Culture and Leadership: A Comparison of Coca-Cola and Pepsi - Case Study Example

Running Head: Culture and Leadership Culture and Leadership: A Comparison of Coca-Cola and Pepsi This paper is written with the objective of presenting a comparison of Coca-Cola and Pepsi in terms of culture and leadership theories and applications. The essay would initially provide a brief historical background of the two beverage companies. Further, the culture in both organizations would be evaluated and assessed to determine which is more effective given underlying factors. Finally, the topic on strategic leadership would be proffered in conjunction with those employed by Coca-Cola and Pepsi. It would thereby be analyzed in the context of factors which make an organization more effective than the other. Introduction Leadership behavior is influenced and affected by the culture in which each leader and worker operates. Culture influences leadership philosophy and practice mainly through motivation. The idea that leadership works though people, however tautological, is vital for leaders in a culture that differs from their own. Culture affects people – their needs, wants, aspirations, all of which the leader must tap. Leadership values and practices of many organizations reflect the culture of the society in which these organizations exist. In fact, values and practices often derive much from the cultures of the society from which it evolved. Identifiable cultural differences may make it inappropriate to take management and leadership theories and practices from the culture in which they were developed and apply them to another culture. This is exemplified with the concepts of culture and leadership in Coca Cola Company and Pepsi Company. In this regard, this paper is written with the objective of presenting a comparison of Coca-Cola and Pepsi in terms of culture and leadership theories and applications. The essay would initially provide a brief historical background of the two beverage companies. Further, the culture in both organizations would be evaluated and assessed to determine which is more effective given underlying factors. Finally, the topic on strategic leadership would be proffered in conjunction with those employed by Coca-Cola and Pepsi. It would thereby be analyzed in the context of factors which make an organization more effective than the other. Brief Historical Background Coca Cola is the world’s top brand of soft drinks manufactured by Coca Cola Company. It was founded by Dr. John Styth Pemberton, in Atlanta, Georgia in 1886 originally as a headache remedy. It was officially incorporated in 1892. Its humble beginning experienced promotional dilemma which led Pemberton to sell the business to Asa G. Candler in 1891. Under Candler’s leadership, Coca Cola grew and expanded through product development, advertising, promotions and product packaging. Currently, “Coca-Cola makes four of the top five soft drinks in the world, Coca-Cola at number one and Diet Coke, Fanta, and Sprite at numbers three through five.” (International Directory of Company Histories, 2005, par. 1). Pepsi Cola, on the other hand, is the world’s second largest manufacturer of soft drinks. Its origin began in 1898 when Caleb D. Bradham, a pharmacist from North Carolina, tried to concoct a soda parallel with Coca Cola. Though it initially showed potentials for close competition in terms of taste, Bradham became bankrupt; had to sell the business to Roy C. Megargel, who was also not successful in running the company. The company made a dramatic turn under the helm of Charles G. Guth, who steered it to tremendous growth and success. Today, “three of its brands--Pepsi-Cola, Mountain Dew, and Diet Pepsi&mdashe among the top ten soft drinks in the U.S. market.” (International Directory of Company Histories, 2005, par. 1). Culture in Companies and/ or Organizations The impact of culture on leadership and on the people being managed is tremendous. This concept has been acknowledged by the leaders themselves who operate with due consideration for the values, needs, aspirations, beliefs of their work force and even of their clientele. According to Martires & Fule (2000), culture is the “accumulated system of ideas, values, beliefs, customs, mores, and traditions transferred from one generation to another that affects and influences the pattern of living as well as lifestyle of a people in a given society” (pp. 226 – 227). Culture Using Coca Cola versus Pepsi The official website of Coca Cola indicated in its Heritage Timeline that “Coca-Cola is committed to local markets, paying attention to what people from different cultures and backgrounds like to drink, and where and how they want to drink it. With its bottling partners, the Company reaches out to the local communities it serves, believing that Coca-Cola exists to benefit and refresh everyone it touches.” (Coca-Cola Now, 2009, par. 2) In this regard, through partnership with global organizations carrying the Coca Cola brand, the company was successful in applying management’s policies through infusion of relevant cultural perspectives in the local markets where they operate. In most of Coca Cola’s marketing strategies, management has acknowledged that Coca Cola is being consumed by generations belonging to the pop culture. Coca Cola became a way of life: drinking it comes naturally when people from all walks of life get together and have lunch or dinner or even ordinary snacks. It is being consumed more in Europe and /South America and comprised 53% in 2006 of the cola shares worldwide (The New York /Times, 2007, par.1) The same is true with Pepsi. Management targets the young generation who are open to try new things and new tastes. In fact during the 1960s to the 1970s, Pepsi revolutionized the soft drinks market by coining “The Pepsi Generation” composed of young people who wanted variety. Pepsi, however, is more popular in some Asian cultures. More Effective Culture (Coca Colas or Pepsis) Effectiveness is measured in terms of which company was able to capture the biggest market share after employing specific marketing strategies world wide. In this regard, Coca Cola is more effective in its strategy of convincing more people from diverse cultures to drink its products. With its market leadership in the carbonated drinks industry, the strategies implemented to capture a wider and diverse clientele is more effective. Strategic Leadership Hitt & Duane (1999) define strategic leadership as "a persons ability to anticipate, envision, maintain flexibility, think strategically, and work with others to initiate changes that will create a viable future for the organization" (p. 43). It is likewise defined by Guillot (2003) as “the ability of an experienced, senior leader who has the wisdom and vision to create and execute plans and make consequential decisions in the volatile, uncertain, complex, and ambiguous strategic environment.” The kinds of strategic leadership depend on the personalities of the leader. They can be autocratic, democratic, or free rein. Other factors such as skills, training, value system, philosophies and specific assumptions about people contribute to the kinds of strategic leadership employed in a given situation. Strategic Leadership in Coca-cola and Pepsi Coca-cola boasts of being a “driver of marketplace innovation and an investor in local economies.” (Coca Cola Company, 2009, par. 1) They have an operating group leadership and functional leadership as the structure to focus of external expertise in the marketplace. Contained in the definition of the mission and vision of the company, Coca-cola emphasized that “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 whats to come.” (Coca Cola Company: Mission, 2009, par. 1) At Pepsi, strategic leadership is implemented through their Performance with Purpose multi-year growth strategy is “focused on balancing strong financial returns with giving back to communities worldwide. Performance with Purpose is premised on offering a broad array of choices for healthy, convenient and fun nourishment, reducing environmental impact, and fostering a diverse and inclusive workplace culture.” (PepsiCo, Inc., 2009, par. 2) More Effective Strategic Leadership Considering the components that make a strategic leader, still, Coca Cola is more effective in terms of its thrust to prepare for the future – to assess, evaluate and understand the factors that would affect their operations today as it strives to continue being the top in the soft drinks industry. The leadership style being practiced is proactive in nature. Pepsi’s Performance with Purpose did not mention anticipating future changes in the environment. It is more reactive than proactive. It exemplifies finding out what strategies would the leader in the soft drinks market come out next so that they would respond to it. Strategic leadership is a challenging endeavor due to the intricacies and factors affecting not only the leaders themselves, but the subordinates they lead, as well as the environment within which the organization operates. Strategic leadership can thereby be made more effective through forecasting changes in the environment and anticipating how these factors would impact the operations of the company. By being able to foresee changes and conflict that could make drastic deviations in the company’s future plans, a strategic leader could immediately act upon these factors for the betterment of the company. Conclusion One of the most exciting and challenging theories encompassing human behavior in organizations is leadership and culture. Leadership being the process of influencing people to work or act towards the attainment of specifically defined goals. There have been a significant number of literatures covering the nature, theories and applications of leadership and culture, and their effect to job performance and satisfaction. These theories are appropriately applied through strategic leadership in both Coca Cola and Pepsi. Education paves the way for creating an environment for performance. Leadership deals with human relationships. When a leader is truly effective, the institution where he operates becomes transformed. By learning, competence is improved. Leaders lead by example and the values they hold are exemplified in their actions. This is how we ultimately learn. References Coca Cola Company. (2009). Coca-Cola History. Retrieved 27 Nov. 2009. < http://heritage.coca-cola.com/> ----------------------. (2009). Coca-Cola Mission, Vision & Values. Retrieved 27 Nov. 2009. < http://www.thecoca-colacompany.com/ourcompany/mission_vision_values.html> Guillot, M (2003). “Strategic Leadership: Defining the Challenge.” Air & Space Power Journal. Winter Issue. Hitt, M. & Duane, R. (1999). “The Essence of Strategic Leadership: Managing Human and Social Capital.” Journal of Leadership and Organizational Studies. Vol. 9, No. 1. International Directory of Company Histories. (2005). The Coca Cola Company. Vol.67. St. James Press, USA. --------------------------. (2001). PepsiCo, Inc. Vol. 38. St. James Press, USA. Martires, C.R. & Fule, G.S. (2000). Management of Human Behavior in Organizations. National Bookstore. Philippines. pp. 226 – 227. The New York Times. (Nov. 2007). Coca Cola Share in the World Market. New York, USA. Read More