Strength & Weaknesses Of Coca Cola Essay

1022 words - 4 pages

5Strength & Weakness of Coca ColaCoca ColaIntroductionThe purpose of this integrated essay is to explore the strengths and weaknesses of Coca Cola (Coke) using the Value Chain Analysis Framework developed by Michael Porter. Using Exhibit I from Porter's Framework, I examined the linkages and strategic significance of Coke's value system.Description of Theories/Core ConceptsAccording to Michael Porter (1985), information technology changes the way companies operate by specifically targeting how companies create their products. Porter divided the business operation process into value activities that were either technologically or economically based. Porter then stated that performing the value activities at a lower cost or creating a differentiated, premium-paid product yields a competitive advantage.Exhibit I classified the value chain activities as either primary or secondary. Primary activities include all facets dealing with product creation, sales, delivery, and servicing new products. On the contrary, secondary activities support the primary activities by providing all services necessary to ready the product for the customer. (Porter, 1985). An example of a supporting activity would include the hiring activities of the human resource department. Their duty is to hire skilled employees to produce the company's products.Lastly, Porter addressed the linkages that exist between interdependent activities in the company's value chain and with suppliers. Often interdependent activities lead to trade-offs in areas such as performance, cost, and quality. Optimization of those trade-offs leads to a strong competitive advantage. Whereas a failure to capitalize on those trade-offs causes numerous issues include low sales, loss of competitive edge, and layoff.Analysis/Explanation/DiscussionCoca Cola (Coke) is the largest manufacturer of non-alcoholic beverages in the world. Coke markets over 500 products in over 200 countries. With that being said, Coke's revenue for 2013 only surmised to $46 billion as opposed to the $64 billion posted by PepsiCo, Coke's top rival. Upon further examination, I discovered that PepsiCo operates in both the snack and beverage industry unlike Coke, which solely deals in beverages. Of the $46 million in revenues posted by Coke, at least 75% of the revenue came from beverage sales. In comparison, PepsiCo has a diversified portfolio with at least 25% of revenue attributed to beverage sales. Therefore, in reality, the $64 billion reported by PepsiCo equates to roughly $16.5 billion in comparable sales ("KO Income Statement", n.d.).Coke's strongest competitive advantage lies in their name. With having such a long history and loyal customer base, Coke has endured many years of increased profits. In addition, another plus for Coke is the marketing strategy used. Coke makes a stance that Coke is for everyone regardless of age. On the other hand, Pepsi's slogan targets the young with their new age marketing approach. Lastly, Coke...

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