Coca-Cola was one of the first MNCs to enter post-reform China. The soft-drink manufacturer established robust market share on the back of a strong brand. Chinese consumer preferences, however, gradually changed: they preferred “healthy” drinks over soft drinks. As a result, Coca Cola's competitive position eroded as foreign and domestic competitors released new products. After a failed high-profile M&A attempt, Coca-Cola faced a strategic challenge: develop new products in-house or attempt to acquire them?
1) To use Porter’s five-forces analysis to evaluate change in China’s beverage market in comparison to more developed beverage markets;
2) To understand how MNCs in China, in light of Coca-Cola’s experience, are revamping their business models with an increasingly competitive industry landscape and regulatory challenges;
3) To assess how different cooperation models with local firms, including strategic partnerships and M&A, can help boost a firm’s competitive position.