This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.
Coca-Cola was established on May 8, 1886 by Dr. John Stith Pemberton, a local pharmacist in Atlanta, Georgia. It was first sold in Jacobs pharmacy for five cents per glass. Initially Coca-cola was sold as a drug, Pemberton during that time considers Coca-cola as a cure for diseases such as dyspepsia, morphine addiction, headache and impotence (North America Operating System, 2008).
In the year 1985, due to the aggressive campaign of its rival Pepsi, the Coca-Cola Company reformulated the popular carbonated drinks to suit the preference of the consumers which is sweeter soda. However, the New Coke became a commercial failure which leads to the adverse reaction of the public. Protests from different sectors of the society emerged. Due to these events the company return the original formula and named it Coca-Cola Classic. Despite returning the original formula, the company still received accusations from different groups. In the year 2005 the company launched and announced their upcoming products which are the Diet Coke and Coca-Cola Zero.
Coca-cola Company is clearly one of the most popular companies in the world. Aside from the fact that it is also one of the oldest corporations that was able to withstand World War II and other changes in the economy over the past years. The fact still remains that it is one of the most famous brands of Cola in the world.
The Coca-Cola Company was able to resist the hindrances that occurred; the company was able to utilised change management as efficiently as possible to withstand the obstacles.As mentioned earlier, changes in management is caused by three different factors which are the external environment, internal changes and the proactive reaction to possible threats and difficulties.
External Environment Evaluation- over the past decades, the Coca-Cola Company has faced a number of changes in the external environment that have transformed the management of the company. One of the best examples is during the World War II. The company was able to maintain the status of the company, at the same time, was able to enter new markets despite the environment. Instead of lying-low because of the war, the company became more aggressive through providing free drinks for the GIs during the World War II. Through this the corporation was able to hit two birds at one stone. First, because the carbonated drinks sent by the company, it became a patriotic symbol by the United States soldiers in which led to consumer loyalty. Second, the company was able to take advantage of the situation and established the product in newly-occupied countries by the Ally forces and because of that the company established plants in various locations worldwide paving the way for its post-war expansion.
Another aspect in the external environment is the change of taste and expectations of the consumers. During the mid-1980s wherein the Americans favoured the sweet taste of the rival product, the company created its counterpart but became a commercial failure; however instead of backing down, Coca-Cola changed its management strategy and returned the old formula, and just renamed it as Coca-Cola Classic. And with the rise of obesity in the United States and consumers became health conscious the company released new versions of Coke in order to address the needs of these type of consumers, such products include Diet Coke and Coca-Cola Zero.
In addition, according to Bool (2008) companies such as Coca-Cola are compulsory to transform due to trends that have a huge impact on their business, and one of these trends is the health and fitness. A number of people are noe investing more in their health, and in order to keep up with the trend, Coca-Cola introduced their new product which is a calorie burning soft drink, the Enviga. Moreover, Coca-Cola is collaborating with the Swiss company Nestle. Coca-Cola is dealing with innovation and change. During the Asian Financial Crisis, Coca- Cola was also triggered to change its course of management in that particular region. The responses and reactions of Coca-Cola with the external environment are its internal changes.
Internal Changes- as mentioned earlier, Asia experienced its financial crisis in 1997. According to Barton, Newell and Wilson (2002) as the financial crisis swept the Asian region, the chief executive officer, Douglas Daft responded to this by mobilising his executives to workshops about how Coca-Cola would seize new growth opportunities. Barton et al, stated that Coca-Cola gave emphasis on acquisition opportunities, Coca-Cola bought acquired bottling business in South Korea which gave more access in retail stores in South Korea, as well as, better entry in China, Japan and Malaysia. Coca-Cola disregarded its country-defined market perspective and focused on regional strategic view and acquired local brands of tea and coffee.
In the case of health trends and changing taste of the consumers, Coca-Cola responded to this through innovation and change. Innovation is accomplished through development of new products such as the Enviga, Diet Coke, Coca-Cola Zero, and other variants of Coke. The change is incited by the trend in health and fitness and consumer tastes which had an impact on the business of Coca-Cola. During World War II, the response of Coca-Cola to the situation is to provide free drinks to the GIs in order to access new markets in which the company was able to do.
Technological Innovation in 21st centuary
Muhtar Kent, chairman and CEO of The Coca-Cola Company, presented the 5 keys to innovation.
To build a culture of innovation and growth, Kent says that companies need to have:
1. Continuous Investment
Leading companies and organizations invest resources, time and strategy - even in a depressed economy, says Kent. During the Great Depression, Coca-Cola chairman Robert Woodruff increased promotional spending, while other companies cut back on advertising and marketing. The result? Increased brand exposure and a stronger business. Similarly, Coca-Cola recently announced plans to invest more than $30 billion in the company's brands and infrastructure over the next five years in pursuit of the company's 2020 Vision - a plan to double the overall size of Coca-Cola's business over the course of this decade.
2. Global-Minded Talent
As a global company, Coca-Cola seeks out the best of the best from around the world. "We have people from Latin America working in Asia, Europeans in South America, Africans in Europe and so on," says Kent. "At our headquarters in Atlanta, we have more than 50 different nationalities represented."
3. Strategic Partnerships
Coca-Cola collaborates with organizations across business, government and civil society - an alignment Kent calls the "Golden Triangle" - to develop solutions to the world's complex challenges. "Golden Triangle innovations are growing and flourishing and producing wonderful fruit all around the world," says Kent. "The ones that work are next-level partnerships: ones focused on real results and organized with a bias for action. With those kinds of partnerships, magical things happen."
Coca-Cola's current partnerships with the Global Fund, the Gates Foundation and the Yale Health Leadership Institute to increase access to vital medicines in Tanzania are examples of these global partnerships, as is Coca-Cola's collaboration with the Ball Corporation, which led to the development of a 7.5-oz., 90-calorie mini-can. Another area of collaboration is water. Together with World Wildlife Fund, USAID, the Nature Conservancy and CARE, the company has launched 286 community water projects in 94 countries since 2005.
You never know where the next innovation will come from, said Kent. "New ideas can circle the globe in an instant." That's why Coca-Cola boasts six Research & Development centers, the goal of which is to advance local and regional innovations. The company also has a multicultural, multiethnic, multigenerational innovation council that meets quarterly to develop promising ideas.
5. A Relentless Focus on Sustainability
I'm convinced that some of the most important business breakthroughs will come at the intersection of sustainability and innovation," notes Kent. "That's where I believe the action will be - and where we're moving at Coca-Cola." For example, Coca-Cola's groundbreaking PlantBottle packaging, which is made partially from plant material, has cut the company's dependence on oil by 60,000 barrels since 2009. Kent also cited Coca-Cola's network of entrepreneur-owned Micro Distribution Centers in Africa, which employ 19,000 people and generate $600 million in annual revenue, and the company's 5by20 initiative to enable the empowerment of 5 million women entrepreneurs around the globe by 2020.
One of the things I always share with Coke people is the need to remain constructively discontent," Kent concludes. "Today, for all of us in business and government and civil society, the choice is between innovation and irrelevancy. You either innovate or you become irrelevant."
Further Innovations Are As Under:
1)Taste the Difference New DASANI DROPS Enliven the Everyday with a Splash of Flavor
2)Liters of Light Turn Bottles Into Bulbs
3)Burger King Introduces High-Tech Coca-Cola Soda Fountain
4)Japanese Launched the 'Impossible' Vending Machine
5)Tapping into Taste: Pay With Your Phone at the Vending Machine
Change in Information System due to changes in the world -wide market structures.
Over the past years people, systems and the environment have evolved. Change is the only thing that is constant in this ever changing world. From the physical attributes of individuals, up to the environment, change is very evident. Just like the environment and people, businesses also undergoes changes, it can be either massive or minimal. Often times, changes occur in the management of the corporation, in order to keep up with the competition. According to MacCalman and Paton (2000) the people who went home winners and on top have the common characteristics of effectively handling the changes in the situation. Changes in management is a process that any organisation must undergo, a business will not be complete if it never experienced change.
Strategy and mission
The strategy of The Coca-Cola Company has for a long time been best characterised as follows: global marketing and local manufacturing. However, the global marketing approach has been changed to local marketing because of the differences in consumer demands and experiences. To implement their "think local, act local" philosophy, the following key areas are considered:
Consumers - by using innovative and tailored marketing programs based on local consumer insights, The Coca-Cola Company will keep growing its core brands while also leveraging its distribution system to capture other growth opportunities in the ready-to-drink nonalcoholic beverage category.
Communities - local offices around the world ensure that the Company is a respectful corporate citizen and participates as an integral part of each community.
Customers - the Company provides value to customers through every consumer purchase, through superior customer service and through great value creation programs.
Coca-Cola System - the Coca-Cola system business model delivers value to the Company and to its bottling partners. By working together, the Coca-Cola system focuses on growing the overall profits from the beverage category in order to provide strong returns for all parties involved.
Coca-Cola People - the Company recognises the value of its associates and remains focused on ensuring it has the most talented, creative and motivated people throughout the world.
Mission: to maximize share-owner value over time.
In order to achieve this mission, we must create value for all the constituents we serve, including our consumers, our customers, our bottlers and our communities. The Coca-Cola Company creates value by executing a comprehensive business strategy guided by six key beliefs:
Consumer demand drives everything we do.
Brand Coca-Cola is the core of our business.
We will serve consumers a broad selection of the non-alcoholic ready-to-drink beverages they want to drink throughout the day.
We will be the best marketers in the world.
We will think and act locally.
We will lead as a model corporate citizen.
The ultimate objectives of the Coca-Cola's business strategy are to increase volume, expand their share of world-wide non-alcoholic ready-to-drink beverage sales, maximize the long-term cash flows and create economic-value-added by improving economic profit.
The Coca-Cola Company is positioned to capture opportunity:
The Premier Relationship Company
Challenging The Status Quo
Redefining Our Marketplace
Anticipating Consumer Trends
Strong cash flow position, which can be derived from consistent performance and lower investment requirements.
An average earnings per share growth of approximately 15% over the long term.
Capital expenditures will be stable to declining from historical trends over the next 5 years, as the investments in the bottling side of the business will be reduced.
Gradually reduce the dividend pay-out ratio to 30% over time. This reduction will occur due to an increase in earnings, not due to a decrease in the aggregate amount of the dividend payment.
Maintain the net debt-to-net capital ratios that have been shown historically.
The Coca-Cola Company is confident that all the steps they have taken will put them on the forefront of change. They believe that they have a strong understanding of consumer habits and will continue to learn more as they continue to build our core carbonated soft drink business and as they enter into new categories. With the Coca-Cola's new culture taking hold, combined with their great brands and bottling partners, they are optimistic about their ability to deliver on volume growth and financial results consistently over the long-term.
The Coca-Cola Company has been a dynamic company, always moving to anticipate and meet the present and future desires of customers and consumers. The world is changing with blinding speed in countless ways: technologically, educationally, culturally and economically. Coca-Cola Company has been able to meet these changes seeing them as new opportunities. Although it has faced many difficulties along the way, it has still been a very successful company and probably continues this way. Coca-Cola has for a long time followed the strategy: global marketing and local manufacturing. They have taken a global approach to different countries trying to reach as wide market as it could, giving them quite standardized products, which are produced locally. With the changes taking place in the global market, companies must try to remain as close to the customers and consumers as it can in order to meet their different desires in the best way. Due to that the Coca-Cola Company has also changed its strategy from global marketing and local manufacturing to local marketing and local manufacturing. This will help the company to differentiate its products in more specific way, which will result in meeting the different needs and desires of consumers and the market situation in a particular country as well. Our opinion is that this strategy will help Coca-Cola to manage its situation in Estonia as well. They have still ensured its leading position in Estonian beverage market and to maintain this they must try to accommodate their products according to the needs of our customers. This may mean developing new products and why not kvass as well if Estonia consumers demand it.
Change management is a process in which all companies undergo. This is an important procedure because it enables the organisation to make decisions that will be advantageous and beneficial to the company. In addition, organisations that are open to change are generally more successful compare to companies that resist it. In a globalise market, new technologies and procedure are emerging rapidly, in order to keep up with this progress a company must be willing to adapt to management changes. The international, as well as, the local market has a very stiff competition, therefore in order to be on top change management must be utilised by companies. Coca-Cola is one of the best examples of companies that utilised change management efficiently and have yielded positive results. The evidence is the dominance of Coca-Cola in the soft drink industry not just in the United States but all over the world.
Risk Management- Companies whether it is small or large are already acting in advance in order to combat the possible risks that may arise in the future. According to Neville (2005) in the wake of 911, the insurance market have changed, big companies reconsider the possible risks and how are they going to use insurance, in Coca-Cola after the prices increased the company look past the typical path of buying insurance directly but instead Coca-Cola considered wholesale insurance through captives.
In the year 2000, The Business Wire, reported that Coca-Cola changed its senior management team and organisational structure for the purpose of facing the opportunities, threats and challenges as the company enters the new phase of management. Moreover, Coca-Cola North America is decentralising its organisation, as well as, pushing accountability and authority into the field of the organisation.
The change in the senior management is one change management step that Coca-Cola have undergone in order to increase the efficiency of the company. The appointed individuals are seasoned beverage bottling executives; therefore Coca-Cola sees consistent increase in the revenues of the company. The change in the senior management has been effective because the sales of Coca-Cola in North America have been consistent.
In addition, according to North America Operating System. (2008), the company undertook a significant change in which an organisational structure was developed to respond to the needs of consumers through incorporating the North American bottle and can, fountain and juices in a single unit of operation. Through this change it enhanced the way beverage choices are created, and it unifies the system of the supply chain, procurement and distribution in which it increased the efficiency of services to consumers.
Individual Change Management- According to Hiatt and Creasey (2002) individual change management is the process in which the company provides tools and training to its employees to be able to handle their personal transition through change. The ADKAR Model, according to Hiatt and Creasey is a model that can be use as an individual change management. The ADKAR model shows five stages an individual undergoes during the process of change (Hiatt and Creasey 2002):
Awareness of the need to change- in Coca-Cola employees, stakeholders and even consumers are informed in the changes, especially in the management, just like in the case of appointing Shaun B. Higgins as the new president of the Coca-Cola Company in 2005.
Desire to participate and support the change- the employees in Coca-Cola especially the ones in the management positions participate in the changes that the company must undergo, like in the case of changing the packaging of Coca-Cola.
Knowledge about how to change- the senior managers of Coca- Cola have adequate knowledge regarding the changes that must take place within the company, an example is in the case of Daft in which he had knowledge on changes that must be done in order to counter the Asian Financial Crisis in 1997.
Ability to implement new skills- Coca-Cola has a long history of changes, some are failures, but most of the time it is effective, therefore the company has the ability to put into action the changes that the company have developed, take the case of Daft, together with his team, they were able to implement the changes, not just in one country but a whole region successfully.
Reinforcement to keep the change in place- Coca-Cola is an established company and has already made a mark not just in the lives of Americans but most people in this world. The successful implementations of the changes in the company are due to the strict reinforcement of changes in the company.
Organisational Change Management- this theory presents a general procedure for managing the change in the side of the people at an organisational level (Kotter, 1996). According to Hiatt and Creasey, the organisational change management is consists of three phases, which are, preparing for change, managing change and reinforcing change.
The theory of organisational change management was effectively utilised by Coca-Cola. Different managers in various parts of the world have used organisational change management in order to address the issues that the Coca-Cola faced.