Africa: Coke’s Last Frontier

Article Summary

This article gives an overview of Coke’s presence in Africa. The author begins by giving a case study of a shopkeeper in Kenya who sells Coke products in her retail store. In the case study, an estimate reveals that per capita consumption of Coke products is 39 servings in one year.

Stanford compares this consumption with Mexico, one of the biggest consumers of Coke, and mentions that it consumes 665 servings of Coke in the same duration (Stanford, para. 1). The author surveys various markets around the world, such as South Africa, China, India, Zambia, United States etc, and makes interesting observations.

He concludes that Africa seems to have a lot of potential as a marketing area for Coke. The CEO of Coke, Muhtar Kent, asserts that Coke seems to be potentially in danger of losing its market share. In 1989, Americans bought $2.6billion worth of Coke, yet over the next two decades, this figure rose only by $0.3billion. This seems to be the case for most developed countries, making continents like Africa a potential “savior” for this multi-million dollar company.

Implications for Professionals Involved in Coke’s Strategic Management

The strategic management team must consider the above statistic in creating their strategic plan over the next decade. As it seems, developed countries like the USA do not promise a brighter future for the company. Nevertheless, the volume of money changing hands in developing countries like Kenya and South Africa implies that Coke has a better chance of scoring in third-world countries.

This means that the company should make more investments in these countries as they have the potential to generate the much needed 7-9% growth investors expect from Coke Corporation. This means that the management needs to boost its distribution team so that more supplies and more product varieties reach such shops, as those analyzed in the case study.

Some of the strategies that the managerial team needs to implement in these countries include making the products more affordable for the market, though one has to consider the budget that will make this to work out. The other strategy that Coca-Cola can employ is making sure that distribution channels are effective.

This way, the company can cut down on transportation and distribution costs thereby lowering operation costs and hence product prices. The product’s packaging should also be strong enough to withhold some of the harsh conditions in these war-torn countries. In other words, the maintenance costs of the products should be minimal. Finally, Coca-Cola should consider economics of scale, and sell the product more in mass numbers rather than on a retail basis in these developing countries.

The professionals in the managerial team may also have to look deeper into ways of combating their competitors all around the developed world. For example, China’s Coca-Cola Company is facing stiff competition from Wahaha, a beverage company owned by the richest man in China (Stanford, para. 5).

This means that their marketing team needs to come up with strategies of drawing more customers to their side. In countries like India, where Pepsi is the main competitor, the company needs to adopt newer ways to increase sales and improve profit margins (Stanford, para. 7).

Conclusion

There is still a bright future for Coca-Cola, but there needs to be keenness in handling some of the managerial decisions in the executive team. Competition against Coca-Cola is intense, and it will take a bit more aggressive marketing techniques to win over more customers.

Work Cited

Stanford, Duane. Africa: Coke’s Last Frontier. Bloomberg Businessweek. October 2010.

Web. March 8, 2011. < http://www.businessweek.com/magazine/content/10_45/b4202054144294.htm >