Applied Business Project of The Coca-Cola Company

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Executive Summary

The Coca-Cola Company is the largest carbonated soft drink company that has its drinks sold in restaurants, supermarkets, vending machines in approximately over 195 nations (Bell 2004,p.1-22).

Every aspect of the organizations business should thus be carefully planned and executed so that when specific activities are carried out within various functional areas they are done so with a high degree of accuracy in accordance with the overall organizational strategy and this can only be realized when overall organizational strategies are supported by the most appropriate operational strategies (Mahadevan 2005, p.122).

This is the reason why business managers and operational management experts ensure that organizations design all business process including their products and services so that the organization can be able to have a high degree of control of the various services and product which are being delivered to the customers.

Introduction

Operations management is a very important component of today’s business environment because it makes sure that there is up-to-standard management of an organizations entire resources that are committed to the creation and delivery of products and services to customers (Mahadevan 2005, p.42).

The anticipated success or failure of organizational strategies emanating from the highest to the lowest levels of strategy often depends on how well business managers are able to initiate operation management strategies, which act as incremental actions which will actually see the overall organization strategy come to succeed.

Leading multinational organizations such as Coca-Cola, Pepsi, and Nestle have their operations spread throughout the globe and it is thus necessary that these organizations be to operate in such a way that will allow the company to be highly efficient.

Multinational organizations such as these usually consist of numerous departments/function areas which serve as semi-independent units which absorb various inputs and come up with outputs which are vital to the day-to-day operations and overall business mission of the organization and hence this is why every action and operation of such companies are usually planned and mapped to follow a particular path (Ronen & Pass 2007, p 88-94).

It is important to know that the overall functioning of the organization depends on how well these functional areas/sub-systems are able to integrate their activities and therefore operate with synergy.

Normally in the ordinary course of business without the help of operational management practices, then such organizations are most likely to experience high levels of inefficiency that will hinder these organizations from operating smoothly and efficiently.

In simple terms, it is the duty of top management to ensure that the overall strategic intentions of the organization are actually backed up by operational strategy that will ensure that the organization is able to operate at smooth capacity.

The advantage of operating with a well-formulated operations management plan is that an organization is able to deliver its product and services to its market with a good measure of speed, thus saving time, thus making the organization more dependable (Campbell et al., 2002, p.146-150).

Additionally, the organization will enjoy high levels of flexibility within various functional areas of the organization resulting to high-quality products and services because of the existence of better production systems. Moreover, operating management practices also ensure reduced costs within the organization and a healthy and safe organization with happy workers.

Methodology

The research report on The Coca-Cola Company was mainly qualitative taking a look on the various operations management strategies that have been put in place by the organization in order to ensure that overall organizational strategies together with short-term strategic intentions are realized.

The data gathered was hence gathered by way of a telephone interview using a semi-structured open-ended questionnaire that allowed the researcher to use his/her discretion to answer questions and drive the conversation with the interviewee in the best possible direction. The findings of the research went ahead to make the main contributions of this research.

The Coca-Cola Company

My research involved taking a look at overall strategy and especially the Operations Strategy and the key Operational Performance Objectives in a company/organization, I had the chance to interact with the management of The Coca-Cola Company.

The Coca-Cola company which is located in Atlanta, Georgia U.S.A., was founded and expanded on a strong culture of research and rigorous planning, which has enabled the top management to use a holistic planning approach that enables the management to conduct entire product and process planning.

The company has over 100 years experience in the world market and the ride has not been particularly smooth for the company. Upon founding, Coca-Cola was sold in pharmacies, but due to the increased demand of the product, the company decided to expand and go commercial through a mass production strategy. By the 1950’s the drink had a huge consumer market U.S.A. having millions of people as a part of its huge following.

Since Coca-Cola’ inception of Bottled soda, the company put into place well-developed planning and operation management strategies that have assisted the company to go global through franchising and licensing strategies to meet demand patterns in various regions.

Instances of poor operations management have also cost the company a lot of money and market in the past, especially in 1985 when Coca-Cola tried to change its formula hoping to please customers, but what ensued was public outcry ensued forcing the company to revert back to classic Coca-Cola.

The reaction of the public to the new Coca-Cola was so harsh simply because the company had not properly embraced the importance of Operations Strategy and the key Operational Performance Objectives in its product and process modules, thus leading to the death of the new formula Coca-Cola.

The Coca-Cola Company Strategy

The Coca-Cola Company is one of the most profitable companies in the world, making annual profits of over $5 billion. The company’s corporate strategy is to grow and expand its sales and product line through penetrating the market more or introducing newer product lines.

This fact has enabled the company operate with an aggressive business strategy that demands that all employees and departments be quite innovative and aggressive in their business. The Coca-Cola Company has thus been able to develop new product lines, including various flavors on Coca-cola, Novida and many other beverages with the aim of competing effectively within the market.

The Coca-Cola Company’s strategic intent is to “Bring refreshment to a thirsty while at the same time to create shareholder value through profitability and other business dimensions. The company desires to have a production and supply system proficient enough of realizing opportunities on a global scale through speed, reliability, quality and high degrees of efficiency.

Moreover every functional area within the company operates with the same orientation that is streamlined with corporate and business level strategies this is why functional areas such as marketing, finance, research and development, procurement, business development, research and competitor intelligence are usually vigorous and more aligned with the consumer needs and the market (Mahadevan 2005, p.70-77).

Comparison of Overall Strategies to Operations Strategy and How They Complement Each Other

The Coca-Cola Company highest management organ is located in its corporate headquarters and is solely charged with the responsibility of giving the soft drink giant an overall direction in accordance with the corporate strategy and providing the necessary support to the regional structure by closely directing their efforts and strategic direction.

Key strategic decisions are made by an Executive Committee of 12 Company Officers, the Committee is not only responsible for shaping strategic priorities but also setting operation strategies and the necessary operation performance objectives of the entire organizations in liaison with geographical heads ( Bell 2004,p 5-15).

It is the duty of the topmost management in coordination with other regional offices to set out the appropriate operation strategy and operational performance objectives, which will ensure that day-to-day operations and actions will assist in achieving long term strategic targets.

The Coca-Cola Company is an organization whose success is founded up on its capability to connect with consumers, and understand their needs. This is hence one of the many reasons that, The Coca-Cola Company is organized into a regional structure to oversee that set operation objectives and performance targets are met in tandem with short-mid and long term objectives (Campbell et al. 2002, p.24).

Furthermore, each regional department /SBU is divided down into divisions which are charged with the responsibility of ensuring that Divisions headed by directors who oversee day to day operations in various functional areas these directors are answerable to and regions operate as business unit teams, with each Director reporting to the General Manager (Bell 2004,p 5-15).

The Coca-Cola headquarters usually operates with quarterly sales forecasts obtained from various regional strategic business units, which serve as a basic framework of setting targets and a clear operational framework in a given business cycle.

Targets and forecasts within The Coca-Cola Company emanates from important business data, which is periodically collected and communicated to their various franchises/bottling plants worldwide. Using these forecasts and targets the company is then able to implement a matching operations strategy/plan, which will enable the company achieves its targets (Koontz & Weihrich 2009, p.48-54).

The company has put in place a clear process and a smooth and open communication system within the company that ensures every functional department and regional headquarters coordinate activities smoothly with all bottling plants.

Since franchises also exist as semi-autonomous units the company ensures that they maintain a healthy relationship that creates a good climate for fostering growth and achievement overall corporate and business strategies.

The current Operation strategy within the company has been put in place by the top management in consultation with other relevant departments to ensure the company is able to stabilize and increase long-term cash flow by growing gallon sales by way of increasing the concentrate volume demand by various allied bottlers hence increasing the periodic and annual profit margins of the company (Bell 2004, p. 64).

Secondly, current operation strategies aim to expand the company’s global presence by continuously improving business systems by identifying the right partners in order to penetrate the market more effectively through principles of objective of bottling that makes sure the company’s makes moves which boost the competitive position of the company by coming up with production systems which are highly efficient, distribution channels which are entirely timely and highly reliable, and marketing mechanisms that are capable of fostering long-term growth not only in volume but also in revenues and cash flow hence contributing majorly to increase in shareholder and stakeholder value in the within the company(Campbell et al. 2002, p.103-104).

The diagram below is an illustration explaining how often operation managing is important because product and process design usually assist a company to achieve its financial targets and break even in good time. It is operations management techniques that have enabled Coca-cola to be able to achieve regional sales targets.

Over the last 100 years, The Coca-Cola Company has successfully been able to reduce its vulnerability in the market and its business model thus making the company more acceptable by pursuing more feasible business options that reduce the amount of risk that the company faces in its environment.

Before launching the product, the company rigorously conducts marketing research activities in order to identify and screen ideas and concepts that are considered valuable to the company (Mahadevan 2005, p.90).

The practice of carrying out serious and comprehensive research has enabled the company’s ability to implement more feasible and workable ideas increase tremendously, thus increasing the success of the company.

Since the failure of the new formula Coke and the reversion of Coke classic, the company’s top managers decided to employ a more holistic process design, product & service design program that would guarantee the success of the company’s future moves in the market.

This practice has ensured that the company has been able to launch new product lines or even revitalized product lines with the right speed and perfect timing, thus not delaying the realization of break even.

The Coca-Cola Company has a very strong and well-designed system that controls all aspects of obtaining raw materials and distributing finished products using Manufacturing resource planning which depends mainly on set forecasts of various franchisees; this enables The Coca-cola Company to accurately calculate concentrate shipments at specific intervals to various bottlers around the world.

The use of Materials resource planning and superior scheduling together with the best sequencing techniques, the company is able to match demand and supply patters globally while at the same time avoiding shortages(Koontz & Weihrich 2009, p.56-60).

Coca-Cola has put in place the necessary business policies and operational safeguards to care for the company’s suppliers and maintain a healthy relationship that will ensure the company gets the highest quality of input from them.

Additionally, Coca-Cola operates with lab technicians and nutritionists who are charged with the responsibility of scrutinizing supplies which come from their suppliers in order to ensure a higher quality of products which are manufactured by Coca-Cola.

Operation management techniques within Coca-Cola have enabled experts to have the ability to plan in the short-term, mid-term and long-run and dedicate the necessary raw materials and supply chain resources to distribute finished products that are of high quality.

Using specific sales forecast data and proforma statements emanating from channel members the company is able to offer consulting and advisory services that are part of their franchise management services to recommend to partners on what amount of various concentrate quantities to acquire.

Additionally, the use of forecasts based on sales form part of the framework, which is used by the company, which is used by the company and various franchises in the process of capacity building.

The company’s mission is to quench the thirst of individuals throughout the year and thus the company ensures that its supply chain activities are up to date and capable of ensuring that raw materials from a single source which is the headquarters and various distribution channels which include regional departments/strategic business units which are put in place to match demand and supply globally (Campbell et al. 2002, p.67).

The entire manufacturing processes of Coca-Cola products are carefully mapped; scheduled and sequenced using Computer-Aided Technology using computer integrated manufacturing lines, which ensure that product quality is highly accurate with minimal errors.

The use of computerized manufacturing technology and distribution systems has enabled the company operate daily under the right capacity by designing and creating a good layout of the workflow within their plants (Slack, Chambers & Johnston 2007, pg 54-58).

Computer-Aided manufacturing plays a very big role in ensuring that not only capacity is achieved but also project planning and control are carried out within suitable grounds to avoid high degrees of failure. Furthermore, computerized manufacturing systems are responsible for ensuring that some of the TQM (total quality management) objectives within the company are met.

With high levels of quality then costs that arise as a result of wastage are more likely to be avoided and this operational strategy contributes a lot to the company’s overall strategic intent.

Additionally, human resource managers have played their role properly as far as operations management is concerned by using job design techniques that ensure employees are motivated and that their work is flexible enough to optimize day to day requirements within various plants around the world.

With the company currently having 90,000 employees worldwide the company has been able to properly allocate and assign human resources where they are critically needed most within the company’s network of bottling plants (Koontz & Weihrich 2009, p.113).

The marketing operations plan has also played a big role towards ensuring that the company is able to achieve its long term business objectives. The company’s promotion mix is made upon a consolidated fund that is collected from various regions and used in the process of developing the final promotion mix of the entire organization.

The promotion mix is then matched to the various seasonality changes within the market day in day out one step at a time, this way the company is entirely able to inform, remind, educate and persuade the target market so that the organization can successfully sell the desired quantities of its product to the market.

Coca-Cola’s main aim of its promotional activities revolve around getting enough shelve spaces in departmental stores to display their products; they also conduct sale promotions for both end consumers retailers and distributors (Koontz & Weihrich 2009, 112-120).

The main media that are used by the company in advertising include television commercial, billboards, and print media. Additionally, channel members get assistance by getting point of sale materials such as posters and stickers and periodic promotions to woo consumers to purchase more of the product (Campbell et al. 2002, p.45-49).

The company has been able to link its overall long term goals to simple day to day advertising that aims to increase repeated exposure through landmarks such as sports arenas and teams ranging from soccer, cricket and basketball to promote their product and to achieve their long-run sales targets.

Conclusions and Recommendations

Operations management is a very important part of business operations. Strategies tend to have futuristic and long term orientation and it is hence necessary that managers develop a day to day operational plan that will consist of specific business actions that will act as incremental actions that will give birth to the vision, which is the strategy.

The Coca-Cola’s company has put in place good strategies but knowing this is not enough, the management and corporate headquarters should put in place a more vigorous and comprehensive surveillance system that will ensure the right operational plans are put in place in the present and future to ensure that day to day operations within various functional areas to guarantee success.

The operation strategy has ensured that marketing activities, finance activities, research and design activities and activities of all other functional areas are streamlined with overall corporate strategies using good operational strategies that ensure day to day efforts within the organization all aiming to achieve long term goals.

Coca-Cola’s aggressive competitive strategy is only successful because of the fact that the company’s top management has put in place the right Operations Strategy and the key Operational Performance Objectives within the company to help the company/organization achieve the kind of reputation and market position the company faces today.

Advanced operation management practices in product design, network design, layout of plants, job design within the human resource function, capacity planning, total quality planning and failure prevention that are coordinated with the help of the corporate headquarters has been quite instrumental in operations management within the organization.

References

Bell, L. 2004, The story of coca-cola: built for success, Black Rabbit books, Mankato MN.

Campbell et al 2002, Business Strategy an Introduction, 2 edn, Butterworth-Heinemann, Linacre House, Banbury Rd.

Koontz, H. & Weihrich, H., 2009. Essence of Management an International Perspective. New Delhi: Tata McGraw Hill.

Mahadevan R., 2005. Operations Management: Theory and Practice. New Delhi: Pearson Education India

Ronen, Y. & Pass, S., 2007. Focused operations management: achieving more with existing resources. New Jersey: John Wiley and Sons.

Sinkovics, R. & Ghauri N. P., 2009. New Challenges to International Marketing. London: Emerald Group Publishing.

Slack, N. Chambers, S. & Johnston, R. 2007. Operations Management. Harlow: Pearson.

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