Strategies businesses can adopt to respond to issues of globalisation

With reference to one or two organisations, evaluate different strategies businesses can adopt to respond to issues of globalisation.

Globalisation is the process by which businesses and other organisations develop international influence or start operating on an international scale. As the world becomes increasingly interconnected through cross-border trade and operations, more opportunities as well as threats have been introduced to all businesses. Thus, businesses such as The Coca Cola Company have to adopt certain strategies to capitalise on opportunities and deal with threats. Strategies are plans set by such firms to achieve their long-term goals. Likewise, The Coca Cola Company, which is the world’s leading beverage corporation, have met with opportunities for, and threats to their growth, and have thus adopted various strategies to achieve their long-term goals of increasing market share and profits. Firstly, the phenomenon of globalisation has provided Coca Cola with the opportunity to lower costs of production, by enabling the company to operate on a larger scale and to source for new markets to operate in other countries. The present day Coca Cola Company operates through factories, retail shops and subsidiaries in every continent with the exception of Australia and Antarctica, in over 200 countries. By doing so, the company can enjoy the benefit of lower costs of production as labour is much cheaper in countries such as China. The propagation of globalisation has also helped Coca Cola gain access to areas which are rich in resources. For instance, with globalisation, Coca Cola can get a stake of the fresh groundwater found in Latin America and India, which is needed to produce their mineral water products and soft drinks. Thus, not only can the company enjoy lower costs of production by expanding overseas, it can also increase production, thus increasing profits.

Secondly, the Coca Cola Company can also enjoy larger economies of scale, as well as an increase in customer base and revenue. The company has a stake in more than 900 factories and bottling plants worldwide, through subcontracting and the creation of the Bottling Investments Group (BIG) to meet the demand for their products. The BIG operates globally in 18 countries, such as Qatar, China and Singapore. Thus, the large-scale of Coca-Cola’s operations means that their products can be produced at a higher and faster rate, increasing efficiency and productivity for each factory, ensuring the maximisation of their input resources. Additionally, this also enables Coca Cola to invent and produce new products at a quickened rate, since the firm already has the technology and system in place, therefore satisfying customer demand and expectations. Furthermore, by operating in over 200 countries worldwide, the company has increased their consumer base and increased demand for their products, enabling more revenue. However, globalisation has also brought about threats like increased rivalry. In particular, Coca Cola faces stiff competition from Pepsi Company, which is the second largest beverage company. With the advancement in technology and social media, several companies, like Pepsi Co have taken advantage of this to advertise and promote brand image to the public, increasing competition Coca Cola’s competition. In fact, the ‘Cola Wars’ is a term used to describe a campaign of mutuallytargeted television advertisements and marketing campaigns since the 1960s between Coca Cola and Pepsi, for example, Pepsi’s most successful campaign ‘Drink Pepsi, Get Stuff’, which was a loyalty rewards programme, enabled Pepsi to dominate the summer Atlanta Olympic Games, despite the fact that Atlanta is Coca Cola’s hometown, and Coca Cola was the official sponsor for the games. In response, Coca Cola Company came up with its own rewards programme, ‘Coke Rewards’. Thus, globalisation has also led to the rise of competition from rival groups, resulting in Coca-Cola having to spend large sums of

money on advertising and campaigns to compete and remain attractive to customers. In order to capitalise on the several opportunities that have emerged for growth, due to globalisation, the Coca Cola Company has adopted the strategy of diversification, both related and unrelated. The company has invented a wide range of products, from soft drinks to energy drinks and also mineral water, all of which is sold separately in different countries. For instance, Sprite is sold in Asia, Fanta Pineapple in Greece, Europe and Inca Kola in Peru. It is after conducting thorough research that the company could understand the local preference and taste buds better, and then create beverage suiting the local taste, before introducing it in the respective countries. In doing so, Coca Cola hopes to increase market share and profits. Additionally, in an effort to deal with competition from Pepsi and other drinks companies, Coca Cola has dabbled in the film industry, so as to increase their global influence. In 1982, Coca Cola acquired Columbia Pictures for $692 million. The company then sold it to Sony in 1989 for $3 billion, making a hefty profit. Thus, by not limiting themselves to the Food and Beverage industry, the company could create awareness about their brand and products, increasing influence on the markets, and promoting a popular brand image that is meant to convince customers of the edge that the company has over Pepsi Co and other rivals. As the more popular choice, customers may be more inclined to patronise Coca Cola rather than its rivals, thus allowing the company to maintain their customer base, effectively dealing with threats to their growth. Other than competitors, the customers of Coca Cola have also benefitted, in positive ways, from the strategies of the company to address the issue of globalisation. With Coca Cola making the monopolising of the beverage industry their goal, the company has expanded overseas at an elevated rate. This means that customers who enjoy their products can have more

access to it, through the numerous retail shops and vending machines set up at every corner of the globe. Furthermore, with the rewards system, customers can receive additional benefits while still being able to satisfy their cravings for Coca Cola’s drinks. In conclusion, in order to respond to issues of globalisation, the Coca Cola Company has carried out several strategies, from market penetration, to diversification and making use of social media platform for advertisement, so that they can continue benefitting from the opportunities globalisation has provided, as well as effectively deal with the threats to their growth.