Coca Cola Value Chain Analysis

Value chain analysis of Coca Cola:

Coca Cola is one of the most recognizable brands globally. Known for its strong brand image and global presence, Coca Cola has several billion dollar brands in its portfolio. However, creating such a large and successful brand also requires managing the value chain successfully. A value chain includes all the activities starting from obtaining the raw materials from various sources to the final sales and after sales service. There are several activities in the middle which form the value chain. The concept of value chain analysis was introduced by Professor Michael E Porter of Harvard Business School. Managers can obtain a picture of how each stage in the value chain adds value to the product and accordingly optimize the value chain to obtain better results. Optimization will not just bring efficiency but it can also generate new sources of competitive advantage. Here is a detailed value chain analysis of Coca Cola. There are primary and support activities in the value chain which are discussed below:


Coca Cola Value Chain Analysis


Primary activities:

Inbound logistics:

Coca Cola has managed a very large supply chain which consists of tens of thousands of farmers and suppliers. It treats its suppliers as business partners.  These business partners provide its system with raw material including ingredients, packaging and machinery as well as goods and services.  However, it has also set guiding principles for the suppliers to follow. At a minimum these suppliers are required to comply with all the applicable laws and regulations. In its guidelines Coca cola also emphasizes on responsible environmental and workplace policies and practices. It has managed excellent relationship with it suppliers and that helps it maintain a continuous and uninterrupted flow of raw material.

Operations:

The operations function of Coca Cola includes concentrate development and all the administrative functions of headquarters. Coca Cola is a global business that operates at a local scale in every community where it does business. The Coca cola system operates through many local channels.  However, it does not own or control all its bottling partners. The company just manufactures and sells beverage bases and syrups to bottling operations. The company owns the brand and is responsible for the consumer brand marketing initiatives.

Outbound logistics:

This part of Coca Cola’s Value chain consists of its bottling partners and distributors. It bottling partners manufacture, package, merchandise and distribute the final product to the customers and vending partners. These vending partners then sell the product to the customers. The customers of Coca Cola include the grocery stores, restaurants, street vendors, convenience stores, movie theatres and amusement parks. The bottling partners of Coca Cola work with the customers to execute localized strategies developed in partnership with Coca Cola company.

Marketing and sales:

Coca Cola is a globally recognized brand.  However, it has not become as famous without focusing on marketing. The coca cola logo is one of the most recognizable logos. Its brand is also known for a very heavy expenditure on marketing. Apart from digital channels and social media, Coca Cola also uses print media and outdoor marketing to promote its brand and products. It also runs campaigns from time to time. Last year it brought a major shift in its marketing strategy and rather than promoting its brands separately, it is now focusing on promoting the entire brand together. Its products are sold in more than 200 countries worldwide. From retail stores to restaurants and theatres, Coca Cola products can be seen everywhere decorating the shelves.


Support Activities:

Technology:

Coca Cola also maintains heavy focus on technology and research and development.  From production to distribution and sales, everywhere it has invested in technology. Apart from that it also focuses on technological innovation through R&D. It has six R& D centers around the world that  are connected to external technology and assessment hubs connecting it with partners, tech start ups  and university researchers.  The company collaborates with partners in the other industries to fuel innovation across products, packaging, equipment and the other things. In this way, Coca Cola is continuously focusing on innovation for growth.

Human Resource Management:

This is also a very important area of Coca Cola’s value chain.  The company has focused on hiring and developing talent and creating an environment of learning and growth. It pays them good salaries and also complements the payments with rewards.  Coca cola focuses on employee motivation and engagement. Apart from it, the focus is on performance management to provide the employees with career growth.

Procurement:

Coca Cola procures from thousands of farmers and suppliers. It uses technology to make the entire process easier and efficient.  It has maintained good relationships with its suppliers and provided guidelines that the suppliers are required to follow.

Firm Infrastructure:

The role of a firm’s infrastructure is central to its success. Coca Cola has managed a large infrastructure including its management, human resources, financial and technological infrastructure. It is also educating its suppliers and focusing on innovation through its R&D centers.

Sources:

http://www.coca-colacompany.com/our-company/the-coca-cola-system

http://www.coca-colacompany.com/our-company/workplace-overview/suppliers/supplier-and-customer-partnerships

http://www.coca-colacompany.com/stories/rethinking-r-d-how-coke-uses-its-global-scale-to-take-innovations-further-faster

Abhijeet Pratap

Abhijeet has been blogging on educational topics and business research since 2016. He graduated with a Hons. in English literature from BRABU and an MBA from the Asia-Pacific Institute of Management, New Delhi. He likes to blog and share his knowledge and research in business management, marketing, literature and other areas with his readers.