Case Study - Is Coca-Cola The “Perfect” Business?

Case Study – Is Coca-Cola the “Perfect” Business?

Creating a ‘perfect’ business is challenging regardless of the company’s industry. Although there are diverse metrics that gauge the success of a business, there are common qualities that successful businesses exhibit regardless of their industry. Coca-Cola is one of the businesses that exemplifies a perfect business, owing to its operational systems and qualities. Coca-Cola’s ability to sell to the world, inelastic demand for its products, minimal labor and capital requirements, and hard-to-imitate products make it a model for business perfection.

Characteristics of a Good Business

One of the attributes of a ‘perfect’ market is the ability to sell to the world. An ideal business should have access to the market on a global scale and not just focus on a neighborhood, state, or country. For instance, the Coca-Cola Company operates in about 200 countries, thus safeguarding its profit margins even if there are market shocks in its mother country, the USA (Hymson, 2011). Another quality of a ‘perfect’ business is offering products/services with inelastic demand, such that people will buy regardless of its price. Customers should be willing to purchase the product because they enjoy and desire it. The company has successfully marketed its beverages as initiators of happy times; hence, people are always willing to pay the price to achieve happiness.

Additionally, an ideal business deals with products that cannot be imitated or substituted. If customers cannot find a perfect substitute for their product, it means that a business company has achieved long-term loyalty from its customers (Hymson, 2011). Coca-Cola has managed to keep the production processes of its beverages secret by only sharing syrup, which is later processed by local bottling plants prior to distribution.

Another key quality of a ‘perfect’ business is minimal labor requirements and limited new capital investment. By creating a system whereby the business collaborates with third parties to keep its systems going, the company will require low new capital investment as it leverages its partners’ human resources and machinery (Hymson, 2011). Coca-Cola Company’s collaboration with third-party bottling plants means the company will require limited capital investment in production plants, heavy machinery, and delivery trucks.

Examples of ‘Perfect’ Businesses

Chipotle

Chipotle is a US-based fast-food eatery. The company’s breakthrough emerged in 2020 when it established drive-through lane services, a shift from the traditional counter-services. The convenience created by the company’s investment in drive-through has contributed to its growth; hence, 250 new restaurants opened, and 7,000 jobs were created in 2023 alone (Ludwig & Fallon-O’Leary, 2023).

Netflix

Netflix’s shift from traditional DVD renting to streaming services has significantly contributed to its success. One of the characteristics that make Netflix successful is global access enabled by the Internet (Ludwig & Fallon-O’Leary, 2023). Besides, the company has low new capital investment since it purchases shows produced by other companies such as Sony and DC.

Starbucks

Starbucks stands out because of its focus on offering customers a relaxing and enjoyable experience. Due to the great experience the company offers at its shops, customers are willing to pay more for Starbucks coffee, unlike other brands (Ludwig & Fallon-O’Leary, 2023). Offering a product with inelastic demand contributes to the long-term success of a business.

Apple

Apple’s success as a company is pegged on its loyal customer base and innovation. Despite charging premium prices for its hardware products like Smartphones and computers, the company has retained a loyal customer base (Ludwig & Fallon-O’Leary, 2023). Apple’s top-tier innovations, including the iPhone series, have made its products have an inelastic demand, implying that its customers will make purchases regardless of the price.

Conclusion

In summary, Coca-Cola has cemented its position as a ‘perfect’ business by embracing qualities that ensure successful operations. Some of such qualities include access to the global market, low capital requirements, inelastic demand for products, and hard-to-imitate products. Likewise, Chipotle, Netflix, Apple, and Starbucks possess traits reminiscent of a successful business.

References

Hymson, L. A. (2011). The company that taught the world to sing: Coca-Cola, globalization, and the cultural politics of branding in the twentieth century. [Dissertation, The University of Michigan]. https://hdl.handle.net/2027.42/86471

Ludwig, S., & Fallon-O’Leary, D. (2023, December 27). 10 hugely successful companies that reinvented their business. CO- by US Chamber of Commerce. https://www.uschamber.com/co/good-company/growth-studio/successful-companies-that-reinvented-their-business

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