Semester 2 2026 - DUE August 2026; 100% Correct
solutions and explanations.
Question 1
Absorptive Capacity of The Coca-Cola Company
Absorptive capacity refers to an organisation's ability to identify and acquire valuable
external knowledge, assimilate and understand that knowledge, transform it by
combining it with existing knowledge, and exploit it effectively to improve organisational
performance, innovation, and competitive advantage (Cohen & Levinthal, 1990; Zahra &
George, 2002).
The Coca-Cola Company demonstrates a strong absorptive capacity through the
following four dimensions:
1. Acquisition
Acquisition is the organisation's ability to identify and obtain valuable knowledge from
external sources.
Coca-Cola demonstrates this capability by continuously monitoring changes in consumer
preferences, government regulations, environmental trends, and technological
developments across global markets. In South Africa, the company has recognised
changing consumer demand following the introduction of the Health Promotion Levy
(sugar tax), environmental sustainability expectations, and water scarcity challenges. It
also acquires knowledge through partnerships with organisations such as PETCO,
Collect-a-Can, and The Glass Recycling Company, which provide expertise in recycling
and circular economy initiatives.
2. Assimilation
Assimilation refers to the organisation's ability to analyse, interpret, and understand the
knowledge it has acquired.
Coca-Cola effectively assimilates external information by evaluating market trends,
regulatory developments, environmental data, and customer feedback across its global
operating segments. Information gathered from different regions is shared throughout the
Coca-Cola system, enabling management and bottling partners to understand emerging
risks and opportunities. This allows the company to coordinate strategic decisions across
its worldwide operations while remaining responsive to local market conditions.