The Coca-Cola Business Model and their competitive advantage

23 Nov

We’ve seen that Competitive advantage in simple terminology is what your company is best at. Why do your customers buy from you and not your competitors? What is the value that the business can create for the customer?

Another look at competitive advantage allows us a different perspective into its relationship with business models, innovation and information systems. A competitive advantage is attainable if the current strategy is value-creating, and not currently being implemented by present or possible future competitors. Sustaining a competitive advantage is difficult and although a competitive advantage has the ability to become sustained, this is not necessarily the case. A competing firm can enter the market with a resource that has the ability to invalidate the prior firm’s competitive advantage, which results in reduced rents. Sustainability in the context of a sustainable competitive advantage is independent with regard to the time frame. Rather, a competitive advantage is sustainable when the efforts by competitors to render the competitive advantage redundant have ceased. When the imitative actions have come to an end without disrupting the firm’s competitive advantage, the firm’s strategy can be called sustainable.

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After extensive reading, a link I keep seeing is the connection between innovation, competitive advantage, information systems and business models. A few examples show this;

Dell became really successful by exploring the web as a distribution channel. Gillette has made a fortune by establishing a continuous relationship with customers based on its disposable razors. Apple resurged based on its core capacity of bringing design to computers and electronic gadgets. Cisco became famous for its capacity of configuring activities in new and innovative supply chains. Intel thrived for its capacity to get partners to build on its processing platform. Google tapped in an innovative revenue streams by linking highly specific search results and content with text ads. Wal-Mart became dominant by its ability to slash cost throughout its business model.

Coca Cola is an example of a company with sustained competitive advantage, innovation, an extensive business model and an intelligent and substantial distribution network. The best example of a company with a sustainable competitive advantage is The Coca-Cola Company. The Coca-Cola Company was incorporated in 1892 to produce the sweet fizzy drink – first developed by a pharmacist – that has become the world’s most recognised brand.

Today, almost 120 years later, The Coca-Cola Company is still going strong and is one of the most sought-after stocks on the New York Stock Exchange. Coca-Cola’s competitive advantage has proven its sustainability over the last 100 years.

This can be ascribed to:

  • The secret recipe for Coca-Cola, which arguably tastes better than other cola drinks.
  • Their ability to continue developing new products and re-inventing old ones – Coca-Cola currently offers over 400 brands in 200 markets worldwide.
  • The world’s most comprehensive distribution system has made Coca-Cola accessible to billions of people worldwide. Coca-Cola is often available in ample supply to people in areas where other consumer goods companies would never consider delivering their products. The African continent is an excellent example – it’s fairly common to see a small shop selling cold Coke in the middle of nowhere.
  • Coca-Cola’s production techniques are so well developed that it costs a fraction of the selling price to manufacture their product, resulting in high profit margins.

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http://www.businessmodelalchemist.com/

http://www.digplanet.com/wiki/Resource-based_view

Coca-Cola Business Model- Google Images

http://www.cocacolasabco.com/

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19 Responses to “The Coca-Cola Business Model and their competitive advantage”

  1. 04ac November 26, 2012 at 5:56 pm #

    There are some interesting examples in this blog of companies which have excelled in their chosen market, your case study on Coca-Cola highlights how far a company with a good business model can go. As you point out Coca-Cola has been around for 120 years and are still at the top of their game. It shows that they are very good at sticking to the key goals you mention and have a clear plan how to see they are implemented. I’m sure many other companies could learn from their efficiency.

    • jamesdaly1990 November 27, 2012 at 12:10 am #

      Thanks for the comment. Ya i felt it was relevant to use such a popular and household brand name such as Coca-Cola whilst using the other big examples to exemplify the massive importance of their competitive advantage. I agree that many companies could take a page or two from their book.

  2. oconnormatty7 November 27, 2012 at 9:55 am #

    Compelling reading jamesdaly1990. Very interesting to see the visualisation of such a well known product in terms of the competitive advantage concept.

  3. Gail Tromburg January 10, 2013 at 5:43 pm #

    i really love the taste of Coca Cola compared to other brands of softdrinks, Coke is now testing a stevia based sweetener.;

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  4. oconnormatty7 January 22, 2013 at 7:11 pm #

    Popular little blog you have there jamesdaly1990!

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  6. oconnormatty7 April 30, 2013 at 9:16 am #

    This blog continues to succeed in a competitive environment. How was this competitive advantage achieved??

  7. Get More Information June 2, 2013 at 12:47 am #

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    • oconnormatty7 July 21, 2015 at 1:21 pm #

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  9. edmar October 18, 2013 at 4:09 am #

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  10. MP.Shiva Kumar November 12, 2013 at 3:36 pm #

    Quite Interesting -Authors contribution is highly remarkable. Coke origination and efforts in maintaining its Image is worth reading.

  11. anil thapa February 5, 2014 at 1:39 am #

    good lado

    • charlie johns January 12, 2017 at 10:34 am #

      your name looks like anal therapy

      • charlie johns January 12, 2017 at 10:37 am #

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  12. Prosper Armstrong Phiri May 21, 2014 at 11:41 am #

    I lent a lot about the Coka-cola business model , i now understand what exacly a working business model is ,,, well done

  13. kuldip April 21, 2016 at 3:44 pm #

    nice article

  14. JABBER SINGH February 20, 2017 at 11:01 am #

    COCA COLA IS SPREAD WORLDWIDE

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