The Need for Change Management in Coca Cola
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Published: Mon, 5 Dec 2016
The company was established by Dr. John Stith Pemberton -a local pharmacist in Atlanta on May 8, 1886. It was first sold in Jacob’s pharmacy for 5 cents per glass. Initially, Coca-cola was sold as a drug for curing minor diseases like dyspepsia, morphine addiction, and headache. Asa Griggs Candler acquired a stake in Pemberton’s company in 1887 and incorporated it as the Coca-Cola Company in 1888. Now, Coco-cola is one of the largest manufacturer, distributer and marketer of non-alcoholic beverage concentrates and syrups in the world. Coca Cola products bearing the company’s trademark are now being sold in more than 200 countries around the world. The company owns or licence more than 450 brands, including diet and light beverages, waters, enhanced waters, juice, teas, coffees, and energy and sports drinks. The company step on blending raw material, packaging in canisters and shipping the finished products to bottlers. The bottling partners of coco-cola range from international and publicly traded business to small, family owned operations. The bottling partners hold 90,500 associates to carry on the product to more than 200 million customers. The company had introduced at least 29 new lines of products from October 2004-August 2007 alone In 2009, the company generated revenue of $31billion with $6.8 billion net income. This company has fully understands the importance of innovation in business is the Coca-Cola Company
Change management is a continuous process and it is followed by many organisations on a routine basis (Schroeder and Self, 2008). This process aims at attaining successful strategies, manpower and process for an organisation. The management of an organisation usually goes for a change mainly because of its stiff competition in market due to globalisation factor, technological innovation and demographic trend. Quite few people disagree with the concept but few say that the organisation is performing well by managing the major changes inside the organisation. Greenwood & Hinings, 1988 state that organization needs to survive and in order to do so they anticipate and adapt to these changes through strategies including organizational redesign. This adoption of strategies leads to the change in the culture of the organisation. (Schroeder and Self, 2008 cite Collins, 2001) stating that organizations which fail to adapt or do not respond to the changes required in a timely fashion are prone to the risk of losing their market share to competitors, the further implications could be that they might lose key employees or lose the support of the shareholders and in extreme situations even demise. They also outlined two major challenges that the organisations face. The first would be to recognize the need for change and the second which is more significant is how to deploy strategies formulated to implement the changes recognised. If the change implementation is planned properly, then the chances of the failures are reduced a lot and it could also prevent the aftermaths of the failed change process such as reduced employee morale or diminished commitment.
Need for strategic change in an organisation
Coco-cola Company is one of the popular manufacturer and distributor of Non-alcoholic beverages. It operates in many parts of the world and provides services to different customers. Today, many companies are using new approach for their products to reach more target market and to ensure that they can survive with the globalisation challenge. For this, the company needs to develop a new change process for sustaining in world market and facing the stiff competitors. The current state of Coca Cola stores in Hong Kong is pretty good and it is still one of the top distributors of soft drinks in Hong Kong. However, if it will be compared to other Coca Cola convenience stores in the world the marketing, inventory, and performance of workforce is not equivalent to other Coca Cola company. For that, the company decides to increase the efficiency of the marketing and inventory, as well as the productiveness of workforce through implementing change management programmes for maintaining standards and sustaining in world market. If the changes are applied within the management then in future there would be an increase in the company output.
Factors driving the change:
The main aim of Coca-Cola is to meet and satisfy the needs of customers with excellent product manufacturing and distribution. The change management of this company is very fragile since they predicted that there are some marketing challenges in the near future that they need to face. In-order to access the changes in Coca-Cola Company, there should a concrete identification of issues attached with company. The radical change process will affect the employees and other stakeholders of Coca-Cola Company. Basically, the route of the change is towards the development of workforce and not on the services. Since, the company has already established a reputation of delivering good services in the market. The change is also about the possible financial problems that the company may face in the near future. From this discussion, the following figure shows the force-field analysis of the change management procedures suggested to the application of change management within Coca Cola Company.
From this analysis, it is clearly seen that the computed forces to change is much higher compared to the forces against change. Force-field analysis is one of the most important tools used in change management (Bass, I. 2009). Meaning to say, the plan is quite logical with respect to possible opposition. Actually, change management is basically defined as the formulation and assimilation of change in a methodical process (Kotter, J. P., & Schlesinger, L.A. 1979). Meaning, the major objective of change management which is the introduction of new systems in the work organisation therefore the change project is normal to companies engaged in change management. Similarly, this can be compared to the adoption of new marketing strategies. Businesses like Coca-Cola Company must normally undergo change in order to evolve to a higher level of for instance, stability, management or production. Coca- Cola Company always wanted to have an extreme development. The Chief Executive Officer of Coca-Cola may include changing the company’s mission, reforming business operations, application of new technologies, major group efforts, or adoption of new programs. Usually, the organisation is encouraged on settling on change management due to external influences, usually termed as the environment (Nickols, 2004). Thus, change management can alternately be defined as the response of different business to changes brought about by environmental influences in which organisations have minimal or absolutely no control over. Perhaps the space between the new organisation design and implementing it into reality is the whole coverage of organisation change and development. However, certain skills must be present from the initiators of change so as to successfully implement their project. Thus, managers need to have the necessary abilities not only on detecting what needs to be changed but also how to introduce the change effectively.
System to involve stake holders
The change process are relied on the whole organisation, which means various parties likely affected by change involving the increase in efficiency of marketing and inventory, as well as the effective work-force of employees. Stakeholders pertain to the parties linked to the business firm who stand to experience benefits or adverse effects from the change (Friedmand, 2007, p. 172). Identifying the stakeholders and the respective interests is important to develop ways of wining over these various stakeholders who are likely to contribute to the success of the planned change. Determining stakeholders or the parties affected by the change together with the impact of the change to these parties is also important in prioritizing stakeholder interests as well as the resolution of issues faced by the stakeholders. (French & Delahaye, 1996, p. 22)
Involving stake holders in change management strategies
There are a number of stakeholders in the planned change falling under either internal or external stakeholders.
First is top management of the organization who decide on the change, direct strategy implementation, and carry accountability for the outcomes of the change.
Second are middle managers who are minimal affected by the change and comprise implementers of the tasks constituting change.
Third are employees also affected by the change and serve as the movers in process of change.
These three stakeholders also constitute internal stakeholders as they form part of the organization and directly experience and participate in the change process.
Fourth are bottler’s associates of the company who could be affected by the change of product.
Fifth are investors and investment parts providing capital needed in the change process.
Sixth are customers for whom the change is directed and from whom the impact of change is assessed.
These last three stakeholders comprise external stakeholders by not being part of the organization. These stakeholders influence the change indirectly but could influence the success of the change management activity. The most important tool is the analytical tool is the resource dependence theory (Frooman, 1999, p. 191) that classified the relationship between the firm and stakeholders into four types, which are 1) firm power, 2) high interdependence, 3) low interdependence, and 4) stakeholder power. The nature of the relationship determines the issues requiring resolution to manage effectively stakeholders. The core idea of this analytical tool is the recognition of the limited self-sufficiency of business firms so that they have to rely on their environment to address difficulties.
Middle Managers, Employees,
Customers, Top Management
Investors and Investment Parties
The implementation of this analytical tool shows the stakeholder priority of the organization in achieving the planned change in the context of resource accumulation. Since the company has strong dependence on investors and investment parties as source of capital and investors also rely on the company to experience returns. This means that the company should develop mutual positive relationship with investors and investment parties. Since the power of stakeholder is high in the case of customers and top management, which means that the company should consider the important roles of top management in directing change policy and customers in justifying the area of change.
Resistance to change
The main success of implementation the change is achieved by identifying and understanding the factors which block the implementation process. Kotter (1996, p. 3) described blocks as the entirety of the hindrances and issues experienced by business firms in the course of implementing change. The unaddressed resistance may lead to severe delays, accumulation of additional costs and even failure in implementing the change.
Resistance finds explanation through the transition curve (Fisher, 2001). The resistance for establishing the changes in marketing, inventory and performance of personal in Coco-cola Hong-Kong will rely entirely on managers and employees of the organisation. It also restructures the organisation by making some changes in the management by removing some employees or position or by adding some more employees or reassignment employees. This situation builds up a fear in the minds of employees and managers. The change also includes in hiring new employees, which can be perceived as a threat by existing employees. In particular, there are many sources which could resist the planned change. The employees have some fear on their employment status if any changes are implemented. So, the initial response of employees will be on fighting against the change to prevent their actual positions. On the other hand, it can create a positive attitude on employees that the new change will secure their position after implementing the changes. Employees experience more safety by improving their skills and knowledge and in order to finish their work effectively. Still another is the different perspectives of managers and employees towards the purpose and impact of the planned change. The different in opinion could divide support for the change. Last is the adverse perception towards the change because of lack of consultation. The implementation of change without sufficient consultation, based on the perspective of managers and employees, could develop negative regard towards the change.
Kotter’s model of change
Kotter’s model provides eight reasons why process of change in an organization fails. It means that if these eight reasons for failure is removed or their impact is minimized a successful change process is possible. These eight steps can broadly divided into three categories as preparation (steps 1-4), action (steps 5-7) and grounding (step 8). So Kotter’s model can be used to assess the change process in Coco-cola Company:
1.) Establish a sense of urgency:
The senior management of coco-cola realised that a change in their system of operations was necessary in order for them to grow in business. Hence the coco-cola Hong-Kong firm did not delay in addressing the issue and realised the need for technological innovation and new marketing strategies required in the company operations. These were the internal factors that the company was sorting out after reviewing the financial report of the convenience stores. All in all, it can be said that the sense of urgency was established.
2.) Form a powerful guiding coalition:
The second step is to create a strong guiding coalition. The management of coco-cola formed a team of experts to help in guiding the change process of the management.
3.) Creating a vision:
The expert team appointed by the management presented a new vision for favouring the success and growth of the organisation. They also suggested some strategies to achieve the vision on a short period of time.
4.) Communicating the Vision:
The management created a vision for the change and it is very important for the company to communicate the vision to its employees. The company planned to increase the productiveness of work force. So, this may create a conflicts or misunderstanding between management and employees of the company in communicating vision. The top management should properly guide the employees in how to respond that change.
5.) Empowering others to act on the vision:
In this step the Coco-cola management was completely failed because they didn’t empower employees to implement that vision. Employees weren’t encouraged to take any risks without the approval of the management and they were not allowed to take decisions at their own. Even management never used to welcome any new ideas from the employees during the branch meetings.
6.) Planning for and creating short term wins:
Here management needed to motivate its staff members by creating short-term targets for them with a degree of low failure. But this wasn’t the case. There was no short-term win strategy planned by the management and it was more focused on achieving the yearly targets of profit. So employees were totally neglected in the change process and nothing was done to motivate them like salary increase, bonuses, etc
7.) Consolidating improvements and producing still more change:
For implementation of new vision the top management needs to change the systems and policies of coco-cola which didn’t support that change. But this wasn’t done. The employees who were more responsible to implement change were neither promoted or the company didn’t hire any additional people for carrying on the vision. Coco-cola tried to execute change with help of the existing employees
8.) Institutionalizing new approaches:
Coco-cola had realised the need of new strategies to implement change and also introduced incentives for the employees who would implement the change successfully. The company also saw to it that they communicated what they wanted from the employees successfully through conferences, emails and meetings.
Overcoming Resistance to change
In change management, the resistance of employees in firm is usual expected. However, overcoming the resistance is important in order to implement the required changes in the management strategies. According to Kotter and Schlesinger (1979) there are six approaches that an organisation can use in dealing with the resistance by the workforce and these are:
Education and Communication- In order to overcome the resistance in Coca-Cola the employees should be educated and informed regarding the changes within the company before implementation and also to prevent incorrect information that will surround the work area.
Participation and Involvement- employees should be involved with planned changes in management programmes of the company because once they become involved the employees will not resist but instead will participate in the changes that will be undertaken.
Facilitation and Support- Some employees will resist the changes because they are unable to adjust with the new programmes implemented by the management to avoid resistance the management must support the employees that are having a hard time with the changes, establishing a support system will help and assist the employees to adjust quickly.
Negotiation and Agreement- Coca-Cola should talk and negotiate with employees, and during the talks the management must discuss the incentives they will receive once they accepted the changes in the management strategies.
Manipulation and Co-option- if the other approaches didn’t work inviting the union leader to participate and be a representation in the change process will aid in overcoming the resistance to change.
Explicit and Implicit Coercion- if all approaches didn’t work then the last step would be forcing them to accept the implemented changes and threaten them that if they will not comply the employees will lose their jobs.
Change management is basically defined as the formulation and assimilation of change in a methodical process. The major objective of change management is the introduction of innovative means and systems in the work organisation. This can similarly be compared to the application of certain information technologies in the company or the adoption of new marketing strategies. Businesses must normally undergo change in order to evolve to a higher level of for instance, stability, management or production. Appointing a new head officer, for example, can greatly enhance his subordinates based on his management principles and personality. From these discussions, we may conclude that 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 Asia but all over the world.
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