Coca Cola: Future Strategic Alliance Objectives and Strategy Overview Recommendations

Coca-Cola’s dyad of alliances needs to become more tight-knit. The company has begun taking strides in recent years to acquire equity interests in its bottlers. The Alliance Constellation Map shows some of these equity interests. As previously discussed, the company prefers to ally with bottlers rather than acquire them outright. As Coca-Cola’s access to foreign markets begins to fill out and growth in those markets slows in the coming years, the company will be looking for new sources of revenue. One option is for the company to acquire its bottling partners. This strategy will actually decrease the number of partnerships Coca-Cola has, but it will enhance bottom-line profitability at the firm. The company has more than 300 bottling partners worldwide. By cutting out the middle-man, so to speak, Coke can boost its margins and have more control over the distribution of its product. Potential drawbacks of this recommendation relate mainly to the attitude of other bottling partners regarding Coca-Cola. If bottlers begin to perceive Coke as a money-hungry company that seeks to acquire all, Coke’s ever-increasing might could lead them to feel intimidated. Developing expansive bottling and distribution operations of its own would allow Coke to be more assertive in franchise contract negotiations with existing bottling partners. The potential for deteriorating relationships aside, acquiring its bottling partners generally makes sense for Coca-Cola, and is one very possible avenue for future growth.
Another option for Coca-Cola to continue growing revenue and maintain a healthy portfolio of alliances is to acquire more drink brands. With end consumers became increasingly more wary of sugary sodas, Coke should try to buy out well-known healthy drink brands. In recent years the company has already begun to do this, as was evident by its acquisitions of Honest Tea and Energy Brands. Fair-trade certified tea and Vitamin Water are both the types of products that health-conscious consumers today are demanding. As social pressure builds on Coke’s core soda brands, the company needs to be ready to step in with another line of beverages that address the health issue. By developing product offerings involving tea, coffee, vitamins, and vegetables, Coca-Cola can really diversify its brand portfolio to the max. Giving consumers more choice will reduce public backlash and generate more sales revenue.

Coca-Cola’s current portfolio of alliances is very strategically oriented. It has been designed for efficiency and profitability with minimal capital investment. Looking at the Alliance Constellation Map, it is clear that Coke could institute horizontal integration by buying up its bottling partners, or pursue vertical integration by controlling its suppliers and diversifying its brand portfolio. So far, Coca-Cola’s portfolio has been designed to limit the costs of expanding internationally in rapid fashion. As the world’s beverage markets mature, the company will ultimately invest in changing its alliance portfolio to maintain high profitability. Doing so will undoubtedly help Coca-Cola remain the world’s largest beverage provider, and one of the most recognized brands in the world.

Other posts on Coca-Cola's brand and strategy:

Coca-Cola: Company Strategic Alliance Objectives with Suppliers
Coca-Cola: Company Strategic Alliance Objectives with Bottlers
Coca-Cola: Company Strategic Alliance Objectives with Brands
Coca-Cola: Life-Cycle Model of Evolving Strategic Alliance Strategy Early Days
Coca-Cola: Current Strategic Alliances – Major Strengths
Coca-Cola: Life-Cycle Model of Evolving Strategic Alliance Strategy
Coca-Cola: Current Strategic Alliances – Major Weaknesses
Coca Cola: Future Strategic Alliance Objectives and Strategy Overview Recommendations
Works Cited Page for Coca-Cola Analysis of Alliances Portfolio