3/15/2006

Wal-Mart goes direct with Coca Cola

I was reading an article on knowledgeproblem.com titled, “Is Coke's Franchising Business Model Obsolete? This made reference to an article from the Wall Street Journal about Wal-Mart wanting to go direct to Coca Cola with Powerade. Apparently Wal-Mart has developed their distribution system so that they can do a “better job” than Coca Cola. The big deal is that the bottlers of Coca Cola feel that they are being taken out of the loop and that if Coca Cola allows this deal to go through than what will stop them from allowing other deals to go direct. My question is, isn’t this economically efficient?

2 comments:

Ashton said...

I think this would be a great idea. Any time you can find a way to get rid of the middle-man I think you should. If Coke's bottlers are having a problem with this they should try to become more efficient. A middle-man should only be used if they make the process more efficient.

Dr. Tufte said...

Get the drift here folks. Wal-Mart wants to remove producer surplus from bottlers and pass it on to buyers as consumer surplus. As Martha Stewart says ... it's a good thing.

Ashton: I think the article made the point (weakly) that once upon a time the local bottlers did make Coke more efficient.