Coca Cola Highlight Benefits of Leveraging Core Business Activities
The Coca-Cola system's Manual Distribution Center (MDC) program in Africa was referenced as an example of an innovative solution that advances both business goals and the international development agenda.
14//05/09 In a panel discussion at the Brookings Institution, former President Bill Clinton, Muhtar Kent, Chairman and CEO of The Coca-Cola Company, and Pat Woertz, Chairman, CEO and President of Archer Daniels Midland Company, discussed ways business can play a role in creating value for both shareholders and society. They emphasized the value of leveraging core business activities to foster growth and development, especially in emerging markets.
The Coca-Cola system's Manual Distribution Center (MDC) program in Africa was referenced as an example of an innovative solution that advances both business goals and the international development agenda. Coca-Cola's approach to distributing its products in hard-to-reach urban and peri-urban areas in Africa utilizes small businesses that deliver Coca-Cola products manually to local small-scale retailers. The MDCs account for over 80% of the company's sales in East Africa while creating small-business ownership opportunities and jobs for an increasing number of first-time entrepreneurs and women. To date, the Coca-Cola system has created over 2,500 MDCs in Africa employing over 12,000 people and generating over $500 million in annual revenues.
"For Coca-Cola, the Manual Distribution Centers are a wonderful example of the way business can focus on meeting its consumers' and customers' needs while supporting the sustainability of communities," said Muhtar Kent, Chairman and CEO of The Coca-Cola Company. "It has long been our philosophy to look at our business system holistically and determine where we can have the greatest impact on advancing initiatives that are critical to the communities and stakeholders that we rely on."
The Company has been committed to scaling-up the number of MDCs in Africa since joining the Business Call to Action, an initiative that mobilizes large companies to help reach the Millennium Development Goals by harnessing core business competencies. To determine how best to scale-up its model, Coca-Cola asked the Corporate Social Responsibility Initiative at the Harvard Kennedy School and the International Finance Corporation (IFC) to review the approach.
During 2008, a review of the current operations of the MDC model in Dar es Salaam, Tanzania and Addis Ababa, Ethiopia was conducted.
"There is a growing recognition in the corporate and international development communities that the most sustainable contribution companies can make to poverty alleviation is to carry out their core business activities in a profitable, responsible and inclusive manner," said Jane Nelson of the Harvard Kennedy School.
"Our review of Manual Distribution Centers in Tanzania and Ethiopia demonstrates the potential of large corporations to build economically viable business linkages with small enterprises in their value chains, which can also have development benefits," said IFC Director Toshiya Masuoka.
The research study identified a number of opportunities to further enhance the MDC approach. These include: 1) investing in continuous improvement of the core business model through improved access to finance and expanded and enhanced training; 2) broadening socio-economic opportunity for MDC owners and employees through life skills and further education opportunities; 3) promoting small business development and entrepreneurship more widely by supporting entrepreneurship education and advocacy for small enterprise development, 4) exploring how the business model could distribute social products or messages; and 5) undertaking participatory evaluation and action-based learning.
