Value Chain Analysis

A companys value chain relates the successive stages during which value is created when producing, distributing, and servicing a product. It identifies the primary activities that create customer value and the related support activities. In this section we will observes the components of Coca Colas value chain and evaluate its contributions to the overall competitive advantage of the company. Coca Colas primary activities involve: Supply Chain Management - Suppliers provide the companys system with materials, including ingredients, packaging and machinery. The Coca-Cola Company headquartered in Atlanta manufactures the syrup concentrate which is then sold to various bottlers throughout the world. The bottling production plant has its own supply chain which supplies them with Sugar, Empty bottles (Procured on contractual basis from different vendors) Crowns, Caps, Crates etc. Suppliers are expected to adhere to the companys Supplier Guiding Principles which emphasize the importance of responsible workplace policies and practices and comply, at a minimum, with applicable environmental laws and with local labor laws and regulations.
Operations - Operations are the second phase of the primary value chain activities. Operations

are the value creating activities that transform the inputs into the final product. After receiving
the concentrate from The Coca-Cola Company (Atlanta) through one of the regional offices under the supervision of The Coca-Cola Export Corporation, the bottler ships it to one of its manufacturing facilities. These highly automated facilities produces the final drink by mixing the syrup with filtered water and sweeteners, and then carbonating it before putting it in cans and bottles. To effectively control and

monitor the business environment, the company conducts continual appraisals of the business operations and readily acts upon any factors, which cause inefficiencies in any phase of the production and consumer process. Distribution - From the production plant, the beverages (in the form of cans or bottles) are shipped to distribution and sales centers using the bottlers own fleet of commercial vehicles. The distribution centers are responsible for storing and managing the inventory. Each distribution center is responsible for the implementing the push strategy in the supply chain. The bottlers execute several competitive strategies to maximize sales like inter-zone competitions and give generous incentives to top performers. Marketing and Sales - Considering that the company experiences average sales in the billions of dollars per year, Coca Cola has an excellent strategy where the focus on both quality products and innovative advertising. The Company supports its international bottler network with sophisticated marketing programs seeking to guarantee the Company's brands are available where anyone is seeking refreshment. Services - Coca Colas Customers include large international chains of retailers and restaurants and small independent businesses. Through their Customer Development and Training, they

provide support to smaller customers to help make their businesses more efficient and profitable. They also work with customers to broaden the range of beverages they offer, provide nutritional information and ensure our beverages are marketed responsibly.

Coca Colas Secondary Activities involve: Human Resource Management - HR put in place the policies, practices and procedures that ensures that Coke has the right people in the right places to implement its overall business strategy. This involves the recruitment of a skilled and knowledgeable workforce. Product Innovation - The third strategic priority in Cokes sustainability plan is Innovate for the Future. Coke is committed to finding opportunities for innovation; collaboration and partnership which help them address some of the business, industry and societal challenges they face as a corporate citizen. General Administration - Coca Colas financing activities contain net borrowings, dividend payments and share repurchases. The companys global presence and sturdy capital position give it easy entrance to key financial markets around the world, allowing it to elevate funds with a low effective cost.

Evaluation
Some of the first thought that appear in our minds when we think about Coke is a company that sells a simple type of product and that have established its name because of their superior quality or product taste. While this may be true, when thoroughly observed, we come to realize that the quality and even taste are not everything. Perhaps they are not even one of the main competitive advantages that coke has. Looking at the company value chain we can clearly see that the primary activities are far more important than the secondary ones. Among those primary activities we can still point out the three parts of the value chain that are directly responsible for the competitive advantages that coke has. They are: In bound logistics: Coke closely monitors the raw materials that are bought because they spend a great amount of money investing in product quality. In addition to offering products in satisfactory conditions, the companies (Suppliers) that do business with coke have to adhere to strict guidelines i.e. Supplier Guiding Principles (SGP). This is to ensure that suppliers follow a pattern of quality. The SGP requires those companies to comply with laws and governmental regulations, ensure strict prohibitions against child labor and overtime work as well as proper health and safety conditions for employees. The Supplier Guiding Principles reflects cokes commitment to respect human rights across its business system and global supply chain. Coke is also committed to creating a Coca Cola Quality pattern which can be extended to all their products. Cocas most recent attempt to boost supply chain efficiencies involves its acquisition of a significant number of independent bottling companies.

Outbound Logistics: The distribution system that coke has can be considered a strong competitive advantage and is perhaps the most significant facet of the value chain. Known as The Coca Cola System, Coca Colas sophisticated distribution network is nothing less than innovative where it involves sea, land and four legged transportation elements. Coke owns leases and operates in over 800 plants around the world. The 2,400 beverage products that they market reach customers in more than 200 geographic locations. However, coke does not accomplish this on its own. They are actually only responsible for producing the syrup that is going to be used in their products and it is the responsibility of the bottlers to convert the raw materials into final products. Coke has over 300 bottling partners, which range from gigantic companies to small family owned corporations. The guidelines set out in the SGP are also valid for the bottlers. The fact that coke outsources some of its operations is an important advantage in the distribution channel because it creates a lighter and flexible company. Taking into account all of the aforementioned; indeed Coca Cola has a truly valuable distribution network Marketing and sales: Although the industry is relatively small and consists of only a few competitors, creativity presents itself as being something vital for coke. Coke aims at building and maintaining a lasting, deeper relationship with its customers. Cokes universal marketing strategy is based on three timeless principles: acceptability - through effective marketing, ensuring Coca-Cola brands are an integral part of consumers daily lives, making Coca-Cola the preferred beverage everywhere, affordability - Coca-Cola guarantees it offers the best price in terms of value for money and availability making sure that Coca-Cola brands are available anywhere people want refreshment, a pervasive penetration of the marketplace. This sector is so important that Coke invests huge sum of money (about 14% of its profit) to utilize various forms of media. This effectively enables them to be easily recognized by consumers across the globe which in itself contributes significantly to Cokes competitive advantage.

Recommendations
Encourage rigorous and regular monitoring to ensure existing labor and quality standards are met and investigate the constraints facing small scale retailer and distributor partners in the Coca-Cola system to identify opportunities to address economic and other barriers to successful growth. Ensure The Coca-Cola Companys Global Responsible Marketing Policies are being effectively and consistently implemented at a regional level.