The performance of Coca Cola
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Published: Wed, 03 May 2017
The Coca Cola Company is considered to be one of the topmost beverage companies of the industry. It has its business all around the world. It engages in production, distribution, and marketing of non-alcoholic beverages in 200 countries worldwide. It produces almost 3300 beverages ranging from caffeinated beverages, fruit juices, water, milk-based beverages and energizers and has managed to capture the hearts of millions of people worldwide. Brand building, technological know-how as well as aggressive marketing skills are the core competencies of Coca Cola which help the company in gaining competitive advantage over other companies. Coca Cola’s brand is respectable and dependable and it took many years for the company to build this image. Not only is it a favourite among many individuals, but also has acquired a household name. Their brand and logo can never be mistaken, which is why consumers feel a sense of ease when the purchase the company’s products. Coca-Cola is a cash cow in the soft drink industry. Due to its strong brand name, Coca Cola will remain profitable in the soft drink industry in the future too. The management of the company harmonizes the venture of human resources and organizes technology along with other core resources such as physical assets, marketing skills, financial resources, and skills and knowledge of employees in order to set up an effective and efficient internal organizational structure of business. The function of the organization focuses on division, coordination, and control of activities and tasks along with flow of information within the institution. Also, the managers allocate responsibility and authority to all people within the organization. The Coca Company focuses on acquiring and retaining highly skilled knowledgeable employees in its company in order to maintain the company’s superior most position in the market. Coca Cola treats its resources as an asset. It provides such an environment for employment to its employees that the employees develop a sense of unity with the company and carry out their duties willingly and in the most effective and efficient manner. The company entertains it employees by providing a security of employment so that they are not carried away by uncertainties of their future. These objectives, strategies, and programs are already specified drawn in advance by the company which serves as a guideline to the management and unions when taking decisions. Also they concur with the organization’s mission, objectives, strategies, policies and its internal and external environments. Since the organization concentrates mainly on marketing, human resource is an essential asset to the company. Without its knowledgeable employees along with their abilities and skills, The Coca Cola Company can never be successful. The ability to adjust and researching and finding out new markets have been of great help to Coca-Cola in becoming a symbol of the American culture. Since the company’s affiliation in 1892, a strong focus on growth and marketing has existed. There were also traditional advertisements in the local newspaper but apart from this, the company’s founder Asa Candler distributed thousands of coupons for free glasses of Coca Cola so that many people would be forced to taste it. many tokens that showed the trademark of the company. This type of aggressive marketing is the foundation of The Coca-Cola Company’s strategy and its culture. In the Coca-Cola Company, the divisional managers are responsible to run the operations in the general region. The functions of each vice president are divided into functions such as human resources, innovation/research/development, marketing, public affairs and communication. Marketing, innovation, research, and development are the functions which are of utmost importance to the company in gaining competitive advantages. It’s mainly because the company is interested in keeping its brand name capitalized and so marketing plays a major role. It is the responsibility of the innovation, research, and development department that they come up with something new as demanded by marketing functions. Majority of the top level managers of the company have been exposed to different regions and different areas of the company. Many of them have worked for the bottling companies that partner with The Coca-Cola Company. Owing to the fact that these topmost members have well rounded backgrounds, they have an eye to look at problems from different angles. The current objective of the organization is to use its assets, which is namely its brand, financial strength, its unbeatable distribution system, research and a strong commitment by its management and employees worldwide in order to achieve a long-term sustainable growth. The core competences that helps the company in gaining its competitive advantage is its strong brand name and its widespread network with bottlers and distributors. Its marketing capabilities and broad portfolio of products is unbeatable and very difficult to imitate. The strong brand name gives the company a strong bargaining power and leverage. The company also influences consumers’ tastes and trends. When the company launched Diet Coke, the company performed a blind taste test with consumers. The results was that the consumers preferred a glass labelled Diet Coke over a glass labelled Ta by 12 percent, even though the liquids in each glass was same (Plasketes, 2004). This is nothing but its strong brand name. In spite of all these core competences and its outstanding performance in the market, the company withstands a number of challenges, many of which arise from the fact that the company operates on such a large level. Different markets have different trends and styles. Consumes in some markets are found to be health conscious. In order to adapt to this trend, the company has created many diet and low-calorie drinks. The company always tries on bringing new ideas and innovations to adjust to the changing market trends. Due to the anti-carbohydrate trends introduced by the Atkins diet, Coca-Cola C2 was introduced. It is supposed to have the same taste as Coca-Cola but it contains half the carbohydrates. Also, The Coca-Cola Company faces a problem due to social and political differences of each market. It’s mainly because different countries have different laws and so Coca Cola has to follows laws of each and every country where it operates but in spite of this, it faces strong criticism. The structure of the company has characteristics of both mechanistic and organic modes. It is more leaned towards centralized structure but now slowly and gradually it is moving towards decentralization. The stakeholders of the company are mainly shareowners who are its bottling partners, government, suppliers, retail customers, and local communities. Since each group of stakeholders have their individual goals, this gives rise to conflicts. The shareholders are interested only in profits, the local communities have concerns about environment issues and labour standards, the suppliers want to charge as much as they can in order to generate more revenue whereas the company wants to keep the lowest price to decrease its cost of production. The managers aim at keeping labour costs down whereas the employees aim at wage increase and increased benefits. There are at least 5 hierarchical levels at the corporate level. Due to its very big organizational structure, it experiences communication problems. One of the problems discovered was that the employees and the company did not have clear goals. This huge hierarchy structure has caused motivation problems and that is why the company is attempting to get employees more engaged. The increased use of company’s intranet greatly resolves the communication gap and increases communication at every level of employees and allows the management at the topmost level to communicate more effectively to the front line employees. The company is moving towards decentralization which has resulted in a strategic structural change and has affected the company positively. Sales increased and the employees were much more satisfied. The company is trying to develop a more innovative culture by following the path of decentralization. The Coca-Cola Company is trying to compete to get the best employees. The production of beverages does not demand skilled employees but on the contrary, it has had problems finding the proper personnel in order to run the organization. In the year 2004, The Coca-Cola Company’s top choices for the open CEO position decided not to join the company because they disliked the gestures of the board of directors. Due to the company’s high creditability in the market, the company has the capability to raise funds at lower cost. This gives the company an opportunity to finance operations such as expansion. This is of much more importance to the company when the company wants to expand or if it decides to enter into new markets or to purchase new brands. The company operates in a very charismatic environment and this type of environment is difficult to predict and control due to the global nature of the operations. The company faces a danger of reduced production or interruption in its distribution if any problem occurs in the market. There is also a possibility of workers going on strike or stoppage of work or distribution falls during bad economic times. Also the raw materials it uses are dependent on specific climates. Climate changes have a drastic affect on price of raw materials they require and so indirectly affects the production cost. The company has received plenty of criticism for its operations in India due to the fact that their bottling plants caused a great deal of pollution and have damaged local water supplies. The company believes in using different techniques in order to maintain good relationships with stakeholders, and strategic alliance is one of them. Nearly 100 percents of its revenue comes from strategic alliance. In 1999, the company signed a 10-year contract with Burger King as it was among the list of restaurants with being the only supplier of beverages. PepsiCo offered Wendy’s a much a better deal but still the restaurant signed a 10-year deal with The Coca-Cola Company. This really depicts the strong brand name of the Coca-Cola. The company has done a fabulous job by managing some aspects of the environment but done extremely poorly while managing other parts of the environment. The negative publicity it received in India has led to the boycotts of the Coca-Cola products at some places. This seems to be very bad for the company but the average customer is completely ignorant of these allegations. The company is doing a fair job of damage control but while the company has not had any problem with the suppliers, its future cannot be predicted. It does not seem like the company is not making sincere efforts in trying to secure supplies and for this reason, vertical integration is most suitable. The company has a very strong bond with its distributors. The relationships between these two create collaborative interdependencies and so the victory of both creates a direct impact on each other. Differentiation is one of the business strategies of The Coca-Cola Company. This is clearly evident from the above example where the consumes preferred a drink with Coke as the brand name attached. The company succeeded in its strategy of differentiation because of its aggressive marketing skills. The company has been always known for its innovative marketing and its brand names and so it stands above its competitors. The Coca-Cola Company needs to improve its portfolio of brand names. To be very specific, the organization needs to start introducing new types of beverages as it enters the markets late. The company was late to enter the market of sports and energy drinks as well as coffee drink (Morris, 2006). Even if creates a new type of beverage, it’s always alone in the market and it can hardly force its competitors to react. The structure of the organization is hybrid in nature and it best suits its differentiation strategy. Its marketing and innovation functions have always remained centralized which allows the company to keep control over development, marketing, and production. It performs extensive researching and tries to find new ways to serve a new group of customers. The culture of The Coca-Cola organization is mission oriented and focuses on refreshing the mind and making a difference. The company means a lot to its customers and its employees. It provides a sense of pride to them and inspires new employees to act more positively which in turn have a positive impact on the world. The company tries to change its culture by giving liberty to its employees to shape and reform the goals of the company. The company provides a strong base to encourage its employees by becoming model citizens and not just employees of the company. The output processes are the greatest source of uncertainty for the company. The company does not produce the final product. The distributors and bottlers mingle other ingredients and then sell the final product. Who bottles it does not matter and only the end product is important with Coca Cola as its brand name. So the company should make efforts by maintaining good relations with bottlers and distributors and try to pressurize them to maintain high quality final product, otherwise, it could have negative effect on the company and its brand. There appears to be very limited information about the production of company’s syrup. At The World of Coca-Cola, a museum for the company, there is no mention as to how the syrup is produced. Based on some information available, the company has a moderately high level of complexity in relation to the fact that it uses mass production. Task variability in production is also low because it is extremely mechanized and routine. As a result, task analyzability is high. When a problem occurs, it is not hard to find solutions. So, this shows that the typical structure of a manufacturing company that uses mass production is a mechanistic structure, in which efficient production is the desired end. The company has a mechanistic structure, in which efficient production is the desired end. The company’s structure is that of organic type due to its focus being mainly on marketing and local appeal. If the structure mismatches, then the production may not be efficient but however, the benefits of the company’s structure outweighs the consequences. 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 create a problem for the company. 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 smashes them. If a supplier experiences bankruptcy or some type of natural calamity then the company could suffer 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 suitable solution would to be use backward vertical integration and purchase a supplier. As a result of this, the company can grab the profits that were earlier earned by the supplier, save the costs, and have a trustworthy source of supplies.
The company knows that it needs to meet the ever changing requirements of its customers. The company so moved toward decentralization in the 90s. The company allows decision making at local level and so it can promptly respond to the changing market demands. Also, the higher-level management then direct their attention more on long-term planning. Some divisions of the company like finance, innovation, human resources, marketing, and strategy and planning are located centrally within the corporate division of the company. Some of the decisions are made at the lower levels in each regions of the company while majority of the decisions are taken at top hierarchy. The company’s structure is of hybrid type which consists of both mechanistic as well as organic features. The focal point of the company is on responsiveness. The complex integrating mechanisms are the special features of the organic structure. The surveys and interviews used by the company allow information to flow from the bottom-up, and the intranet allows for information to be exchanged laterally. The surveys have also forced The Coca-Cola Company to adapt simplification and standardization. Centralization and high standardization are associated with mechanistic structure. The mixture of both types of structures seems to be ideal for the organization. Flexibility is essential when trying to address such a big number of independent markets but high standardization is also necessary to remain efficient in production. The use of complex integrating mechanisms allows for easier coordination for the global company. Centralization keeps organizational choices in line with organizational goals. Since the information in the company is flowing in each and every direction, upper management will have access to information more quickly which adds to the organization’s flexibility and responsiveness. This recent shift towards a more decentralized and organic structure corresponds with the uncertainty of the organization’s environment.
Every individual should acknowledge lifelong learning, and every successful organization in the same way like Coca Cola should become a permanently learning organization. Many successful organizations like Coca-Cola feel a sense of pride in describing themselves as a learning organization while other successful organizations have one of their strategic goals to become such an organization. The company appoints vice presidents for knowledge, learning and intellectual capital whose work is to develop knowledge management systems that enable them to quickly adapt development tendencies, influencing in that way the customers, competitors, distributors and suppliers like.
For internal collaboration, The Coca-Cola Company has established its Innovation Framework. It is a system which combines project management and business intelligence capabilities to give operating units in 50 countries the chance to search for and reapply concepts which are utilized in developing and marketing over 2500 beverages produced by Coke. The company uses it to develop new soft drinks, design equipment such as vending machines and fountain dispensers that it leases or sells, and creates packaging concepts for new and its already existing products. The Innovation Frameworks helps Coke recognize duplicate product ideas and prioritize the best allocation of resources. For example, Coke Zero’s expansion is the result of Innovation Framework. It was introduced in USA in 2005 and now it is sold in almost 100 countries. This is the outcome of knowledge flow between financial, legal, sales, marketing, and R&D teams in different countries. This type of platform helps conquer the product development insights, team members join their hands together in some regions and share them with teams in other countries. The formula, brand, and packaging already developed for one market can then be introduced to other markets. Learning is directly linked with business. Learning is a capability which requires skills and processes. It also requires leaders who can value it. Learning is a primary focus in The Coca Cola Company.
The company’s decision strategic planning process does not comply with its structure, mission, vision, and values. Its decision making process is centralized in nature and when it is compared with other things with the company, it totally mismatches. Coca Cola has an organic structure and the vision and values of the company focuses more on creativity and employee contribution. The company can improve their decision making process and work out on their organic structure by executing a strategy for organizational learning. They can bring amendments in a few things by alternating managers of different departments on a periodical basis. This will force the managers to think outside the box when making decisions. This will help in achieving organizational learning and set the organic structure into everyone’s mind frame. On doing this, the company will have the ability to solve many big problems promptly and become a stronger organization as a result. Also, the company should allow its employees to interact with their managers and make suggestions if necessary. This will allow the managers to become aware of the problem at the very initial stage and help them to solve the problems when they are smaller ones before they become big problems in the future. So for this employee involvement is very necessary and an open door policy should be implemented become large ones. By changing their decision making process, the managers can become more used to their most recently approved vision, mission, and values. In this way, they can cultivate a sense of optimism in all stakeholders by making decisions in a timely manner. This will make the stakeholders pretty confident that the company has a better picture for the future because the problems will be less likely a hurdle for them in the future. The company by having more number of employees at lower level in their decision making process can promote leadership, inspire collaboration, and innovation.
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