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Custom Coca Cola Financial Health Analysis Essay

Coca Cola Company is the largest manufacture of soft drinks and beverages with headquarters in Atlanta Georgia. It has over 500 brands and over 3,500 brands. With its operations in over 200 countries spurning in six continents, Coke enjoys global success. It also employs about 139,600 people around the globe. It has 125 years of experience in the manufacture of soft drinks and beverages.

The company manufactures the concentrates beverages bases and syrups that make their brands unique. They sell these to their bottling partners (300 companies) who make the logistical systems in delivering products. They also participate in marketing, online programs, retail shop displays and package designs.

Cash flow position and the primary sources and uses of cash

Coke Cola has exceptionally strong cash flow position. In year 2010, they made US$5.1 Billion that whose projection was to continue upwards. They have an extremely aggressive marketing strategy that seems to pay off. The primary sources of their cash are in their unique products that are still very popular 100 years down the line. Coca Cola invests a lot on their human resources personnel. Employees enjoy good salaries, employment conditions are favorable and in their sustainability report, they got a strategy that aims to continue improving in this area. Another area they use their cash well is in marketing and advertising. Their advertising campaigns have remained popular with people. Their brands are identified easily and their products give customers value of their money. They also involve in environmental conservation and humanitarian activities. 

Shareholder’s dividends and management’s determination

In reference to their corporate article written on Feb. 16 2012, the company has approved the payment of dividends. This will be 50th annual dividend increase. They will be paying $2.04 per share up from $1.88 per share in 2011. Payment for shares is from April 2012. The increase in dividend reflects the Board’s confidence in company long-term cash flow; The Company returned $8.6 billion to shareowners in 2011, through $4.3 billion in dividends and $4.3 billion in share repurchases.

Prospect for investment in the company

Coca Cola Company is the largest selling beverage company in the world. They have 15 billion dollar unique brands, easily recognizable and they have loyal customers that make ready market. The company has strong cash flow system. Moreover, from their sustainability report and future financial projections this will undoubtedly continue to increase.

The company is committed also to building sustainable communities, it participates in initiatives that reduce environmental pollution, promote healthy living, create safe working environment and enhance economic development of the communities where they operate.

They also engage in helping communities; for example,the company pledged US$7.3 Million in cash and product donations to the relief after the country suffered massive earthquake in March 2011. Going by above reasons and in reference to their mission striving to refresh, inspire optimism, happiness, create value and make a difference in people’s life, I would invest in the company.

Coca Cola Vs Pepsi

For a long time, the soft drink industry has experienced a market dominance struggle between two leading giants PepsiCo and Coca Cola Company. Research indicates that, even though both companies were founded at almost the same time, it was not until after the World War II that Pepsi became a major competitor of Coca Cola. Although both companies engage in the production of alcoholic and non-alcoholic beverages, the fights have been concentrated mainly in the “non-alcoholic sector”. Deichert (2006), observes that, for many decades the two companies have fought “cold wars” in an effort to dominate and gain a bigger market share. The rivalries have continued on international fronts, where both companies occasionally accuse each other of a false market reports, use of anticompetitive ethics and questionable market conduct. However, financial and market analysts argue that such rivalry has been positive for the market.

Between the year 2000 and 2004, Coca Cola dominated the soft drink industry with 45% of the market share, while Pepsi held 15% of the market share. As a result of the eminent competition in the market, Coca Cola decided to focus on traditional soft drinks, and pursued international opportunities to gain additional market potential in the soft drink industry. On the contrary, Pepsi focused on the production of “new age drinks” by formed partnership with Starbucks by venturing into snack food business (Datamonitor, 2005). Through the use of innovative strategies and focusing on the snack food business, by February 2006, PepsiCo had surpassed Coca Cola’s market share and improved its overall performance.

Market share

In regard to market share, statistics indicate that Coca Cola commands a large market share in Europe 35%, Asia 25% and North America 30%, while Pepsi has majority control in the United States 63%. Globally, Coca Cola commands 51% of the market share in the soft drink industry in over 80% of the markets, in which it operates, compared to PepsiCo market holding of 25%. Conclusion

As a result of new entrants in the soft drink industry, the market has become fully saturated with many competitors. In terms of product strategies, Coca Cola must expand its product line and engage in product innovation. Product differentiation by the company will make it stable and appeal to the stakeholders and potential customers. This is because the new entrants are bringing stiff competition and decreasing the market share. Although Coca Cola is a brand that is recognized all over the world, the company should enhance brand loyalty. For example, the company should develop other leading brands to strengthen Diet Coke, which has the highest brand loyalty among consumers in the world.

PepsiCo must find creative and innovative ways of competing with Coca Cola. Since it is a global brand, it should develop products that appeal to the older people by venturing into the territories of Coke. In this respect, Pepsi should focus its efforts towards improving its brand equity in order to have more trade leverage among the distributors and create a competitive edge in the market. Overall, Coca Cola and PepsiCo should reduce their huge spending on sponsoring events and channels money towards more innovation and packaging activities.

Code: Sample20

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