The Global Trade Distribution Processes of Coca-Cola company Essay

The Global Trade Distribution Processes of Coca-Cola company - Essay Example Entry into a new market may require products to be changed in order to suit the preferences and tastes of the new foreign market. Multinationals are to be aware of the best stores for their products, the features most valued by the foreign audience, and the right prices to set for the products. This document covers Coca-Cola Company (from here on known as Coke); a beverage company that sells and distributes more than four hundred brands in two hundred countries around the globe (Coca-Cola, 2011); critically analyzing its success with respect to its international distribution strategies and processes while evaluating the issues involved in its quest for global dominance in the soft drinks and beverages industry. Distribution is defined by Daniels, Radebaugh and Sullivan (2011) as â€Å"the course, physical path or legal title that goods take between production and consumption. In international marketing, a company must decide on the method of distribution among countries as well as t he method within the country where final sale occurs.† The choice of a distributor and channel is the first step towards foreign market distribution. According to Daniels, Radebaugh and Sullivan (2011), a new company in a new market should rely entirely on external distributors as it is economical. This is a case where the new company distributes its products via other local distributors due to an under-developed market. However, the company can assume in house distribution once the market share is large. In Belarus, the market is not large and as a result, Coke relies on local distributors to handle transportation of products to retailers and final consumers in order to cut on their transportation costs (Daniels, Radebaugh and Sullivan, 2011). The US is one of the largest markets for the company’s products and as a result, the company has developed a business model that is mature and with distribution. Here, the company has outsourced its distribution and production to its distribution and bottling companies. The process involves marketers distributing Coke products (syrup) from Coke plants to bottling plants from where the canned and bottled products are distributed to centres and later they find their way to the final consumer or retail outlets (Kant, Jacks and Aantjes, 2008). Reports reveal that China will eventually surpass the U.S to become the Coke’s largest market (Chung, 2003). In China, Coke operates its own direct-to-retail distribution but the operation is faced by a slow growth accounting for just a fraction of the country’s Coke sales. The company has at least one sales centre in most Chinese cities housing more than one million people but most are owned by bottling companies (Weisert, 2001). The poor distribution of these stores in the country can be associated with inaccessibility and the culture of the Chinese people. A company looking for foreign distributors will typically opt for potential distributors. Among the common criteria followed when choosing these distributors is the financial strength of the company as well as its well-established connections. Since the relationship between the producer and the distributor is expected to be long lasting, the financial strength of the distributor is vital. In addition, the relationship will involve maintenance of certain things like inventories and as such assurances need to be made

Business Valuation and Financial Analysis Essay

Business Valuation and Financial Analysis - Essay Example ATO is an indicator of the efficiency of utilization of assets to generate earnings for the company, and a forecast of this indicator ATO is provided in table no. 2. The value forecasted is considered to be stable over the next five years. Furthermore, it was necessary to forecast the net dividend payout and taking into consideration that it is usually a stable indicator over the years, it was considered to be 35%. The small percentage considered has the intuition that the company will reinvest the other part of the profit in investments, which can provide growth to the company (Fabozzi and Drake, 2009). The forecast for this indicator is provided in table no. 4. The last indicator forecasted was the after-tax cost of debt, which is important considering also the level of leverage of the company (depicted in figure no. 2). The value for this indicator is considered to be stable and is provided in table no. 5. The forecasted leverage is decreasing for the period 2011-2013, and after that is considered an increase in the amount of borrowed resources. A higher leverage ratio can be attractive for the company because debt is deductible, and can be more beneficiary for the company. In order asses the company’s performance for past years and opportunities for the future years, it were analyzed some financial ratios because (Elliot and Elliot, 2011). These financial ratios were computed by using information from the balance sheet and income statement. According to Needles and Powers (2010), the liquidity ratios (e.g. current, quick ratios) measure the company’s ability to meet its short-term obligations. An overview of the most important financial ratios is provided in table no. 6. In order to reach the forecasted sales growth ratios the company will need to invest more in marketing for its products, and probably a more