Change and Pressures to Innovate - The Coca Cola Case

By: Hans Bool
Submitted: 2007-01-17 15:31:49
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Think about “Coca Cola,” and tell me what you come up with. (I’ll just wait a moment ...) ... Possible associations are with: a giant company, a great drink, sugar.

But not with health.

Companies like Coca Cola and McDonald’s are forced to change because of trends that affect their business in a negative way. Coca Cola is traded on the New York Stock exchange and its stock price has declined about fifty percent over the last eight years -- from 90$ in 1998 to 45$ currently (www.nasdaq.com / stock: KO).

One such a trend is health and fitness. People invest more and more in health and fitness. McDonald’s, for example has introduced salads in a response to this trend, Coca Cola recently announced the introduction of a calorie burning soft drink: Enviga - Coke's Enviga: It May Burn Calories, but It Isn't a Cure for a Bulging Belly,” mentions the Wall Street Journal (http://articles.news.aol.com/business/_a/cokes-enviga-it-may-burn-calories-but-it/20061013075409990001)

Interesting is also the fact that Coca Cola is cooperating with the Swiss company Nestle, that is no coincidence because the soft drink is “tea based.” Developing new business like this is also another trend we have seen done by other companies in fact by one of the competitors of Nestle -- Sara Lee / DE (Douwe Egberts). They have collaborated with Philips in the design and roll-out of the “Senseo” a single serve coffee machine.”

In both cases the companies are dealing with innovation and change. The innovation is done by a new product development. The change is initiated by a trigger from a new trend that affected the business of both companies. For Coca Cola the change is due to a health trend that affects their market and that also provides a new train to jump on.

The question is whether the market will recognize Coca Cola as a business dedicated to health. (Product) innovation is one thing, changing the image of a company another. The current image of Coca Cola is still associated with action, youth and passion, but not (yet) with health. And that is probably why the new product development is done cooperating with another company. A sort of island solution -- once it has become a success the next step in the change will be examined and prepared. Let’s just follow this stock for a while...

© 2006 Hans Bool

Hans Bool is the founder of Astor White a traditional management consulting company that offers online management tools. Have a look at some of our free management tools

Article source: Expert Articles

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