Counting Beans

Coca Cola Company utilizes bottling partners to prevent diseconomies of scale. Coca Cola sells syrups and concentrates to their bottling partners who are responsible for packaging and distributing the product. The bottlers are mixing the product on-site, allowing for effective distribution by being close to the customer. Coca Cola has ownership interest in these bottlers. Utilizing this structure has allowed Coca-Cola to maintain efficient economies of scale to manufacture and distribute products, both domestically and globally. This structure allows management to effectively make decisions related to their facilities without the significant bureaucracy usually found in large companies. It also promotes worker motivation by being close to the end product allowing employees to see how their job contributes to the end product. These bottlers can also leverage the buying power of Coca Cola to get low costs from their suppliers. This business model has proved to be a successful business strategy for Coca Cola.