Table of Contents
The objective of the discussion is to initially review the case study of Coca-Cola using Barney’s characteristics (VRIO) to identify the resources that are important so the company can gain competitive advantage. Based on the resources identified, recommendations that are aimed to help Coca-Cola make decisions about their investments should be stated. The objective in doing so is to determine what kind of resources Coca-Cola should continue investing on and what new resources to acquire in order to gain favorable outcomes and enhance performance. Another objective is to determine how valuable the recommendations will be to Coca-Cola and whether those recommendations are aligned to the company’s current situation, resources, positioning perspective, and future plans.
The Coca-Cola Case: Resources for Competitive Advantage
The objective of using Barney’s characteristics (VRIO) is to evaluate a company by determining: (a) value – the ability of a company to properly address potential risks and threats with its current resources to prevent or mitigate those risks, (b) rarity – the ability of the company to acquire and offer unique resources that would help the business gain competitive advantage, (c) imitability – the ability of the company to create unique products or resources that are difficult to imitate by its competitors, and (d) organization – the quality of a company’s foundations and current operations that will enable it to run business smoothly and harmoniously. The outcomes of evaluation using Barney’s characteristics are expected to help businesses
Based on the case of Coca-Cola, the history of the company is one of its most valuable assets. Coca-Cola has been in the business for the longest time, thus, the company has acquired a massive and loyal consumer base. Moreover, the company has maintained an image and a reputation that prove the best quality of products and services that Coca-Cola provides. Due to Coca-Cola’s strong presence in the market, the company’s brand image is considered a valuable element in the company’s success. Due to the company’s brand image and strong following, the company was able to target different demographics. Coca-Cola’s marketing strategy, for instance, is aimed towards a mixed demographic – children, young adult, adults, and the elderly, both male and female, and consumers from different lifestyles. Today, Coca-Cola continues to provide a variation of products in order to target new and emerging target markets, like consumers who are health and weight conscious (Yoffie & Slind 2006: 9). Coca-Cola’s existing resources play an important part in Coca-Cola’s steady growth in the market. With the company’s massive financial resources, Coca-Cola is capable of expanding its reach (the reason for Coca-Cola’s worldwide appeal) and acquiring new facilities and upgraded technological systems or devices in order to increase efficiency, improve production, and enhance the company’s overall performance – proof that Coca-Cola’s strengths include efficient and quality products and services, brand image and marketing, and its financial resources that allows the company to innovate and expand on various levels.
In terms of rarity, the beverage industry may be considered saturated with the number of options that consumers and other stakeholders can invest in. However, Coca-Cola maintains the company’s ability for growth and gaining competitive advantage by making sure that it offers unique products and services. Coca-Cola maintains rarity by offering something that consumers will not find from other products. For one, the taste of Coke is distinct and no other product in the beverage industry has replicated the taste. Moreover, the Coca-Cola brand is identifiable. Due to the product’s popularity, people from any part of the world know the company by its logo, by their products’ tastes, and the by the image that it represents. One effective marketing strategy that allows consumers to identify Coca-Cola from others is the brand’s attachment to Christmas and family. Every year, Coca-Cola creates Christmas advertisements that are distinct, notable, unforgettable, and relatable.
Since the popularity of rivals Coke and Pepsi, various companies emerged with different brand names under the beverage industry like Mountain Dew, Fanta, Seven-Up, Dr. Pepper, etc. However, Coca-Cola remained inimitable because it has something that other products have not yet acquired – the “Coke recipe.” The taste of various beverage products are palpable different and no other product comes close to imitating Coke. Many companies tried to produce a soda recipe that would rival Coke but no business came close to replicating the “Coke recipe.” Aside from the taste, Coca-Cola’s brand image and marketing strategies are also difficult to imitate. The most challenging aspect of Coca-Cola’s business that other companies experience difficulty in imitating or gaining is its loyal consumer base. As previously discussed, Coca-Cola has been around for a long time. It is an established company and if any other beverage company is better and more efficient than Coca-Cola, then it must have beaten the company by now. However, Coca-Cola remains to be one of the top brands internationally. I believe other companies would not be able to surpass the success of Coca-Cola and therefore, would not reach the level of success that the company has achieved all those years.
Coca-Cola is a highly organized company. Years of experience has taught the company to handle all challenges and difficulties and operations from the management to the service chain. Coca-Cola also handles the company’s value chain effectively from conducting Research and Development (R&D), production locally and internationally, and marketing concerns effectively.
So far, Coca-Cola is faring well but when it comes to considerations of investing and disinvesting, the company should focus more on R&D and Corporate Social Responsibility (CSR). Consumers nowadays are highly concerned with the effects of products on them, specifically their health and well-being, and the concern with food and beverages is how health they are for consumption. Coca-Cola has already produced drinks like Coke Light and Coke Zero, however, the marketing for these products is not the company’s main concern. Moreover, the company needs to develop more satisfying results that would diversify its products and meet the demands and needs of consumers. Moreover, the sales of Coca-Cola have been steady but not monumentally significant for a noteworthy increase or gains. The company has to come up with a new product line or increase its reach in regions where its sales are sluggish (Collis & Montgomery 1995: 118).
From a resource perspective, as highlighted by the VRIO evaluation, Coca-Cola is doing well because the company owns something of value that enables the company to prevent and mitigate risks (Barney 1995: 49). Moreover, Coca-Cola’s products and brand image are rare and difficult to imitate, and it is handling operations well through effective organization. The recommendations, however, are focused on the company’s strategic position because improved R&D and product development are valuable in Coca-Cola’s growth and expansion through strategic evaluation and planning (Grant 1991: 116).