Coca Cola In China Case Study
From 1979 to 1984, the entry mode of Coca – Cola was a franchise, which was low-risk entry based on the Uppsala theory of internationalization. The bottling plants’ proprietary belonged to China’s state-owned enterprises. After having a negotiation with the Chinese Government on accessing its market, Coca – Cola had the permission to sell their soft …show more content…
The company has a franchise arrangement with foreign partners, which are Malaysia’s Kerry Group and Hong Kong’s Swire Group, to overcome the problem of shortage human resources and reduce risk. Meanwhile, they still have Joint Venture with Chinese partners. The strengths of local partners are strong distribution and knowledge of local beverage markets, while foreign partners have not only an identical view about the goal of long-term profit and market share maximization with Coca-Cola but also strong political connections to the Chinese Government. This company’s internalization strategy could potentially result in revenue-enhancing, cost-reducing and risk-avoiding benefits to …show more content…
Coca – Cola has had many success as well as challenges to overcome in the few decades in China. The external factors from Chinese environment have influenced company’s internationalization strategies when it penetrated into this market. The shift of the market expansion strategy of Coca – Cola from Franchises to Joint Ventures, and then to the current combination of two entry modes proved the influence of Political, Economic and Social factors to the company. Besides, Technological factor also plays an important role in the successful of marketing and promoting strategy of the company. Understanding the uncontrollable elements gives Coca – Cola an overview of the market to adjust the method of investment, which contributed to a rapid growth in market share and a high degree of market penetration in an emerging market as China.
In conclusion, the successful of the Coca – Cola company in China market is constituted of some secrets as follows:
Firstly, Coca – Cola gained benefits from its reputation brand. They built a strong trademark in some countries before entering the Chinese market.
Secondly, by having Joint Venture with Chinese partners, Coca – Cola created an efficiency and effectively distribution network, associated with franchise stores from foreign partners to boost product’s