History

History It is rare to find any staple of American life that has its roots in the preceding century. This is one facet of the Coca-Cola Company that makes it very interesting. From its very meager beginnings, to a multinational fortune five hundred company that has the distinction to serve over one billion people in the course of a day. Dr. John Stith Pemberton founded the Coca-Cola Company in 1886. The first batch was mixed in a three legged brass kettle in his back yard. He then distributed it at the local pharmacy.

That first year sales of Coke averaged nine drinks a day, and grossed $50. Since it actually cost $70 to produce the entire supply of product for that year money was actually lost. Confectioner Joseph Biedenharm first bottled Coke in the summer of 1894. This complemented the fountain soda production of that year. This contributed to the spread of the popularity of the product that was consumed in every state and territory of the United States in 1895.

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Expansion was quick to follow to keep pace with growing demands for Coke. Its interesting to note that this growth was under direction of Asa G. Candler who purchaed Coca-Cola Corporation in its entirety for the sum of $2,300. It was also under his direction that the unique contoured bottle was developed. This has remained a distinct feature of this product and effectively separated it from its lesser competitors. A few years later in 1919 the Company was again sold. However, by this time it was sold for the very sizable sum of $25 million. The buyer, banker Ernest Woodruff and a group of investors decided that this was a prime time to bring the company public.

The initial offering was $40 per share and if the dividends were reinvested, one share of stock today would be worth a very respectable $6.7 million. This can be marked as the point where Coke became a financially viable company. An investment in Coke is a solid one, and does not appear to be a high-risk company. Another point of note is that historically, Coke has paid a dividend four times a year since 1920. This is only a year after the initial stock offering.

Coke stock has also split ten times in its lifetime. Although there is no formula for determining when Coke will allow their stock to split the proof that it does is very evident. Even the United States government has sponsored Coke. During World War II, Coke dedicated itself to get every man in uniform a Coke for five cents no matter what the cost. Concurrently the United States government ordered three million bottles of Coke and the equipment to bottle, wash, and refill each of those bottles twice monthly. This is a similar strategy to the one that Gillette used in providing samples to the United States army and then having it followed by a very substantial order.

The 1960’s are the next dates of notice. This is when the Coca-Cola Corporation made one of their largest acquisitions. Minute Maid Company are producers of high quality fruit juices and complemented the Coke family of products very nicely. Today Minute Maid is the largest producer of concentrate orange juice in the world. The Sixties were also the time when the metal cans that were shipped to the troops in Korea were available on the shelves of your local grocery store. This was the birth of the can of soda.

Life has not always been clear sailing for coke. During the mid 1980’s, Coke decided that it needed a more modern flavor, New Coke was born. The product flopped due to a public out cry and out pouring of loyalty to the beverage that had become an American institution. The result of this was a return to the original formula. Coca-Cola Classic was born.

Cherry Coke was also introduced at this time. The health conscience Eighties also brought about another revolution in the soft drink industry. Suddenly a large segment of the market segment that previously drank soda with a high sugar content wanted a drink with the same taste but not the same sugar content. Thus, Diet Coke became another staple beverage of the American people. This willingness to change is a factor that will keep Coca-Cola viable and in touch with the people.

The bright history that has preceded Coke’s success is nothing but the tip of iceberg, the best days for this company are yet to come. Facts: Dr. John Stith Pemberton first introduced Coca-Cola in 1886. Atlanta Georgia was the Birth City of this company. Coke was first sold from a jug for five cents a glass at the local Pharmacy. Asa G.

Candler bought Coke-Cola for $2,300 in 1891. In 1895 Coke is consumed in every state and territory of the U.S. Canada and Mexico were added to the Coke market in 1898. Coke implements a regional bottling system to supply its growing market. The distinctive contoured bottle is introduced as a Coke trademark in 1915.

Ernest Woodruff and some investors purchased Coke for $25 million. Coke’s stock was first offered to the public at $40 a share. One share purchased then would now be worth $6.7 million if dividends were reinvested. The company’s stock ticker symbol is ko. Coke’s foreign division is a subsidiary called The Coca-Cola Export Corporation.

Coke carries $3.3 million in net debt. This company currently posts a profit of $3.53 Billion in net profit. Coca-Cola is a proud sponsor of the Olympic games. Coke sells 1 billion servings of product per day. Up from 9 per day when the company was founded.

The company’s current chairman is M. Douglas Ivester. He is the tenth chairman of the board in the company’s history. Coke offers $1.9 million in scholarships to graduating high school students. Coke employs 30,000 people in its facilities worldwide.

The Coca-Cola Company offers a full range of benefits to their employees, including a tuition aid program. Coke’s company web site can be found at www.coke.com. Stock can be directly purchased form the Coca-Cola if the buyer has a preexisting hold in the company. The Company pays dividends four times a year: April 1, July 1, October 1, and December 15. The Company has paid quarterly dividends since 1920.

Stock of the Coca-Cola Company has split 10 times since 1919. The Company’s most recent stock split was a two-for-one split in May of 1996. Coca-Cola Corporation also owns Minute Maid Corporation. Ten strategically aligned business partners of the Coca-Cola Company bottle Coke. They are the anchor bottlers.

Anchor bottlers are a group of select companies throughout the Coca-Cola bottler system. The Coke bottlers are also traded independently from the parent company. Coca-Cola recently acquired the Cadbury-Schweppes Co. Coke pulled its add dollars from the World Wrestling Federation, due to its violent content. Coke has produced 27 different varieties of soft drinks in its history. Coke’s subsidiaries produce over 160 different brands of soft drinks for other companies.

Coke’s Minute Maid Corp. is the world’s leading marketer of premium fruit juices and juice drinks. Coke invests greatly in advertising. Their slogans include Coke is it and It’s the real thing. Problem The problem is to develop a three-year strategic plan for Gillette Co.

SWOT Strengths: By far one of Coca-Cola’s largest strengths is their strong advertising campaign. In 1998, Coke had the most recognized trademark in the world (Ivester). The catchy slogans that they roll out every few years consistently become a household commonality. When the average American hears the phrase it’s the real thing they automatically think Coca-Cola. Also during the Christmas season Coke’s clever ads with the polar bears needn’t even be identified specifically as a Coke commercial in order for the viewer to recognize the product. Advertising alone doesn’t make a company product.

Production also plays a large part in Coca-Cola’s strategy. Their product is produced by ten bottling subsidiaries that are totally controlled by Coke (Ivester). All ten of these bottles are publicly traded independently of Coca-Cola. Coke also licenses local bottlers to produce their product. Coke utilizes this method in order to maintain their public image as local company in contrast with their global reality (Coke web site).

Actually 70% of Coca-Cola’s business comes form outside the United States. Due to the vastness of Coke’s worldwide empire the consistency that they maintain is nothing short of a minor miracle. After all, with one billion servings sold a day that’s a lot of volume of soda per year to produce, distribute, and sell. Coca-Cola’s management structure is divided into five geographic groups plus the Minute Maid group. This diversity of the management structure allows each group to tightly control all of the functional areas. With an operation of this size this system is of great value.

If the corporate structure was that of a single head overseeing the entire operation it is conceivable that the head would lose touch with the arms. Weaknesses: The way we see it, we would much rather manage a business in nearly 200 countries than try to build a business in nearly 200 countries (Ivestor). This statement was included as part of a letter to the share holders in Coca-Cola Co. In recent years, due to the changing global economies Coke has taken a less aggressive stand in the market place. Despite this stance, Coke stock and market share has continued to rise.

A company should always remain dedicated to building a better business. This is the promise that a company makes to its stockholders everyday. They promise to do the best that they can to increase the profits of their business. Coca-Cola really needs to reconsider the impact of this statement and re-evaluate its goals for the future. Although Coca-Cola’s decentralized management structure can be a strength, it can also be a weakness.

The company currently does not set common corporate goals. Instead, each management region sets it own goals. In the more economically developed countries this systems works very well. In economically challenged regions where Coke is not established as a daily staple, Coca-Cola needs to change its internal management structure in order to deal with this problem. Perhaps a company wide common goal of supporting the regions where this problem exists with more resources from the other regions and from corporate headquarters.

Another slight problem that exists in the Coca-Cola empire is the relationship that Coke has with their independent bottlers. The contract with the bottlers is under constant negotiations. This has led to some tension in the past. Granted that Coke has a vested interest in the bottlers and the product that they produce Coca-Cola posts a very sizable net profit this year, nearly $3.5 billion. In light of this it seems strange that such a cash rich company should carry $2.2 million in long term debt.

The advantages of carrying this debt for tax purposes do not out weigh the adv …

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