The final essay will be based on a case study of a business using data driven decision making.

  • The final essay will be based on a case study of a business using data driven decision making. The student will use the skills learned in the class to review and critique the business’s decision process, including answer the following questions:

1.What data and analyses did the company use? What are the benefits and downsides to these data and analyses?
2.What decision(s) was(were) made? How did the evidence justify this decision? What decision would you have made in the same situation and why?
3.How was storytelling used in this decision-making process?
4.What was the result of this decision? How is the company monitoring the outcomes? What KPIs do they use? How would you monitor the outcome?
5.Come up with a follow-up decision this company make based on their data and/or the outcome of this decision. Devise a plan to collect and analyze data, make a decision, and measure its outcome.
Structure of essay

  • Executive summary of case study (1-3 sentences)
  • Introduction
  • Analysis
  • Conclusion

First draft

  • Complete document reviewed for spelling and grammar

Use everything you’ve learned so far for your interpretation and assessment
This case was prepared by Edward D. Hess, Professor and Batten Executive-in-Residence, Darden School of
Business Administration, University of Virginia. It was written as a basis for class discussion rather than to illustrate
effective or ineffective handling of an administrative situation. Copyright © 2007 by the University of Virginia
Darden School Foundation, Charlottesville, VA. All rights reserved. To order copies, send an e-mail to No part of this publication may be reproduced, stored in a retrieval system,
used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying,
recording, or otherwise—without the permission of the Darden School Foundation.
The Coca-Cola Company was the world’s largest manufacturer and distributor of
nonalcoholic beverage syrups and concentrates in 2006, selling more than $24 billion worth of
products in more than 200 countries, with 74% of its sales outside the United States. Coca-Cola
sold its syrups and concentrates directly to fountain purchasers and consumers through
independently or partially owned bottlers and canning or distribution companies.
Coca-Cola owned approximately 36% of Coca-Cola Enterprises (CCE), the world’s
largest marketer, producer, and distributor of Coca-Cola products, which operated and controlled
the U.S, Canadian, Belgian, French, British, and Dutch markets. Coca-Cola became a highgrowth
company under the leadership of Roberto Goizueta, who served as president and later
chairman and CEO from 1980 until his death, in 1997. Under Goizueta’s leadership, Coca-Cola’s
market cap grew from $4.3 billion to $180 billion. But after his death, Coca-Cola’s market cap
declined to under $115 billion, and by 2006, for the first time in their long competition, PepsiCola
gained the larger market cap. This decline had taken place under three CEOs: Doug Ivestor,
Doug Daft, and Neville Isdell.
Without Goizueta at the helm, Coca-Cola had been plagued by internal political issues,
international business and public-relations issues in Belgium, the United Kingdom, India,
France, and Colombia, racial discrimination and whistle-blower lawsuits, and channel-stuffing
allegations. Coca-Cola’s “captive” but nonconsolidated financial relationship with CCE also had
come under the microscope. The company had been playing catch-up with such noncarbonated
beverages as water, tea, and energy and health drinks. Coca-Cola desperately needed a
blockbuster breakout growth idea to transform the company, and it needed to show Wall Street
that it was not wedded to its legacy model—that it could be a growth company again.
Early History
Dr. John Pemberton, an Atlanta pharmacist, developed the Coca-Cola formula and
dreamed that he could make a fortune selling it as a medicine for many ailments. Pemberton got
his inspiration from a French wine concoction that he tinkered with to create a mixture made of
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coca leaves and spices. In 1886, Pemberton first sold his medical tonic in Jacob’s Pharmacy in
Atlanta for five cents, but Pemberton was unable to turn Coca-Cola into a business by himself
and had to turn to investors for money. Although his syndication of the Coca-Cola product was
alleged to have been haphazard, surprisingly, more than 100% of it was sold. In 1887, Asa
Candler purchased an interest in Coca-Cola and ultimately acquired 100% interest, for a total
investment of $2,300. Candler then patented the Coca-Cola formula, which has remained a
closely guarded secret.
Candler realized Coca-Cola’s potential, but he lacked the capital to expand the business
quickly, so in 1899, for $1.00, he sold the exclusive rights to bottle and distribute Coca-Cola in
most of the United States to two Chattanooga, Tennessee, businessmen, Benjamin Thomas and
Joseph Whitehead. These men enlisted John Lupton in their new venture, and by 1919, there
were more than 1,000 independent Coca-Cola bottlers.
From Robert to Roberto
In 1919, the Candler family, allegedly without their father’s knowledge, sold Coca-Cola
for $25 million to an investor group led by W. C. Bradley and Ernest Woodruff, the father of
Robert Woodruff, who would become president of Coca-Cola in 1923 and rule Coca-Cola until
1997—almost 75 years. Woodruff managed Coca-Cola conservatively, and the company paid
out more than 50% of its earnings as dividends and operated with little or no debt.
Robert Woodruff extended Coca-Cola’s distribution reach to gasoline stations and
vending machines, and through global expansion. During World War II, Woodruff made sure
Coca-Cola was available to U.S. service personnel worldwide. It was also during Woodruff’s
reign that Coca-Cola was first sold in cans, and Tab, Fresca, and Sprite were introduced. Under
Woodruff, Coca-Cola was controlled from its headquarters in Atlanta, Georgia, and its board was
controlled by Woodruff and its bank, the Trust Company of Georgia. By the end of the Woodruff
years, Coca-Cola was bottled and distributed by approximately 400 independent bottlers.
Roberto Goizueta (1980–1997)
Serving as chairman and CEO of Coca-Cola from August 1980 until his death, in October
1997, Roberto Goizueta was reputed to have created more shareholder value during his tenure
than any other CEO in history. He was the first nonfounder CEO to become a billionaire while a
company CEO.
Born into a wealthy Cuban family, Goizueta graduated from Yale University. He first
went to work for Coca-Cola in Cuba as a chemical engineer, but after defecting with his family
to the United States during the Castro revolution, he worked for Coca-Cola in Miami. After
moving to Coca-Cola headquarters in Atlanta, Goizueta moved up the corporate ladder as a
technician and head of legal and external affairs. Although he was not a marketing or financial
person by training or experience, Goizueta still learned to excel in these areas by the time he
ascended to the top job at Coca-Cola, where his selection as president by Robert Woodruff
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surprised many. He beat out another well-respected Coca-Cola marketing wizard—Donald
Keogh—who Goizueta convinced him to stay on as his number-two man.
Together, Goizueta and Keogh created a remarkable partnership that, over the years,
made both of them very wealthy. Goizueta became, in effect, “Mr. Inside” and “Mr. Wall
Street,” while Keogh became the global marketer.
Goizueta, the chemical engineer and master internal politician, became a master marketer
of the Coca-Cola brand. After he became president, in 1980, he quickly maneuvered his way into
the chairmanship and CEO positions, and by 1981 had changed the rules regarding boardmembership
qualifications to solidify his power base.
Goizueta experienced both success, with the introduction of Diet Coke in 1982, and
failure, with the introduction of New Coke in 1985 to much fanfare, only to withdraw it when it
proved to be a flop. He dealt with the independent bottling system by forcing the weak bottlers to
sell (usually to Coca-Cola) and by buying up the strong bottlers who wanted to sell, preventing
them from being bought by other corporations. Some of the purchased bottlers were resold at a
profit to other bottlers, and some continued to be held by Coca-Cola, reducing the number of
independent bottlers to fewer than 200.
In 1986, as financial engineers, Roberto Goizueta and Doug Ivestor saw an opportunity to
consolidate the bottling operations and spin them out of Coca-Cola into CCE—thus moving
significant assets off Coca-Cola’s balance sheet. This move provided a second financial benefit
as, in most cases, Coca-Cola was able to structure and control the price of its syrup sales to CCE.
Realizing that Coca-Cola’s use of equity capital to expand was more costly than debt, Goizueta
led Coca-Cola’s first major debt offering of $215 million. In addition, he saw the positive impact
of a Coca-Cola stock-buyback program, and instituted one that bought back a significant amount
at low prices. He was responsible for Coca-Cola’s expansion into China, India, and Indonesia.
Also during his tenure, Coca-Cola sold off its shrimp-farming, wine, and Acqua Chem
businesses, allowing the company to focus on its carbonated-beverage business. The result was
that sales grew from $4 billion to $18 billion and its market cap from $4.3 billion to $180 billion.
Goizueta’s reign at Coca-Cola could be called the “golden years” because he led the creation of
substantial shareholder value and became the first nonfounder CEO billionaire while working for
the same company. Goizueta motivated his leaders through stock options, and introduced a
strategic process as well as centralized controls within Coca-Cola. His tremendous impact
endured through the Goizueta Foundation, which, together with other donations, made major
bequests to the Goizueta Business School at Emory University.
Doug Ivestor (1997–1999)
When Goizueta succumbed to lung cancer, in October 1997, his replacement was Doug
Ivestor, who had previously worked for Goizueta as an accountant with Ernst and Young. At
Coca-Cola, Ivestor became Goizueta’s financial-engineering partner as the company’s CFO, and
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was intimately involved in the CCE initiative and Coca-Cola’s capital strategy and earnings
Ivestor’s reign was short and unsuccessful, and was marred by a major racialdiscrimination
lawsuit, health scares in Belgium and France, European Union antitrust issues,
and botched acquisitions of Orangina in France and Cadbury Schweppes in Australia, Mexico,
and continental Europe.
Doug Daft (1999–2004)
Ivestor was replaced by another Coca-Cola executive, Australian Doug Daft, who was a
change agent in many ways. For instance, Daft saw the need to focus on noncarbonated drinks.
This was a major shift as the Coca-Cola system was built upon and engineered to market,
manufacture, and bottle carbonated drinks. Daft also tackled Coca-Cola’s structure, which he
considered bloated, and its attitude, which he felt was complacent. He undertook Coca-Cola’s
first major restructuring, laying off nearly 20% of the company’s work force and forcing out or
reassigning 30 of its top 32 senior managers. Although Daft managed to settle the racialdiscrimination
lawsuit for $156 million, survive antitrust investigations in Europe, and clear the
company’s name regarding channel-stuffing allegations and investigations in Japan, Germany,
and the Balkans, several events tainted Coca-Cola’s global image during his tenure: the
whistleblower lawsuit exposing the Burger King drink-test manipulation, the botched
introduction of Dasani into the United Kingdom, and the controversy surrounding killings in
Daft tried to move aggressively into new-drink segments by negotiating the purchase of
Quaker Oats and its Gatorade product. Surprisingly, this proposed acquisition was rejected by
the board as being too expensive, creating a golden opportunity for Pepsi-Cola, which bought it
and later profited when Gatorade became the dominant energy/athletic drink. Still, Daft pressed
on. He tried to be innovative by forming a joint venture with Procter & Gamble regarding
Minute Maid. He announced that Coca-Cola would start home-delivery service under his regime.
He introduced Vanilla Coke. But Daft announced his intent to resign in 2004, setting the board
on a very public search outside Coca-Cola for a new CEO.
Neville Isdell (2004–present)
The board was unable to recruit a high-profile CEO from Kellogg, Gillette, or Home
Depot, or, reportedly, lure Jack Welch out of retirement. Instead, it brought back a former CocaCola
executive, Neville Isdell. The ascension of Isdell to CEO was described by Fortune
Since then [1998], with breathtaking speed, it [Coca-Cola] has become a case
study in business dysfunction. In just six years this group [the board] has installed
one CEO, ousted him, and installed another so inexperienced that he needed
constant shoring up, and finally, after a very public search that found no outside
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takers, named a third—a retired Coke executive who had been passed over for the
top job [before].1
Dutifully, Isdell took the helm and announced that “if the system isn’t broken, there’s still
opportunity for both Coca-Cola and the other soft drink brands.”2
Under Isdell, Coca-Cola
adopted a “Manifesto for Growth” strategy, together with its mission “to refresh the world.”
Isdell inherited a company that was still number one in carbonated drinks, a slow-growth
market, but was a distant second in the high-growth non-carbonated-beverage market. In three
years, he tried to move Coca-Cola into the new-beverage market, with increased new-product
development and acquisitions. The company introduced many new drinks and varieties of drinks
already being marketed, including Tab Energy, Coca-Cola Blak, Full Throttle Fury, and CocaCola
Zero, and bought Fuze Beverage and Energy Brands (maker of Glacéau beverages).
Under Isdell, Coca-Cola reorganized its North American beverage division into three
groups: sparkling beverages, still beverages, and energy beverages. Isdell also tried to make sure
that Coca-Cola understood the reality of its situation, addressing Wall Street’s concerns by
setting the following realistic growth targets:
• Volume: 3% to 4%
• Revenue: 5% to 6%
• EPS: high single digits
Financial Results
From 2000 to 2006, Coca-Cola’s market value increased from $108 billion to $112
billion, as shown in Table 1. Financial highlights are shown in Table 2.
1 Fortune, May 31, 2004, 84–92. 2 BusinessWeek, May 17, 2004, 81.
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Table 1. Selected financial data.*
Year Ended December 31 (in
millions, except per share data)
2006 2005 2004 2003 2002
Summary of operations:
Net operating revenues $ 24,088 $ 23,104 $ 21,742 $ 20,857 $ 19,394
Cost of goods sold 8,164 8,195 7,674 7,776 7,118
Gross profit 15,924 14,909 14,068 13,081 12,276
Selling, general, and
administrative expenses
9,431 8,739 7,890 7,287 6,818
Operating income 6,308 6,085 5,698 5,221 5,458
Net income 5,080 4,872 4,847 4,347 3,050
Total market value of common
111,857 95,504 100,325 123,908 108,328
Capital expenditures 1,407 899 755 812 851
Shareholder equity 16,920 16,355 15,935 14,090 11,800
Net cash provided by operating
$ 5,957 $ 6,423 $ 5,968 $ 5,456 $ 4,742
* Coca-Cola used Unit Case Volume as its primary metric. Its Unit Case Volume growth worldwide averaged 4%.
Source: 2007 Coca-Cola Web site: Financial Highlights.
Table 2. Financial highlights.
Unit Case Volume 2006 versus 2005 Annual
Five-Year Compound
Annual Growth Rate
Africa 4% 5%
East Asia, South Asia, and Pacific Rim (5%) 1%
European Union 6% 2%
Latin America 7% 4%
North America 0% 2%
North Asia, Eurasia, and Middle East 11% 10%
Bottling Investments*
16% n/a
Worldwide 4% 4%
* Bottling Investments was formed effective January 1, 2006.
Source: 2007 Coca-Cola Web site: Financial Highlights.
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Between 2001 and 2006, Coca-Cola’s stock performance, as compared with its peer
group and the S&P 500, had been disappointing, as shown in Table 3.
Table 3. Five-year stock performance.*
Coca-Cola Peer Group S&P 500
12/31/01 $100 $100 $100
12/31/06 $115 $170 $135
* SEC Form 10-K for fiscal year ended December 31, 2006.
Table 4 shows where Coca-Cola produced its net operating revenues geographically.
Table 4. Net operating revenue by operating segment.*
Year Ended December 31 2006 2005 2004
Africa 4.6% 4.8% 4.4%
East Asia, South Asia, and Pacific Rim 3.3 3.1 3.2
European Union 14.6 17.8 18.0
Latin America 10.3 8.9 8.2
North America 29.1 28.9 29.5
North Asia, Eurasia, and Middle East 16.5 17.7 17.9
Bottling Investments 21.2 18.4 18.3
Corporate 0.4 0.4 0.5
100% 100% 100% * SEC Form 10-K for fiscal year ended December 31, 2006.
Although Coca-Cola’s distant second place in the non-carbonated-beverage market was a
major issue, its product portfolio and new-product introductions made up a long list. Coca-Cola
owned or licensed more than 400 brands, and it launched many new products between October
2006 and August 2007. Coca-Cola Enterprises’ top-selling brands in North America were as
• Coca-Cola Classic
• Diet Coke
• Sprite
• Dasani
• POWERade
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CCE’s five top-selling brands in Europe were as follows:
• Coca-Cola
• Diet Coke/Coca-Cola Light
• Fanta
• Schweppes
• Sprite
Coca-Cola’s U.S. gallon sales are broken down in Table 5.
Table 5. U.S. gallon sales.*
Sales to 76 bottlers 54%
Fountain syrups 34%
Finished beverages 12% (juices, water, beverages)
* SEC Form 10-K for fiscal year ended December 31, 2006.
Coca-Cola Enterprises accounted for 51% of all U.S. sales in 2006.
Asa Candler’s decision in 1899 to outsource bottling and distribution to franchised
bottlers and the consolidation of bottlers in the United States resulted in CCE’s creating a strong
stakeholder base, which had been Coca-Cola’s focus for many years. A Fortune magazine article
described the situation: 3
Over the years, Coke has sapped its bottlers’ profits in order to boost its own….
Analysts say that Coke has increased concentrate prices 3% to 4% annually
during the past decade: U.S. bottlers, with customers hooked on discounting,
generally haven’t been able to raise prices. The upshot: only one of Coke’s ten
anchor bottlers around the world … is believed to earn a return above its cost of
The economic interrelationship between Coca-Cola and its bottlers was evidenced by its
ownership of bottlers, as shown in Table 6.
3 Fortune, March 6, 2000, 58–59.
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Table 6. Ownership of bottlers.*
Coca-Cola Ownership Global Volume
0% 25%
Unconsolidated equity: 52 companies 58%
Controlled or consolidated 7%
Ownership Ownership Sales
Coca-Cola Enterprises 35% $19.8 billion
Coca-Cola Hellenic 23% $ 7 billion
Coca-Cola FEMSA 32% $ 5.2 billion
Coca-Cola Amatil 32% $ 3 billion
SEC Form 10-K for fiscal year ended December 31, 2006.
Although the bottler agreements varied by geography, U.S. bottlers generally had an
exclusive license to produce, market, and distribute Coca-Cola products in perpetuity in
authorized containers. Coca-Cola also had absolute authority to set prices and terms of payment
and purchase. Bottlers could not distribute non-Coca-Cola products, and Coca-Cola had to
consent to any sale of any bottler, in whole or in part. The financial results of Coca-Cola’s
largest bottler, CCE, are shown in Table 7.
Table 7. Selected financial CCE data, except stock revenues, in millions for fiscal years.
2006 2005 2004 2003 2002
Net operating revenues $19.8 $18.7 $16.2 $17.3 $16.1
Cost of sales 12 11.2 10.8 10.2 9.5
Gross profit 7.8 7.6 7.4 7.2 6.6
Selling, delivery, and
administrative expenses
6.4 6.1 6.0 5.6 5.2
Net income n/a .514 .596 .674 .491
Closing stock price 20.42 19.17 20.85 21.87 21.72
Shareholder equity $4.5 $5.6 $5.4 $4.4 $3.3
Source: Coca-Cola Enterprises SEC Form 10-K for fiscal year ended December 31, 2006.
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Growth Plateau
CEO Neville Isdell inherited a culture created by Robert Woodruff, a financial system
developed by Roberto Goizueta, a bottling system designed by Asa Candler, a restructured
company engineered by Doug Daft, and a new consumer marketplace. He also inherited seven
years of anemic growth. Isdell formulated a “Manifesto for Growth,” setting modest, realistic
growth targets, depending on one’s perspective. But he still had to answer several questions:
How could Coca-Cola reverse its seven years of modest growth? How could the company regain
the market-capitalization lead from Pepsi, which it had lost for the first time in its 100-plus years
of competition? What type of blockbuster strategic-growth move could he make to bring back
Coca-Cola’s Camelot years?
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