chapter 8: strategy formulation and implementation

Coke might be the world’s most powerful
brand, but that has not helped much lately.
When Douglas Daft took over as CEO of the
Coca-Cola Company, he inherited a host of
troubles. Soda sales had slumped in the
important U.S. market and to a lesser extent
around the world, and Coke had failed to
match rival Pepsi’s aggressive moves into
nonsoda businesses. A high-profile racial
discrimination suit in the United States and
a soda-contamination scare overseas had
damaged the company’s reputation and its
relationships with customers, governments,
and bottlers. Under the previous CEO, M.
Douglas Ivester, there was no real sense of
crisis at Coke’s headquarters, where managers
pretty much continued business as
usual. The Australian-born Daft knew that
needed to change if Coca-Cola was to remain
one of the world’s most admired and
Management Challenge
respected companies. During his first year on
the job, Daft began dismantling the stale old
regime at headquarters and brought in new
top managers willing to make the tough
changes to turn the company around. He also
spent much of his time repairing relationships
with government regulators in Europe and
handling the backlash from financially
strapped bottlers who charged that Coke had
been trying to eke out profits at the bottlers’
expense. Despite these early moves, Coke’s
sales and profits have stayed flat and the stock
has continued to decline. The CEO knows he
needs to come up with a powerful strategic
plan to reignite the company in a hurry. 1
If you were the CEO of Coca-Cola, what strategies
might you adopt to regain the competitive
edge? How would you go about formulating and
implementing a new strategic plan?
1