- Active healthy living
- Energy management and climate protection
- Community
- Sustainable packaging
- Water stewardship
1.3 – STAKEHOLDERS
Stakeholder is a person, group, organization, or system who directly or indirectly affects or can be affected by an organization’s actions. There are 2 types of stakeholders: internal and external.
Internal:
- Owners
- Shareholders
- Managers
- Employees
External:
- Suppliers
- Community
- Customers
- Society
- Government
Shareholders are the owners of the company. The main thing for shareholders is their rights and responsibilities. Shareholders have the rights to:
- Vote on matter (election of the directors)
- Propose shareholder resolutions
- Share in distributions of the company’s income
- Purchase new shares issued by the company
Managers in organizations have responsibility to make decisions to manage company. Functions of the managers are planning, organizing, leading, coordinating, controlling, staffing and motivating.
Employees are hired to provide services to a company on a regular basis in exchange for compensation. They don’t provide these services as part of their own businesses.
Customers buy goods and services produced by the company. Customers are not just the individual people; they can also be other businesses. Firms must understand and meet the needs of their customers, otherwise they will fail to make a profit, or indeed, survive.
Suppliers are any person or organization that provides particular service or commodity. Businesses should have effective relationships with suppliers in order to get quality resources at reasonable prices. Suppliers depend on the companies they supply.
Community often provides many of the firm’s staff and customers. The businesses supply goods and services vital to the local area.
Government economic policies affect firm’s costs. Legislation regulates what business can do in areas such as the environment and occupational safety and health. Businesses with success are good for government as they create wealth and employment.
1.4 - THE COMPANY’S STAKEHOLDERS
SUPPLIERS
To refresh the world, as the main mission of the Coca-Cola Company, suppliers help to company providing necessary products and services. The products are produced by local people, using local resources and, in many cases, local suppliers. In fact, through the multiplier effect and local nature of global business, the company supports local economics. With each job that the company creates, many additional jobs are created through suppliers and other business partners. The suppliers are assessed according to adherence to “Supplier Guiding Principles”, which emphasize the importance of responsible workplace policies and practices that comply, at a minimum, with applicable environmental laws and with local labor laws and regulations. Suppliers are also complied with “Code of Business Conduct for Suppliers”, that describes standards in the areas of conflicts of interests, business and financial records, bribery and information protection. Suppliers for the Coca-Cola system are expected to operate their businesses according to the highest standard of business conduct, labor rights, quality and service.
EMPLOYEES
Nowadays, the Coca-Cola company beverages are enjoyed more than 1.5 billion times a day around the world. It means the company directly depends on employees. The Coca-Cola Company strives to be the best place to workplace for the employees, so they are given great opportunities to collaborate, to develop their skills. Below there are few examples of improving workplace in Coca-Cola Company:
- Issued Workplace Rights Policy in 2007, reflecting fundamental respect for the rights of associates and commitment to provide a rights-based working environment
- Conducted 106 Workplace Rights Policy assessments and 74 training sessions worldwide in 2007.
CUSTOMERS
Customers are a significant part of a chain, without dependence from that, whether it is the greatest in the world a network of fast food restaurants, or it is a little shop in Mongolia - all of them directly realize production to the consumer. And Coca-Cola grants the buyers constantly profitable drinks which help to grow to their business. The last part of the chain: “Suppliers – Company – Bottlers – Deliveries – Customers” are consumers. Consumer is a king, because he has got various choices around him.
TASK 2
2.1 – TYPES OF ECONOMIC SYSTEM
Economic system is the system of production, distribution and consumption of goods and services of economy. The economic system is composed of people and institutions, including their relationships to productive resources. There are mainly 3 types of economic system:
- Market economy /America, India/
- Planned economy /China, North Korea/
- Mixed economy /Japan, Germany/
Market economy
In the market economy assumptions of the market play a main role in deciding the right path for a country’s economic development. The national and the state governments play minor roles. The main points in this economy are consumers and their buying decisions.
In the real world, however, there is no such thing as a truly unfettered market economy, and so the term is used to describe economies which are largely dictated by market forces. As a result, whether or not a given economy is actually a market economy can be open to some debate.
There is no central planning in the market economy, and it is one of the major features of this economic system. Supplying and demanding are the mainly dominated marketing decisions. The role of the government in a market economy is to simply make sure that the market is stable enough to carry out its economic activities properly.
Planned economy
In the planned economy /command economy/ all major decisions related to the production, distribution, commodity and service prices are made by the government. Also the government formulates all decisions about the use of resources and the distribution of output.
Planners decide what should be produced and direct lower-level enterprises to produce those goods in accordance with national and social objectives. It means a planned economy aims to use all available resources for developing production instead of allotting the resources for advertising or marketing.
Mixed economy
The mixed economy has the elements of both the market and the planned economy in one cohesive system. It means to form this type of economy certain features from both economic systems are taken. In a mixed economy there is flexibility in some areas and government control in others. The mixture of two different economic philosophies can imply a variety of consequences for a country, some of which are seen as beneficial, while others are neutral or detrimental. Most of the developed countries of the world have a mixed economy.
2.2 – Political, economic and social factors
There are the factors that impact the organization: political, economic and social factors
Political - how and to what degree a government intervenes in the economy. Specifically, political factors include areas such as tax policy, labor law, environmental law, trade restrictions, tariffs, and political stability.
Economic – how businesses operate and make decisions. Economic factors include economic growth, interest rates, exchange rates and the inflation rate.
Social - how companies operate in the demand for their products. Social factors include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety.
Political factors for Coca-Cola:
The government plays a role within the operation of manufacturing products in terms of regulations. All businesses must follow the rules, that the parliament creates or changes. The Coca-Cola Company could cause potential fines, if they don’t follow the new rules. In the example of taxation below it is described how the government affects the company. Some of the profit made by the Coca Cola Company is given to the government. But if the government raises the tax, the company has to raise their price too, so they don’t lose any money.
Economic factors for Coca-Cola:
Economic factors highly affect the Coca Cola’s resolutions. If the economic condition of the country is not strong the price of the products must be not high. Otherwise it will impact negative in the Coca Cola Company’s productions. Also the inflation, recession and few other factors will affect the company.
For example, in 2001 bottling and distributing franchise of the Coca Cola Company was opened in Mongolia. In the present time MCS Coca Cola Company employs over 300 people. Comparing this to the whole population, it is not small number. In addition, in Mongolia the prices of the products are less comparing to the high-developed countries. The main reasons are the population of the country, the inflation and the economic conditions.
Social factors for Coca-Cola:
The Coca Cola Company has more than 2800 products in over 200 countries. The main products of the company are Coca-Cola, Fanta and Sprite. The company produces new types of drinks after making researches in local areas. All social factors influenced on becoming the number one non-alcoholic beverage company. For example, many people in the world are choosing healthier lifestyles. This affected the Coca Cola Company to produce sugar free drinks, like Diet Coke, Coke Zero and bottled waters.
2.3 – SOCIAL AND INDUSTRIAL POLICIES
Social welfare
For the Coca Cola Company the economic, environmental and social implications are more important than ever. The strength and sustainability of the most recognized brands are directly related to the social license to operate, which the company must earn daily by keeping their promises to the customers, consumers, associates, investors, communities and partners. Live positively™ is the company’s commitment to making difference in the world. Live positively focuses on seven core areas key to the business sustainability:
- Beverage benefits /drinks for every lifestyle, life stage and occasion/
- Active health living /active healthy life, physical activity programs/
- Energy management and climate protection
- Community /develop economies, improve lives, create opportunity/
- Sustainable packaging /reduce, recover, reuse packages/
- Water stewardship /safely return to nature water same as used/
- Workplace /health and safe place to work, human rights principles/
Industrial policies
The industrial policy is government policy or law. Governments have different regulations for domestic and international trades. Domestic traders need to follow own governments, while international trades need to follow regulations of both countries /import, export/. The purpose of government regulations and laws is to prevent any unfair business and smuggling.
The Coca Cola Company is focused on initiatives that protect the environment, conserve resources and enhance the economic development of the communities where we operate. Because public policy issues have the potential to impact the business, people and communities, the Company, like other commercial enterprises, uses its resources on occasion to advance matters of public policy that are consistent with the sustainability of the business and the Company’s values. Company’s political contributions are based upon the following criteria:
- Legal compliance
- Board and Management Oversight
- Public policy support
- Public Transparency
To conclude this chapter, we can say that the Coca Cola Company operates in environment, where the mixed economy is dominated
TASK 3
3.1 – DIFFERENT MARKET STRUCTURES
In economics, market structure describes the state of a market with respect to competition. Below there are basic market structures:
-
Perfect competition /market consists of large number of firms producing similar products
-
Monopolistic competition /large number of independent firms which have a very small proportion of market share/
-
Oligopoly /market is dominated by a small number of firms which own more than 40% of the market share/
-
Oligopsony /market with many sellers and a few buyers/
-
Monopoly /only one provider of product or service/
-
Monopsony /only one buyer in a market/
Competition in the market is useful because it can align the seller’s interests with the buyer’s interests and can cause the seller to reveal his true costs and other information.
Determinants of market structure:
- Freedom of entry and exit
- Natural of the product – similar, differentiated
- Control over supply/output
- Control over price
- Barriers to entry
The correct sequence of the market structure from most to least competitive is perfect competition, imperfect competition, oligopoly, and pure monopoly.
REFERENCE TO BASIC MARKET STRUCTURES
3.2 – ROLE OF COMPETITION COMMISSION
The Competition Commission is independent public body which conducts in-depth inquiries into mergers, markets and the regulation of the major regulated industries. They investigate and address issues of concern in three areas:
-
In mergers - when larger companies will gain more than 25% market share and where a merger appears likely to lead to a substantial lessening of competition in one or more markets in the UK.
-
In markets - when it appears that competition may be being prevented, distorted or restricted in a particular market.
-
In regulated sectors where aspects of the regulatory system may not be operating effectively or to address certain categories of dispute between regulators and regulated companies.
The investigation of the Competition Commission is opened. If the investigation shows that the situation considerably damages or limits the competitiveness in the UK, then they work to advance and carry out appropriates remedies. A wide range of remedies is available to the Competition Commission both in merger and market investigations. Inquiries are always initiated following a concern referred to them by another authority: usually the Office of Fair Trading. They also investigate issues referred to them by the sector regulators for communications, gas and electricity, water, rail, airports, postal services or by the Secretary of State for Business, Innovation and Skills.
3.3 – MARKET STRUCTURE OF THE COCA COLA COMPANY
As described above, the perfect competition is a market, in which there are many firms, all producing similar goods. The market structure for the Coca Cola Company is oligopoly. An oligopoly is a market form in which a market or industry is dominated by a small number of sellers. The dominant players in the non-alcoholic soft drink area are the Coca Cola Company and PepsiCo. The market here can be also called duopoly. The competition in soft drink industry has become more intense. Competition also tends to increase as the products become more standardized. The price of a Coke is not any less than the price of the Pepsi. The rivalry in an industry can also increase when the other competitor become dissatisfied with their market position and launch moves to bolster their standing at the expense of rivals. The main things that will increase competition in the soft drink industry are powerful, successful competitive strategies.
In this duopoly market the Coke is more popular than Pepsi in terms of market share. However the popularity of the companies depends on many different factors, such as geographical location, time, demography, gender, etc. In addition, when we discuss Pepsi vs. Coke, it should be considered which sub-brands we should include, because both companies have many lines of soft drink products.
In conclusion, it is very hard to create a perfect competition in soft drink market. The reason is these two companies already have their competition, consumers, well-known brand names, etc.
TASK 4
4.1 – INTERNATIONAL TRADE, ECONOMIC INTEGRATION AND GLOBALIZATION
International trade is exchange of capital, goods, and services across international borders or territories. In most countries, it represents a significant share of gross domestic product. Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system. Without international trade, nations would be limited to the goods and services produced within their own borders.
Economic integration is a term used to describe how different aspects between economies are integrated. As economic integration increases, the barriers of trade between markets diminish. The most integrated economy today, between independent nations, is the European Union and its Euro-zone.
Economic globalization describes the integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration, and the spread of technology.
We can see the Coca Cola Company as an example of economic globalization. The first year of Coca Cola sales produced a total of about $50. Today Coca Cola is a multi-billion dollar company. The company began building its global network in the 1920s. At the beginning of World War II, Coca-Cola was bottled in 44 countries, now it operates in more than 200 countries.
4.2 – EXAMPLES OF INTERNATIONAL TRADERS /EU, NAFTA/
The European Union
The European Union is the world’s biggest trader, accounting for 20% of global imports and exports. Free trade among its members underpinned the launch of the EU 50 years ago. The Union is therefore keen to liberalize world trade for the benefit of rich and poor countries alike. The EU’s trade policy is closely linked to its development policy. The Union has granted duty-free or cut-rate access to its market for most of the imports from developing countries under its generalized system of preferences.
NAFTA /North American Free Trade Agreement/
NAFTA is an agreement signed by the governments of the United States, Canada and Mexico creating trilateral trade bloc in North America. One important thing that NAFTA did right away was to eliminate a large number of tariffs on goods shipped between the three countries. American goods, mostly, were being sold to Canada and especially to Mexico and carried with them a high tariff. Mexico and Canada did not wish to pay the tariffs, so the goods were not sold in North America. Prime examples of these goods were cars, car parts, computers, and food.
Many observers consider NAFTA to be the same sort of economic and political union that the EU is. This is both true and untrue. The EU, like NAFTA, is an economic union that fosters greater trade and cooperation between a large handful of the countries of Europe. EU members, however, have a common currency, while NAFTA members do not. Also, the EU has a political element and its own government, neither of which NAFTA has.
4.3 – THE ANALYZE OF EUROPEAN UNION POLICIES ON ORGANIZATION
There are 2 Coca-Cola Companies in the UK: Coca-Cola Great Britain, Coca-Cola Enterprises. Coca-Cola Great Britain is responsible for marketing and developing new and existing brands. Coca-Cola Enterprises manufactures and distributes soft drinks for both the Coca Cola Company and other brand owners.
The one of the policies that impacts the company is water policy. Protection of water resources, of fresh and salt water ecosystems and of the water and bathe in is therefore one of the cornerstones of environmental protection in Europe. Water is vital to the Coca Cola Company’s production process, where it’s used for rinsing, heating, cooling and washing. It’s also single biggest product ingredient. Therefore it is determined to use water in a responsible, sustainable way. The company uses large volumes of water – 3.7 billion litres from municipal and groundwater sources in the UK every year. On average, this translates to 1.54 litres of water per litre of drink produced in Great Britain. This includes all the water used in the production process, and the aim is to reduce water usage ration in Great Britain to 1.5. Another way in which company manages water sustainably is by re-using and recycling as much water as possible in our production processes. And the company tries to use water in a manner that takes account of the needs of the communities around the sites and the environment in general.
The second policy that impacts the company is waste policy. As European society has grown wealthier it has created more and more rubbish. The EU is aiming for a significant cut in the amount of rubbish generated, through new waste prevention initiatives, better use of resources, and encouraging a shift to more sustainable consumption patterns.
The European Union's approach to waste management is based on three principles:
-
Waste prevention /reduce the amount of waste, usage of greener products and less packaging/
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Recycling and reuse /recover and recycle materials/
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Improving final disposal and monitoring /non-recycled and non-reused waste to be incinerated
Packaging plays a vital role in delivering food and drink safely to consumers. As one of the largest users of packaging in Great Britain, the company needs to reduce the environmental impact of their packaging:
- Reducing the weight of packaging
- Using recycled contents in packaging
- Using recyclable materials
- Recycling the waste created during the production
- Encouraging consumers to recycle
There are few examples of reducing weight of packaging. The weight of 500ml polyethylene terephthalate (PET) bottle is now weighs just 26 grams, down from 39 grams in 1994. The classic 330 ml glass bottle’s weight has reduced from 263g to 210g, made it 20% lighter, slightly shorter and more impact-resistant. The average weight of cans has been reduced by about 30% since 1987.
Glass bottles contain an average of 30% recycled glass and our aluminium cans contain around 50% recycled aluminium. As well as reducing the amount of raw materials, this also saves considerable energy.
4.4 – IMPLICATION OF THE UK JOINING THE EUROZONE
Most of the British citizens are against to have the same currency with Eurozone. But it is better for the businessmen, because of a negative influence of global financial crisis. There are few examples of advantages and disadvantages of the UK joining Eurozone. If the UK joins the Eurozone, all the businesses will be affected. With Euro, it will be possible to compare prices for the same goods or services in different Eurozone countries. It will also help companies to know their competitors price. With the Euro, it will be easier and cheaper to find and to work with new suppliers outside home market.
If not joining the Eurozone, UK hopes to play a leading role in the EU also UK has the freedom to manipulate its own exchange rate as a safety valve in times of depression. Vending machines, coin machines, ATMs will all have to be changed or replaced.
UK at the moment is deeply divided over the Euro issue. It is a too difficult and complicated issue to be tackled alone. Economists and decision scientists should work together to analyze the impact of UK Euro membership in a systematic way.
REFERENCES
- Economics: European economics /Michael Parkin, Melanie Powell, Kent Matthews – Fourth edition/
- Business economics /Win Hornby, Bob Gammie, Stuart Wall – Second edition/
by
khebi (student)
