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MKTG221 New Product Management

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MKTG221 New Product Management

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Course Code: MKTG221
University: University Of Pennsylvania

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Country: United States

The concept of distribution strategy. You may choose a company that you are familiar with in order to provide your analysis.
Your paper should discuss the overall distribution strategy of the company, clearly describe the distribution channels, and why you think the distribution strategy of your company of choice is effective and provides a competitive advantage. 
Assignment Description: 
You are to also provide possible alternatives to the companies distribution strategy in light of what you have learned thus far in the course. When providing alternatives, such should be well-founded, and based on appropriate research rather than simply stating an opinion without support. 

Coca-Cola company is one of the largest beverage companies all around the world. The company supply chain is one of the largest also in the entire world where it supplies over 500 different brands in over 200 countries all around the world (Jackson & Singh, 2015). Coca-Cola is US based company where its headquarters is in Atlanta, Georgia. Coca-Cola is considered to be in existence for over 150 years which has led to the company to continue growth in its brand and market expansion making it the largest non-alcoholic beverage company in the world. The company most recognized brands include sprite, Diet Coke, Fanta, Minute Maid, Powerade, and Coca-Cola zero. In its brand portfolio, the most valuable brand is Coca Cola which is estimated to be worth over $70,667 million (Gattorna, 2017).
Currently, the main focus on the company is to re-establish its approaches to serve the entire community and promote the social development. In terms of region domination, Middle East is one of the few major areas where Coca-Cola has not been able to capture effectively and the only region where the company cannot be considered as the main leading company (Sodhi & Tang, 2014). Due to the increasing competition, Coca-Cola has been forced to operate under very effective distribution system in consideration of the continuous changes in the market.
Coca-Cola SWOT Analysis
Coca-Cola Strength
 The main strength of the company is its brand recognition in the beverage market. The position of the company in the market is also very strong which has been contributed by years of strategizing with little competition in the market unlike currently where competition is considered to be very high (Jackson & Singh, 2015). The company has also a large percentage of loyal customers who are estimated to contribute approximately 80% of the total revenue of the company.
Coca Cola’s internal weakness
Over the past decade, the company has faced various criticism majorly including its weakness in corporate social responsibility in its major operation sites example India as one of the majorly affects countries. The health concern on the company products has also been one of the main weakness in the company. With over 500 different brands, most of the brands have low popularity thus also affecting revenue income of the company (Gattorna, 2017).
 Coca-sCola’s external opportunities
Despite its large dominance in the market, Coca-Cola has very large untapped markets which majorly comprise of Middle East region, Asia, and Africa markets. The unpopular products have also a very huge potential for growth with the application of proper marketing and distribution channels (Sodhi & Tang, 2014). With its brand power, Coca-Cola has the potential of increasing the market gap between its competitors such as Pepsi.
Coca-Cola’s external Threats
As stated earlier one of the increasing threat for Coca-Cola is the continuous increase in competition in the market. The company products have also continued to face various criticism with respect to consumer health. The company has been reported to be also losing its popularity in the market where drinking habit has changed (Lambert & Schwieterman, 2012). Most of the widely consumed drinks today major comprise energy drinks and healthier brands in the beverage. The suit law has also been described as one of the major threats facing the company operates in most of the countries.
Competitor’s Analysis
The soft drink market has continued to be one of the most competitive industries today. In the USA, Coca-Cola has successfully been able to retain its dominance where other company brands such as Fanta and Sprite have continued to grow in terms of popularity which has enhanced the position of the company (Higbie Jr, Cross, BIPPERT, Lennon, Lee, & Anglea, 2018). Currently, Coca-Cola controls more than 38% of the total market share where its followed by Pepsi with the control of about 22% of the total market share. The US alone generates about 43% of the total revenue which makes it the largest and strongest market in the company.  Despite the company leading advantage, the Coca-Cola management still believes it’s not a victory for the company as some of its competitors such as Pepsi have been reported to also increase their value-adding concept in various levels (Lambert & Schwieterman, 2012).
Through brands such as Mexican kola, Corsica Cola in France, Irn-Bru in Scotland, and RC Cola in Israel, Pepsi has been able to beat Coca-Cola in various regions making it as one of the strongest competitors threatening Coca-Cola. One of the main competitor’s competitive advantage is the approach of healthier products in the market. The health concern has led to the rise of various companies such as Red Bull energy drink which is majorly consumed product by the young target market (Fernie, 2014). On the other hand, Coca-Cola has also the wide scale of competitive advantages which include patent regulation, brand equity, and strong market brand. The pursue by the company to also integrate its operations as ‘green-oriented’ has also improved the company reputation and position in the market. Another competitive advantage that has managed to enhance the company performance is its intensive input in R&D. This has led to the growth of healthier products such as Coca-Cola zero sugar which has been described to perform even much better in new markets (Wisner, Tan, & Leong, 2014).
Coca-Cola Supply Chain Mapping and Analysis
According to Leidner (2010), the supply chain of Coca-Cola company is of the most unique and efficient supply chain strategies in the world. The main activity involved in the distribution system is that Coca-Cola only produces Syrup which is later transported to the different bottler agencies distributed all over the world. Coca-Cola is also an owner of some of the bottler agencies such as the Coca-Cola Refreshments located in North America. The ownership of the bottler companies is majorly characterized by the type of the market where Coca-Cola opts to directly control bottler companies which are located in sensitive and concentrated markets. After the production process, Bottlers are the one with a mandate of supplying products in the respective markets i.e. retail stores, restaurants, vending machines, and other foodservice distributors (Monczka, Handfield, Giunipero, & Patterson, 2015). Coca-Cola supply chain is redistributed into various levels which majorly include Upstream activities and Downstream activities.
The upstream of activities majorly comprise the production of syrup concentration. One of the main approaches of this activity is to secure the formula of the syrup. This has been perceived as one of the greatest attributes of the company which is over 150 years the company has been existence it has managed to protect its formula ingredients from its competitors. It reported that the main formula is kept in SunTrust Bank vault, Atlanta. According to the 2017 company report, the operating margin was estimated to be around 28% where the cost of goods sold was in excess of 15 million dollars (Ellinger, Natarajarathinam, Adams, Gray, Hofman, & O’Marah, 2011). The company uses various approaches to track down the global price of its major commodities it uses in its production which major consist of sugar, high-fructose corn syrup, sucrose, Carbonated water, Natural flavorings, and phosphoric acid v. Caramel (E150d), which are the main used products in the production of syrup. Coca-Cola majorly relies on its long-term supply partners in order to have a successful supply of required raw material in the upstream activities (Sáenz & Revilla, 2014).
The downstream activities in Coca-Cola company majorly comprise of activities such as manufacturing of the final product and distribution channels used by the company to reach the targeted market. Coca-Cola mainly utilizes the application franchises in order to redistribute its product effectively (Monczka et al., 2015). As stated earlier, Coca-Cola company only produces the required syrup for production of various brands which later sold to the respective bottlers in different regions. Apart from some of the bottlers which are wholly owned by the company, Coca-Cola also has shares in some of the major franchises which include Coca-Cola Amatil, Coca-Cola FEMSA, Coca-Cola Hellenic Bottling Company (CCHBC), and Coca-Cola Enterprises (Waters, 2011). However, the partially owned franchises only produce half of the Coca-Cola Products while the other half is produced by the fully independent franchises. One of the significant attributes of this system is that independent franchisees are allowed to ‘modify’ products so that it can perform much better in the local market (Ghosh & Shah, 2015).
In the partnership program, Coca-Cola only layout the basic requirements such as final product standards and others issues that pertain the company image. Unlike in the event where Coca-Cola would control its entire market share, the company enjoys a wide range of benefits which are only accessible with the partnership of franchises. Through the franchises, the company is faced with some of the heavy international taxations or any kind of restrictions which may be imposed on multinational organization so as to protect local firms. The main body that is mandated with the responsibility of selling concentrated syrup to franchises is known as Coca-Cola Export Corporation (TCCEC) (Colicchia, Melacini, & Perotti, 2011). The TCCEC offices are widely located in all major franchised regions where Bottler companies can be able to request their amounts and at the same have easy access to the syrups. Its only in the US that TCCEC is authorized to sell fountain syrup to the franchises whereas in other region TCCEC is responsible for the entire manufacturing process and only sell the final product to the retailers and wholesalers (Leidner, 2010).
To have an equitable supply chain in the entire company, Coca-Cola has some basic guidelines which are supposed to follow by all the franchises i.e. the bottling partners. This is to allow effective centralization in the company decision-making process and to be able to meet the supply-demand and quality in the market (Ellinger et al., 2011). For effective redistribution in the company supply chain, the company has major head offices in various market regions. The company head offices are responsible for all the major operations in the company supply chain which offers the company a very effective direct monitoring system. The company head offices are also responsible for allocating bottlers in different market regions where they can be able to have production advantage (Tanwar, 2013). Bottler companies also have a significant role to play in the company supply chain where they are responsible for linking the production plants with the entire market through the most effective distribution ways in respect to the regional infrastructure. In some of the undeveloped regions, Coca-Cola has picked-up the effort of building an effective distribution systems such as roads and other easily accessible contact points with the market.
Through the above report and analysis of the Coca-Cola supply, the main thing the system lacks is effective communication in the distribution system. With the increase in globalization and industrialization, the company supply chain requires to be very flexible with respect to the continuous changes in the market. The communication challenge has been majorly perceived in consumer part where the supply chain locks out the consumer engagement in the production process (Leidner, 2010). This has been one of the main reasons why the issue of CSR has continued to be a challenging encounter in Coca-Cola company. On the same note, due to communication challenges the other recommendation that should be implemented is the improvement of transparency between bottlers and TCCEC. This has been a major challenge in the Asian market where TCCEC and bottlers have continuous arising challenges majorly in sales quotas (Tanwar, 2013).
In improving company efficiency, Coca-Cola should also re-evaluate its TCCEC regulation and part it plays in the supply chain system. Example, in some of the major markets such as the US, UK, China, and India, the TCCEC should be allowed to bypass the partnership program with bottlers and conduct the entire manufacturing process (Sáenz & Revilla, 2014). The TCCEC should therefore only provide finished products to retailers and wholesaler where an example in the US, bypassing bottlers, the TCCEC can be able to deal directly with retailers such as Walmart. Through this main approach, the company will be able to improve its lag time and at the same time reduce its lead time (Higbie Jr et al., 2018).
In summary, Coca-Cola company can be characterized as the largest soft drink company in the world where over the years it has also continued to improve in its distribution system. The Company main supply chain activity includes the production of syrup which is later sold to the independent bottlers who manufacture the final product and they are also responsible for the distribution of the product to the targeted market. I believe the use of the franchises are one of the competitive advantages the company has been able to fully optimize on and strongly capture respective markets. For example, through the use of franchises, Coca-Cola has been able to expand its brand portfolio, and engage more effectively with local markets. Through the implementation of the above recommendation, the company will be able to significantly improve its supply chain efficiency and standard quality of the growing market. This will also help the company to eliminate the CRS issues and improve its shareholder engagement methods (Kumar, Teichman, & Timpernagel, 2012).
Colicchia, C., Melacini, M., & Perotti, S. (2011). Benchmarking supply chain sustainability: insights from a field study. Benchmarking: an international journal, 18(5), 705-732.
Ellinger, A. E., Natarajarathinam, M., Adams, F. G., Gray, J. B., Hofman, D., & O’Marah, K. (2011). Supply chain management competency and firm financial success. Journal of Business Logistics, 32(3), 214-226.
Fernie, J. (2014). 02 Relationships in the supply chain. Logistics and retail management: Emerging issues and new challenges in the retail supply chain, 35.
Gattorna, J. (2017). Introduction. In Strategic supply chain alignment (pp. 15-21). Routledge.
Ghosh, D., & Shah, J. (2015). Supply chain analysis under green sensitive consumer demand and cost-sharing contract. International Journal of Production Economics, 164, 319-329.
Higbie Jr, J. A., Cross, D. Q., BIPPERT, D. A., Lennon, S. P., Lee, S. A., & Anglea, T. A. (2018). U.S. Patent Application No. 10/026,043.
Jackson, L. A., & Singh, D. (2015). Environmental rankings and financial performance: An analysis of firms in the US food and beverage supply chain. Tourism Management Perspectives, 14, 25-33.
Kumar, S., Teichman, S., & Timpernagel, T. (2012). A green supply chain is a requirement for profitability. International Journal of Production Research, 50(5), 1278-1296.
Lambert, D. M., & Schwieterman, M. A. (2012). Supplier relationship management as a macro business process. Supply Chain Management: An International Journal, 17(3), 337-352.
Leidner, D. E. (2010). Globalization, culture, and information: Towards global knowledge transparency. The Journal of Strategic Information Systems, 19(2), 69-77.
Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2015). Purchasing and supply chain management. Cengage Learning.
Sáenz, M. J., & Revilla, E. (2014). Creating more resilient supply chains. MIT Sloan management review, 55(4), 22-24.
Sodhi, M. S., & Tang, C. S. (2014). Supply?chain research opportunities with the poor as suppliers or distributors in developing countries. Production and operations management, 23(9), 1483-1494.
Tanwar, R. (2013). Porter’s generic competitive strategies. Journal of business and management, 15(1), 11-17.
Waters, D. (2011). Supply chain risk management: vulnerability and resilience in logistics. Kogan Page Publishers.
Wisner, J. D., Tan, K. C., & Leong, G. K. (2014). Principles of supply chain management: A balanced approach. Cengage Learning.

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