SWOT Analysis Of Coca-Cola’s Global Supply Chain

SWOT Analyses

The company selected is “Coca-Cola” for this project. Reason being, coca cola has the world’s largest supply chain. The coca cola is a beverage manufacturer, marketer, and retailer of non-alcoholic drink syrups and concentrates. The company headquartered in Georgia is best known for its popular product “Coca-Cola.” It offers a wide range of products like water, tea, juices, energy drinks, coffee, and light and diet beverages (cocacola.co.uk, 2018).

The company has a unique system of supply chain management. The company creates syrup concentrate, which is further sold worldwide, to various bottlers who embrace an exclusive territory. The bottlers who are held for exclusive contracts territorially with the company, finished products are produced in bottles and cans, in the combination of sweeteners and filtered water are concentrated. After this the bottlers trade, merchandise and distribute the resulting products of Coca-Cola to vending machines, retail stores, food service distributors, and restaurants. There are two different levels in Supply chain, that is upstream and downstream activities. Upstream activities consist of manufacturing of the concentrate. The formula used for manufacturing by the company is a trade secret, so the exact ingredients information is not revealed. Downstream activities include franchise distribution system, where the company is only responsible for the production of a concentrate of liquid. The largest franchise includes Coca-Cola FEMSA, Coca-Cola Enterprises, Coca-Cola Hellenic Bottling Company (CCHBC), and Coca-Cola Amatil. Independent bottlers are authorized to the change quantity of sweetness according to the preference in the local market (Coca-colacompany.com, 2018).

The nature of its products are more customized, therefore the company prefers to follow intensive distribution process. According to this system, the company sets business guidelines for operational procedures, query management, and customer relationship management. Nevertheless, bottlers have authority to construct SOPs related to deliveries, developing credit lines, and fleet management (Bowers, Petrie, & Holcomb, 2017).

Strengths · Tightly held trade secret Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper · Purchasing power	Weakness · Product diversification · Inventory control
Opportunities · Capture Packed drinking water market · Health beverages	Threats · Raw material source · Water scarcity

• Tightly held trade secret- the ingredients while producing syrup, is considered under trade secret. Due to this, the exact ingredients are unknown to the competitors. Therefore, the unique taste is maintained(Mills, 2015).
• Purchasing power – due to the large scale of production, the purchasing power while purchasing raw materials lies in the hands of company.
• Product diversification – products of Coca-Cola are limited to beverages. It is one of the weaknesses of the company in the competitive market
• Inventory control – the stock control is a necessity, there must a better inventory control software to reduce delays in primary production.
• Capture Packed drinking water market – one of the products of Coca-Cola is drinking water bottles, which do not have a great market share yet, which can be captured in near future to gain opportunity.
• Health beverages – in today’s world, people are becoming more health conscious. The company can introduce various health concern beverages like green tea to gain opportunity.
• Raw material source- suspected use of pesticides and the vast consumption of water is a major threat to the company. The climate change can hamper a company’s production capacity due to the use of water(Wright & Pujari, 2017).
• Water scarcity – the major threat is at the countries where water scarcity is the major concern. The beverage company will be pointed out in such a case, which can negatively influence the company(Whelan & Fink, 2016).

Strengths · Economies of scale · Enterprise Resource Management Software · Centralization to an extent	Weakness · Heterogeneous bottling operations · Coordination
Opportunities · Water management · Reduce lead time	Threats · Late deliveries · Quality concern

• Economies of scale – large production are the biggest strength of the company. It leads to cost-effective operations and eventually decreases in the price of each product.
• Enterprise Resource Management Software- the software named, “BASES” is very helpful in managing operation worldwide.
• Centralization to an extent- the strategic decision is centralized. Even if freedom of some changes are given to the bottlers, but the major decisions are centralized with the company.
• Heterogeneous bottling operations – one of the drawback is that all the bottlers have separate had different processing system.
• Coordination- coordination is one of the problematic areas due to various numbers of bottlers worldwide
• Water management – managing the use of water and facing water scarcity in an efficient manner is an opportunity for the improvement in operations of the company.
• Reduce lead-time – the lead-time must be reduced, for the timely reach of products to the customers.
• Late deliveries – one of the threat is the delivery of the package to the retailers must be on time. Late delivery can lead to losing market share to the major competitors of Coca-Cola
• Quality concern – the company was suspected of the quality concern in many countries. This is the major threat to the company. The quality must always be maintained.

Strengths · Intensive distributing system · Franchised distribution system · Push strategy	Weakness · Diversified product portfolio · Complex supply chain model
Opportunities · Developing nation · Increased warehouse capacity	Threats · Wide audience reach · Bottling partners dependency

• Intensive distributing system – this system of the company make local bottlers reach different geographical areas, which is the strength of the supply chain(Sodhi & Tang, 2014)
• Franchised distribution system – this distribution system is a plus point for the company. According to this the company is only responsible for the creation of syrup and rest part is franchised with many large enterprises and completely independent bottlers, which are authorized to change the sweetness level in the drink according to the local taste and preferences(Salar & Salar, 2014).
• Push strategy- a positive aspect of the distribution system is that every center of distribution of the company is implementing this strategy in the supply chain to increase consumption of the product in each zone(Zhang, Fang, Yang, & Zhang, 2018).
• Diversified product portfolio – since many products are sold by the company, it is beneficial for the profits of the company. However, this is a problematic aspect to manage for distribution process in the company(Jurevicius, 2018).
• Complex supply chain model- supply chain model is very complex of Coca-Cola, which makes the distribution task more difficult.
• Developing nation- one of the opportunity can be gained if the company will expand its distribution center in developing countries, which is not tapped yet.
• Increased warehouse capacity- by increasing the warehouse capacity at distribution centers will make the company produce more products at a time and gain advantage from economies of scale.
• Wide audience reach- reaching to a wide audience is the biggest threat to the distribution system. For reaching the demanded audience on time, the distribution system must be improved with time.
• Bottling partner’s dependency- the syrup when sole to bottlers, they are responsible for further processing, it can be a threat in case any bottler is unable to reach the standard quality of the product. Therefore this dependency on bottler partners is a major threat to the company(Coca-colacompany.com, 2018).

Strengths · Largest distribution network · Market power over suppliers and competitors · Dominant market share in the beverage industry	Weakness · Numerous beverages to offer · Tight credit terms
Opportunities · Other complementary merchandise	Threats · Indirect competitors · Saturated market

• Largest distribution network – Coca-Cola has one of the largest distribution network worldwide, which are the biggest strengths for reaching retailers on time(cocacola.co.uk, 2018).
• Market power over suppliers and competitors- brand loyalty is very high of customers for the brand. Even if the retailer or departmental stores are selling many brands, and Coca-Cola products at one place, coca cola is preferred over other beverages. It there is a market power of coca cola over its competitors(Monczka, Handfield, Giunipero, & Patterson, 2015)
• Dominant market share in the beverage industry – market share is very high of coca cola in the beverage industry in most of the countries worldwide. Due to which retailing is not an issue and retailers are ready to include Coca-cola at their store to serve customers(Schram, Labonte, Baker, Friel, & Reeves, 2015).
• Numerous beverages to offer- this could be a disadvantage for the company because the retailers are not selling only one beverage at their store. There are many options for customers other than Coca-Cola in the same place. This can reduce the sale of Coca-Cola.
• Tight credit terms- retailers are the one who is directly linked to the customers. If the credit provided to the retailers is restricted then the quantity of the product is also restricted for retailers to purchase(Heckman, Comes, & Nickel, 2015).
• Other complementary merchandise- the company can retail their products through different merchandizing like an increase in vending machines, the availability of coca cola at hotels, different places like restaurants, food service distributors, and lounges.  
• Indirect competitors- while retailing there are many indirect competitors, which are a threat to the company, like cafes, alcoholic drinks.  
• Saturated market- the carbonated market has been saturated. This could be the major threat for the company and biggest hurdle for the company to grow further.

Strengths · Power over the buyers · Query management · Powerful marketing strategy · Customer loyalty	Weakness · Increase the rate of obesity · Diabetes · Low bottled water demand · Negative publicity
Opportunities · Health concerned products · Acquisitions	Threats · Intensive competition · Increase in demand for healthy beverages · Change in consumer preference

• Power over the buyers- the demand of the product is very high, due to which the bargaining power lies in the hands of the company.
• Query management- the query management and customer service are very strong of Coca-Cola. This increases the satisfaction level among customers. This a major strength for the company
• Powerful marketing strategy – marketing strategy of coca cola is very strong worldwide. The company choose popular brand ambassador according to the particular country the products are offered(Sauerbornn, Barros, & Faria, 2018)
• Customer loyalty- another strength of the company includes the brand loyalty of customers for the product. It can be said through a high consumption level of Coca-Cola.
• Increase the rate of obesity- the rate of obesity is increasing with time, which makes people consume less carbonated drink and it could decrease more in near future(Tillin, Sattar, Godsland, & Fourouhi, 2015).
• Diabetes – the sugar consistency is very high in the carbonated drinks. Due to which the health issue especially diabetes has been triggered much more.
• Low bottled water demand- the demand for the packed water bottle is one of the weakness. This could be because people are not aware of the company is producing bottled water product also.
• Negative publicity- one of the major weakness is negative publicity of the product. Many cases related to quality concern have been the case with Coca-Cola in various countries. After such event and negative publicity, changing consumer mind and perspective becomes very difficult.
• Health concerned products- the company should offer healthy products like green tea, lemon tea under the brand to gain opportunity after the saturated market of carbonated beverages(VanEpps & Roberto, 2016).
• Acquisitions- another opportunity is to acquire the brands, which are competitors to the brand. This will let the company increase the customer base(Zhou & Wang, 2016)
• Intensive competition- one of the threats of losing customers are the increased competition. Directly through various brand in the same product line, or indirectly through various cafes, and other beverages instead of carbonated beverages.
• Increases in demand for healthy beverages- people are becoming more health conscious these days, because of which Coca-Cola has loose numerous customers. This can be a major threat in near future.
• Change in consumer preference- this is a major threat, it could be possible that consumer preferences changes in the near future, might be because of increase in obesity level, or increase in health-conscious people(Scott, Lundgren, & Thompson, 2018).

It is a huge responsibility of a company to establish an active and positive image in economic, environmental, and social sustainability. Coca-Cola system in Great Britain uses innovation in order to reduce the effect over environment across climate and energy protection, water stewardship, and recycling and packaging. The company is also focused on enhancing consumer well-being, especially the issue of obesity.

The company is providing a wide variety of drinks and different packaging sizes according to the occasions. The company is investing £20 million for improving local communities’ well-being until 2020 (coca-cola.co.uk, Corporate Sustainability Report, 2017).

Core areas of sustainability according to “corporate responsibility and sustainability 2015-2016” report are as follows:

Critical Analysis

It is a major global challenge, that world is facing.  It is important for companies to take initiatives for reducing carbon deliveries by deploying technologies that are low-carbon, reduce carbon emission, and energy efficiency. The initiative company will take for this concern are a reduction in manufacturing emission, for this, the company joined 80 UK business, to call on the government of UK to take respective action to fight climate change. Moreover, investing in technology and innovation, reducing refrigeration emission, and reducing distribution emission (coca-cola.co.uk, Energy and Climate Chang, 2017).

(source: coca-cola.co.uk, Energy and Climate Chang, 2017)

Coca-cola is UK’s largest user of materials of packaging, and safeguarding packaging is very important to protect the quality of the beverage. For sustainable packaging, the initiatives taken are using less material, assuring own packages are wholly recyclable and using more renewable and recycled materials. For recycling, the initiatives took and will be taken by the company are consumer behavior and disposal, collecting and sorting, anti-litter campaigns, and reuse and reprocessing. For this, facts and figure include 100% of waste was sent for energy recovery and recycling and zero percent to landfill (coca-cola.co.uk, Sustainable Packaging and Recycling, 2017).

Since water is critical to the environment and a precious resource, it is majorly responsible for the ecosystem and business sustainability. Water stewardship program includes initiatives like becoming water efficient, investment in water-saving technology, and treating and returning the company’s wastewater. For protecting and replenish the water, company uses, the initiatives include, replenishing watersheds in areas of water scarcity, protecting sources of water, which supplies the manufacturing operations of the company, and minimizing the impact of water in the value chain of Coca-Cola, through sustainable sourcing programs (coca-cola.co.uk, Water Stewardship, 2017).

The community in which the company operates, it took initiatives for a positive difference in many ways like providing opportunities for the company’s employee, for volunteering on the company’s community programs, giving in kind, and direct investing in community partnership and programs. 2015 facts and figure include, that the company has invested £1,2 million in community programs and education.11,176 people were visitors to the education center of Coca-Cola. 88,900 people took part in “Real bus challenge” (coca-cola.co.uk, Community, 2017).

Physical inactivity is the major issue in Great Britain and the team of coca cola is encouraging people to become more active through this programme. The physical activity is reduced by 20% in the United Kingdom. Coca-cola is investing in Grassroots Programs for active lifestyles support like launched “ParkLives,” a long-term programme nationwide. “StreetGames” programme is a UK charity that allows disadvantaged community’s young people to participate in dance and sports. Special Olympics Great Britain initiative includes a long partnership of coca cola with Special Olympics GB. For this, 8,000 and more young adults are supported by charity. 75,000 and more participants were there in free sessions of ParkLives, and more than 33,000 participants took part in StreetGames (coca-cola.co.uk, Wellbeing: Active Lifestyles, 2017).

Sustainability Issues

The human resource makes a company sustainable and successful. The aim of the company is to recruit the most efficient people, development of the inclusive and diverse team and providing rewarding careers to employees in an environment that will sustenance their development. A safe, positive, and healthy environment would be provided to the workforce for achieving their whole potential. Three main areas that would be covered in this are Employee wellbeing, Health and safety, and Inclusion and Diversity (coca-cola.co.uk, Workplace, 2017).

The carbonated drink market is saturated, and people are becoming more health conscious. To target, such customers, the company must introduce more beverages that are good for health. For example, green tea or lemon tea.

Water scarcity is a major concern, as studied above, more than 1.5-liter water is required for the production of 1-liter cold drink. This will make a negative impact on the environment. A proper water management system must be added to the supply chain of coca cola. With that optimum utilization of water can be done and use minimum water for manufacturing and other processes.

The bottlers from more developing countries must be included in the franchise system of distribution of coca cola. The market is becoming saturated; targeting new market is the next step for the growth of the company.

The products must be diversified; products like snacks can be captured in near future. Moreover, more beverages like apple juices, or many more juices can be added to existing product list to gain advantage through economies of scale.

Other than physical stores, vending machines can be increased for retailing. In addition, make the product available at lounges, cafes, restaurants.

If the lead-time will be reduced, there would not delay in production of product on time. In addition, the more lead-time can result in reduced sales and a further decrease in demand.

Conclusion 

To conclude, it can be said that the supply chain of Coca-Cola from primary production to consumption of the product was analyzed. The strengths, weakness, opportunity, and threats were analyzed critically based on five elements of the supply chain of Coca-cola. Those were primary production, processing, distribution, retail, and consumers. The social, environmental, and economic sustainability of coca cola in the United Kingdom has treated an important part for the company. Various programs have been conducted by the company, for the wellbeing of people, water stewardship for the issue of water management, and climate change.

Conclusion

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