Coca Cola's Re-Entry

Abstract

Coca Cola, like any other businesses, runs with a mission to maximize its shareowner value over time. To accomplish this mission they created value for each constraint they served which includes their customers, consumers, communities and bottlers. With one fifth of the world’s population, China is one of the best investments by Coke. Therefore they re-entered China in 1979 and eventually became China’s most trusted brand. I plan to show the experience they share in China’s market with respect to objectives of their partners. The market expansion strategy of Coca Cola in this region is determined in terms of theory by costs, positioning, strategy, and the realities of China’s market.

To get rid of higher costs and to adjust effectively in to a different market arena, Coca Cola had to undergo 3 different phases in order to develop the very best financial investment method. Costs are generally increased by market flaws which could have be the result by trouble in the market, the small numbers of market agents that are available, opportunism or bounded rationality. (Mok, Dai, and Yeung, 2002).

In the first phase throughout 1979-1984, the beverage industry and the foreign investment industry in China was still tightly controlled by the government; despite Deng Xiao Ping's 'open door' policy that was implemented in 1978. At first, foreign industries were not permitted to have their own bottling plants, so the only method for Coke to get around this was to work as a wholesaler selling the soda to the bottling plants that were owned by the government which were also their market agents who then were responsible for the production and distribution of Coke's products. (Weisert D., 2001). Coca Cola encountered issues of opportunism, lack of market expertise and power and uncertainties about the market, in that they did not share the very same long term strategic goal as their market agents. Coca Cola's local partners acted passively in the company's initial...