MAJOR RESEARCH topic globalization the success story of coca cola vietnam

NATIONAL ECONOMIC UNIVERSITYADVANCED EDUCATION PROGRAM MAJOR RESEARCH Topic: Globalization: the success story of Coca Cola Vietnam Student’s name : Nguyễn Văn Thành Student code : 111964

NATIONAL ECONOMIC UNIVERSITY

ADVANCED EDUCATION PROGRAM

MAJOR RESEARCH Topic:

Globalization: the success story of Coca Cola Vietnam

Student’s name : Nguyễn Văn Thành

Student code : 11196458

Course : International business management

Lecturer : Ph D Dinh Le Hai Ha

Table of content

Part 1 Introduction 2

1.1 Rationale 2

1.2 Objectives 2

1.3 Scopes 2

1.4 Methodology 3

1.5 Structure 3

Part 2 Theorical framework 3

2.1 Theory of international business strategy 3

2.2 Types of international business strategies 4

Part 3 The story of Coca Cola Vietnam 6

3.1 Overview of Coca Cola 6

3.1.1 History of Coca Cola 6

3.1.2 Coca Cola International Business Strategy 8

3.1.3 SWOT analysis – Coca Coca Vietnam 11

3.2 Business strategy of Coca Cola in Vietnam 13

3.2.1 History of Coca Cola in Vietnam 13

3.2.2 Business strategies analysis of Coca Cola Vietnam 14

3.3 Assessment 20

3.3.1 Strengths 20

3.3.2 Drawbacks 20

Part 4 Recommendation – Lesson – Conclusion 21

References 22

Part 1 Introduction

1.1 Rationale

Large business CEOs and senior management teams, notably in North America,Europe, and Japan, recognize that globalization is the most pressing problem they

confront today They are also aware that identifying internationalization plans and

commercial partners has gotten more difficult over the last decade

Entering a foreign market is like discovering new territory for business owners It can

be difficult, since foreign countries have different laws, currencies, political, economics and cultural differences Therefore, companies need to choose the most approriate

business strategy and apply them to achieve success in the chosen country Multinational companies need to know how to penetrate the markets, which strategies are best suited fortheir products, what features the audience values and what

Within the framework of this report, we will take a closer look on the story of Coca Cola company, its history, analyze the business strategies which Coca Cola has applied togain achievements, focusing on the success story of Coca Cola in Vietnam market

1.2 Objectives

The essay is conducted to provide information about the Coca-Cola company in general and in Vietnam in particular The essay aims to study the international business strategy that Coca-Cola has been applying in the Vietnamese market Besides, the

research also showed that on the basis of penetrating the Vietnamese market, Coca-Colahas taken advantage of its competitive advantages to capture market share and sales Thereby, evaluating the degree of success Coca Cola achieved in Vietnam and propose recommendations for other companies

1.3 Scopes

Within the framework of the essay, I will analyze some international business

strategies, some forms of market penetration of transnational companies, thereby

focusing on the case of Vietnam market penetration by Coca Cola: The penetration strategy, legal basis, advantages and difficulties of this group when officially entering themarket in Vietnam since 1960, focusing on the phase from 2000 to 2020

1.4 Methodology

For secondary data: Collect secondary data from books, newspapers, syllabuses on international business management, works related to entering foreign market, reports from McDonald Viet Nam

1.5 Structure

This report consists of 4 main parts

Part 1: Introduction

Part 2: Theorical framework

Part 3: The story of Coca Cola in Vietnam

Part 4: Recommendation – Lesson – Conclusion

Part 2 Theorical framework

Business strategy is vital for any company seeking to grow its business in a strategic manner, but what exactly is a business strategy?

Put simply, Business strategy is a clear set of plans, actions and goals that outlines how a business will compete in a particular market, or markets, with a product or number of products or services

But while simple to understand in theory, developing a good business strategy - and then actually implementing it - is no easy task

2.1 Theory of international business strategy

In the era of integration, the trend of globalization is growing and flourishing, the participation of businesses in this playground not only to grasp the trend of the times but also brings a lot of benefits International business activities create conditions for

enterprises to participate in the international division of labor and international trade exchanges, making the national economy an open system, creating a bridge actively and actively between the domestic economy and the world economy, turning the world economy into a place that provides input factors and consumes output factors for the national economy in the economic system international Therefore, more and more multinational enterprises and established networks covering the whole world Along with that, in order to adapt to this environment, businesses are constantly experimenting and coming up with appropriate international business strategies

International business strategy is a part of an enterprise's development strategy, it includes the long-term goals that the business needs to achieve through international business activities, policies and solutions a great way to take your existing business to a new, physically higher state

In essence, an international business strategy is a set of goals, policies and

operational plans of an enterprise in order to achieve a certain rank in the long term under

the influence of the global business environment International business strategy plays a role in guiding international activities for businesses.

Business strategy shows the advantages and disadvantages of the business,

Create conditions for businesses to fully exploit business opportunities,

Minimize threats and operational risks,

Exploit competitive advantages to operate effectively against other competitors in the international market

2.2 Types of international business strategies

There are four types of international business strategies based on pressure to reducecosts and pressure to adapt locally: multi-domestic strategy, global strategy, internationalstrategy and transnational strategy

Multidomestic: Low Integration and High Responsiveness

Companies with a multidomestic strategy have as aim to meet the needs and

requirements of the local markets worldwide by customizing and tailoring their products and services extensively In addition, they have little pressure for global integration Consequently, multidomestic firms often have a very decentralized and loosely coupled structure where subsidiaries worldwide are operating relatively autonomously and

independent from the headquarter

Global: High Integration and Low Responsiveness

Global companies are the opposite of multidomestic companies They offer a standarized product worldwide and have the goal to maximize efficiencies in order to recude costs as much as possible Global companies are highly centralized and

subsidiaries are often very dependent on the HQ Their main role is to implement the parent company’s decisions and to act as pipelines of products and strategies This model

is also known as the hub-and-spoke model

Transnational: High Integration and High Responsiveness

The transnational company has characteristics of both the global and multidomesticfirm Its aim is to maximize local responsiveness but also to gain benefits from global integration Even though this seems impossible, it is perfectly doable when taking the whole value chain into considerations Transnational companies often try to create economies of scale more upstream in the value chain and be more flexible and locally adaptive in downstream activities such as marketing and sales In terms of organizational design, a transnational company is characterised by an integrated and interdependent network of subsidiaries all over the world These subsidiaries have strategic roles and act

as centres of excellence Due to efficient knowledge and expertise exchange between subsidiaries, the company in general is able to meet both strategic objectives

International: Low Integration and Low Responsiveness

Bartlett and Ghoshal originally didn’t include this type in their typologies Other authors on the other hand have attributed the name to the lower left corner of the matrix

An international company therefore has little need for local adaption and global

integration The majority of the value chain activities will be maintained at the

headquarter This strategy is also often referred to as an exporting strategy Products are produced in the company’s home country and send to customers all over the world Subsidiaries, if any, are functioning in this case more like local channels through which the products are being sold to the end-consumer

Part 3 The story of Coca Cola Vietnam

3.1 Overview of Coca Cola

The Coca-Cola Company, headquartered in Atlanta, Georgia, but incorporated in Wilmington, Delaware, is a beverage company and multinational manufacturer, retailer, and promoter of non-alcoholic beverages and syrups of the United States The Coca-Cola

brand has always been the top-selling soft drink brand and everyone in the world loves Coca-Cola or one of its other enticing drinks.

3.1.1 History of Coca Cola

As the first owner of Coca-Cola, but actually Asa Griggs Candler is not the

inventor of this special drink The first person to invent Coca-Cola was pharmacist John Styth Pemberton, owner of a laboratory and private pharmacy With the aim of inventing

a popular medicinal drink to combat headaches and fatigue, Pemberton experimented and concocted a syrup that was as black as coffee Just a spoonful of syrup mixed with a glass

of cold water is a refreshing drink that can relieve headaches and increase refreshment

Pemberton kept the formula secret and only knew that the most important

ingredient of this drink contained a certain percentage of essential oils extracted from the leaves and fruits of the Kola tree This is a plant found only in the tropical forests of SouthAmerica and has a significant composition of koffein and kokain Because of that,

drinking water with Kola essential oil has a refreshing and anti-fatigue effect The name Coca-Cola was named by Frank M.Robinson, Pemberton's chief accountant, starting from that origin but replacing the letter "K" with the letter "C" which seems easier on the eyes and familiar

When he invented Coca-Cola, the pharmacist Pemberton was very interested and

he went on marketing everywhere, especially in the "Soda-Bar" which is very popular in Atlanta That was in 1886 But Pemberton was disappointed because the brown beverage was too new and few people tried to drink it, because people still considered it to be a medicine, not a beverage, if it was drinkable

The Coca-Cola recipe was perfected by accident An employee of the bar "Jacobs Pharmacy" mistakenly mixed Coca-Cola syrup with soda water instead of normal water

as Pemberton's recipe But miraculously, that wrong Coca-Cola cup was unusually

delicious and refreshing At that time, Coca-Cola was really a beverage that could serve a large number of consumers Since then, this bar has averaged 9 to 15 drinks per day

1891: Mr Asa G Candler, a pharmacist and businessman in Atlanta, saw the greatpotential of Coca-Cola, so he decided to buy back the formula and all ownership of Coca-Cola for $2300

1892: Asa G Candler named the Coca-Cola syrup company the Coca-Cola

Company

1897: Coca-Cola is introduced to several cities in Canada and Honolulu.

January 31, 1899: A group of merchants including Thomas & Whitehead and hiscolleague J.T Lupton obtained the rights to build a bottling plant for the purpose of bottling and distributing Coca-Cola products to all parts of the United States

1919: The heirs of Candler's fortune sell the Coca-Cola company to Emest

Woodruff, an Atlanta banker

1923: Emest Woodruff is elected executive chairman of the company, beginningsix decades of leadership, and taking the Coca-Cola company to new heights that no other human could have dreamed of

In 1929, Coca-Cola was marketed in 76 countries around the world

1938: Coke enters Australia, Austria, Norway, and South Africa

During World War II, Coke made a deal to supply Coca-Cola to the US military.During this period, the company built 63 bottling plants worldwide

1945: The Coca-Cola Company registers the trademark "Coke"

1946: Coca-Cola raises its price for the first time after 70 years, maintaining theprice of 5 cents

1950: The first 30-minute Coke television commercial is broadcast on

Thanksgiving Day on BCS

1953: “Coke Time” is released on both radio and TV, becoming so popular thateven a disc of promotional songs is printed

1956: McCann Erickson Inc replaces D'Arcy as Coke's advertising agency

1959: Coke is distributed by a network of 1,700 bottlers, operating in more than

100 countries

1960: Coke buys orange juice company The Minute Maid

1961: Coke made his film debut, a movie titled "One, two, three" On February 1st introduced new product Sprite

1962: Coke offers shares to the public, priced at 101 USD/share

1963: Tab – the first diet drink was born, the name was chosen from a computersurvey with 300,000 results The “Things Go Better with Coke” advertising campaignbegins.

1965: Coke sponsors the popular television series "A Charlie Brown Christmas".Fresca orange juice was born

1969: Coke launches a new logo with 2 colors white - red, new slogan "It's The Real Thing"

1985: Coca-Cola decides to release a new product, New Coke, to replace its secret formula – what critics call the mistake of the century And the classic recipe returnsjust 79 days after the launch of New Coke

top-In 2008, Coca-Cola was awarded the Design Grand Prix for the first time at theprestigious Cannes Lions ceremony thanks to its new brand image and aluminum bottlepackaging

In 2009, Coca-Cola launched “plant bottles” – 100% recyclable and made from 30% renewable materials of plant origin

In 2015, Coca-Cola bottle turned 100 years old Dubbed “The Perfect Liquid Packaging” by Raymond Loewy

Up to this point, after more than 100 years of establishment and development, Coca-Cola has been present in more than 200 countries around the world

Around the world, Coca-Cola operates in 5 regions: North America, Latin

America, Europe, Eurasia & Middle East, Asia, Africa Particularly in Asia, Coca-Cola operates in 6 regions: China, India, Japan, Philippines, South Pacific & Korea (Australia, Indonesia, Korea & New Zealand) West and Southeast Asia (SEWA) including Vietnam

3.1.2 Coca Cola International Business Strategy

In order to become a famous brand worldwide, Coca-Cola has built and

implemented effective international business plans

Multi-domestic market strategy

Coca-Cola's international business strategy in the early stage of entering

This is a strategy geared towards maximizing local responsiveness The

characteristic of companies implementing a multi-domestic market strategy is that theycustomize their products and marketing strategies to suit local requirements

At this time, Coca Cola has just begun to penetrate the domestic market of other countries In order to take certain steps and create favorable conditions when setting foot

in these countries, Coca Cola needs to respond well to local demand to create acceptance for this product Coca Cola has researched and launched product lines with a high degree

of suitability with the tastes and preferences of local people

Each value-creating activity such as production, marketing, and product

development is concentrated in a few locations around the world in order to exploit economies of scale and location economies

With this strategy, Mr Roberto Goizueta, with the slogan: "Think global, act global", has pushed Coca-Cola to become a global company, concentrating a lot of management and marketing activities at headquarters company in Atlanta, focus on its core brands, and buy ownership stakes in foreign bottlers so the company can exert more strategic control over them

The globalization strategy helps Coca-Cola exploit the potential international market outside And above all, standardization helps Coca-Cola focus on core products, control business strategy and reduce costs

Moreover, applying the globalization strategy, Coca-Cola can manage product quality and create a sustainable brand From there, increase competitive advantage, gradually gain market share With this strategy, Mr Goizueta has helped Coca-Cola get67% of total income and 77% profit from countries outside North America

Transnational strategy

Currently, Coca-Cola's international business strategy is a transnational strategy

The reasons that Coca-Cola chooses a transnational strategy for its international business strategy can be mentioned as follows:

- Pressure for local adaptation is high: due to different tastes in each country and differences in the policies of the host country

- Pressure to reduce costs is high: there are more domestic manufacturers with large and modern production lines to compete

Through the analysis of two pressure groups: High pressure to reduce costs and High pressure to meet local requirements, Coca-Cola, under the leadership of Mr Neville Isdell, has since moved to implement the Transnational Strategy family

This strategy is a combination of both Goizueta's global strategy and Daft's

previous multi-domestic strategy To meet the pressure team to meet local requirements,Coca-Cola reviews and guides the development and marketing of local products, but adopts the belief that strategy, including pricing, product service, and marketing

messages, need to be changed from market to market to suit local conditions

By combining the two aspects of each strategy, Coca-Cola builds an image of a defined brand as well as understanding of local practices that enables them to create and embrace cultural differences Coca-Cola prides itself not only on creating its own

distinctive brand but also with its attention to local market needs

=> To become one of the famous beverage brands in the world, Coca-Cola has built and implemented effective international business strategies Key strategies in Coca-Cola's international business strategy include:

Multi-domestic market strategy

Globalization Strategy

Transnational strategy

3.1.3 SWOT analysis – Coca Coca Vietnam

Opportunities Threats

Strength Opportunities (SO) Strength Threats (ST) Strategies

Strategies Strengths Vietnam Coca can use two approaches -

Using Vietnam Coca strengths building on present strengths or analyze

to consolidate and expand the the trend and build processes to market position pronged market penetration approach

two-Weakness Opportunities

Weaknesses Threats (WT) Strategies (WO) Strategies

Weaknesses Building strategies based on Vietnam Coca should just get out of these

business areas and focus on strength andconsumer-oriented product

threats box, or on weakness anddevelopment and marketing

opportunities box

approach

Strengths

- Strong relationship with existing suppliers – As an incumbent in the industry,

Vietnam Coca has strong relationship with its suppliers and other members of the supply chain

- Diverse Product Portfolio of Vietnam Coca – The products and brand portfolio of Vietnam Coca is enabling it to target various segments in the domestic market at the same time

- Superior product and services quality can help Vietnam Coca to further increase its market share as the current customer are extremely loyal to it

- Strong Brand Equity and Brand Awareness – Vietnam Coca has some of the most recognized brands in the domestic market it operates in

- First Mover Advantage – Vietnam Coca has first mover advantage in number of