Biography
Whats so special about Mr. Kent?
What I find most striking about Mr. Kent’s leadership
is his expertise in business forecasting, his strategic focus on globalization
and his revival of Coca-Cola’s focus on consumer needs and wants. Basically,
globalization is a part of business forecasting and Mr. Kent’s focus on
business forecasting suggests that he is a visionary, concerned about future
opportunities. Additionally, his actions to revive Coca-Cola’s focus on
consumer needs and wants, advocates his ability to focus on current problems at
the same time. Mr. Kent has this unique ability to plan ahead but at the same
time he does not lose sight of current challenges. It is remarkable that how
Mr. Kent balances these two opposite approaches and makes the best out of them
to achieve his goals.
Business
forecasting
Mr. Kent has a unique ability to see business
opportunities where others may see nothing. He can predict the direction and
dynamics of the market, i.e., consumer demand. For example, when Berlin wall
fell in 1989, he realized at once that there would be a rapid increase in
demand and an opportunity for the business to grow. There were 400 million
people behind the iron curtain who were all potential customers for Coca-Cola. He
seized the moment and took full advantage of the opportunity; Coca-Cola built
more than 20 plants in less than 30 months to meet the rapid increase in
demand. This initiative resulted in tremendous growth and set the pace of
successful expansion in new territories which continues through today. [9]Mr.
Kent recognized early in his career that continuous growth for Coca-Cola is
only possible through global diversification. Company growth and profits for
the past few years is due to this global diversification. As shown in figure 1,
total annual revenues have grown from $31,944 million, in 2008 to $46,542
million, in 2011, even when the whole world economy was in recession.[10]
Furthermore,
Mr. Kent has introduced the new innovative method of water recovery system.
This system will allow Coca-Cola to reduce operational water needs and improve
water use efficiency by up to 35 percent in manufacturing plants. [25]
This improvement in water use efficiency will result in cost reduction and more
profits for Coca-Cola; moreover, it also addresses the future threat of water
shortage. These initiatives show Mr. Kent is able to assess future
opportunities and threats. More importantly, Mr. Kent takes appropriate
practical steps to address these issues effectively.
Globalization Strategy
To
diversify globally, Mr. Kent launched numerous initiatives to expand Coca-Cola
as a global brand. First he improved the company’s working relationship with
its 300 bottling partners, operating worldwide. These bottling partners
provided useful information about their local markets to Coca-Cola. This
healthy relationship with the bottling partners resulted in a better
understanding of consumers in the international market. Once Mr. Kent was aware
of the market situation, he invested heavily in countries where he could
predict growth opportunity. For instance, Coca-Cola has committed investment of
5 billion dollars in India, 3 billion dollars in Russia and 4 billion dollars
in China.[18][19][20] These are investments in the future towards globalization;
moreover, Coca-Cola has awarded more than 70 million dollars to 263 Community Organizations
Worldwide in 2011 through its primary international philanthropic arm “Coca-Cola
foundation”.[10]These initiatives have resulted in improving Coca-Cola’s
image worldwide, evident from its rise to rank 4 in 2012“World’s Most Admired
Companies 2012”. Mr. Kent is exploring new markets for growth opportunities.
For Coca-Cola the United State’s consumer market is at a mature state and the
competition is fierce, whereas in the global market there is plenty of room for
growth. Mr. Kent’s interest in emerging markets is practical and justified, as
the new middle-class consumer market is rapidly growing in countries like China
and India. Coca-Cola is already benefitting from globalization and will
continue to do so in the future.
Reviving customer focus
When
asked about his own business philosophy, Mr. Ray Kroc, founder of McDonalds, has
been quoted as saying: “Look after the customer and the business will take care
of itself” [26]. Mr. Kent knew that customer focus is crucial for
success and survival of Coca-Cola in today’s highly competitive consumer
market. In 2008, when Mr. Kent became CEO, he inherited a company that suffered
from an inward-looking, “arrogant” corporate culture and one that was losing
customer focus. In order to succeed, he knew that they would need to focus on
the consumers’ rapidly changing needs and wants. He resolved this problem by
bringing in new people from all over the world and changing the corporate
culture of Coca-Cola. Mr. Kent strategy worked and he was able to fulfill the
consumers physical as well as emotional needs, evident from Coca-Colas’ rise to
rank 4 in 2012“World’s Most Admired Companies 2012”. Additionally, in order to
address the sensitive issue of “obesity” that is so prevalent in many developed
nations across the world; he has taken countless actions at every level. Coca-Cola
partnered with Washington Nationals against child obesity to increase awareness.
[15] When asked a question regarding “health and obesity” in an
interview by Mr. Charlie Rose, Mr. Kent explained that Coca-Cola is offering
wide array of products with low or zero calories to address this problem;
moreover, Coca-Cola is also offering numerous healthy life style products such
as vitamin water and juices. He explained further that the key to “healthy life
style” is to offer consumer the wide array of choices in products. Coca-Cola
has offered around 2000 additional products since 2008, totally more than 3500
products in more than 200 countries, 20 percent of these are no or low calorie
products.[16]Similarly, Coca-Cola in its pursuit of promoting “healthy
lifestyle” has committed 8.4 million dollars to setup 100 fitness centers in
USA and to support fitness and nutrition
programs around the world.[17] Mr. Kent has gone the extra mile to
improve Coca-Cola’s image; as a result, he was able to successfully create a
positive emotional link between Coca-Cola and the consumers. This emotional
link is the key to long term sustainability and competitive advantage over
competitors.
Conclusion
Coca-Cola has grown in all aspects from product
portfolio to new markets; Coca-Cola is offering many new products and also expanding
to new markets. Mr. Kent has achieved this growth by improving the corporate
culture of Coca-Cola. Changing culture of such an enormous organization is not
easy and it is a task next to the impossible. Mr. Kent has also revived the
Coca-Cola’s lost customer focus and has brought back the culture of winning. However,
Mr. Kent is limiting growth potential of Coca-Cola by limiting its business
scope only to “Hydration” business. Coca-Cola can easily increase the scope of
its business by including additional products to its current product portfolio,
for example candies, sweets and ready-to-eat products. In an interview with HBR
(Harvard Business Review), Mr. Kent predicts massive urbanization in the coming
years that will result in the rapid increase of the middle class globally. If this
is the case, is it logical for Coca-Cola to limit itself only to hydration
business? Trends like urbanization, increase in value conscious consumers, and
massive increase in middle class indicate tremendous opportunity for ready-to-eat products. As we get busier
every day the demand for ready-to-eat products will dramatically increase. I
believe Coca-Cola already has an edge over other brands and it would be a great
strategic move for Coca-Cola to expand its business scope beyond “Hydration”.
24. “The coming urban explosion”. McKinsey.
Retrieved 2012-7-09
25. “Innovative Water Recovery System”. The Coca-Cola Company. Retrieved 2012-7-25
References
1.
"Muhtar Kent: Chairman of the Board
and Chief Executive Officer". The Coca-Cola Company. Retrieved 2012-07-04
2. "Alumni
services". Cass Business School. Retrieved 2012-04-18.http://en.wikipedia.org/wiki/Muhtar_Kent
3. “2012
The Coca-Cola Proxy”. The Coca-Cola Company. Retrieved 2012-07-04
4. “The Coca-Cola
Company Share Price”. NYSE (New York Stock Exchange). Retrieved 2012-07-04
5. “World’s
Most Admired Companies”. CNN Money. Retrieved 2012-07-07http://money.cnn.com/magazines/fortune/most-admired/2012/full_list/
6. “Global
500”. CNN Money. Retrieved 2012-07-04
7. “Shaking
Things Up at Coca-Cola”. Interview with Mr. Muhtar Kent by Adi Ignatius.
Harvard
Business Review. Retrieved 2012-07-04
8. “Brief
historical overview”. Berlin Wall Online. Retrieved 2012-07-06
9. “A
conversation with Muhtar Kent”. An Interview with Mr. Muhtar Kent by Mr.
Charlie Rose. Retrieved 2012-07-06
10. “2011
Annual Review”. The Coca-Cola Company. Retrieved 2012-07-06
11. “2012
Q1 Earning Release”. The Coca-Cola Company. Retrieved 2012-07-06http://www.thecoca-colacompany.com/presscenter/pdfs/ko_earnings20120417.pdf
12. “The Coca-Cola
Company Revenue Growth”. YCharts.com. Retrieved 2012-07-06
13. “America’s
Most Admired Companies, Top 20”. CNN Money. Retrieved 2012-07-07
14. “How To
Be Marketing Focused”. Dr. Dennis Rosen. Retrieved 2012-07-07
15. “Partner
Against Child Obesity”. The Coca-Cola Company. Retrieved 2012-07-07
16. “Product
Descriptions”. The Coca-Cola Company. Retrieved 2012-07-07
17. “Coca-Cola
Support Active Healthy Lifestyles”. The Coca-Cola Company. Retrieved 2012-07-07
18. “3
Billion Sustainable Growth India”. The Coca-Cola Company. Retrieved 2012-07-08
19. “3
Billion For Sustainable Growth in Russia”. The Coca-Cola Company.
Retrieved 2012-07-08
20. “Company
Invests US4 Billion in China”. The Coca-Cola Company. Retrieved 2012-07-08
21. “Supporting
Reconstruction in Japan”. The Coca-Cola Company. Retrieved 2012-07-08
22. “Muhtar
Kent's new Coke”. CNN Money. Retrieved 2012-07-09
23. “CandyLand
Products”. CandyLand website. Retrieved 2012-07-09
26. “Quotes”. Quotes. Retrieved
2012-7-27
No comments:
Post a Comment