Globalization is the expansion of global practices, connections, awareness, and social organization. It arose due to concerns about the transformative effects of globalization and as a reaction to modernization theory. The dimensions of cultural, economic, and political can be employed to study globalization. Certain cultural theorists perceive it as promoting cultural homogeneity through cultural imperialism, while others view it as fostering the emergence of unique local manifestations.
Globalization, in the twentieth century, refers to the spreading of the capitalist world-system worldwide. This process is not new as some key features of the world-system have stayed consistent over centuries. At present, there is a crisis facing the capitalist world economy at the beginning of the twenty-first century. The main supporter of this theory contends that what is perceived as globalization is actually the final act of our historical system rather than a genuine celebration (I. Wallerstein, 1998: 32).
Globalization has greatly affected the Coco Cola Company, a well-known Multinational Corporation globally. The Coca-Cola logo is widely acknowledged and represents Coca-Cola’s widespread presence in communities worldwide. Originally formulated by Dr. John S. Pemberton in Atlanta, Georgia, it is commonly referred to as Coke. It was initially served as a fountain beverage created by mixing Coca Cola syrup with carbonated water. Presently, it can be bought at various establishments such as stores, restaurants, and vending machines across more than 200 countries. The Company has been in existence for over a hundred years.
Coke is a versatile beverage that appeals to people from various demographics and backgrounds. It has diversified its selection by introducing different types of cola, with Diet Coke being the preferred choice for those seeking a diet-friendly option. Furthermore, Coca Cola provides well-known brands including Dasani water, Sprite, Minute Maid, and Coke Zero on a global scale. The company follows a franchise model in which licensed bottlers are responsible for production and distribution worldwide. Additionally, multinational corporations like McDonald’s, Subway, and Church’s Chicken also include Coca Cola products as part of their franchise offerings.
The marketing strategies implemented aimed at establishing Coke as a prominent global brand. The political dimension of globalization plays a crucial role both in theory and practice. Theoretically, Coca Cola, like other multinational companies, must navigate the political regulations imposed by each nation. It is logical to accept that different regulations exist in the 200 nations in which Coke conducts its business. However, in reality, Coca Cola faces a perpetual political challenge in the realm of public relations.
As the company has grown on a global scale, it has encountered worldwide criticism. In India, Coca Cola has faced allegations of depleting and contaminating water resources, polluting neighboring communities, and incorporating excessive pesticides into its beverages. Campaigns led by local communities have targeted the company’s bottling plants in India, asserting that Coca Cola is intensifying water scarcity and polluting the limited water and soil in its operational areas.
These accusations further elaborate on the concept of globalization as they are exclusive to India. Pepsi has also faced accusations related to political and ethical matters in India. Ethical concerns arose in relation to Pepsi India’s aggressive marketing campaign that resulted in environmental damage in the country. In India, Pepsi sells more than 160 million cases each year through 750,000 retail stores. The main individuals responsible for these ethical issues are Pepsi’s marketing personnel, likely based in India, and the individuals they employed to paint rocks with vibrant Pepsi advertisements in the Himalayas.
Coca Cola is a dominant force in the economy, generating $31 billion in revenue and achieving a net income of $6.8 billion in 2009. However, the growth rate for carbonated soft drinks (CSD), which contribute to 78% of Coca Cola’s sales, has been declining as consumers opt for healthier beverage options. Additionally, the company’s profits are at risk due to fluctuating costs of vital raw materials such as corn syrup, aluminium, and plastic that are utilized in their beverages.
Coca-Cola is dealing with various challenges, such as increased costs and a weak economic environment. Additionally, the slowdown in consumer spending in its primary market of North America adds to the complexity. The impact of currency fluctuations worsens the situation, particularly when the US Dollar strengthens. This is problematic because approximately 75% of Coca-Cola’s revenue comes from international sales. Despite these difficulties, Coca-Cola has managed to maintain profitability.
While the non-carbonated soft drink (CSD) market is growing rapidly, the traditional CSD market continues to generate significant revenues and volume and remains highly profitable. Coca-Cola has preserved its share in this important market by offering a broad range of products within the CSD category and capitalizing on the strong brand equity associated with its iconic Coca-Cola trademark. Moreover, Coca-Cola has adapted to changing consumer preferences by introducing new non-CSD products and acquiring Glaceau in 2007.
On February 25th, The Coca-Cola Company announced its intention to acquire Coca-Cola Enterprises (CCE) for $12.3 million. Over the past 24 years since separating from Coca-Cola Enterprises, substantial changes have occurred in the soft drink industry as consumers increasingly choose fewer carbonated drinks and opt for more non-carbonated beverages like Powerade and Dasani water.
The Coca-Cola Company has made a new agreement to gain control of 90% of the total North America volume by acquiring the bottler’s operations in that region. In return, Coca-Cola Enterprises will take over Coca-Cola’s bottling operations in Norway and Sweden, focusing on Europe. This move follows discussions initiated by Coca-Cola Company in March 2010 to acquire OAO Nidan Juices, a Russian juice company. Currently, OAO Nidan Juices holds a 14.5% share of the Russian juice market and is owned 75% by a London private equity firm and 25% by its Russian founders. If successful, this acquisition would allow Coca-Cola to surpass Pepsi’s current 30% market share in Russia and increase their own market share from 20%. The value of the juice market in Russia is estimated at around $3.2 billion dollars. The projected purchase price for Nidan ranges from $560 to $620 million.
Coca-Cola has achieved significant success in China as one of the first companies to enter its market many years ago. They established their first bottling plant there ten years after World War I, making them the initial American company to distribute products in China after it opened up to foreign investors in 1979.
Coca Cola has achieved remarkable success in China, currently holding a 35 percent market share in carbonated beverages and generating annual sales of $1.2 billion. Additionally, Coca Cola’s presence in China has resulted in significant economic benefits. A study conducted by Beijing University, Qinghua University, and the University of South Carolina reveals that Coca Cola directly employs 14,000 individuals in China. The study also indicates that Coca Cola has invested over $1 billion in China over the past two decades. Despite being headquartered in the United States and repatriating all profits to the country, Coca Cola’s global brand status contributes to the national economy through taxes and profits. This is primarily attributed to Foreign Direct Investment (FDI), as multinational corporations (MNCs) like Coca Cola bring wealth and foreign currency by purchasing local resources, products, and services. Ultimately, this supports education, healthcare, and infrastructure development – all factors contributing to Coca Cola’s reputation as one of the world’s most renowned and profitable brands due to its strong brand equity.
Globalization has fostered a global village where individuals worldwide embrace a harmonized culture and way of life, primarily influenced by mass media. People frequently incorporate and accept elements they are exposed to into their respective cultures. Coca Cola, for instance, employs mass media advertising campaigns to appeal to customers on a global scale. The company’s influence on diverse cultures around the world is so profound that it has been coined as “coca-colonization”.
In India, Coca Cola is more prominent than in the U.S. They are adopting aspects of American pop culture, which may not be as esteemed in the U.S., and accepting it. This illustrates the effectiveness of the multinational corporation in disseminating American culture through globalization. Furthermore, Coca Cola’s product offerings have also seen an impact from the growing awareness of health-conscious living, as evidenced by the introduction of Dasni bottled water, The Minute Maid Company (producers of juices), and Diet Coke.
Coca Cola also expanded its customer base by introducing Cannings, a flavored soft drink with a distinct taste. We examine George Ritzer’s McDonaldization theory and its increasing influence across various sectors beyond American society. In India, the McDonald Corporation introduced the ‘Maharaja Mac’ to accommodate cultural preferences where cows are revered and most people do not consume beef. Similarly, in China, Japan, and neighboring Asian countries, McDonald’s incorporated rice into their menu to cater to the local culture.
Roland Robertson’s concept of “glocalization,” which refers to the blending of global and local elements in different geographic areas, can be exemplified in the automobile industry. Honda manufactures hybrid cars as a response to the global demand for a cleaner environment. Additionally, Coca Cola sponsors international events like the Summer Olympics and FIFA World Cup, as well as renowned telecasts and celebrities. In the case of the 2008 Olympics, they advertised their product in Chinese, demonstrating its recognition in any language.
The impact of the corporation extends to social culture and language. Coca Cola’s origin language, English, has become the most commonly used language for communication on the internet in email and instant messaging. Additionally, globalization has influenced travel and tourism, leading to a rise in travel as lifestyles and interests change. The worldwide prevalence of fast food culture, with Coca Cola as a major participant, has resulted in health concerns such as obesity, especially in the United States where many view the product as detrimental to health.
According to an article on Natural News, Coca Cola paid a doctor to argue that soft drinks are unfairly targeted in the fight against obesity. The doctor emphasized the importance of balance, variety, and moderation for a healthy lifestyle. It was mentioned that singling out one culprit is problematic because multiple factors influence obesity and health risks. The article also highlighted that research on soft drinks overlooks the broader context and fails to consider other factors contributing to the 300 extra calories consumed daily by Americans.
The advancement of information and communication technologies has shortened distance and time, making technology the main driver of globalization. Coca Cola has embraced globalization by using efficient production techniques and leveraging rapid advancements in technology. This has made Coca Cola easily accessible through vending machines that can be operated with just a touch, eliminating the need for human interaction. The company’s success is credited to its secret syrup formula and innovative bottling technology, which have allowed it to spread its products worldwide.
Globalisation has had an impact on Coca Cola due to its extensive use of ingredients derived from the Coca leaf and Kola nut during its early days. This demonstrates the international nature of the creation of the soft drink, as these ingredients were sourced from various South American countries. Additionally, Coca Cola’s ongoing improvement of the extraction process has resulted in global breakthroughs, including the widely used decaffeination process. In later years, the company also took the lead in utilizing Saccharine, a sugar substitute, in response to increased sugar prices.
Coca Cola achieved success in Europe after World War II due to their use of alternative sugars, as sugar prices were higher there compared to the U.S. This aspect of globalization, known as technology, refers to the spread of technology through the company’s growth. Additionally, Coca Cola fulfilled the technological aspect of globalization by developing new bottling techniques. While glass bottles are still used in some locations, Coca Cola introduced metal cans in the 1960s.
Globalisation has resulted in the worldwide implementation of Coca-Cola’s technology in different markets and with various products. One example is the S.M. Jaleel Company, a soft drink company located in Trinidad, which was among the first to introduce polyethylene terephthalate (P.E.T.) plastic bottles in the Caribbean region. The current filling lines use automated machinery that minimizes the need for human labor. These machines produce, fill, label, and package bottles made from granular plastic at very fast speeds under sanitary conditions without any human intervention.
Coca Cola incorporates technology into both its production process and value chain. In 2008, in response to rising fuel costs, Coca Cola and its two largest bottlers in the U.S. decided to switch their fleets to hybrid electric vehicles. Currently, Coca Cola operates a total of 142 hybrid-electric delivery trucks throughout the U.S. and Canada, demonstrating their commitment to addressing environmental concerns.
Honda is widely known for its innovative technology in the automotive sector, which has been a defining characteristic of the company since its foundation. As a result, Honda stands out as one of the most technologically advanced companies in the automobile industry.
Today, Honda utilizes its innovative technology in the automated manufacturing of top-notch power sports products. This technological progress eliminates the necessity for manual labor on assembly lines, benefiting multinational corporations. Nevertheless, it also results in reduced job opportunities and an increased requirement for cutting-edge technological skills.
According to Wall and Rees (2007), “new technologies have significantly increased output per unit of labor input (labor productivity) and per unit of both labor and capital input (total factor productivity)”. The Multi-National Enterprise (MNE) also sources labor locally in the countries where it is located. For example, in China, locals are hired in sweatshops and paid lower wages, leading to lower labor costs, which in turn result in lower production costs and higher profits, creating a competitive advantage for the company. Technology also has an impact on communication and other areas.
The advent of cellular phones, internet, and e-commerce has brought about a positive impact on the business world, making globalization possible. Consumers have embraced the convenience of having information and the ability to purchase goods online from the comfort of their homes. Companies have also leveraged this trend to their advantage. E-commerce exemplifies the real effects of globalization. The merging of information and communication technologies has led to a reduction in the cost of accessing information, thereby promoting global standardization and globalization. Despite English becoming the dominant global language, language barriers continue to be significant challenges.
Entering any border comes with its own set of barriers in the legal environment that multinational enterprises (MNEs) must navigate. One of the top priorities for these companies should be to comply with the law of the country in which they establish their operations. These legal systems are designed to enforce standards and prevent problems arising from activities such as environmental pollution, safety risks, or the imposition of subpar working conditions and low wages on local employees. As previously mentioned, Coca-Cola has faced multiple lawsuits filed against them by various individuals and groups.
Other multinational enterprises (MNEs) have encountered legal problems. McDonald’s, the largest fast food chain globally, is currently in a legal battle with a group of overweight teenagers. However, the lawsuit’s primary allegation, that some of the food is more unhealthy than people realized, was withdrawn in June 2003 (Wall and Rees, 2004). Similarly, Kraft Food faced a lawsuit accusing Oreo cookies of having high levels of trans fats that can block arteries. Nonetheless, Kraft resolved the issue by promising to address the concerns, resulting in the withdrawal of the lawsuit.
India banned Coca Cola in 1977 but permitted its return in October 1993 under certain conditions. With India’s increasing Western influence, Coca Cola has gained popularity, especially among young people and the urban elite. Emerging markets present relatively weak barriers to entry, making it more difficult for Coca Cola to navigate regulatory hurdles, cultural differences, and pre-existing competition with established distribution networks.
The potential impacts of globalization that Coca Cola faces are similar to the actual impacts experienced by other multinational enterprises (MNEs) currently. While changes in global demand for the product are not seen as a threat, it is important for the company to monitor the entry and innovation of both existing and new competitors in the market. Factors such as advancements in technology and equipment, global economic conditions, political landscapes, legislation, and environmental concerns have the potential to either change or remain unchanged within the soft drink industry.
Coca Cola has been present since the start of globalization and has faced both positive and negative consequences of operating in the global arena. It is in the company’s best interest to continue investing in foreign markets and supporting its domestic economy. This involves staying up-to-date with technological advancements, addressing political and legal challenges, overcoming barriers that may still exist, and embracing different cultures to maintain its status as a multinational enterprise.
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