Harvard Case - Coca-Cola: Back in Burma
"Coca-Cola: Back in Burma" Harvard business case study is written by Tatiana Lukoianova, Christopher Williams, Carolyn Burns. It deals with the challenges in the field of General Management. The case study is 18 page(s) long and it was first published on : Jul 29, 2013
At Fern Fort University, we recommend Coca-Cola proceed with a cautious but strategic re-entry into Burma, prioritizing corporate social responsibility (CSR) and sustainable business practices as core pillars of their strategy. This approach will not only allow Coca-Cola to tap into the potential of this emerging market but also ensure that its return is aligned with ethical principles and long-term sustainability.
2. Background
Coca-Cola's withdrawal from Burma in 1988 due to human rights concerns was a significant decision. The company's return in 2013, after a period of political and economic reforms, presented a complex scenario. The case study highlights the challenges of re-entering a market with a troubled past, including navigating political sensitivities, managing stakeholder expectations, and ensuring ethical business practices.
The main protagonists in this case are:
- Coca-Cola: A global beverage giant facing the dilemma of balancing business interests with ethical considerations.
- Burma: A country undergoing political and economic reforms, presenting both opportunities and risks for businesses.
- Stakeholders: Including the Burmese government, local communities, NGOs, and consumers, all with varying perspectives on Coca-Cola's return.
3. Analysis of the Case Study
Strategic Framework: This case study can be analyzed using a combination of frameworks:
- Porter's Five Forces: The Burmese market presents a high threat of new entrants due to low barriers to entry, high bargaining power of buyers due to limited options, and potential for substitute products. However, Coca-Cola's brand recognition and established distribution network could provide a competitive advantage.
- SWOT Analysis:
- Strengths: Coca-Cola's global brand recognition, extensive distribution network, and experience in emerging markets.
- Weaknesses: Potential reputational damage due to past association with the Burmese regime, lack of local market knowledge, and potential for negative public perception.
- Opportunities: Growing Burmese economy, increasing consumer demand for soft drinks, and potential for sustainable business practices.
- Threats: Political instability, potential for negative media attention, and competition from local and international players.
- Corporate Social Responsibility (CSR) Framework: Coca-Cola's commitment to CSR is paramount. This includes:
- Ethical Sourcing: Ensuring sustainable and ethical sourcing of ingredients and packaging materials.
- Community Engagement: Investing in local communities through initiatives that address social and environmental issues.
- Transparency and Accountability: Being transparent about its operations and being accountable for its actions.
4. Recommendations
1. Phased Re-entry: Coca-Cola should adopt a phased approach to re-entry, starting with a pilot project in a specific region to assess market conditions and build relationships with local stakeholders. This allows for flexibility and minimizes risk.
2. Prioritize CSR: Coca-Cola should integrate CSR into all aspects of its operations in Burma. This includes:* Sustainable Sourcing: Partnering with local farmers and suppliers who adhere to ethical and sustainable practices.* Community Development: Investing in community projects that address social and environmental issues, such as water conservation, education, and healthcare.* Transparency and Dialogue: Engaging in open dialogue with stakeholders, including NGOs, local communities, and the government, to address concerns and build trust.
3. Build Local Partnerships: Coca-Cola should forge strategic partnerships with local businesses, NGOs, and community leaders. This will provide valuable insights into the market, enhance local acceptance, and facilitate collaboration on CSR initiatives.
4. Invest in Technology and Analytics: Utilizing data-driven decision making and advanced analytics can help Coca-Cola understand consumer preferences, optimize supply chain management, and track the impact of its CSR initiatives.
5. Develop a Strong Communication Strategy: Coca-Cola should proactively communicate its commitment to ethical business practices and CSR initiatives. This can be achieved through public relations campaigns, social media engagement, and transparent reporting on its activities.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies: Coca-Cola's core competencies in brand management, distribution, and marketing can be leveraged to achieve success in Burma.
- External Customers and Internal Clients: Coca-Cola's success depends on satisfying both external customers (consumers) and internal clients (employees, suppliers, and stakeholders).
- Competitors: Coca-Cola needs to be aware of the competitive landscape and differentiate itself through its commitment to CSR and sustainable business practices.
- Attractiveness: The Burmese market offers significant growth potential, but the risk profile is high. Coca-Cola's phased approach and focus on CSR can mitigate risks and enhance its long-term attractiveness.
6. Conclusion
Coca-Cola's return to Burma presents a unique opportunity to contribute to the country's development while upholding ethical business practices. By prioritizing CSR, building local partnerships, and adopting a phased approach, Coca-Cola can navigate the complex challenges of this emerging market and achieve sustainable success.
7. Discussion
Alternatives:
- Rapid Expansion: A rapid expansion strategy could lead to faster market penetration but also increase risks and potentially damage Coca-Cola's reputation.
- Complete Withdrawal: While avoiding potential risks, this would miss out on the growth opportunities in Burma.
Risks and Key Assumptions:
- Political Instability: Political instability could disrupt Coca-Cola's operations and negatively impact its reputation.
- Negative Public Perception: Negative media attention or public backlash could damage Coca-Cola's brand image.
- Lack of Transparency: Failure to be transparent about its operations could erode trust among stakeholders.
Assumptions:
- The Burmese government will continue to pursue economic reforms.
- Coca-Cola can successfully implement its CSR initiatives.
- Consumers in Burma will respond positively to Coca-Cola's commitment to sustainability.
8. Next Steps
Timeline:
- Year 1: Pilot project in a specific region, establishing local partnerships and implementing CSR initiatives.
- Year 2: Expand operations to other regions, based on the success of the pilot project.
- Year 3: Full-scale market entry, with a focus on sustainable growth and continuous improvement in CSR performance.
Key Milestones:
- Secure necessary permits and licenses.
- Develop a comprehensive CSR strategy.
- Establish partnerships with local businesses and NGOs.
- Implement a transparent and accountable communication strategy.
- Continuously monitor and evaluate the impact of CSR initiatives.
By following these recommendations, Coca-Cola can return to Burma in a responsible and sustainable manner, contributing to the country's development while protecting its brand reputation and achieving long-term success.
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Case Description
Coca-Cola has announced the opening of its first bottling plant in Burma in almost 60 years. Since 1962, Burma has been a closed and isolated country and under military rule. As a result of the military's steady relinquishing of control over the government, Burma has begun opening its doors to international trade and investment. However, political instability is still very high and economic development is far from secure. Furthermore, although a framework agreement between the U.S. and Burmese governments has been signed, a bilateral investment treaty to provide protection for Coca-Cola's direct investment is not yet in place. How should Coca-Cola pursue its strategy in Burma?
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