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financial reengineering, but is now moving away from this strategy. The pany has realized that “big is not always better” and is trying to get out of anchor bottlers in Brazil and the Philippines. Source: Annual reports。 unfavorable customer reaction ? Divests entertainment business in 1987 ? Focuses on core, profitable business and doubles ine to $1 billion in 1988 ? Enters bottling business in mid 1980s 1990s ? Launches “Always CocaCola” theme in 1993 ? CEO articulates priorities in 1993 creation of stock holder value, brand building longterm focus ? Top 16 markets account for 80% of volume。 petes with 500 manufactures selling over 7,000 drinks ? Global petitors: PepsiCo, Cadbury Schweppes, Nestle ? Competitors in Japan: Kirin, Ito En, Suntory ? Owns 40% stake in CocaCola Enterprises (world’s largest bottler) 4 COMPANY EVOLUTION Coke has been an international pany since the start of the century, but WWII made it a true multinational. Coke entered the bottling business in the mideighties. Recently, the pany has seen strong profits from financial reengineering in its bottling segment. 1800s ? Invented in 1886 in Atlanta, USA, as a headache, indigestion, and exhaustion remedy ? Major advertising started in 1892。 75% of brands are Japanese Competitors: ? Kirin, Ito En, Suntory CST DCS ? Eric Friberg*, Todd Guild*, Mark Loch, Hirokazu Yamanachi* 33 32 21 14 23 15 33 29 34 29 22 15 25 23 38 14 CAGR 9% * Has worked on Japan studies 2 CONTENTS ? Company overview ? Japan market entry strategy ? Products ? Capabilities ? Organization 3 COKE – COMPANY BACKGROUND ? Founded 1886 in Atlanta, USA ? Number of global employees: 37, 400 ? CEO: Douglas N. Daft (Australian) ? Most senior manager for Japan: Mary Minic (President, Japan) ? Key products: carbonated and sports drinks, juices, tea, coffee ? Market cap: $151 billion (as of November 13, 2023) ? Key industry focus: beverages – No. 1 soft drink pany globally – 50% global market share – Owns two of top three global brands (No. 1 CocaCola classic, No. 3 Diet Coke) – Market leader in soft drinks in Japan still has “ugly American” syndrome。 bottling and distribution managed through alliances。 h as h ad t ode v el op n e w s k i l l s i n d ev el o pi ng no nc arbo na t ed b e v erag es? Ma r k et rel at i on s ? B ot t l ers a l l i an c es s m oo th ed m ar k et e nt r y an d c on t i n ui ng o pe r at i o ns f or Cok e i n J a pa n? Di s trib u ti on a nd s a l esc ha nn e l s? Rel a ti o ns hi p wi th 17 b ot t l ers , o wns 9 30 ,0 0 0 v en d i n g m ac hi ne s (ov er t wi c e th e nu m be rof c o m pe ti to r s )? Ma r k et i ng ? Dev ot es h ug e r es ou r c es to a d v erti s i ng c am pa i g ns a n d prom ot ed a c t i v i t i es res ul t i n g i n s to r yan d brand i m ag e? A l l i a nc es a n d ac q ui s i t i o ns ? Fr eq ue n tl y a l l i es wi th bo tt l ers , res ta urant s a nd m ar k et i ng ag e nc i es (e. g. , s up pl y al l i a nc e wi thMcD on a ld ’s , p art ne r s hi p w ith D en i s u)O r gan iz atio n? A s pi r at i o n an d pr i ori t y ? J ap an re gi on m ad e pri ori t y a nd s tron ge s t t al e nt was d ep l o y e d th ere (e. g. , c urr en t CE O us edto h e ad J a pa n, c urr en t c h i ef o f m ar k et i ng u s e d to h e ad m ar k et i ng f or J ap an )? T al en t ? T en s i on w i th l oc al s ta f f (al m o s t 1 0% o f J ap an of f i c e i s f orei gn ers )? Dec i s i o n m a k i ng a n dr es po ns i b i l i t i es? Mo s t p r of i ta bl e m ar k et a f te r th e . (17% 2 0% of o v era l l prof i t)。CONFIDENTIAL This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client anization without prior written approval from McKinsey Company. This material was used by McKinsey Company during an oral presentation。 it is not a plete record of the discussion. Discussion document December 2023 Coke Case Study – Winning in Japan Ratin g Ratio naleP r od uct?