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Coca-Cola’s (Coke's) Growth Strategy

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Internal growth strategies tend to rely on actions such as hiring more employees, growing the customer base, opening new company-owned locations or developing new products through internal research and development. External growth strategies tend to focus on meeting growth objectives by establishing relationships with third parties, such as strategic-alliance partners, licensees, franchisees and co-branding allies.

For example, Coca-Cola Beverages Ceska rebulica is the Czech Republic (CR) arm of Coca-Cola Company.  As the cola wars rage on, CR enjoys the lion’s share of market with 1.8:1 over Pepsi and cheaper local brands.  The potential for growth for the company in this region and globally is Coca-cola’s system of partnering with the bottler.  Both the distributor and the bottler are Coca-Cola companies via a franchise to sell and distribute Coca-Cola merchandise; both mutually benefit from the strategic alliance.  In CR, the system has grown to 10 sales and warehousing facilities and one production facility. This is an example of internal growth for the local distributor and a combination of internal and external growth for the Coca-Cola as a whole.  When the corporation sells a franchise, it brings money into the company as a whole; when the local distributor uses the strategic alliance (business system) it is increasing its growth internally.

Companies can learn from this example, to effectively use both internal (opening new company-owned locations) and external (franchisees) growth strategies to improve their market share and positioning.

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YouSigma. (2008). “Coca-Cola’s (Coke's) Growth Strategy." From http://www.yousigma.com.

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