Coca-Cola Value Chain Analysis

This report provides an analysis of Coca-Cola's value chain, SWOT analysis, competitor analysis, and supply chain mapping. It discusses the company's strengths, weaknesses, opportunities, and threats. The report also provides insights into Coca-Cola's upstream and downstream activities, bottling partners, and franchises.

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Coca-Cola Value Chain Analysis
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Coca-Cola Value Chain Analysis
Introduction
Coca-Cola company is one of the largest beverage companies all around the world. The
company supply chain is one of the largest also in the entire world where it supplies over 500
different brands in over 200 countries all around the world (Jackson & Singh, 2015). Coca-Cola
is US based company where its headquarters is in Atlanta, Georgia. Coca-Cola is considered to
be in existence for over 150 years which has led to the company to continue growth in its brand
and market expansion making it the largest non-alcoholic beverage company in the world. The
company most recognized brands include sprite, Diet Coke, Fanta, Minute Maid, Powerade, and
Coca-Cola zero. In its brand portfolio, the most valuable brand is Coca Cola which is estimated
to be worth over $70,667 million (Gattorna, 2017).
Currently, the main focus on the company is to re-establish its approaches to serve the
entire community and promote the social development. In terms of region domination, Middle
East is one of the few major areas where Coca-Cola has not been able to capture effectively and
the only region where the company cannot be considered as the main leading company (Sodhi &
Tang, 2014). Due to the increasing competition, Coca-Cola has been forced to operate under
very effective distribution system in consideration of the continuous changes in the market.
Coca-Cola SWOT Analysis
Coca-Cola Strength
The main strength of the company is its brand recognition in the beverage market. The
position of the company in the market is also very strong which has been contributed by years of
strategizing with little competition in the market unlike currently where competition is

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considered to be very high (Jackson & Singh, 2015). The company has also a large percentage of
loyal customers who are estimated to contribute approximately 80% of the total revenue of the
company.
Coca Cola’s internal weakness
Over the past decade, the company has faced various criticism majorly including its
weakness in corporate social responsibility in its major operation sites example India as one of
the majorly affects countries. The health concern on the company products has also been one of
the main weakness in the company. With over 500 different brands, most of the brands have low
popularity thus also affecting revenue income of the company (Gattorna, 2017).
Coca-sCola’s external opportunities
Despite its large dominance in the market, Coca-Cola has very large untapped markets
which majorly comprise of Middle East region, Asia, and Africa markets. The unpopular
products have also a very huge potential for growth with the application of proper marketing and
distribution channels (Sodhi & Tang, 2014). With its brand power, Coca-Cola has the potential
of increasing the market gap between its competitors such as Pepsi.
Coca-Cola’s external Threats
As stated earlier one of the increasing threat for Coca-Cola is the continuous increase in
competition in the market. The company products have also continued to face various criticism
with respect to consumer health. The company has been reported to be also losing its popularity
in the market where drinking habit has changed (Lambert & Schwieterman, 2012). Most of the
widely consumed drinks today major comprise energy drinks and healthier brands in the

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beverage. The suit law has also been described as one of the major threats facing the company
operates in most of the countries.
Competitor’s Analysis
The soft drink market has continued to be one of the most competitive industries today.
In the USA, Coca-Cola has successfully been able to retain its dominance where other company
brands such as Fanta and Sprite have continued to grow in terms of popularity which has
enhanced the position of the company (Higbie Jr, Cross, BIPPERT, Lennon, Lee, & Anglea,
2018). Currently, Coca-Cola controls more than 38% of the total market share where its followed
by Pepsi with the control of about 22% of the total market share. The US alone generates about
43% of the total revenue which makes it the largest and strongest market in the company.
Despite the company leading advantage, the Coca-Cola management still believes it’s not a
victory for the company as some of its competitors such as Pepsi have been reported to also
increase their value-adding concept in various levels (Lambert & Schwieterman, 2012).
Through brands such as Mexican kola, Corsica Cola in France, Irn-Bru in Scotland, and
RC Cola in Israel, Pepsi has been able to beat Coca-Cola in various regions making it as one of
the strongest competitors threatening Coca-Cola. One of the main competitor’s competitive
advantage is the approach of healthier products in the market. The health concern has led to the
rise of various companies such as Red Bull energy drink which is majorly consumed product by
the young target market (Fernie, 2014). On the other hand, Coca-Cola has also the wide scale of
competitive advantages which include patent regulation, brand equity, and strong market brand.
The pursue by the company to also integrate its operations as ‘green-oriented’ has also improved
the company reputation and position in the market. Another competitive advantage that has
managed to enhance the company performance is its intensive input in R&D. This has led to the

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growth of healthier products such as Coca-Cola zero sugar which has been described to perform
even much better in new markets (Wisner, Tan, & Leong, 2014).
Coca-Cola Supply Chain Mapping and Analysis
According to Leidner (2010), the supply chain of Coca-Cola company is of the most
unique and efficient supply chain strategies in the world. The main activity involved in the
distribution system is that Coca-Cola only produces Syrup which is later transported to the
different bottler agencies distributed all over the world. Coca-Cola is also an owner of some of
the bottler agencies such as the Coca-Cola Refreshments located in North America. The
ownership of the bottler companies is majorly characterized by the type of the market where
Coca-Cola opts to directly control bottler companies which are located in sensitive and
concentrated markets. After the production process, Bottlers are the one with a mandate of
supplying products in the respective markets i.e. retail stores, restaurants, vending machines, and
other foodservice distributors (Monczka, Handfield, Giunipero, & Patterson, 2015). Coca-Cola
supply chain is redistributed into various levels which majorly include Upstream activities and
Downstream activities.
The upstream of activities majorly comprise the production of syrup concentration. One
of the main approaches of this activity is to secure the formula of the syrup. This has been
perceived as one of the greatest attributes of the company which is over 150 years the company
has been existence it has managed to protect its formula ingredients from its competitors. It
reported that the main formula is kept in SunTrust Bank vault, Atlanta. According to the 2017
company report, the operating margin was estimated to be around 28% where the cost of goods
sold was in excess of 15 million dollars (Ellinger, Natarajarathinam, Adams, Gray, Hofman, &
O’Marah, 2011). The company uses various approaches to track down the global price of its

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major commodities it uses in its production which major consist of sugar, high-fructose corn
syrup, sucrose, Carbonated water, Natural flavorings, and phosphoric acid v. Caramel (E150d),
which are the main used products in the production of syrup. Coca-Cola majorly relies on its
long-term supply partners in order to have a successful supply of required raw material in the
upstream activities (Sáenz & Revilla, 2014).
The downstream activities in Coca-Cola company majorly comprise of activities such as
manufacturing of the final product and distribution channels used by the company to reach the
targeted market. Coca-Cola mainly utilizes the application franchises in order to redistribute its
product effectively (Monczka et al., 2015). As stated earlier, Coca-Cola company only produces
the required syrup for production of various brands which later sold to the respective bottlers in
different regions. Apart from some of the bottlers which are wholly owned by the company,
Coca-Cola also has shares in some of the major franchises which include Coca-Cola Amatil,
Coca-Cola FEMSA, Coca-Cola Hellenic Bottling Company (CCHBC), and Coca-Cola
Enterprises (Waters, 2011). However, the partially owned franchises only produce half of the
Coca-Cola Products while the other half is produced by the fully independent franchises. One of
the significant attributes of this system is that independent franchisees are allowed to ‘modify’
products so that it can perform much better in the local market (Ghosh & Shah, 2015).
In the partnership program, Coca-Cola only layout the basic requirements such as final
product standards and others issues that pertain the company image. Unlike in the event where
Coca-Cola would control its entire market share, the company enjoys a wide range of benefits
which are only accessible with the partnership of franchises. Through the franchises, the
company is faced with some of the heavy international taxations or any kind of restrictions
which may be imposed on multinational organization so as to protect local firms. The main body

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that is mandated with the responsibility of selling concentrated syrup to franchises is known as
Coca-Cola Export Corporation (TCCEC) (Colicchia, Melacini, & Perotti, 2011). The TCCEC
offices are widely located in all major franchised regions where Bottler companies can be able to
request their amounts and at the same have easy access to the syrups. Its only in the US that
TCCEC is authorized to sell fountain syrup to the franchises whereas in other region TCCEC is
responsible for the entire manufacturing process and only sell the final product to the retailers
and wholesalers (Leidner, 2010).
To have an equitable supply chain in the entire company, Coca-Cola has some basic
guidelines which are supposed to follow by all the franchises i.e. the bottling partners. This is to
allow effective centralization in the company decision-making process and to be able to meet the
supply-demand and quality in the market (Ellinger et al., 2011). For effective redistribution in
the company supply chain, the company has major head offices in various market regions. The
company head offices are responsible for all the major operations in the company supply chain
which offers the company a very effective direct monitoring system. The company head offices
are also responsible for allocating bottlers in different market regions where they can be able to
have production advantage (Tanwar, 2013). Bottler companies also have a significant role to
play in the company supply chain where they are responsible for linking the production plants
with the entire market through the most effective distribution ways in respect to the regional
infrastructure. In some of the undeveloped regions, Coca-Cola has picked-up the effort of
building an effective distribution systems such as roads and other easily accessible contact points
with the market.
Recommendation and Conclusion

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Through the above report and analysis of the Coca-Cola supply, the main thing the
system lacks is effective communication in the distribution system. With the increase in
globalization and industrialization, the company supply chain requires to be very flexible with
respect to the continuous changes in the market. The communication challenge has been majorly
perceived in consumer part where the supply chain locks out the consumer engagement in the
production process (Leidner, 2010). This has been one of the main reasons why the issue of CSR
has continued to be a challenging encounter in Coca-Cola company. On the same note, due to
communication challenges the other recommendation that should be implemented is the
improvement of transparency between bottlers and TCCEC. This has been a major challenge in
the Asian market where TCCEC and bottlers have continuous arising challenges majorly in sales
quotas (Tanwar, 2013).
In improving company efficiency, Coca-Cola should also re-evaluate its TCCEC
regulation and part it plays in the supply chain system. Example, in some of the major markets
such as the US, UK, China, and India, the TCCEC should be allowed to bypass the partnership
program with bottlers and conduct the entire manufacturing process (Sáenz & Revilla, 2014).
The TCCEC should therefore only provide finished products to retailers and wholesaler where an
example in the US, bypassing bottlers, the TCCEC can be able to deal directly with retailers such
as Walmart. Through this main approach, the company will be able to improve its lag time and at
the same time reduce its lead time (Higbie Jr et al., 2018).
In summary, Coca-Cola company can be characterized as the largest soft drink company
in the world where over the years it has also continued to improve in its distribution system. The
Company main supply chain activity includes the production of syrup which is later sold to the
independent bottlers who manufacture the final product and they are also responsible for the

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distribution of the product to the targeted market. I believe the use of the franchises are one of
the competitive advantages the company has been able to fully optimize on and strongly capture
respective markets. For example, through the use of franchises, Coca-Cola has been able to
expand its brand portfolio, and engage more effectively with local markets. Through the
implementation of the above recommendation, the company will be able to significantly improve
its supply chain efficiency and standard quality of the growing market. This will also help the
company to eliminate the CRS issues and improve its shareholder engagement methods (Kumar,
Teichman, & Timpernagel, 2012).

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