Coca-Cola recently announced that it would acquire the bulk of its domestic bottler, Coca-Cola Enterprises, and eventually acquire selected European bottlers. The move reverses an earlier decision to continue working with independent bottlers. Coke cites changes in American consumers’ tastes and the need to have a more flexible distribution system to respond to those needs. The primary advantage seen from the deal is that it would allow Coke direct distribution to supermarkets and other large retailers and allow the company to compete more effectively with smaller bottled water companies.

QUESTIONS:

1. Examine Figure 8.4. Create a SWOT analysis that would lead Coca-Cola to conclude that purchasing its bottler is a good strategic move. How will the purchase strengthen Coke?
2. What growth/diversification strategy approach does the purchase of the bottler represent? Why, after nearly 25 years of working with independent bottlers, would Coca-Cola do this?
3. Coke CEO Muhtar Kent previously told investors the company intended to continue using independent bottlers. More recently, he said the reversal of strategy had nothing to do with a similar move by competitor PepsiCo. How might strategic incrementalism explain the reversal?

SOURCE: B. McKay, “Coca-Cola Deal Marks Major Shift in U.S. Strategy,” Wall Street Journal (Retrievable online at http://online.wsj.com/article/SB10001424052748704479404575087123562176374.html)

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