COCA COLA CASE Study PDF

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Detailed notes on Coca Cola as an alternate case study ...

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COCA COLA CASE STUDY Business overview – Prime function Coca cola is a global business operating across over 200 countries with its business activities centralised around its main function, that is the manufacturing, retailing and marketing of non-alcoholic beverage concentrates and syrups branded broadly as ‘Coca Cola’. With over 900 bottling and manufacturing facilities, Coca Cola provides its line of products to local and metro areas across all 200+ companies contributing to the growing globalisation of the world creating interconnections between nations and a global supply chain. As a leading company in the beverage sector it provides customers with over 500 brands and 1.6 billion drinks per day promoting itself as a brand that is considered part of a lifestyle of “passion, optimism and fun”* Under its overarching function of the production and distribution of its non-alcoholic beverage, Coca-Cola focuses on the provision of employment across its facilities and production plants creating over 61 000 jobs. By operating on a national scale with a large workforce it enables the business hence to fulfil its prime function at a sustainable level as its high profitability and workforce mean its operations and marketing activities can be conducted at a long term sustainable level. Legal structure As coca cola operates as a global business, that is having branches in different countries and operating across nation borders, its legal structure reflects this. Taking into account its large size, location of market (global) and type of industry being a secondary industry as it transforms raw materials into finished products, Coca Cola operates as a Public Company trading its shares on the New York stock exchange. Being an incorporated public company means Coca Cola raises its share capital from shareholders and investors that have bought shares in the business enabling the company to raise large amounts of money. As it raises finance and is run by a board of directors this means that control over the company is distributed across individuals spreading the risk of company ownership. As the company is an incorporated public company, the legal structure finds itself having both advantages and disadvantages. Benefits of such a legal structure include the perpetual succession of Coca Cola due to the limited liability and ease of ownership transferring that comes under being a public company. However the company still maintains downfalls as more regulatory and legal requirements are demanded for public companies to protect shareholders and ensure compliance across all company manufacturing and distribution facilities. It also means ownership issues mat be encountered due to conflicts of interests between institutional shareholders and CEO, James Quincey. Management Structure The management structure of a business denotes the companies arrangement of power and responsibilities where the roles of individuals are aligned in lines of authority indicating the flow of information and decisions. In terms of Coca Cola, the business has seen to adopt a hierarchal structure that is fluid to the needs of the business, with the company pushing towards decentralisation to meet the changing needs of customers. The company has combined a geographical organisational structure, matrix structure and an administrative structure. This is identified in the business as it operates six geographic operating segments called Strategic Business Units (SBUs) which are then separates into sub divisions. Here the geographical structure is used, ensuring markets are geographically separated enabling quicker responses to changing market demands and tailor the company’s operations to individual markets. The administrative management structure is seen as key strategic decisions of Coca Cola are made by an executive community chaired by the CEO of the company thus serving as the head of the company’s hierarchal structure with decisions as to the running of the business flowing down from this level. The matrix structure enlisted by the business is applied for each function of the business where the Finance directory in the Sydney Division will report to the Sydney division President for Coca Cola but also report to the Finance Director of New South Wales. This allows for separate regions to operate as unit teams, showing the companies emphasis on team work with each regional director operating to a higher power. Therefore the combination of geographical, matrix and administrative management structures has been seen to be employed by coca cola allowing for flexibility in its operations more effective communication between its 94 800 employees (approx.) and upper management, essential when appealing to numerous Indepdent markets.

*taken from coca cola company website INFLUENCES

Technology Technology is an influence which plays a significant role in operations particularly the application of this process and the way that a product is manufactured. With technology being a growing influence within a modern society, business’ such as Coca Cola have found itself adopting innovative practices and systems that improves the business’ efficiency and manufacturing process’. As technology can be applied to all levels of operations, it can easily impact the processing level identified in Coca Cola’s recent implementation of the technology, ‘PlantBottle packaging’. This leading-edge technology enables the company to use fully recyclable PET plastic partially made from plants, enabling the company to produce its beverage at a more efficient level as the packaging is recyclable meaning there is a reduction in the amount of natural resources needed to produce beverage bottles. With the use of PlantBottle, the transformation process of the beverage had to be altered to ensure it suits the use of the new material being used. Technology has also affected the operations process of Coca Cola through the use of Augmented reality (AR). This new technology has been seen to improve the efficiency of the transformations process by assisting in the monitoring of equipment used. As AR is used in bottling plants, it connects technicians to remote experts who can help service equipment by seeing what the technician sees. this is then complemented by the use of Artificial intelligence in vending machines which are used to trigger maintenance and refill needs. This shows how operations is improved by technology, as the use of AR/AI means corrective action can be taken for faults in equipment, aiding in more efficient production and an avoidance of problems in the transformation process and outputs. Government policies With business operating in an environment government by political and legal influences, it means that the operations of Coca Cola are highly susceptible to being affected. As government policies are often changing and too hold immense power and authority, they are a significant influence on how Coca Cola’s products can be made and distributed. Taxation is a government policy that has a substantial impact on Coca Cola’s operations in its ability to inhibit the amount of sales across countries, detrimental to the business as it operates globally. Recent news has seen governments aiming to reduce the consumption of sugary beverages by increasing taxes on sodas. With the city council of Philadelphia moving to pass a tax increase of 1.5 cents per ounce of sugar-added into soft drinks it has meant Coca Cola has the potential to face a decrease in sales possibly needing a reduction in expenses within the operations process in inputs or equipment. This impact is supplemented by the results of the 10% tax imposed in Mexico on sugar-sweetened beverages including Coca Cola where a 12% reduction in the sales of total taxed drinks followed. As such, the operations process has also been significantly affected by the government policy as Coca Cola is forced to ensure its other ‘still’ products such as water and Minute Maid are making sales in the marketplace to balance a potential decrease in sales of its main product, ‘Coke’. This ensures the sustainability of the business and shows the influence of government policies on all stages of Coca Cola’s operations processes. In addition to this, government policies relating to public health policies have affected Coca Cola’s operates in US. Recently in California, the chemical 4-methylimidazol has been added to the list of carcinogens. With this ingredient being used to colour Coca Cola’s beverage Corporate social responsibility Corporate social responsibility (CSR) refers to the business actions of Coca Cola that are seen to do more than what is required legally, going beyond simply legal compliance. These activities are seen to represent a stride to openly serve people, society and the environment with the growing demand for business’ to be socially responsible significantly affecting the operations of Coca Cola. Over time consumers have shown an increasing desire for business’ to adopt environmentally sustainable practices, stemming from concerns about climate change. As such, Coca Cola has adopted greenhouse abatement measures, announcing a program to reduce carbon footprint by 25% by 2020 along with a 20% improvement in energy efficiency from 2004. This demonstrates Coca Cola taking responsibility for the protection of the environment and going beyond current legal requirements by increasing their expenses so that it’s transformation process’ and outputs meet the principle of ecological sustainability. Further, the operations of Coca Cola have been influenced by the business undertaking CSR as its ‘5by20’, program shows Coca Cola’s response to the demand for diversity and inclusion by business’. As this program supported the economic empowerment of 5 million female entrepreneurs, it shows the business aligning with the principles of the International Labour Organisation (ILO), a key figure of ethical responsibility. They have also done this by being an active participant in ILO conventions (through representative Edward potter). As such the influence of CSR has been significant but ultimately beneficial on Coca Cola as the company strives to improve its operations in order to indicate a commitment to the environment and people.

PROCESSES Inputs –

Inputs are the resources used in the transformation process with Coca Cola using both transformed and transforming resources. Coca Cola begins its processes with the use of information, its transformed resource, as opposed to mateirals. This is because the business aims to combat wastage in its inputs by forcasting sales for the week (within each of its regional facilities) and producing accordingly. With each production line having the ability to prodce a maximum of 140 000 beverage cases/day the business uses internally gathered information on price plans from its largest customers, price and promotion points as well as financial statistics from new product introductions to forecast demand data which is then transferred to its production facilities to establish volume needed for the week. Coca Cola uses numerous materials in its process’ including PET bottles alongside its pre-existing aluminium cans for its drink ‘Coke’. Both types of packaging use the raw materials of PET pellets and aluminium coil sheets, respectively which undergo process’ to create the intermediate product of PET bottles and alumium cans. In terms of the ingredients used in the production of the beverage, coca cola uses numerous intermediate products that form a concentrated beverage base and a liquid sweetner, combined to form the surup from which Coca Cola drinksk are made from. Its transforming resources are seen to be its facilities, being the bottling plants and offices globally distributed, as well as its human resources that play varying roles across its production process’. The company has numerous bottling plants that are used to produce its beverage from which the product is transported to resellers globally. These physical assets are owned by the Coca Cola company as opposed to leasing providing the company with control over the space and the ability to alter and fit out the facility for maximum efficiency. Its human resouces are a significant transforming resource used along the production process to create the prodyct. Although a surge in the use of technology has decreased human labour, employees are still used in the analysis of information (a transformed resource) and to check for any inconsistencies or fasults on production lines. Transformation process The transformation process is the intermediate aspect of production where the inputs of Coca Cola undergo processing to be converted into the outputs of the business. As with all business, Coca Cola is seen to be subject to the product aspects of operational process decisions, specifically variation in demand. With Coca Cola being amultinational company, the influence of demand is highly variable as it spans across different countries. Coca Cola often finds its transformation process to be affected by seasonal changes, with demand increasing during the summer seasons ]where the consumption of its beverage increases due to the weather and social, outdoor activities. Coca Cola has also seen variation in demand to affect its process’ in response to the growing trend of consumer health awareness. As such there has been an increased demand for more health conscious products resulting in an increased volume of production and sales of its Diet Coke seen in the unit case volume growth of 3% in the first quarter. Within its transformation process, Coca Cola also undertakes numerous practices of monitoring to obtain data on the performance of Coca Cola and if required implement control measures to take corrective action. Coca Cola has been seen to use numerous performance management strategies one of which being the Distributed Knowledgeable Performance Management System (DKPMS). This system is a example of continuous performance measurement fused to collect and analysize data on suppliers, Coca Cola process’, performance and employees to measure the performance of the business. This practice is also partnered with the use of a performance measurement tool being a balanced scorecard which is used by Coca Cola to monitor the execution of activitities by employees and also compare the performance against the business’ goals. As such it can be seen that Coca Colas transformation process is highly dependent on both the product aspects and quality aspects of operations process; Outputs Coca Cola’s main output is seen to be the numerous beverages it produces, having a range of over 3500 beverages spanning from sodas to energy drinks to soy-based drink. Apart from this Coca Cola’s outputs is the customer service that it provides in delivering its products as well as in ensuring customer satisfaction. As Coca Cola’s product are dispersed globally and sold by numerous retailers, the c ustomer service provided is often varied according to the retailer thus being difficult to measure. However in termsof the Coca Cola Company, its website maintains a level of customer service offering the ‘Contact Us’ and ‘Ask Coca-Cola’ services where consumers are able to receive information on queries about products or the company Coca Cola also measures the customer service provided by its bottling companies through GfK, a market research company which interviews over 14,000 customers to measure how well Coca Cola’s subcontractors meet the needs of Customers. It is from this that Coca Cola has demonstrated its ability to exceed customer expectations through its outputs . OPERATIONS STRATEGIES

Out s our c i ng Ou t s our c i ng si sa ne ffic i e nc ys t r a t e gye mp l o ye db yCoc aCol awhe r et h ec ompa n yha sc h os e nt ous ee xt e r na lpr ov i de r s t ope r f or ms e r vi c e swi t hi ni t sop e r a t i onspr oc e s s ’ . Coc aCol a ’ sus eofout s ou r c i n gs p a nsa c r os snume r ousa s pe c t sofi t s ope r a t i onsho we v e ri ti si de nt i fie dmos tp r omi ne nt l yi ni t st r a ns f or ma t i o npr oc e s s e s . Thec ompa nyou t s our c e svi a f r a nc hi s e s ,t hebo t t l i n gofi t spr oduc t st of or e i gnc o mpa ni e se s pe c i a l l yt oI ndi a . Coc aCol ac ur r e n t l yha s2 1bot t l i ng pl a n t swi t hi nI nd i aa ndt heus eofout s our c i ngbot t l i n gf a c i l i t i e spr ov i d e sCoc aCol aa c c e s st oc he a pe rl a boura n d s ki l l e dl a b our ,bo t hwo r ki n gt oc r e a t ec os ts a vi n g sf o rt h ec ompa n y .No tonl yt hi sbutt h eu s eofout s ou r c i n ga l s o s t r e n gt h e nsg l ob a lc onne c t i o nsf ort hec o mp a n yi npr o vi d i n gbe ne fit sf o rI n di aa st hee s t a bl i s h me n tofHi n dus t a nCoc a Co l aBe v e r a g e sPvt . Lt dha sn o wbe c omet h ec ount r y ’ sl a r g e s t‘ f a s tmo vi n gc o ns ume rg oods ’( FMCG)ma n uf a c t ur i n g a nddi s t r i but i onc omp a n y.Co c aCo l aha sa l s oou t s o ur c e dt hei n put sofi t sbus i n e s s ,r e l y i n gonI nd e pd e ntbus i n e s s ’ s uc ha sMons a nt oChe mi c a lComp a n ya ndCa r gi l lt omi n e , pr o c e s sa ndr e finet h ei n g r e di e n t sus e dt oc r e a t et h es y r u ps a ndba s eofi t snume r ou sbe v e r a g e s . Byus i n gt he s ei nde pe nde n t l yo wne dp r oduc e r sa nddi s t r i but o r s , i ta l l o we dCo c a Co l a ’ sop e r a t i o nst ob es i mp l i fie da sf e we ra c t i vi t i e sa r ebe i n gpe r f or me dwi t hi nt hebus i n e s sa swe l la sa g a i n i mpr o vi n gt hee ffic i e nc yofi t si n put sa ndt r a ns f or ma t i o npr o c e s sb yu s i n gbu s i n e s s ’t ha ta r es pe c i a l i s e di nt her e q ui r e d i n put .Fur t he r mor ea na r t i c l eb ySwa ns onRe e d( 2 017)ha ss ho wnt h a ti nr e c e nty e a r sc o c ac ol aha se xp a nde di t sus eof out s o ur c i n gt oR&D. Ne wpr oduc tde s i g nandde v e l opme nt Thec r e a t i onofne wpr odu c t si sa not he rs t r a t e g yi mp l e me n t e db yCo c aCo l at obo t hg a i nac o mpe t i t i v ea d v a nt a g ei n t h eb e v e r a g ei n dus t r yb yc a t e r i n gt one wc ons ume rde ma ndsa n da l s ot oe xpa ndCo c aCo l a ’ spr oduc tr a n g et hus a ppe a l i n gt oawi de rc ons ume rma r ke t . Co c aCol aus e sac o ns ume rpr e f e r e n c e sa ppr oa c ht opr o duc tde s i gna n d de v e l o pme nt ,us i n gma r k e tr e s e a r c ht oi d e n t i f yt hepr e f e r e nc e so fc ons ume r swhi c hc a nb ea ppl i e dt one wpr oduc t s . By i d e nt i f yi n gg a p si nt h ec on s ume rma r ke t , s pe c i fic a l l ywhe r et he r ewa sa ni n c r e a s i n gi n t e r e s ti nhe a l t hc ons c i ousdr i n ks f r o m nut r i t i ona l l ya wa r ec ons u me r s ,Co c aCol awa sa b l et ous ei t sCo n v e ni e nc eRe t a i lTe a mt od e v e l o ppr od uc t st h a t c a t e r e dt ot hi s . The s ei nc l ude dt he‘ ZI COCOCOLI XI RS’whi c hc o nt a i n sZI COor g a ni cc oc o nutwa t e rwi t hor g a ni c c ol d pr e s s e dj u i c e . Thi sdr i n kno tonl yp r o v i d e dahe a l t h yr e f r e s h i n gb e v e r a g e , buta l s ot a r g e t e dt h ede ma ndf o r c oc onu twa t e ra spe op l ebe c a memor ea wa r eofi t sf unc t i ona lbe ne fit s . Coc aCol aa l s ode v e l o pe dt h ep r oduc tl i n eofi t s e xi s t i n gbr a nd‘ Vi t a mi n wa t e r ’ , i n t r oduc i n gt hep r oduc tof‘ Vi t a mi n wa t e rAc t i v e ’i n2018.Ag a i n,ma r ke tr e s e a r c h i d e nt i fie dc ons u me rde ma nds hi f t i n gwhe r et he r ewa sa ni n c r e a s ei na c t i v ei ndi vi dua l sa ndag a pf orpr oduc t st ha t c a t e r e dt oa na c t i v el i f e s t y l e . Thedr i nkoffe r s‘ s p o r t s l e v e l ’h ydr a t i on ,a n t i o xi d a nt sa ndna t ur a l l ys our c e de l e c t r o l y t e s ( c oc onutwa t e r )t oc r e a t eanut r i e nt e n ha nc e dpe r f o r ma nc edr i n k.Duet ot hed e v e l o pme n to fne wpr oduc t sb yCo c a Co l a ,s u ppl yc ha i nma na g e me nti sa ni mpor t a ntc o ns i de r a t i o na st h en e wpr o duc t swi l lr e q ui r ene wi nput s( c o c onu t wa t e r ) ,wh i c hma ydr a wf r o m ne ws uppl i e r s . I tma ya l s or e qu i r ea ni nc r e a s ei nt hea mou ntofr e s our c e si fde ma ndf or t h e s epr o duc t se x c e e dst hel e v e le xi s t i n g .Pr o du c tde s i gna ndde v e l o pme n ti nbo t ht h e s ec a s e sha v ep...