Question

Coca-Cola's Internal Environment Coke's Value Chain- What does Coke do that adds value to the Coca-Cola Company The inbound logistics aspect of Coca-Cola is very strong as they have over 300 distribution or bottling centers across the globe serving to over 200 countries. Having many distribution facilities will minimize shipping time to decrease shipping costs and therefore increase revenue. A lot of research is put into the design and layout of the warehouse and other bottling centers. Since having intelligently laid out these warehouses, Coca-Cola has increased efficiency. Not only having inbound warehouses being effectively designed, Coca-Cola incorporates this layout technology in their outbound factories to increase their overall workflow design. Coca-Cola is one of the most recognizable brands in the world and continues to market their product extremely well. Coke's trademark value is estimated at a whopping $25 billion. The brand basically sells itself, but Coke is not just sitting back and being lazy. The Coca-Cola Company actively researches the needs of its customer segments and targets to provide drinks and snacks that people will want. As a luxury product, Coke understands that luxury items are the first things to go when times get tough. For this reason they provide excellent service to their suppliers and customers. Without excellent service, a beverage company will fall by the wayside as there are many other products out there to substitute any type of drink. 3 With over 500 brands owned by the Coca-Cola Company, there are many raw materials that are needed to support these snack and beverage brands. The main ingredient most of Coca-Cola's products is water. Coke understands the difficulties with many countries receiving fresh water and they work hard to deliver to these remote areas. Other than water, nutritive and non-nutritive sweeteners are used in their products. Coke has developed win-win relationships with their suppliers because both parties are in understanding that they will do a lot of business together. Coke does depend on one supplier for different ingredients they use. This could be dangerous for Coke as the supplier may take advantage of this relationship. The Coca-Cola Company is massive and has its own internal administration. These internal divisions include Human Resources, Information Technology, Accounting and others. They also spend millions of dollars a year on research and development of new products. Continually changing and understanding the needs and wants of the world's population will lead to happier customers and increased revenues. Required:

(a) Analyze this case and conduct a Value Chain Analysis (VCA) for Coca Cola Company.

b) Managing the value system for a global business like Coca Cola requires an organisation to make two broad choices. Discuss the two choices in light of the Coca Cola Company.

Answer 1

(a) Value Chain Analysis for Coca Cola Company includes its Primary activities and support activities. Among its Primary activities, the company has well planned inbound logistics that is based on the global operational needs. The company works with its suppliers so that the raw materials are sourced on quality basis and technology standards for efficiency. Operation network of Coca Cola is spread around the world and the company coordinates its global operations based on clearly defined guidelines. The operations are planned as per its global business needs in different countries and the supply chain is efficient. The outbound logistics of the company are also well developed with its distribution center and warehouse located at strategic locations.

The secondary activities like marketing , research and development , human resources development are constantly upgraded as per the global standards and latest trends in business to offer premier value to the brand.

(b) The two choices for the company is to focus on its primary activities in the value chain or secondary activities to deliver more value to the customers.

The primary activities are responsible for building value in the supply chain and efficiency so that the resources can be well utilised for growing the business globally.

The secondary activities like marketing , research and human resources support the operations and are essential to run the primary activities as per plan. The secondary activities provide the goals and objectives for the primary activities in value chain like the regions for growth, target profitability, competition analysis and trained human resources and hence are important part of value chain for Coca Cola.

The value chain is created on basis of primary activities of supply chain to derive value for the company and customers but the business goals and operations are largely dependent on marketing, research and development, and human resources quality of the organisation.