1、CONFIDENTIALThis report is solely for the use of client personnel.No part of it may be circulated,quoted,or reproduced for distribution outside the client organization without prior written approval from McKinsey&Company.This material was used by McKinsey&Company during an oral presentation;it is no
2、t a complete record of the discussion.Discussion documentDecember Coke Case Study Winning in Japan 第1页FINGERPRINT COKEHighLow2NJ-262408.756/001117NbgeoHR1第2页COKE IN JAPAN CapabilitiesLocalizes physical assets;bottling and distribution managed through alliances;bottling alliances are typically inclus
3、ive 17 bottlers in JapanCreates direct distribution system to stores through bottlersOffers marketing,manufacturing,and investment support to partners,when neededHas supply alliances with McDonaldsSpends huge resources on influencer relationshipsPartners with local agencies for marketing capabilitie
4、s(e.g.,Dentsu)Customer pull demand in product push Japan Uses segment marketing to understand customer behaviorOrganizationStrong community feel to CokeHolds conventions for bottlersDistributes bottlers magazineCompensation is competitive attracts graduates from top schoolsAlmost 10%of Japan office
5、is foreigners some degree of tension with local staff;still has“ugly American”syndrome;senior Japanese experience glass ceilingJapan seen as strong progression path CEO used to head JapanProductAdapts products to local marketsAlmost 10%of revenue comes from Japan-specific productsBrands include Geor
6、gia Coffee,Sokenbicha,and AquariusBottlers guided Coke into developing localized products“Fast follower”strategy quickly followed lead of smaller local players to enter tea and coffee drinksCoke maintains full control over product content Launches new types of products in Japan(e.g.,canned soup drin
7、k)Middle Far EastEuropeNorth AmericaSales$Billions1993199519971999Performance/backgroundLevers for successOtherMarket informationMarket is very competitive more than 7,000 soft drinks are sold in Japan by 500 manufacturersVending machines account for 50%of soft drink sales Company informationCoke is
8、 the market leader in JapanJapan is a very profitable market for Coke(potentially the most profitable)Maintains 900,000 vending machines,2x the number of competitors ProductsCoffee drinks,green tea,black tea,milk/yogurt drinkCoke offers 5 brands with 60 flavors;75%of brands are JapaneseCompetitors:K
9、irin,Ito En,SuntoryCST DCSEric Friberg*,Todd Guild*,Mark Loch,Hirokazu Yamanachi*14.018.018.919.833322114231533293429221525233814CAGR 9%*Has worked on Japan studies3NJ-262408.756/001117NbgeoHR1第3页CONTENTS Company overviewJapan market entry strategyProductsCapabilitiesOrganization4NJ-262408.756/00111
10、7NbgeoHR1第4页COKE COMPANY BACKGROUND Founded 1886 in Atlanta,USANumber of global employees:37,400CEO:Douglas N.Daft(Australian)Most senior manager for Japan:Mary Minic(President,Japan)Key products:carbonated and sports drinks,juices,tea,coffeeMarket cap:$151 billion(as of November 13,)Key industry fo
11、cus:beveragesNo.1 soft drink company globally50%global market shareOwns two of top three global brands(No.1 Coca-Cola classic,No.3 Diet Coke)Market leader in soft drinks in Japan56%market share;competes with 500 manufactures selling over 7,000 drinksGlobal competitors:PepsiCo,Cadbury Schweppes,Nestl
12、eCompetitors in Japan:Kirin,Ito En,SuntoryOwns 40%stake in Coca-Cola Enterprises(worlds largest bottler)5NJ-262408.756/001117NbgeoHR1第5页COMPANY EVOLUTION Coke has been an international company since the start of the century,but WWII made it a true multinational.Coke entered the bottling business in
13、the mid-eighties.Recently,the company has seen strong profits from financial reengineering in its bottling segment.1800sInvented in 1886 in Atlanta,USA,as a headache,indigestion,and exhaustion remedyMajor advertising started in 1892;by 1895 Coke was sold in every U.S.state 1900s-1920sCoke sells in C
14、uba,Jamaica,Bermuda,the Philippines,Puerto Rico,and Europe by 1916First bottling franchise established in 1901Repositions Coke as non-medicinal productCoke bottle invented in 1916Devotes personnel to maintaining good relations with bottlers in 1922Establishes pioneering market research agency 1930s-
15、1960sAdvertising targets minorities starting in 1950sWorld War II catapults Coke into world market,creating first U.S.multinationalFanta innovated by Coke in Germany,driven by ingredient constraints during WWIIOpens 15-20 plants worldwide during 1950sMerges with Minute Maid in 1960Merges with Duncan
16、 Foods in 1964Acquires Belmont Springs Water Co.in 1969Expands product line in response to PepsiCo competition in 1960sFanta in U.S.in 1960Sprite,Tab,Fresca introducedDiet versions introduced 1970s-1980sAcquires Aqua-Chem(desalting machines)in 1970Acquires Taylor Wines and other wineries in 1977Intr
17、oduces Coke in Russia and China in 1970sAcquires Columbia Pictures in 1982 for$750 millionReformulates Coke in 1985;unfavorable customer reaction Divests entertainment business in 1987Focuses on core,profitable business and doubles net income to$1 billion in 1988Enters bottling business in mid 1980s
18、1990sLaunches“Always Coca-Cola”theme in 1993CEO articulates priorities in 1993 creation of stock holder value,brand building long-term focus Top 16 markets account for 80%of volume;the markets comprise 20%of world populationBottling business plays important role in profitability Invention Reposition
19、ing and marketing Expansion,acquisitions,and diversification Diversification and rationalization MarketingSource:International Directory for Company Histories 6NJ-262408.756/001117NbgeoHR1第6页Source:Annual report;Standard&Poors RegistarNameRoleJapan experienceDouglas N.DaftCEO and ChairmanSENIOR MANA
20、GEMENTPresident and COOJames E.ChestnutEVP,Operations SupportCharles E.FrenetteGary P.FayardSVP and CFOJoseph R.GladdenEVP and General CounselCarl WareEVP,Head of Global Public Affairs and AdministrationSVP,Chief Marketing OfficerStephen C.JonesCoke has a diversified team of senior managers.Used to
21、head JapanJack L.StahlEVP,President of Greater EuropeUsed to run marketing in Japan7NJ-262408.756/001117NbgeoHR1第7页COKE STOCK PRICE COMPARISON U.S.Coca-Cola Co.Beverages(non-alcoholic)S&P 500 Comp Ltd.Coke dramatically outperformed the market as well as its competition,especially when it started div
22、esting non-core businesses to focus on its profitable segment.Coca-Cola Co.Beverages index(non-alcoholic)S&P 500 index8NJ-262408.756/001117NbgeoHR1第8页COKE SALES BY REGION$Billions Coke has an estimated 56 percent market share in Japan and has been growing its Japanese contribution to total sales.199
23、319951997199914.018.018.919.8OtherMiddle and Far EastEuropeNorth America CAGR=9%142132332933231514222935382326139NJ-262408.756/001117NbgeoHR1第9页Source:Company web-siteCOKES SALES BY BRAND In 1999,63 percent of Cokes total gallon sales came from products bearing“Coke”trademark.CokeOther10NJ-262408.75
24、6/001117NbgeoHR1第10页Coke has historically made equity investments in selected bottlers with the intention of financial reengineering,but is now moving away from this strategy.The company has realized that“big is not always better”and is trying to get out of anchor bottlers in Brazil and the Philippi
25、nes.Source:Annual reports;McKinsey analysisHIGHLIGHTS OF COKES BOTTLING BUSINESS Breakdown of worldwide unit case volume produced/distributedBottlers owned and controlled by CokeIndependently owned bottlersBottlers in who Coke has non-controlling ownershipPercentHistorically,Coke invested in underva
26、lued bottlers worldwide,provided financial and managerial support,and improved operating efficiencies which generated increased sales;Coke benefited from growth,improved cash flows and increased owner value;at times,Coke sold these bottlers after turning them around,for sound profits11NJ-262408.756/
27、001117NbgeoHR1第11页SELECTED LOCATIONSCoke is headquartered in Atlanta,Georgia in the U.S.,but has subsidiaries located over a wide geography.NOT EXHAUSTIVE12NJ-262408.756/001117NbgeoHR1第12页CONTENTS Company overviewJapan market entry strategyProductsCapabilitiesOrganization13NJ-262408.756/001117NbgeoH
28、R1第13页STORYLINE In order to enter and succeed in Japan,Coke realized that it needed to adopt a partnering strategy.Coke allied with 17 locally owned and managed bottlers and leveraged these relationships to set up a direct distribution channel as well as gain manufacturing and marketing capabilities
29、It followed its bottlers advice and expanded its product offerings to include specialized beverages(e.g.,milk-based drinks,coffee drinks,teas).In addition,Coke introduced new product categories(e.g.,canned soups,Coo,a flavored juice product)and new flavors in existing brands(e.g.,Fanta Golden Pineap
30、ple)to increase its market share in trend-oriented JapanThe company was also innovative in its alliance strategy(e.g.,supply alliance with McDonalds),its marketing techniques(e.g.,introduced reclosable PET bottles),and its acquisitions(e.g.,acquisition of Kanebos vending machine operations).Cokes sa
31、les channel(930,000 vending machines,over twice as many as its nearest competitor)is a distinct competitive advantage in Japan where vending machines are the most popular sales channelCoke realized that it needed top talent to compete effectively in Japan and sent strong managers like Doug Daft(curr
32、ent CEO)and Stephen Jones(current Chief of Marketing),to Japan in leadership roles.Thus,Japan was seen as a progression path to top positions in the companyCoke is currently the market leader in Japans soft drink segment with a 56%market share.Coke owns the number 1 local brand Georgia(coffee drink)
33、.However,the company has been a slow mover in exploiting new opportunities(e.g.water and sports drinks)In the future,Coke faces the challenge of expanding its low market share penetration(20%)in the Japans most rapidly growing segment of specialized beverages 14NJ-262408.756/001117NbgeoHR1第14页CONTEN
34、TS Company overviewJapan market entry strategyProductsCapabilitiesOrganization15NJ-262408.756/001117NbgeoHR1第15页PRODUCT STRATEGY Coke understands the importance of offering products that appeal to the local market,in addition to its existing,classic products.16NJ-262408.756/001117NbgeoHR1第16页COKES J
35、APANESE PRODUCTS Coke has consistently rolled-out new products tailored for the Japanese market.Source:Company website Georgia(coffee drink)Ambasa(non-carbonated lactic soft drink)Real Gold(carbonated herb mix flavored drink)Vegitabeta(fruity drink with multiple nutrients)Ko Cha Ka Den(blended tea R
36、oyal Milk,Fine Aroma Straight,Garden Lemon)Saryusaisai(non-sugar Oolong tea)Saryusaisai Sokenbicha(special branded tea)Seiryusabo(Green and Barley teas)Shipla(“functional”,stress flavored drink with mulivitamins)Lactia(lactic,non-carbonated drink;promotes healthy digestion)Calo(“functional”soft drin
37、k;helps build healthy bones)Perfect Water(mineral water)17NJ-262408.756/001117NbgeoHR1第17页CONTENTS Company overviewJapan market entry strategyProductsCapabilitiesOrganization18NJ-262408.756/001117NbgeoHR1第18页COKE CAPABILITIES IN JAPAN Coke leverages local alliances to gain capabilities.The company a
38、lso offers marketing,manufacturing,and investment support to partners when needed.19NJ-262408.756/001117NbgeoHR1第19页Japan is Cokes most profitable market after the U.S.Coke derives about 17-20%of its overall profit from Japan.Source:Wall Street Journal,January 14,1999JapanROWPercentJAPAN CONTRIBUTIO
39、N TO COKES PROFITS IN 199920NJ-262408.756/001117NbgeoHR1第20页CONTENTSCompany overviewJapan market entry strategyProductsCapabilitiesOrganization21NJ-262408.756/001117NbgeoHR1第21页StructureDecision-rightsTalentCultureORGANIZATIONAL LEVERS Realignment of organization in January Increases focus on local
40、business unitsRedefines roles and responsibilitiesIncreased autonomyTransfer of responsibility from corporate to local business unitsCorporate only responsible for overall company policy and strategyPerformance and results driven culture;aggressive approach to finance and marketing Compensation is c
41、ompetitiveJapan is seen as strong progression path and top talent is sent thereCEO used to head JapanChief of Marketing used to run marketing in JapanLack rotation of top Japanese peopleStill has“ugly American”syndromeSenior Japanese feel out of place,experience glass ceiling and do not get high positions in AtlantaStrong community feel to CokeHolds conventions for bottlersDistributed bottlers magazineSome degree of tension with local staffAlmost 10%of Japan office is foreignersCulture not“appropriate”but effectively translatedWinners allowed to be aggressive22NJ-262408.756/001117NbgeoHR1第22页
