The Poorest Continent
COLLEGE OF BUSINES/ATC
UNIVERSITI UTARA MALAYSIA
BFMA 6043 INTERNATIONAL BUSINESS
SEMESTER 2011/2012
INDIVIDUAL ASSIGNMENT NO: 2
PREPARED FOR :
DR. SABRI
PREPARED BY :
MOHD GHAZALLY BIN ABDUL RAZAK (MATRIX NO: 808707)
SUBMISSION DATE : 4TH. DECEMBER 2011
Coca Cola Case Study
Case Discussion Questions
Question 1
Why do you think that Roberto Goizueta switched from a strategy that emphasized localization towards one that emphasized global standardization? What were the benefits of such strategy?
Answer 1
Roberto Goizueta switched from localization strategy to global standardization strategy because during his initial control over Coca Cola Company in 1980’s, the Coca Cola brand has already been marketed to more than 76 countries in the world and the subsidiaries were managed individually by the local management to suit with local taste and preference. This practice has given bad impact on the company profit as there were a lot duplication of functions, smaller scale of production runs and too much of customization which limits the ability of the firm to capture the cost reduction.
The benefit of Global Standardization is the company will enjoy increase profitability and profit growth by reaping the cost reduction through economies of scale(produce in large quantity), learning effect(the production efficiency is improving from time to time as the worker become expert after repetitive sequence) and location economies(product’s value creation is done at the optimal location/environments). So by having the Global Standard, the product is produced at the most economic price and will create better perceived value for money spent by the customer.
Question 2
What were the limitations of Goizueta’s Strategy that persuaded his successor, Daft, to shift away from it ? What was Daft trying to achieve? Daft’s strategy also did not produce the desired results. Why do you think this was
UNIVERSITI UTARA MALAYSIA
BFMA 6043 INTERNATIONAL BUSINESS
SEMESTER 2011/2012
INDIVIDUAL ASSIGNMENT NO: 2
PREPARED FOR :
DR. SABRI
PREPARED BY :
MOHD GHAZALLY BIN ABDUL RAZAK (MATRIX NO: 808707)
SUBMISSION DATE : 4TH. DECEMBER 2011
Coca Cola Case Study
Case Discussion Questions
Question 1
Why do you think that Roberto Goizueta switched from a strategy that emphasized localization towards one that emphasized global standardization? What were the benefits of such strategy?
Answer 1
Roberto Goizueta switched from localization strategy to global standardization strategy because during his initial control over Coca Cola Company in 1980’s, the Coca Cola brand has already been marketed to more than 76 countries in the world and the subsidiaries were managed individually by the local management to suit with local taste and preference. This practice has given bad impact on the company profit as there were a lot duplication of functions, smaller scale of production runs and too much of customization which limits the ability of the firm to capture the cost reduction.
The benefit of Global Standardization is the company will enjoy increase profitability and profit growth by reaping the cost reduction through economies of scale(produce in large quantity), learning effect(the production efficiency is improving from time to time as the worker become expert after repetitive sequence) and location economies(product’s value creation is done at the optimal location/environments). So by having the Global Standard, the product is produced at the most economic price and will create better perceived value for money spent by the customer.
Question 2
What were the limitations of Goizueta’s Strategy that persuaded his successor, Daft, to shift away from it ? What was Daft trying to achieve? Daft’s strategy also did not produce the desired results. Why do you think this was