Competitive advantage is a form of advantage that a firm obtains over its competitors in an industry. This business element allows it to generate higher sales margins as well as retain more clients than its competitors. As observed, competitive advantages include unique cost structure, distribution techniques, customer support as well as firm’s cost structure. Coca-Cola is an outstanding example of a company in the soft drinks industry with excellent merits obtained from its competitive advantage. However, competitive advantage succeeds under excellent employment of certain resources in the industry. However, there are extensive differences between the benefits the merits for resources used by Coca-Cola in comparison to resources identified in the soft drink industry. These resources are extremely influential to suggestions or decisions made on behalf of the company.
Coca-Cola is the best company in the soft drinks industry in the world. This gives the company an extremely strong customer base in comparison to other companies in the industry. This means that the company has been able to sustain an outstanding name in the world. Through production of extremely enjoyable drinks in different varieties, the company has been enjoying an extremely excellent reputation in the entire world (Barney, 1995). It is true that the reputation of a company may be significant in making the company outstanding in comparison to other players in the industry. However, this is not always the case, since the reputation of the company alone cannot convince clients if the tastes of the clients are not met. At industry’s viewpoint, the reputation of a company is not a guarantee for success. The company must work in line with the tastes of the customers. If Coca-Cola sustained its name and changed the taste for its goods, it could be extremely hard for the customers to buy products that do not match their tastes in the name of being loyal to the Coca-Cola brand.
Also, Coca-Cola being the most outstanding global player in the soft drinks industry enjoys a huge capital base. The company also enjoys outstanding sales in the global market. This means that the company satisfies the other resource required for achievement of competitive advantage of financial strength. Financial resource aids on reaffirmation of products value as well organizational sustainability. Coca-Cola has continuously used its strength to intimidate most companies that have come up in the industry. This has also been assistive in the company’s dominance of the global soft drinks industry. However, this is not the case on the industrial perspective of the merit posed by financial resource as a competitive advantage for a company. The financial strength of a company may be challenged by the rise of another company which poses extensive challenge to the dominant company (Barney, 1995). This is because customers become divided over tastes with the dominant company being the main loser. In this case, Coca-Cola is bound to lose its financial strength following introduction of Pepsi in the industry.
Technology, innovation, and creativity form the third resource necessary to equip excellent competitive advantage for Coca-Cola Company. The main aim of this resource is to cater for inimitability as well as rarity. However, the firm cannot define its prowess in sustenance of performance through enhanced innovation, creativity, as well as technology. For example, Coca-Cola could not have predicted that its business operations as well as production could have been copied by Pepsi. Therefore, the firm’s perspective varies to the industry’s perspective over the resource. This is based on the fact that no company can dominate an industry in creativity, innovation, or technology by developing elements that can never be used by other companies in the industry. This is an extremely open field where any firm can adopt prowess through creativity, innovation and technology. Creativity, technology and innovation are some of the most difficult elements to patent (Yoffie &Slind, 2006). Therefore, this may not be referred to as a stronghold for Coca-Cola Company over other firms in the industry.
The above mentioned resources may be extremely insightful to the various strategies that Coca-Cola may be advised to undertake for continued excellence in performance. Building an excellent reputation for the company is an outstanding resource that may assist the company in brand positioning. The brand of a company is recognized as an excellent marketing tool that customers should identify with in an extremely fast manner. Also, following the prowess of the company in financial resource, the company can still benefit massively in achieving excellent performance since it has the ability of reducing the prices of its products to counter any challenge that may be poised to the company by any competitor. This will give excellent performance for the company as it will sell more of its products compared to its competitors. The innovation, creativity and technology resource is extremely useful in defining what a company can achieve through development of a competitive edge based on innovation (Porter, 2004). Coca-Cola can achieve its excellent performance through employment of this resource in its operations. This will gear up production as well as sales leading to increased revenue for the company.
Although, some of the perspectives on various resources differ on firm’s and industry’s view point, the three resources cannot be ignored to offer Coca-Cola an upper hand over its competitors like Pepsi. Coca-Cola remains the best company in the soft drinks industry in terms of sales, which increases revenue, excellent production that maintains its excellent brand, and improved production as well as improved tastes as a result of sustained innovation and creativity in the company.
References
Barney, JB 1995, ‘Looking inside for competitive advantage’, Academy of Management
Executive, 9 (4), pp 49-61. Retrieved from: http://sfxhosted.exlibrisgroup.com.ezproxy.liv.ac.uk/lpu?title=academy+of+management+executive&volume=9&issue=4&spage=49&date=1995.
Porter, ME 2004, Competitive Advantage: Creating and Sustaining Superior Performance /
Michael E. Porter, n.p.: New York; Free Press, 2004. University of Liverpool Catalogue, EBSCOhost, viewed 12 July 2013.
Yoffie, D. &Slind, M 2006, ‘Cola wars continue: Coke and Pepsi in 2006’, Harvard Business
Review, (706447). Retrieved from: http://cb.hbsp.harvard.edu/cb/pl/9807336/9807338/c8b6e6fe642e870f0cc14cf20b15b725
