07clx;date=2004-09-23%202018-09-23;geo=VNright33528000Milk tea demand
Figure SEQ Figure * ARABIC 7. Milk tea demand in Viet Nam. Retrieved from: https://trends.google.com/trends/explore?date=2004-09-23%202018-09-23;geo=VN;q=Tr%C3%A0%20s%E1%BB%AFa