Value Chain
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The value chain is best understood to be the prospective sources of a company’s economic advantage within its own industry. The value chain separates the firm into its major activities so that the behaviour of costs, the associated value added and the probable sources of differentiation could be understood. It depends on comprehending how a firm’s value chain relates to, and interacts with the value chain of suppliers, competitors and customers.
The main aim of a value chain analysis is to identify opportunities to obtain cost advantages which the firms gain by controlling the key cost drivers, finding ways to rearrange the value chain and optimising the linkages between activities. Another major purpose of the value chain is to increase differentiation. This is achieved by comprehending and selectively integrating the firm’s linkages with their customers’ value chains thereby enhancing their customers’ competitive advantage.
The Coca- Cola Company one such company which seeks to enhance their customers’ competitive advantage. The company was founded by Dr. John
Styth Pemberton and is presently the world’s leading manufacturer in the beverage industry. It boasts of being the number one soft-drink company since it owns four of the five major soft drink brands (Sprite, Fanta, Diet Coke and Coca Cola). The company also has an extensive product range of four hundred other drink products (Minute Maid, POWERade, Dasani Water, etc) in more than two hundred nations worldwide.
Due to the widespread globalisation occurring worldwide the Coca-Cola Company must in the future tailor its value chain to suit rapidly expanding market. The company will face increasing competition as barriers to trade and entry into the market are reduced. This will also give consumers access to purchase the products globally, regionally and locally. Also, customers