Overview
Monitoring competitors' performance and strategies is a key aspect of an external audit. This exercise is designed to give you practice in evaluating the competitive position of organizations in a given industry and assimilating that information in a CPM.
Challenge
Respond to Exercise 3B, Steps 1-3 from the textbook.
EXERCISE 3B
Develop a Competitive Profile Matrixfor Coca-Cola
Monitoring competitors' performance and strategies is a key aspect of an external audit. This exercise
is designed to give you practice in evaluating the competitive position of organizations in a given industry
and assimilating that information in a CPM.
Instructions
Step 1 Turn back to the Cohesion Case and review the section on competitors (p. 28). Also view
online resources that compare Coca-Cola with Pepsi. Use the sources listed in Table 3-7
Step 2 Prepare a CPM that includes Coca-Cola, Pepsi, and Dr Pepper.
Step 3
Turn in your CPM
What to submit?
Post your CPM analysis and conclusions in narrative form.
< 88="" part="" 2="" •="" strategy="" formulation="" purpose="" 0="" 0="" c="" x="" exercise="" 3b="" develop="" a="" competitive="" profile="" matrix="" for="" coca-cola="" monitoring="" competitors'="" performance="" and="" strategies="" is="" a="" key="" aspect="" of="" an="" external="" audit.="" this="" exercise="" is="" des="" igned="" to="" give="" you="" practice="" in="" evaluating="" the="" competitive="" position="" of="" organizations="" in="" a="" given="" in-="" dustry="" and="" assimilating="" that="" information="" in="" a="" cpm.="" instructions="" step="" 1="" step="" 2="" step="" 3="" turn="" back="" to="" the="" cohesion="" case="" and="" review="" the="" section="" on="" competitors="" (p.="" 28).="" also="" view="" online="" resources="" that="" compare="" coca-cola="" with="" pepsi.="" use="" the="" sources="" listed="" in="" table="" 3-7.="" prepare="" a="" cpm="" that="" includes="" coca-cola,="" pepsi,="" and="" dr="" pepper.="" turn="" in="" your="" cpm="" for="" a="" classwork="" grade.="" set="" 2:="" strategic="" planning="" for="" my="" university="" exercise="" jc="" develop="" an="" efe="" matrix="" for="" your="" college="" or="" university="" purpose="" most="" colleges="" and="" univers="" ities="" do="" strategic="" planning.="" institutions="" are="" consciously="" and="" systematically="" ide="" ntifying="" and="" evaluating="" external="" opportunities="" and="" threats="" facing="" higher="" education="" in="" your="" state,="" the="" nation,="" and="" the="" world.="" instructions="" step="" i="" step="" 2="" step="" 3="" join="" with="" two="" other="" individuals="" in="" class="" and="" jointly="" prepare="" an="" efe="" matrix="" for="" your="" institudon.="" go="" to="" the="" board="" and="" record="" your="" total="" weighted="" score="" in="" a="" column="" that="" includes="" the="" scores="" of="" all="" three-person="" teams="" participating.="" put="" your="" initials="" after="" your="" score="" to="" identify="" it="" as="" your="" team's="" score.="" which="" team="" viewed="" your="" college's="" strategies="" most="" positively?="" which="" team="" viewed="" your="" col-="" lege's="" strategies="" most="" negatively?="" discuss="" the="" nature="" of="" the="" differences.="" exercise="" 3d="" develop="" a="" competitive="" profile="" matrix="" for="" your="" college="" or="" university="" purpose="" your="" college="" or="" univers="" ity="" competes="" with="" all="" other="" educational="" institutions="" in="" the="" world,="" especially="" those="" in="" your="" own="" state.="" state="" funds,="" students,="" faculty,="" staff,="" e="" ndowments,="" gifts,="" and="" federal="" funds="" are="" areas="" of="" competitiveness.="" other="" areas="" include="" athletic="" programs,="" dorm="" life,="" academic="" reputation,="" loca-="" tion,="" and="" career="" services.="" the="" purpose="" of="" this="" exercise="" is="" to="" give="" you="" practice="" in="" thinking="" competitively="" about="" the="" business="" of="" education="" in="" your="" state.="" instructions="" step="" i="" step="" 2="" identify="" two="" colleges="" or="" universities="" in="" your="" state="" that="" compete="" directly="" with="" your="" institu-="" tion="" for="" students.="" interview="" several="" persons,="" perhaps="" classmates,="" who="" are="" aware="" of="" particular="" strengths="" and="" weaknesses="" of="" those="" universities.="" record="" information="" about="" the="" two="" competing="" universities.="" prepare="" a="" cpm="" that="" includes="" your="" institution="" and="" the="" two="" competing="" institutions.="" include="" the="" following="" io="" factors="" in="" your="" analysis:="" 1.="" tuition="" costs="" 2.="" quality="" of="" facu="" lty="" 3.="" academic="" reputation="" 4.="" average="" class="" size="" s.="" campus="" landscaping="" -------------•="" ----------------------------------~="" 0.="" (="" ~="" 386="" )="">< 28="" ~="" back="" to="" page="" 0="" 0="" c="" part="" 1="" •="" overview="" of="" strategic="" management="" coca-cola="" company,="" 2018="" by="" fred="" r.="" david="" www.coca-cola.com,="" ko="" x="" headquartered="" in="" atlanta,="" georgia,="" coca-cola="" company="" (coke)="" is="" the="" world's="" largest="" producer="" and="" distributor="" of="" beverages,="" marketing="" over="" 500="" nonalcoholic="" brands="" in="" more="" than="" 200="" countries.="" coke="" has="" 21="" billion-dollar="" brands,="" 19="" of="" which="" are="" available="" in="" lower-="" and="" no-sugar="" options.="" four="" of="" the="" top="" five="" beverages="" sold="" globally="" are="" coke="" products:="" i)="" coca-cola,="" 2)="" diet="" coke,="" 3)="" fan="" ta,="" and="" 4)="" sprite.="" other="" coke="" products="" include="" dasani="" waters,="" fanta,="" gold="" peak="" teas="" and="" coffees,="" honest="" tea,="" powerade="" sports="" drinks,="" simply="" juices,="" glaceau="" smartwater,="" sprite,="" and="" zico="" coconut="" water.="" however,="" company's="" revenues="" for="" 20="" i="" 7="" declined="" 15="" percent,="" so="" rumblings="" are="" spreading="" within="" the="" firm.="" coke="" brands="" sold="" mostly="" outside="" the="" united="" states="" include="" ayataka="" green="" tea="" in="" japan,="" i="" lo="" has="" water="" in="" japan,="" ice="" dew="" water="" in="" china,="" fuze="" tea="" outside="" the="" united="" states,="" minute="" maid="" pulpy="" in="" asia="" pacific,="" georgia="" coffee="" in="" japan,="" and="" del="" valle="" in="" latin="" america.="" five="" large="" independent="" bottling="" companies="" supply="" coke="" with="" 39="" percent="" of="" their="" bottling="" needs,="" led="" by="" coca-cola="" femsa="" that="" sup-="" plies="" central="" mexico="" and="" countries="" in="" latin="" and="" south="" america.="" coke="" revenues="" have="" declined="" every="" year="" for="" nearly="" a="" decade,="" usually="" accompanied="" by="" net="" income="" declines.="" since="" 2005,="" sales="" of="" diet="" soda="" in="" general="" have="" dropped="" every="" year,="" a="" combined="" 34="" percent.="" although="" diet="" coke="" is="" the="" weakest="" link="" in="" the="" company's="" whole="" soda="" lineup,="" the="" brand="" is="" still="" the="" third="" best-selling="" carbonated="" drink="" in="" the="" united="" states.="" environmentalists="" are="" complaining,="" saying="" coke="" produces="" i="" io="" million="" plastic="" bottles="" annually="" that="" end="" up="" in="" landfills="" and="" oceans.="" to="" combat="" this="" complaint,="" the="" company="" launched="" in="" 20="" i="" 8="" its="" "world="" without="" waste"="" initiative.="" coke="" needs="" a="" good="" strategic="" plan="" because="" its="" customer="" base="" is="" erod-="" ing="" and="" its="" shareholders="" want="" sustained="" 5="" percent="" annual="" growth="" in="" revenues="" and="" profits-and="" not="" declines-every="" year.="" copyright="" by="" fred="" david="" books="" uc.="" history="" founded="" in="" 1886,="" coke's="" flagship="" product="" coca-cola="" was="" invented="" in="" 1886="" by="" pharmacist="" john="" pemberton="" in="" columbus,="" georgia.="" coke="" has="" operated="" a="" franchised="" distribution="" system="" since="" 1889,="" whereby="" the="" com-="" pany="" only="" produces="" syrup="" concentrate,="" which="" is="" then="" sold="" to="" various="" bottlers="" throughout="" the="" world,="" who="" hold="" exclusive="" territories.="" interestingly,="" the="" big,="" jolly="" man="" in="" the="" red="" suit="" with="" a="" white="" beard="" (santa="" claus),="" did="" not="" always="" look="" that="" way.="" in="" 1931,="" coke="" paid="" illustrator="" haddon="" sundblom="" to="" create="" advertising="" images="" depicting="" a="" jolly,="" plump,="" red="" (like="" coke="" cans)="" dressed,="" warm,="" friendly="" santa="" claus="" delivering="" toys="" to="" children.="" to="" create="" the="" new="" santa="" ads,="" sundblom="" used="" clement="" clark="" moore's="" 1822="" poem="" "a="" visit="" from="" st.="" nicholas"="" (commonly="" called="" "'twas="" the="" night="" before="" christmas").="" coke's="" new="" santa="" advertisements="" debuted="" in="" 1931="" in="" magazines="" such="" as="" the="" saturday="" evening="" post,="" national="" geographic,="" the="" new="" yorker,="" and="" others.="" before="" 1931,="" santa="" was="" depicted="" as="" every-="" thing="" from="" a="" tall="" gaunt="" man="" to="" a="" spooky-looking="" elf.="" he="" was="" often="" shown="" wearing="" a="" bishop's="" robe="" and="" a="" norse="" huntsman's="" animal="" skin.="" from="" i="" 93="" i="" to="" i="" 934,="" coke="" ads="" featuring="" the="" new="" santa="" claus="" changed="" the="" whole="" world's="" view="" of="" santa;="" these="" original="" images="" of="" santa="" are="" valuable="" works="" of="" art="" even="" today.="" in="" 20="" i="" 0,="" coke="" became="" the="" first="" brand="" to="" exceed="" i="" billion="" euros="" in="" annual="" united="" kingdom="" grocery="" sales.="" in="" january="" 2018,="" in="" the="" united="" states,="" coke="" introduced="" its="" slimmer="" 12-ounce="" diet="" coke="" can,="" updating="" the="" logo="" and="" offering="" the="" 35-year-old="" drink="" four="" new="" flavors:="" mango,="" cherry,="" blood="" orange,="" and="" ginger="" lime.="" diet="" coke="" sales="" have="" declined="" as="" more="" people="" switch="" to="" other="" low-calorie="" drinks,="" such="" as="" flavored="" fizzy="" water.="" the="" company="" said="" the="" new="" flavors="" and="" look-="" with="" a="" different="" color="" vertical="" stripe="" for="" each="" flavor="" and="" red="" for="" plain-are="" aimed="" at="" appealing="" to="" millennials="" (people="" ages="" 18="" to="" 34).="" coke="" tested="" more="" than="" 30="" flavors="" before="" settling="" on="" the="" four="" new="" ones.="" •="" ------------------------------------="" 0.="" (="" ~="" 386="" )="">< 0="" 0="" c="" x="" chapter="" 1="" •="" the="" nature="" of="" strategic="" management="" core="" values,="" vision,="" and="" mission="" provided="" on="" the="" corporate="" website,="" coke's="" core="" values="" center="" on="" seven="" words:="" leadership,="" collaboration,="" integrity,="" accountability,="" passion,="" diversity,="" and="" quality.="" coke's="" visio11="" statement="" has="" not="" changed="" in="" more="" than="" a="" decade;="" provided="" on="" the="" corporate="" website,="" it="" reads="" (paraphrased):="" people:="" to="" be="" a="" workplace="" where="" people="" are="" inspired="" to="" be="" the="" best="" they="" can="" be.="" portfolio:="" to="" offer="" quality="" beverage="" brands="" that="" antic="" ipate/satisfy="" consumer="" desires/needs.="" partners:="" to="" nurture="" customers="" and="" suppliers="" working="" together="" to="" provide="" value.="" planet:="" to="" be="" a="" responsible="" citizen="" helping="" build="" and="" support="" sustainable="" communities.="" profit:="" to="" maximize="" long-term="" return="" to="" shareowners="" g="" iven="" our="" overall="" responsibilities.="" productivity:="" to="" be="" an="" effective,="" lean,="" and="" fast-moving="" company.="" coke's="" missio11="" statemem="" too="" has="" not="" changed="" in="" more="" than="" a="" decade="" and="" is="" g="" iven="" on="" the="" corporate="" website;="" it="" reads="" (paraphrased):="" "to="" refresh="" the="" planet;="" to="" create="" moments="" of="" optimism="" and="" happiness;="" to="" provide="" value="" and="" make="" a="" difference."="" business="" ethics="" and="" diversity="" the="" coke="" website="" says="" the="" company="" "directs="" zero="" advertising="" targeted="" to="" children="" under="" age="" 12."="" also,="" in="" regards="" to="" business="" ethics,="" the="" company="" places="" substantial="" nutr="" ition="" information,="" including="" calories,="" on="" the="" front="" of="" most="" o="" f="" their="" cans="" and="" packages.="" a="" wide="" range="" of="" packaging="" sizes="" are="" provided="" and="" over="" i="" 00="" reduced,="" low,="" or="" no-calorie="" beverages.="" coke="" annually="" publishes="" an="" elaborate="" sustainability="" report="" that="" details="" the="" company's="" water="" stew-="" ardship,="" women's="" economic="" empowerment,="" and="" philanthropic="" giving.="" in="" addition,="" the="" company's="" year="" 2020="" sustainability="" goals="" include="" the="" firm="" giving="" back="" i="" percent="" of="" the="" company's="" operating="" income="" annually,="" and="" recovering="" 75="" percent="" of="" the="" recyclable="" bottles="" and="" cans="" introduced="" into="" developed="" mar-="" kets.="" the="" report="" is="" available="" on="" the="" corporate="" website.="" financial="" position="" coke's="" fiscal="" year="" ends="" on="" december="" 31.="" as="" indicated="" in="" exhibit="" i,="" coke="" posted="" revenues="" of="" $35.4="" billion="" in="" 2017,="" compared="" to="" $41.8="" billion="" in="" 2016,="" a="" 15="" percent="" decline.="" net="" income="" was="" $="" 1.28="" billion="" compared="" to="" $6.66="" billion="" in="" 2016,="" an="" 8="" 1="" percent="" dec="" line.="" declines="" in="" both="" of="" these="" numbers="" are="" alarming.="" note="" all="" the="" negative="" numbers="" in="" exhibit="" i,="" even="" though="" for="" most="" companies="" 2017="" was="" a="" very="" properous="" year.="" coke's="" balance="" sheets="" are="" provided="" in="" exhibit="" 2.="" note="" that="" coke="" purchased="" $3.7="" billion="" of="" its="" own="" stock="" in="" 20="" 17.="" in="" 2017,="" coke="" paid="" $5="" bill="" ion="" out="" to="" shareholders="" in="" dividends="" even="" though="" the="" company's="" net="" income="" was="" only="" $="" 1.28="" billion.="" thus,="" basically="" the="" company="" borrowed="" money="" to="" pay="" dividends;="" this="" event="" resulted="" in="" a="" negative="" retained="" earnings="" for="" the="" year="" 2017="" and="" a="" large="" drop="" in="" re-="" tained="" earnings="" on="" the="" 2017="" balance="" sheet,="" as="" shown="" in="" exhibit="" 2="" .="" note="" in="" exhibit="" 2="" that="" coke's="" paid-="" in-capital="" increased="" a="" whopping="" 89="" percent="" in="" 2017="" revealing="" high="" use="" of="" equity="" as="" a="" source="" of="" capital.="" exhibit="" 1="" coke's="" income="" statements="" (in="" millions="" of="" dollars)="" income="" statement="" 12/31/16="" 12/31/17="" percent="" change="" revenues="" $41,863="" $35,410="" -0,="" -="" 15.41="" %="" cost="" of="" goods="" sold="" 16,465="" 13,256="" -0,="" -="" 19.49%="" gross="" profit="" 25,398="" 22,="" 154="" -0,="" -="" 12.77%="" operating="" expenses="" 16,772="" 14,653="" -0,="" -12.63%="" ebit="" 8,626="" 7,501="" -0,="" -="" 13.04%="" interest="" expense="" 490="" 759="" '(}-="" 54.90%="" ebt="" 8,="" 136="" 6,742="" -0,="" -="" 17.13%="" tax="" 1,586="" 5,560="" '(}-="" 250.57%="" non-recurring="" events="" (23)="" 66="" '(}-="" na="" net="" income="" 6,527="" 1,248="" -0,="" -80.88%="" source:="" based="" on="" information="" at="" www.coca-colacompany.com="" ------•="" -----------------------------------------~="" 0.="" 29="" (="" ~="" 386="" )="">< 30 part 1 • 0 0 c x overview of strategic management exhibit 2 coke's balance sheets (in millions of dollars) ba lance sheet 12/31/16 12/31/1 7 percent change assets cash and short term investments $18, 150 $15,358 -0, -1 5% accounts receivable 3,856 3,667 -0, - 5% inventory 2,675 2,655 -0, - 1% other current assets 9,329 14,865 i} 59% total current assets 34,010 36,545 i} 7% property plant & equipment 10,635 8,203 -0, - 23% goodwill 10,629 9,401 -0, - 12% intangibles 726 368 -0, - 49% other long-term assets 31 ,270 33.379 i} 7% total assets 87,270 87,896 i} 1% liabilities accounts payable 9,490 8,748 -0, - 8% other current liabilities 17,042 18,446 -0- 8% total current liabilities 26,532 27,194 -0- 2% long-tenn debt 29,684 31 ,182 -0- 5% other long-term liabilities 7,834 10,543 -0- 35% total liabilities 64,050 68,919 'fr 8% equity common stock 1,760 1,760 ¢ 0% retained earnings 65,502 60,430 -0, - 8% treasury stock (47,988) (50,677) i} 6% paid in capital & other 3,946 7,464 i} 89% total equity 23,220 18,977 -0, - 18% total liabilities and equity 87,270 87,896 -0- 1% source: based on information at www.coca-colacompany.com exhibit 3 reveals that coke spends about $4 billion annually to advertise its beverages. note also in exhibit 3 that the company is intent on increasing its dividends paid every year even if it has to bor- row money to make th is payment. the company's long-term debt is creeping up every year. operating segments regarding 2017 cases of beverages sold, the usa accounted for 19 percent of the company total; case volume outside the usa accounted for 8 1 percent of sales. of the 19 percent of cases sold in the usa, 62 percent were sparkling soft drinks. the four countries outside the united states that coke sells most to are mexico, china, brazil, and japan. these four countries accounted for 3 1 percent of coke's outside-usa sales in 2017, and 7 1 percent of these sales were of 30="" part="" 1="" •="" 0="" 0="" c="" x="" overview="" of="" strategic="" management="" exhibit="" 2="" coke's="" balance="" sheets="" (in="" millions="" of="" dollars)="" ba="" lance="" sheet="" 12/31/16="" 12/31/1="" 7="" percent="" change="" assets="" cash="" and="" short="" term="" investments="" $18,="" 150="" $15,358="" -0,="" -1="" 5%="" accounts="" receivable="" 3,856="" 3,667="" -0,="" -="" 5%="" inventory="" 2,675="" 2,655="" -0,="" -="" 1%="" other="" current="" assets="" 9,329="" 14,865="" i}="" 59%="" total="" current="" assets="" 34,010="" 36,545="" i}="" 7%="" property="" plant="" &="" equipment="" 10,635="" 8,203="" -0,="" -="" 23%="" goodwill="" 10,629="" 9,401="" -0,="" -="" 12%="" intangibles="" 726="" 368="" -0,="" -="" 49%="" other="" long-term="" assets="" 31="" ,270="" 33.379="" i}="" 7%="" total="" assets="" 87,270="" 87,896="" i}="" 1%="" liabilities="" accounts="" payable="" 9,490="" 8,748="" -0,="" -="" 8%="" other="" current="" liabilities="" 17,042="" 18,446="" -0-="" 8%="" total="" current="" liabilities="" 26,532="" 27,194="" -0-="" 2%="" long-tenn="" debt="" 29,684="" 31="" ,182="" -0-="" 5%="" other="" long-term="" liabilities="" 7,834="" 10,543="" -0-="" 35%="" total="" liabilities="" 64,050="" 68,919="" 'fr="" 8%="" equity="" common="" stock="" 1,760="" 1,760="" ¢="" 0%="" retained="" earnings="" 65,502="" 60,430="" -0,="" -="" 8%="" treasury="" stock="" (47,988)="" (50,677)="" i}="" 6%="" paid="" in="" capital="" &="" other="" 3,946="" 7,464="" i}="" 89%="" total="" equity="" 23,220="" 18,977="" -0,="" -="" 18%="" total="" liabilities="" and="" equity="" 87,270="" 87,896="" -0-="" 1%="" source:="" based="" on="" information="" at="" www.coca-colacompany.com="" exhibit="" 3="" reveals="" that="" coke="" spends="" about="" $4="" billion="" annually="" to="" advertise="" its="" beverages.="" note="" also="" in="" exhibit="" 3="" that="" the="" company="" is="" intent="" on="" increasing="" its="" dividends="" paid="" every="" year="" even="" if="" it="" has="" to="" bor-="" row="" money="" to="" make="" th="" is="" payment.="" the="" company's="" long-term="" debt="" is="" creeping="" up="" every="" year.="" operating="" segments="" regarding="" 2017="" cases="" of="" beverages="" sold,="" the="" usa="" accounted="" for="" 19="" percent="" of="" the="" company="" total;="" case="" volume="" outside="" the="" usa="" accounted="" for="" 8="" 1="" percent="" of="" sales.="" of="" the="" 19="" percent="" of="" cases="" sold="" in="" the="" usa,="" 62="" percent="" were="" sparkling="" soft="" drinks.="" the="" four="" countries="" outside="" the="" united="" states="" that="" coke="" sells="" most="" to="" are="" mexico,="" china,="" brazil,="" and="" japan.="" these="" four="" countries="" accounted="" for="" 3="" 1="" percent="" of="" coke's="" outside-usa="" sales="" in="" 2017,="" and="" 7="" 1="" percent="" of="" these="" sales="" were="">