Coca-Cola's Fizz Factor
Case # 2, pg. 113, Fizz Factor
Discussion Questions
From this abbreviated description, what resources and capabilities do you think The Coca-Cola Company has? Does the fact that an organization is so heavily into global markets make it more difficult to develop unique resources and distinctive capabilities? Explain.
In terms of resources, The Coca-Cola Company has many things working in its favor. As an industry leader, the company has been able to establish a strong financial position which enables it to fund new production ideas such as expanded product lines (Fanta, Sprite, Diet Coke, etc.) as well as new product marketing strategies such as updated bottle designs and newly designed coolers. In addition to financial resources, Coca-Cola also enjoys the benefit of brand recognition and global familiarity. “Having the ‘best’ global brand, at least according to this [BusinessWeek] ranking, means the brand has value, just like any other asset.” (Coulter, pg. 113) But, as it is mentioned in the text, resources only provide value when the company has processes in place to exploit those resources. For Coca-Cola, these organizational capabilities have been demonstrated through successful marketing campaigns (with the exception of New Coke), the development of successful product offerings, and a constant system of evaluation for brand image. Being involved in global markets, though, can create some challenges in execution of these capabilities. Companies that operate on a global scale must always maintain an awareness of how their actions (good or bad) impact the world around them. According to the sustainability report from Coca-Cola’s Web site, their company approach “involves contemplation of [their] role in addressing global challenges that are far bigger than any one company – challenges such as climate change, water stewardship, economic disparity and more.” Having the resources to exploit for company benefit only works if it those resources are utilized in a way that does not create a negative global impact. There is a challenging balance to be struck, but it seems that The Coca-Cola Company is planning accordingly.
Do you think the company has any distinctive capability(ies)? Explain.
I do feel that The Coca-Cola Company has some definite distinctive capabilities. “Distinctive organizational capabilities are the special and unique capabilities that distinguish an organization from its competitors” (Coulter, pg. 95) and Coca-Cola has shown that they can distinguish themselves in this way. While there are other global beverage brands like PepsiCo, Coca-Cola has been able to utilize a strong marketing program that keeps their brand relevant to the industry consumers. “The company’s polar bears, jingles, and advertisements are always popular. In the fall of 2011, the company unveiled a specially designed Coke can as part of a marketing campaign aimed at protecting polar bears and their habitat.” (Coulter, pg. 113) Additionally, CEO Muhtar Kent has worked to expand the company’s global brand awareness – developing a consistent brand image for all customers worldwide while working with distributors and vendors in an effort to create a solution for barriers in the field (such as old equipment). These capabilities are supported not only by financial resources, but also by effective staff that the company has assembled in order to execute on these capabilities.
Go to Coke’s Web site [thecoca-colacompany.com], and find five “fun” facts in the material about the company. Write these down, and then discuss how each could be a strength, a weakness, or both.
The Coca-Cola bottle is celebrating 100 years of being in production.
I see this as a company strength. When it comes to brand recognition, Coca-Cola has done a terrific job of making their bottle immediately recognizable to consumers. Even though it has been in production for 100 years and has undergone minor style updates, the Coca-Cola bottle is familiar and alluring to consumers in a sea of other products.
Water replenishment goals are alive within the company.
Coca-Cola has established a company goal of being able to replenish 100% of the water used in the production of their beverages. This means taking innovative steps to safely return water to the communities from which Coca-Cola draws in production. This is accomplished by identifying waste water treatment systems and water use reduction strategies. This can be a strength in the long run because it establishes Coca-Cola as a sustainable brand with environmental consideration. However, the development of this technology is time consuming and costly which depletes resources from other operational pursuits and may be seen as a weakness in the short run.
Coca-Cola owns or licenses 113 different beverage products and/or beverage brands.
This can be seen as both a strength and a weakness for the company. Each brand that Coca-Cola owns maintains the potential to create a revenue stream for the company which is a definite strength. Additionally, the variety of brands means that the company is likely to appeal to just about every segment of the market. However, such a large variety products means the dilution of brand presence in the market. For every Barq’s Root Beer sold (one of the many Coca-Cola brands), there is one less purchase of the primary Coke product. Despite the ultimate financial gain for Coca-Cola, the reduction in brand presence can have a negative long-term impact which seems like a weakness.
Coca-Cola has worked to build our current image of Santa Claus.
While the story of Santa Claus dates back to 1822 (if not earlier), the modern image of Santa Claus is based largely upon the work of Coca-Cola artist Haddon Sundblom. Sundblom began illustrating the modern Santa with an ad campaign in 1931 and, although the image was updated slightly over the years, the company has been able to create a lasting image that appeals to people all over the world. While the Santa image is helpful to seasonal marketing campaigns, it is more widely indicative of the power of Coca-Cola’s marketing ability. That ability to build lasting images is a definite strength for the company.
Coca-Cola has been working to innovate ideas around sustainable packaging – including the development of a new “plant bottle”
The development of more sustainable packaging is another way in which Coca-Cola is working to appeal to the more environmentally conscious consumers in the world. Developing products like the “plant bottle” helps consumers feel good about buying from a brand that supports such initiatives. In fact, according to the Coca-Cola website, “the innovation has boosted sales of key brands like Dasani”. This provides a definite strength to the company because they are expanding their loyal consumer base. However, like the water replenishment initiative, development of sustainable product packaging can divert financial resources from other company ventures which can be seen as a weakness.
What approach to internal analysis would you suggest that CEO Muhtar Kent use in assessing his organization’s strengths and weaknesses? Why?
I would suggest that CEO Muhtar Kent utilize the steps of the Capabilities Assessment Profile to evaluate his company’s strengths and weaknesses. In our case study, it is noted that when Kent came onboard, “One of the first things he noticed about the company was its inward focus.” (Coulter, pg. 113) This internal focus created a limitation for the company because it never really looked at the global potential for brand development. The Capabilities Assessment would help Kent to fully recognize the distinctive capabilities of Coca-Cola and better understand how to exploit those capabilities. “Despite its market-leading brand, Coke cannot take anything for granted, especially in today’s harsh economic climate.” (Coulter, pg. 113) It is imperative that Coca-Cola continue to maintain the competitive advantages that they have established in years past. Being constantly aware of company capabilities is a key step in achieving this.
References:
Coulter, M. Strategic Management in Action – 6th Edition (2013)
Moye, J. (2013) 15 Billion and Counting accessed from http://www.coca-colacompany.com/stories/15-billion-and-counting/
The Coca-Cola Company (2012) 5 Things You Never Knew About Santa Claus and Coca-Cola accessed from http://www.coca-colacompany.com/holidays/5-things-you-never-knew-about-santa-claus-and-coca-cola/
The Coca-Cola Company (2016) All Brands accessed from http://www.coca-colacompany.com/brands/all/
The Coca-Cola Company (2016) Celebrating 100 Years of the Coca-Cola Bottle accessed from http://www.coca-colacompany.com/cokebottle100/
The Coca-Cola Company Water Stewardship & Replenish Report accessed from http://www.coca-colacompany.com/packages/water-stewardship-replenish-report/collaborating-to-replenish-the-water-we-use/