SOE11440 - Developing Competitive Advantage at Coca-Cola Beverages

This report provides a comprehensive analysis of Coca-Cola Beverages Sri Lanka Ltd.'s competitive advantages within the Sri Lankan economic environment. It begins by outlining the current economic landscape and its impact on the beverage industry, highlighting Coca-Cola's role in foreign exchange earnings, innovation, and rural economy upliftment. The report then assesses the company's current competitive position using Michael Porter's Five Forces, evaluating factors such as the threat of new entrants, substitute products, bargaining power of buyers and suppliers, and rivalry among existing firms. Furthermore, it explores Coca-Cola's brand name, product packaging, and target marketing strategies as key competitive advantages. Looking ahead, the report discusses the company's strategic goals for the next three years, focusing on revenue maximization, productivity improvements, brand investment, and portfolio expansion. The report concludes by suggesting strategies for achieving these goals, including cost reduction, marketing enhancements, and supply chain optimization, emphasizing the importance of continuous improvement and adaptability in a dynamic market.

Running head: Developing Competitive Advantage
Developing Competitive Advantage

Developing Competitive Advantage 1
Executive Summary
In the business, competitive advantage is the feature which permits the company to outwit its
competitors. A competitive advantage may consist of access to the natural resources,
geographical locations, high entry barriers, highly expertized labor and easy accessibility to new
technology by the company. Competitive advantage refers to the situations where the company
creates goods or services at a comparatively lower price but at the same value at which its
competitors are manufacturing.
These situations allow the company to create more sales and more profit margins as compared to
its rivals. The competitive advantage is attributed to a variety of factors such as branding, cost
structure, the quality of product offered, the intellectual property rights and the customer services
offered by the company.
So, in this report, the economic environment of the Coca-Cola Beverages Sri Lanka Ltd. would
be analyzed along with assessing the competitive advantage in the context of current and future
scenario of the company. Also, recommendations would be given for developing the competitive
advantage of the company for reaching at the desired position in the next three years.

Developing Competitive Advantage 2
Contents
Introduction.................................................................................................................................................3
Brief summary statement of the economic environment the company is likely to be operating in............4
Where are we now?....................................................................................................................................4
Where do we want to be?...........................................................................................................................6
How do we get there?.................................................................................................................................8
Conclusion.................................................................................................................................................10
References.................................................................................................................................................11

Developing Competitive Advantage 3
Introduction
Competitive Advantage is the situation which allows a company to manufacture the products or
create services at a lower price but with the same or superior quality which its competitors are
producing. It helps in generating greater value for the company and its stakeholders due to
which it becomes difficult for the competitors to outwit the company.
The competitive advantage pertains to the favorable position which the organization seeks in
order to be more profitable than its competitors. To gain the competitive advantage, the company
must be able to show a higher degree of comparative or differential value as compared to its
competitors and transfer the information to its target market (Njambi et al., 2016).
Coca-Cola Beverages Sri Lanka Ltd. (CCBSL) is situated in Biyagama, the only Coca Cola
bottling plant in Sri Lanka. It was originated in 1961 and it has over 700 employees. It
manufactures and sells over 12 million of cases of beverages per year and is operated by a
country wide network comprising of 127 distributors (Linked in, 2017).
So, in this report, the analysis of the economic environment of the Coca-Cola Beverages Sri
Lanka Ltd. would be assessed along with evaluating the competitive advantage in the context of
current and future scenario of the company. Also, suggestions would be given for developing the
competitive advantage of the company for reaching at the desired position in the next three years.

Developing Competitive Advantage 4
Brief summary statement of the economic environment the company is
likely to be operating in
The economic environment in which the company would be conducting its operations has been
in progressive mode in the Sri Lankan economy. It delivers lots of benefits such as foreign
exchange earnings, contribution to the innovation in the beverage industry and up liftment of the
rural economy. It has been an appropriate source of employment and has played a significant role
in the local economy (Athukorala et al., 2017).
The beverage industry is amongst the crucial segments in the agri- business industry. The
transforming economic status has given a chance to the company so that it can increase the
manufacturing units in the country. Many industries have started in the Northern and the Eastern
Districts to increase the manufacturing of the raw and finished goods for the beverage industry.
The land has been allocated to the company and various training programs have been conducted
by the government for the workers of the beverage companies to enhance their employment
skills.
The beverage industry has reported a growth rate of 3.7 % in the first quarter of 2017 in the Sri
Lankan economy (Department Of Census and Statistics, 2017).
Where are we now?
Coca-Cola Beverages Sri Lanka Ltd. is the biggest beverage company in Sri Lanka and it
delivers more than 500 brands to its consumers. It formulates various policies and procedures
which can be adapted to the changing business environment in the industry in which it operates.
The current competitive advantages of the company can be evaluated with the help of Michael
Porter’s Five Forces. The five forces were discovered by Porter to measure the industrial
competitiveness of the company. Industrial competitiveness can be defined as the capability of
the industry to expand itself in the market and to retrieve more profits than its competitors
subject to certain conditions (Xing & Guo, 2017). The five forces are:

Developing Competitive Advantage 5
1. Threat of New Entrants /Potential Competitors: The obstructions for the entry are
comparatively less in the context of beverage industry. The switching cost of the consumer is
zero with zero capital investment. Upcoming brands have been developing in the market with
same amounts as that of the coke products.
Also, it is not observed as a product but as a brand. It holds a very large brand share in the
market since a long time and its loyal consumers will not shift to other brands.
2. Threat of Substitute Products: There is a threat of substitute products replacing Coca-
Cola Beverages Sri Lanka Ltd. in Sri Lanka. Since it does not have a unique flavor and people
can easily switch to other drinks if they are in a search of new tastes (Hassan et al., 2014).
3. The Bargaining Power of Buyers: Regarding the bottled beverages market, the buyers
can bargain up to a large extent which can impact the bottom line of the company directly. Coca
Cola deals with the distributors, vending machine companies, colleges and grocery stores
because of which the company has to consider the price at which the goods are sold to the end
user.
4. The Bargaining Power of Suppliers: The bargaining power of suppliers of the company
is less .It is due to the reason that the number of suppliers is high and the switching cost of the
company is low. The suppliers of Coca-Cola Beverages Sri Lanka Ltd. cannot easily switch
from the company while it can easily change the suppliers.
5. Rivalry amongst existing firms: There are two main players of the beverage industry in
Sri Lanka viz. Coca Cola and Pepsi. Besides these two players, there are few small competitors
which do not pose competitive threat. The products manufactured by these two companies are
similar so the level of differentiation between these two brands is low (Yusuf et al., 2015).
Besides the Porter’s five forces of competitive advantage, there are other factors evaluating the
current competitive advantage of the company. These are brand name and trade mark. A brand is
a name, sign, design, term or a combination of all these aspects which is used for distinguishing
the goods or services of one seller from other. Trade mark differentiates the offering of one
company to other. Coca Cola has become a leader in the beverage industry of Sri Lanka through
its excellent quality and brand. It is known for its creativity and it targets the young section of the

Developing Competitive Advantage 6
society. It has successfully accomplished its goal of capturing the attitude of the Sri Lankan
youth (Sarich et al., 2015).
Product Packaging is another competitive advantage possessed by the company. The shape of the
bottle of Coca Cola was first registered as Coca Cola Bottle. The packaging of the product draws
the attention of the customers of the company and justifies the worth of the product to them
(Titus, 2012).
The target market is another competitive strategy followed by the company. The target marketing
for the advertising strategy of the brand comprises of the demographic, geo-demographic m
product usage characteristics and psychographic components of the consumer section it is aiming
at. The company deals with the international chains of retailers to create mutual benefits .It apply
the demographic factor to target the youth customers.
Where do we want to be?
According to The Coca Cola Company (2016) the company has focused on maximizing its
revenue and profit to arrive at its competitive position in three years’ time. The company has
implemented the revenue growth strategies according to the type of market it is operating. It has
focused on increasing the sales in the emerging market of Sri Lanka. It has attempted to keep the
price of its products affordable and strengthened the foundation of its success in future. In the
developing market of Sri Lanka the company has balanced the volume and pricing of its
products. Also it has increased its profitability by offering smaller packages and aluminum
bottles to its consumers (Munasinghe et al., 2017).
The company has become more efficient to rebuild its growth for developing its competitive
advantage in the next three years. It is investing to develop better marketing skills along with
enhancing its financial stability. It has increased its efficiency and productivity along with
lowering its cost of production. It is operating on the formula of “Zero Based Work”. It implies
from the assumption that the budget of the company begins with zero and it must be justified on
yearly basis. It should not be carried to the next year on the basis of levels established in the last
year. By cutting its expenses on non-media marketing such as store campaigns, the organization
has found new investments in its systems of supply chain (Koc & Koc, 2014).

Developing Competitive Advantage 7
With the help of the funds retrieved by productivity improvement, the company would be able to
invest in its brands and business, thereby increasing the returns to its shareholders. The company
considers productivity not as an event or series but as a continuous process for becoming more
efficient in its operations.
Investment in brand and business is another strategy to gain competitive advantage in the next
three years. Healthy business requires regular investments by the company. It has invested for
better marketing strategies, thereby enhancing its quality and quantity to achieve competitive
advantage in the next three years. The company has started investing more than $ 250Million to
create more stronger and influential ads (Grath, 2013).
The company has invested to expand its beverage portfolio and tried to improve its position in
the energy category .It has created strategic partnerships with the famous beverage brands of Sri
Lanka. In the year 2015, it developed its first international advertising for the promotion of the
Coca – Cola trademark of Coke. It has recently launched the “Taste the Feeling” campaign
which emphasizes on its refreshing taste.
Further, the company is refocusing on its core business model to build a competitive advantage
in the next three years. It is expanding its portfolio which includes more than 500 brands
including fruit juices, water, tea, coffee, energy drinks and value added dairy products .Also, the
company has been able to lead the international system for independent bottling partners, thereby
creating value for its consumers. The company has acquired and regulated a number of bottling
partners for improving its performance and enhancing its manufacturing and distribution
systems.
Coca-Cola Beverages Sri Lanka Ltd has taken steps to reshape its business. It has tried to assess
the taste of its consumers and their priorities along with creating innovations in its retail and
supply chains. It is recognizing the areas in its operating structure where it could be more
efficient and faster. It has connected its business units directly to the headquarters and aligned
the internal procedures for enhancing its efficiency and productivity. Also, it has also made the
workplace interesting and full of learning and growth for its employees so that they become
motivated to work (Ionescu & Dumitru, 2015).

Developing Competitive Advantage 8

Developing Competitive Advantage 9
How do we get there?
Coca-Cola Beverages Sri Lanka Ltd operates in the non –alcoholic division of drinks in the
beverage industry. The non-alcoholic beverage division of drinks is highly competitive and
comprises of several firms. It includes firms operating in many geographical areas as well as
those conducting their commercial activities in the local and regional areas.
The recommendations regarding the ways to achieve the desired competitive advantage in the
next three years comprise of many factors. First of them is acquiring various positions in the
market to fulfill the various necessities of the customers in terms of value for money. Therefore
the company should choose the strategic option of hybrid in which the company can maintain its
price thereby differentiating itself from its competitors. The company can select a mix of pricing,
sales promotion techniques, advertising, enhanced competence in techniques of production,
innovation in products, vending and dispensing equipment, introduction of new packaging and
safeguarding the brands and trademarks (Karanja, 2015).
In this regard, Coca Cola should increase its yearly marketing budget, launch new products
catering to the needs of different consumer segments and evaluate the model to assist its retail
consumers so that it can maximize its sales. The risk of losing the market share due to lowering
its prices can be managed through economies of scale in which the company can produce
products in large quantities to cover its cost of production along with entering new geographical
markets (Gomez, 2012).
Furthermore, the company should innovate and add more unique products to its portfolio. It can
diversify its range of products in various market segments. Diversification is an approach which
differentiates the company from its current markets and merchandises. It is a good option for the
company as it will assist in breaking new grounds in different market segments. Diversification
requires a lot of capital for the company. It also requires research and development along with
the requirement of the skilled people to diversify the business of the company. Coca Cola needs
a lot of careful planning along with large amount of public awareness to diversify its business
(Diris et al., 2013).

Developing Competitive Advantage 10
The company should diversify its business according to the changing preferences and choices of
the consumers. The consumers have become aware of their health and thus avoid consuming
beverages which contain high amounts of sugar and caffeine. Thus Coca Cola should
manufacture products which can cater to the emerging health conscious section of the society.
Also, it can produce energy and sports drinks for its targeted consumers-the youth. It has to
capture their attitude and attention by producing unique and appealing products in the nominal
price range. Thus the company should think globally but act locally (Pride & Ferrell, 2015).
The consumers have different experiences based on their personal priorities and locations. So,
Coca Cola should adjust its approach so that it can make use of these variations by appropriately
marketing its beverages to connect with its consumers (Butler & Tischler, 2016).
Moreover, the company should align its global strategy with the corporate strategy. The
corporate strategy assists the performance of the overall commercial activities of the business
and the distribution of resources to achieve the goals of the business. Moreover, the company
should develop system productivity and capabilities together with its bottling partners (Thushara,
2015).

Developing Competitive Advantage 11
Conclusion
Hence to conclude, it can be said that Coca-Cola Beverages Sri Lanka Ltd is one of the largest
beverage companies, largest producer and marketer of nonalcoholic beverages in Sri Lanka.
The competitive advantage of the company is its outstanding marketing strategies, hold of its
target market specially the young section of the society and its innovation skills. It has strongly
positioned itself in relation to its competitors. It competes itself in the nonalcoholic beverage
segment of the beverage industry. It competes with the firms operating in the international
markets as well as those operating in the local and regional markets.
It can enhance its competitive advantages by adopting various techniques. The key strategies of
the success of the business are customer satisfaction and innovation. The productivity of the
corporate resources comprising of people, money and machines in all the facets of the
commercial activities is dependent on how the consumers feel about the business.
So, if Coca-Cola Beverages Sri Lanka Ltd wants to accomplish its competitive advantages in
the next three years, it should rearrange its operations to be consumer driven along with its
excellence in the research and development, manufacturing and marketing activities. So, for the
company, it is not the question for doing it right rather doing the right thing. So the strategies
which would assist the company in accomplishing its competitive advantage in the near future
are winning the consumer loyalty, repeated buying, product innovations and consumer
satisfaction.