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Value Chain Analysis Of Coca Cola

3369 words - 14 pages



REG NUMBER: R0223518




Individual Assignment, Due March 2012

Craft a Value Chain Analysis for an organization you are familiar with.


The value chain approach was developed by Michael Porter in the 1980s in his book “Competitive Advantage: Creating and Sustaining Superior Performance” (Porter, 1985). The concept of value added, in the form of the value chain, can be utilised to develop an organisation’s sustainable competitive advantage in the business arena of the 21st century. All organisations consist ...view middle of the document...

The value chain analysis essentially entails the linkage of two areas. Firstly, the value chain links the value of the organisations’ activities with its main functional parts. Then the assessment of the contribution of each part in the overall added value of the business is made (Lynch, 2003). In order to conduct the value chain analysis, the company is split into primary and support activities (Figure 1). Primary activities are those that are related with production, while support activities are those that provide the background necessary for the effectiveness and efficiency of the firm, such as human resource management. The primary and secondary activities of the firm are discussed in detail below.

Primary activities

The primary activities (Porter, 1985) of the company include the following:

• Inbound logistics

These are the activities concerned with receiving the materials from suppliers, storing these externally sourced materials, and handling them within the firm.

• Operations

These are the activities related to the production of products and services. This area can be split into more departments in certain companies. For example, the operations in case of a hotel would include reception, room service etc.

• Outbound logistics

These are all the activities concerned with distributing the final product and/or service to the customers. For example, in case of a hotel this activity would entail the ways of bringing customers to the hotel.

• Marketing and sales

This functional area essentially analyses the needs and wants of customers and is responsible for creating awareness among the target audience of the company about the firm’s products and services. Companies make use of marketing communications tools like advertising, sales promotions etc. to attract customers to their products.

• Service

There is often a need to provide services like pre-installation or after-sales service before or after the sale of the product or service.

Support activities

The support activities of a company include the following:

• Procurement

This function is responsible for purchasing the materials that are necessary for the company’s operations. An efficient procurement department should be able to obtain the highest quality goods at the lowest prices.

• Human Resource Management

This is a function concerned with recruiting, training, motivating and rewarding the workforce of the company. Human resources are increasingly becoming an important way of attaining sustainable competitive advantage.

• Technology Development

This is an area that is concerned with technological innovation, training and knowledge that is crucial for most companies today in order to survive.

• Firm Infrastructure

This includes planning and control systems, such as finance, accounting, and corporate strategy etc. (Lynch, 2003).

Figure 1: The Value Chain: Source: Porter (1985)


Porter used the word ‘margin’ for the...

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