Coke Assignment 2

Yasser Imam Faiz Student ID: 21838399 MGW 3381

Assignment 2

Coca Cola

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Yasser Imam Faiz Student ID: 21838399 MGW 3381Table of Contents

Executive summary………………………………………………………………………………….3

Introduction……………………………………………………………………………………………. 4

Background…………………………………………………………………………………………4Plan…………………………………………………………………………………………………….4Mission Statement……………………………………………………………………………..4

Business Model………………………………………………………………………………………..5Business Strategy…….……………………………………………………………………………….6Porter’s competitive forces………………………………………………………………………7Value Chain analysis…………………………………………………………………………………8 Primary activities………………………………………………………………………………..9 Support activities….…………………………………………………………………………..11How Technology may facilitate the operations of the company………………13Conclusion………………………………………………………………………………………………15Recommendation……………………………………………………………………………………16Referrences…………………………………………………………………………………………….17

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Executive Summary

This report will analyze the business environment and operations of the Coca Cola

Company. It dominates the soft-drink market since the early 1900s till now and is considered

the best brand in the world.

This report will illustrate the company’s business model and business strategy. To

perform a critical analysis on the people, organization and the technology factors Porter’s

competitive forces model will be briefly used. This study will also carry out the value chain

analysis to understand the company’s primary and support activities. After that, this case study

will discuss how the company uses technology to carry out its operations. It will also explore the

possibilities of present and new technologies to gain more efficiency. Lastly, few

recommendations will be presented to improve the company’s operations including

introduction of DIAD (Delivery information acquisition device) for the distribution channels.

After going through this report it can be understood how Coca Cola has achieved one of

the most superior brand image. It can also be seen how the company manages to keep up with

its growing demand and what else it needs to adopt in specific areas such as logistics .

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Introduction

Background

Back in 1886 a pharmacist from Atlanta called John Pemberton came out with a new

drink out of his curiosity, that new drink was named Coca Cola by his book keeper. To this day,

Coca-Cola is written the same way. In the first year, Pemberton sold just 9 glasses of Coca-Cola

a day which is a staggering 1.7 billion servings per day across more than 200 countries, making

it the most successful soft drink company in the world. Additionally, it has taken the top rank as

the best brand for 11 years in a row. Over the years Coca Cola has introduced 500 more new

brands such as Coke Zero, Sprite, Minute maid, Fanta, Diet Coke and many more. It is the

largest manufacturer, distributer and marketer of non-alcoholic drinks and syrups in the world

(Coca Cola, 2011).

Mission Statement

“Strive to refresh the world, inspire moments of optimism and happiness, create value

and make a difference.” (Coca-Cola, 2011).

Plan

The primary mission of Coca Cola in simple words may be derived as quenching thirst of

more than billion people across the world including remote places. This leads to the global

business strategy of this company. The report will begin with the business model and business

strategy of Coca Cola. Porter’s competitive forces and value chain analysis will also be carried

out to understand the activities and environment of the company. Later on, the technology

factors will be discussed. Finally, the report will be summarized by a conclusion and a few

recommendations.

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Business Model

PEST analysis may be used to evaluate the business model of the company. It is a tool

that helps the organisations for making strategies and to know the external environment in

which the organisation is working and is going to work in the future (Robbins, Bergman, Stagg,

Coulter, 2006)

Political- This means the degree of government intervention in business. Government may

intervene in areas like tax, trade and environment. Coca Cola had a negative impact on

countries like India and USA when they were subjected with health issues. In 2001, the

government of Venezuela banned Coke Zero for health dangers. On the other hand the

governments of many countries like Turkey, Cambodia, and Paraguay welcomed the company

in their market during the 1960s which gave the company more opportunities.

Economic- In 2008 and 2009, the global economy has fallen into a recession. Not just the

United States but countries from all over the world have felt the impacts of the 2008 Financial

Crisis. This may be a problem for Coke, which derives approximately 75% of its sales from

outside North America. Still, the company has positioned itself well in international markets

both organically and through acquisitions. On March 5, 2010, Coke's CEO said that emerging

markets are bouncing back quicker than more developed markets. Changes in economy have to

be tackled by the company accordingly with changes in strategy.

Social- This includes all the cultural aspects such as health consciousness and social trends. It

affects the value of the community. The strategy which the company uses in Japan may be

taken as an example; an antioxidant called ‘catechins’ is included in the drink. Consuming this

new ingredient is good for health and the health conscious Japanese people were more happy

with the product.

Technology- This factor includes research and development, automation and rate of

technological change. The company has high priorities in research and development and invests

a lot in it. This gives them a competitive edge. As mentioned earlier Coca Cola at present have

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Yasser Imam Faiz Student ID: 21838399 MGW 3381500 beverages. This is due to the advanced technology they are using. They also use technology

to make drinking easier such as the innovation of can.

Business Strategy

As the Company is in a relationship with countries all around the globe it has a global

business strategy. It has to compete in the market for raw materials which is one of the most

important part of the company. Coca Cola expands the business in some cases by purchasing

other new brands such as Glaceau a major vitamin water drink (New York Times, 2007). The

purchase of such brands gives Coca Cola more market share in noncarbonated beverages

market. To raise funds for this type of acquisitions the company can use its high credit rating at

a lower cost.

One of the most useful techniques to manage relationships with its stakeholders is

strategic alliances. A former CEO claimed that all of its revenue comes from strategic alliance.

The company uses exclusive contracts with its bottling partners and other customers such as

Burger King. Coca Cola had a ten year deal with Burger king to be their only supplier of

beverages. Coca Cola had a similar deal with Wendy’s as well even though, Coca Cola’s huge

rival Pepsi had a better deal. This shows the importance and power of the brand name. In fact,

this is one of the main core competences of the company. Coca Cola makes the most of its

name in terms high bargaining power. This differentiation strategy has been from the beginning

and results to achieve the highest number of soft drink customers (Coca Cola, 2011).

Distribution strategy of Coca Cola is another competitive advantage. The Coca Cola

agrees not to sell to other parties in the local market and the bottler also agrees to buy only

from Coca Cola dealers. They have over 300 bottling partners globally. Nonetheless, it continues

to invest on bottling partners (Coca Cola, 2011).

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Porter’s Competitive Forces Model

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Traditional Competition

Old brands like PepsiPrices of other beveragesFor Example: Sprite, Diet Coke, Coke Vanilla and other brands

Substitute Products or Services

Energy drinks Gatorade, coffee drinks, new type of drink (e.g. carbonated soft drink)

New Market Entrants

Similar beveragesForeign Global Competition.Example: Brands such as Double Cola entering the market for Coca Cola.

Customers

PerceptionQualityBrand ImagePurchasing power

Suppliers

Integrated Supply ChainPunctual DeliveryPrice and availability of raw materialsQuality Safe


Value Chain Model

The value chain is a systematic approach for examining the development of competitive advantage. It consists of primary and support activities as shown in the diagram below (Jewels, 2000).

A Value Chain is a model used to disaggregate a firm into its strategically relevant value generating activities, in order to evaluate each activity’s contribution to the firm’s performance (Terms, 2006).

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Primary activities

Inbound Logistics

Suppliers and business partners are vital to attain success. The suppliers provide materials,

including ingredients, packaging and machinery, as well as goods and services. As a company,

Coca Cola has a responsibility to hold direct suppliers and bottling partners to standards no less

than those required by applicable law. Suppliers are expected, at a minimum, to conduct

business in an ethical manner and comply with all applicable laws and regulations. Supplier

Guiding Principles (SGPs) communicate company’s values and expectations for the bottling

partners and business partners. The SGPs are a part of all supplier agreements, and a pre-

certification practice is in place for trademark marketing suppliers. Suppliers are also provided

training and assistance programs for areas they need to improve their operations (Coca Cola,

2011).

Operations

The primary operation is making branded beverage products available to consumers

throughout the world through the network of company-owned or controlled bottling and

distribution operations, bottling partners, distributors, wholesalers and retailers. These

operations are carried out using various technology and automated mechanisms. The Coca Cola

bottling plants also use high-tech machinery. Most of the branded beverage of this company

outside North America are manufactured, sold and distributed by independent bottling

partners. However, in underperforming markets Coca Cola takes control to improve

performance.

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Yasser Imam Faiz Student ID: 21838399 MGW 3381Sales and Marketing

Out of approximately 2,400 products, Coca Cola markets four of the worlds top sales drink

brands. Although the industry is relatively small and they only directly compete with two

companies, creativity is a vital marketing strategy to Coca Cola. Coca Cola ultimate goal is to

deepen their brands connection with consumers. As a result, they have to constantly reinvent

their product (Coca Cola 2006). The marketing strategy they use is directly linked to the

consumer; from advertising, to point of sale, to ultimately opening and consuming a Coca Cola

beverage. Techniques which they have used to achieve this include developing new products

and brands, changing the design of their packaging, and designing various new advertising

campaigns (Coca Cola 2006).

On October 19th, Coca Cola reported their earnings for the third quarter. Earnings per

share are up which results in higher benefits for shareholders. According to Neville Is dell, CEO

of Coca Cola, they have experienced a growth in sales of five percent compared to the same

quarter last year. This is as a result of balancing performance across their global markets and

their product portfolio (Coca Cola 2006).

Services

Activities that maintain and enhance a product value include customer support, repair

services, installation and training. Coca Cola customers range from large international retailers

and restaurants to smaller independent businesses and vendors. As a result, they provide

services tailored to meet their customer’s needs. Coca Cola also supports their customer by

providing them with the training necessary to help their businesses become more effective and

profitable. They have established Customer Development and Training Centers which are

available to improve productivity. Whether the customer is a large restaurant or small fast food

shop Coca Cola will provide service to create mutual benefit (Coca Cola, 2011)

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Yasser Imam Faiz Student ID: 21838399 MGW 3381Outbound logistics

This activity refers to the movement of material associated with storing, transporting, and

distributing goods to its customers. This requires huge transportation, technologically advanced

warehousing and smart distribution management. They have over 200000 vehicles, automated

warehouse and a wide distribution channel. Coca Cola also engages in long contracts with fast

food chains and restaurants.

Support Activities

Human Resources

Microsoft SharePoint online intranet has made the communication within organization

very smooth. This ease of communication enables good care of employs. The various

applications of the system make it very easy for employees to perform well. Coca Cola wants to

recruit the best work force and also offers training programs to assist the workers (Microsoft,

2010).

Administration and management

This section of Coca Cola has been outstanding. After partnering with Microsoft everyone

in the organization could communicate from higher level to lower level. If the communication is

smooth then any problems could be addressed and resolved quickly. Managers could get

feedbacks and information easily.

Procurement

When making purchasing decisions on products and supplies, Coca Cola considers

environmental impact, performance, safety and regulatory requirements, and cost

competitiveness. Operations give purchasing preference to products made entirely or partially

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Yasser Imam Faiz Student ID: 21838399 MGW 3381of recycled materials (consistent with current performance, safety and regulatory

requirements, overall environmental benefit, and cost competitiveness). Operations establish

procurement policies that consider the environmental impact of packaging and other materials

used (Coca Cola, 2011)

Technology

Technology is a key factor of achieving competitiveness. Coca Cola had been incorporating

with Microsoft and later recently it improved its Information systems with the aid from HP

(HP,2011). Furthermore the bottlers also use high tech machinery. One of the type of machine

can produce 1700 cans per minute (Packaging Digest, 2011). The company had also been

exploiting technology for researching, Coca Cola launched an RFID enabled drink dispenser

which provides 100 options and all the information of sales are sent back to the company for

analyzing (RFID, 2009)

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How technology may facilitate the operations of the company

As mentioned earlier, Coca Cola Company uses an automated warehouse which has been

working well. However, Coca Cola had issues in dealing warehousing because of contract

rejections (Marketwire, 2011). The company had faced strikes by workers few times. A solution

could be saving costs by using more efficient system. Coca Cola may introduce the use of Radio

Frequency in its warehousing. One of the companies offering this technology is called “SSI

Schaefer”. In its automatic mode the Schaefer Satellite System can be left in the lane of the

warehouse to automatically stack while the forklift driver may continue other operations with

other satellites. One Radio Frequency controller may operate up to 360 satellites and each

satellite can service up to 2,000 pallets that may work continuously for a period of 20 hours

without recharging. An additional benefit with this system will be utilizing 80% of any available

warehouse space. This warehousing company also has revolutionized processes which

eliminate the use of few types of equipment and can store heavier inventory. Most importantly

it guarantees safety and more competitive storage solution (Ferret, 2011).

Coca Cola currently uses more than 200000 vehicles around the world to deliver its

products. There is a lot of scope to reduce cost by simple changes as the result will be

cumulative. Introducing DIAD (Delivery Information Acquisition Device) which is a handheld

data collector used by companies to record and transmit delivery information across a mobile

cellular network could benefit the company in a few ways. The Coca Cola drivers could use

them. Coca Cola has taken many successful measures such as collaboration with ‘Microsoft’ to

improve communications within the organization. However, with intranet and other employee

interfaces it is not possible to reach workers who work in the field without computers. Using

DIAD brief messages can be sent. If Coca Cola uses DIAD the system can electronically capture

and store detailed order and delivery data of inventory or raw materials sent to bottling

companies and retailers. This also enables the company to keep track of the chain of records for

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Yasser Imam Faiz Student ID: 21838399 MGW 3381each delivery. Therefore, if a delivery is missing or lost information can be detected

immediately and tracked. The data of the deliveries may be stored for many years as well.

These records can also be used to analyze distribution.

DIAD has GPS system, Internet access, wireless connectivity options and memory

storage. The driver can log his or her DIAD to the system and receive short messages from the

central management. With DIAD it will no longer be required to brief the workers who work on

field. Since all the messages including receipts can be transmitted by this device paper

consumption will also decline. With so many vehicles on the road each day, every second

wasted means more fuel, more carbon emission and more cost. DIAD is mainly used in courier

companies, e.g. UPS uses a system in DIAD which eliminates all the left turns and gives the

shortest routes. Surprisingly that little change is able to save millions of dollars and reduce

carbon emissions. Coca Cola may also use this and be more efficient. Reducing carbon

emissions will also add more value to the brand loyalty.

Using this technology Coca Cola may do the distributing operations more efficiently in

terms of time and cost. Another aspect of DIAD it does not need high speed internet so it can

be used in most of the countries.

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Conclusion

After this report it could be seen that Coca Cola has a very strong global business

strategy. After drawing out the competitive forces model it can be understood that Coca Cola

does not seem to have any real potential threat from competitors. The company manages very

strong terms with the suppliers; however there are very limited suppliers. Other activities of

business run very smoothly. Coca Cola might have to reinforce their logistics to keep up with

the growing competition. The marketing and sales had always been the key to success for Coca

Cola and it is still holding on to its dominance by introducing new products and acquiring other

beverages.

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Recommendations

Coca Cola should compete more for raw materials needed for its products. In

some parts of the world clean water is also difficult to get. For some of the

ingredient the company has very few suppliers such as ‘aspartame’ which has

only two suppliers. In this dynamic environment they should be more cautious

about suppliers. This should not be much affected by a Netcentric economy

because it is less related to technology.

As mentioned earlier in this report, the logistics of the company does not seem

very impressive. There might be a lot of room to save costs. In this competitive

environment every single second counts. The introduction of DIAD might take

the efficiency higher. Since Coca Cola has one of the largest distribution system,

it has more chance to push its efficiency. In a Netcentric economy it may be a

better step, because it is very likely that new innovations in telecommunication

and internet technologies will emerge and that might allow DIAD to upgrade and

offer even more functions.

Coca Cola has used many Medias and ways to advertise and promote its

products. At present it will be more difficult to promote and achieve a strong

position in the market with its new products. Coca Cola till now does not seem to

have made much use of the Internet. The company can make deals with the

popular websites. In this Netcentric economy there should be a lot of potential in

the World Wide Web. The company should use it with creative ideas to gain

consumers.

References

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Yasser Imam Faiz Student ID: 21838399 MGW 3381 BIBLIOGRAPHY Casey, L. (2011, April 12). Retrieved May 8, 2011, from Packingdigest: http://www.packingdigest.com/article/517792-Spiral_conveying_technology_at_Coca_Cola_botling_plant_featured_on_National_Geograpgic_Channel.php

Coca Cola. (2011). The Coca cola company. Retrieved May 8, 2011, from Coca Cola: Robbins, S., Bergman, R., Stagg, I. & Coulter, M. (2006). Management, 4th edn, Pearson Education Australia, Frenchs Forest, NSW

ferret. (2006, April 6). Retrieved May 8, 2011, from ferret: http://www.ferret.com.au/c/Schaefer-Systems-International/Innovative-warehousing-technology-on-show-n696624

Gorgan, E. (2009 , June 13). Softpedia. Retrieved May 7, 2011, from Softpedia: http://news.softpedia.com/news/Coke-Zero-Banned-in-Venezuela-for-Serious-Health-Concerns-114080.shtml

Jewel, B. R. (2000). An Integrated Approach to Business Studies. United Kingdom: Pearson Education Limited.

market wire. (2008, April 7). UFCW Canada. Retrieved May 8, 2011, from market wire: http://www.marketwire.com/press-release/coca-cola-workers-in-windsor-chatham-sarnia-area-reject-final-offer-841029.htm

Microsoft. (2009, June 22). Case Studies. Retrieved May 8, 2011, from Microsoft: http://www.microsoft.com/casestudies/case_study_detail.aspx?casestudyid=4000004609

Robbins, S., Bergman, R., Stagg, I. & Coulter, M. (2006). Management, 4th edn, Pearson Education Australia, Frenchs Forest, NSW

Sorkin, A. R. (2007, May 26). Business. Retrieved May 8, 2011, from The New York Times: http://www.nytimes.com/ref/business/20070527_COKE_GRAPHIC.html

The Telegraph. (2010, September 16). retail and consumers. Retrieved May 7, 2011, from The Telegraph: http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/8005303/Coca-Cola-named-worlds-best-brand-for-11th-year-in-a-row.html

Weier, M. H. (2009, June 6). RFID. Retrieved May 9, 2011, from information week: http://www.informationweek.com/news/mobility/RFID/217701971

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Coke Assignment 2

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