Analysis of Coca Cola Business Model in China
With the aim at building the biggest market in China ( China Daily, 2013), Its value
proposition is to provide Chinese customers with a wide variety of products such as carbonated
drink with Coca Cola, Diet Coke, Sprite and Fanta, and non-carbonated drink (water, tea, milk,
fruit juice) with Heaven and Earth Jinrneile, Smart, Lanfeng, Qoo and Sensation (Liberty
University School of Business, 2016). It is a good diversification of products when Coca Cola
want to expand its market widely and deeply in China. The customer segmentation of Coca Cola
products is mass market. The company chooses indirect way to distribute its products through
their bottlers, which helps to cut its cost down. It also nurtures customer relationship by sales
representative’s visit to distributors, offering free fridges with its logo for distributors and
advertisements. Its revenue streams come from both joint-ventures bottlers and concentrate
producer. In order to run excellent business in China, some key activities are carried out,
including marketing, bottling and distribution. It also obtains some key resources such as secret
recipe and distributors as well as bottling plants. Under Chinese law, Coca Cola made a joint-
venture with Chinese key partners at a low percentage of share so that it can control activities of
producing products. Finally, cost structure includes marketing and sales, bottling and
distribution.
APPENDIX 1
SWOT ANALYSIS
Figure 1—SWOT Analysis with Internal Factor Evaluation, External Factor Evaluation, and
SWOT Bivariate Strategy Matrix.
A: SWOT Analysis
Strengths
- (1) Brand Awareness
- (2) Large scale of operation
- (3) Robust distribution network
- (4) Strong marketing and advertising
Weaknesses
- (1) Negative publicity
- (2) Low diversification of products
- (3) Lack of health beverage
Opportunities
- (1) Trend of healthy food
- (2) Sales on carbonate drink growing
in China
- (3) Increase of demand on packaged
drink
Threats
- (1) Competition from domestic
companies
- (2) Water scarcity
- (3) Chinese’s concern about
contaminated food and beverage
B: Internal Factor Evaluation (IFE) Matrix
Internal Strengths
Weight
Rating
Weighted Score
Brand awareness
0.2
4
0.8
Large scale of operation
0.05
3
0.15
Robust distribution network
0.2
4
0.8
Strong marketing and advertising
0.15
3
0.45
Internal Weaknesses
Negative publicity
0.2
3
0.6
Low diversity of products
0.1
1
0.1
Lack of health beverage
0.1
3
0.3
Poor (1), below average (2), above average (3), superior (4)
TOTAL WEIGHTED SCORE
1
3.2
C: External Factor Evaluation (EFE) Matrix
Opportunities
Weight
Rating
Weighted Score
Trend of healthy food
0.2
1
0.2
Sales on carbonate drink growing in China
0.2
3
0.6
Increase of demand on packaged drink
0.2
2
0.4
Threats
Competition from domestic companies
0.2
4
0.8
Water scarcity
0.1
2
0.2
Chinese’s concern about contaminated food
and beverage
0.1
3
0.3
Poor (1), below average (2), above average (3), superior (4)
TOTAL WEIGHTED SCORE
1
2.5
D: SWOT Bivariate Strategy Matrix
SWOT Bivariate Strategic
Matrix
Internal
Strengths
Weakness
External
Opportunities
Strengths – Opportunities (SO)
- (S1, S3 – O2): Based on
brand awareness, Coca Cola
need to improve channel for
distribution in order to gain
more market share in
carbonate drink
- (S2, S3, S4 - O3, O4): with a
large scale of operation an
robust distribution channels,
Coca Cola need to boost
advertisement and promotions
for healthy products an
Weaknesses-Opportunities (WO)
- (W1 – O1, O2): Improve
quality of products to avoid
negative claim on harms to
health by users.
- (W3 – O1, O3): Launch a new
type of packaged healthy drink
and introduce it to market.
package rink
Threats
Strengths – Threats (ST)
- (S1, S4 – T1): Launch
advertisement and promotions
campaigns and improve
distribution channel in order to
overcome competition of
domestic rivals
- (S1, S4 – T3): build brand
awareness on good beverage
by advertisement and
promotions campaigns relating
to that topic
Weaknesses – Threats (WT)
- (W1 – T1): carry out PR
activities to build up good brand
image so that domestic rivals
cannot take over.
- (W1 – T3): create a new
healthy beverage in order to
respond to trend of market
BCG Matrix
Current and Historical Financial Statements
Reference
CHINA: Coca-Cola Co aims to make China biggest market. (2013, May 13). just-drinks.com.
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Liberty University School of Business. BUSI 690 Summer D Casebook.
