Core Competencies
Firms are repositories of capabilities as determined by the social knowledge structured by organizing principles. (Kogut, Zander)
New knowledge can be created on the basis of combinative capabilities of the firm.
Core competencieds of a firm can be firm specific and those that are in public domain (Belcher, Hassard & Procter 1996). These can be applied into a core competency grid which consists of all possible meanings of core competencies with respect to a firm.
It involves product, process and administrative competencies.
Coca Cola has its product competencies in its brand name and the distinct taste that Coke offered. Coca Cola has become an indispensible component of the American culture. The company's brand name and popularity and identity all over the world are what make it saleable to all types of individuals.
It is able to create products that taste goods and is liked by many people. However, in case of New Coke, the new product in itself was an attack on the "Coke" brand name and hence not accepted by the product.
Coke has firm specific competencies as its model of licensed bottlers and a "secret" concentrate have not been successfully imitated by the competitors. The company makes use of a formula for their product that is top secret and it helps them achieve uniqueness in its industry. According to this view, firm-specific core competencies evolve only when there is a desire by the company or the customers to develop them. (Duarte & Snyder 2003).
The company makes use of a formula for their product that is top secret and it helps them achieve uniqueness in its industry. The next core competency is the administrative competency. The public domain competencies are a part of the human category of administrative competencies and can be well-defined procedures for administrative activities, for instance organizational structure, administrative capabilities etc. (Deal & Kennedy 2000).
Coke has a well organized organization structure which gives it administrative competency. It ensures that the company performs well and achieves its targets.
The total core competencies of Coca Cola can be summarized as strong brand value, franchise network, cost controls, distribution network and administrative control.
Therefore, the core competency of Coca-Cola can be shown in a grid as follows:
Reference: Strategic management and core competencies, Anders Drejer
Resources and Capabilities
The figure below shows the method Coke uses to interface between strategy and firm.
We can see that they are moving from emphasis on the Environment Strategy to a Firm Strategy. With regards to the decisions made by Coke, the following are the two notable points:
Internal resources and capabilities are used for formulating strategy rather than external market focus
The primary source of superior profitability is competitive advantage rather than industry attractiveness
The figure below shows the process through which Coke links its resource, capability and competitive advantage. The organizational capabilities in order to implement its strategy and attain competitive advantage are also given below.
Coke follows a strategy of leveraging its brand building capabilities to attract and retain consumers for its products. Thus, the competitive advantage of Coke is its 'Brand'.
The organizational capabilities of Coke in each functional area can listed be as follows:
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