HSC Business Studies Case Study Notes
Topic One OPERATIONS
Syllabus
Case Study
role of operations management
· strategic role of operations management – cost leadership, good/service differentiation
· goods and/or services in different industries
· interdependence with other key business functions
· Coca Cola Amatil (CCA) has two main goals that it attempts to achieve through its strategic role of operations. These goals are to perform and grow and as stated by CCA he strategy is defined by three pillars: LEAD, EXECUTE, and PARTNER. CCA aim to lead
ands in each major NARTD category in each market, continually innovate marketing to continually strengthen
and equity, evolving their portfolio so that it adapts to changing consumer preferences. They execute world-class customer service that provides customer diversification, also executing low-cost manufacturing, sales and distribution. CCA also partner with ‘The Coca Cola Company’ as well as other organisations to maximise growth and opportunity.
· CCA have utilised cost leadership by utilising their 35 production facilities, 9 of which are on Australian soil. They reduce their costs by buying cans, bottles and raw materials in bulk (economies of scale). The investment in state of the art technology allows CCA to be highly efficient and cost effective due to this technology resulting in the reduction of jobs. This technology allows CCA to mass produce their products with each production facility producing a variety of products which resulted in $388.3million NPAT.
· CCA caters to a wide range of consumers through its 140+
ands. This diversification in products allows CCA to target niche markets, and adapt to consumer taste. An example of CCA’s adaption to consumer taste through goods/service differentiation is the continued reduction in sugar in all of their products, targeting a health conscious market. CCA offers a variety of beverages in an attempt to cater to as many consumers as possible. These beverages can be categorized into RTD alcoholic beverages, spirits, flavoured milk, juice, sparkling (non-alcoholic), still (non-alcoholic), energy drinks, and hot beverages like tea and coffee.
· CCA operates in the secondary industry. The company operates in the Australian industries of soft drink manufacturing, fruit and vegetable processing, tea, coffee and other food manufacturing, soft drink and pre-packaged food wholesaling, liquor wholesaling, bottled water manufacturing, fruit juice drink manufacturing, mining and industrial machinery wholesaling, and general line grocery wholesaling. While CCA is involved in many industries its prime function is the sale of ca
onated beverages.
· Operations & Marketing: A recent successful marketing campaign by CCA is the ‘Share a Coke’ campaign. CCA aims to create a social and happy relation with the beverage, Coke. The ‘Share a Coke’ campaign does this as it accentuates Australia’s multiculturalism with the integration of names from differing ethnicities such as “Sunita” and “Lee”. This benifits CCA’s public reputation as they are seen as encouraging multiculturalism. As well as allowing them to target most demographics, custom cans and bottles are available in order to target people of all backgrounds, maximising CCA’s profit. Operations & Finance: The investment in new, state of the art technology, along with stricter hiring strategies and recently developed training programs and has helped CCA minimise costs. This has allowed the company to invest funds elsewhere in the business. For example the creation of ‘Orange Vanilla Zero Sugar Coke’, a new flavour that hit shelves in early 2019, came as a result of increased availability of funds. Operations & HR: CCA operates with over 12,000 employees across 6 different countries. Over 3000 of these employees operate within Australia. Operations need to ensure all workers are protected by the ‘Fair Work Act 2009’, a well as ensuring the safety and wellbeing of CCA employees. CCA has been working to ensure the safety of employees with a 75% decrease in workplace injuries since 2012, as a result of increased communication and regulations put in place by human resources.
influences
· globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability
· corporate social responsibility
· the difference between legal compliance and ethical responsibility
· environmental sustainability and social responsibility
· CCA operate across 6 different countries within the Asia Pacific region including Australia, New Zealand, Samoa, Fiji, Indonesia, and Papua New Guinea. Globalisation has allowed CCA to employ over 12,000 employees and reach 270million potential consumers.
· CCA has fully automated pallet storage technology in place to maintain the highest efficiency while keeping costs low. In XXXXXXXXXX, CCA invested in $90million into the Richards, Queensland manufacturing facility. CCA utiloise of their state of the art technology to ensure operations are efficient, productive and flexible.
· CCA has established a reliable reputation among consumers for delivering consistently high quality products. To maintain this reputation, CCA employ ‘quality control’ personnel that use chemical testing of samples to check that each product has the co
ect contents. CCA utilise strategies such as this to ensure the quality expectations of their product are met.
· CCA attempts to achieve lost costs while still achieving a high quality product. Other large beverage companies that operate in the same market as CCA like PepsiCo provide competition between the
ands. To combat this CCA has recently closed the Adelaide manufacturing facility in order to provide the Richards, Queensland facility with a $90million reinvestment, improving the supply chain in Queensland, while minimising long-term costs.
· CCA must follow zoning regulations under local councils when obtaining land or property. When building the CCA Headquarters in Northmead, NSW, CCA first needed approval from Pa
amatta Council. The company must also follow government policies such as the tax rate on profits, with 30% of all profit being taxed. This lead to a $51million tax expense in 2018.
· CCA follow all legal requirements in order to avoid legal consequences as well as public backlash.
· CCA is very conscious about the environmental impact of their business, constantly setting goals and updating their commitments to reduce the company's impact on the environment. From 2010 to 2019 CCA have reduced their ca
on footprint by 20%, aiming to further reduce it to 25% by the conclusion of 2020.
· Difference between legal compliance & ethical responsibility: CCA demonstrate legal compliance by following the laws and regulations set in their region of operations. If these laws are not followed consequences like possible suspension of their trading license and/or legal actions may be taken. While ethical responsibility is not punishable it is important in maintaining the public reputation of a
and. CCA demonstrates ethical responsibility through its involvement in charities, donating $1.1million a year to charity, as well as their indigenous barista program, where CCA provides indigenous individuals for an opportunity for a career in CCA. Environmental Sustainability: CCA has recently revamped their “World Without Waste” campaign where for every bottle or can produced another is recycled. CCA is also operating an investigation on 80% of its suppliers to ensure materials are being responsibly sourced, to create
and transparency. Social Responsibility: Maintaining appropriate work conditions is one of the many ways CCA maintains social responsibility. Ensuring the workplace is safe for employees through adequate training and communication, has reduced injuries in the workplace by 75% since 2012. CCA also support communities to demonstrate social responsibility. CCA “grants to charities with a clear and measurable program addressing an issue aligned with the CCAF mission, up to $200,000 per annum for up to three consecutive years”, strengthening their public reputation by being socially responsible. CCA acts socially, environmentally and ethically responsible to maintain loyal customers and good public reputation.
operations processes
· inputs
· transformed resources (materials, information, customers)
· transforming resources (human resources, facilities)
· transformation processes
· the influence of volume, variety, variation in demand and visibility (customer contact)
· sequencing and scheduling – Gantt charts, critical path analysis
· technology, task design and process
layout
· monitoring, control and improvement
· outputs
· customer service
· wa
anties
· Materials: To achieve their operational goals, CCA purchase raw materials to manufacture their goods. Ca
onated water, natural flavours, and caffeine are some of the most common ingredients purchased as they are used in a range of CCA’s products including Coke and many of their energy drinks. CCA lower costs by purchasing their materials in bulk. Information: Ensuring CAA has co
ect and up-to-date information in their database helps ensure the companies awareness of changing consumer tastes. This allows the company to efficiently alter their products to suit certain demographics to maximise profits and maintain a good public reputation. Customers: CCA utilise customers by encouraging feedback on their website as well as on their many social media accounts. CCA use this feedback to adjust their goods to account for changes in consumer taste. An example of this is the implementation of ‘Coca Cola Minis’ after CCA came under scrutiny for being a major contributor to obesity. The minis provided smaller sizes with reduced sugar, becoming more acceptable in a health conscious market.
· Human Resources: CCA’s 12,000 employees act as a transforming resource for the business (human labour), all being appropriately trained to ensure CCA runs as efficiently as possible while maintaining high quality products. These employees are also needed to operate and manage facilities. Facilities: Along with human resources, CCA utilises facilities as transforming resources, assisting in the manufacturing process as well as managing inventory. While certain facilities have made many jobs redundant due to their efficiency, they still require human capital to manage any issues that may be encountered.
· Transformation process is highly affected by the 4 V’s: Volume, Variety, Variation in demand, and Visibility. Volume: CCA purchase an extremely high volume of materials, in 2018, buying an estimated 273,000 metric tons of raw materials. These materials are used to produce an extremely high volume of manufactured goods. In 2018 their trading volume within Australia was just over 307.1million cases of 24 cans and/or bottles. CCA’s ability to buy and produce in such high volume, helps them maximise profits and maintain flexibility. Variety: Although mass production is a large component of CCA’s operations, they rely of variety in products to satisfy differing consumer markets. With extensive research on consumer tastes, variation in CCA’s products will continue to increase in order to maximise profits through satisfying a range of demographics. Variation in CCA’s Coke products include diet coke, vanilla coke, coke zero-sugar, and coke minis. Variation in Demand: CCA products are in constant demand, however as consumer demand changes CCA must adjust their products in order to capitalize on these variations in demand. Demand for certain goods may increase or decrease and CCA must utilise their feedback programs and research in order to understand how demand for products may vary in different regions. Visibility: CCA products are visible in almost every supermarket, service station, convenience store, or fast food restaurant. All ingredients are