Sample Management Essays on The Coca-Cola Company

Strategic Business Units

The Coca Cola Company’s (TCCC) organizational mission is pegged on three aspects namely the provision of customer value, refreshing the world, and creating moments of optimism. All the three focus areas of the company’s mission clearly indicate its customer-centric approach to doing business, which should be the focus of every other company (The Coca-Cola Company, 2020). Moreover, the company operates within the precincts of its strategic business units to achieve the organizational mission and visions. The enterprise’s operations are categorized into five strategic business units (SBUs, and these are Africa, North America, Eurasia and Middle East, Europe and Asia (The Coca-Cola Company, 2020). Each of these SBUs is divided into various departments to promote customer satisfaction and to ensure sustainable organizational success. TCCC has managed to utilize its SBUs to gain organizational growth over time, and the success of each of the units requires operational efficiency in their distinct geographical locations.

The operations of each of the three SBUs in TCCC are centered on three aspects, including production, suppliers, and customers. The production aspect of the business operations is the central point of the organizational business units. Particularly, each of the SBUs has its own production systems, based on a franchising business model. TCCC produces concentrate syrup for use in all its franchises across the five different SBUs. The concentrate is distributed to bottlers across the world that operates specific franchises for the business. The bottlers are responsible for diluting the concentrate with clear water and adding sugar, and finally for the carbonation and packaging of the soft drinks for marketing by the company. Production is thus an inescapable aspect of the SBU operations, and the objective is to produce a consistently acceptable product across the world.

The TCCC partners are not the same entity as the business itself from both a legal and management perspective. Each SBU comprises of several partners, each of whom is considered an independent business entity from the legal and management perspectives. In the production aspect, TCCC focuses on the production and marketing of brands and trademarks while the partners are responsible for producing and packaging the finished beverages for sale into the international markets (The Coca-Cola Company, 2020). Besides, the production and packaging is done in alignment with the pre-agreed designs and formulations provided by TCCC to maintain product consistency across all the SBUs. Sales to retail markets and distributors are managed by individual SBUs for the areas in which they operate. Moreover, the management and business structures of the different organizational partners are distinct from those of TCCC. Accordingly, the characteristics of the SBUs vary depending on the constituting partners. For instance, there are multinational corporations that are TCCC franchisees, family-owned businesses and even publicly traded organizations. The management structures of such organizations therefore vary depending on the complexity of their operations, their locations, and the types of businesses they run.

The production relationship at TCCC is often described in three distinct categories. Firstly, there are bottlers who have also invested in the mother company, and who have shared interests with those of TCCC. Secondly, there are partners who have no ownership or interest in the mother company. These operate as independent companies from TCCC and only collect the raw materials, namely concentrate, from the TCCC (Kalumari & Sekar, 2014). The third category comprises of organizations that have invested and have no controlling interests in TCCC. Such companies run their productions as part of the general Coca Cola Company, but do not show any interests in company shares or profitability.

As mentioned, the second aspect of the SBU’s operations is the suppliers. According to Kalumari and Sekar (2014), suppliers play an important role to the productivity and profitability of TCCC. For all partners, TCCC supplies the concentrates for the production of carbonated and other soft drinks. However, some additional ingredients cannot be supplied by TCCC. Different suppliers source ingredients, materials, machinery, and packaging materials as well as goods and services for the company. Notably, all suppliers that have been authorized by the different franchisees have to be in compliance with the different regulations and applicable laws, such as those on forced labor, labor abuse, freedom of association among employees, child labor, wages and labor benefits and collective bargaining among others (The Coca Cola Company, 2020). Nevertheless, the applicable laws and regulations are different from one SBU to another and from one partner to another. Moreover, understanding the suppliers is important to foster effective work relationships and even the general relationship with TCCC. The suppliers coordinate with TCCC management at different plants to understand the needs of those plants and to be able to bid against set proposals for the specific plants they would like to supply with materials.

Besides the suppliers, the SBUs at TCCC have been able to coordinate effective work processes with their customers, who make up the third aspect of the corporation. TCCC has a large marketing function that works towards more effective cultural oriented marketing. The marketing activities in which the firm engages are aimed at giving the impression that whatever people do and wherever they are, TCCC always fulfills their desires in a soft drink. Furthermore, different marketing strategies such as the use of adverts and promotions are used to reach the different target markets in the six SBUs. The fact that the SBUs are distributed based on their geographical locations implies that they are more likely to share various cultural practices, which makes it easier to develop marketing content that is SBU specific (Kalumari & Sekar, 2014). Through such marketing content, the company has been able to unite its customers across the globe with the feeling that wherever one goes, TCCC products always appropriate to use. Moreover, the global marketing activity unites the franchisees linked to TCCC to the general company’s mission and vision. Because of the common global marketing practices, is difficult for most customers to comprehend the fact that the franchises operate independent of the multinational TCCC and that the trademark company only provides the soft drink concentrates and the formulations. The formulations have also helped to create a sense of uniqueness and global oneness as they are secret and used globally regardless of the producer and the SBU to which they belong. As such, it has been near impossible to distinguish between products from different SBUs.

The SBUs’ alignment with community cultures in which they exist is important to TCCC not only for marketing purposes but also for satisfying customers’ needs and reducing production costs. The stake held by TCCC at the different franchises has been sufficient for creating global impact and being consistently profitable. TCCC uses a cascaded distribution practice as a strategy for realizing cost reduction in distribution. In the cascaded distribution practice, TCCC only has to distribute the concentrates and that each SBU, through its respective partners, in turn distributes products only within its regional boundaries (Kanesan, Ismail, & Krishnen, 2018). This cascaded distribution in turn, increases the profit margins for each SBU and the overall profit margins of the company. Furthermore, in SBUs whose customers have particular complaints, such as in the Asian countries where the amount of sugar in products was previously a concern, the company has been able to overcome its challenges by developing formulations that target specific SBUs. In this way, the development of different operational SBUs has been quite beneficial to TCCC.

Internal Strategic Position Analysis

The purpose of the company is its biggest strategic position that drives the achievement of organizational goals. The firm’s purpose is to “refresh the world and make a difference” (The Coca-Cola Company, 2020). The best explanation of this purpose is the company’s strategic mission and vision statements. Through the organizational mission and vision statements, TCCC has been able to unite the purposes of its partners in different SBUs and across the world. The enterprise has a vision centered on developing brands that are loved across the world, running its operations sustainably, and working towards a shared future. TCCC has worked effectively towards the achievement of each of these elements of the vision, with impeccable outcomes across the world. For instance, to create loved brands across the world, TCCC has implemented disciplined portfolio growth that is customer centered by continuously pursuing innovation, understanding brand building trends and focusing on varying revenue growth strategies (The Coca-Cola Company, 2020). The corporation has also continuously worked with the objective of continuous improvement. Additionally, TCCC has implemented practices that help to build strategic relationships with the organizational partners, such as the franchisees. The franchise business model is run based on strategic alignment with organizational goals and objectives, improved execution of organizational plans, and the establishment of a winning culture at the partner levels and at the general TCCC level (The Coca-Cola Company, 2020). Each of these practices has enabled TCCC to share the organizational purpose with its key stakeholders and train practice towards continuous growth.

The shared purpose of TCCC has also enabled the company to build a unified culture. The organizational culture is considered one of the strategic resources that any organization can have due to its impacts on organizational behaviors, management practices and general organizational performance (The Coca-Cola Company, 2020). TCCC has developed a supportive and inclusive culture not only for its partners but also for the customers associated with the company. In the recent years, TCCC has built a culture that focuses on sustainability, response to consumer trends, and focus on brands. Furthermore, the organizational culture has been the point of reference for the development of the organizational code of conduct, which stipulates the relationships between employees, non-employee contacts and even organizational directors. These outcomes have in turn resulted in the development of a mutually beneficial work environment for the employees, continuous employee engagement and respectful work relationships.

On sustainability, the company shifted its focus to sustainable business operations following the realization of the impacts of its operations on natural resources, particularly water consumption. The firm has since come up with various strategies that have helped show its commitment to sustainability. One of these practices is satisfying all customer needs by providing more than 500 different brands targeting different customer needs (Kanesan et al., 2018). In this way, the company satisfied even customers who would like low sugar products. Besides the different brands of drinks, the company has developed strategies to recycle various packaging materials, including bottles and cans and to allow their partners to also recycle those materials (The Coca-Cola Company, 2020). The contemporary shift towards healthier lifestyles and environmental sustainability has been a strong source of support to TCCC in its bid to pursue sustainability.

In the contemporary times, the organizational environment provides either opportunities or threats to business performance through political, social, and technological characteristics among others. The social environment is characterized by competition, changes in consumer trends, and environmental characteristics. The operational environment for TCCC is characterized by high competition. The company’s biggest competitor is Pepsi, but TCCC has been able to maintain strong market shares over many years in spite of the competition (Kanesan et al., 2018). The environment is characterized by the shifting of social trends towards sustainable operations. The company’s alignment to sustainability has given it an advantage over its competitors in such an environmentally centered environment. Moreover, the shifting consumption trends across the world, whereby people are constantly pursuing healthier, low sugar soft drinks, has also given TCCC an opportunity for greater profitability through the development of healthier alternatives (The Coca-Cola Company, 2020). The company has managed to leverage this opportunity through the use of its capability in terms of both resources and competencies.

In terms of capability, TCCC has both adequate resources and competence to compete favorably in the soft drink and beverage industry. The resources are considered to be either tangible or intangible. In this regard, the tangible resources include the plants, finances and the labor resources. The company works with a franchising business model, which has enabled access to plants across the world. In the franchising business model, TCCC does not have to invest in the geographical location of a plant, machinery or even buildings (Kanesan et al., 2018). Additionally, the business does not invest in costs involved in managing human resources as the franchisee takes responsibility for this since the company provides the trademark and the formulations to be used in the product development. Accordingly, the capital costs of putting up plants is relatively low for franchising businesses, especially on the side of TCCC and the company has been able to develop strategic partnerships with individuals and companies with adequate physical resources across the world (Kalakumari & Sekar, 2014). On the other hand, the intangible resources include the formulations for the company products, which have been considered a top secret over the years. Because of the uniqueness of the formulation, it can be considered a valuable, rare, inimitable, and non-substitutable (VRIN). The formulation is what distinguishes TCCC from other companies, hence it is valuable. It also specifically belongs to TCCC and is a secret formulation that has been almost impossible to reproduce over the years; hence it is both rare and inimitable. It is also non-substitutable as substituting the formulation results in drinks of different characteristics that may not produce the same kind of customer satisfaction that TCCC drinks cause (Kalakumari & Sekar, 2014). However, there are several soft drinks that can be used as substitutes for TCCC soft drinks, and the company’s focus on innovation is the only factor that can distinguish it sustainably from competitors.

In terms of competence, the company has manahed to develop core strengths in different areas, each of which contributes significantly to its success. The best evidence of competence is visible through the company’s use of effective skills and abilities to deploy resources effectively through various organizational processes and activities.

 

References

Kalakumari, T., & Sekar, M. (2014). A conceptual framework of marketing strategies in Coca-Cola. Global Journal of Commerce & Management Perspective, 3(1), 153-157. https://www.longdom.org/articles/a-conceptual-frame-work-of-marketing-strategies-in-cocacola.pdf

Kanesan, S., Ismail, N.A., & Krishnan, K. (2018). Identifying market segments and targets for marketing strategy plan for Coca-Cola Company in Malaysia. International Journal of Business and Management Invention, 7(4), 77-80. https://www.ijbmi.org/papers/Vol(7)4/Version-2/I0704027780.pdf

The Coca-Cola Company (2020). Our company. https://www.coca-colacompany.com/company