Theoretical Concepts Taken from Resources and Capabilities Literature

This paper will discuss theoretical concepts taken from resources and capabilities literature in order to understand how coca cola generate sustainable competitive advantage. The paper will formally evaluate the research based view of strategy, taking in other contemporary works such as the VRIN model to establish what competitive advantage is, and to what lengths do coca cola formulate a sustainable competitive advantage strategy. This can be understood by drawing upon ideas through theory. The paper will then examine the historical development of capabilities, and how the emergence of capability's in the late 19c led for major investments and subsequently an increased flow of goods.

The main argument that the paper will develop is if knowledge integration meets the requirements of Coca colas resources to sustain competitive advantage, and if so, what approaches can be adopted in the future to continue the trend.

The resource based view of strategy is that an organisation is said to have a competitive advantage, when ''implementing a value creating strategy that is not simultaneously being implemented by any current or potential competitors'' (Barney, 1991:102).

To sustain a competitive advantage an organisation must have a set of unique resources. Resources include ''assets, capabilities, organisational processes, attributes information and knowledge controlled by the organisation'' (Barney 1991:91). Barneys (1991) VRIN model, states that to be a source of sustainable competitive advantage these resources need to be ''Valuable/Rare/Non inimitable/Non substitutional.

In regards to Coca cola, its global operational resources that I have highlighted are its worldwide distribution network, its secret recipe, and consumer marketing skills. The 'valuable' part of the VRIN model is designed to 'exploit opportunities and neutralise threats' (Barney 1991 p102). Coca cola has a worldwide distribution network that it utilises for entering global markets. The secret formula is 'valuable' as it's unique in its proposition to the customer. Coca colas effective use of advertising is 'valuable' as it appeals to differing demographics in many locations across the globe.

The 'rare' 'possessed by only a few firms in the industry' (Barney 1991 p102) would be coca colas worldwide network, and its secret formula - as only coca cola possess it. Coca colas consumer marketing skills are rare also as its difficult usually for organisations to obtain cross-cultural distinction.

The imitable (costly to imitate) part of the VRIN model in terms of Coca colas worldwide distribution network, would make it very hard for competitors to imitate due to exclusive rights and agreements that are in place. Coca cola secret recipe has been around since the late 19c and it would be extremely difficult to imitate, as countless of competitors have tried to over the decades. As the brand name is so well-known and respected, Coca colas consumer marketing skills already have a clear advantage from its rivals that cannot be imitated easily.

In terms of the 'non substitution' aspect of the VRIN model it is quite evident that there is no clear way that a competitor could replace Coca colas worldwide distribution network. Its secret recipe also means competitors would find it difficult to use another resource or capability to overcome Coca cola.

These are all capabilities of the organisation that make it distinctly competitive within the market. Coca colas worldwide distribution network is only a temporary advantage as others may well imitate. This core competency is not a provider of sustained competitive advantage. However its secret formula is that no competitor has been able to make a direct copy of it since its formulation. Coca cola consumer marketing skills also provide sustainable competitive advantage by drawing different demographics in many locations across the world into the Coca cola 'brand'.

The historical development of capabilities state that the economics of organisational value are generated by the creation of products/services by the resources used. The emergence of capabilities in the 1880's led for major investments in shipping, railways, telecommunications and roads. Flow of goods increased as a result of these changes. Chandler 1992 suggests a link between technology and humans, and that as knowledge and technology develops; links are often unique within organisations.

Coca cola existed at a time where the emergence of capability was in its heyday. Initially Coca cola grew interconnected markets , which led to a specialisation in what coca cola do, and inevitably led to national distribution centres springing up to satisfy demand.

This created within the organisation a sense of strategic capability. Strategic capability is the ability to repeatedly perform tasks, so a sense of value is created by the customer.

Competencies are activities that underpin strategic capability. They are non-transferable at their core such as coca cola and their unique recipe. Tradability changes over time and alters the boundaries of an organisations interrelationship, between competencies and strategic capability.

Johnson and Scholes (2002) suggest ''strategic control is concerned with the shaping of behaviour in business with the context that managers are operating'' Strategic control in this regard has to be the implementation of the key resources that Coca cola possess.

Grants 1996 models of knowledge integration states a number of 'mechanisms to integrate knowledge' these are direction, routines and culture. In terms of Coca cola, the direction that the organisation is taking is that of a major world brand that sells on the world market through advertising the power of the brand- this is its key resource. Its routines are driven by large scale distribution, producing syrup and bottling centres to keep up with demand. And its culture is displayed by its customer relations through the brand that make it a viable well known product. Coca cola was one of the top ten brands in the world in 2013 generating 79.2 billion us dollars. It ranked as the 3rd biggest brand in 2013 and was the biggest brand in 2012.

''Strategy is connected with matching a firms resources and capabilities to the opportunities that arise in the external environment'' grant 132 analysing resources and capabilities

Coca cola effectively do this by creating a near tangible brand that is revered around the globe in virtually every market segment. Its global distribution networks for one allow for them to execute effective business processes, getting the product to the customer are vital for any business, but in terms of Coca cola and its