Coca-cola Case Study

University of Jordan Faculty of Business Strategic Management “Coca-Cola Company” Case Study STRATEGIC MANAGEMENT

Prepared By Fathi Salem Mohammed Abdullah

2009

History analysis •

•

• • •

•

In May, 1886, Coca Cola was invented by Doctor John Pemberton a pharmacist from Atlanta, Georgia. John Pemberton concocted the Coca Cola formula in a three legged brass kettle in his backyard. Being a bookkeeper, Frank Robinson also had excellent penmanship. It was he who first scripted "Coca Cola" into the flowing letters which has become the famous logo of today. The soft drink was first sold to the public at the soda fountain in Jacob's Pharmacy in Atlanta on May 8, 1886. Until 1905, the soft drink, marketed as a tonic, contained extracts of cocaine as well as the caffeine-rich kola nut. Until the 1960s, both small town and big city dwellers enjoyed carbonated beverages at the local soda fountain or ice cream saloon. Often housed in the drug store, the soda fountain counter served as a meeting place for people of all ages. Often combined with lunch counters, the soda fountain declined in popularity as commercial ice cream, bottled soft drinks, and fast food restaurants became popular. On April 23, 1985, the trade secret "New Coke" formula was released. Today, products of the Coca Cola Company are consumed at the rate of more than one billion drinks per day.

Vision Statement (actual) To maintain our reputation as the leading cola company in the world.

Mission Statement (actual) Everything we do is inspired by our enduring mission: • • •

To Refresh the World... in body, mind, and spirit. To Inspire Moments of Optimism... through our brands and our actions. To Create Value and Make a Difference... everywhere we engage.

(proposed) At Coca Cola we believe our main responsibility is providing customers (1) with refreshing beverages including soft drinks, water, energy drinks, juices, and tea (2) to fit any occasion in their day to day lives (6). Our signature product, Coke (7), is a favorite around the world and a wide variety of our products are sold in over 200 nations (3). We use the only the most sophisticated equipment (4) to process and make our products to

ensure each glass of Coke product is as good as the last (5). Our employees (9) are fairly compensated and we practice fair trade in all markets we compete. We value our responsibility to all communities we serve and support many educational and leadership programs (8). 1. 2. 3. 4. 5. 6. 7. 8. 9.

Customer Products or services Markets Technology Concern for survival, profitability, growth Philosophy Self-concept Concern for public image Concern for employees

The Five Forces Framework Barriers to Entry: The several factors that make it very difficult for the competition to enter the soft drink market include: •

Bottling Network: Both Coke and PepsiCo have franchisee agreements with their existing bottler’s who have rights in a certain geographic area in perpetuity. These agreements prohibit bottler’s from taking on new competing brands for similar products. Also with the recent consolidation among the bottler’s and the backward integration with both Coke and Pepsi buying significant percent of bottling companies, it is very difficult for a firm entering to find bottler’s willing to distribute their product.

The other approach to try and build their bottling plants would be very capital-intensive effort with new efficient plant capital requirements in 1998 being $75 million. •

Advertising Spend: The advertising and marketing spend (Case Exhibit 5 & 6) in the industry is in 2000 was around $ 2.6 billion (0.40 per case * 6.6 billion cases) mainly by Coke, Pepsi and their bottler’s. The average advertisement spending per point of market share in 2000 was 8.3 million (Exhibit 2). This makes it extremely difficult for an entrant to compete with the incumbents and gain any visibility.

•

Brand Image / Loyalty: Coke and Pepsi have a long history of heavy advertising and this has earned them huge amount of brand equity and loyal customer’s all over the world. This makes it virtually impossible for a new entrant to match this scale in this market place.

•

Retailer Shelf Space (Retail Distribution): Retailers enjoy significant margins of 15-20% on these soft drinks for the shelf space they offer. These margins are quite significant for

their bottom-line. This makes it tough for the new entrants to convince retailers to carry/substitute their new products for Coke and Pepsi. •

Fear of Retaliation: To enter into a market with entrenched rival behemoths like Pepsi and Coke is not easy as it could lead to price wars which affect the new comer.

Suppliers: •

Commodity Ingredients: Most of the raw materials needed to produce concentrate are basic commodities like Color, flavor, caffeine or additives, sugar, packaging. Essentially these are basic commodities. The producers of these products have no power over the pricing hence the suppliers in this industry are weak.

Buyers: The major channels for the Soft Drink industry (Exhibit 6) are food stores, Fast food fountain, vending, convenience stores and others in the order of market share. The profitability in each of these segments clearly illustrate the buyer power and how different buyers pay different prices based on their power to negotiate. •

Food Stores: These buyers in this segment are some what consolidated with several chain stores and few local supermarkets, since they offer premium shelf space they command lower prices, the net operating profit before tax (NOPBT) for concentrate producer’s in this segment is $0.23/case

•

Convenience Stores: This segment of buyer’s is extremely fragmented and hence have to pay higher prices, NOPBT here is $0.69 /case.

•

Fountain: This segment of buyer’s are the least profitable because of their large amount of purchases hey make, It allows them to have freedom to negotiate. Coke and Pepsi primarily consider this segment “Paid Sampling” with low margins. NOPBT in this segment is $0.09 /case.

•

Vending: This channel serves the customer’s directly with absolutely no power with the buyer, hence NOPBT of $0.97/case.

Substitutes: Large numbers of substitutes like water, beer, coffee, juices etc are available to the end consumers but this countered by concentrate providers by huge advertising, brand equity, and making their product easily available for consumers, which most substitutes cannot match. Also soft drink companies diversify business by offering substitutes themselves to shield themselves from competition. Rivalry: The Concentrate Producer industry can be classified as a Duopoly with Pepsi and Coke as the firms competing. The market share of the rest of the competition is too small to cause any upheaval of pricing or industry structure. Pepsi and Coke mainly over the years competed on differentiation and advertising rather than on pricing except for a period in the 1990’s. This prevented a huge dent in profits. Pricing wars are however a feature in their international expansion strategies.

PEST Analysis The PEST Analysis is an analysis to examine the macro-environment of CocaCola’s operations (Johnson, Scholes and Whittington, 2008). Political Like most companies, Coca-Cola is monitoring the policies and regulations set by the government. There are no political issues in this instance. Economic There is low growth in the market for carbonated drinks, especially in Coca-Cola’s main market, North America. The market growth recorded at only 1% for North America in 2004. Social There are changes in consumers’ lifestyles. Consumers are more health conscious. This affects the Coca-Cola’s sales of the carbonated drinks as consumers prefer non-carbonated drinks such as tea, juices and bottled drinks. Demand for carbonated drinks decreases and this leads to a decrease in Coca-Cola’s revenues. Technological As the technology advances, new products are introduced into the market. The advance in technology has led to the creation of cherry coke in 1985 but consumers still prefers the traditional taste of the original coke.

External Audit Opportunities 1.

Bottled water consumption has increased 11 percent.

2.

According to the S&P Industry Survey, consumers are drawn to new smaller beverage brands that are not sold on a mass scale.

3.

Word Economic Forum’s annual Davos, Switzerland gathering grants international voice.

4.

Less developed countries are in desperate need to improve community water supplies.

5.

Energy drink sales are expected to increase 7 to 8 percent in 2007.

6.

Disposable income has increased 6.2 percent.

7.

Consumers are striving to drink and eat their way to better health than pervious generations.

8.

EPS is expected to rise 7 to 8 percent in 2007.

CPM – Competitive Profile Matrix

Threats

1. Consumption of American beverages is denounced by foreign officials in areas where conflicting interest exist. 2. Multiple lawsuits against the new Enviga beverage for calorie burning claims in advertising 3. Smaller, lesser known brands are turning to major beer distributors for bottling. 4. Overall carbonated drink sales have been flat due to links of sugar to obesity and high fructose corn syrup to heart disease. 5. Pepsi is more diversified offering beverage and food products. 6. High cost of commodities such as sugar, and metals used in production of cans. 7. Many smaller companies are fierce competitors around the world in their local markets.

Critical Success Factors Market Share Price Comp Financial Position Product Quality Product Lines Customer Loyalty Employees Marketing Total

Weight 0.15 0.10 0.12 0.15 0.15 0.15 0.11 0.07 1.00

Coca-Cola Rating Weighted Score 4 0.60 3 0.30 4 0.48 3 0.45 4 0.60 4 0.60 3 0.33 3 0.21 3.71

Rating 3 3 4 3 4 4 3 3

Pepsi Weighted Score 0.45 0.30 0.48 0.45 0.60 0.60 0.33 0.21 3.56

Cadbury Schweppes Rating Weighted Score 2 0.30 3 0.30 3 0.36 3 0.45 3 0.45 3 0.45 3 0.33 3 0.21 2.85

External Factor Evaluation (EFE) Matrix Key External Factors Opportunities 1. Bottled water consumption has increased 11 percent. 2. According to the S&P Industry Survey, consumers are drawn to new smaller beverage brands that are not sold on a mass scale. 3. Word Economic Forum’s annual Davos, Switzerland gathering grants international voice. 4. Less developed countries are in desperate need to improve community water supplies. 5. Energy drink sales are expected to increase 7 to 8 percent in 2007. 6. Disposable income has increased 6.2 percent. 7. Consumers are striving to drink and eat their way to better health than pervious generations. 8. EPS is expected to rise 7 to 8 percent in 2007. Threats 1. Consumption of American beverages is denounced by foreign officials in areas where conflicting interest exist. 2. Multiple lawsuits against the new Enviga beverage for calorie burning claims in advertising 3. Smaller, lesser known brands are turning to major beer distributors for bottling. 4. Overall carbonated drink sales have been flat due to links of sugar to obesity and high fructose corn syrup to heart disease. 5. Pepsi is more diversified offering beverage and food products. 6. High cost of commodities such as sugar, and metals used in production of cans. 7. Many smaller companies are fierce competitors around the world in their local markets. TOTAL

Weight

Rating

Weighted Score

0.06

4

0.24

0.05

2

0.10

0.02

2

0.04

0.02

2

0.04

0.06

3

0.18

0.05 0.07

3 3

0.15 0.21

0.07

4

0.28

0.02

3

0.06

0.04

2

0.08

0.06

2

0.12

0.10

2

0.20

0.20

3

0.60

0.10

3

0.30

0.08

3

0.24

1.00

2.84

Internal Audit Strength

Weakness

1. Product line has over 400 brands. 2. Strong global presence, located in over 200 countries. 3. Long history has built excellent brand recognition. 4. Partnership longevity with established sporting events including the Olympics. 5. Industry leader in market capitalization with $112 billion. 6. Return on Equity yielded 30 percent in 2006. 7. Leader of dividend yields of 2.6 percent. The company has had 43 consecutive years of an annual dividend increase. 8. Joint venture between The Coca Cola Company and Nestle has resulted in the establishment of Beverage Partners Worldwide (BPW). 9. Coca-Cola has formed a strong partnership with McDonalds, with McDonalds becoming their largest customer.

1. Product line is limited to beverages. 2. A failed $16 billion acquisition of Quaker Oats hinders longterm growth. 3. Negative publicity in India because of water issues, has led to poor brand image and hindered growth there. 4. Lack of management willingness to place foreign products into American markets. 5. Marketing deficiencies due to turnover in leadership and a 16 percent decrease in advertising spending. 6. Coca Cola’s inventory turnover is only 5.4 compared to Pepsi Co.’s 8.0.

Financial Ratio Analysis (December 2007) Growth Rates %

Coca Cola

Industry

SP-500

Sales (Qtr vs year ago qtr) Net Income (YTD vs YTD) Net Income (Qtr vs year ago qtr) Sales (5-Year Annual Avg.) Net Income (5-Year Annual Avg.) Dividends (5-Year Annual Avg.) Price Ratios Current P/E Ratio P/E Ratio 5-Year High P/E Ratio 5-Year Low Price/Sales Ratio Price/Book Value Price/Cash Flow Ratio Profit Margins Gross Margin Pre-Tax Margin Net Profit Margin 5Yr Gross Margin (5-Year Avg.) 5Yr PreTax Margin (5-Year Avg.) 5Yr Net Profit Margin (5-Year Avg.) Financial Condition Debt/Equity Ratio Current Ratio Quick Ratio Interest Coverage Leverage Ratio Book Value/Share Investment Returns % Return On Equity Return On Assets Return On Capital Return On Equity (5-Year Avg.) Return On Assets (5-Year Avg.) Return On Capital (5-Year Avg.) Management Efficiency Income/Employee Revenue/Employee Receivable Turnover Inventory Turnover Asset Turnover Adapted from www.moneycentral.msn.com

Date 12/06 12/05

Avg. P/E 20.30 21.00

19.20 8.30 13.30 6.54 5.01 11.49

22.20 25.70 30.00 8.45 9.38 12.61

11.60 17.10 9.30 13.09 19.82 10.00

25.4 NA NA 5.00 6.97 21.10

26.2 49.9 20.7 3.96 5.71 19.60

20.3 26.8 6.8 2.37 3.45 10.70

64.2 26.0 19.8 64.4 27.9 21.1

52.7 17.5 14.2 59.1 20.1 14.9

34.5 17.8 12.6 34.3 16.4 11.4

0.49 0.8 0.6 55.1 2.1 8.52

0.69 1.0 0.7 41.0 2.5 10.25

1.06 1.1 0.9 31.8 3.7 18.53

28.9 14.9 22.6 32.0 16.7 24.6

22.0 11.2 16.9 25.4 12.6 18.2

24.9 7.6 10.2 18.5 6.4 8.6

76,690 386,732 9.8 5.4 0.8

56,327 360,922 10.1 6.8 0.8

92,892 806,706 14.3 7.8 0.8

Price/Sales 4.71 4.18

Price/Book 6.61 5.84

Net Profit Margin (%) 21.1 21.1

12/04 12/03 12/02

23.30 25.00 31.10

4.65 5.99 5.56

Date Book Value/ Share Debt/Equity 12/06 $7.30 0.27 12/05 $6.90 0.35 12/04 $6.61 0.45 12/03 $5.77 0.38 12/02 $4.78 0.45 Adapted from www.moneycentral.msn.com

6.29 8.79 9.18 ROE (%) 30.0 29.8 30.4 30.9 33.7

22.3 20.8 20.3 ROA (%) 17.0 16.6 15.4 15.9 16.3

Interest Coverage 28.7 25.4 29.1 29.3 27.4

Net Worth Analysis (December 2007 in millions) 1. Stockholders’ Equity + Goodwill = 17,000 + 1,400 2. Net income x 5 = $5,000 x 5= 3. Share price = $58.00/EPS 2.34 =$24.78 x Net Income $5,000= 4. Number of Shares Outstanding x Share Price = 1,600 x $58.00 = Method Average

Internal Factor Evaluation (IFE) Matrix

$ 18,400 $ 25,000 $ 123,931 $ 92,800 $65,032

Key Internal Factors Strengths 1. Product line has over 400 brands. 2. Strong global presence, located in over 200 countries. 3. Long history has built excellent brand recognition. 4. Partnership longevity with established sporting events including the Olympics. 5. Industry leader in market capitalization with $112 billion. 6. Return on Equity yielded 30 percent in 2006. 7. Leader of dividend yields of 2.6 percent. The company has had 43 consecutive years of an annual dividend increase. 8. Joint venture between The Coca Cola Company and Nestle has resulted in the establishment of Beverage Partners Worldwide (BPW). 9. Coca-Cola has formed a strong partnership with McDonalds, with McDonalds becoming their largest customer. Weaknesses 1. Product line is limited to beverages. 2. A failed $16 billion acquisition of Quaker Oats hinders long-term growth. 3. Negative publicity in India because of water issues, has led to poor brand image and hindered growth there. 4. Lack of management willingness to place foreign products into American markets. 5. Marketing deficiencies due to turnover in leadership and a 16 percent decrease in advertising spending. 6. Coca Cola’s inventory turnover is only 5.4 compared to Pepsi Co.’s 8.0. TOTAL

\

SWOT Strategies

Weight

Rating

Weighted Score

0.09 0.10 0.06 0.05

4 4 4 4

0.36 0.40 0.24 0.20

0.12

4

0.48

0.04

4

0.12

0.04

4

0.16

0.06

4

0.24

0.10

4

0.40

0.09 0.10

1 1

0.09 0.10

0.03

2

0.06

0.02

2

0.04

0.05

2

0.10

0.05

2

0.10

1.00

3.09

Opportunities (O)

Strengths (S)

Weaknesses (W)

SO Strategies

WO Strategies

1.

2.

Threats (T)

Improve environmental awareness with community involvement (S2, S4, O2, O3). Market new diet drinks that have healthier sugar substitutes (S5, O7).

ST Strategies 1. Acquire Krispy Kreme (KKD) to help diversify the product line (S5, T5). 2. Acquire Golden Enterprises (GLDC) to help diversify the product line (S5, T5).

SPACE Matrix Coordinate: (3.6, 2.2)

1. Market international beverages to American consumers (W4, O2, O6, O7). 2. Increase marketing efforts for bottled water (W5, W6, O1). WT Strategies 1. 2.

Acquire Krispy Kreme (KKD) to help diversify the product line (W1, T5). Acquire Golden Enterprises (GLDC) to help diversify the product line (W1, T5).

FS Conservative

Aggressive

CA

IS

Defensive

Competitive

ES Financial Strength (FS) Return on Assets (ROA) Leverage Net Income Income/Employee Inventory Turnover Financial Strength (FS) Average Competitive Advantage (CA) Market Share Product Quality Customer Loyalty Technological know-how Control over Suppliers and Distributors Competitive Advantage (CA) Average

x-axis: -1.4 + 5.0 = 3.6 y-axis: 5.4 + -3.2 = 2.2 Coordinate: (3.6, 2.2)

Grand Strategy Matrix

6 6 6 6 3 5.4

-1 -1 -1 -2 -2

Environmental Stability (ES) Rate of Inflation Technological Changes Price Elasticity of Demand Competitive Pressure Barriers to Entry into Market Environmental Stability (ES) Average Industry Strength (IS) Growth Potential Financial Stability Ease of Entry into Market Resource Utilization Profit Potential

-1.4 Industry Strength (IS) Average

-3 -2 -2 -6 -3 -3.2

5 6 4 5 5 5.0

Rapid Market Growth Quadrant II

Quadrant I

Weak Competitive Position

Strong Competitive Position Quadrant IV

Quadrant III

Slow Market Growth

The Boston Consulting Group (BCG) Matrix

Relative Market Share Position

Coke

Stars

Question Marks

Industry Sales Growth Rate Cash Cows

The Internal-External (IE) Matrix The IFE Total Weighted Score

Dogs

High 3.0 to 3.99

Medium The EFE Total 2.0 to 2.99 Weighted Score

Strong 3.0 to 4.0 I

Average 2.0 to 2.99 II

Weak 1.0 to 1.99 III

IV

V

VI

VIII

IX

Coca Cola

Low 1.0 to 1.99

VII

Grow and Build Divisions North America Bottling Investments North Asia, Eurasia & Middle East European Union Latin America Africa East, South Asia & Pacific Rim Corporate

QSPM Strategic Alternatives

Percent Revenue 2006 29.1 21.2 16.5 14.6 10.3 4.6 3.3 0.4

Acquire KKD and GLDC Key Internal Factors Strengths 1. Product line has over 400 brands. 2. Strong global presence, located in over 200 countries. 3. Long history has built excellent brand recognition. 4. Partnership longevity with established sporting events including the Olympics. 5. Industry leader in market capitalization with $112 billion. 6. Return on Equity yielded 30 percent in 2006. 7. Leader of dividend yields of 2.6 percent. The company has had 43 consecutive years of an annual dividend increase. 8. Joint venture between The Coca Cola Company and Nestle has resulted in the establishment of Beverage Partners Worldwide (BPW). 9. Coca-Cola has formed a strong partnership with McDonalds, with McDonalds becoming their largest customer. Weaknesses 1. Product line is limited to beverages. 2. A failed $16 billion acquisition of Quaker Oats hinders long-term growth. 3. Negative publicity in India because of water issues, has led to poor brand image and hindered growth there. 4. Lack of management willingness to place foreign products into American markets. 5. Marketing deficiencies due to turnover in leadership and a 16 percent decrease in advertising spending. 6. Coca Cola’s inventory turnover is only 5.4 compared to Pepsi Co.’s 8.0. SUBTOTAL

Key External Factors

Weight

Produce new diet drinks that have healthier sugar substitutes AS TAS 4 0.36 -----

0.09 0.10

AS 2 ---

TAS 0.18 ---

0.06 0.05

2 ---

0.12 ---

4 ---

0.24 ---

0.12

4

0.48

3

0.36

0.04

4

0.16

3

0.12

0.04

---

---

---

---

0.06

---

---

---

---

0.10

---

---

---

---

0.09 0.10

4 ---

0.36 ---

1 ---

0.09 ---

0.03

---

---

---

---

0.02

---

---

---

---

0.05

---

---

---

---

0.05

4

0.20

1

0.05

1.00

Weight

1.50

1.22

Acquire KKD and GLDC

Produce new diet drinks that have healthier sugar

Opportunities 1. Bottled water consumption has increased 11 percent. 2. According to the S&P Industry Survey, consumers are drawn to new smaller beverage brands that are not sold on a mass scale. 3. Word Economic Forum’s annual Davos, Switzerland gathering grants international voice. 4. Less developed countries are in desperate need to improve community water supplies. 5. Energy drink sales are expected to increase 7 to 8 percent in 2007. 6. Disposable income has increased 6.2 percent. 7. Consumers are striving to drink and eat their way to better health than pervious generations. 8. EPS is expected to rise 7 to 8 percent in 2007. Threats 1. Consumption of American beverages is denounced by foreign officials in areas where conflicting interest exist. 2. Multiple lawsuits against the new Enviga beverage for calorie burning claims in advertising 3. Smaller, lesser known brands are turning to major beer distributors for bottling. 4. Overall carbonated drink sales have been flat due to links of sugar to obesity and high fructose corn syrup to heart disease. 5. Pepsi is more diversified offering beverage and food products. 6. High cost of commodities such as sugar, and metals used in production of cans. 7. Many smaller companies are fierce competitors around the world in their local markets. SUB TOTAL SUM TOTAL ATTRACTIVENESS SCORE

Recommendations

substitutes AS TAS -----

0.06

AS ---

TAS ---

0.05

1

0.05

3

0.15

0.02

---

---

---

---

0.02

---

---

---

---

0.06

---

---

---

---

0.05 0.07

--2

--0.14

--4

--0.28

0.07

4

0.28

3

0.21

0.02

---

---

---

---

0.04

---

---

---

---

0.06

---

---

---

---

0.10

2

0.20

4

0.40

0.20

4

0.80

2

0.40

0.10

---

---

---

---

0.08

---

---

---

---

1.47 2.97

1.44 2.66

The QSPM strategies assessed whether acquiring KKD and GLDC (a potato chip and snack food company) was a better option than producing a new diet soda line made form more healthy sugar alternatives. Both scores on the QSPM are relatively close and given the financial condition of KKD and GLDC, it is recommended Coca Cola undertake both strategic alternatives. The Net Worth of both companies is provided below. It is estimated it would cost $200 million to research, produce and market the new diet drinks. Krispy Kreme (KKD) Net Worth January 2008 (in millions). 1. Stockholders’ Equity + Goodwill = 79 + 28 2. Net income x 5 = $-42 x 5= 3. Share price = $2.73/EPS -0.94 = NAx Net Income $-42= 4. Number of Shares Outstanding x Share Price = 65 x $2.73 = Method Average

$ 107 $ NA $ NA $ 177 $142

Golden Enterprises (GLDC) Net Worth January 2008 (in millions). 1. Stockholders’ Equity + Goodwill = 19.4 + 0 2. Net income x 5 = $1.2 x 5= 3. Share price = $2.95/EPS 0.19 =$15.52 x Net Income $1.2= 4. Number of Shares Outstanding x Share Price = 11.2 x $2.95 = Method Average

EPS/EBIT Analysis $ Amount Needed: 360M

$ 19.4 $ 6.0 $ 18.6 $ 33.0 $19.3

Stock Price: $58 Tax Rate: 35% Interest Rate: 5% # Shares Outstanding: 1,600M

EBIT Interest  EBT Taxes EAT # Shares EPS

Common Stock Financing Recession Normal Boom 4,000,000,000 6,000,000,000 8,000,000,000 0 0 0 4,000,000,000 6,000,000,000 8,000,000,000 1,400,000,000 2,100,000,000 2,800,000,000 2,600,000,000 3,900,000,000 5,200,000,000 1,606,206,897 1,606,206,897 1,606,206,897 1.62 2.43 3.24

Recession 4,000,000,000 18,000,000 3,982,000,000 1,393,700,000 2,588,300,000 1,600,000,000 1.62

EBIT Interest  EBT Taxes EAT # Shares EPS

70 Percent Stock ­ 30 Percent Debt Recession Normal Boom 4,000,000,000 6,000,000,000 8,000,000,000 5,400,000 5,400,000 5,400,000 3,994,600,000 5,994,600,000 7,994,600,000 1,398,110,000 2,098,110,000 2,798,110,000 2,596,490,000 3,896,490,000 5,196,490,000 1,604,344,828 1,604,344,828 1,604,344,828 1.62 2.43 3.24

70 Percent Debt ­ 30 Percent Stock Recession Normal Boom 4,000,000,000 6,000,000,000 8,000,000,000 12,600,000 12,600,000 12,600,000 3,987,400,000 5,987,400,000 7,987,400,000 1,395,590,000 2,095,590,000 2,795,590,000 2,591,810,000 3,891,810,000 5,191,810,000 1,601,862,069 1,601,862,069 1,601,862,069 1.62 2.43 3.24

References 1.

www.moneycentral.msn.com

Debt Financing Normal 6,000,000,000 18,000,000 5,982,000,000 2,093,700,000 3,888,300,000 1,600,000,000 2.43

Boom 8,000,000,000 18,000,000 7,982,000,000 2,793,700,000 5,188,300,000 1,600,000,000 3.24

www.coca-cola.com 3. Strategic Management concepts and cases by Fred David 12 edition th 4. Exploring Corporate Strategy text & cases 8 edition 2.