Coca-Cola - Global Production Network - Case Study Example

Name: Professor: Course: Date: Coca-Cola GPN Globalisation can be defined as the worldwide movement towards financial, economic, trade or as the process through which organisations develop influence internationally. It has also been defined as both a process, project, and practice. A process through which labour is increased and capital mobility are realized, a practice that is highly contested by corporations and a neo-liberal project by corporate elites and capital for their benefit. Coca-Cola is a global company that operates in over 200 countries through franchising its operations to large bottling companies in the world. This has seen it partner with more than two hundred and fifty bottling companies worldwide in its world segments in Asia, Europe, Africa, North America and Latin America. Coca-Cola is a product that has global brand recognition and is its leading product in the world. The company carries out due diligence in all stages of production and distribution through an integrated quality management program referred to as Coca-Cola Operating Requirements (KORE). This ensures that globally, the quality and safety of all operations are measured against the same rigorous standards, and this makes the product manufactured of the same quality worldwide (Dicken 2015, 274). Coca-Cola is a global company accounting for about seventeen percent of the global soft drinks beverages industry volume. Its global status is attributed to franchising across the world. Franchising has been defined as passing over the rights of using a product name, its design, the management systems involved in the production of the product and management, the format used in packaging and more to a foreign company or organisation at a fee or payment on agreed terms. This, therefore, means that the Coca-Cola produced globally is of the same quality and has passed the same or even more rigorous process, safety checks, quality checks and much more. In every country and continent that one purchases a Coke, they encounter the same taste, the same quality and in the same packaging that they are used to enjoying back home. This is what has produced brand loyalty among clients who, in the final run have generated the company revenues upwards of forty-six million dollars. The company has global brand recognition because of operating a strict franchising business that has led to the creation of jobs and opportunities in the countries they operate in. As has been mentioned before, KORE program is the one that ensures standard maintenance of the quality and safety of the soft drink produced in all parts of the world. It is a quality management system that allows steers the company towards improvements and helps the company to not only identify risks but also to mitigate against such risks. Since it is a soft drink production company, KORE strictly ensures that the quality attributes of the beverage are stringently tested and measured in every step of the production process, and in modern laboratories equipped with modern equipment. This is what is done in all regions that the organisation exists in and is also in compliance with the world’s food policies while at the same time adhering to local food standards in the countries they operate in. This, therefore, is the system that distributes the labour that goes into the production of coke and it is such a one that integrates business objectives and quality objectives in monitoring performance of the company through aligning them with metrics that have been consistent. This also manages risks faced by the company in its bottling actions and all of its operations across the supply chain in every region while also defining problem-solving tools and even methods that increase quality with an eye on consistency and improvement. This benefits the global company because the fees that are paid throughout the world are a reflection of the program that is in current use that allows the company to monitor all steps of production, supply, and distribution, therefore, giving it an upper hand in terms negotiations (Peng & Mike 2014, 129). The regions involved in the production process also greatly benefit from the franchising of coca-cola in that the countries get to build new industries that lead to not only job creation but also economic growth of the regions. As has been previously stated, the soft drinks industry accounts for about thirty-five percent of the beverages industry globally, making it the largest segment of the industry. Coca-cola, on the other hand, accounts for about seventeen percent of the global beverages industry and from the figures, it is clear that such a company is a large player that drives economic growth wherever they are (Newsome 2015, 433). In this respect, the regions benefit from the drink because of also foreign trade since the payments have to be remitted and also knowledge is created in the countries through which job creation, an opportunity is born. The local water company benefits from the production of the soft drink in that they provide the water used for production, cleaning and other purposes. The water volumes required for the production of the drink are big and as such the company ends up paying the water companies’ in the region huge bills, and as such benefits the local water companies. The water that is used in the production of Coca-Cola has to be treated before use. It is common knowledge that water from municipal facilities or water companies is generally treated before distribution and supply to the companies. While this is the case, the manufacturing policies and food and beverages policies currently in place and even different legislative policies in different regions do not allow the company to use the regular water. This, therefore, necessitates for a treatment facility in the production center and in the case of coca-cola, outsourcing is done. Companies that provide cleaning services are contracted by the organisation to treat the company’s water to safety and global standard requirements as stipulated in KORE. This is also a stage through which the incoming water is tested, and the treatment parameters are tweaked to provide the ultimate quality that should be used in production. This, therefore, benefits existing and other international corporations that provide such services while at the same time creating employment in the regions because the companies require people in the providence of such services. Skilled labour is a requirement because it is a process that involves chemicals used in the water treatment industry and also machines that are used at every stage of the process (Peng & Mike 2014, 159). As such, skilled labour for analysing the water at every stage of the treatment process, troubleshooting the problems likely to be found, and most importantly tweaking the parameters during the process to come out with the standard required treated water is the one required in the company. Water is the main component of the drink, and as such, its treatment using the standard requirements set out in KORE allows the company to produce quality at almost every sip of the drink. Other than water, there are different ingredients or components involved in creating the product. One such ingredient is fine sugar. This is either procured from the country of operation, but since most regions have no such facilities for producing the vast amount of sugar used in the company on a daily basis, the sugar is mostly imported from their main supplier. This supplier is vetted internationally using the same stringent rules to ensure they adhere to the quality required by the company. This benefits both the company in ensuring there is foreign trade thus boosting economic growth and also benefits logistics companies used in ensuring a smooth and timely delivery for the production of the soft drink. Sugar in the African market is mostly sourced from Egypt, and this ensures that Egypt’s economy increases significantly from foreign trade while at the same time benefitting all the countries that import such sugar in their foreign trade. Parallel to this, locals also benefit in all the countries since they participate as drivers in the logistics companies and also the management of the company in the regions they operate in. The sugar is mixed with the water and the flavoured coke syrup which is also imported, and this is where production begins. Skilled labour is involved in the process since it is where the quality tests are involved and engineering in the process (Newsome 2015, 433). The company has managerial teams that oversee all aspects of production. There are those involved in the production, heads of services team, management involved in projects, distribution and sales management and much more. They are all overseen by the CEO of the plant who reports to Coca-Cola global management through the KORE structure. As such in the production department, there are different segments which have different heads that report the production management. As is the case with quality assurance, there are heads of such that ensure that the drink is produced according to international standards. It is at this point that ingredient safety is confirmed even before being accepted into the process and this is where they are inspected carefully even though they originate from trusted and reliable suppliers who have been vetted and passed the security and quality concerns. This double-checking method ensures that quality is maintained globally. This is also done while adhering to the laws and regulations put forward in every region and local market especially pertaining to health and safety. The suppliers need to be certified by the internationally recognized GFSI standard which stands for the Global Food Safety Initiative and as such ensures quality and safety assurance of the supply chain. Once in the production process, the drink is taken through extensive tests in line with the regulations of the country and international food safety to ensure that only the standard quality drinks leave the production line (De Kluyyer 2010, 319). In the process, quality analysts from different fields are brought together in various levels and are involved in the testing of the product at almost every stage and past the filler in the machine where the final product is given. The product has to pass an analysis involved and stipulated in the KORE manual, and anything that goes below or above the levels or standards required are discarded. This ensures quality in every product and similarity in every market or region. Unskilled labour is also required by the company in that the lines during the production process. Here, workers are involved in controlling the machinery involved in arranging the bottles in the crate, taking them through a bottle washer and also operators of the machines used in filling the bottles. Operators represent a team of semi-skilled plant workers whose jobs can be phased out by emerging technologies and as such are an endangered species that benefit from the company. Constant communication with the quality department during the production process allows the company to be efficient in production since it is at this point that production actually happens. Other than the unskilled labour, there are machines in the production process that require experts in their operations and as such, skilled labour is required during production. Glass bottles are recycled by the company, and as such, they have to be cleaned before use. In the process, qualified technicians are involved in tweaking the parameters for the operation of the machines involved in cleaning the bottles that have been brought back. Such technicians play a critical role in the company because they ensure that every bottle is equally clean and safe in regard to the policies outlined by food safety authorities worldwide and also in adherence to the local best practices. This ensures management of the process is done at every point from water treatment to the final production of the beverage (De Kluyyer 2010, 354). The production process also involves a services section that is key to the efficiency and even the operations of the company. This is the engineering unit that is tasked with ensuring all machinery are in proper working conditions and minimising breakdowns through instituting processes that enable them to ensure continuous production. The team consists of mechanical engineers, electrical engineers, and engineers from all sectors while also incorporating business officials since they are also involved in the purchasing of equipment either during maintenance, overhaul or replacement. Change-overs during production also requires that the service men be involved in changing parts of the different machinery when producing a product of different sizes as is the case with the Coke beverage. Therefore, these are a key cog in the process and play a major role in ensuring a smooth production process in the plant (Ghemawat 2007, 355). The company mostly benefits from such because with a smooth and measurable production process, strategies for growth can be implemented after analysis, and this also provides an overview of market demand and satisfaction. As such, this also benefits the many employees in the services sector of the company globally through employment and wealth creation. Another issue is that the integrated management system in use by the company globally has defined methods that can be used in addition to the tools involved in problem-solving and this has enabled the company to grow in all regions with consistency in quality and also improvements. Leadership is also endorsed in all segments involved in the production process through the incorporation into the operation of Hazard Analysis and Critical Control Points. This ensures that the critical stages of the production system are monitored since it is in such that the company can become profitable. Another system that has been incorporated by the company for the benefit of the revenue streams of the company is the charging of downtime to different players of the production process when it occurs. This keeps all members on their toes because such charges reflect poorly on the team's abilities and at times their bonuses and as such the company benefits greatly from reduced downtimes or periods of inaction (Ghemawat 2007, 315). Accounting is also important because it is from this that the numbers are used to provide for either increase in revenue or losses. The financial management team works in close contact with the supply and distribution teams to add up the numbers so as to provide information on the performance of the company in the region and globally. The brand is the most recognised in the world as done by surveys and this sees the company sell about 1.9 bottles a day. The company, however, does not own the distribution channels in much the same way that it does not own the bottling facilities but is however involved in consumer brand and marketing. The company works closely with local vendors to ensure that the global product has a local reach and it is in this section that locals benefit most from the global production network of the beverage. The bottling companies are involved in the manufacture of the product, the packaging of the product to meet the needs and standards set out by Coke, merchandising the product and distribution of the final products to the market or customers. Since branding is taken care of by the company in creating both awareness and recognition, the bottling companies have an advantage. When it comes to distribution, the company is feted to have the best network or system in the world. This is because of their eye for the local market as this ensures that the bottling company works closely with their customers who in turn work together with the final consumers. There is a general perception that Coca-Cola runs its operations on a global scale through an integrated system; however, such is not the case since its operations occur via local channels in the region it operates. The regional bottling companies work in close conjunction with suppliers in the region, restaurants, vendors, parks and distributors who in turn ensure the final commodity gets to the final consumers. This is done through executing local strategies for distribution and marketing in the host country in partnership with the company, and as such, one billion nine hundred million servings of the beverage are made in a single day. This is one of the excellent examples of executing a global idea in a local framework that has driven innovation, brand recognition, brand reliance and consumer loyalty in the company. Advertising also a key aspect of the company since it is the one that takes up consumer brand marketing initiatives such that it is involved in the marketing practice of the beverage (Williams 2013, 284). This benefits both the company and locals in that it drives up sales which increase production and this translates to more income and revenue and at times growth in an economy. Through carrying out massive marketing campaigns worldwide, the company is able to imprint its brand worldwide while at the same time creating revenue via an increase in demand for the product. As has been the case in the past, the company advertisements are based on selling not only the beverage but also the feeling accompanied with the same drink which is purportedly good or nice. This has seen the value of the brand and the company increase thus benefitting both the company and also the local bottling companies. The company clearly benefits from the structure adopted in the manufacture and distribution of its product while at the same time ensuring the demand of the product is maintained in the market through carrying out massive marketing campaigns that keep its demand at peak. The value in the company is evenly captured in that the host bottling companies benefit from the most modern manufacturing knowledge and appliances plus the knowledge of the production of such while the company benefits from a continued market for its concentrates, brand, and crates keeping both at considerable profits. Economies also benefit from foreign trade since concentrates, and other ingredients have to be imported. This structure benefits both stakeholders, and its local distribution channels that enable it to use locally developed strategies keep the company at peak while also benefiting locals (Dicken 2015, 298). Works Cited De, Kluyver C. A. Fundamentals of Global Strategy: A Business Model Approach. New York, N.Y.] (222 East 46th Street, New York, NY 10017: Business Expert Press, 2010. Internet resource. Dicken, Peter. Global Shift: Mapping the Changing Contours of the World Economy. , 2015. Print. Ghemawat, Pankaj. Redefining Global Strategy: Crossing Borders in a World Where Differences Still Matter. , 2007. Internet resource. Newsome, Kirsty. Putting Labour in Its Place: Labour Process Analysis and Global Value Chains. , 2015. Internet resource. Peng, Mike W. Global Strategy. Mason, Ohio: South-Western, Cengage Learning, 2014. Print. Williams, Steve. Globalization and Work. , 2013. Print. Top of Form Top of Form Top of Form Bottom of Form Bottom of Form Bottom of Form Top of Form Top of Form Bottom of Form Bottom of Form Read More