Task
1. Analyzing this document/essay.
• Give personal feedback to the author – positive but also some kind of critical.

2. Key question for this essay – which also have to be reflected/answered:
• It´s an interesting analysis of Coca Cola using the VRIO characteristics. If we look at the company from a SWOT analysis perspective with the SW elements from the internal analysis and the OT from the external. That being the case what are the key internal SW elements for Coke?
Based on Barney’s (1995) view that a firm’s resources and capabilities include financial, physical, human and organization assets used by a firm to deliver value to its customers, we analyze the main internal capabilities and resources of Coca-Cola to position itself advantageously in the beverage industry.
Firstly, and considering that the best resources are often intangible (Collins & Montgomery, 2008), Coca-Cola has the power of its brand. A strong brand is a source of differentiation advantage (Grant, 1991), which for Coca Cola has become a strong source of competitive advantage. According to Yoffie (2009), Coke’s patented 6.5-oz bottle with a unique “skirt” design has become and American Icon. The Coca-Cola brand is valuable in that it exploits the opportunity to satisfy a desire from the consumer to refresh while inspiring moments of “optimism and happiness” (The Coca Cola Company, 2013). Because this emotional connection (and the decades of marketing campaigns to establish it), the Coca Cola brand is a resource that is rare and hard to imitate, and therefore a source of sustainable competitive advantage.
A second resource is Coca Cola financial muscle. With a market cap of US$ 173 Bn., Coke is the #27 company in the Forbes 2000 global list (Forbes, 2013). Definitively a valuable resource, it is not as rare or hard to imitate, given the ability of capital markets to quickly fund a competitor.
From a capacity perspective, Coca Cola has a bottler and distribution network capable of reaching the whole country, which is partly owned—80% in 2004—and partly franchised (Yoffie, 2009). This bottler network is also highly efficient thanks to large investments in building 50-million-case production lines that involved high levels of automation (Yoffie, 2009). Because of its capacity and cost advantage, this resource is valuable and hard to imitate by new competitors. It is not rare in that Pepsi has a similar network, albeit slightly less powerful and consolidated.
Coca-Cola also has established an important international presence, which entails managerial know-how, relationships and human resource capabilities. According to Yoffie (2009), “Coke flourished in international markets, and also relied upon them, far more than Pepsi”. Coca-Cola’s products are available in 200+ countries (The Coca Cola Company, 2013). Given the large investments in terms of time, funds and learning curve that are required to internationalize a business the way Coke has, we can consider this organizational resource as valuable, rare and hard to imitate, at least in the beverage industry.
Another organizational capability is the expertise to successfully develop new products/beverages categories. This ability to create new alternatives is the collection of a large number of small processes, collaboration between functional areas and access to information that create what Collins & Montgomery (2008) call path dependency, which in turn make a resource hard to imitate. Coca-Cola has envision that “as much as a third of the industry growth in the next 5 to 10 years could come from disruptive brands from categories that do not exist today” (Watson, 2013), and has committed to the creation of a special Venturing & Emerging Brands team to lead internal knowledge, processes and decisions in the development of such new products (Watson, 2013). Because of the ability of Coca-Cola to quickly launch new product categories, the company possesses an internal capability that is valuable (as it captures potential opportunities regarding changes in consumer taste and preferences), hard to imitate and organizationally sound.
Furthermore, Coca-Cola has a strong relationship with key communication channels such as sports, cinema and music, as well as with other powerful brands such as McDonald’s (who carry the Coke brand exclusively in their restaurants). According to Wernerfelt (1984), one of the factors that potentiate a company’s resource is first mover advantage, since the fact that someone already owns the resource adversely affects the cost and revenue of later acquirers. Thanks to this, this intangible resource (i.e.: a strong and long term relationship with key partners in the development of the brand) is a source a valuable, rare, hard to copy competitive advantage.
As Coca Cola moves forward in it quest to lead the CSDs and beverage industry, it would be recommendable to pay attention to the sustainability and appropriability of the above-mentioned resources. In others words, in which resources should Coca-Cola invest and/or acquire. Firstly, given the significant value of its brand, Coca Cola should continue to keep its trademark as an investment priority in terms of maintaining it relevant and fresh. One example of investment to keep a brand modern is social media (Hingley, 2008). Secondly, the ability to quickly develop and market new products is another key component in the changing beverage industry. According to Yoffie (2009), “In 2004, CSD volume in the United States grew by just 1%, whereas non-carb volume increased by 7.6%”. Therefore, Coke’s capacity to expand its portfolio should be nurtured to the point that Coca Cola should question if their internal capabilities are best-in-class, and look outside its industry for expertise in order to acquire it (for example, in rapidly changing and innovation-intense industries, such as pharma). Finally, in terms of the valuable resource coming from the partnership with key communication and retail channels, Coca Cola should question who is appropriating the highest amount of value (ex.: is McDonald’s benefiting more from the discounts in the purchase of Coca Cola products, or is Coca Cola obtaining sufficient advertising benefits from being present in McDonald’s restaurants worldwide?). If the appropriabilty balance is not ideal, Coke should invest the necessary means to ensure that the highest amount of value coming from this resource falls inside its strategic and financial advantage.
In conclusion, Coca-Cola possesses a number of valuable, rare, hard to imitate and organizationally sound resources that allows it to obtain competitive advantage that is sustainable, as long as the company continues to invest in keeping such resources current, relevant and powerful.

Resources
Barney, J.B. (1995) ‘Looking inside for competitive advantage’, Academy Of Management Executive, 9, 4, pp. 49-61
Collis, D. & Montgomery, C. (2008) ‘Competing on Resources’, Harvard Business Review, 86, 7/8, pp. 140-150
Forbes (2013) ‘Coca-Cola on the Forbes Global 2000 List’ [Online]. Available from http://www.forbes.com/companies/coca-cola/ (Accessed 13 June 2013)
Grant, R.M. (1991) ‘The Resource-Based Theory of Competitive Advantage: Implications for Strategy Formulation’, California Management Review, 33, 3, pp. 114-135
Hingley, J. (2008) ‘Using consumer-generated content for competitive advantage — Interview with John Hingley of Andiamo Systems’, Journal Of Digital Asset Management, 4, 3, pp. 158-170
The Coca Cola Company (2013) ‘Mission, Vision & Values’ [Online] Available from http://www.coca-colacompany.com/our-company/mission-vision-values (Accessed 13 June 2013)
Watson, E. (2013) ‘Coca Cola: A third of beverage industry growth could come from disruptive brands in categories that do not exist today’ [Online]. Food Navigator USA. Available from http://www.foodnavigator-usa.com/Manufacturers/Coca-Cola-A-third-of-beverage-industry-growth-could-come-from-disruptive-brands-in-categories-that-do-not-exist-today (Accessed 13 June 2013)
Wernerfelt, B. (1984) ‘A Resource-based View of the Firm’, Strategic Management Journal, 5, 2, pp. 171-180
Yoffie, D. (2009) ‘Cola wars continue: Coke and Pepsi in 2006’, Harvard Business Review, April, pp. 1-2
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