LO2 Assess an organization's internal environment and capabilities

Part one: Determine (resources, competences, capabilities of your selected organization on

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Resources of Coca-Cola

Resources could be classified into 3 categories name Tangible, Intangible and Human. In order
to have an overview of Coca-Cola's resources and strategies

Tangible resources
These contain financial resources and physical resources. In 2018, Coca-Cola earned $ 8.6 billion
in profit. The market value is estimated at $ 158.8 billion (Forbes, 2019) Coca-Cola owns strong
and sustainable financial resources. They use strong financial resources to invest billions of
dollars in major markets such as India, China, Russia, and a few potential markets such as
Vietnam. Investment money is used to build the brand, infrastructure and to develop close
partners to expand the distribution network. Coca-Cola owns the modern head office is divided
into four departments including sales, HR, marketing, and ICT. Each department is equipped
with the appropriate facilities for the work of that department. Besides, Coca-Cola factory
contains two main parts production and ICT. ICT department only serves to check product
quality. Otherwise, in the Production department, modern machinery was invested

Intangible resources
The technological resources and reputation of Coca-Cola are considered intangible resources. In
term of technological resource, Coca-Cola invest to modernize machinery all steps in the
production process are almost fully automated. Coca-Cola can accelerate the production
process, to keep the product quality stable and secure working environment Moreover, Coca-
Cola keeps expanding its network of hybrid engine trucks. It not only helps Coca-Cola saves fuel
costs but also help reduce harmful emissions to the environment Coca-Cola researched and
produced the Plant Bottle the greenest bottle. This kind of bottle more eco-friendly due to its
high decomposition and recycling capabilities In terms of reputation, Coca-Cola Company has
existed for more than 127 years. It has become one of the top 3 most valuable brands in the
world. Coca-Cola products are popular and widely used in more than 200 countries Coca-Cola is
the product of the most consumed beverages

Human resources
Employee engagement is very important to Coca-Cola. Their success depends on their
motivation for employees. Therefore, Coca-Cola often organizes the test to know the level *of
engagement and satisfaction with working conditions. From that given reasonable measures
(Coca-Cola, 2013) In addition, they also attempt to build an ideal workplace where people like
building gym, coke, free fruit with a flexible working time. Besides, the training and
development activities also are focus8. They motivate talented staff training by paying them an
attractive salary to learn and exciting new job opportunities

Capabilities of Coca-Cola

First, the strong financial resources of Coca-Cola are mentioned. With such financial strength,
they can proceed to develop the market on a large scale in many countries. The money’s used to
build infrastructure, staff training, and development of the distribution network. Even they can
fully bear the losses for a long time to invest in the potential market. More particularly, Coca-
Cola had lost 10 consecutive years in Vietnam with a total of about 200 million States. However
they have continued to announce a further $ 300 million investment in Vietnam for three years
from 2013 to 2015 Furthermore, they can use the financial resources to implement various
advertising strategies by ads on television, newspapers, magazines, and posters. In fact, Coca-
Cola's advertising budget in 2011 reaches $ 3.2 billion.
In addition, Coca-Cola owns an efficient organizational capability. They can run more than 100
thousand people and offers the accumulation of more than 500 brands of soft drinks in nearly
200 countries around the world. Their products appear almost in restaurants, supermarkets,
cinemas, schools, or even vending machines on the road. Coca-Cola always knows how to
shorten the distance of the customer with their products
Coca-Cola is one of the three most valuable brands in the world. Brand reputation is being
established after more than one century. It can be considered as a core competency of Coca-
Cola. They have a lot of loyal customers. Thus they can earn stable profits from these loyal
customers to develop the company. Besides brand name awareness of Coca-Cola is much higher
than other competitors. Other customers tend to choose familiar products. Therefore, Coca-Cola
simply based on its reputation was able to create a clear competitive advantage.
Coca-Cola builds a positive and open working environment where employees can share ideas as
well as candid comments. It can help companies find new business ideas as well as talent in the
company. On the other hand, the employee’s frank comments to help Coca-Cola can see the
problem to be solved. So Coca-Cola has more creativity and repair problems early.
Moreover, Coca-Cola is also holding a lot of talented employees around the world. Because
Coca-Cola applies the strategy of talent localization successfully. Each time they enter a new
market they recruit a lot of local staff in order to increase the ability to understand new
markets, so the ability to penetrate new markets is remarkably fast

Coca cola’s Core Competencies

Coca-Cola is truly a worldwide company; the company’s products are consumed and recognized
globally. The coke company structures and organizes itself in a way that reflects the fact. At the
same time, the Company aims at satisfying particular regional market needs in a sensitive
manner and the company’s structure is supposed to reflect it too. Hence, the Coke Company has
to build an organizational structure that will be flexible enough to meet all these requirements
The world’s top four soft drinks are marketed by the Coca-Cola Company since it is the world’s
largest company that produces beverages thus it is the leading producer and market of soft
drinks. The organizational success of the Coke Company is based on the following factors
The company produces a unique and recognized brand: When considering the world’s
recognized trademarks around the globe, Coca-Cola is among the ones which are most
recognized
Quality: Coca-Cola consistently offers its customers products of high quality
Marketing: Creative and innovative marketing programs are always delivered worldwide by the
Coca-Cola company
Availability Globally: All Coca-Cola products are bottled and distributed globally
Ongoing innovation: Coca-Cola Company has provided their customers continually with the new
product, for example, Coca-Cola vanilla that was launched in 2002
Coca-Cola has an organizational structure that is designed to meet the aims, they make use if
the combining the decision-making flexibility, and the best ideas are shared across the coke
organization, they experience control from the center with all the appropriate level of
management. The company enhances the employees’ development by building flexible
structures which greatly encourages the employees to work in teamwork. An example is the
invention and development of new products such as Coca-Cola vanilla which brought together
the different teams of employees with a various specialism
The Coca-Cola Company has also set an organizational strategy that ensures better utilization of
the resources available within the organization. The Coke Company also aims at becoming the
world’s largest world’s provider of the branded beverages products thud delivering profitable
and consistent growth in order to have the product of the highest quality and processes

Analyzes the internal environment and capabilities by using these internal frameworks (VRIO,
value supply chain).

VRIO Analysis

Valuable

Global Distribution Network - Yes, it is an important resource that enables Coca-Cola to serve
the global market and maintain a global presence.

Wide range of products: Yes, Coca-Cola has helped reach and serve a global audience with
different tastes.

Skilled Human Resources: Yes, it helps Coca-Cola manage its large system efficiently.

Marketing Skills and Expenses: Yes, Coca-Cola helps manage a distinctive brand image and
better communicate with its audience.
Brand Image: Yes, brand image enhances value and is important for managing an impressive
presence in the market.

Research and Development: Yes, it helps Coca-Cola innovate and constantly respond to
changing market conditions

Rare:

Global Distribution Network - Owned by only a few other companies in the soft drink industry,
The Coca-Cola Company helps manage its global reach.

Great selection of products - not exactly rare, Pepsi and Dr. Pepper Snapple is also in a wide
range of products.

Skilled Human Resources - Yes, Coca-Cola is ahead of all other companies in the soft drink
industry in terms of human resource management.

Marketing Skills and Expenses - Coca-Cola's marketing expenses are approximately $4 billion
which is significantly higher than its competitors. While marketing skills can match the high
level of expenses, this is very challenging for any company.

Brand Image - Yes, it is not easy to build a strong brand image like Coca-Cola. However, Pepsi
also has a strong brand.

Research and Development - Yes, but Pepsi also focuses heavily on research and development

Imitability:

Global Distribution Network: Pepsi also has a global network of distributors.

Wide range of products - Pepsi also has a large range of products.

Skilled Human Resources - Yes, it is difficult to imitate the competitive advantage generated
by skilled human resources.

Marketing skills and expenses: Difficult to imitate due to high expenses.

Brand image: cannot be imitated. However, a competitor's strong brand image can pose a
threat.

R&D: Unmatched because other companies invest in R&D.

O- Organization: firm’s policies and procedures are properly organized to help it exploit it's
valuable, are and inimitable resources.

Global distribution network - yes.

Large product range – yes

Skilled HR – Yes

Marketing skills and expenses – yes

Brand image – yes

Research and development - yes

Provides a sustainable competitive advantage.

Global Distribution Network - No, only a temporary advantage because Pepsi could easily
imitate it. However, it is difficult for any competitor other than Pepsi to imitate it.

Large product range - no, only a temporary advantage because Pepsi can easily imitate it.
However, there is no competitor except Pepsi deals in such a large range of products.

Skilled Human Resources - (competitive parity), as it involves heavy expenditures. However, it

is not very difficult for Pepsi to imitate it due to its financial strength.

Marketing skills and expenses - (competitive parity), as it involves heavy expenses. However,
it is not very difficult for Pepsi to imitate it due to its financial strength.

Brand image - To some extent, because only one competitor, Pepsi has a strong image in the
market.

Value chain analysis of Coca Cola:

Coca-Cola is among the most globally recognizable brands. The brand is known for its strong
image and global presence. It has several billion-dollar brands in its portfolio. However,
establishing a large and successful brand requires successful management of the value chain. A
value chain includes several activities right from obtaining raw materials from various sources
to the sales of the product and after-sales customer service. There are several activities in the
middle also which are an important part of the value chain. The value chain analysis concept
was given by Professor Michael E Porter of Harvard Business School. Managers can get a better
picture of how each stage of the value chain adds value to the product. Accordingly, the
managers can optimize the value chain for getting better results. Optimization of the value
chain brings efficiency and can generate new sources of competitive advantage. Here is a
detailed value chain analysis of Coca-Cola. There are both primary and support activities in the
value chain

Primary activities:

Inbound logistics:

Coca-Cola has managed a very large supply chain that has tens of thousands of farmers and
suppliers. It treats its suppliers as business partners. These business partners provide raw
materials including ingredients, packaging, and machinery as well as goods and services to
Coca-Cola’s manufacturing system. However, the brand has set guiding principles for its
suppliers that they are required to follow. At least the Coca-Cola suppliers are required to
comply with all the applicable laws and regulations. In its guidelines, Coca-cola also lays
emphasis on responsible environmental and workplace policies and practices. The brand has
also managed an excellent relationship with it suppliers. This has helped the brand maintain a
continuous and uninterrupted flow of raw material.

Operations:

The operations function of Coca-Cola includes concentrate development and all the
administrative functions at its headquarters. Coca-Cola is a global brand operating at a local
scale in every community where it operates. The Coca-cola system operates using several local
channels. However, the brand does not own or control all of its bottling facilities several of
which are owned by its bottling partners. The company manufactures and sells beverage bases
and syrups to the bottling operations. Coca-Cola owns the brand and does its marketing to its
consumers.

Outbound logistics:

This part of Coca-Cola’s Value chain includes its bottling partners and distributors. The bottling
partners of Coca-Cola manufacture, package, merchandise and distribute the final product to
the customers and vending partners. These vending partners then sell the product to the
customers. The customers of Coca-Cola range from grocery stores, restaurants, street vendors,
convenience stores, and movie theatres to amusement parks. The bottling partners of Coca-Cola
work with its customers for implementing localized strategies they develop in partnership with
Coca Cola Company.

Marketing and sales:

Coca-Cola is a well-recognized and global brand. However, it has invested a lot in marketing to
acquire global popularity. The coca-cola logo is among the most recognizable logos in the
world. Apart from that Coca Cola is known for spending heavily on marketing. It uses digital
channels, social media, in combination with print media, and outdoor marketing for the
promotion of its brand and products. It runs excellent marketing campaigns from time to time
to attract new customers as well as engage the existing ones. In recent years, it brought a major
shift in its marketing strategy. Now instead of promoting its brands separately, Coca-Cola
promotes the entire brand together. Coca-Cola products are sold in more than 200 countries
worldwide. From retail stores to restaurants and theatres, Coca-Cola products can be seen
everywhere in the market.

Support Activities:

Technology:

Coca-Cola has continued to maintain its heavy focus and investment in technology and research
and development. From production to distribution and sales, everywhere the brand has
invested in advanced technology. Apart from that, it invests in technological innovation through
R&D activities. There are six Coca-Cola R& D centers around the world. These centers are
connected to the external technology and assessment hubs that connect them with partners,
tech startups, and university researchers. The company collaborates with partners in other
industries also for innovation across products, packaging, equipment, and other things. In this
way, Coca Cola is continuously investing in innovation for the brand’s growth

Human Resource Management:

HRM is an important area of Coca-Cola’s value chain. The company focuses on hiring and
grooming talent. It has also created an environment of learning and growth inside its
organization. Apart from comparatively better salaries, it complements the payments with
financial and nonfinancial rewards. Coca-cola has focused on employee motivation and
engagement. Performance management policies and procedures are used to provide the
employees with opportunities for career growth.

Procurement:

Coca-Cola procures from several thousands of farmers and suppliers worldwide. To make the
entire process easier and efficient, it has used advanced technologies. The brand has
maintained excellent relationships with its suppliers. It has provided them with guidelines in
various areas that they are required to follow.

Firm Infrastructure:

The role of a firm’s infrastructure is critical to its success. Coca-Cola has managed a very large
infrastructure that includes its management, human resources, financial and technological
infrastructure. It is training and educating its suppliers for better performance. The focus is also
on innovation through its R&D centers.
Part two: You need to use your own languages and own opinion to assess strengths and
weaknesses (at least two points) of an organization's internal capabilities, structure and skill
set.

Applying Mckinsey 7's to Coca Cola

The McKinsey 7S framework is a valuable tool used by organizations to ensure their

company is operating optimally under a variety of circumstances. Developed by the McKinsey
consulting company in the 1980s, the tool sought to promote an alignment of seven key
parameters as a means for maximizing the likelihood of company success. These parameters,
dubbed the “7 S’s”, are all interconnected within the framework, which each “S” being as
important as the next. This interconnectedness also outlines a key component of the framework
– a change in one parameter necessitates a change in all of the others in order to maintain
alignment and ensure company success. The model is particularly useful when re-evaluating a
company’s organizational structure and strategy after a large change (ex: a merger, change in
management, rapid expansion etc.). Such changes will likely cause a large shift in at least one of
the 7 “S” components. It is therefore useful to use the McKinsey 7S model to re-evaluate
whether all 7 S components remain aligned, and make the necessary changes to maintain this
synergy if misalignment has occurred.

Strategy

The strategy at Coca Cola can be broken down into many different sub categories. The
corporate strategy, business strategy, and operational strategy can all be considered key
moving pieces in the success of Coca Cola’s business model. The corporate strategy looks at
continuing to build Coke’s extensive beverage portfolio, asset expansion into Asia, and
developing new products that align with the current demand for more natural and healthy
alternative beverages.

Structure

The corporate structure of Coca Cola is heavily segmented to account for the many
different divisions and regions this multi-billion-dollar company operates in. Head office
provides the main direction for the company, with key strategic decisions being made by the
team of 12 ExCo’s with one head ExCo committee serving as the CEO. The ExCo’s either
represent one of the regional branches of Coca Cola or serve a more specialized niche in the
company (e.g. CFO). Latin America, Pacific, Eurasia & Africa, Russia, and North. America
represents the five key regions that Coca Cola has designated specialized business units for.

Systems
 There are several main systems that are part of Coca-Cola business strategy. The have
directional systems that flow from ExCo’s down to entry level employees where upper
management ensures the shared values is adhered to when making any strategic decisions.
Process systems are in place to divide up large tasks into bite sized chunks and to provide
management with the necessary tools to adhere to the shared values. Additionally, there are
day to day management systems in place to receive employee feedback and provide incentives
and awards for adherence to the shared values.

Style

The corporate culture of Coca Cola emphasizes a style that focuses on teamwork and
togetherness. They continual look to implement the idea of one team, one company, and one
passion. Coca Cola strives to promote sustainability and community development, as well as
being environmentally friendly.

Staff

Due to Coca-Cola’s tremendous standing in the soft drink industry, they draw in some of
the most talented people in the industry. Coca-Cola also provides career development
opportunities, stock options, and performance rewards resulting in a high retention rate and
low employee turnover.

Skills

As previously mentioned, Coca-Cola has some of the most talented employees in the soft
drink industry, thus the skills their workers possess are second to none. Coca-Cola is always
coming up with innovative ways to improve their products and this reflects the great
management, research and development, and systems skills that are prevalent through out the
company. They also always look to allocate whatever technological and staffing resources are
required to make their innovative ideas a reality.

Shared Values

As previously mentioned, the shared values are at the core of McKinsey 7s Model. Coca-
Cola has clearly recognized this and looks to implement their own shared values in their
systems, structure, strategy and style as a world leader in the soft drink industry. Before making
any key business and management decision, Coca-Cola will ensure the decision at hand meets
their 6p’s:
People: Be a great place to work where people are inspired to be the best they can be.
Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and
satisfy people's desires and needs.
Partners: Nurture a winning network of customers and suppliers, together we create
mutual, enduring value.
Planet: Be a responsible citizen that makes a difference by helping build and support
sustainable communities.
Profit: Maximize long-term return to shareowners while being mindful of our overall
responsibilities.
Productivity: Be a highly effective, lean and fast-moving organization.