Value Chain
Value Chain
Value Chain
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.
Value-chain analysis is an analytical framework that assists in identifying business activities that can
create value and competitive advantage to the business. The figure below illustrates the essence of
value chain analysis.
Inbound logistics.
Water is the main ingredient for all products manufactured by Coca Cola Company and the company
occasionally faces significant challenges in accessing this particular raw material. Coca Cola uses high
fructose corn syrup (HFCS) extensively and this raw material is purchased from US-based suppliers and
delivered via trucks. There are also some ingredients that have to be sourced internationally.
Operations. Coca-Cola operating segments are divided into the following 7 groups:
1.Eurasia and Africa
2.Europe
3.Latin America
4.North America
5.Asia Pacific
6.Bottling Investments
7.Corporate
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.
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.
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.
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.
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.