CASE STUDY

IT IS GOOD NEWS EVERYWHERE FOR COCA COLA

Why did the Cola giant fumble in the first place? Here are some mistakes and learnings
that Coca Cola has undergone in the past:

Globalisation Holds the Key

Coca Cola was among the bluest of blue MNCs to have entered India in the 1990s. It was
and still remains among the top five most powerful brands and the largest beverage company in
the world. A lot of that MNC arrogance had a rub-off effect in the way it laid out its India
strategy. Snapping up the locally popular brands like Thums Up, Limca, Maaza to kill
competition, its brand-building exercise for the mother-brand was often at the cost of the local
ones. It was costly and often didn't work. Thums Up remains a very strong brand in southern
states like Andhra Pradesh and in fact in the Brand Equity Most Trusted Brands listing, it ranks
34 - much higher than Coca Cola's 42nd ranking. As the company redraws its India plans, it
promises to be far more rooted to the realities like having more local insights, promoting local
drinks like Aam Panna and localised variants like Sprite - Jal Jeera.

Delegate, Empower and Be Patient

Five CEOs in a decade, a high employee turnover of 30%, Coca Cola India was in a
chaos as constant churn at the top took its toll. "Every time a new CEO took over, he drew out a
new strategy and a fresh game plan to win the market", recalls a Delhi-based ex-employee. Lack
of confidence and patience from the headquarters only made matters worse. "The short-term
approach to show quick results was taking its toll," recalls a Bangalore-based ex-employee who
was involved in operations.

Worse, with $1 billion of investments and having written off $450 million assets in 2000,
penny conscious Coca Cola headquarters began micromanaging issues like hikes. Recalls a
senior HR executive who worked in the eastern region: "No hikes above 10% at any level - we
got the message from the US headquarter". Everything was in a flux - not just in people leaving,

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in roles too changing frequently. There wasn't much flexibility that the HR department had in
managing people.

Slowly, Mr. Singh (CEO, Coca Cola, India) and his team are helping win back the staff
confidence here and getting some freedom from the Atlanta headquarters. "When I came, there
were complains of low salaries. We undertook a transparent benchmarking study to fix that", he
says. Multiple channels for dialogues have been opened up. Every month now, there is an open
house meeting where all employees at the headquarters can air their concerns and issues. "We
are trying to bring down the decision-making process", says Mr. Singh.

Soften that MNC Arrogance

Being the world's most powerful brand had its flipside. Every time there was a problem,
the company pointed a finger elsewhere. "We were in denial mode", says a senior company
executive. "Earlier, we spent more time defending ourselves", says a candid Mr. Singh. Despite
aggressive efforts it realised that in a sensitive business of food and drinks, scientific data matter,
but perceptions matter more. "No matter what you did, it (pesticide issue) was a losing
proposition", says a senior ad industry executive. "You could only side-step it to minimise the
damage", he adds. The company too seems to have figured that out. "Let's focus on solutions
instead of debating if we are part of the issue or not", says Singh. Coca Cola is trying to move
beyond the blame game and has learnt to be more constructive.

Engage Beyond Business

For both Pepsi and Coca Cola the world was small and their attention very focused on
each other. Just then CSE, an NGO, expanded and complicated their business playfield in India.
Suddenly their MNC tag became a noose as the cola glitz and glamour gave way to pesticide,
pollution, and groundwater depletion controversies. Having learnt lessons the hard way, Coca
Cola is now opening up multiple channels of dialogue and engagement with the community it is
operating in. It is setting up a Coca Cola Foundation that will engage in a variety of
developmental work. To help create employable talent, it is setting up Coca Cola Retail
University that will train sales staff. It organises rural games with a consortium of Indian farmers
in the South. Water conservation and recycling have become its pet projects even aspires to
become a net zero water user by 2009 in India. "We want to build a sustainable business model
in India", says Singh.

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 Perhaps, the highs of the past may never return. India and Indians' fascination for the
West and MNC brands like Coca Cola today may have more earthy - rather than heady - appeal.
Of course, the brand itself has come down from its pedestal. "Coca Cola was an insignificant
product delivered spectacularly", says an ad industry veteran. The celebrity endorsements, ad
campaigns and their cricket - connect made them glitzy and desirable. "Soon, they came to be
seen as frivolous without being pleasurable", he adds, just when "cooler" brands like Google and
Nokia overtook it. From such lows, a company can only go up. Coca Cola India is already
beginning to. Hopefully, Atlanta's confidence in India's growth story will song and long-term.
And that the global beverage leader-after a slow of bad publicity and poor business track record -
has gained a humble confidence to chalk up a successful business in India. For a company with
such a difficult past in India, this may yet be early days.

But the management is upbeat. Neville Isdell, chairman and CEO of Coca Cola, said its
India arm registered a double-digit growth in the first quarter this year after a series of negative
growth. Earlier in Atlanta it announced that India will be the No. 3 market for the company. The
company will invest close to $250 million in the next three years - and this is just the beginning.
Today things are working for the company. For the CEO, it is good news everywhere.

This could well be the third awakening in India for the world's largest beverage company.
(Forced out of India in the 1970s, Coca Cola re-entered in 1993 sinking in $1 billion in over a
decade. It began losing its fizz since 2003 when pesticide allegations first surfaced.) But finally,
after negative sales growth the back of public backlash, surging attrition (around 30%) and
internal chaos, the company seems be steadying its feet in the Indian market.

Question :-

As HR manager, what role do you carve for yourself in making Coca Cola a number one cola
company in India?