source j _ 75256945 coca cola porter s five forces analysis and diverse value chain activities in...

33
7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 1/33 Coca-Cola Porter's five forces analysis and diverse value-chain activities in different areas  The impact of the Research Councils on the Coca-Cola value chain by creating absolute effective position. Presented to: Prof. Amal El Kurdi Presented by: Roula Jannoun Spring 2011

Upload: pichi94

Post on 20-Feb-2018

220 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 1/33

Coca-Cola Porter's five forces analysis

and diverse value-chain activities in

different areas The impact of the Research Councils on

the Coca-Cola value chain by creating

absolute effective position.

Presented to: Prof. Amal El Kurdi

Presented by: Roula Jannoun

Spring 2011

Page 2: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 2/33

IntroductionCoca-Cola Company is the world's largest nonalcoholic beverage

company.

It offers a portfolio of world class quality sparkling and still beverages, starting with Coca-Cola® and extending through over 400soft drinks, juices, teas, coffees, waters, sports and energy drinks thatrefresh, hydrate, nourish, relax and energize.

Coca-Cola has more than 400 brands are nearly 2,400 beverage products. Four of the world's top-five soft-drink brands are : Coca-Cola, Diet Coke®, Sprite® and Fanta®. Thums Up and Limca, whichare formulated to appeal to local cultures and lifestyles.

With operations in more than 200 countries, we have a diverse

workforce of approximately 55,000 Company employees.Coca Cola family of beverages accounts for approximately 1.3 billion

servings worldwide of the 50 billion beverage servings consumedevery day-a figure that indicates both strength and growth opportunityof the company.

Page 3: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 3/33

SOME BRANDS OF COCA COLA

Page 4: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 4/33

PRODUCTS DESCRIPTIONThe Rejuvenation division offers a range of drinks designed to

improve how people feel physically and mentally. Products include

ready-to-drink coffees, teas and herbal beverages.

The Health & Nutrition division produces a range of products to

 promote health and well being. In the US, its products encompass

Minute Maid Premium 100% juices, Hi-C fruit drinks and MinuteMaid Coolers.

The Replenishment division offers a range of water products aroundthe world. The division also produces a range of energy drinks, suchas PowerAde.Elsewhere in the world, the company has created other productsdesigned to meet the needs of local consumers and communities. Forexample, in Chile, it developed Bibo (Kapo) because mothers wanteda healthy, noncarbonated drink for their children.

Page 5: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 5/33

Coca-Cola System - Production

The Coca-Cola formula is The Coca-Cola Company's secretrecipe for Coca-Cola. As a publicity marketing strategy

started by David W. Woodruff, the company presents theformula as a closely held trade secret known only to a fewemployees.

The actual production and distribution of Coca-Cola followsa franchising model. The Coca-Cola Company only producesa syrup concentrate, which it sells to various bottlersthroughout the world who hold Coca-Cola franchises for oneor more geographical areas. The bottlers produce the finaldrink by mixing the syrup with filtered water and sugar (orartificial sweeteners) and then carbonate it before filling it

into cans and bottles, which the bottlers then sell anddistribute to retail stores, vending machines, restaurants andfood service distributors

Page 6: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 6/33

 The Coca-Cola Company and bottling partners are not one

and the same from a legal or managerial perspective. The

Company's business is focused on creating and marketing brands

and trademarks, while Coca-Cola bottling companies produce

and package the finished beverage products and then sell and

distribute them to retail and wholesale customers.

These bottling partners range from international and publicly

traded businesses to small, family-owned operations. Their

governance and management structures are separate from those

of The Coca-Cola Company.

Page 7: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 7/33

  The company’s bottling relationshipscan be divided into three types:

1.Bottlers in which coca cola company have invested

and have a non-controlling ownership interest;2.Independently owned bottlers in which the company

have no ownership interest;

3.Bottlers in which the company has invested and has

a controlling ownership interest.

Page 8: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 8/33

The Coca-Cola Company owns minority shares in some of its

largest franchisees, like:  Coca-Cola Enterprises,

Coca-Cola Amatil, 

 Coca-Cola Hellenic Bottling Company (CCHBC)

Coca-Cola FEMSA,

While fully independent bottlers produce almost half of the

volume sold in the world. Since independent bottlers add sugar

and sweeteners, the sweetness of the drink differs in various parts

of the world, to cater for local tastes.

Page 9: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 9/33

Coca- Cola Suppliers

  Suppliers include those business partners whosupply system with materials, includingingredients, packaging and machinery as well as

goods and services. At a minimum, all authorizedand direct suppliers must comply with allapplicable laws and regulations, including thoseconcerning child labor, forced labor, abuse oflabor, freedom of association and collective

 bargaining, discrimination, wages and benefits,working hours and overtime, health and safety,and environmental practices.

Page 10: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 10/33

  Coca- Cola Customers 

  Customers include large, internationalchains of retailers and restaurants, as well assmall, independent businesses. Some of our

customers are major corporations as globallyfamiliar as the name Coca-Cola; others arethe corner market or the local pushcart

vendor.

Page 11: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 11/33

Departments of Coca Cola

  Every organization is made up of different departments,each of these departments help Coca Cola achieve theirobjectives.

As Coca Cola is a large International company, the amounts

of departments are huge. Each country has their own HeadOffice and departments.

 Coca Cola is geographically split into five geographicoperating segments, also known as strategic business units

(SBU's). The five SBU's are North America, Africa, Asia,Europe, Eurasia and Middle East and finally Latin America.If all these departments perform in the correct way then thatwill continue the success of Coca Cola.

Page 12: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 12/33

Coca- Cola In IndiaCoca-Cola was the leading soft drink brand in India until 1977

when it left rather than reveal its formula to the government

and reduce its equity stake as required under the ForeignExchange Regulation Act (FERA) which governed theoperations of foreign companies in India

After a 16-years absence, Coca-Cola returned to India in 1993

Coca-Cola India started business, including new productionfacilities, wastewater treatment plants, distribution systems andmarketing equipment.

 Coca-Cola system has invested more than US$ 1 billion inIndia

Coca-Cola is one of the country's top international investors

Page 13: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 13/33

It employs approximately 6,000 people, and indirectly creates employmentfor more than 125,000 people in related industries through vast

 procurement, supply and distribution system

The Coca-Cola system in India comprises 27 wholly-owned company-owned bottling operations and another 17 franchisee-owned bottlingoperations

The complexity of the Indian market is reflected in the distribution fleet,which includes 10-tonne trucks, open-bay three-wheelers that can navigatethe narrow alleyways of Indian cities, and trademarked tricycles and

 pushcarts.

 Coca-Cola serves in India some of the most recalled brands across theworld, which include names such as Coca-Cola, Diet Coke, Sprite, Fanta,

along with the Schweppes product range.In 2002, Coca-Cola India (CCI) launched a new advertisement campaign

featuring leading bollywood actor - Aamir Khan. The advertisement withthe tag line - 'Thanda Matlab Coca-Cola ' was targeted at rural and semi-urban consumers.

Page 14: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 14/33

Executive Summary

A company that fully understands the importance of value

chain in business is the Coca-Cola Company. A global leaderin the beverage industry, the Coca-Cola Company furtherindulges in enhancing their value propositions as aninstrument to create ‘virtuous cycles of geographic expansion'and thus greater advantage. Coca-Cola owns the most

important elements of the value chain such as the brand, thetechnology, the management, the marketing expertise and therelationships

This search includes Coca-Cola SWOT Analysis, Porter's five

forces analysis and diverse value-chain activities in differentareas. In addition, the search presented the interplay betweenthe Research Councils and how it impacts Coke's value chainas well as creating the absolute effective position.

Page 15: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 15/33

  COCA- COLA SWOT ANALYSIS

STRENGTHS

Strong brand name

Co-operate identity

 Global distribution

 Innovative capabilities: Coca-Cola Increases Marketing and

Innovation Spending to $400M Globally Coke Brands Enjoy a High-Profile Global Presence

Broad-based bottling strategy

47% of global volume sales in carbonates

WEAKNESSES Carbonates Market is in Decline

Over-complexity of relationship with bottlers in North America

The existing distribution system is not so efficient for non carbonates

Page 16: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 16/33

OPPURTUNITIES Expansion –  Reaching all segments

Catering to Health Consciousness of People

Soft drinks volumes in the Asia- Pacific region forecast to increase by

over 45%

Use distribution strengths in Eastern Europe and Latin America

Increased Consumer Concerns with Regard to Drinking Water

THREATS  Health Drinks –  Fruit Juice Companies

Competition-Pepsi

Boycott in the Middle East

or er s orces mo e

Page 17: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 17/33

or er s orces mo e 

The five forces model of Porter is and outside-in business unit

 strategy tool that is used to make an analysis of theattractiveness (value…) of an industry structure 

Allows the development of a competitive strategy

Suggests 5 main forces may be decisive in helping shape the

outcome:

Suppliers

 New entrants

Substitutes

Buyers

Rivalry (Industrial competitors)

Page 18: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 18/33

Coca-Cola : Porter’s Five Forces 

Rivalry ( Condition

concentrated on 2 main

Coca-Cola

Pepsi

Substitutes (Wilde and Thick

causing a significant decline inCoca-Cola profits . To reduce the

threats it embraced bottling and

concentrated on diversification

Teas

Milk Coffee

Juice

Alcoholic drinks

Bottled water

Energetic drinks

Other refreshments

Page 19: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 19/33

Coca-Cola : Porter’s Five Forces (Cont.) Barriers to Entry (Penetrating the soft

drink industry is hard because of the

established name of Coca-Cola,

Exclusive Territories

Direct-store-delivery (DSD)

Substantial Investment

Current Market Presence of Coca-Cola

Coca-Cola has long-term relationshipswith their retailers and distributorsmaking possible the defense of the position by means of discounts and

other tactics, and regulation make itimpossible for new bottlers to enterareas where an existing bottler operates.

Power of Suppliers

Sugar

Packaging

Bargaining power of suppliers is lowdue to two reasons.

First, the main inputs are sugar and

 packaging. Sources of sugar are on theopen market which subsequently makesthe creation power of suppliers at lowlevels. There are several suppliers for packaging as well as the abundance insupply of inexpensive aluminum.

Second, direct negotiations fromconcentrate producers to suppliers are present; an initiative to encourage reliablesupply, faster delivery and lower prices.

Page 20: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 20/33

Coca-Cola : Porter’s Five Forces (Cont.) 

Bargaining Power of Buyers depends on the marketing channel used.For Coca-Cola, there are six core channels such as:

Super Markets

Convenience Stores

Mass Merchandisers

Fountain

vending machine

Restaurants and Food stores

Bargaining power of buyer is high for fountain supermarkets andmass merchandising because of the low profitability and strongnegotiation power of retail channels but for vending bargaining

 power is non-existing caused by high profitability.

Page 21: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 21/33

Porter’s value chain: Overview 

Understanding Where To Explore

Infrastructure

Financial

Management

Human Resources

Sales

&

Marketing

Outbound

LogisticsProcess

Inbound

logistics Aftercare

   S  u  p  p  o  r   t   A  c   t

   i  v   i   t   i  e  s

   P  r   i  m  a  r  y   A  c   t   i  v   i   t   i  e

  s

Source: Porter,1985

Page 22: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 22/33

Coca-Cola Value Chain 

The purpose of Coca-Cola 's value chain is divided into four areasnamely shareholder, consumer, business operation and key processes.

1. To deliver superior returns to its shareholders is the mission of the Coca-Cola value chain. The key elements to achieve this end are a strong brandequity and revenue management that is comprised of sales, volume,

 pricing and costs

2. Consumers and customers are the focal points of the value chain driven by

 brand preference, pervasive market penetration and superior price/valueratio.

3. Operational drivers are identified as the strategic metrics, processexcellence and organizational excellence.

4. Key processes are further divided into five key functions: Consumer and

Customer Service Systems, Demand and Operations Planning,Warehousing and Logistics, Manufacturing, and Infrastructure Planningand Development

Page 23: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 23/33

Coca-Cola Value Chain (Cont.)  There are four enablers in Coca-Cola's value chain. These :

1. Coca-Cola's suppliers include business partners that provide the company with rawmaterials such as ingredients, packaging, machinery and services. Authorized and direct

suppliers are subjected to comply with all applicable laws and regulations specially whichtackles just employment practices. In addition, these suppliers must comply with thecompany's Supplier Guiding Principles.

2. Coca-Cola 's customers range from far-reaching, international chains of retailers andrestaurants to major corporations to small and independent businesses to corner marketsdown to local pushcart vendors. Coca-Cola works with these people for the purpose ofcreating mutual benefits alongside their bottling partners. To assist them in their initiative,serving the customers are assisted by account management teams that provides service andsupport tailored to the need of the customers.

3. Coca-Cola Retailing Research Councils provide research concerning issues that havesignificant impacts on the food retailing industry. Within the company, there existscollaborative customer relationship process. The purpose of this collaboration is to improveshopper marketing and supply chain collaboration. Acceleration of innovation in order to provide superior beverage selections to every customer is another aim of the collaboration.

4. Coca-Cola Customer Development and Training provide support to smaller customers in

terms of making their business more efficient and profitable. In different areas of operation,Coca-Cola had established customer development training centers. Through this, theexchange of information about broadening the range of beverages offered, providingnutritional information and ensuring beverages are marketed responsibly

.

oca- o a s va ue c a n n a ves cou e summe up n areas:

Page 24: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 24/33

oca o a s va ue c a n n a ves cou e summe up n areas:

1. Supplies of Components and Materials : Coke has a relatively wide range ofcooperation among its suppliers. The company has generally not experienceddifficulties obtaining raw materials. Through the assistance of Coca-Cola Bottlers' Salesand Service, Coke purchase materials like nutritive sweeteners and non-nutritive

sweeteners and bottling requirements with different companies like The NutraSweetCompany, Ajinomoto Co., Inc., Nutrinova Nutrition Specialties & Food Ingredients andTate & Lyle.

2. Purchasing: Order sizes depended on customers or sales volume per person, frequencyof visit based history and order collection based on customer attributes, made possiblethrough order collection personnel. Variables are geography, density and logistics.Moreover, total value of purchase is highly-reliant on the purchase agreement betweenCoke and suppliers. In general, the total value of purchase over time per supplier is 43%in terms of value and 36 % by volume on just-in-time basis.

3. Inventory Holding: Coke has 68 days inventory on hand and has 5.7927 inventoryturns. The figures mean that Coke sells its entire inventory 5.79 times each year.

4. R&D/Design/Engineering: Coca-Cola has a patent portfolio inside and outside the US,800 and 1800, respectively; relating to various beverages with related technologies.Apart from product formulation as the trade secret, technologies complementary tothese are packaging, vending equipment, fountain equipment and water treatment.Driven by the consumer value proposition, R&D is the core commitment.Implementation of strategies has been modified in efforts to allow more freedom tolocal operating divisions. R&D is not outsourced but works jointly with development

 partners.

oca- o a s va ue c a n n a ves cou e summe up n areas:

Page 25: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 25/33

oca o a s va ue c a n n a ves cou e summe up n areas:

5. Component Manufacture: The three largest components within thesystem are manufacturing, fleet/transport and sales/marketing equipment.There are nearly 850 plants in the manufacturing process, with system'sfleet of approximately 200, 000 vehicles to transport ingredients,

 packaging and finished beverages.Beverage concentrates are shipped to bottling operations by sea whilefinished beverages are mostly transported by road into distributors andretail customers.There are 9 million vending machine and coolers that keep products cold.These components are placed in 200+ countries of operation.

5. Testing/Quality Control: Coke uses different technology to control product quality like the Chemunex. Coca-Cola invested in real-time microbiology analyzer or the D-count. Such technology isadapted because of: quantitative analysis with satisfying detectionlimit, automated analysis with reduction of the analytical time,reliability of the results and robustness of the system for anintensive routing use.

oca- o a s va ue c a n n a ves cou e summe up n areas:

Page 26: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 26/33

oca o a s va ue c a n n a ves cou e summe up n areas:

7. Inventories of Final Goods: The selling numbers of Coca-Cola ranges from 9

glasses per day to over six trillion from the period of 1886 to 2003. Getting from

this, we can determine that the unpredictability of sales follow a logical pattern

that serves as indicators of the amount Coke produced and sold.Given the lack of cyclicality in different segments, the company invested in

raising advertising budget into 38%.

8. Sales and Marketing: Coca-Cola is getting their products advertised more

frequently by means of own advertising as well as through sponsorships and other

organizations. For example, Coca-Cola products appear in McDonald's

advertisements, appearing on side boards of basketball arenas and other sporting

events and also appearing on social events as sponsors in effort to be a household

 product and to demonstrate goodwill.

Marketing also depended on the targeting of Coca-Cola products at individuals

and groups of all ages and demographics. Marketing, in addition, comes in

different styles and forms such as network television, radio and print media. To

achieve brand visibility and become well-known to widest possible markets and

most consumers reach, a number of new commercials are introduced each year.

oca- o a s va ue c a n n a ves cou e summe up n areas:

Page 27: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 27/33

oca o a s va ue c a n n a ves cou e summe up n areas:

9. Distribution: In the distribution of products, the wholesalers have no

involvement; but rather conform to agent network. The company divides

a country into various regions and established a franchisee within these

regions. Franchisees have own bottling plants and has the autonomy tomanage daily operations

10. Service/Dealer Support: Within each region are different dealers that

orders through three primary categories: bulk, side load and full service.

Coca-Cola system ensures that dealerships are assisted upon. So thecompany opened their distribution system and embraced the DSD system

or the direct-to-store concept. The movement is from wholesalers

channels into Direct-store-delivery DSD channels.

Coca-Cola Retailing Research Councils – Impact on

Page 28: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 28/33

Coca-Cola Retailing Research Councils    Impact onInnovation and Products

 

Research Councils conduct different studies on issues that could possible assistretailers to respond to the ever-changing marketplace. According to the company,the unique value of these activities is vested on the fact that retailers define the

objective, the scope of each project and own the process after it was released anddisseminated to the broader retail community .

There are five council members: Asia, Europe, Latin and North America and National Association of Convenience Stores (NACS). Such councils are cashingin on research to innovations of product portfolio by means of introducing new

concepts and ideas about merchandising and store formats as well as ideageneration for connecting store performance and the actions of store managementteams as examples of retail innovations.

Products-wise, the Council aimed at ensuring sustainable products andresponsibly-sourced and traceable products as well as eco-friendly packaging, and

this product must be accessible at reasonable prices. Ensuring product assortmentis also under the Council's scrutiny to further guarantee innovative health goods.Assortment for Coca-Cola means small/fractionable, to consume right after ataffordable prices

Coca-Cola Retailing Research Councils –

Page 29: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 29/33

Coca Cola Retailing Research Councils    Interconnection with the Value Chain

 

Research Council removes unnecessary costs that could be incurred from distributionand supply systems; increase consumer choice and reduces overall costs of inventoriesand physical assets. Apart from this, the Research Councils are the key towards

achieving Class A standards as part of the CPE program. CPE stands for ConstantPursuit of Excellence. Such program is initiated within the Coca-Cola system in orderto support growth, to improve customer service and to increase market responsiveness.These are evidenced by the following:

1. Inventory levels are down: Each of the facilities and components such as the concentratemanufacturing facilities and canning plant that received Class A rates obtained significant

 progress in inventory turnover, with specific facilities that accomplished the number ofweeks of inventory on hand declined between 50 to 75%.

2. Improved productivity Level of quality targets within these facilities, whether for products, bottles or cans, coupled with high responsiveness to production experienced productivity gain of 85% to 100%.

3. Improved customer delivery performanceIn different facilities, order fulfillment and delivery are technically reported to be 100% ontime. In fact, the time since the last missed shipment is measured in years, not days, weeksor months. For Coke, this is just a part of putting value not just to the products but on

 punctuality and customer responsiveness. 

Coca-Cola Retailing Research Councils –

Page 30: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 30/33

Coca Cola Retailing Research Councils    Interconnection with the Value Chain

 

4. Better supplier delivery performance: Prior to acquiring the Class A rate, the performance of the supplier is measured to be falling between 50 to 75%. But right afterthe complete integration of CPE, while taking into critical account of the ResearchCouncils' role, worldwide facilities had experienced supplier on-time delivery

 performance of higher than 95%.

5.  Improved business processes: For different processes like purchasing and customerorder processing, there had been a large reduction in cycle times.

6. High data integrity Inside different Coke facilities, inventory record accuracy and bill ofmaterial accuracy is reported to be 99-100% and 100%, respectively.

7.  Decline in cost of goods: The reductions, as high as 20%, in each facility annually isviewed to be a significant improvement.

8. High team spirit: Communications within and between marketing, finance, qualityassurance and manufacturing are improved with respect to the global teams.The focus of the company is on holistic improvement instead of systems replacement thatcenters on the development of the business operation in different levels but mostsignificantly on the retailing. Implementations are the key towards proactivefunctionality within manageable and actionable initiatives. Coca-Cola 's plan is onefacility at a time with decision-making that is based on anticipated benefits.

Page 31: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 31/33

Coca-Cola –  Creation of the Absolute Effective Position 

1. Coca-Cola continued to deliver unit case volume growth. Been ranking –  4 of the

top 5 nonalcoholic sparkling beverage brands are owned by the Coca-Cola.

2. Brand-wise, the original Coca-Cola is still the best known brand globally Evidently,the beverage leadership position is delivered by how consumers can more around

the Coke portfolio depending on their needs at different stages of their lives.

3. Financially, the Coca-Cola Company reported in February 2007 that profit jumpedof about 18% with net income nearly $6B - $5.98 billion on $28.9 billion in

revenue. Further, Coca-Cola and its bottling partners delivered unit case volumegrowth of 6% for the year 2007 and four consecutive quarters of double-digitearnings per share growth. Worldwide, the sparkling beverage volume increased by4% and the still beverages by 12%.

4. In terms of systemic integration, adding value with its bottling partners, there had been the existence of collaboration, support and shared values and goals andthrough its customers, Coke brands were made possible for the consumption in localcommunities. Driven by the Coca-Cola system, the company is now no. 1 in sales ofsparkling beverages, juices and juice drinks, no. 2 in sales of sports drinks and no. 3in sales of bottled water.

Page 32: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 32/33

Conclusion 

At Coke, the creation of the absolute effective position is central on investing

on Coca-Cola Retailing Research Councils. Along with its four key processes,

Coke creates value through proactively engaging their retailers at technicallyevery levels of the value chain from raw materials down to end-products.

Conforming to holistic improvements, Coke strategically put value to store

management, providing consumers with the right to choose while also

enjoying the health benefits of its brands.

More than complying to standards and acquiring first rates, Coke aimed atenhancing the shopping experience and enjoyment of refreshments which are

reflected in the figures they accumulate coupled with ethical operation.

Page 33: Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

7/24/2019 Source j _ 75256945 Coca Cola Porter s Five Forces Analysis and Diverse Value Chain Activities in Different Areas

http://slidepdf.com/reader/full/source-j-75256945-coca-cola-porter-s-five-forces-analysis-and-diverse-value 33/33