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Logistics and Operations Management Coursework Writing Sample

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Logistics and Operations Management

Coca-Cola Company

The Coca-Cola Company is one of the most successful companies globally regarding market share and customer satisfaction (MintGlobal, 2014). The company ventures in the production of a wide range of still as well as sparkling beverages including juices, bottled water, sports drinks, ready to drink coffees and teas, among others. The company started operating in the early 20th century in Georgia but has currently undergone massive restructuring and vigorous growth to attain a global coverage (Pendergrast, 2013).

Market Position of Coca-Cola

According to MintGloba (2014), the company currently owns/licenses more than five hundred nonalcoholic brands of beverages comprising of more than 3500 products consumed in over two hundred nations globally. The report further reveals that Coca-cola has partnered with more than two hundred and fifty bottling companies across the world so as to ensure it effectively satisfies the thirst of its wide base of customers. Maverick (2015) reveals that Coca-cola and controls approximately 40% while PepsiCo controls 20% of the global nonalcoholic beverages (Stanford, 2012).

Coca-cola was rated among the most valuable brands by Interbrand owing to its vast brand value totaling to $78.42 billion as of 2015. The beverage industry is currently dominated by Coca-cola and PepsiCo, which control the market in most of the countries globally. According to MarketLine research, 2013, the company currently controlled 17.9% in volume of the soft drinks market as of 2013. This percentage is quite large globally considering soft drinks control a whopping 35% of the global beverages industry. The company reported revenues over $44 billion in 2014 which was highest among companies that venture in the same industry (Coca-cola Inc., 2014).

A table showing the level of competition between Coca-Cola and PepsiCo Soft Drinks Category Share for 2007/2012

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Adapted from Euromonitor International, 2013.

However, Coca-cola experiences stiff competition from other multinational beverage corporations such as Dr. Pepper Inc., PepsiCo, and Nestle. Interestingly, the company has reduced the competition while simultaneously adding to its customer base and coverage by the acquisition of companies such as Minute Maid in 1960, Thums India in 1993, Barg’s in 1995, Odwalla fruit juices and smoothies in 2001, Fuze Beverages in 2007, and Ziko in 2013. It has also made various attempts eliminate competition by bidding to purchase Huiyan Juice in 2009 in China which would have made it a monopoly. It has also acquired a stake in other beverage companies such as Suja Life LLC (Coca-Cola Inc, 2014.).

Business Competitive Strategies

It is necessary to analyze the competition so as to develop effective competitive strategies and to assess the best route for the company.

Cost-Leadership Strategy

A cost-leadership strategy is one of the strategies used by large corporations such as Coca-cola to achieve lowest possible distribution and production costs by use of economies of scale. These companies have purchasing, manufacturing, and distribution strengths which they use to fight lower companies that lack the strength (David, 2013). Coca-cola, for example, has implemented the strategy by signing a contract with bottling companies so as to ensure they do not offer services to other companies. The company also implements a financial might advertising strategy so as to increase its coverage while fighting off the competition from smaller firms in the business who lack such financial strength. In 2014, for example, the company spent $ 3.499 billion on advertising compared to Dr. Pepper Snapple Group, which was the third largest advertiser in 2014 at $ 473 million (Elmore, 2015).

Differentiation Strategy

The differentiation strategy involves targeting quality and value seekers by offering premium, value-added, unique, and strong brand equity at levels that competitors cannot manage. Coca-cola has implemented the strategy by introducing unique premium products like diet coke, cherry coke, vanilla, and lemon Coke, which target healthy-diet seeking customers (Russell & Taylor, 2006).

Cost-Focus Strategy

Cost-focus strategy is a form of strategy that focuses on a narrow segment to protect the corporation from competition, the difference being the level of specialization. The strategy closely resembles cost-leadership with Coca-cola accomplishes this strategy by offering low prices in its coffee beverages in particular geographic areas such as Japan so as to counter competition. It has also labeled differently drinks that have little differences and offered lower prices so as to counter competition from companies like PepsiCo.

Operations Strategy

Proper and innovative operations strategies are often the main reason behind the success of various corporations. According to David (2013), these strategies are concrete actions that the companies chose, mandate, and stimulate while implementing then within the operations functions in order to realize the set goals.

Operations Strategy Formulation

The initial process of operations strategy requires proper formulation which means choosing the most appropriate course of action in order to realize the company’s goals and ultimately fulfill the organization’s vision. Operations strategy formulation starts by setting of the organization’s objectives which stress the state of a corporation being and future status. It is necessary for a company to set achievable but ambitious objectives before formulating strategies which in this case act as the medium for the realization of the objectives (David, 2013). The company should also evaluate the organizational environment and the general industrial and economic environment so as to identify strengths and weaknesses as well as those of the competitors. It should then set quantitative targets by practically fixing values for some objectives to compare with long term customers and evaluate the departmental and product zones contribution. The step involves critical macroeconomic trend analysis. Once the step happens, the company should then create a performance analysis to evaluate the gap between planned performances before making a choice of strategy by considering organization strengths, goals, external opportunities, and potential limitations.

Coca-cola is known for its clear strategies such as the Vision 2020 which aims puts emphasis on public relations and elaborate customer satisfaction as a great necessity in achieving its projected profits. The company often makes long-term strategies that are vigorously evaluated so that to ensure it outdoes those of the competitors so that they will always have an upper hand over their close rivals (Elmore, 2015). Long term strategies are important for profit improvement of such big companies which are beyond the survival-fighting stage. Their proper drafting has led to the continuous success of their implementation such as education funding in India.

Operations Strategy Implementation

The implementation process ensures that the long-term aspirations of a company are realized. It often consists of various activities that that intend to turn the basic ideas of operations strategies into actual operations to achieve the set goals. Strategy implementation forms the basis of the operational process which emphasizes on efficiency and involves every means related to the execution of already formulated strategic plans (David, 2013). The process involves designing of an infrastructure for the business operations and initiation of decision-making or strategic activation. The management is then required to monitor and control the actual performance of the businesses while ensuring the correct course is followed. The corporation is also charged with exercising of strategic leadership so that to ensure that the implementation process takes place in the planned way. The implementation process is critical, and the company should, therefore, ensure that they have a purpose, a clear entry point, the actual process, and a precise definition of the implementation participants. Coca-cola is one of the few companies whose implementation processes are conducted thoroughly and at par with the plan. Its effective strategy implementation can be seen in the rate at which the processes succeed such as its 2014 world cup and various instances of Olympics where it is one of the most standout official sponsors (Aaker, 2008).

Operations Strategy Monitoring

During implementation, the company should closely monitor its operations to ensure that there is proper adherence to the operations plan. Resource monitoring enables the management team to know when to make alterations to the plan or when to make improvements against performance indicators that were set in the previous processes. One of the most critical areas to monitor is the environmental changes which may force the company to alter its strategies to adjust to the changing conditions. The second area to monitor is resource usage which is likely to affect the implementation team’s performance when changes occur. The company should monitor to ensure that the proportion of resources used is congruent to the level of performance achieved.

Coca-cola conducts extensive monitoring on its implementation of operations strategies so as to ensure that its concrete foundation as the leading beverage manufacturer prevails. This monitoring aspect is evident in how the company changes its course of action to ensure it accommodates the changing environmental factors such as sponsorship deals to upcoming activities that help the company to market its brand. The company has exercised various activities such as acquisitions so as to counter the external environmental changes which such as competition. Its introduction of Diet Coke and bottled water in the recent past clearly demonstrates its swiftness in grabbing upcoming opportunities and conducting necessary changes within its implementation of long-term strategies.

Operations Strategy Control

The last process of operations strategy is the control process which is a set of measurements, analysis, and action decisions that the company requires for timely management of the strategic operations of a process. The control process mainly involves measuring the accuracy of quantitative value chains of outcomes. The process mainly occurs in intervals such as profit per quarter or some weeks and often uses past performance on similar services/products or by current similar operations being performed as the control object. To achieve its long-term strategic plans, Coca-cola makes drastic changes within its operation to ensure that non-profit making operations are corrected so as to maintain profitable operations (Elmore, 2015). The recent unexpected shortage of sugar led to the company’s closure of its operation plants in Venezuela after it reached a point where the amounts it produced had drastically dropped below its set volumes. Its control of three Indian plants as a result of poor demand is also attributed to its realization that the orders being made were lower than the values in earlier years.

Strategy Improvement

Strategy improvement is the variation and alteration of the strategic plan so as to accommodate changes that were not easily predictable during the formulation process. Operations management is of major importance in strategy improvement in that it facilitates monitoring of the strategy during implementation as well as against past performances so as to identify variations and make the necessary adjustments. Proper monitoring is necessary so that the company will realize when it is necessary to make adjustments to achieve good results. It is necessary to document monitoring data so that the company can easily note the changes as they occur within the operation strategy and helping in improving the planning process. The monitoring process will be more successful if selection, analysis, measurement, improvement, and evaluation are carried out in a modeled cycle. It should also be conducted before, during, and after an event so that to ensure the occurrences at the three stages are easily comparable so as to give a clear course of action.

Conclusion and Recommendation

Despite the fact that Coca-cola has been performing excellently and increasing trust among its customer base, it should improve so as to maintain its position and improve its growth. As time goes, people’s needs keep on changing and with Coca-Cola’s financial might, it should be making steps to establishing new products into the market. Coca-cola should also embrace public relations so as to avoid conflicts with the general public as happened in India as a result of water conflicts which directly affected it by reducing its number of customers and consequent closure of plants. The company should also improve its workforce by enhancing continuity so as to guarantee a positive direction.

References

Aaker, D. (2008). Strategic market management. Chichester, John Wiley.

David, F. R. (2013). Strategic management concepts and cases: A competitive advantage  approach. Boston: Pearson.

Elmore, B. J. (2015). Citizen Coke: The making of Coca-Cola capitalism. New York: W.W.  Norton & Company

Euromonitor, (2013). Coca-Cola Co. SWOT Analysis: In Soft Drinks (WORLD). Retrieved from http://www.euromonitor.com/medialibrary/PDF/Coca-Cola-Co_SWOT_Analysis.pdf

Russell, R. S., & Taylor, B. W. (2006). Operations management: quality and competitiveness in a global environment. Hoboken, NJ, John Wiley.

Coca-cola. (2014). Coca-cola 2014 Annual Report. Retrieved from https://www.coca-colacompany.com/content/dam/journey/us/en/private/fileassets/pdf/2015/02/2014-annual-report-on-form-10-k.pdf

Pendergrast, M. (2013). For God, country and Coca-Cola: the definitive history of the great American soft drink and the company that makes it. Retrieved from http://zniub.com/61328.html

Stanford, D. (2012). Marketing Budget to Take On Coca-Cola: RetailPepsiCo May Boost

Marketing Budget to Take On Coca-Cola. Retrieved from http://www.bloomberg.com/news/articles/2012-01-27/pepsico-may-boost-marketing-budget-to-take-on-a-surging-coca-cola-retail

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