The Coca-Cola Company is the world’s leading beverage company, with markets in over 200 countries and over 1,100 brands under their portfolio. The company was founded in 1886 and is currently headquartered in Atlanta, Georgia, USA. This paper seeks to explain the impact of globalization on the standardization versus adaptation decision using examples from the Coca-Cola Company’s performance and strategies since their inception as a company.
Globalisation can be defined as the movement toward economic, financial, trade, and communications integration by countries and their populations globally. It is a constant process and it has resulted in the intertwining and generalisation of the needs and wants of people worldwide. Another result has been the creation of a singular ‘global market’ as opposed to separate markets according to geographic regions. The Globalisation process has accelerated in recent years due to several factors such as advances in technology, government policies and laws, increased consumerism due to growing per capita income levels and the rise of powerful multinational companies who influence international trade and economies greatly.
Globalisation made it possible for companies who were once restricted to their own domestic markets to branch out and compete in the global market. However, while it is true that consumer needs and wants are becoming more generalised, it is often the case that companies who desire to sell their products outside of their domestic market must now evaluate their products and services and decide if they are well suited to the market or markets that they wish to enter or if they need to be tailored to suit. Companies must decide if to standardise their product or invest in product adaptation.
Standardisation is the introduction of a company’s product into a foreign market without any alterations to the product whatsoever. It is an attractive option for many companies because it reduces the amount of expenses incurred in research and development, manufacturing overhauling and marketing or promotional adjustments. Companies are also able to achieve greater economies of scale through standardisation as well as a consistent brand image.
Adaptation, in contrast, is the alteration of products to suit the market or markets that the company wishes to enter. Alterations can be made in a variety of ways, for example, changes can be made to taste, product dimensions, packaging design, brand name and even promotional activities. The major goal of adaptation is to increase sales revenues by catering to the needs and wants of the consumer. In the long run adaptation helps to build customer loyalty and sustained support and spending by customers.
The Coca-Cola Company has managed to expand into almost every country in the world (with the notable exceptions being North Korea and Cuba) and they have done this by keeping a fine balance between standardisation and adaptation.
Since 1889, the Coca-Cola Company operates a franchised distribution system where the company only produces syrup concentrate which is then sold to various bottlers worldwide that hold an exclusive territory. When the syrup is delivered to the franchisee, they then add their own distilled water and sweeteners following the guidelines sent from Coca-Cola. Depending on the water quality and the type of sweeteners used, the taste may vary but it’s the same secret formula used across the board.
Coca-Cola uses relatively standard brands, formulations, packaging, positioning and distribution in its global markets. The design of the Coca-Cola soft drink bottle has changed little in its history, from the logo to the distinctive glass bottle which is sold in each country. Even though the name Coca-Cola is written in the calligraphy of India, Japan and the Middle East, the packaging and the design remains the same and its red and white colours is associated with the...
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