Coca-Cola HBC Positioned to Maintain a Sustainable Value

Question: Write an essay on Coca-Cola HBC. Answer: Coca-Cola HBC has been known for its fundamental strengths as well as strong sales that had been well positioned to maintain a sustainable value over the long-term. However, the organization calls itself sustainable because it has created shared value not for its shareholders, employees but also its consumers as well as customers that had been associated with the company. It was merely in last decade, when the company opted for corporate social responsibility that was incorporated in all aspects of business management. Dow Jones Sustainability and Europe Sustainability Indices have recognized their efforts in sustainability since 2009 (Coca-Cola Hellenic 2016). Moreover, a companys sustainability can be analyzed by different profitability ratios such as Return on Investments (ROI), Return on Equity (ROE), Payout Ratio, Return on Assets (ROA) and Gross Profit Margin from the Revenue. The table below is given from 2013 to 2015 for the company Coca Cola Hellenic. 2013 2014 2015 ROI 5.56% 6.76% 6.94% Gross margin 35.43% 35.56% 36.70% ROA 3.05% 4.17% 4.18% Payout Ratio 87.60% 54.70% 80.30% ROE 7.43% 10.26% 10.00% a) ROI The ROI positioning of the company has increased in the upcoming years this depicts that the company has shown an increased investments profitability that suggests that the efficiency of the use of funds have been showing an increasing trend as higher ROI is considered to be a better choice (Rezaee 2015). b) Gross Profit Margin The gross profit margin of sales from the revenue depicts the revenue to be increasing in the last three years. The revenue, which stands to be 6874 in 2013 followed by 6510 in 2014 and 6346 in 2015, shows a declining trend. However, resulting in less of Cost of Goods sold following the years, the gross profit margin has shown to be increasing. The drastic increment can be seen from the year 2014 2015 illustrating an upward trend. c) ROA The Return on Assets sole purpose is to generate assets that could be convertible into cash and simultaneously generate profits. Although, it is an indicator of net income but it has been showing an increasing sometimes can be red. Moreover, the ROA can be sometimes regarded as Return on Investment even because assets even generate sales. According to the graph, the ROA has been increasing gradually depicting to show an increasing trend (Nicolescu, Alpopi and Zaharia 2015). d) Payout Ratio The payout ratio depicts that the company has been emerging to a better dividend paid company in 2015 as it reviews that firm the sustainable position of the company has been fluctuating over years. Although, 2015 depicts to be a good years for Coca Cola Hellenic but has been facing bottlenecks when aligned with the economic cycle. The sustainable earnings or rather the cash flow position of the company depicts not to be stable over the extended periods but shows an increasing trend (Rezaee 2015). e) ROE Return on Equity is called as Return on Common Stockholders Equity. It illustrates the generation of income for the stockholders equity. However, as depicted, every stockholder gets 10% of the equity for every one dollar invested in 2015. Although, ROE shows a fluctuating trend but according to last year result, it has been showing a decreasing trend on shareholders equity (Lin, Chang and Dang 2015). 2. GRI Table to identify Ethical Issues GRI is the Global Reporting Initiative that has been undertaken to depict a wider perspective of the sustainability position of the organization. The GRI studies all the perspectives relating to organization, environmental, societal as well as economic issues that may impact the sustainable position of the organization based on the guidelines of maintaining a balance, comparability, accuracy, timeliness, clarity as well as reliability (Coca Cola Hellenic 2015). The GRI table given on each organization is different from one another such that they are based on firm size, location and reporting process that produces comparable results (Coca-Cola Hellenic 2014). Coca Cola Hellenic has varying level of expertise in the years of reporting a sustainable position. The ethical issues points out towards the business and society that has been growing complex in the fields such that the changes made for the high performance results in rapid decisions that lead to mistakes and negative impacts in various areas of the organization. Coca Hellenic has always been complex and changing like sustainability that has been focusing on issues enough to encourage innovation and transparency on the burning issues (Global Reporting Initative 2015). 1) The organization has been facing problems with the internal processes that are posing a threat to the corporate social responsibility of the organization. 2) The issues had been quite augmenting on the economic as well as environmental parameters while listening to the material aspects and managing the resilience of the business towards human capital skills and others. 3) On the other hand, corporate governance is another issue that needs to be formulated. 4) GRI guidelines mar k transparency with dialogues as one of the issue that Coca Cola Hellenic is not able to keep with as it is resulting in a multifaceted reasons (Global Reporting Initative 2015). Overall, the issue that needs to enhance in the stakeholder management is the principles of Materiality, Completeness and context of Sustainability. On precise terms, the real amount of sustainability needs to be achieved on better management, employment, investments, campaigning, purchasing, etc. a) Environmental Issues The environmental issue relates to the increase in carbon density that has been hampering the companys revenue. Although, the company in 2015 has been involving itself in endorsing reduction targets but this is the only proposed work rather the implementation needs to be started in due time (Coca-Cola Hellenic 2016). The energy activities has been lost die to the use of different machinery that has been depleting the energy resources around the factory areas. However, there is a need for investments. As far as the figures are concerned, the revenue and the less payout received is due to the profits have been implemented in the energy activities as well as recycling of waste generation. The other environmental issues that are highlighted are the water risks relating to issues in basins that seem to be stressing on the worsening conditions in the southern and the eastern regions in the climate changes taking place. On the other hand, packaging issue has been prominent as the waste from packaging is the non-renewable content that is damaging the atmosphere. Moreover, the recovery and recycling content has been facilitated (Idowu and Leal Filho 2014). b) Economic Issues The economic issues are not concentrated to economy but also to the holdup that has been there in business. The advantages over core business activities have been generating economic bottlenecks. The other concern highlights less measurable results have been gathered over delivering long-term partnerships. In addition, there is a continuous encouragement for the participation of the employees in communities. Coca-Cola Hellenic is trying to increase the local supplier base to the business activities that support investments projects and train the employees rigorously. The employment not has been reached to 600,000 people throughout the supply value chain in Europe (Coca-Cola Hellenic 2016). c) Social Issues There is a need to generate managerial roles as the company needs to establish the contingency reserve in the areas and develop the roles for women as well. The social issues accompany the resilience that there should be a world-class safety culture that needs to be undertaken to not only promote well being but also ethical nature which is inclusive of the fair workplace. On the other hand, human rights policy activated should be activated on the employees to create a follow up such that the employees are given equal opportunities with occupational health and safety while developing proper leadership and control and compliance with employment and labour laws (Coca-Cola Hellenic 2013). References Coca Cola Hellenic. (2015).Sustainability Report 2015. Available at: https://coca-colahellenic.com/media/2390/coca-cola-hbc_2015-integrated-annual-report.pdf [Accessed 2 Jun. 2016]. Coca-Cola Hellenic. (2013).Coca-Cola HBC 2013 Global Reporting Initiative Communication on Progress (GRI COP) Report 2013. Available at: https://coca-colahellenic.com/media/1181/cch-gri-cop-2013.pdf [Accessed 2 Jun. 2016]. Coca-Cola Hellenic. (2014).Its good to share Building trust, spreading happiness. Available at: https://coca-colahellenic.com/media/1202/annual-integrated-report_2014.pdf [Accessed 2 Jun. 2016]. Coca-Cola Hellenic. (2016).Coca-Cola HBC AG 2015 Integrated Annual Report Showcases Focus on Sustainable Growth. Available at: https://coca-colahellenic.com/media/2526/2015-iar-non-reg-march-2016.pdf [Accessed 2 Jun. 2016]. Financials Morningstar. (2016).Growth, Profitability, and Financial Ratios for Coca-Cola HBC AG (CCH) from Morningstar.com. Available at: https://financials.morningstar.com/ratios/r.html?t=CCHregion=gbrculture=en-US [Accessed 2 Jun. 2016]. Global Reporting Initatve. (2015).Sustainability Reporting Guidelines. Available at: https://www.globalreporting.org/resourcelibrary/GRIG4-Part1-Reporting-Principles-and-Standard-Disclosures.pdf [Accessed 2 Jun. 2016]. Idowu, S. and Leal Filho, W. (2014).Professionals' perspectives of corporate social responsibility. Heidelberg: Springer. Lin, C., Chang, R. and Dang, V. (2015). An Integrated Model to Explain How Corporate Social Responsibility Affects Corporate Financial Performance.Sustainability, 7(7), pp.8292-8311. 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