Mergers and acquisitions are business strategies taken by companies, that involve either merging two companies or operating them together or a company taking over operations of another company. Multinational corporations tend to acquire full ownership or a certain percentage of a company’s operations to incorporate others services within its objectives and to some extent, it can be seen as a business move to reduce speculated competition. This step is essentially used to improve the financial performance of the company and to lessen the risk that the corporation is likely to face. Mergers are common in many areas of the business industry including health care, technology and beverage industry, and retail companies. Many beverage companies are competing to be at the top. Hence, mergers and acquisitions are among the strategies used to maintain their competitive advantage. Coca-Cola is a significant example of a company that never seems to quench its thirst for mergers and acquisitions.
The Coca-Cola Company is the world’s biggest beverage company. It has managed to breakthrough in the market; it has been ranked as the third world’s most valuable brand. It has a diverse range of products and brands in over 200 countries (Mundari, 2014). It has several brands that are worth millions of dollars such as Dasani, Sprite, and Diet Coke among others. As at 2015, it had a net income of $7.4 billion. More interestingly, it has daily servings of about 1.9 billion (Munarriz, 2014). Coca-Cola has done an excellent job at providing satisfaction to its consumers for 130 years and is still applying strategies to maintain its position in the market (Munarriz, 2014). This company has employed a method of strategic partnerships and acquisitions. Coca-Cola has a long history of acquiring various beverage companies some of which were a good choice and some did not make much difference. It has made acquisitions of companies like Monster, Minute Maid, PowerAde, and many others.
One of the most known acquisitions made by Coca-Cola was in 1960 when it acquired ownership of Minute Maid; this happened at a time when Coca-Cola had taken a leap of faith in becoming a total beverage company (Munarriz, 2014). The strategy that led to this acquisition was that the Coca-Cola was at a period of reinventing itself when it became a total beverage company. It now wanted to indulge in various new products in the beverage industry. It plunged ahead and researched on a new entity in the market; frozen concentrate, which was under Minute Maid, hence its acquisition. The main aim of this move was to diversify its range of products and consequently increase its market. This was indeed a smart move since a few years after the acquisition, the company had taken a third of the 30 existing brands in the market, and later it expanded to concentrates to pineapple and grapefruit among others (Buehler, 2016). Since then, Coca-Cola has continued to use mergers and strategic partnerships and frankly, this strategy has steered the company to the top and most importantly, it has accorded it a competitive advantage.
Reed’s Inc. is also a beverage company In US precisely in California. It started with a ginger brew by Chris Reed in 1987, when he tried a ginger brew experiment that turned out successful (Home - Reeds, Inc., 2016). The company has further expanded in providing ginger based soft drinks, root beer, three flavors of ice creams and even recently, it began the production of ginger candies. Reed’s Inc. has more than 14000 stores all over the United States (Home - Reeds, Inc., 2016). The strategy that Reeds mostly applies is the act of reinventing itself, and this has enables it to be quite successful in its endeavors. In 2010 and 2011, it got runners up position in the National Choice Awards. Its activities started getting profitable in the second fiscal quarter of 2012 and since then, it has plunged into improving itself hence getting an identity in the market (Home - Reeds, Inc.,2016).
Jones Soda would be a prospective candidate for Reed’s Inc. to merge with; this is because firstly, they were formed at around the same time and they have been involved in similar operations. Secondly, despite their activities being the same they have indulged in different kinds of products. Therefore, it is essential for them to merge because, in this way, they can capture a larger market hence maximum profitability in their operations. In addition, it is quite evident that these companies are rivals. In fact, in 2010, Reed’s Inc. wanted to purchase Jones Soda, though it opted out of the deal. Therefore, should these companies, merge, it would help eliminate the rivalry between them and also assist in achieving better sales for their products since they will have a larger market base.
The main agenda of a company is to satisfy its customers and to ensure sales to customers are sustained. This is achieved through business level strategies, whereby the critical steps and decisions are made by a company to provide quality products to its clients and also to attain or maintain its competitive advantage in the industry (“Business Level Strategy, 2016). In essence, the international business strategy is mainly aimed at maintaining the company’s position in the industry and improving its profit margin. There are different types of business level strategies. The first one is cost leadership, in that the company competes with other companies through the price ranges of its products. Many companies achieve this through reducing the cost of its products and building the state of the art facilities that would make it quite difficult for its competitors to imitate their strategy. Another type of business level strategy is differentiation, where a company decides to produce unique products. This is essentially a form of value to the consumers. There is also focused low cost where the company is focused on selling products at a low cost to a particular market, like if a company decides to sell its products at a low cost to the US market only ("Business Level Strategy," 2016). Another type is focused differentiation, which mainly deals with an emphasis on a particular market and providing them with unique products. This is likely to improve the profits of the company ("Business Level Strategy", 2016).
Coca-Cola has applied the differentiation type of business level strategy; it prides itself on providing unique products to its customers. It has achieved this through various actions. It has used unique marketing and advertising strategies to encourage its customer to continue purchasing their products ("Coca-Cola: Business Level Strategy", 2013). According to research, customers feel better when using slimmer shaped bottles. Hence, Coca-Cola has adopted this strategy of using slim bottles that are curvy shaped. This has also improved its market coverage and profitability. It has also applied the Coca-Cola Freestyle machine that allows its customers to enjoy mixed beverages and flavors; this has played a vital role in improving the sales of the company.
The strategies applied by Coca-Cola are substantially profitable to the enterprise. However, it is quite challenging even to other multinational corporations to maintain its position in the market. It is, however, advisable for Coca-Cola to continue applying its strategies in differentiation so as to preserve its global position in the market. This will be made possible if it continues to introduce unique products in the market, this move will help in sustaining brand loyalty from the consumers. Another recommendation would be to couple its brand with an alcoholic brand. In a way, they would need to introduce a differentiated brand under the liquor hence this would steer the company to its advantage. A good example involves collaborating with Captain Jack. Hence, it would cater for the alcohol-drinking customers. Hence, this would widen the market for their products.
International corporate level strategies are the decisions taken by an organization that usually affect the entire multinational corporation, specifically at a corporate level. It involves the scope of the business operations and through both geographical and product diversification (Malunes, 2016). This can be viewed as corporate strategic planning, that would help in improving the performance of the company. Financial results and allocation of available resources are considered part of corporate level strategies. It involves the direction that the company needs to take and the roles that each business unit need to take to achieve the maximum profits within its objectives. There are three main divisions of corporate level strategies that focus on stability, growth, and retrenchment. It has four main types, which include concentration, which involve the process of growing the existing smaller businesses (Malunes, 2016). There is also integration, which requires a company using various strategies in integrating other businesses and its objectives to achieve maximum benefit. Another type of corporate level is strategies diversification, which is mainly achieved through mergers and acquisitions (Malunes, 2016). International expansion also involves the company testing and exploiting new markets on a global scope.
Coca-Cola has applied various corporate level strategies, and the most significant one has been the product development strategy that mainly falls under the diversification type of corporate level strategies. This famous company has also upheld broad diversifications of its goods and brands (Mahoney, 2010). It started acquiring businesses that had a promising future in the beverage industry, and this has worked out for the company. Through this move, the company has managed to make various brands in the beverage line and consequently has captured a wider market, therefore improving the profits of the enterprise.
Coca-Cola should be aggressive regarding advertising and marketing. It should apply a diversified method in selling its products since the competition posed by other companies is quite aggressive. It has done a splendid job in strategic mergers and acquisitions, though it needs to strategize in maintaining its position on a global scope. It should also collaborate with bottling companies to ensure a safe working environment for its staff and the hygiene of the customers. Despite the fact that they have diversified their products, it is also vital that the company applies focus differentiation, which primarily concentrates on a particular market. In this case, the company can take care of a small percentage of the market, whereby, in spite of the fact that there is Coke Zero, there should also be availability of low-sugar products in the other brands, a good example could be Fanta-Zero. In this way, a wider market can also be captured and therefore increasing the profit of the company.
Despite the efforts being put in by Reed’s Inc. It is evident that it has a long way to go regarding the strategies it needs to apply, so that it can compete on a global scope. It is however recommended that it implement the focus differentiation business strategy, which can clearly improve the value of its products and therefore improving its position even on a global scope. Reed’s Inc. should be involved in differentiating its products and developing its brand. In this case, it will be able to capture a wider market, and more people will be able to purchase its products hence improving the market satisfaction. Regarding the corporate level strategies, it is wise to apply the international expansions strategy. It is high time that Reed’s Inc. expands its market and functionalities to a global scope. It is quite evident that it has the capability to reach the global level consequently gaining more profit and therefore joining the ‘big boys’ in the beverage industry.
In conclusion, mergers and acquisitions are a vital part of the operations of a company, and they are a smart move especially if taken by multinational corporations. It is understood that Coca-Cola has benefited a lot from mergers and acquisitions. Companies like Reed’s Inc. can also benefit if they apply such strategies. It is also paramount to monitor the business level and corporate level strategies of a company. In essence, every company is capable of competing on a global scope if strategies are well controlled.
References
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Buehler, N. (2016). Top 5 Companies Owned By Coca-Cola (KO) | Investopedia. Investopedia. Retrieved 12 May 2016, from http://www.investopedia.com/articles/markets/011216/top- 5-companies-owned-coca-cola-ko.asp
Coca-Cola: Business Level Strategy. (2013). Mycokespot.blogspot.co.ke. Retrieved 12 May 2016, from http://mycokespot.blogspot.co.ke/2013/03/business-level-strategy.html Business Level Strategy. (2016).
Home - Reeds, Inc. (2016). Reeds, Inc. Retrieved 12 May 2016, from http://reedsinc.com/
Investors Info: SEC Filings. (2016). The Coca-Cola Company. Retrieved 12 May 2016, from http://www.coca-colacompany.com/investors/investors-info-sec-filings/ ("Investors Info: SEC Filings", 2016)
Mahoney, J. (2010). Strategic management-Business Policy. Presentation, Mc Graw Hill
Malunes, (2016). Chapter 4 corporate level strategies. Slideshare.net. Retrieved 12 May 2016, from http://www.slideshare.net/rkaysee/chapter-4-14330584
Munarriz, R. (2014). What Company Will Coca-Cola Drink Up Next? DailyFinance.com. Retrieved 12 May 2016, from http://www.dailyfinance.com/2014/08/20/coca-cola- potential-acquisition-targets/
