A strategic paper for CCBPI

• Main Author: Portugal, Carmelo S.
• Format: text
• Language: English
• Published: Animo Repository 1997
• Subjects: Business Administration, Management, and Operations
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/2235
• Institution: De La Salle University

Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a company with a colorful history in the Philippines. On March 9, 1927, The Coca-Cola Company granted an exclusive bottling and distribution franchise to San Miguel Brewery. That was to be the start of a very successful partnership. CCBPI came to being, and began operation on June 1, 1991 70% owned by the San Miguel Corporation and 30% owned by The Coca-Cola Company. CCBPI is synergy at work: it started with only a market share of 30%, but in the years that followed, the company had become the industrys dominant player, growing its status as one of the largest Coca-Cola bottlers in the world. The vision: CCBPI is the responsible leader in the Philippine soft beverage industry and a major anchor bottler of soft drinks in Asia, enhancing shareholder value through the continuous long-term development of the enterprise. Along this line, CCBPI has set lofty corporate targets: V2X double the business in terms of size and value in five years (1995 2000). CCBPI finds itself in an industry that abounds with opportunities and threats. Improved Philippine economic conditions characterized by one of the highest GNP growth rates in the region, lower inflation, and positive balance of payments figures (prompting analysts to call it the new tiger of the region) has resulted to higher real wages, translated to higher propensities to consume. Coupled with increased inflow of foreign investments and a boom in infrastructure activities, the beverage industry is one of the direct beneficiaries, and is thus one of the growth industries, characterized by new and emerging products and channels, and a fast-growing buyer group in the food service industry, all translating to more consumption occasions, and a potential for increased per capita consumption. The industry landscape is changing, as the dominance of the carbonated soft drinks category is threatened by the rapid growth of the powdered fruit drinks, ready-to-drink and bottled water categories. By the year 200, the carbonated soft drinks category share is projected to decline by about 8%. The intensity of the rivalry among the major industry players have intensified. Big players Coca-Cola, Pepsi, and Cosmos are engaged in aggressive capacity build-ups and complex marketing maneuverings Tang and Eight Oclock, the major players in the powdered fruit drinks category are engaged in price war and other marketing games. Another c=industry force that exerts strong pressure is the bargaining power of suppliers of critical raw materials. Major industry players are either looking at improving linkages with these key supplier, or are considering backward integration. The market leader, CCBPI derives strength from its technology development support activities in operations, marketing and sales, and service. Likewise, CCBPI derives competitive advantages from the company reputation associated with a long tradition of good corporate citizenship, and its association with the worlds best-known brand, and the companys ability to offer the consumers products with the highest quality, most consistent quality with unmatched availability, and supported by Team CCBPI able to provide the quickest response time to changing consumer needs/inquiries/complaints. As CCBPI moves towards the future, CCBPI looks at aligning its strengths, the high-performance and innovative standards of its key implements with industry opportunities and societal expectations. Along this line, CCBPI is embarking on strategies based on leadership through innovation and differentiation. Six corporate strategies are proposed: (1) Professionalize its human resources base, (2) Out-innovative the competition, (3) Capacity growth with flexibility, (4) Expansion of product scope, (5) Selective vertical integration, and (6) Optimization of linkages in its value chain to create maximum value to the customer. A framework is presented for implementing these strategies successfully. This framework is posits that with a charge in strategy, CCBPI needs to look at changes in its structure, system, style (of management), staff, skill, and the shared values that pervade the entire organization.