Coca-cola International Enterprise is one of the leading soft drink producing companies in the world, with its headquarters based in the US. Over the years, the company has grown tremendously despite high competition in the beverage industry. This paper discusses the role Coca-Cola International Enterprise plays as a multinational enterprise, especially in this era of globalization of trade. The paper begins by describing the company’s journey to the international stage and factors that have contributed to its success. Primarily, the company has huge investments in capital and human resources that contribute greatly to its internationalization. In the process, Coca-Cola has enhanced global communication, social, and infrastructural development, especially in developing countries.
The paper also looks at the challenges that multinational companies of Coca-cola stature impose on host nations. Among these challenges are exploitation of local labor and resource markets due to immense powers they possess, corporate social responsibility problems, and erosion of local consumer cultures. Finally, the paper looks at problems that multinational enterprises face, especially in developing countries. These include poor leadership and governance, unskilled labor due to illiteracy, poor infrastructure, and corruption. The paper concludes by stating that, despite challenges from both multinational companies and host nations, Coca-Cola should foster relationships with host nations to create a win-win situation where it generates trade benefits while at the same time economically empowered the host nations.
Coca-cola International Enterprise is a great world distributor, marketer, and supplier of Coca-Cola products. It is a brand well recognized across the world for its popular drinks and great success over the years. It was founded in 1986 and had its headquarters in Atlanta, Georgia. Generally, the company uses the word anchor bottlers to refer to its focal bottlers internationally, an idea that has enabled it to attract potential clients from as far as China, Eastern Europe, and Russia. It has succeeded in becoming a multinational company and making a name for itself in the global arena. A multinational company simply means that an enterprise has its headquarters in one country but still has operations in many others. Its global presence has made the company beneficial to many countries since it sells its products to almost all countries in the world (Rwabutoga, 2005).
Multinational companies and enterprises are highly involved in international trade, for instance, Coca-Cola has its headquarters in the US, but it has stretched its products to many other countries worldwide, making its market share to spread both at home and to other territories. Coca-Cola has a lot of influence on international trade, especially in the host countries it operates in because of its endowment in terms of capital and resources, both human and technological (Rwabutoga, 2005). The huge strides of growth that Coca-Cola enterprise has made have given it both the knowhow and expertise it needs to venture into International trade and become a force to reckon with in addition to being the worlds largest and most known beverage company.
The company has achieved its huge success by aiming at people who are its customers (Grillo, 2011). Coca-cola’s main aim is making its client happy through quality products that are highly appreciated, partnering with people in the countries it operates in to create sustainable development and creating a conducive environment for its employees to work. It has done all these through having a strong mission and vision; indeed, in business, discipline and having long-term goals is the key to its success or failure.
The Role of Coca-Cola Plays as a Multinational Enterprise
Multinational enterprises play a huge role in the process of globalization, with many countries, both developed and developing, taking it as their main conduit for economic development. The investments that Coca-Cola has made in different countries not only benefit it as an enterprise but also the people living in those areas (Kleinert, 2004). The main factor of globalization is the economy; the Coca-Cola Enterprise, being a big company, has a lot of capital and investments, which contribute handsomely to the economy of the world.
Through having branches in so many countries, Coca-Cola plays a key role in the promotion of partnerships and relationships through business-related means. The nations can interact economically through investments being made, capital exchange, and even the trade. The company has elaborate distribution channels to transport its products from one country to another and has warehouses in host countries; these enhance international trade although the company has opted for Foreign Direct investment in some countries (Kleinert, 2004). This fosters a working relationship between nations and the company, which also employs a large number of people, including youth in its many braches across the world.
More often than not, Coca-Cola looks for labor, preferably cheap, with developing countries being the main target, as they are more vulnerable and willing to offer hosting services due to low economic status (Martell, 2010). When people get jobs, it affects the economy of the host country positively, since this contributes to the growth of the countries revenue stream through taxation. This goes a long way in boosting the countries’ productivity, especially because of benefits arising from foreign direct investment (FDI) (Sawalha, 2007).
Globalization has also helped in social and infrastructure development, given that, for the company to be able to reach people who are in the heart of rural areas, it takes good infrastructure and communication systems (McIntyre, Ivanaj, & Ivanaj, 2009). Indeed, a visit in many rural areas around the world would not be complete without coming across a Coca-cola retail shop. This is mainly because the company has penetrated even into the rural areas and widened its market by going local and reaching the people in grassroots. It has made its products available and affordable to everyone, including the low-class society. By doing this, the company has helped in the development of some of these areas through retail shops that serve local people.
Women have always been left out in many businesses in the guise of it being a man’s world. This is crippling them economically by not giving them a chance to show their expertise. However, Coca-cola Enterprise has taken upon itself to empower the women. This was seen when it promised to take a step and empower women retailers working for the company and the entrepreneurs in Zambia (Grillo, 2011). The project was called five by 20, and it would seek to build capacity as well as offer economic assistance and training to women to help them move their families away from poverty (Grillo, 2011). This is a major step in working towards the millennium development goals (MDCs) by reducing the rate of poverty and giving women more opportunities to be dependent.
Coca-Cola has also tried a great deal to create a clean environment through its bottles, which can be recycled or are easily disposable. Its relations with the governments too can be termed as positive. When one reflects on the company’s way of working, it is more of the top to bottom approach because it prioritizes the needs of the client and strives to please them. The governments in developing countries should also aim at prioritizing the issues of people in their governing. By collaborating with the countries, Coca-cola is forced to improve its technology as a way of gaining a competitive advantage over its main competitors in trade; this would tend to be beneficial to the host country (McIntyre, Ivanaj, Ivanaj, 2009).
Challenges Faced By the Host Countries through the Enterprise
The Coca-cola Company has successfully achieved what some of the least developed countries can only dream of achieving. A challenge occurs when the company has to force its way into some countries and take advantage of their poor economic status and vulnerability. In some cases, multinational companies tend to offer an unfair deal to host countries, especially in developing countries and boss them on trade terms instead of allowing host countries to do so. Due to the desperation of developing countries for foreign direct investment, they give way to the companies to negotiate the terms, which will be in their favor rather than for the benefit of the host countries (Buckley, Clegg, 1991).
This has always been the problem even when it comes to trading terms across the borders; those who control the terms are the developed countries who sway the terms in their favor. Indeed, the multinational enterprises are owned by developed countries, so they have enormous power to dictate the terms. Foreign direct investment may be seen as a great advantage for helping in the development of least developed countries, but their state limits their power to negotiate favorable standards (Sornarajah, 2010)
The enterprise has better to offer in terms of payment and opportunities. It requires innovative, skilled, and hardworking young people to work for it, leading to brain drain from developing countries. This means that the youth in the least developed countries go to work for the enterprise whenever they are called upon, taking the much-needed skills elsewhere due to the lure of better pay and jobs. This leads to the country losing some of its finest skills to multinational enterprises. This is a challenge to due to the fact that these youth should be concentrating in creating wealth in their countries using their skills for sustainable future instead of shifting their labor to multinational enterprises such as the Coca-cola Company (McIntyre, Ivanaj, Ivanaj, 2009).
As the company works towards maximizing its profits, it will be keen on finding ways to boost its returns. However, the countries in which the company establishes its operations have various political, legal, and social requirements that may not be favorable to its business. Also, the way the leaders would want the company to operate might be different from how it runs the show, and this creates conflicts between the company and the leaders in more ways than not. This affects the working relationship, especially when the host government feels undermined and threatened by the foreign entity (Buckley, Clegg, 1991). At other times, the leaders may be corrupted, and in such cases, they allow the enterprise to bend the rules to suit them, but in the long term, the host country stands to lose as the enterprise gains.
As seen in the media, which comprises of television and radios, among others, the enterprise has managed to penetrate and get the publicity needed to boost its market. In the television, there are advertisements that are solely praising the products of Coca-cola, and they are done to the advantage of the company, as they convince consumers to buy such products. In the local stations in host countries, there are advertisements that claim the beverages from the company are the best in making children happy and energized all day. This is a great marketing strategy because children tend to remember what they see and then ask for it when in the market shopping (Kleinert, 2004). The disadvantage comes in the fact that the local drinks will not get as much publicity as possible, and very few people will want to buy them. They will opt to go for the coke beverages.
Another issue is the belief that the beverages provided by Coca-Cola Company have no health benefits compared to the natural fruit drinks, which most doctors and health specialists advise people to change to due to health reasons. However, many people have chosen to stick to the beverages and fast foods since they are more popular, especially to urban population and school-going children at all levels (Martell, 2010). The natural fruit juices that boost health system have somehow lost their popularity to coke drinks. This is a disadvantage in terms of health issues and getting rid of them is close to impossible, since when one is thirsty, the first thing that comes to mind is buying a bottle of soda from the nearest retail shop. It has become more of a habit to people that are not going to die any time soon.
Problems Coca-Cola Faces as an Enterprise
Leadership and development go hand in hand in that, for economies to thrive, there has to be great governance. The biggest challenge the company faces is poor governance in developing countries. Some examples in mind include African countries such as Southern Sudan, Congo, and the Central African Republic, all of which have a history of infighting and volatile political systems. There are also countries like Syria and Egypt suffering from perennial political instability. This affects the business because everything is crippled, especially during the time of unrest; and if that is not enough, a lot of property is destroyed, causing substantial losses to both the multinational enterprise and the host country. This also affects the working relationship of the enterprises and the country, as no enterprise would risk investing in an unstable environment (McIntyre, Ivanaj, Ivanaj, 2009).
The levels of illiteracy in developing countries are alarming to some extent. For one to work in the company, he or she needs to have skills and competence (Rwabutoga, 2005). Illiteracy provides a huge challenge to the company, especially when it intends to open new operations in developing countries.
Apart from local problems, the company faces competition from both local and other multinational enterprises. Therefore, to stay at the top of the game, it has to employ the best strategies that would be difficult for competitors to emulate. The local drinks are a threat to Coca-Cola. Thus it needs to do all it takes to eliminate the competition. In trade, creativity and innovation come in handy because no company wants to sell at a loss (Rwabutoga, 2005); they all want to remain relevant in the market and if possible, always be the best. As a beverage group that has a wide target market, keeping up with all these people all over the world can be quite a challenge. It needs skilled labor to help in reaching all the areas and promote its products.
The company has a high level of technology it uses in its marketing and distribution. However, some of the host countries, especially the least developed countries might lack the capacity to handle such technology. It is then up to the company to find a way to implement its technology to make it consistent with the existing systems in the host country. The government might not have the funds to help with this, so it is up to the company to provide the capital needed (McIntyre, Ivanaj, Ivanaj, 2009). The same applies to infrastructure leading to areas where the company has retail shops. At times, the roads are very poor, and some areas are neglected, making it a bit tricky for a business to prosper. This forces the company to come up with strategies that would enable its retailers to start up in such areas and boost the locals by giving them employment that will help in the development of those areas. It is not a guarantee that it would work to their benefit, but it is a risk worth taking; this shows evidence why there are many coke retail shops in areas one would least expect them.
Corruption in the developing countries, which also serve as the host countries, is a major problem not only to the Coca-Cola enterprise but also to other companies (Grillo, 2011). The company has competent managers who are in charge of different places in the world and who represent it effectively. The challenge that comes with corruption is hiring incompetent people, losses due to the big bosses not being accountable and transparent, and workers who feel suppressed due to being underpaid. Such workers tend to work half-heartedly because the environment does not encourage them whatsoever.
The Coca-Cola Company, as an enterprise has challenges and advantages. The fact that it is the best beverage company says a lot about it, as it has achieved great success. It can work with the host countries in helping them become great economies. It can also work towards sustainable development through having a mutual working relationship with host countries by not seeing itself as being superior; rather, consider them as partners (McIntyre, Ivanaj, Ivanaj, 2009).
The company should also not take advantage of the countries due to their vulnerable and failing economies; however, it should foster relationships with leaders gearing towards empowering local people by creating employment opportunities (Buckley, Clegg, 1991). This will help in the millennium development goal of eradicating poverty.
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