This case was presented in Spring 2010 and revolves around Coca-Cola's questionable water and waste management practices in developing countries leading up to 2007.

1. Commit to the Environment EnviroCordia Consultants Mark Bundang Sarah Dupuis Thomas Elipulikattu Johnny Legakis

3. Strategic Challenge

4. Analysis

5. Alternative Strategic Directions

6. Recommendation

8. Coca-Cola must determine how to maintain growth and leadership in the beverage industry, in light of emerging water scarcity, public criticism and intense competition for superior brand image. Strategic Challenge Strategic Challenge Analysis Alternative Strategies Recommendation Implementation

9. Industry-wide ethical factors Strategic Challenge Analysis Alternative Strategies Recommendation Implementation Systemic Systemic Organizational Given the importance of water in the production of beverages, the emerging issue of water scarcity may hinder the firm’s ability to achieve objectives

10. Recommendation Strategic Challenge Analysis Alternative Strategies Recommendation Implementation Increase corporate commitment to the environment

11. CURRENT SITUATION

12. Competition is of high intensity given the duopolistic nature of the beverage industry Analysis Strategic Challenge Alternative Strategies Recommendation Implementation VS.. Both firms carry leadership responsibility with respect to global water sustainability

14. Vending Machines

15. Key Ingredients

16. Water Sources

17. Bottles, Cans

18. Mixing of Ingredients

19. Manufacture of Syrup

21. Water Sources

22. Bottles, Cans

23. Mixing of Ingredients

24. Manufacture of Syrup

25. Bottling or other packagingGovernments Environmental Advocates Local Communities A major challenge in addressing criticism is the lack of industry-wide standards on water utilization

26. Intense competition results in pressure to produce volume, a water-intensive process Analysis Strategic Challenge Alternative Strategies Recommendation Implementation Pressure to produce volume Pressure to sell volume

27. Firms are depleted water at a considerable pace It is in the industry’s long term interest to absorb the short term costs involved in adopting water sustainable production processes The industry faces a foreseeable long term economic constraint in water scarcity

28. INTERNAL ASSESSMENT

29. Coca-Cola maintains a strong leadership in the beverage industry Analysis Strategic Challenge Alternative Strategies Recommendation Implementation 4 of the top 5 soft drink brands in the world Diverse product line Market dominance implies that CC is in a position to lead the industry in whichever strategic direction it chooses.

30. Core competencies provide competitive advantages, generating volume sales Analysis Strategic Challenge Alternative Strategies Recommendation Implementation

31. Coca-Cola engaged in several environmental initiatives to address public criticism Analysis Strategic Challenge Alternative Strategies Recommendation Implementation GOALS: Improve water efficiency in its operations by 20% by 2012 Achieve water-neutrality by 2010

32. Water utilization increased by 21% since 2002 in large part due to diversification into water-intensive products. Water efficiency initiatives reduced water waste by 4% Given that production water waste averages 40% in India, 4% seems like a mere drop in the bucket Water usage and efficiency goals are unlikely to be attained

33. The EWRD could be more influential in ensuring that the environment is considered in decision-making Analysis Strategic Challenge Alternative Strategies Recommendation Implementation Addressing Issue Taking Action DECISION-MAKING EWRD developing ineffective benchmarks? EWRD not heavily involved in decision making? CC not adhering to benchmarks set out by EWRD

34. Actual impact of water initiatives on the environment and communities remains ambiguous Analysis Strategic Challenge Alternative Strategies Recommendation Implementation Participation in initiatives is done with great intention Objectives are unclear Metrics are unclear Reports on CC’s engagement in community initiatives are developing internally, resulting in bias Critics continue to claim that initiatives are ineffective Greater transparency on impact of initiatives is required

35. Environmental advocates are unappeasable

36. FINANCIAL ANALYSIS

37. Coca-Cola has the ability to attain additional debt to fund initiatives, as needed Analysis Strategic Challenge Alternative Strategies Recommendation Implementation Sales: $29B Operating Income $7.58B (17.74% increase) Net cash due to operating activities: growth of 20.03%

38. Shareholders expect to see continued growth Analysis Strategic Challenge Alternative Strategies Recommendation Implementation Costs associated addressing ethical issues may significantly impact the bottom line in the short term, thus affect stock prices Reduces long term risk

39. ALTERNATIVE Strategic directions

40. Alternative solutions were evaluated against the following decision criteria Alternative Strategies Strategic Challenge Analysis Recommendation Implementation

41. Proposed Strategic Directions Alternative Strategies Strategic Challenge Analysis Recommendation Implementation

42. PROS Least costly Has some impact on environment and community (awards) Advertising re: initiatives has helped maintain current brand image CONS Inadequate in helping CC achieve goals (>20% efficiency by 2012, water-neutrality by 2010). Negative impact on brand image in long-term May lose opportunity for first mover advantage (ie. for greater cost advantage and brand image). May impact leadership position. Strategic Direction 1: Status Quo Alternative Strategies Strategic Challenge Analysis Recommendation Implementation

43. Strategic Direction 2: Commitment to Environment Alternative Strategies Strategic Challenge Analysis Recommendation Implementation PROS CONS Opportunity for first mover advantage Clear and strong environmental standards Positive impact on the environment Will further address public criticism Reduces threat of potential litigation Timely implementation Pepsi expected to follow Costly to implement Does not force competitors to comply with standards (directly or immediately)

44. Strategic Direction 3: Coalition for Industry-wide Standards Alternative Strategies Strategic Challenge Analysis Recommendation Implementation PROS CONS Greater scope of change Shared costs would minimize financial impact Will further address public criticism Standards will be minimal Regulations would not be enforced First mover advantage is foregone Untimely to implement given likely disagreements between CC and Pepsi

45. recommendation

46. Evaluation of strategic directions Recommendation Strategic Challenge Analysis Alternative Strategies Implementation

47. Requires internal motivation to behave at a higher ethical standard Despite cost of implementation, long-term financial, environment and legal benefit will be worthwhile First Mover Advantage Leverage the implementation Global Application Water cost benefits in other regions Sets the bar the highest Overall impact on the environment and community is best. Most timely as there are few barriers This alternative provides several benefits and has the most impact on water resource management. Recommendation Strategic Challenge Analysis Alternative Strategies Implementation

48. Civil Learning Tool Recommendation Strategic Challenge Analysis Alternative Strategies Implementation OrganizationalLearning Civil Strategic Managerial Compliance Defensive Higher op. Green Zone Risky Red Zone Latent Emerging Consolidating Institutionalized Issue Maturity

49. Implementation plan

50. Overview of Implementation Marketing Implementation Strategic Challenge Analysis Alternative Strategies Recommendation Human Resources Operations Research and Development

51. Operations Implementation Strategic Challenge Analysis Alternative Strategies Recommendation 1. Redefine scope of the Environmental and Water Resource Department (EWRD) Assess how EWRD can be used effectively in decision-making and execution of initiatives at CC Increase communication between EWRD and rest of company $0M

52. Operations Implementation Strategic Challenge Analysis Alternative Strategies Recommendation 2. Assess effectiveness of EWRD initiatives External initiatives Consult with environmental advocates to assess targets, metrics and impact Continue and increase investment in community water initiatives Find new areas of local community development Production Consult with team of external specialists to review and assess current productive Water utilization Waste management Water toxicity Regulatory/Government Create standards Train staff on new standards $500K $4M $1.5M

53. Operations Implementation Strategic Challenge Analysis Alternative Strategies Recommendation Internal standards: Water usage E.g. Use less than 2.7L per bottle Water efficiency E.g. Waste less than 1.7L per bottle Waste management Reduce amount of by-products Eliminate improper disposal of by-products Toxicity Comply and surpass high accepted standard (eg. CSE)

54. Operations Implementation Strategic Challenge Analysis Alternative Strategies Recommendation 3. Increase Transparency Assessments are provided in the form of an annual report, which is communicated both internally and externally. $0M Evaluating the impact of initiatives, establishing stricter standards, and considering the environment in decision making will result in a fundamental change in Coca-Colas perspective towards the importance of environmental issues

55. Research and Development Implementation Strategic Challenge Analysis Alternative Strategies Recommendation Investment into research Water usage Water efficiency Waste management Toxicity Eg. Water purification methods $5M Taking the time to investigate new, and more efficient processes will result in less waste and may lead to production costs savings.

57. Consider changing Leader of CC India

59. Incentive plans

60. Meet production standards

61. Reward for ideas for environmental initiativesHuman Resources Implementation Strategic Challenge Analysis Alternative Strategies Recommendation $5M $3M New people need to be brought in to facilitate integration of this new outlook. Existing employees need to be educated and share this outlook.

62. 1. Internal Communication Communication on progress re: water initiatives: Objectives: update learning transparency Receive feedback Marketing Implementation Strategic Challenge Analysis Alternative Strategies Recommendation $1M

63. 2. External Communication Ad campaigns : Increase advertising of CC’s new green outlook . Online communication: Coca-Cola Website Disseminate updates on CC initiatives Engage consumers: educate and take suggestion Social media: Interactive participation Surveys Learning on water initiative Marketing Implementation Strategic Challenge Analysis Alternative Strategies Recommendation $0M Transparency to both the public and employees is key in the success of these new ideas.

64. Budget and Timelines Implementation Strategic Challenge Analysis Alternative Strategies Recommendation

65. So what is the value of this implementation value? Implementation Strategic Challenge Analysis Alternative Strategies Recommendation

66. Thank you!

67. APPENDIX

68. Regulation by government Medium to Long term Enough time to put into place standards above and beyond what regulation would require already changing corporate structure Advantage to Coca Cola over competition Risks and Contingencies Implementation Strategic Challenge Analysis Alternative Strategies Recommendation

69. Pepsi starts standards & shifts corporate culture Expected in the long run Emerging issues, all companies will be forced to deal with this CC will be ahead of Pepsi in their efforts Recognized by the public as the first mover Risks and Contingencies Implementation Strategic Challenge Analysis Alternative Strategies Recommendation

70. Continued criticism from critics Disregard this when considering its environmental policies. Critics will eventually see this and back off Risks and Contingencies Implementation Strategic Challenge Analysis Alternative Strategies Recommendation

71. Water intensive beverages (Tea & Coffee) increase in popularity Concentrate the R+D efforts towards these beverages Reduce the water necessary. Consider the environmental cost vs. the economic benefits before making the decision Risks and Contingencies Implementation Strategic Challenge Analysis Alternative Strategies Recommendation

72. Issues relating to water and waste management come to forefront of public awareness Come under intense immediate scrutiny Invest more into the implementation we have recommended in order to accelerate the effects to prevent possible backlash. Risks and Contingencies Implementation Strategic Challenge Analysis Alternative Strategies Recommendation

75. Pesticide levels in drinks

76. Releasing chemical waste

77. Selling of sludge

78. customer advocacy groups are pushing CC to become more transparent about how it measures the progress of its water initiatives

79. lack of industry-wide standards on water consumption and utilizationStakeholders (ethics) Legal

80. Large scale production in developing countries like India have been associated with poor water resource management, impacting the communities within the affected region. Analysis Strategic Challenge Alternative Strategies Recommendation Implementation