ASSIGNMENT – 01

SUBJECT : CORPORATE STRATEGY

TOPIC : COMPETATIVE ADVANTAGES
& VALUE CHAIN OF COCO COLA
COMPANY LTD.
 TABLE OF CONTENTS
1. INTRODUCTION
2. VALUE CHAIN ANALYSIS
3. COMPETITIVE ANALYSIS
4. CONCLUSION

INTODUCTION
On May 8, 1886, Dr. John Pemberton sold the first glass of Coca-Cola
at Jacobs' Pharmacy in downtown Atlanta. Serving nine drinks per day in
its first year, Coca-Cola was new refreshment in its beginning. See the
story here of how it all began.

Primary Activities in Coca Cola Value Chain Analysis

Primary activities are directly responsible for the creation and delivery of
products. According to Porter's model, there are five critical areas in
primary activities.

1. Inbound Logistics
2. Operations
3. Outbound Logistics
4. Marketing and Sales
5. Services

Let’s discuss these activities regarding the Coca-Cola value chain

analysis.
Inbound Logistics:

Inbound logistics in the Coca-Cola value chain comprise receiving,

storing, and distribution of the inputs of the products. We relate it to
bringing raw material from the source to the company. Coca-Cola has a
large supply chain. Coca-Cola endeavours to gain a competitive
advantage at this first step. It treats the suppliers in the value chain as
business partners. However, the suppliers also have to adhere to some
rules according to applicable laws and regulations. Coca-Cola also
believes in responsible environmental and workplace policies and
practices.

Operations:

Coca-Cola is a global business. However, it operates through local

channels. Coca-Cola has its beverage lines along with companies with
bottling partners. However, it does not own the partners or their
products. It manufactures and sells beverage bases and syrups.

Outbound Logistics:

Coca-Cola ensures that thousands of retailers globally are consistently

well stocked with a variety of Coca-Cola products. They used a similar
principle for industrial clients. Timely delivery, secure transport, and
efficient delivery are the foundation of a smooth-running Coca-Cola
value chain. This cultivates strong retailer relationships and continued
customer loyalty.

Marketing and Sales:

Coca-Cola is a globally recognized brand. Therefore, the marketing

endeavours of the company must have been phenomenal. The Coca-
Cola logo is one of the most popular and recognized logos. Coca-Cola
engages digital channels, social media, print media, and outdoor
marketing to influence the customers and make an identity.

Coca Cola value chain analysis shows that it focuses on a single

marketing strategy that promotes all its brands in a unified effort.
Service:

The pre-sale and post-sale services by the Coca-Cola Company help gain
customer loyalty. Coca-Cola has a very efficient call center and online
presence globally to cater to its clients and solve their queries.

COMPETITIVE ANALYSIS
1. Threat of New Entry
Coca-Cola dominates more than three-fourths of the non-alcoholic
beverage market and the remainder of the market is dominated by Pepsi
, therefore Coca-Cola is an oligopoly. An oligopoly is where two firms
dominate, and it would be hard for new non-alcoholic beverage
manufacturer to break into the global market (Levitt, 1983). Coca-Cola’s
level of customer loyalty in the beverage industry is unprecedented and
for any brand to build customer loyalty it will take some time.

2. Competitive Rivalry
When thinking about Coca-Cola and its competitors, Pepsi is likely one
of the primary organizations that to come to mind. The two companies
have been in competition with each other for more than a century. They
have very similar ingredients in their flagship beverage products: Coke
and Pepsi. The two companies also have similar still beverage interests,
such as milk, orange juice and bottled water. Most importantly, if trends
continue to decline within the sparkling beverage market, Pepsi has the
ability to leverage its other product lines (Strom, 2014). Coca-Cola does
not have the same opportunity because of heave dependency on the
carbonated beverage industry and lack of diversification efforts into
other industries. Coca-Cola could be left vulnerable.

3.Threat of Substitution
The threat of substitution is high for Coca-Cola, there are a multitude of
organizations in the United States and internationally that offer
substitute products such as carbonated drinks, fruit juices, milk, coffee,
and teas. Furthermore, there are low costs involved for consumers if they
chose to purchase alternative beverages offered in the market place.
Consequently, the quality of the substitute products is comparable to
Coca-Cola (Butler, 2017).

4.Buyer Power
With regards to the commercial beverage industry, buyers have an
advantage of bargaining power, and this affects Coca-Cola’s profitability
directly. Coca-Cola does not sell directly to its consumers. Coca-Cola
depends on the sales of concentrates and syrups to independent
bottling partners (The Coca-Company, 2017). Coca-Cola’s success
depends on the financial condition and profitability of distribution
organization such as fast food chains, vending machine companies, and
grocery stores. Ultimately, Coca-Cola must sell its product to distribution
networks and other customers at prices low enough that they can sell to
the consumer that results in profitability and customer loyalty.

5. Supplier Power
Lastly, the final competitive force of the analysis is: Coca-Cola’s suppliers.
By forming strategic partnerships and agreements with suppliers, Coca-
Cola strives to standardize pricing. However, Coca-Cola’s usage of
commodities in manufacturing such as orange and fruit juice
concentrates, sugar, and additional derivatives prices can fluctuate. Per
Coca-Cola’s 10-K report, “Increases in the prices of our finished products
resulting from a higher cost of ingredients, other raw materials and
packaging materials could affect affordability in some markets and
reduce Coca-Cola system sales” (The Coca-Cola Company, p.14, 2017). If
substantial increases in pricing for raw materials occur, Coca- Cola does
not have the ability to pass the change to their customers. Thus,
increased supplier pricing increases operational costs which could
reduce Coca-Cola’s profitability and adversely affect bargaining power
with suppliers.
CONCLUSION
Taking everything into account, Coca-Cola is broadly viewed as the world
pioneer of the commercial beverage industry because of its very
developed reputation. The organization itself is one of the longest
surviving brands surpassing 130 years of business and their intentions
are to continue to maintain their stance in the market. By reinventing
and reestablishing their business strategy geared towards innovation;