Management of the Coca Cola Company and BHP Billiton - Case Study Example

Strategy of international Business Introduction Multinational companies face more complex and increased challenges as compared to companies that operate at regional or national levels. Most of the challenges faced by these companies revolve around the nature of their business environment particularly with regards to the cultural, legal, economic and political aspects. Some of the challenges faced by multinational companies have to a great extent influenced the development of their business, the formulation of their international strategies, the development of their business processes and international networks. In response to these challenges the management of multinational companies have introduced and implemented new business strategies that enable these companies to effectively adapt to the changing needs of an increasingly global and competitive business environment (Koontz & Weihrich 2006). This paper seeks to examine how the challenges faced by the management of two multinational companies; namely the Coca Cola Company and BHP Billiton have influenced the development of their business, the formulation of their international strategies and the development of their international business processes and networks. It will also examine how new business strategies introduced by the management of these companies have helped these multinational companies to adapt to the ever changing needs of an increasingly competitive and global business environment. Foremost, this paper will provide a brief background of the two companies. Secondly, it will incorporate a methodology section illustrating the methods that will be used to collect and analyse data. Subsequently, it will provide a discussion of the main findings of the data collected. In addition, this paper will provide recommendations on the international strategies that these multinational companies should employ in order to meet the needs of their market and maintain their competitive edge in the market. Background The Coca- Cola Company The Coca- Cola Company is a leading American multinational Company known for manufacturing, distributing and marketing syrup and non-alcoholic beverages like energy drinks, water, juice drinks, sports drinks, light and diet beverages. The company was founded by Asa Candler in 1892 and has since realised tremendous growth and success. One of the key products that the company is known for manufacturing and distributing is Coca-Cola or Coke, a carbonated soft drink (Tung 2001). Over time, the company has introduced other drinks under the Coca-Cola brand name. Some of these drinks include; Diet Coke, Coca-Cola cherry, Coca-Cola Vanilla, Coca-Cola Zero among many others. Currently, the Coca-Cola Company has over 500 brands, the company operates in over 190 countries and serves over 1.7 billion consumers everyday. The company’s market base comprises of five geographical groups namely; the Greater Europe, the Northern America group, Latin American group, Middle and Far East group and the Africa group (Tung 2001). The company acknowledges that customers are very important to their business that is why they actively endeavour to meet the needs of their customers by providing quality products and involving skilled employees in the production, quality control and marketing of their products. Moreover, the company appreciates the national, cultural and ethnic diversities of the market base it operates in. Due to this, the company employs multi-domestic strategies, the company produces different products based on the needs of a particular market base or the internal and external environment of a particular country (Coca-Cola, 2010). Since its inception, the Coca Cola Company has excelled to become one of the world’s leading brands. However, over the recent decades, the company has experienced numerous challenges and as a result the company has experienced difficulties in realising its financial objectives. Some of the challenges experienced by the company revolve around its international strategies, management and ethical issues. In response to these issues the company has over time come up with new business strategies in a bid to sustain its business and actualise its strategic goals (Ferrell, Fraedrich & Ferrel 2010). BHP Billiton BHP Billiton is one of the world’s largest multinational companies that specialises in oil, gas and mining. The company was formed in 2001 through a merger between the Australian Broken Hill Proprietary Company and the Anglo-Ditch Billiton plc. The company has about ten main operating units with over 41,000 employees. It operates different mining and processing operations in over 25 countries around the globe (Divecha & Martinvich 2003). The company’s headquarters are based in Melbourne whereas some of its key management offices are based in the United Kingdom and London. Furthermore, BHP has operation centres in Singapore, Houston, Shanghai and Johannesburg. Although the Australian BHP limited and the British BHP Billiton plc are listed with different shareholder bodies, they operate as a single business with the same management structure and board of directors (BHP Billiton 2010). Based on the company’s revenue and market capitalisation, BHP can be ranked among the world’s largest mining companies (Hitipeuw2011). BHP Billiton is not only known for its achievement in mining, oil and gas operations, but also for its corporate governance principles and solid work ethics based on commitment, respect and integrity. In all its operations around the world, the company aims at working with integrity and accountability. In order to achieve this goal the company operates under principles of corporate governance that are also embedded to its codes of business conduct commonly known as the “BHP Billiton Code of Business Conduct (BHP Billiton 2011). The key aim these corporate governance principles and codes of conduct is to help the company to establish trust with the company’s stakeholders and clients by upholding high business and ethical standards (BHP Billiton 2011; Jones, Felps & Bigley 2007). Despite the fact that BHP has experienced tremendous success and growth over the years, the company has experienced numerous challenges that have affected the company’s capacity as a world leader in mining, oil and gas business. Some of the challenges experienced by this company revolve around the company’s management issues, ethical issues and operations in different business environment. In response to these issues the company aims at being responsive to the needs of the business environment it operates in by using effective international strategies (BHP Billiton 2011). Methodology This study will include both primary and secondary data. Primary data is data that is observed or collected directly from firsthand experience or direct contact with the data source. This will include data from interviews and questionnaires (Newman and Benz 1998). In this study, primary data will be collected through interviews and questionnaires. For the interviews, managers or relevant employees from the Coca- Cola Company and BHP Billiton will be contacted early in advance and informed about the interview, the schedule of the interview and its objectives. Subsequently, an interview will be carried out in order to establish how the challenges faced by the management of the Coca- Cola Company and BHP Billiton have influenced the development of their business, the formulation of their international strategies and the development of their international business processes and networks. Moreover, interviews will be carried out to establish how new business strategies introduced by the management of these companies has helped these multinational companies to adapt to the ever changing needs of an increasingly competitive and global business environment. In addition to this, online questionnaires will be sent to managers or relevant employees from the Coca- Cola Company and BHP Billiton. The online questionnaires will collect information from the alleged respondents relating to the objectives of this study. Secondary data refers to data that has already been collected and documented in other sources. This may include quantitative data such as statistics and sales figures or qualitative data such as business reports and studies (Newman and Benz 1998). The secondary data sources for the study will be obtained primarily from books, newsprint journals, online business reports and articles. The secondary data collected will be both quantitative and descriptive in nature. The company’s business reports will be assessed online through the official website of the company. In order to examine how the challenges faced by the management of the Coca- Cola Company and BHP Billiton have influenced the development of their business, the formulation of their international strategies and the development of their international business processes and networks, literature review will be used as the key source of secondary data. Moreover, literature review will be used to examine how new business strategies introduced by the management of these companies has helped these multinational companies to adapt to the ever changing needs of an increasingly competitive and global business environment. Data Analysis Data analysis is a process through which the raw data collected is organized and evaluated in order to extract useful meaning from it. In this study, most of the data collected will be qualitative in nature. The data collected will be evaluated to extract meaning and conclusion using different data analysis techniques. This study will mainly employ grounded theory as a data analysis technique. According to the grounded theory, the data collected will be evaluated without any preconceived theory (Newman and Benz 1998). Ethical considerations Data collected in this study will be qualitative in nature. The interviews and questionnaires will be carried out on a voluntary basis and all the information collected will be treated as confidential. The respondents will be sensitised on the purpose and objectives of the research and they will be duly informed on what the study entails. Respondents will be not be coerced to participate in the study and their anonymity will be protected and respected with no respondent required to disclose their identity unless otherwise. The participants taking part in the online questionnaires will also not be subjected to any form of coercion or exposed to risks relating to hacking or identity theft. In this study, the secondary data collected will be publicly available for access or purchase in online and print libraries. The information collected will in no way constitute a breach of privacy, copyright or distribution laws and shall not be reproduced or shared without citing the authors or publishers. Main findings The Coca-Cola Company One of the key challenges faced by the Coca-Cola Company over the years, involve increased allegations on the possible health impacts of Coca-Cola products. The company has been subjected to scrutiny and protest due to allegations that it produces unhealthy products that contribute to diabetes, cancer, dental erosion and obesity among many other health complications. For instance, since 1940, a number of court cases have been filed against the Company on grounds that the ingredients used in the production of the company’s products are not fit for human consumption (Hassan 2006; Dugmore & Rock 2004; KillerCoke 2011). In 2003 , an activist group referred to as the Centre for Science and Environment reported that the findings of a laboratory based study show that Coca-Cola brands contain pesticide residue such as DDT, chlorpyrifos, malathion and lindane that exceed global standards by over 30 times. These pesticides are known to cause birth defects, cancer, disruptions to the immune system and severe damage to reproductive and nervous system. In response to these reports the government of India banned Coke and launched independent investigations. As a result of these reports and other allegations in different business environments on the potential health impacts of Coca-Cola products, the sales of Coca-cola products plummeted (Kaye 2004). Over time, this challenge has influenced the management of the Coca-Cola Company to develop their international strategies and business processes in order to build the brand image of Coca-Cola and promote the sales of its products. Generally, the company has denied some of the allegations relating to the potential health impacts of its products however the company acknowledges that some of its products could be contributing factors to health risks such as obesity and diabetes due to their high sugar and calorie content. In response to some of these allegations the company has over time committed itself to work with national and local stakeholders in different business environments that it operates in. The company in conjunction with stakeholders at the local, regional and national level have introduced a number of initiatives aimed at combating obesity and encouraging healthy lifestyles. For example, some of the initiatives promoted by the company support and provide opportunities for people to engage in healthy living through the development of nutrition education and physical activity programs. Moreover, the company in conjunction with other stakeholders have been actively involved in developing educational programs and tools that are effective in sensitising the public on the significance of energy balance in realising healthy and active lifestyles(Coca-Cola 2006)According the Coca-Cola 2007/ 2008 sustainability review, the company introduced the Fit for the Future (FFF) program in Europe. The FFF program is one of Coca-Cola’s comprehensive international strategies aimed at engaging with stakeholders on wellness and health issues. The program also provides resources and funds scientific and research studies on health related issues such as obesity, nutrition and active lifestyles (Coca-Cola Company 2009). Another management challenge facing the Coca-Cola Company revolves around environmental issues. The company’s operations have come under increased criticism in some countries due to its water use and the packaging used for the company’s products. The type of packaging used in Coca-Cola’s products has considerable environmental impacts. Furthermore, the company has been accused of promoting environmental degradation through its operations which deplete ground water table thus affecting many local communities (Coca-Cola Company 2009). In response to these challenges, the management of the company has actively committed its efforts towards sustainable packaging, water stewardship, climate protection and energy management. At the local level, the company has partnered with different environmental institutions to address environmental issues. For example, the company partnered with the Environmental Law Institute (ELI) to develop the capacity of the company’s bottling partners and staff so that they can effectively engage with other local stakeholders in water resource management. In over 20 countries in Asia, Middle East, Latin and Africa, the company has been actively involved in promoting sustainable water management. In 2008, the company received the USAID Global Development Alliance’s “Alliance of the Year “award due to its efforts in promoting sustainable water management and building infrastructure so as to provide better access to sanitation and water in developing countries (Coca-Cola Company 2009). Moreover, the Coca-Cola Company experiences challenges relating to legal, economic, social and political issues in the business environment that it operates in. In some countries, where the company operates in there are political tension, unfavourable social conditions and economic sanctions. This has in turn forced the company to develop international strategies, business processes and international networks in order to maintain its competitive edge in the market. In addition to these challenges, the management of the company experiences challenges relating to the management of cultural and geographical diversities. As a result, the company employs multi-domestic strategies. The company produces different products based on the needs of a particular market base or the internal and external environment of a particular country (Coca-Cola, 2010). The new strategies employed by the Coca-Cola Company have over the years helped the company to adapt to the changing needs of an increasingly competitive and global business environment. As a result of these strategies, Coca-Cola has over time managed to maintain its position as a leader in the beverage industry. Despite of the controversies and allegations linked to Coca-cola products, the company has managed to maintain the appeal of its brands. Coca-Cola products are widely known around the world and as a result enjoy a wide market base. Due to the new strategies employed, the company has successfully established sustainability initiatives that in turn act as value drivers for its business (Insider Profiles 2010). For example, the company’s program for water stewardship in both its plants and the community not only help to minimize water consumption but they also help to avert the risks of business disruption that come as a result of water shortage and other related issues. The company’s strategy to use less energy and packaging material has enabled the company to minimise the costs of Coca-Cola products thus enhancing the profitability of the company. Additionally, the company’s involvement in addressing health issues affecting the community has helped the company to establish a positive public image, this has in turn enabled the company to strengthen costumer’s loyalty towards its brand (Insider Profiles 2010). BHP Billiton As a gas, oil and mining multi-national company, operating in over 25 countries, the management of BHP Billiton experiences many challenges. Key among the challenges that the BHP management experience involves the need to balance between sustainable development and an increasing demand for resources. In order for the company to effectively adapt to the changing needs of an increasingly global and competitive business environment, there is need for it to demonstrate to the host government and communities that the company values and works towards protecting their social and environmental resources. It is worth noting that the Company’s operations greatly impact on the environment and the lives of the surrounding communities. Due to the nature of the company’s operations, environmental management is therefore one of the key challenges faced by the management of BHP Billiton (BHP Billiton 2007). One of the ways in which the company addresses this challenge is through environment stewardship. The company is committed to environmental responsibility by ensuring the efficient use of resources and the enhancement of biodiversity through the assessment of ecological value and land use in all its operations. Over the years the company has been actively involved in findings ways of preventing and minimizing pollution and ensuring that the impacts associated with its operation are managed, minimized and prevented (BHP Billiton 2011). For example, in the 2006/2007 financial year the company embarked on research geared towards investigating new forms of engineering technology that reduce exposure to chemicals that can cause cancer. The company developed a Diesel Particulate Initiative that decreases the exposure of diesel exhaust fuel to the environment (BHP Billiton 2007). Moreover, BHP has launched various initiatives aimed at protecting the environment in most of the countries that the company operates in. For instance, in order to fully mitigate the effects of the company’s mining operations, the company works in partnership with industry associations, governments, non-governmental organizations, academia and other businesses. The company has invested heavily in research and development. Some of the research projects that the company sponsors include; the CO2 Cooperative Research Centre in Australia and the US FutureGen project among many others. BHP has also worked in partnership with the Australian government to determine National Carbon Emissions Trading System. To date, the company continues to build its emissions trading profile in European countries (BHP Billiton 2007). As a result of the new strategies employed, the company has managed to maintain its position as the world’s leading mining company. These strategies not only help to protect the environment but they also act as value drivers for the company’s business. In order for businesses to survive in today’s global market, there is need for them to demonstrate that they use sustainable business practices therefore by employing these sustainable environmental strategies, BHP is able to maintain its competitive edge in the global market (BHP Billiton 2011;BHP Billiton 2007). Recommendations In order for these multinational companies to maintain their competitive edge and adapt to the changing needs of the global market, the management of these companies should; Increasingly collaborate with stakeholders, government and local communities in order to effectively implement strategies that meet the specific needs of the business environment that they operate in. Create awareness among its business networks, investors and shareholders on the newly introduced strategies and the need of implementing sustainable business practises. Enhance their regulatory framework on sustainable international strategies Develop institutions or bodies that evaluate the performance of the company particularly with regards to sustainable business practices and the effectiveness of the newly introduced international strategies. Formulate regulations and policies that will ensure that sustainable business practices and international strategies are fully enforced and implemented. Conclusion This paper has examined how the challenges faced by the management of the Coca Cola Company and BHP Billiton have influenced the development of their business, the formulation of their international strategies and the development of their international business processes and networks. It has also examine how new business strategies introduced by the management of these companies has helped these multinational companies to adapt to the ever changing needs of an increasingly competitive and global business environment. Based on the findings of this study, it is evident that in order for businesses to survive in today’s global market, there is need for them to demonstrate that they use sustainable business practices therefore by employing sustainable international strategies and business practices, these companies are able to maintain their competitive edge in the global market (Insider Profiles 2010; BHP Billiton 2007). For instance, sustainable strategies employed by the Coca-Cola Company have over the years helped the company to maintain its position as a leader in the beverage industry and maintain the appeal of its brands. On the other hand, sustainable strategies and practices have helped BHP Billiton to maintain its competitive edge in the global market (BHP Billiton 2011). Bibliography BHP Billiton, 2007, BHP Billiton Sustainability Report, Retrieved on December 7, 2011 from BHP Billiton, 2010, Our History, Retrieved on December 6, 2011 from BHP Billiton, 2011, Codes of Business Conduct, Retrieved on December 6, 2011 from < http://www.bhp.com.au/bb/aboutUs/codeOfBusinessConduct.jsp> Divecha, S. & Martinvich, D., 2003, BHP Billiton: Behind the world’s Biggest Mining Company, Mineral Policy Institute, UK. Dugmore, C. & Rock, P., 2004, A multifactorial analysis of factors associated with dental erosion. British Dental Journal 196(5), pp. 283-286. 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