Summary
Owing to the increasing cost of operating the distributions and manufacturing units, Coca-Cola Company has thus decided to sell most of its units and reduce their number by to a sustainable. It follows two year period of target profit misses by the company. To remain financially stable, the company has opted to divestment. The profit target misses have threatened the investors who feel that the company faces possible acquisition. Even though the company had already attempted to franchise many of its units, it has now decided to sell all of them.
Value chain of Soft Drink Company
Manufacturer bottling Distribution Merchant Consumer. Coca-Cola occupies manufacturing bottling and distribution in the value chain.
How the plan seeks to alter the chain
The companies move will ensure that it relies on the services of other partners for manufacturing and distribution operations. The move thus ensures that it offloads the financial budget through equipment and wages as it will reduce its human resource as well. Due to unprofitable nature of the business, the company is attempting to cut away the manufacturing and distributions links and reduce them to a manageable size.
The pros and cons of the move
Pros-The company will likely gain transparency and value. Streamlining the focus ensures that transparency is enhanced and the overall value is increased.
Cons- the company will have to meet the costs of personnel relocation or retrenchment which can be high. Also, the company is likely to have contractual issues with businesses that were in contractual agreement with the targeted units.
Does Coca-Cola have long-term strategy or improvisation mode
In the view of the article, there is no clear-cut plan that Coca-Cola has laid. The evident back and forth moves to franchise and divest clearly being in the improvisation mode.
Key concepts from article
