Coca-Colas Effort to Refresh the Whole World

Read the case and answer the questions that follow. Studying this case will help you better understand how concepts relat-ing to global expansion can be applied in an organization such as the Coca-Cola Company.

People know Coca-Cola as a global brand. However, when the company entered the Indian market in the mid-1990s, it was the companys second try. Coca-Cola had operated there from 1950 until 1977, when it left with other Western firms in reaction to a law requiring foreign businesses 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 companys top 10 markets.

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 customersfor 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 decreased dramatically,although the farmers themselves may be contributing to the problem. Whatever the cause, the government is restricting water use and the locations of bottling plants.

Coca-Colas 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, andthe United States, Kent lived two years in New Delhi, India, when his father was posted there. He saw India as a beautiful and excitingbut also complex and challengingplace. Later, as a manager, he learned that doing business there requires flexibility. Just as the company has been creative in adapting its distribution to the needs of Indias small merchants, advertising combines corporate-wide themes with locally tailored messages. In a recent television ad,Indian movie stars present a story of young people experiencing moments of joy; Cokes Open Happiness theme is about a universal emotion.

Efforts such as these have helped to make Coca-Cola the worlds 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 Cokes 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 the company and those communities. For example, by extending electric power grids into Indian villages, it makes life more comfortable while making it 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 emissions.

These efforts preserve Coca-Colas 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- Colas 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.66

4-9. How can an understanding of Indias culture help a Coca-Cola manager succeed there?