available, which forms high competition amongst existing players and drives down the potential profit due to price wars.1
Due to such environmental factors, Coke has distinctively chosen to streamline their spending to the areas of marketing and advertising, a primary business activity, in order to create value. By creating a recognized brand image and leveraging their secret recipe, Coke has become a product differentiator in which other companies cannot easily replicate. This is further evidenced through a DuPont analysis (see Exhibit 1), which indicates a growing profit margin (an indicator of product differentiation) despite a decreasing asset turnover.
IT Strategy
At Coke, there has been a recent shift in IT strategy that places information technology at the forefront of their business. The CIO has changed his attitude to become a “revenue-generating CIO” (“Driving the top line with technology,” n.d.), more driven towards making decisions based on how IT will transform the industry in order to increase performance of the company. Thus, Coke can be placed in the Strategic quadrant of Mcfarlen’s grid.
In July 2010, the company began implementing a new Enterprise Performance Management (EPM) system to enhance its supply chain processes (“Things Go Better With Coke’s Supply Chain,” n.d.). It identified problems such as its new ventures and bottling partners having inconsistent reporting regulations, and ultimately inconsistent calculation of metrics1. Also, even when the same KPIs (Key Performance Indicators) were used to identify stock levels, partners still had varying results in terms of fill rates and stock count. Thus, the company turned to SAP and ITC Infotech to be the pioneers to implement SAP’s BusinessObjects Supply Chain Performance Management. Both companies have strong reputations within their respective industries, and in turn have greatly reduced