Organizational Structure in Coca-Cola Company - Assignment Example

1. Introduction The term organization in the sense of an institution has been defined differently, but all simply expresses it as a set up or configuration of tasks, functions, people, skills or techniques and structure. Structure determines the level of effectiveness and efficiency that an organization can achieve and is usually described by regional offices, departments, divisions, section and units in the form of a specified hierarchy. Organizational structure, on the other hand, is the institutional set up that defines the way in which mobilization of resources across all levels is conducted (Black and Kim, 2012, pp. 210). The range of resources here includes human, information, physical and financial (Claver et al, 2012, pp.998). This paper will explore the organizational structure through a case study of Coca-Cola Company as well as endeavour to determine the extent to which the organizational structure is supportive or unsupportive of the company’s goals and suggest possible recommendations for improvement if any. 1.1 The Coca-Cola Company Profile The Coca-Cola Company is the largest beverage company in the world and the leading producer and maker of soft drinks. It is surely a global brand known by anyone because of its popularity through publicity and marketing. The firm in the beverages industry1 whose business idea was first conceived in downtown Atlanta on May 8, 1886 when only one product called the ‘Coca-Cola’, a mix of Coca-Cola syrup and carbonated water, existed. The price of one glass of coke back then was five cents a glass and only 9 drinks were sold per day. Today, the company is more than 126 years old with a client base around the world in more that 200 countries from just one city in one country back then (Coca-Cola Bottling Co., 2012, pp.5). The company currently estimates the average drink sales per day at about 1.8 billion with more than 500 brands by 2011, four2 of which are the world’s top-five sparkling brands. Coca-Cola has a global presence and became a billion dollar brand in 2010. It has sponsored world’s sporting events such as the FIFA world cup for more than 80 years (The Coca-Cola Company, 2012, pp2). The company has undertaken many social responsibility initiatives including the Haiti Hope Project in 2010, which aimed at developing a sustainable mango industry in Haiti. The company attributes its business success to five main factors which are unique and recognized brand3, quality, marketing, global availability and ongoing innovation (Sun and Naveh, 2004, pp.6). 2. Coca-Cola’s Organizational Structure (See appendices) Coca-Cola’s organizational structure is composed of President of the firm at the peak, the board of directors4, senior functional leadership and operations leadership in that order. The firm’s management structure is composed of four key operational areas for which the functional management is responsible namely corporate, manufacturing, marketing and finance. Each of these areas is represented by the operational leadership and staff working under them in different regions around the world (Davis, Eisenhardt and Bingham, 2009, pp 420). The board of directors or the executive committee has two arms of responsibility – as chair, under which regional chief operating executives fall, and as Chie Executive, under which senior business executives fall. Coca-Cola’s regional offices, which are the company’s divisions, are spread across Europe, Latin America, North America, Pacific and Eurasia & Africa. Each of these divisional offices has many subdivisions led by the operational leadership. The corporate segment is the head office responsible for providing overall company direction and support to the regional structure. Strategic decisions are made by an executive committee responsible for shaping strategic priorities (Da Silva, Hutcheson and Wahl, 2010, pp. 149). The firm’s organizational model is functional and organic in the sense that it allows faster distribution of information and knowledge within the organization thus increasing the level of responsiveness to changes in the environment. This organic organizational model has enabled the leadership at Coca-Cola Company to achieve business success over the years through high differentiation of tasks with specialists responsible for specialized tasks mainly buoyed by the desire to remain relevant and competitive in the modern dynamic and uncertain business environment (Donaldson, 2001, pp. 102). The structure has also promoted tight integration of functional areas of the company around the world through rapid communication and sharing of information, decentralized decision making with all staffs involved in one or the other to provide input on problem solving and better ways of doing certain things for business growth. These attributes have enabled the company to motivate staffs by promoting corporate strategy ownership thus reducing turnover as part of a strong corporate culture (Egeihoff, 1982, pp. 439). The organic structure adopted by Coca-Cola Limited has contributed to little standardization and formalization of tasks. This is because formalized procedures are usually not practical particularly in a rapidly changing business environment where tasks also must immediately take shape with new performance demands to match with and surpass competitors’ efforts. The firm’s organizational model and management style may be described as highly adaptable, flexible, and more suitable especially in rapidly changing and unpredictable external environment (Miles et al, 1978, pp. 549). 3. Coca-Cola’s Business Strategy The company has a ten year vision which is purposed to position the firm to embrace a forward looking business perspective in the ever changing world circumstances, understand business trends and forces and provide swift preparation for tomorrow. Coca-Cola Company vision is to be ‘the world’s leading provider of branded beverage solutions, to deliver consistent and profitable growth, and to have the highest quality products and processes’. The vision is all about getting ready for tomorrow today and creates a long term purpose for the firm’s business as well as acting as a roadmap to successful business performance (Entin et al., 2003, pp. 72). The vision statement is packaged in six different dimensions of people, portfolio, partners, planet, profit and productivity. The mission, on the other hand, is one that aims to proclaim the rationale for which the corporation is in existence and provide a benchmark for evaluating decisions and actions made by the management. The mission is stated in three sentence statements as follows (The Coca-Cola Company, 2012, pp.1): “To refresh the world”, “To inspire moments of optimism and happiness” and, “To create value and make a difference” The company’s strategic objectives as drawn from the six dimensions of the vision can be stated as follows: a. To be a highly effective, lean and fast-moving organization b. To bring to the world a portfolio of quality beverage brands that anticipate and satisfies people’s desires and needs. c. To be a responsible citizen that makes a difference by helping build and support sustainable communities. d. To maximize long-term return to shareowners while being mindful of our overall responsibilities. e. To be a great place to work. f. To nurture a winning network of customers and suppliers, together we create mutual, enduring value. g. To invest intelligently in market growth. h. To drive efficiency and cost effectiveness by using technology and large scale production to control costs. 4. Coca-Cola Company’s Contingency Factors A contingency is an unexpected event whose timing of occurrence is unknown, and that must be taken care of during the planning process. Planning for contingencies is a risk management process, which if ignored may result in deadly consequences to the business of the firm. For an organization to effectively respond to changing technology and complex global environment, it must embrace dynamic and strong structure and culture. These also enhance the employees’ awareness of the surrounding environment. The organizational design of Coca-Cola Company just like any other organization in the market place is affected by three major contingency factors though other factors may have played a role. These include changes in organizational strategy, its size, technology and the environment. With various strategy changes through reenergized vision and mission, the organizational structure has also changed to match the provisions of the new strategy (Entin et al, 1999, pp.325). The company has grown significantly since inception as described under its profile above and as such the company has tended to become more formalized over time and thus size has affected the organization’s structure or design. Technology, on the other hand, may have been caused by the biggest impact on the structure as the production process and/or service delivery changed over time to match the ever dynamic technological environment. The work culture adopted by Coca-Cola’s management, and workforce is to live the company’s values, work smart, focus on the market, and act like owners and to be the brand (Evans, 1991, pp. 85). These perspectives have supported in one way or the other the ease of varying organizational structure due to dynamic business environment in terms of size, strategy and technology among others. The processes or methods that transform inputs into outputs differ by their degree of routineness, which determines the level of standardization of the institutional structure. The more routine the technology, the more standardized will be the structure. Coca-cola has over the years taken technology very seriously for innovation. In order to keep the sales high throughout, the company constantly changes its production and manufacturing processes, rebrands, and advertises its products and services using the new technologies available which necessitate the overhaul of the organizational design in one way or the other. The company introduced greener bottles and packaging in 2009, complying with the requirement to have products with lower petroleum content. It has also harnessed the power of social networking and reached out to over thirty four million fans through social sites such as face book and twitter to popularize its brands and engage in aspects of social responsibility as well as in trying to connect with individual customers around the globe. This has allowed the firm to conveniently and cheaply carryout advertorial campaigns and sells out its products with positive feelings created on the audience. The introduction of free-style dispensers in 2010, which allow customers to create beverages by choosing from over 100 drinks in various combinations, has been received with a lot of appreciation from the market. The dispensers not only allow customers access to a variety of beverage choices but also record information on consumer’s drink choices as part of market research for the company because they are computerized. Finally, the company has adopted and effectively used online advertising to make consumers feel like they really want its products. It does this through popping advert content in other websites containing material related to the food and beverage industry or otherwise (Miller, 1987, pp. 20). These are just some of the technological advances that Coca-Cola has embraced so far and which have had an impact on its organizational structure in a variant of ways. Coca-cola has pursued a global strategy for a long time and particularly used technology to make the strategy a reality. This has worked magnificently reading from its great coverage of the market place around the world, its increased number of popular and ordinary brands, competitiveness of these brands against those of competitors and the increased consumer interrelationships the company has maintained globally. The global strategy has entailed selling the same product everywhere in the world and expecting to create demand and popularity of the product almost the same way in the different geographical and cultural backgrounds. Global strategy has also enabled the company sustain growth around the world regardless of environmental dynamics. In terms of the organizational structure, the global strategy has helped the company to minimize managerial structural changes as a result of changes in geographical, cultural or country preferences of the different markets. The company has maintained its strong presence in its markets even with these dynamics prevailing without having to significantly restructure. The biggest advantage the company has enjoyed from the global strategy is efficiency that has resulted from leveraging economies of scale, which means that from huge revenues of worldwide product sales, it can buy raw materials in bulk thereby making huge savings in terms of cost, labour, packaging as well as marketing (So and Durfee, 1993, pp. 63). Global strategy has also helped the company in terms of product life cycle where it has enabled it phase introduction of products such that older ones are introduced to new markets and new versions of older products introduced to more sophisticated markets. 5. Assessment of Fit Between Organizational Structure, Goals And Contingency Factors Coca-Cola Company is one of the most successful business concepts around the world. This is perhaps because of its strong and prospective business focus as guided by its clear, aggressive and proactive strategy that has received commitment and ownership from the management and workforce over the years. The company’s vision is always reenergized by the founder’s philosophy, which talks about inculcating an innovative spirit characterized by learning to quickly fix common headaches to do with business development and taking advantage of global events such as the Olympics to market and promote company products. Still, the philosophy emphasize on marketing prowess including aggressive use of marketing materials containing the company’s logo among others (Ferber and Gutknecht, 1998, pp. 132). Taking an assessment of the company’s managerial structure, its goals for successful business performance and considering contingent factors that have affected the strategy and the structure of management, it is evident that the company has not only remained cognizant of the need to strike a balance but has kept the spirit of competitiveness in the market place and remained resilient to externalities over time guided by its vibrant strategy. The company has perfectly managed to seamlessly weave the strategy and the structure to deliver its plans (Glasser and Morignot, 1997, pp. 106). The company’s management style has ensured a combination of flexible decision making and sharing of ideas across the organization, a structure that has continuously promoted flexibility and encouraged teamwork almost in dealing with every decision making issue. The disadvantage of allowing everyone to participate in providing ideas for decision making is that some members of the team may not like to compete with their colleagues who are smarter and whose input and ideas are usually embraced by the management (Grinyer, Yasai-Ardekani and Al-Bazzaz, 1980, pp. 199). The company has both internal and external managerial structures to achieve effective delivery of business objectives. These include the regional structure that is aimed at supporting growth, encouraging closer attention to the needs of local customers as well as increasing connectivity with local consumers, which is one of the factors that yielded the business success seen so far. This structure is also aimed at enhancing clarity of strategic direction for the firm from the centre. The regional structure combines both elements of centralization and decentralization (Gobble, Petrick and Wright, 2012, pp. 66). The general structure has also supported innovation, partnership and teamwork thus enhancing workforce morale through relationships and open communication channels, which has resulted in ownership of the plans and energized workforce for the growth of the firm. A number of open communication channels that have contributed to a strong culture, from relationships created, have been developed. These include monthly leadership team meetings for functional managers, weekly departmental team meetings, monthly employee team briefing meetings, consultative regional employee groups and surveys to monitor employee views and feelings. Major regions such as Great Britain, for example, have their own marketing structure consisting of marketing director at the peak, head of strategic marketing alliances, head of media & marketing assets, youth & adult brand director, Coca-Cola brand director, Packaging innovations manager, and head of consumer brand communications. This set up is aimed at enabling the company to achieve its priorities related to market growth and expansion (Kaplan and Norton, 2006, pp. 102). The company’s multidivisional structure enables it to have best options to react to changes in its uncertain business environment as well as keep strong to stability of the business. It also allows ease of tailoring operational tasks to specific geographical market. Thus, divisional managers can focus on their core operations as corporate managers concentrate on long term planning and strategy (Patricia, 2012. pp. 139). The disadvantage of the multidivisional structure is that it may be too complex for a global organization and lead to reduced coordination between corporate and divisional levels with little or no synergetic efforts in creating solutions to problems. The Coca-Cola has recognized that structuring the organization has two perspectives; the internal and external relationships. The company has, therefore, built well-structured relationships with many groups outside the organization including but not limited to bottling companies. It has succeeded in this structuring because of the recognition that internal and external synergies yield great results to the firm and that it is also a potent tool of fighting external competition for business opportunities and delivering unmatched quality and service to customers. In fact, Coca-Cola Company mostly engages in the manufacture and selling of beverage concentrates and syrups, leaving the canning and distribution functions to other firms that are its partners in business. Embedded on the organizational structure is the culture which has been adopted and spread across the company’s regional offices from the Head office in Great Britain. The culture emphasizes on teamwork and empowerment where the company and management view the employees as the key asset on the understanding that motivated staffs are the company’s growth engine while the leadership acts as the engine oil and the driver to take the firm to its destined route as guided by the vision, mission and strategy. The management appreciates that organizing people into teams encourages and lifts their morale, feel more valued and contribute to the workforce that is positively aligned to the goals of the organization. Members of the teams are encouraged to freely air their views, opinions and ideas on how certain specific things could be done better or completely new initiatives put in place to bring positive difference for growth. Through this managerial structure, Coca-Cola has been able to develop trust among the employees and management, create a friendly and innovative working and social culture in the workforce thus achieving sustained brand leadership through a high quality workforce. Other fringing benefits of these relationships include increased and ever growing consumer trust and confidence that the firm will continue to offer excellence services and products to satisfy their expectations. Even bottling and other partner firms are motivated by the way business continues to thrive competitively year after year, which is something that encourages stronger business partnerships for greater value to all parties. 6. Conclusion An organization is a set up or configuration of tasks, functions, people, skills or techniques and structure. Organizational structure, on the other hand, is the institutional set up that defines the way in which mobilization of resources across all levels is conducted. This paper set to study the organizational structure and strategy of Coca-Cola Company Limited. The Company is surely a global brand; the largest beverage company in the world and the leading producer and maker of soft drinks. The firm’s business idea was first conceived in downtown Atlanta on May 8, 1886. Coca-Cola’s organizational structure is composed of the executive management led by the President of the firm at the peak, senior functional leadership and operations leadership in that order. Management structure is composed of four key operational areas namely corporate, manufacturing, marketing and finance. Coca-Cola’s regional offices, which are the company’s divisions, spread across Europe, Latin America, North America, Pacific and Eurasia & Africa. Strategic decisions are made by an executive committee responsible for shaping strategic priorities. The firm’s organizational model is functional and organic in nature in the sense that it allows faster distribution of information and knowledge within the organization thus increasing the level of responsiveness to changes in the environment. The organizational model and management style may be described as highly adaptable, flexible, and more suitable in rapidly changing and unpredictable external environment. The priority areas are targeted at improving growth, quality, profitability, people inspiration, customer satisfaction, efficiency and cost effectiveness and corporate social responsibility. As part of the contingency factors affecting organizational structure, the company’s management structure is affected in a number of ways by changes in its corporate strategy, size and technology. In fact, technological advancements have necessitated the overhaul of the company’s production processes and service delivery mechanisms in a bid to reduce operational costs, increase competitive advantage, improve product quality and enhance the effectiveness and efficiency for growth. The company’s multidivisional structure has supported growth, encouraged closer attention to the needs of local customers as well as increasing connectivity with local consumers, enhanced clarity of strategic direction from the managerial epicentre, supported innovation, partnership and teamwork, thus, enhancing workforce morale and provided best options to react to changes in uncertain business environment as well as enabled the firm to remain stable over time. The disadvantage, however, is that it may be too complex for a global organization and lead to reduced coordination between corporate and divisional levels. Every brand that seeks to excel and sustain prosperity must create a universal appeal; reach out to local environments around the globe to satisfy unique needs and requirements of each geographical area it expands to. Although Coca-Cola might have achieved this to a moderate degree through its management structure and strategy, it still needs to increase connectivity with every individual customer that gets to enjoy as well as derive utility and value from its products or service. This can only be achieved with heavy local presence in the regions it operates in. The company, therefore, may have to continue to improve its organizational structure to be able to sustain and deliver a global and local strategy concurrently. Bibliography Black, B. and Kim, W., 2012. The Effect of Board Structure on Firm Value: A Multiple Identification Strategies Approach Using Korean Data. Journal of Financial Economics, Vol. 104 Issue 1, p203-226 Claver, E., Pertusa, E. and Molina, J., 2012. 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