VALUE CHAIN ANALYSIS

DEFINITION It refers to a process whereas a firm determines the costs associated with organizational activities from purchasing raw materials to manufacturing into final goods and distribution of those goods. Michael Porter introduced a generic value chain model that comprises a sequence of activities common to a wide range of firms. Porter suggested that the activities of a business could be grouped under two headings: 1. Primary activities: those that are directly concerned with creating and delivering a product. 2. Support activities: are indirectly involved in production, brings effectiveness or efficiency.

1-Primary activities
1. 2. 3. 4. 5. Inbound Logistics: Receiving and storing externally sourced materials. Operations: Inputs are converted into final products. Outbound Logistics: Getting finished goods and services to consumers. Marketing & Sales: Identification of customer needs and the generation of sales. Service: Supporting customers after the product or service has been sold to them.

2-Support activities
1. 2. 3. 4. HRM: Recruitment, training, development, motivation and compensation of employees. Infrastructure: Structure, Planning, Management, Quality control, Culture, and Finance. Procurement: Sourcing resources and negotiating with suppliers. Technology development: Managing information, developing and protecting new products and services, developing more efficient processes, and improving quality.

COCA COLA INTRODUCTION

Coca Cola is a nonalcoholic beverage company that markets nearly 2,400 beverage products in over 200 geographic locations. It was formed in March 27 (1944). As a result of a superior value system it has remarkably developed as an industrial giant. Throughout this study we will analyze their value system by value chain analysis model.

MISSION
To refresh the world. To create value and make a difference. To inspire moments of optimism and happiness.

VISION
The vision of Coca Cola is concerned with people, partners, portfolio, planet, profit and productivity with a broader spectrum.

1-PRIMARY ACTIVITIES 1-INBOUND LOGISTICS

Inbound logistics deals with the handling of raw materials and inventory received from various suppliers.. Coca Cola has over 300 bottling partners which range from publicly traded businesses to small family owned operations They get a certain ingredient out of it, and this is sent all over the world. Coca Cola has factories in more then 250 countries. The coca leaves are coming out of South America. The operational procedures and tasks surrounding inbound logistics include warehousing, storage and control of raw materials used for concentrate and syrup manufacturing. Inbound logistics are a primary activity as they represent the beginning of Coca-Colas value adding conversion of inputs. The recipe is all over the world the same; this means there is strict development process and standardization in every country. Few initiatives are taken to streamline inventory control, storage and material handling. Some of the initiatives implemented are optimized such as the location of distribution facilities to minimize shipping times, material and inventory control systems, ICT systems to reduce time to send returns to suppliers and warehouse design to increase efficiency of operations for incoming materials. RAW MATERIALS Bottles Sugar Coca leaves water CO2 Crates Water Concentrate(fluid)
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2-OPERATIONS
The Coca-Cola Company and its bottling partners are not one and the same. The end product is made in two different factories. The Coca Cola Company fabricates the treacle (soda) and sells it to the Coca Cola Enterprises; they are responsible for the production, distribution and sales. The Coca-Cola Company only produces a syrup concentrate which it sells to over 300 bottlers worldwide who hold Coca-Cola franchises for one or more geographical areas. It owns or licenses the brands, and to connect its brands to the consumers, the company focuses on various marketing activities (The Coca-Cola System 2011). The bottlers in turn produce, package, distribute and merchandise the final product to customers like convenience stores, restaurants, street vendors, grocery stores, movie theatres, schools, amusement parks and etc. These customers then sell the products to consumers. MAJOR OPERATIONAL PRACTICES Efficient plant operations Level of automation Quality production control systems Efficient plant and work flow design PRODUCT MANUFACTURING PROCESS Syrup preparation Container washing Filling and crowning Final inspection Managing waste water

3-OUTBOUND LOGISTICS
The Coca-Cola Company has one of best and most efficient outbound logistics. The focus in outbound logistics is on controlling the flow and distribution of concentrate to the bottlers. Activities and procedures related to outbound logistics comprise inventory control, warehousing and storage and transportation of finished products. The Coca-Cola Companys outbound logistic departments perform an outstanding job including effective shipping processes to provide fast delivery and reduce damages, efficient finished goods warehousing processes, shipping of goods in big bulks to reduce costs and quality material handling equipment to increase order picking. The goods are delivered to various customers like stores, restaurants, wholesalers, retailers and other businesses. COMPONENTS OF OUTBOUND LOGISTICS Warehousing Inventory controls Transportation Shipping processes Distributional networks Order fulfillment management
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4-MARKETING AND SALES

The thing that Coca Cola does the best is marketing its product and brand. With their entire slogans and commercials trough the last twenty years it has become one of the most appreciated and respected brands all over the world. Everyone knows Coca Cola. Every country has its own marketing and promoting actions, but they fit all in the same vision of Coca Cola worldwide. For years Coca Cola had a monopoly and in a way they could set the price they would like to set, because there was only one Cola. The marketing strategy they use is directly linked to the consumer; from advertising, to point of sale, to ultimately opening and consuming a Coca Cola beverage. MARKETING PRACTICES Developing new products Changing current products Changing advertisements Changing packaging Launch new advertisement campaigns

5-SERVICES
The service that Coca Cola applies is also of huge value to the consumers and also to Coca Cola itself. In each country the service that Coca Cola delivers is different. Coca Cola wants to give the consumer a real experience when the product is bought. Its not just the drink but everything around it. This is also the reason why Coca Cola focuses for example in sports. In Europe they want to be related with mainly football, while in the states the target is basketball. Customer support Repair Maintenance Installation

2-SUPPORT ACTIVITIES

1. HUMAN RESOURCE MANAGEMENT

Coca Cola is one of the biggest companies of the world and has thousands of employees in all kind of different functions. It is the global company and it is impossible to create certain policies or procedures applicable in all divisions of the company, cultural and political differences need to be taken into account. The business side of Coca Cola is of course very marketing orientated. And Coca Cola selects their employees strictly with many needed competences. The selection procedure of Coca Cola has a lot of research in people that want to work for the Company. The people get screened and everything is checked.

HRM OF COCA COLA Effective HRM Planning Job Analysis Recruitment & Selection Training and development Performance Appraisals Compensation and Reward

2. TECHNOLOGY DEVELOPMENT
The technology development of the company is very modern and Coca Cola does a lot more then only sell the drink. There is a lot of niche marketing that focuses on all kinds of different products that can be bought in certain Coca Cola stores or via the web. The technology development of the drink itself is also very modern and advanced. TECHNOLOGY STATEMENT Using technologies to improve efficiency, leverage existing knowledge, and proactively mitigate legal issues by educating clients on key issues affecting the Company, while at the same time recognizing the constraints of cost, supportability, and compatibility with the overall Company's Information Technology strategy." TECHNOLOGIES Air tight bottling Just in time inventory system Inventory management Software solutions Strong networking Time saving processes Sophisticated equipment

3. PROCUREMENT
The procurement that Coca Cola applies is very strict. They have devised a full document of procurement for the suppliers so that to minimize the factors effecting the firms products and services. We purchase syrups and concentrates sweeteners; juices; mineral waters; finished product; carbon dioxide; fuel;; glass, aluminum, and plastic bottles; aluminum and steel cans; pouches; closures; post-mix (fountain syrup) packaging; and other packaging materials. We generally purchase our raw materials, other than concentrates, syrups, mineral waters, and sweeteners, from multiple suppliers.

PROCUREMENT POLICIES FOR RAW MATERIALS To be in accordance to the specifications Must be Safe and healthy Should be Environmental friendly PROCUREMENT POLICIES OF WORK PLACE Ensuring good work environment Health and safety Wages and benefits Overcoming labor or child abuse PROCUREMENT POLICIES FOR ENVIRONMENT Fulfillment of environmental laws Protection and preservation of environment Environmental laws and regulations Social responsibilities

4-INFRASTRUCTURE

CULTURE Coca cola has a strong organizational culture of ONE COMPANY, ONE TEAM and ONE PASSION. It supports the idea of strong culture to bring prosperity for the organization and for employees. Coca colas culture has really assisted the firm to achieve higher profits and enjoy good reputation throughout the world.

STRUCTURE Coca cola has an effective organizational structure with a strong hierarchy that supports the team work through immediate reporting. It promotes the idea that less people work under a specified leader so that ease of leading promotes effective interaction among the employees.