Coca-Cola, commonly referred to as coke is one the world’s most popular brands. The beverage competes in non-alcoholic segment with its competitors in the global commercial beverages sector. In 2006, coke’s global sales touched 10% of the whole market, in the non-alcoholic products. It faces competition from its own peer products as well as the home country’s local products. They have spread their sales in more than 200 countries but it is made available throughout the globe as it is said “coke is bottled locally but enjoyed all over the world” (Coca-Cola, 2009).
With the changing economy, Coca-Cola’s growth has come down with change in beverage tastes. Coke saw an unusual drop in sales by 2% in North America, its home, due to wet weather. The sales volume fell 1%. Coca-Cola also suffered tainted image due to contamination scare (Brenda Bouw, 2013).
Clash among antitrust supporters further brought down the sales in Europe and Chile which damaged both the company’s reputation and the share price of coke. Coca-Cola also has been facing problem with change in consumer’s perceptions on health grounds to avoid aerated beverages. Rivalry companies’ broader range of products including sports drink and fruit juices also brings down the sales of Coca-Cola both in its home and overseas markets (Janet Morrison, 2006)
Coca-Cola also has been facing problems with the sluggish markets in the Asian countries. The beverage was able to capture the “pure global segment” (Coca-Cola, 2014) in these countries similar to US. But the biggest challenge they face is, they need to reach the semi-global and local segment. These two segments are dominated by the local preferences or a mix of global and local preferences. So coke is investing heavily in overseas factories and distribution. It is putting its best efforts to tap the Chinese market. The toughest portion with the Chinese market is future cola, a local Chinese beverage which poses a very big threat to coke in china. The Chinese local product, future cola was able to penetrate and capture the rural market in both semi-global and local segments (Panos Mourdoukoutas, 2013) Coca-Cola has been encountering problems with the rural areas of china and India. The design of cokes in glass bottle posed problem here, when Coca-Cola changed them to craters for easy transportation to rural areas and reduced the price of the drink. (Janet Morrison, 2006). The sales are going flat due to its highly pricey stock.
The overseas setback continues with Europe sales coming down by 4% and 2.6% slide in revenue with just 1% volume growth and coke is facing tough competition from its peer beverage PepsiCo and also from other herbal drinks and Red Bull, especially in the overseas market. (Brenda Bouw, 2013)
Review of Management Accounting
Management accounting “involves preparing and providing timely financial and statistical information to business managers so that they can make...