A Case Study Of The Coca Cola Company Business Essay
Thi paper contains a comprehensive analysis of The Coca-Cola Company and addresses several Organizational Behaviour and Human Resources issues. Recommendations are proposed based on the problems that were discovered during the study. The goals of the recommendations are to address uncertainty with The Coca cola Companies suppliers and distributors, and also align company decision-making with the structure of the organization.
List of Abbreviations v
Definition of terms: vi
List of Tables and Figures: vii
CHAPTER ONE 1
INTRODUCTION AND BACKGROUND INFORMATION. 1
1.0. Organizational Background 1
Mission, Vision HYPERLINK "#__RefHeading__107929_754499052"&HYPERLINK "#__RefHeading__107929_754499052" Values 1
Why is our role Important 4
Organization structure 4
Organisation culture 5
List of Abbreviations
Definition of terms:
List of Tables and Figures:
INTRODUCTION AND BACKGROUND INFORMATION.
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This was called Atlanta Begining (1886-1892). It was 1886, and in New York Harbor, workers were constructing the Statue of Liberty. Eight hundred miles away, another great American symbol was about to be unveiled.
Like many people who change history, John Pemberton, an Atlanta pharmacist, was inspired by simple curiosity. One afternoon, he stirred up a fragrant, caramel-colored liquid and, when it was done, he carried it a few doors down to Jacobs' Pharmacy. Here, the mixture was combined with carbonated water and sampled by customers who all agreed -- this new drink was something special. So Jacobs' Pharmacy put it on sale for five cents a glass. Â
Pemberton's bookkeeper, Frank Robinson, named the mixture Coca-ColaÂ®, and wrote it out in his distinct script. To this day, Coca-Cola is written the same way. In the first year, Pemberton sold just 9 glasses of Coca-Cola a day. Â
A century later, The Coca-Cola Company has produced more than 10 billion gallons of syrup. Unfortunately for Pemberton, he died in 1888 without realizing the success of the beverage he had created. Â
Over the course of three years, 1888-1891, Atlanta businessman Asa Griggs Candler secured rights to the business for a total of about $2,300. Candler would become the Company's first president, and the first to bring real vision to the business and the brand. (The Coca cola company website)
Its popularity would not stay within the United States for long, though, because in the year of 1906, Coca Cola was bottled in Cuba and in Panama. Bottling operations were soon started in Hawaii the next year, then in the Phillipines, France, Belgium, Bermuda, Colombia, the Honduras, Italy, Mexico, Haiti, and Burma in later years. By the year of 1940, the famous soft drink was bottled in forty countries.
Advertising for the cola has included many product slogans including, "The Pause That Refreshes", which was used in 1929, "Have A Coke And A Smile," which was used in 1979, and "Always Coca Cola" which was used in 1993 when sales from this soft drink exceeded ten billion cases worldwide. (http://www.essortment.com/all/cocacolacompan_rlee.htm)
Mission, Vision & Values
The world is changing all around us. To continue to thrive as a business over the next ten years and beyond, we must look ahead, understand the trends and forces that will shape our business in the future and move swiftly to prepare for what's to come. We must get ready for tomorrow today. That's what our 2020 Vision is all about. It creates a long-term destination for our business and provides us with a "Roadmap" for winning together with our bottling partners.
Our Roadmap starts with our mission, which is enduring. It declares our purpose as a company and serves as the standard against which we weigh our actions and decisions.
To refresh the world...
To inspire moments of optimism and happiness...
To create value and make a difference.
Our vision serves as the framework for our Roadmap and guides every aspect of our business by describing what we need to accomplish in order to continue achieving sustainable, quality growth.
People:Be a great place to work where people are inspired to be the best they can be.
Portfolio:Bring to the world a portfolio of quality beverage brands that anticipate and satisfy people's desires and needs.
Partners:Nurture a winning network of customers and suppliers, together we create mutual, enduring value.
Planet: Be a responsible citizen that makes a difference by helping build and support sustainable communities.
Profit: Maximize long-term return to shareowners while being mindful of our overall responsibilities.
Productivity: Be a highly effective, lean and fast-moving organization.
Our Winning Culture
Our Winning Culture defines the attitudes and behaviors that will be required of us to make our 2020 Vision a reality.
Live Our Values
Our values serve as a compass for our actions and describe how we behave in the world.
Leadership:The courage to shape a better future
Collaboration: Leverage collective genius
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Accountability:If it is to be, it's up to me
Passion:Committed in heart and mind
Diversity: As inclusive as our brands
Quality:What we do, we do well
Focus on the Market
Focus on needs of our consumers, customers and franchise partners
Get out into the market and listen, observe and learn
Possess a world view
Focus on execution in the marketplace every day
Be insatiably curious
Act with urgency
Remain responsive to change
Have the courage to change course when needed
Remain constructively discontent
Act Like Owners
Be accountable for our actions and inactions
Steward system assets and focus on building value
Reward our people for taking risks and finding better ways to solve problems
Learn from our outcomes -- what worked and what didn't
Be the Brand
Inspire creativity, passion, optimism and fun
The Coca-Cola System
Meet Our Company
The coca cola company i the worlds largest beverage company. We operate in more than 200 countries and market a portfolioof more than 3000 beverages products including sparkling drinks and still beverages such as waters,juices and juice drinks and still beverages such as waters, juice and juice drinks, teas, coffees, sports drinks and energy drinks.
Who we are
Headquarted in Atlanta, Georgia, we employ approximately 92,400 associates across our six operating groups-Eurasia &Africa,Europe,Latin America, North America, Pacific and bottling Investment in addition to Corporate.
What we Do
Our Company manufacturee the concentrates, beverage bases and syrups thats make our brand unique, and sells them to bottling operations. We oown our Licence the Brands adn, to connect our brands to our customers, we focus on marketing activities including print and television advertising, online programs retail store displys, sponsorship, contests and package design.
Why is our role Important
Our focus on beverage creation and marketing enables us to understand and meet the diverse and ever-changing beverage needs and desires of our consumers around the world.
We are a global business that operates on a local scale, in every community where we do business. We are able to create global reach with local focus because of the strength of the Coca-Cola system, which comprises our Company and our more than 300 bottling partners worldwide.
While many view our Company as simply "Coca-Cola,"our system operates through multiple local channels. Our Company manufactures and sells concentrates, beverage bases and syrups to bottling operations, owns the brands and is responsible for consumer brand marketing initiatives. Our bottling partners manufacture, package, merchandise and distribute the final branded beverages to our customers and vending partners, who then sell our products to consumers.
All bottling partners work closely with customers -- grocery stores, restaurants, street vendors, convenience stores, movie theaters and amusement parks, among many others -- to execute localized strategies developed in partnership with our Company. Customers then sell our products to consumers at a rate of 1.6 billion servings a day
Designing Organizational Structure: Authority & Control
The Coca-Cola Company currently employs approximately 92,800 employees up to december 2009.
According to a general details obtained from the company's website, there are at least 5 hierarchical levels at the corporate level. Eg there is aboard of Directors, Operating group leadership and Functions leadership.
Due to its tall structure, the organization has experienced communication problems. One of the problems discovered through the survey mentioned before was that the people and the company lacked clear goals (Fox, 2007). Tall hierarchies also cause motivation problems, which is why the organization is attempting to get employees more engaged (Arendt, Ch.5). The increased usefulness of the co mpany's intranet will greatly increase the communication between every level of employees, and allow upper management to effectively communicate to the front line employees. Based on information from Re This span of control seems somewhat slim for the CEO of such a large organization. The CEO is also a member of the Senior
Leadership Team. This team consists of each head of the eight operating groups aforementioned, and also has other top executives in areas like innovation and technology and marketing. Although there are only six people that answer directly to the CEO, the CEO is able to receive input from a wide variety of divisions because of this leadership team. Since the team is comprised of members from various divisions, the CEO is able to obtain a wide variety of information. The move to decentralization has caused structural changes for The Coca-Cola
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Company. New offices have been opened to facilitate decisions being made closer to the local markets (Annual Review, 2006). The organization has also undergone centralization of some of the company's departments. In 2006, the Bottling Investments division was created to "establish internal organization for our consolidated bottling operations and our unconsolidated bottling investments (Annual Report, 2006, p.2)." It appears that the organization is striving for a hybrid structure, which allows them to have advantages of both mechanistic and organic structures, while trying to minimize the negative consequences of each. The strategic structural changes that the organization has gone through in recent years have created a much needed positive impact on the company. Sales growth increased and employees are much more satisfied (Fox, 2007). The organization is trying to create a more innovative culture by pushing towards decentralization. It looks as if the company is not content with following trends in the beverage industry, but looking to be on the forefront of new and exciting products.
Creating & Managing Organizational Culture
The culture of The Coca-Cola organization is mission driven; focused on refreshing the mind, inspiring optimism, and making a difference (Thecocacolacompany.com). The rich history of the organization has allowed the company to compile hundreds of stories of consumers and employees. These stories share real life examples of what Coca-ColaÂ© means to their consumers and gives employees a sense of pride to be apart of something that means so much for so many people. They also inspire new employees to make a positive impact on the world. Stories are so important to The Coca-Cola Company that they created a museum in Las Vegas
that focuses on the stories of customers. After visitors heard others' stories, they could record their own, which the company could use in the future (McLellan, 2006). As stated previously, the company has been trying to change the culture by allowing employees to essentially shape and reform the goals of The Coca-Cola Company (Fox, 2007). The positive stories that the company chooses to focus onprovide a foundation to encourage employees to be not only model workers, but model citizens.
What does the organization do? What goods and services does it produce/provide? What kind of value does it create? What does the company's Annual Report describe as the organization's mission?
"Our business is nonalcoholic beverages-principally carbonated soft drinks, but also a variety of noncarbonated beverages. We manufacture beverage concentrates and syrups, which we sell to bottling and canning operations, fountain wholesalers and some fountain retailers, as well as some finished beverages, which we sell primarily to distributors. We also produce, market, and distribute certain juice and juice drinks and certain water products. In addition, we have ownership interests in numerous bottling and canning operations, although most of these
operations are independently owned and managed.
The organization produces a product widely known, Coca-cola or Coke. Besides the namesake, it also has approximately 400 other brands, including an array of other Coke variations. Another facet of the organization bottles and distributes the products. The value it creates for its consumers is that it is a good tasting drink that consumers would like to have. For some, it may give more energy to do to the caffeine, for others, it may just be the taste that they enjoy. We believe that our success depends on our ability to connect with consumers by providing them with a wide variety of choices to meet their desires, needs and lifestyle choices. Our success further depends on the ability of our people to execute effectively, every day. Our goal is to use our Company's assets-our brands, financial strength, unrivaled distribution system, and the strong commitment of management and employees-to become more competitive and to accelerate growth in a manner that creates value for our shareowners (Annual Report, 2006, p.33)."
What challenges confront the organization today? How does its organizational design
relate to these problems?
The Coca-Cola Company faces a wide variety of problems. In the United States, consumers are becoming more health conscious, which has hurt the sales of Coca- Cola. Due to The Coca-Cola Company's global presence, the company must deal with many political challenges. They have been criticized for causing a great deal of pollution, damaging town's water supplies, and have been highly criticized for its alleged anti-union actions. Coca-Cola also faces increased competition from wellestablished global companies, and local organizations as well (Annual Report, 2006). The Coca-Cola Company also faces challenges with its supply of raw materials. The prices for many of its raw materials fluctuate based on market conditions. When these prices rise, so do production costs. Some of the raw materials are available only from a few limited suppliers (Annual Report, 2006).
Coca-Cola has more of a decentralized structure, separated by region. Since the majority of the company's problems are based geographically, the decentralized structure is ideal. Each region has different regulations, different consumer needs, and different problems to deal with. With a decentralized structure, problems can be solved quickly and effectively. Some functions remain centrally located, such as marketing and innovation. This allows the company to formulate one global message, but also allow that message to be tailored at the local level.
- Managing in a Changing Global Environment
Due to its tremendous global presence, The Coca-Cola Company operates in an extremely uncertain environment. Increased competition from global and local companies has led to competition over the most important resource: customers. The Coca-Cola Company must not only compete for customers, but also raw materials needed for each product. In some parts of the world, clean water is becoming increasingly hard to come by. The Coca-Cola Company has only one or two suppliers for some of its raw materials. For example, they view The NutraSweet Company as one of only two viable sources for the ingredient aspartame (Annual Report, 2006).
The Coca-Cola Company is at a strong disadvantage if they cannot decrease their reliance on a small number of suppliers. If relations with suppliers deteriorate, or if the suppliers go bankrupt, it would have dire consequences for The Coca-Cola Company. The Coca-Cola Company must also compete to get the best employees possible. The production of the beverages does not require skilled labor, but the organization has had problems finding the proper personnel to run the organization. In 2004, The Coca-Cola Company's top choices for the open CEO position decided not to join the company because they did not like the actions of the Board of Directors (McKay and Terhune, 2004).
Due to the organization's high credit rating, the company has the ability to raise funds at a lower cost (Annual Report, 2006). This allows the organization the opportunity to finance operations such as expansion through the issuance of debt. This may be necessary if The Coca-Cola Company looks to expand into new markets, or purchase new brands. The environment in which The Coca-Cola Company operates in is extremely dynamic. The environment is difficult to predict and control due to the global nature of the operations. The Coca-Cola Company faces the threat of reduced production or disruption in distribution if there is a problem in a market. The Annual Report (2006) lists risks, such as worker strikes, work stoppages, and the chance a distributor falls on harsh economic times. Another reason the company's environment is tremendously dynamic is due to the nature of their raw materials. Some of their key raw materials are dependent on specific climates (Annual Report). Climate changes may impact the price of the materials they need to obtain and, in turn, affect the cost of production.
The strength and interconnectedness of the general forces that The Coca-Cola Company must deal with make the environment extremely complex. Recently in the United States, two forces have started to become inter-woven: cultural/social values and political/environmental forces. Many American companies are now being lambasted if they do not try to be more environmentally friendly, and The Coca-Cola Company is no different. The company has received plenty of criticism for its operations in India, with claims that they cause a great deal of pollution and have damaged local water supplies ("Online extra," 2006). Dynamism Low (stable) High (dynamic) Munificence Abundant Scarce Abundant Scarce Complexity
Few Many Few Many Few Many Few Many
The Coca-Cola Company uses a wide variety of techniques to manage relationships with its stakeholders, the most useful tool being strategic alliances. A former CEO of the organization claimed that 100 percent of its revenues came from strategic alliances ("The science of alliance," 1998). The company uses exclusive contracts with its bottling partners and other customers as well (Annual Report, 2006). In 1999, the organization signed a ten-year deal with
Burger King to be the restaurants only supplier of beverages. Even though PepsiCo was willing to give Wendy's a much better deal, the restaurant signed a ten-year deal with The Coca-Cola Company (Deogun & Gibson, 1999). This example shows how powerful the Coca-ColaÂ© brand name really is. The Coca-Cola Company has done an excellent job managing some aspects of the environment, but done a poor job at managing other parts of the environment. The
negative publicity received from its operations in India and the actions of its
bottling partner in Colombia has led to boycotts of Coca-ColaÂ© products on some campuses ("Online extra," 2006). While this is clearly bad for the company, the average consumer is completely unaware of these allegations. This means that The Coca-Cola Company is doing a decent job of damage control. While the company has not had any trouble with suppliers lately, the future is always uncertain. It does not seem like the company is not actively trying to secure supplies, which is why vertical integration was recommended.
The Coca-Cola Company has a high level of uncertainty when it comes to the raw materials it uses. For a few of the ingredients, the company only has one or two viable suppliers. This could be extremely problematic for a variety of reasons. The Coca-Cola Company has less bargaining power if there is little substitutability in suppliers. Another problem could arise if a supplier
experiences an event that economically devastates them. If a supplier goes bankrupt, or is in some type of natural disaster, The Coca- Cola Company would suffer greatly as well.
The Coca-Cola Company can improve and secure relationships with suppliers using a few tactics such as minority ownership or strategic alliances. The most optimal method would be to use backward vertical integration and purchase a supplier. The results of such a strategy would allow the company to keep profits that used to be earned by the supplier, save on costs, and have a reliable source of supplies. Besides the actual purchase of the organization, another costly aspect of vertical integration is high bureaucratic costs (Jones, 2007).
The Coca-Cola Company should look at buying the following companies: The NutraSweet Company, Ajinomoto Co., Inc., Nutrinova Nutrition Specialties & Food Ingredients GmbH, or Tate & Lyle. These companies are one of two possible suppliers for important raw materials (Annual Report, 2006). Although the company has not experienced significant problems, future events are always uncertain. The most secure way to control suppliers for a company is through ownership. While ownership of a sugar/sweetener company is clearly out of the company's domain, the move would make their core business more profitable. The Coca-Cola Company would be able to purchase one of these companies through financing. The organization has a high credit rating and, therefore, would be able to raise money for the acquisition at a low cost.
The Coca-Cola Company's decision making process does not fit into its structure or mission, vision, and values. Their decision making process is more centralized, and when compared to everything else going on at The Coca-Cola Company, it does not match. The Coca-Cola Company has a more organic structure and their mission and values preach creativity and employee involvement. They would improve their decision making and enforce their organic structure by implementing a strategy for organizational learning. They can begin by shaking things up more often by changing managers for different departments on a periodical basis. This will force
managers to think outside the box when making decisions (Jones, 2007). This will also enforce a learning organization and instill the organic culture into everyone's mind frame. Because of this, The Coca-Cola Company will have the ability to solve large problems more quickly and become a stronger community as a result.
Another way The Coca-Cola Company could match their decision making skills to their structure is by making sure employees do get involved. They should implement an open door policy in which any employee can go to their manager and suggest ideas for solving different problems. This will allow the management to become aware of small problems before they become large ones. By changing their decision making process, they will also become more accustomed to their recently adopted mission, vision, and values. They will inspire optimism in all stakeholders by making decisions in a timelier manner. This will show stakeholders that The Coca-Cola Company has a great outlook for the future because problems will seem like less of an obstacle for them. By including more, lower level employees in their decision making process, they are promoting leadership and inspiring collaboration and innovation.
The Coca-Cola Company has become highly criticized for the actions of its bottling partners in Colombia. The bottling company is alleged to have killed employees due to their ties with a union, and even while The Coca-Cola Company does not own that plant, The Coca-Cola Company has been the target of boycotts and lawsuits. Even if The Coca-Cola Company was unaware and uninvolved in what happened, their name is attached to the product. In order to make the situation better, The Coca- Cola Company should buy the bottling partners in Colombia. The company can use its resources to create stable bottling plants. Managers would need to work with union leaders to create an agreement that was fair for both sides. While taking over and running the plants would cost the organization money, the company would have full control over the activities of managers. This increased accountability and dedication to correcting any wrong doings would garner some positive publicity for the company's operations, and provide the benefit of having a stable distribution channel in the region.
Although the organization does not own most of their bottling plants, acquiring the Colombian bottlers would provide The Coca-Cola Company with the ability to foster better relationships with the citizens of the country. This acquisition would cost the company money in the short-term, but it could provide fruitful benefits in years to come.
Introduction/ executive summary
The organisation strategy
Services offered by Pathfinder International
What they wear
Mode of communication
Chain of command
Human resources and management
Performance appraisal and motivation
Barriers to change management
Conclusion and recommendation
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