Multinational Strategy adopted by Coca Cola Essay

Multinational Strategy adopted by Coca Cola - Essay Example When companies become multinationals they tend to experience high degree of strategic tension. The MNCs drive for economic growth as well as success tends to pull the companies towards exploitation of the global economies of scale and scope through various operations that gets integrated on the global basis. In addition, the need of acceptance of the companies in its local country tends to make them more responsive towards national differences and policies (Root & Visudtibhan, 1992, p. 42). The multinational enterprise also known as MNEs owns as well as control the income generating assets globally and at least one fifth of the global output. In UK, one third of the company’s profit is derived from overseas operations. MNEs usually comprises of a relatively small number of large enterprises. The growth of the multinational enterprises is seen as a genuine activity of multinationals which included countries like United Kingdom, Japan, Switzerland, Germany, France and Netherland s (Sutton, 1980, p. 86). It is the pressure of globalization which has led companies to manufacture, design and market its products on a global basis. Pressure with respect to globalization generally arrives from company’s domestic and also foreign competitors who tend to challenges the company in each and every segment of the market where it operates. When the pressure is high, companies need to build facilities in the international countries and thus create an international network in those countries (Miltenburg, 2005, p.165). The company chosen for analyzing the multinational strategy is the Coca Cola Company. The company has been widely recognized as being one of the biggest multinational companies. The mission statement of Coca Cola states that the company strives to refresh the globe, inspire the moments of happiness and optimism and hence create value with an intention to make a difference (The Coca Cola Company, 2012). Analysis of multinational strategy Multinational strategies are mainly used when there exists a high pressure due to local responsiveness and globalization. Companies establish factories in those countries where the demand for its product are relatively high as compared to other countries. Mainly joint ventures and acquisitions are used to gain entry to the foreign country. Therefore when pressure due to globalization is high companies follows a special form of multinational strategy known as the transnational strategy (Miltenburg, 2005, p.166). Significant drivers and financial factors The significant drives for multinational strategy of companies can be categorised into various drives which leads to globalisation. Drivers are the factors, which has the ability to give rise to the required needs in the process of global strategy and they are divided into four main groups (Jane, et.al, 2005, p. 283). The drivers include, market drivers, cost drivers, competition drivers and government drivers. The market drivers for coke, which be longs to the soft drinks industry, would be medium in case of global strategy as Coke tends to have global customers and the customers need are also high for its products. Government globalisation drivers can be regarded as high in case of Coca Cola, because it is related with the political conditions of the operating countries. If the government policies and the company policies do not match, it would prove to be a big problem for the firm to operate internationally. Cost drivers for Coke would be low due to the