Monday, October 10, 2011

American Companies Gone Global

In today's world isolation is difficult to sustain as changes in technology and communications have definitely made the world a smaller place. Many companies, in any industry, have expended and now have operations in multiple companies are the globe. Coca-Cola Co. and their bottling partner- Coca Cola Hellenic Bottling Co.- have a business plan to invest $3 billion in Russia over the course of the next five years. This investment includes the opening of the 15th Coca-Cola plant in Russia. Coke also has a 7 year contract which was started in 2008 with Capgemini and have a significant portion of workers in fields such as accounting employed in India. PepsiCo also signed a 5 year outsourcing agreement in India in 2009.
Yum Brands, responsible for Kentucky Fried Chicken and Pizza Hut, has a large involvement in China, with the Chinese market sometimes making up to 60% of their operating profit in a quarter. Yum is in trouble currently however as inflation rises in China, and Yum, who was used to the low cost of business in China, struggles to keep their low-price marketing strategy up to standards with rising prices in China. Menu prices in China for Yum Brands have gone up around 2% recently.
PepsiCo in 2008-2009 had a similar idea as Coca-Cola and invested money in India. PepsiCo, in 2007, provided around 4000 jobs in India and indirectly employed around 60,000. Pepsi's business plan involves making heavy investments in Russia and Brazil as well.
General Mills is doing very well in China with many top selling products being sold there. China isn't all however, General Mills sells its products in over 100 countries and has seen a lot of success in developing nations as of late. General Mills is predicted to see continued growth and success in the future. Kraft also signed an outsourcing deal with French company Capgemini, who, as previously stated, also has a contract with Coca Cola and seems to be doing quite well for themselves.


http://www.tampabay.com/news/business/economicdevelopment/article503815.ece

http://online.wsj.com/article/SB10001424052970204422404576594582636996232.html

http://online.wsj.com/article/SB10001424052970203388804576612963541585884.html

http://www.industryweek.com/articles/pepsico_inc-_globalization_next_17392.aspx

http://online.wsj.com/article/SB124129973577780457.html
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3 comments:

  1. Naisha - Section 003 TAOctober 15, 2011 at 9:42 AM

    Brady,

    Nice post. Interesting facts.

    What are the advantages/disadvantages of companies, such as the ones you mentioned, going global?

    ReplyDelete
  2. Brady DwyerOctober 17, 2011 at 1:35 AM

    In such a globalized society the advantages of going international, especially in the general senses that I mentioned in my post, are plentiful. Cost of production is less in most cases by due to out sourcing and the U.S.'s high minimum wage laws. Also it allows for networking in countries that are coming up economically. Most of the countries mentioned here are BRIC(K) nations and are valuable countries to be associated with in the future, if predictions hold true.

    ReplyDelete
  3. Liang WuOctober 17, 2011 at 8:05 AM

    I have read a WSJ article about the future problems YUM will face in China. Similar to what you mentioned, YUM is facing inflations in the currency and food prices. In terms of profit, it will have less marginal profit than before. However, do you think this inflation/price increase significantly alter YUM's future profits since it has such a big market share in China? In your opinion, what would the best market strategy YUM should have going forward since in the production cycle, it seems to have reached the maturity stage?

    ReplyDelete

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