Multinational Corporations (1) (1) (3)

docx

School

London School of Science and Technology *

*We aren’t endorsed by this school

Course

MISC

Subject

Business

Date

Nov 24, 2024

Type

docx

Pages

Uploaded by nicholaskidenge

1 MULTINATIONAL CORPORATIONS & HOW THEY BRING EXTERNAL INNOVATION INSIDE by (Name) The Name of the Class (Course) Professor (Tutor) The Name of the School (University) The City and State where it is located The Date

2 Contents Executive Summary ..................................................................................................................................... 3 Introduction ................................................................................................................................................. 3 Open and Close Innovation ..................................................................................................................... 4 A Critical Evaluation of the Approach to External Innovation and Competition by CocaCola and its Competitors ............................................................................................................................................. 4 Porter Diamond Model Analysis of Coca-Cola and its Competitors .................................................... 4 Internationalization, Localisation, and Competitiveness .............................................................................. 7 Merits and Demerits of Meeting The 'Demand for Internationalisation' and The 'Demand For Localisation' Simultaneously ................................................................................................................... 7 Why Coca-Cola Should Adopt Internationalization to Maximise Its Corporate Profitability Through Low-Cost Leadership or Product Differentiation Or Focus ..................................................................... 8 Organizational Purpose, Profitability, and Social Responsibility ................................................................ 9 Coca-Cola Vision and Mission .................................................................................................................... 9 Organization Purpose Theory .................................................................................................................... 11 Corporate Profitability Theory .................................................................................................................. 11 Corporate Social Responsibility Theory .................................................................................................... 12 Evaluating Coca-Cola's CEO and Board of Directors' Ability to Achieve C.S.R. and Corporate Profitability ............................................................................................................................................ 13 Personal Reflection .................................................................................................................................... 14 Introduction ............................................................................................................................................... 15 Conclusion ................................................................................................................................................. 16 List of References ...................................................................................................................................... 17

3 Executive Summary Purpose: This report critically analyzes the corporate strategies that Coca-Cola has been using to stay ahead of its competitors like Pepsi in Nigeria. Coca-Cola, a premier brand in Nigeria, was introduced in 1951. It has over 2900 employees in the country. Guided by the open innovation philosophy, Porter's model of national competitiveness, and Social Responsibility theory, the report assess the impact of open innovation, internationalization, and competitiveness of Coca- Cola in Nigeria. Method: The report relied on secondary data, mainly the Coca-Cola Financial statement. Results: The result showed that Coca-Cola leveraged open innovation and internationalization to increase its competitiveness in the market and reported an average net income growth of 32%. Conclusion: Internationalization boosts business by entering new markets. Under its aim statement, the company is internationalized. Internationalization benefits enterprises. Companies may innovate and gain income. The procedure's main shortcomings are high price and uncertainty. Coca-Cola has done well in CSR. 1% of profits go to charity. 90% of packaging is recyclable, with 100% by 2025. With local stakeholders, the firm is making recycling easier. Recommendation: It is recommended that Coca-Cola put more effort into Open innovation to tap into the collective knowledge and expertise of external individuals and organizations. Introduction Innovation is the key to long-term success in an increasingly competitive global economy. Innovation refers to introducing novel concepts, tools, or methods into an existing business to increase productivity and better respond to customer needs. A company's success depends on its innovation ability ( Bašić, 2021) . Organizations may use open or closed innovation, two competing methodologies, to achieve this goal.

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

4 Open and Close Innovation The origin and process of the creation of innovation are key differentiating factors. To create new goods and service delivery methods in response to the strategic environment, open innovation encompasses drawing on information from beyond the walls of a company ( Yun and Liu, 2019) . Furthermore, to produce more desirable goods and services, open innovation allows for the collaboration of both internal and external elements of technology and funding. Closed innovation advocates for firms to create new goods and services utilizing only their own personnel, facilities, and other internal resources. This strategy emphasizes privacy, intellectual property protection, and independence (Mintzberg and Lampel, 1998). Closed innovation advocates argue that it helps firms safeguard intellectual property and remain ahead of the competition. However, disadvantages include inefficient R&D methods, the likelihood of technological obsolescence, and limited creativity owing to a lack of outside input. A Critical Evaluation of the Approach to External Innovation and Competition by CocaCola and its Competitors Due to several variables, Coca-Cola's capacity to deal with external innovation and competition is susceptible to change. When comparing a company to its competitors, Michael Porter says that the local characteristics and reputation it carries in its native country are crucial ( Porter, 2011) . According to Porter, the local country reveals a company's strengths and shortcomings and helps shape the company's strategic decisions moving forward. Porter Diamond Model Analysis of Coca-Cola and its Competitors This model provides a robust framework for assessing a company's international competitiveness. The research considers how the firm is structured in the nation where it operates (Lasserre, 2018). According to the model's creator, Michael Porter, a company's international

5 competitiveness is best measured by its performance in its domestic market (Porter 1991). The model focuses on six elements: endowment, related and supporting initiatives, demand conditions, strategy, structure, rivalry, government, and chance. Factor endowment is the quantity and quality of a country's human resources, financial resources, and technological innovation. Coca-Cola has taken advantage of this by spending much on R&D to create novel products that meet customers' varying needs and preferences in various states in Nigeria. The Coca-Cola firm has built one of the world's most well-known beverage distribution networks using a system of bottling and distribution facilities and a network of partners, distributors, retailers, and wholesalers. Diet Coke, aimed at health-conscious customers, and regular Coke, the company's bestseller, allow it to reach a broad audience and satisfy a variety of consumers' preferences. Through its segmentation efforts, Coca-Cola aims to appeal to consumers of all ages and economic levels. It recognizes that age is a critical corporate segment since it is one of the essential factors in segmentation. According to this, Coca-Cola mainly markets to those between the ages of 10 and 35. Coca-Cola utilizes celebrities in commercials and focuses its marketing efforts on educational institutions to attract a younger demographic. Soft drink use is often associated with people of that age. However, Coca-Cola does not just cater to the younger generation. People over the age of 40 who are battling diabetes are the primary target demographic for their diet products. Related and supporting industries are also important in promoting innovation and internationalization. Coca-Cola, for instance, has entered new markets with the help of bottler and distributor agreements in many different nations. By teaming up with local partners, the firm has entered new markets rapidly and effectively. As a result, Coca-Cola dominates the non- alcoholic beverage market with a 50% share in Nigeria compared to 40% of Pepsi.

6 Demand conditions are also important in driving innovation. Nigeria has a vast population of 221,070,097 offers a massive market for Coca-Cola products. Coca-Cola has been able to identify and respond to changing consumer preferences in different markets. For instance, the company recognizes the need for low-calorie and sugar-free beverages; therefore, it has offered such options. Coca-Cola also doubled its system capacity packaging in 2017 to accommodate the repackaging of beverages in 12-ounce cans. Customers wanted smaller cans because they thought the bigger packs were too expensive. So, Coca-Cola spent $30 million on bottling operations to make these convenient single-serve packages. The company's strategy, structure, and rivalry have also significantly promoted innovation and internationalization. In addition, the decentralized organizational structure of Coca-Cola allows for local autonomy. This has allowed the business to adapt rapidly to shifting customer tastes and market situations. As a result, despite stiff competition from firms like PepsiCo, the corporation has managed to preserve its dominant position in the industry. Government policies also impact Coca-Cola's approach to external innovation and competition. This is because the corporation has had to deal with foreign regulatory systems that were very different from their own. The corporation, for instance, has had to adhere to many nations' tax rules, food safety requirements, and environmental laws. Finally, chance occurrences like natural catastrophes, economic downturns, and pandemics may influence Coca-Cola's attitude to external innovation and competition. The recent COVID-19 epidemic, for example, interrupted global supply networks and compelled the firm to reconsider its distribution strategy. Furthermore, the present economic slump has reduced people's disposable money, which has impacted firm sales.

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

7 Internationalization, Localisation, and Competitiveness Localization describes the steps used to tailor a product to a particular market. While internationalization focuses on making a product flexible enough to appeal to consumers in various countries, localization narrows in on a specific need and demographic to make the product or service as relevant as possible. Merits and Demerits of Meeting The 'Demand for Internationalisation' and The 'Demand For Localisation' Simultaneously Companies like Coca-Cola in today's world have to balance the needs of globalization and localization. Internationalization refers to the growing importance of global economic and diplomatic ties. Since multinational corporations play a vital role in facilitating the integration of economies worldwide, their expansion abroad will hasten the pace of globalization ( Li and Liao, 2019) . Conversely, localization works to tailor offerings to match the requirements of regional markets. Both approaches have advantages, but you should also consider the disadvantages. Pursuing internationalization and localization simultaneously allows a company to reach more customers in more places. For example, Coca-Cola has penetrated the Nigerian market because it focuses on the local taste (De Wit and Meyer, 2014). In addition, organizations may increase consumer loyalty and trust by capitalizing on their strong brand reputation and identity. However, doing both at once might be difficult as well. The danger of localization is that it might lead to a watering down of the brand's core values and identity. Coca-Cola, for instance, is instantly recognizable because of its distinctive red and white packaging and flavor. The corporation risks losing its worldwide brand awareness and appeals if it tries too much to cater to local preferences. Too much attention to "international expansion" might have the same effect on

8 Coca-Cola's business as ignoring local markets and missing out on crucial subtleties and trends that could affect sales. Another potential drawback of pursuing both strategies simultaneously is the cost and complexity of managing operations across multiple markets. Changing marketing collateral, packaging, ingredients, and more to accommodate regional needs may be time-consuming and costly. However, it is not easy to oversee a company's worldwide operations due to the complexities of the legal landscape, cultural differences, and logistics involved. Why Coca-Cola Should Adopt Internationalization to Maximise Its Corporate Profitability Through Low-Cost Leadership or Product Differentiation Or Focus To maximize its corporate profitability, Coca-Cola should adopt an internationalization strategy focusing on low-cost leadership, product differentiation, or focus. There are two significant reasons why the company should consider an internationalization strategy. As a first step, Coca-Cola might cut costs by taking advantage of economies of scale by adopting an internationalization strategy emphasizing low-cost leadership. Coca-Cola can lower costs per unit and enhance profitability by manufacturing and selling vast volumes of its goods across several locations (De Wit, 2017). Furthermore, the corporation could compete on price in price-sensitive areas thanks to this approach while retaining its worldwide brand identity. Coca- Cola should increase the number of shops in Nigeria, where there, for instance, might set up shops in developing nations with cheaper labor and manufacturing costs. Second, adopting an internationalization strategy emphasizing product diversification would help Coca-Cola cater to consumers' varying demands and tastes in various parts of the world. As a result, Coca-Cola can differentiate itself from rivals and win over more committed customers by releasing regionally specific products ( Xinyue and Xiaowei, 2018) . Coca-Cola, for instance,

9 should increase the distribution of Coca-Cola Zero Sugar. As a result, Coca-Cola's sales would rise in such areas, and the company could offer more beverages to a broader audience worldwide. Overall, Coca-Cola could improve its bottom line by appealing to a wider variety of customers in Nigeria and lowering production costs by adopting an internationalization strategy based on low- cost leadership and product differentiation. However, such a strategy's advantages might exceed its disadvantages, which include the difficulties of coordinating operations across numerous areas and tailoring goods to local tastes and preferences. Therefore, Coca-Cola's ability to successfully reconcile the demands of internationalization with the requirement to maintain a consistent worldwide brand identity will determine its ultimate success in the global marketplace. Organizational Purpose, Profitability, and Social Responsibility Coca-Cola Vision and Mission The roadmap of Coca-Cola company starts with its mission. It states: "To refresh the world….To inspire moments of optimism and happiness…To create value and make a difference".Achieving the company's stated objective is the primary focus. The company's vision is to create brands and a variety of beverages people like to revive them physically and mentally. And done so in ways that positively impact people's lives, their communities, and the world. In analyzing the company's purpose, Coca-Cola's mission is to help its people grow professionally, boost their productivity, and raise their bottom line. In addition, to capture a sizable portion of the market, the firm ensures client pleasure via portfolio manufacturing and forming partnerships.

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

10 The corporation's overarching goal is to maximize revenues by penetrating foreign markets. Coca-Cola is a global company that places equal emphasis on satisfying its customers and the demands of its franchisees. The company's other stated goals include global awareness and daily market execution. Looking at the Coca-Cola financial statement for 2019 to 2022, the company has been recording an overall increase in net income over the years. However, in 2020, there was a significant decline in net income due to the Covid-19 pandemic. Also, in 2022, there was a slight decline in net income, which can be attributed to global inflation. In 2019 the net income was $ 8,920,000,000. In 2020, the net income was $7,747, 000,000. In 2021, the net income was $9,771,000,000; in 2022, the net income was $9,542,000,000. The corporate profitability is assessed based on the gross profit margin. The gross profit margin for Coca-Cola for the four years is as follows: 2019 (60.77%), 2020 (59.31%), 2021(60.27%), and 2022 (58.14%) ( Stock Analysis on Net, 2023). As the gross profit margin demonstrates, strong brand awareness, a broad product line, and a worldwide distribution network contribute to Coca-Cola's high profitability. Lastly, Coca-Cola's CSR is sustainable. CSR drives corporate success (Lynch, 2006; Johnson and Whittington, 2005). Thus, Coca-Cola prioritizes C.S.R. Company C.S.R. policy has two sections (Johnson and Whittington, 2005). "Better Shared Future" encompasses diversity, community participation, workplace culture, and the Coca-Cola Foundation. Sustainable business includes water conservation, packaging, materials, and ecologically friendly farming. By 2030, the firm wants 25% of its sales in refillable/returnable glass or Coca-Cola freestyle dispensers. The corporation employs 700,000 people, touching countless lives. The firm aims to

11 increase water security by 2030 via context-based water replenishment. Coca-Cola also gives 1% to securities. Organization Purpose Theory According to the organizational purpose theory, businesses serve a greater societal function than just making money. It argues that businesses should consider the greater good of society in their decision-making processes ( Hatch, 2018) . The hypothesis suggests that Coca-Cola, while operating in Nigeria, should aim for more than just profit maximization and instead have a good impact on Nigerian society. Economic growth, community aid, and eco-friendly policymaking are all possible means. Corporate Profitability Theory Profit maximization for the firm and its shareholders is the primary goal of the corporate profitability theory. It implies that a company's main focus is maximizing profits and increasing shareholder value. Applying the theory to Coca-Cola's operations in Nigeria would suggest that the beverage giant's primary goal is maximizing revenue while minimizing expenses to maximize profit ( Nanda and Panda, 2018) . Strategies including increasing market share, releasing new goods, enhancing operational efficiency, and running successful marketing campaigns may all have a role.

12 Source: https://fourweekmba.com/triple-bottom-line/ Corporate Social Responsibility Theory A central tenet of what has been known as "the corporate social responsibility (CSR) theory" is the idea that corporations should care about how their operations will affect the wider community and the natural world. It proposes that businesses should voluntarily take action to solve social and environmental problems, above and beyond what the law requires. According to this hypothesis, Coca-Cola in Nigeria should prioritize CSR efforts, including protecting the local environment, giving back to the community, funding health and education programs, and

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

13 using ethical advertising ( Brin and Nehme, 2019) . Coca-Cola can improve its reputation and boost its brand image in Nigeria by participating in CSR initiatives that benefit society. Evaluating Coca-Cola's CEO and Board of Directors' Ability to Achieve C.S.R. and Corporate Profitability Coca-Cola's leadership conducts ethical and sustainable business. In 2017, Coca-Cola launched its EKOCENTER sustainability program, according to the 2018 Sustainability Report. Clean water for impoverished communities was the company's CSR goal. The board of directors authorized James Quincy to install EKOCENTER kiosks. These hubs store vaccinations and water. This initiative improves public health and environmental sustainability, making it a CSR game-changer for the company. Education empowers Nigeria. Its Youth Empowered initiative has taught over 21,000 Nigerian entrepreneurs (Business Day, 2021). Its Education USA Opportunity Funds Program (OFP) helps academics attend American universities. The company's 2018 World Without Waste project included numerous groundbreaking improvements. Creation, amassing, and cooperation are priorities. 90% of packaging is recyclable, with 100% by 2025. With local stakeholders, the firm is making recycling easier. The firm also met its 5by20 objective. The concept sought to empower 5 million women economically by 2020.

14 Figure 1: Source: https://www.coca-colahellenic.com/ Personal Reflection Coca-Cola's global approach has proven to be successful in every region of the globe. With these methods, Coca-Cola has become a significant player in the soft drink market. Coca-Cola has been so successful because it takes the time to learn all it can about a market before entering it. Coca-Cola has also, for many years, actively sought out celebrities to serve as "brand ambassadors" for the company. This report has helped to clarify why internationalization is so crucial to the success of the Coca- Cola firm. The assessment revealed that open innovation and internationalization are critical to sustaining competitive advantage in the world market. It has also shown how vital it is to use localization tactics to cater to specific regional needs. The evaluation has also highlighted the significance of firms having a well-defined mission and balancing financial success with a sense of social responsibility.

15 The assessment also revealed that Coca-Cola needs sustainability to fulfill international requirements. Coca-Cola's varied product line has helped it beat Pepsi ( Xiao and Zhang, 2020) . Coca-Cola will remain a medium- and long-term market leader due to its enhanced worldwide business and capacity to predict technical, environmental, and cultural changes that might influence its company. The evaluation also highlighted the need for a comprehensive crisis management plan to prepare for and respond to unexpected events like the COVID-19 pandemic. Contingency plans need quick decision-making, risk assessment, and good communication. Without preplanning, a crisis plan is impossible. Good crisis management may lower the company's risk of unforeseen incidents. This safeguards short-term profits and ensures business longevity. Such a strategy requires substantial business understanding. Introduction Multinational enterprises operate internationally. MNCs use open innovation. Open innovation uses internal and external resources to capitalize on new opportunities. This attracts more multinationals. Open innovation for managerial, organizational, and product/service innovation may have enduring advantages. When an M.N.C. beats its competitors and becomes the industry's go-to partner, it often gains a long-term advantage (Mintzberg and Lampel, 2008). Leading open innovation makes it hard for competitors to copy. This case study will examine how Coca-Cola has used globalization and open innovation to beat Pepsi. Coca-Cola rules soft drinks. About 94% of customers worldwide recognize the red and white logo. John Pemberton founded the company in 1886, and it became a global brand within a decade. CEO James Quincey. Nigeria wins. Nigeria's top brand is Coca-Cola, which debuted in 1951. It employs 2900 people nationwide. Revenue has grown significantly.

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

16 Coca-Cola Revenue Growth Figure 2: Source: Statista Conclusion Internationalization boosts business by entering new markets. Under its aim statement, the company is internationalized. Internationalization benefits enterprises. Companies may innovate and gain income. The procedure's main shortcomings are high price and uncertainty. Coca-Cola has done well in CSR. 1% of profits go to charity. 90% of packaging is recyclable, with 100% by 2025. With local stakeholders, the firm is making recycling easier. The company has also succeeded in surpassing its goal for the 5by20 initiative. By 2020, the plan aimed to enhance the lives of 5 million women via economic empowerment.

17 List of References Bašić, M., 2021. Organisational learning antecedents and open innovation: Differences in internationalisation level. International Journal of Innovation Studies , 5 (4), pp.161-174. Brin, P.V. and Nehme, M.N., 2019. Corporate social responsibility: analysis of theories and models. BusinessDay. (2021, October 20). Coca-Cola's seven decades of powering Nigeria through education . Businessday NG. https://businessday.ng/features/article/coca-colas-seven-decades-of-powering- nigeria-through-education/#:~:text=As%20the%20first%20corporate%20partner,colleges%20for %20the%202021%2F2022 Coca-Cola. (2023). FORM 10-K . Investor Relations:: The Coca-Cola Company (KO). https://investors.coca-colacompany.com/filings-reports/annual-filings-10-k/content/ 0000021344-23-000011/0000021344-23-000011.pdf De Wit, B. (2017) – Strategy: An International Perspective, 6th Edition, London: Cengage Learning. De Wit, B. and Meyer, R. (2014) Strategy Process, Content, and Context International Perspective, 5th Edition, London: Cengage Learning. Hatch, M.J., 2018. Organization theory: Modern, symbolic, and postmodern perspectives . Oxford university press. Johnson, G., Scholes, K. and Whittington, R. (2005) Exploring Corporate Strategy: Text and Cases, 7th Edition, London: Financial Times Prentice Hall. Lasserre, P. (2018) Global Strategic Management, 4th Edition, London: Palgrave McMillan. Li, J., Chen, L., Yi, J., Mao, J. and Liao, J., 2019. Ecosystem-specific advantages in international digital commerce. Journal of International Business Studies , 50 , pp.1448-1463. Lynch, R. (2006) Corporate Strategy, Fourth Edition, Financial Times Prentice Hall. Lynch, R. (2018) Strategic Management, 8th Edition, London: Pearson.

18 Mintzberg, H., Ahlstrand, B. and Lampel, J. (1998) Strategy Safari, London: Financial Times Prentice Hall Mintzberg, H., Ahlstrand, B. and Lampel, J. B. (2008) Strategy Safari: The complete guide through the wilds of strategic management, 2nd Edition, London: Financial Times Prentice Hall Nanda, S. and Panda, A.K., 2018. The determinants of corporate profitability: an investigation of Indian manufacturing firms. International Journal of Emerging Markets , 13 (1), pp.66-86. Porter, M.E., 1991. Towards a dynamic theory of strategy. Strategic management journal , 12 (S2), pp.95- 117. Porter, M.E., 2011. The competitive advantage of nations: creating and sustaining superior performance . simon and schuster. Stock Analysis on Net. (2023). Analysis of Profitability Ratios Quarterly Data . 403 Forbidden. https://www.stock-analysis-on.net/NYSE/Company/Coca-Cola-Co/Ratios/ Profitability/Quarterly-Data Xiao, Z. and Zhang, J., 2020. The Analysis of Effectiveness of Cost Control Strategy on the Profitability of Coca-Cola Company From Year 2015 to 2017. Management , 8 (3), pp.232-239. Xinyue, H. and Xiaowei, C., 2018. Research on Implementation of CSR Based on Coca-Cola Case Study. INNOVATION AND MANAGEMENT , p.1617. Yun, J.J. and Liu, Z., 2019. Micro-and macro-dynamics of open innovation with a quadruple-helix model. Sustainability , 11 (12), p.3301.

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

Multinational Corporations (1) (1) (3)

Related Documents