In Atlanta, Georgia, the Coca-Cola corporation was formed in 1886. From coffee to soft beverages, Coca-Cola is among the world’s major producers and suppliers of non-alcoholic drinks. Coca-Cola is also the owner of a slew of iconic soft drink names like Sprite, Fanta, and Diet Coke. Coke operates in various nations, including North America, Asia, Africa, the Middle East, and other nations. Due to its numerous brands, it is the largest beverage corporation globally. In 2020, the Coca-Cola Company predicted that successful firms are founded on reliable decision-making (Al Muhairi and Al Muhairi, 2019, para. 1). Coca-Cola has trailed on growth strategy, enabling it to maximize returns and increase profits while investing in its growth via optimizing its assets, increasing its margin, and allocating its resources leading to robust cash generation.
Coca-Cola’s purpose includes refreshing the globe and generating a difference. Coca-Cola’s unique purpose has enabled it to be where it is, more crucial in the current era. The company works hard towards maintaining its purpose by thinking broadly about revitalizing the spirits and bodies of individuals. It is concerned with how the firm can refill the universe while decreasing their carbon impact, how its operations rejuvenate the societies it serves, how their bottlers refreshes, inspires and develops workers. Coca-Cola provides drinks and products that individuals enjoy, permitting them both mental and physical refreshment, which Coca-Cola must conduct in means that stimulate a sustainable operation and a better shareable future that enhances the lives of people, the environment, and societies. The nourishment is constructed on three pillars: loved brands, sustainable practices, and a better-shared future.
The company has a clear vision for their next stage of development. Its hydration, coffee, sports, and tea products include BodyArmor, Dasani, Avataka, smart wear, Honest, Vitaminwater, GoldPeak, Topo Chico, Georgia, Powerade, and Costa (The Coca-Cola Company, 2022, para 1). Their nutrition, dairy, juice, and plant-dependent beverage commodities include AdeS, fairlife, Del Valle, Simply, Minute Maid, and innocent. The sugar in their drinks to enhancing innovative items in the market transforms its portfolio, from decreasing. Coca-Cola uses its leadership as part of its solutions to enhance positive changes globally and aid the planet in developing a sustainable future. From the firm’s staff to the individuals who associate with the business’s system, investors, and societies, the company invests in improving the lives of persons. The truth of their scale and achievement is that Coca-Cola must lead and be a strength for good and development.
Coca-Cola has a fantastic chance in their forthcoming, and the wind is in their sails the company had set as the north star, leading them to even more meaningful achievement. North America, Coca-Cola’s largest market, has a population of about 320 million people and a retail value of almost $228 billion. Their Latin America segment, which includes 39 markets and a retail value of $72 billion, has nearly 530 million people (The Coca-Cola Company, 2022, para 1). Coca-Cola’s Middle East, Europe, and Africa section encompasses 130 markets, influences roughly 2.1 billion people, and partakes in an appraised trade price of $254 billion. The Asia Pacific segment has a total consumer base of over 3.3 billion people in 39 markets, with an estimated retail value of $308 billion. Coca-Cola designed the Bottling Savings Group in 2006 when it assembled its company-owned bottling activities. BIG was recognized to guarantee that the bottling initiative gets the essential subsidy and services to safeguard their enduring feasibility.
Coca-Cola launched a new operational sector, Global Ventures, in January 2019 to focus on globalizing acquisitions and brands, such as Costa Limited and Coca-investment Cola’s in Monster Beverage Corp and discovering and fostering future development possibilities. The company positively influences people’s lives, the planet, and societies through packaging recycling, water replenishment, sustainable sourcing activity, and reducing carbon emissions across their value chain. Together with their bottling companies, the company employs people exceeding 700000, bringing economic opportunities to local societies globally (The Coca-Cola Company, 2022, para. 2). Coca-Cola’s marketing strategies include ad operations crossways multiple channels that have enabled the company to reach more audiences. Under the economic context, the company has focused on empowering women, and it has established various programs that support women’s activities, creating economic opportunities. Coca-Cola offers beverage drinks to customers in economic and industrial contexts, such as Coca-Cola drinks.
Financial Performance as Reported in the Income Statement
The total cost of goods the Coca-Cola company sold and the company’s sales were high in 2019 but decreased in 2020, probably due to the COVID-19 pandemic, which affected the selling of goods globally. In 2018, the company’s total revenue was $31856, $37266 in 2019, and $33014 in 2020 (Annualreports.com, 2022, p. 67; Finance.yahoo.com, 2022). Coca-Cola’s revenue costs were $11770 in 2018, $14619 in 2019, and $13433 in 2020 (Annualreports.com, 2022, p. 67; Finance.yahoo.com, 2022). Other than the pandemic, other factors could have resulted in declining its sales and cost of sales in 2020, including its marketing strategy. When a firm uses a poor marketing tactic that does not reach a broad group of people, it gets complex for the company to sell more goods, affecting its cost of revenue and total revenue. Due to the decline in total revenue and revenue costs, Coca-Cola decreased its gross profit because it incurred high expenses and decreased sales. In 2018, the corporation had a gross profit of $20086, $22647 in 2019, and $19581 in 2020.
ROE decreased in 2020 due to a decrease in the company’s net profit. A decrease in a company’s profits also decreases its ROE since ROE represents a corporation’s earnings over its equity. Operating expenses decreased in 2020, although they had increased in 2019. Possible reasons that could have contributed include the decline of the company’s sales in 2020. In 2018, Coca-Cola had an operating expense of $10745, $12378 in 2019 and $9856 in 2020 (Annualreports.com, 2022, p. 67; Finance.yahoo.com, 2022). Due to the decrease in operating expenses, Coca-Cola’s operating income also decreased from $10269 in 2019 to $9725 in 2020. In 2018 Coca-Cola had an operating income of $9341, which had surged in 2019 due to the increased sales the company had in 2019. There has been steady progress in interest expenditures after more delayed payments. Referring to Coca-Cola’s income statement 2020, the net functioning net income expenditures were $-237 in 2018, $-383 in 2019, and $-1067 in 2020.
Coca-Cola’s other income expenses increased stably, mainly referring to benefits from financial properties. In 2018, other income expenses were $-754, $-900 in 2019, and $-1091 in 2020. This surge is reliable with the growth of savings made by Coca-Cola. From 2018 to 2020, EBIT has an upward trend, indicating that Coca-Cola generates more profits and its leaders are happy. Coca-Cola’s total expenses increased between 2018 and 2019 but remained constant in 2020, probably because of the increased interest rates that affected their borrowing and spending rates. Shareholder equity also has an upward trend, possibly because of the company’s extra stock shares or retained earnings. Coca-Cola’s inventory turnover decreased in 2020, possibly because of low sales experienced by the company in 2020 and COVID-19. Assets turnover decreased in 2020 due to the economic turmoil various businesses incurred due to the pandemic. Nevertheless, Coca-Cola’s receivables turnover shares increased because Coca-Cola is conventional about spreading credit to clienteles and is effective with its assortment practices.
Reasons for Coca-Cola’s Performance
Coca-Cola’s financial performance has been upward until 2019, when COVID-19 impacted its sales, which affected its gross profit. Importantly, Coca-Cola exploited the crisis as a springboard to accelerate a firm transformation already underway. Coca-Cola’s strong scheme arrangement and networked society enabled the firm to unlock massive potential in their brands and crossways their markets, increasing their revenues (The Coca-Cola Company, 2022, para. 2). Net revenues rose, ensuing net revenues in 2019 and a growth in organic revenues. The rise in Coca-Cola’s gross profit in 2019 is primarily connected to strong product presentation throughout the quarter, constant pricing creativities and a discount of input prices on glistening beverages.
According to Coca-Cola company’s press releases, Coca-Cola incurred a decrease in its sales in 2020 due to burden in the spout commercial in the Northern section of America and far from the home networks in the Western part of Europe owing to the COVID-19 pandemic. The crisis, was partly offset by development in Brazil, China, and Nigeria. The operating revenue, operating loss, and income cost deteriorations were mainly determined by the COVID-19 associated weight on Costa trade provisions, partly counterweighted by robust routine in Costa Rapid machinery in the United Kingdom.
Strategies Coca-Cola has Pursued
Among the strategies Coca-Cola has pursued include sustainability, financial, and growth strategies to facilitate the growth of its position. Through Coca-Cola’s networked institution, the company has altered its working modes reaching the ideal combination of scale and intimacy. To update their advertising and Innovation, Coca-Cola has formed global sector leads with explicit decision-making authority. Coca-Cola has created platform Solutions to enhance and expedite data, analysis, and experiences abilities, resulting in faster growth (The Coca-Cola Company, 2022, para. 1). The solution reduces redundancy and promotes scale. The activities allow more time, funds, and effort for development and improve transparency and implementation speed in the front areas nearest to the customer.
Good publicity starts with attention to development: knowing what the customer wants, creating a better-tasting item, and understandably presenting the brand message using the customer’s passion points. The company’s goal – to “Refresh the World and Make a Difference” – has not changed, nor has its strategy for driving topline and creating value (The Coca-Cola Company, 2022, para. 4). Coca-core Cola’s goals are gaining market share, sustaining good system economics, strengthening its influence among stakeholders, and equipping the company to win in the future. The company selected important objectives for navigating the COVID-19 and set them on a course. On the way to Emerging Stronger, these were its guiding lights. The company emerged strong, with comparable revenues, profitability, and cash generation than pre-pandemic levels.
The beverage industry has used significant research to inform its portfolio optimization strategy, focusing on products to help the Total Beverage Company achieve its goals. The firm undertook the exercise to expand its brand portfolio to support its growth goals and successfully recover from the crisis. The firm’s master brand portfolio has been cut from 400 to 200, allowing global segment groups to concentrate on the most attractive opportunities and commit resources accordingly (The Coca-Cola Company, 2022, para. 2). It aspires to have a well-balanced mix of worldwide, regional, and local brands of sufficient scale to grow its client base, boost frequency, and increase system margins. The organization believes it has a robust portfolio of products that will enable it to cover all drinking events. It plans to continue expanding these trademarks via strategic innovation and execution.
Coca-Cola’s current operating structure enables it to collaborate across departments and locations to develop ideal solutions, allowing the firm to improve on what it does the best. They believe they have experienced a better response to their customers across platforms other than conventional media. They hope that by doing so, they will be able to build more individualized relationships with customers, attract new consumers, and enable further co-creation and meaningful messages. Coca-Cola will offer the enchantment of branding and be more efficient and effective through Strategic Allocation Of resources, which is focused on fundamentally changing the Coca-Cola execute their marketing campaigns. It refers to an approach that merges commercial significances with advanced analytics to initiate scalability and influence. The eight areas listed above are the ones we’ll focus on as we develop this model.
Coca-Cola will boost its effectiveness and stimulate investments in its brands by refining their processes, eliminating redundancy, and optimizing costs on areas like third-party consultants. Its systematic commitment to innovation, which enables the company to introduce new relevant products, equipment, or concepts to the table, complements its work to establish unique brands. The ability to achieve incremental innovation is enabled by customer-centricity. Coca-Cola concentrates on “more controlled innovation,” which is not similar to “less innovation.” It approaches innovation from various perspectives and with specific goals in mind: its 2022 pipeline was created using well-defined procedures and protocols to determine the goal and appropriate level of innovation. Intelligent experimentation involves product, package, and procedure in addition to new tastes and brands.
Coca-Cola promotes community markets to put their most exemplary ideas to the test in a position that enables the institution to nourish, allowing the establishment to expand across regions more quickly than before. The company has implemented excellent execution for constant vital innovation to take off. The firm has made various moves in the continued evolution of its revenue growth control (RGM) program (The Coca-Cola Company, 2022, para. 8). RGM stands for a good skill that replies to necessary business enquiries such as “Where is the revenue within the priority categories?” and ‘Who is your competitor?’ RGM is primarily concerned with determining revenue sources and higher sales tactics. It is a capacity that varies depending on business goals and changing landscape, with various markets at varying journey phases. Advancements play an essential role in Coca-Cola’s RGM strategy by converting information into meaningful insights, delivering competitive advantages that allow Coca-Cola to make smarter, more educated choices faster.
Financial performance can be measured subjectively using assets from a company’s core business model to create income. It is also hired to gauge a corporation’s financial health beyond a specific period. Performance measures consist; of gross profit, net profit, working capital, cash flow, ROA, assets turnover, equity, inventory turnover, quick ratio, and current ratio. Coca-Cola uses a set of key performance indicators (KPIs) to track progress toward achieving its strategic goals. OpEx measures coke’s organizational and financial milestones for growth as a % of NSR and equivalent EBIT margin, which are also included in this list (AnnualReports.com, 2022). The general performance of both Diageo and Coca-Cola is quickly evaluated based on the chosen performance measures of the companies, including investment ratios, profit margin, net profit, equity, and cash flow. Therefore, performance measures are crucial in evaluating a company’s financial performance (Coca-Cola – AnnualReports.com, 2022). They help businesses classify their assets and feebleness, top high players, areas for development, and aid set standards with past data. Increasing revenues while maintaining a low-cost structure creates solid operational leverage. An impartial third poll is conducted by Coca-Cola and compared to other companies that perform well on this criterion.
Coca-Cola uses a monetary system sales measurement to better focus on the company’s underlying performance. It increases FX-neutral revenue per case through pricing and improved category and package mix. In contrast, Diageo’s strategic initiatives help it realize its goal of becoming the country’s most significant, most recognized, and respected consumer goods firm. For premium alcoholic products, Diageo is the world’s most prominent distiller of Diageo. It is frequently held as an example of a high-quality company that investors can securely stash away for the long-term to compound their worth in the future. Numerous quality indicators are unquestionably present, but this business confronts numerous problems, chief among them the ability to adjust and develop in response to shifting consumer tastes. Customers from all around the world are drawn to its impressive collection of brands.
Diageo can deliver on its strategic goals. Diageo sustains quality growth, including everyday efficiency, sensible investments, and positive consumption. Both companies consider the profit margin, ROA, net profit, equity, and cash flow in their annual reports. Coca-Cola’s non-financial performance indicators include creating awareness of its products to target customers, increasing sales, and offering training to clients (AnnualReports.com, 2022). Diageo’s non-financial indicators include listening, tolerance, detachment, and being appealing and nonthreatening. The aforementioned non-financial performance metrics will help Coca-Cola and Diageo, and their stakeholders track their strengths and threats, reveal their performance, provide consumer feedback, and assess how external factors impact their operations.
Non-financial gauges aid in recognizing both one’s strong points and one’s opportunities for growth. The bottom line is a direct reflection of a company’s financial performance. Non-financial measures make it simple to find out what’s causing any discrepancies in performance. An increase in HR budget, for instance, could suggest a high turnover rate. The non-financial measures adopted will benefit both the stakeholders and the company in various ways, including implementing the company’s plans. They will facilitate consistency with the needs and improvement, transparency of efficacy, drivers behind profitability measures, fraud detection, therefore a better stakeholder focus on protracted rather than brief company goals. Thus, the staff members better understand what they need to do to achieve the goals. Employees can also benefit from non-financial indicators, such as their daily attendance boosts production.
An organization encounters a variety of external threats, including recession, natural disasters, conflict, and other events, which are beyond the control of any organization. Risks such as these might affect a company’s income and expenses. When this happens, a company’s financial data may paint a bleak image of its future. As a result, a complete picture can be gained by utilizing metrics other than money. For example, if a firm’s services and satisfaction scores go up during these times, the macro aspects will improve shortly.
Al Muhairi, M. and Nobanee, H. (2019) Sustainable financial management. Available at SSRN 3472417.
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The Coca-Cola Company. (2022) Segments.
Finance.yahoo.com. (2022) The Coca-Cola Company (KO).