Case Study 1 - Is Coca-Cola The Perfect Business

MN 5227
Business Economics
INDIVIDUAL CASE STUDY
Department of Management of Technology

University of Moratuwa
2020
University of Moratuwa
MBA in Management of Technology
Department of Management of Technology
Cover Sheet for Assignment
Names with Initials & student no:

Number Name
208282F Lavan Sathananthan
Title of Case Study: Is Coca-Cola the ‘Perfect’ Business
Subject Code : MN 5227
Subject : Business Economics
Lecturer : Prof. Sarath Dasanayaka
Student’s Statement :
I certify that I have not plagiarized the work of others or participated in unauthorized collusion
when preparing this assignment.
Signature ………………….. Date: 31-Oct-2020
Office use only :

Deadline Met Extension Given Late Submission
Marks Given :
Case Study – 1
Is Coca-Cola the 'Perfect' Business?
(A) One of the most important skills to learn in managerial economics is the ability
to identify a good business. Discuss at least four characteristics of a good
business.
Based on the article about Coca-Cola, there are five essential characteristics of a business
for it to be considered as a Good Business.
1. It should be appealing to both young and old alike.

2. It must have a distinct characteristic which cannot be easily imitated by others.
3. It must already made an impact to the market because it has already earned a large
portion of market share.
4. Profit margin and rates of return should be high.
5. It must have a competitive advantage or economic upper hand.
Appealing to both young and old alike. The product that the company sells / offers can be
used or consumed by people of all ages. It must be enjoyed not only by selected markets
rather it should be enjoyed by all.
Distinct characteristic which cannot be easily imitated by others. The product that the
company sells / offers must be unique and exceptional. It must safeguard its secret
ingredients. So that it cannot be easily imitated by others.
Large portion of market share. The product that the company sells / offers is used or
consumed by a large portion of the market and must be preferred above other companies
who are in the same line of business.
A good business must able to deploy a lot of incremental capital at an above average rate of
return for a long time. If a business is able to do that, it will in effect be helping its
shareholders compound their money at a good rate of return and saving them the trouble
of having to invest the extra dividends they would have received if the company didn’t
reinvest in its operations.
A durable competitive advantage or economic upper hand is what sets apart the good and
great companies from the mediocre and downright incompetent companies. A significant
competitive advantage allows a company to earn better than average profits or maybe even
excellent profits and protects the company’s profits from competitors that want to get a
piece of the action. A strong brand, being the low-cost producer, patents, and having a near
monopoly over a certain market are some sources of competitive advantage.
(B) Identify and talk about at least four companies that you regard as having the
characteristics listed here.
Apple Company
This popular company is the brain behind gadgets like iPod, iPad, iPhone, and MacBook.
Their products are user-friendly and can easily be used by people both young and old. Also,
Apple always sees to it that their products offer unique features which suit the people’s
wants and needs enabling the people to patronise their products; thus in return, earning a
large portion of market share compared to other competitors.
Ceylon Tobacco Company PLC
This is a Sri Lankan tobacco company engaged in the manufacture, marketing and export

of cigarettes. It is a subsidiary of British American Tobacco. CTC is the second largest
company traded on the Colombo Stock Exchange. CTC enjoys a virtual monopoly in the
manufacture of cigarettes in the country. Cigarette brands marketed by CTC in Sri Lanka
include Bristol, Capstan, Dunhill, John Player Gold Leaf, Lucky Strike, Pall Mall and Three
Roses.
John Keells IT
John Keells IT, is a leading consulting and professional services company. It is a fully owned
subsidiary of Sri Lanka's largest conglomerate John Keells Holdings PLC. The John Keells
Holdings PLC, has the highest market capitalization in Sri Lanka and its annual turnover in
excess of US$ 800m. John Keells IT focuses on multiple domains such as Consulting, Digital,
Strategy, Technology and Operations and they are handled through its Strategic Business
Units which are SGIT, JKCS and Infomate. The organization has a broad eco-framework with
vital associations with SAP, Microsoft, Cisco, IBM, Amazon, Google, and so on. JKIT is a
trusted partner for more than 500+ customers and they span 4 continents in making our
customers the trend setter in their respective domains powered by our knowledge capital
which is 500+ professionals with collective wealth of experience for more than 10,000 man
years.
Dialog Axiata PLC
Dialog Axiata Group, a subsidiary of Axiata Group Berhad (Axiata), operates Sri Lanka’s
Leading Quad-Play Connectivity Provider. Dialog Axiata PLC, listed on the Colombo Stock
Exchange, supplements its market leading position in the Mobile Telecommunications
sector with a robust footprint and market presence in Sri Lanka’s Fixed Telecommunications
and Digital Television markets through its fully owned subsidiaries Dialog Broadband
Networks (Private) Ltd (DBN) and Dialog Television (Private) Ltd., (DTV). Dialog Axiata Group
is Sri Lanka's largest Foreign Direct Investor (FDI) with investments totaling USD 2.3 Billion.
(C) Suppose you bought common stock in each of the four companies identifies
here. Three years from now, how would you know if your analysis was
correct? What would convince you that your analysis was wrong?
If I bought common stock in each of the four companies identified above; three years from
now, I would know that my analyses were correct by simply looking back and evaluating if
the company still suffice the list of characteristics of a good business. I will be convinced that
my analyses were wrong if it will not suffice even just one of the characteristics listed for it
to be considered as a good business.

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MN 5227

INDIVIDUAL CASE STUDY

Department of Management of Technology

Names with Initials & student no:

Title of Case Study: Is Coca-Cola the ‘Perfect’ Business

Subject Code : MN 5227

Subject : Business Economics

Lecturer : Prof. Sarath Dasanayaka

Signature ………………….. Date: 31-Oct-2020

Office use only :

1. It should be appealing to both young and old alike.

Ceylon Tobacco Company PLC

This is a Sri Lankan tobacco company engaged in the manufacture, marketing and export

Dialog Axiata PLC

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