This report shows how Coca Cola provides value to its customers and consumers. It describes Porter’s value chain tools and its components. The report also identifies and analysis opportunities and threats which Coca Cola faces at the moment in the following fields: quality management, leadership and motivation, strategic management, as well as communication. As a result of the analysis recommendations for improvement are made. Coca Cola was established in 1886 and is now the best know world brand. Coca Cola value cycle shows the strong relationship between the company and its suppliers, bottling partners and customers.
Coca Cola mainly concentrates on primary activities in order to provide value to the customer. Inboud Logistic, Outbound Logistics and Marketing & Sales are the parts of value chain which are directly responsible for competitive advantages of Coca Cola. The company uses these advantages to improve its competitiveness and to ensure its long-term success. Coca Cola also permanently works on new strategies and operates very professionally in all management fields. However, there are some areas which can still be improved.
In the quality management area Coca Cola should continue developing and using the TCCQ methods in the future, but also encourage employees to continuous quality improvement in their workplace. The company also needs to regularly audit all the organisational units’ compliance with the quality standards. In addition, Coca Cola has to implement non-profit environmental partnership with organisations which work on improvement of water quality and create sustainability programmes in order to generate management benefits and long-term success.
In the leadership area Coca Cola should hire employees from local employment pools, design motivational programs according to the local culture, remunerate and reward incentives structured to reflect local pay and customs, rationalise staff in Europe, North America` and Japan as well as adopt teams in a particular country which promote corporate image and job satisfaction. In the strategic field Coca Cola should expand and invest as well as improve its supply chain in developing countries, especially in Asia as a centre of world economic power. The aim of this assignment is to analyse the value chain of Coca Cola.
The report describes Porter’s value chain tools and its components. It gives an explanation of value chain at Coca Cola and how value is provided to the customer. Specific consideration is given to the four management areas: quality management, leadership and motivation, strategic management and communication. The report identifies current and future opportunities and threats in these management fields and evaluates the overall feasibility of opportunity. As a result of this investigation strategies for improvement of Coca Cola competitiveness are recommended.
2. 0 Porter’s value chain and its components The value chain divides a firm into its strategically relevant activities in order to define potential sources of differentiation and be competitive in a certain industry (Porter M 2004, p. 33). “A firms value chain and the way it performs individual activities are a reflection of its history, its strategy, its approach to implementing its strategy and the underlying economics of the activities themselves” (Porter M 2004, p. 36). The way value chain activities are carried out determines costs and affects profits.
According to Porter (2004, p. 39) these activities can be classified generally as either primary or support activities common to a wide range of firms. According to Porter (2004), the primary activities are: Inbound Logistics – involve relationships with suppliers and include all the activities required to receive, store, and disseminate inputs. Operations – are all the activities required to transform inputs into outputs (products and services). Outbound Logistics – include all the activities required to collect, store, and distribute the output.
Marketing and Sales – activities inform buyers about products and services, induce buyers to purchase them, and facilitate their purchase. Service – includes all the activities required to keep the product or service working effectively for the buyer after it is sold and delivered. Secondary activities are: Procurement – is the acquisition of inputs, or resources, for the firm. Human Resource management – consists of all activities involved in recruiting, hiring, training, developing, compensating and (if necessary) dismissing or laying off personnel.
Technological Development – pertains to the equipment, hardware, software, procedures and technical knowledge brought to bear in the firm’s transformation of inputs into outputs. Infrastructure – serves the company’s needs and ties its various parts together, it consists of functions or departments such as accounting, legal, finance, planning, public affairs, government relations, quality assurance and general management. 3. 0 Overview of the organisation and its value chain.
Company Overview The Coca Cola Company (Coca-Cola) was first established in 1886 when Dr.John Pemberton developed the Coca-Cola syrup. In 1888 another pharmacist, Asa Griggs Candler, claims to have acquired the rights in Coca-Cola. Later Candler incorporates, what is now known as, the Coca-Cola Company. “Coca-Cola is now drunk in every state and territory in the United Stated” (Candler in Mantel 2008). However the bottling business began by the end of the 19th century when a large-scale mechanized bottling plant in Chattanooga secured the right to bottle and sell the drink for the Cola-Cola Company in the large parts of the United States.
Today the company is a leading distributor, manufacturer and marketer of NON-alcoholic beverage concentrates and syrups, in the world. The company operates in more than 200 countries and markets a portfolio of more than 3,500 beverage products including sparkling drinks and still beverages such as waters, energy drinks, vitamin waters, juices, etc. Coca-Cola operates in more than 200 countries and is headquartered in Atlanta, Georgia and employees approximately 139. 600 associates across six operating groups (Coca Cola Company Information, 2011): Eurasia & Africa Europe Latin America Pacific
The company owns the world’s largest beverage distribution system. Through the network of Company-owned or controlled bottling and distribution operations, bottling partners, distributors wholesalers and retailers the organisations serves approximately 55 billion consumers worldwide (Coca Cola Forward-Looking Statement, 2011). 3. 2 The external environment (Porters Five Forces) The external environment are “those factors and forces outside the organisation that affect the organisation’s performance” (Robbins et al. 2008, p. 83). The macro- environment can affect the future performance of an organisation both, positive and negative.
In order to win/remain competitive advantage and be aware of future constrains/impacts the early identification of the external environment is necessary to deliver sustainable market solutions. The Coca Cola Company is a multinational organisation with many different divisions and brand across the globe. This part of the report will analyse the whole business environment by using Porters Five Forces. The Five Forces analysis is the earliest method that focuses in the external factors of the business and the environment where it operates to determine industry profitability.