Question khuong Business & Management

Why does the Coca Cola Company have to rely on its bottling partners to do the packaging for it, rather than doing that itself and exporting worldwide? Is that considered to be a heavy reliance?

Why the Coca Cola Company has to rely on its bottling partners to do the packaging for it but not doing that itself and export worldwide? Is that considered to be a heavy reliance?

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Answer Expert #26447

Coca-Cola operate across the entire world, and utilise over 250 bottling partners across the world to help with manufacturing and logistical challenges. These bottling partners are not owned or controlled by Coca-Cola, and operate as an autonomous company. This allows Coca-Cola to create their bespoke ‘syrup’, and delegate manufacturing, packaging, merchandising and distributing to the bottling partners (Coca-Cola, 2016). Although this means that a large portion of Coca-Cola manufacturing process resides outside of the company, it helps the organisation ensure that they can distribute their product to many countries throughout the world. Furthermore, managing this process internally would need to be supported by intricate infrastructure and a complex supply chain network. By using bottling partners, Coca-Cola eliminate many operational challenges to the organisation, and allows the firm to focus on other areas of operations (Pendergrast, 2013).

Although the use of bottling partners helps streamline operations and eliminates operational challenges, it does place a heavy reliance on these partners. If one or more bottling partner’s operations were stopped for any amount of time, it would seriously impede on Coca-Cola ability to distribute their product (Hays, 2010). It is therefore likely that Coca-Cola have several contingency strategies for if a bottling partner were to collapse, which would ensure a constant stream of products are still being released to customers. Although Coca-Cola could consider integrating their bottling partners into internal operations, it would likely present a high financial burden and many additional complexities (Pendergrast, 2013).

References

Coca-Cola, 2016. The Coca-Cola System. [Online]
Available at: http://www.coca-colacompany.com/our-company/the-coca-cola-system
[Accessed 14 November 2016].

Hays, C., 2010. Pop: truth and power at the Coca-Cola Company. New York: Random House .

Pendergrast, M., 2013. For God, country, and Coca-Cola: The definitive history of the great American soft drink and the company that makes it.. Basic Books: London.