Company Overview
The Coca-Cola Company is a large multinational corporation established in 1892 and is currently headquartered in Atlanta, Georgia (Brondoni, 2019). The most famous product manufactured by the company is its carbonated soft drink, Coca-Cola, which was invented by John Smith Pemberton in 1886 (Brondoni, 2019). However, the corporation has grown in the last century and has acquired more than 500 brands, with a focus on non-alcoholic beverages, such as bottled water, fruit juice, fruit sodas, canned coffee, and energy drinks. The Coca-Cola Company operates as a franchised distribution business, producing syrup concentrate for the drinks and selling it to the bottlers (franchisees).
Due to the variety of products on the list of the Coca-Cola Company’s owned businesses, it also has many large and small competitors. One of the largest rivals is PepsiCo, an American corporation founded in 1920. Similar to the Coca-Cola Company, PepsiCo has a variety of brands that manufacture non-alcoholic carbonated drinks, although they also produce snack foods, energy drinks, juices, and more. Another major competitor is Keurig Dr. Pepper Inc., a conglomerate that was created in 1981. This company produces a soft drink called Dr. Pepper in the United States. Simultaneously, the Coca-Cola Company and PepsiCo have the rights to manufacture this beverage in Europe, South Korea, Canada, and Oceania.
The competitive advantages of the Coca-Cola Company are its large size, long history, and strong brand image. First, the Coca-Cola Company has a variety of products that target a wide selection of client groups. Second, the Coca-Cola Company is one of the oldest carbonated drink companies that became popular worldwide, and its secret formula still has a sense of mystery that attracts customers. Finally, Coca-Cola and other drinks of the firm have been represented in media and advertising for more than a century, making its brand image one of the most consistent parts of modern consumer culture.
Strategic Capacity Planning
Strategic Capacity Planning (SCP) is the process of evaluating the capacity needs of the firm in the long term (Stevenson, 2020). SCP includes assessing the degree of flexibility to address the potential change in demand as well as the number of resources and products that may be needed by the company in the future. SCP is vital for companies of all sizes as it allows the manufacturers to adequately supply goods to customers and anticipate fluctuations in the market without losing resources. For example, adequate SCP may help the company mitigate the consequences of an accident or act quickly to reduce production to prevent losses. In the case of the Coca-Cola company, the flexibility of SCP is vital for managing franchisee relations and monitoring the company’s capacity to satisfy all members of the supply chain.
The three key questions of SCP address the type of capacity, demand, and time. First, one has to answer what kind of capacity is needed for the business. The Coca-Cola Company operates as a franchise; thus, its SCP may involve both its production of syrup and control over franchisees’ ability to obtain the necessary resources. Moreover, as the Coca-Cola Company has different brands internationally, it has to consider the local competition and prognosticate such elements of capacity for its brands as packaging, water, additives, and other resources.
Second, the company has to determine how much capacity is needed to match the current demand. In the case of the multinational corporation, the Coca-Cola Company has to analyze a variety of national markets to understand not only their desire for its baseline products but also the potential for new flavors and collaborations. Here, the analysis relies on the place of the Coca-Cola Company and its products in each separate market. The volume of resources that the business spends should be optimized to avoid waste, which leads to financial losses.
Finally, SCP asks when the capacity is needed; there are three types of capacity planning – long, medium, and short term. As a multinational conglomerate, the Coca-Cola Company has to engage in rigorous long- and medium-term SCP, assessing capacity needs for the company’s overall goals as well as its objectives for the next two to three years. Long-term SCP covers such issues as sustainable capacity (achievable production levels and acknowledgment of breakage and maintenance), production capacity (maximum output possible), and effective capacity (optimal levels of production to fit within people’s working standards).
Supply Chain Management
The Coca-Cola Company has to have many strategic partnerships to deliver its products to people worldwide. Apart from that, the company needs to continuously innovate to optimize its supply chain and manufacture products according to the latest trends on the market. In the last few years, sustainability and environmental protection have been at the center of the discussion in manufacturing. Thus, in 2018, the Coca-Cola Company entered into a strategic partnership with Ioniqa Technologies, a company from the Netherlands that specializes in recycling hard-to-recycle plastic waste (Ioniqa, 2018). The Coca-Cola Company started this collaboration due to the rising consumer interest in the preservation of the environment and the role that plastics play in changing the climate. Ioniqa offered a solution to not only take plastic waste that was easy to recycle but also waste that was not considered by other recycling plants (Business Wire, 2019).
The main risk of the Coca-Cola Company agreeing to this partnership is the lack of a meaningful result and financial losses. If Ioniqa and the Coca-Cola Company cannot find a solution that would incorporate hard-to-recycle plastics into the manufacturer’s packaging, the partnership would have been fruitless. Thus, the Coca-Cola Company’s financial support of Ioniqa would not be strategically viable. Another risk is that the product produced in partnership with Ioniqa will endanger the supply of Coca-Cola’s products or even customers’ health. While Ioniqa ensures that its upcycled plastics are comparable to other recycled plastic products, one cannot guarantee that the bottles will be able to maintain the same quality during the whole lifecycle of the product.
The partnership between the Coca-Cola Company and Ioniqa requires the former to increase its initial costs. First, the Coca-Cola Company is the facilitator for the development that the recycling company performs – this requires the corporation to fund all research and support the production of new plastic bottles. Second, the company also assumes costs for the manufacturing of new bottles. In the future, if the collaboration is successful and new upcycled materials can be integrated into the supply chain, the Coca-Cola Company will be required to work with its franchisees to introduce the new resources into the chain internationally. Moreover, the business will also need to update its quality assessments to ensure that all bottles can maintain the product’s quality throughout its lifecycle, from bottling to customers’ consuming the product after purchase.
References
Brondoni, S. M. (2019). Shareowners, stakeholders & the global oversize economy. The Coca-Cola company case. Symphonya. Emerging Issues in Management, (1), 16-27.
Business Wire. (2019). Breakthrough technology takes plastic from the ocean and uses it in a Coca-Cola bottle. Web.
Ioniqa. (2018). The Coca-Cola Company announces loan agreement with Ioniqa. Web.
Stevenson, W. J. (2020). Operations management (14th ed.). McGraw-Hill Education.