The Coca-Cola Company - Coursework Example

The Coca-Cola Company Executive Summary The Coca-Cola Company is considered a leader globally in the manufacture of non-alcoholic beverages. The company was incorporate in 1889, and since then, it has managed to develop over 400 brands in more than 200 countries around the globe. However, due to its vast presence in different regions around the globe, the firm has shifted to a decentralized structure to improve efficiency in the management of its business. As such, the firm has established operating groups that include, for instance, Latin America, European Union, Pacific and Africa. As a result, the company enjoys more flexibility in terms of making decisions at the local levels. Decentralization for the company has also played a role in allowing the top management ample time to focus on long term planning. However, while the firm has decentralized most of its operations, there are certain divisions that are still centralized due to their importance. These divisions include, for instance, the human resource, finance, innovation and strategy division. On the other hand, the market for non-alcoholic beverages continues to grow, and Coca-Cola can use its economies of scale to expand its market base. Among the new markets that the company needs to exploit include, for instance, India and China where there is a high demand for soft drinks due to hot climate conditions. In addition, there is also a growing market for still drinks as more customers are focusing health and wellness. Conversely, in order to remain competitive, the company needs to embrace innovation. Through innovation, the company will be in a position to develop a business strategy that is unique to the competition. Introduction The Coca-Cola is a multinational company that specializes in the manufacture of soft drinks. A pharmacist known as Stith Pemberton invented the firm’s main product, Coca-Cola in 1886. However, both the formula and Coca-Cola brand was later sold to Asa Candler in 1889, leading to the establishment of The Coca-Cola Company. Since then, the company has expanded its global reach and is associated with over 400brands in more than 200 countries, and serving over 1.6 billion customers each day. As a business strategy, the company also focuses on franchised distribution system where it only produces the syrup concentrate and then sells to bottlers that are spread around the world (MarketWatch, 2006). The headquarters is based in Atlanta, Georgia and its stock is traded in the New York Stock Exchange. As a result of its global presence, the company organizes its structure to cater for a global need and also specific needs of different regional markets. Currently, The Coca-Cola Company is considered as the world’s leading Beverage Company. Among the world’s leading soft drinks that are marketed by the company include, for instance, Sprite, Diet Coke, Fanta and Coca-Cola. Up to date, the firm’s success is influenced by a number of factors that include: developing a unique brand, an emphasis on quality, development of creative and innovative marketing programs and global availability. In addition, the firm also focuses on a continuous innovation to ensure it offers new and attractive products to the consumers (Pfitzer, Bockstette & Stamp, 2013). The structure of The Coca-Cola Company As a result of the need to meet the changing demands of customers, the company has shifted to a decentralized structure. Currently, the firm has established two operating groups known as Corporate and Bottling Investment. The company has further divided operating groups by regions that include, for instance, Latin America, European Union, Pacific and Africa. In addition, the firm has also divided these divisions into geographic regions. As a result, the company enjoys flexibility in terms of management because decision can be made at the local level. In addition, a decentralized structure enables the company to respond fast to the changing market demands. A decentralized structure also allows the top management of the firm to focus their attention on long term planning for the company. However, there are certain divisions that the firm considers critical and are centrally located. Such divisions include, for example, marketing, planning, innovation, finance, human resources and strategy divisions (MarketWatch, 2006). On the other hand, the company deals with its low growth by exploiting the expertise of teams of top managers whose responsibility is to develop solution for the firm’s most pressing problems. On another note, while the firm uses teams of top managers to find solutions for the emerging problems, a decentralized structure ensures that any changes are communicated to employees at the local level. The company further recognizes the importance of a complex integrated mechanism due to its tall and wide structure. Within the company’s organizational structure, there is also a focus on mutual adjustment to help improve growth rates. In addition, the firm’s structure also appears to embrace both mechanistic and organic models. The firm embraces an organic structure by focusing on responsiveness. This is achieved, for instance, through surveys and interviews that enhance the flow of information from the local level to the firm’s headquarters. The use of intranet also allows enhances the lateral flow of information. Through a focus on surveys, the firm has been in a position to engage in implication and standardization. Conversely, mechanistic model within the firm relates to centralization and high standardization. Consequently, combining both structures has ensured the company remains competitive in the global business environment. In addition, since the company is involved in exploiting a large number of independent markets, flexibility is necessary (Kesler, 2008). Focus on high standardization is also important in terms of ensuring that the company remains efficient with regard to its production. The company also relies on complex integrating mechanisms and this help to enhance coordination due to its global presence. With regard to personnel, the company has a contingent of over 90,000 employees. Further, the company is considered to have established at least five hierarchical levels at its corporate level. For instance, the head of a particular division such as Canada is supposed to report to the president in charge of the North America Group. On the same note, the president is expected to report to the CFO who also report to the Office of the General Counsel, and the General Counsel on their part reports to the CEO of the company. However, due to the firm’s tall structure, issues may arise such as communication problems and among the problems that the firm has discovered through a survey include, for example, lack of clear goals in different levels. The other challenge associated with tall hierarchies includes motivation problems, and as a result, the company has endeavored to improve employee involvement. For example, the firm has increased the use of intranet to improve communication employees and allow the top management to communicate effectively with the front line staff. Within the company, the CEO is also considered as part of the top leadership team. This team is composed of the heads of the firm’s operating groups and top executives from divisions that include, for instance, innovation, marketing and technology. Through this arrangement, the CEO is able to receive a wide range of information to ensure he or she takes appropriate actions meant to improve the firm’s competitiveness in the market. While the company focused initially on a centralized structure, the shift towards a decentralized structure has instigated structural changes. For instance, the firm opened new offices to enhance the decision making process that target, for instance, local markets (Koster, 2012). Currently, the firm is more focused on establishing a hybrid structure that can provide an advantage for both mechanistic and organic structures. The company has also undertaken strategic structural changes over the years to ensure it establishes a positive impact in the marketplace. As a result, the sales rates for the company have grown significantly and there is a low employee turnover. In essence, a divisional structure offers the firm the ideal opportunity to adapt to the constant changes in a globalized business environment. In addition, decentralization based on geographic region ensures that the firm can tailor its operations to suit individual markets. Further, divisional managers ease the work of the top management. However, the firm still has to deal with problems associated with a decentralized structure. For instance, in case the company decides to create divisional competition, this may affect coordination since each division will focus on gaining a competitive advantage. As such, the company needs to consider embracing a multidivisional matrix structure in managing its business that has a global presence (Kesler, 2008). Fig 1: The organizational structure of The Coca-Cola Company Source: Gilhuly, 2014 Market opportunities for The Coca-Cola Company Coca-Cola is considered as one of the leading sellers of non-alcoholic beverages globally. As such, the firm is better position to exploit the global beverage industry that is expected to increase in the next seven years to reach $300billion in the year 2020. The company currently boasts of an average 30% of the globe’s beverage industry. In this regard, it is important for the company to maintain its global market share to capitalize on the expected surge in the global value of soft drinks. In addition, The Coca-Cola Company is also strategically positioned to increase its growth in the international front. Further, as per capita income continues to increase in regions such as Africa and Eurasia, the company is in a position to gain by taking advantage of its economies of scale. In essence, an increase in personal income has an influence on consumer spending and this is an opportunity that the company needs to exploit particularly in the emerging markets around the world (Pfitzer et al., 2013). The company can also take advantage of the available room for growth particularly in the regions where there is scarcity of non-alcoholic beverages. On the same note, countries with huge market opportunities where Coca-Cola can exploit include, for instance, India and China. These countries are considered to have a larger market reach compared to the United States. As such, the company can earn more sales revenue by increasing per capita beverage consumptions in the emerging markets. Conversely, the consumption of still beverages is also on the rise in both developed and developing markets. Due to an increased awareness on health and wellness among consumers, they are now demanding for alternative healthier products. In this sense, the company needs to identify market opportunity for the still drinks such as bottled water. A focus on the production of still drinks will ensure the company realizes significant growth in the future. Currently, the company has managed to introduce into the market at least 10 still brands that contributes to a sales revenues of over $1 billion annually. While the firm can boast of a 15% of still drink’s market share globally, there is still room for expansion in new markets particularly in the developing world. Further, the company needs to focus on diversification as a way of expanding its global presence. For instance, the firm should also consider joining the food industry as a way of improving its offerings to customers. Diversification will also ensure the company increases the revenue that it gets from loyal customers. The firm’s already established distribution can be used to distribute other products as a way of minimizing supply chain costs. Supply chain is often a major hurdle due to the rising costs of transportation. As such, the company needs to focus more on improving their supply chain to ensure they minimize unnecessary costs that can affect the company’s overall profits (Pfitzer et al., 2013). On another note, it is also important for the company to market its products that attract low sales. For instance, in the firm’s product portfolio, there are certain products that attract low sales in the market. In this sense, the company needs to focus on marketing such products to improve their appeal in the marketplace. On the other end of the spectrum, it is important for the company to expand its operations in both developing and emerging markets. This is due to the stiff competition for the local market (United States) as a result of new entrants. In addition, trying to concentrate only in the market that the company has already established its present can affect negatively on the growth rate. In addition, the prospects of growth for the company also depend on economic and political stability in the markets it intends to venture. Expansion into the emerging and developing markets also require the firm to develop the capabilities, for instance, to acquire bottling operations, or exploit strategic alliances with local bottlers. The company needs to embrace M& A especially when considering its expansion to emerging and developing markets because of the need for infrastructure improvements to ensure production, distribution and sales is not affected. Prior to expanding to other markets, the company also needs to consider the impact of cultural differences on its business. Since the firm has a presence at both local and international level, there is need to set corporate policy, engage with governments and other companies (Kesler, 2008). An improvement in terms of collaboration with local stakeholders such as suppliers and industry groups is also necessary to address any issues that may affect the firm’s expansion into new markets. Improving brand name also require the firm to engage in other activities unrelated to the production and sale of non-alcoholic beverages. For instance, corporate social responsibility should form part of the firm’s business strategy. In addition, the company needs to be more transparent and accountable to shareholders and customers respectively. In essence, sound practices embraced by the firm can play an important role in ensuring that it expands its customer base globally. The future success of the company also depends on its ability to collaborate with the governments in the countries that it intends to venture (Madhavan, 2012). Innovation at the Coca Cola Company Due to the heightened competition in a globalized business environment, a focus on innovation is important in maintaining a competitive edge, for instance, in the beverage industry. Today, the company faces stiff competition from other firms such as PepsiCo, Inc and Red Bull. . As such, a focus on innovation ensures that Coca Cola develops product differentiation to maintain its competitiveness in the industry. Over the years, the success of the company has been associated with innovation. Through innovation, the company has managed to create more brands and diversify its product portfolio. In this regard, the company is in a position to spread its risks in case a single products loss market due to a saturated market. The firm’s focus on an environmentally friendly packaging is another measure that can be associated with innovation to maintain a competitive edge. Due to an increased awareness among customers regarding environmental sustainability, the competition in the marketplace is influenced by how companies make ecofriendly products. As a leading firm in the manufacture of soft drinks, innovation is necessary to ensure that new products are invented to improve offers to the loyal customers. The success in then firm is also associated with teamwork. In any organization, teamwork plays an important role in improving knowledge sharing necessary to come up with unique products in the marketplace. The generation of innovative ideas is not possible where employees focus on individual work. As such, teamwork contributes to the blending of innovative ideas to help the company realize its intended goals (Pfitzer et al., 2013). As a company whose products appeal to customers with diverse backgrounds, innovation ensures that the company meets their demands for different taste and preferences. For instance, in today’s competitive marketplace, customers are more interested on a product’s benefit. In this sense, a company such as Coca Cola with a vast customer base needs to come up with strategies to ensure their customers do not shift to the competition. Through innovative ideas, value addition services is evident, for instance, through the introduction of vending machines in popular locations around city centres for the convenience of customers who want to purchase Coca Cola products instead of having to visit a retail store. On the other hand, through bottling innovation, the company has been in a position to expand its business around the world. This approach enables the firm to collaborate with local bottlers who have an influence on the local market and this helps to increase the firm’s sales revenue. In addition, collaborating with the local bottlers also helps the company to gain economies of scale that places it in a position to maintain a large-scale franchise system around the world (Pfitzer et al., 2013). Innovative ideas has also contributed to the firm exploit the benefits of, for instance, endorsement marketing. As a result, the company has been able to improve its brand image globally. For instance, Coca-Cola has involved itself in sponsoring various sporting events and this has placed the firm in a better light among sporting enthusiasts. The firm’s innovativeness is also evident on its effective marketing program. Today, Coca-Cola is one of the leading companies globally in terms of promoting its products to customers around the world. For example, through its “open happiness” campaign, the company has appealed to customers in different regions around the world as the advert appreciates different cultures and traditions in the regions where it sells its products. Through innovation, the company has also developed marketing strategies that ensures they can persuade new customers to try their products and this helps to increase revenues for the company. Innovation also helps to improve the technology used in the production of products and services by the company. Some of the innovative technology associated with the company includes, for instance, the improved lighting for coolers to minimize energy consumption and service costs. On the other hand, the company through innovative means has also introduced greener packaging that also contributes towards safeguarding the environment. Innovative ideas has also contributed to the firm embracing technological platforms such as the social media where it utilizes, for instance, Facebook and Twitter to advertise its new products and improving its brand image. Innovative ideas in the company have also contributed to the rolling out of freestyle dispensers that has played role in improving customers’ experience (Madhavan, 2012). Further, innovativeness has played a role in helping the firm identify other channels to market their products other than the traditional advertisements that are more expensive and have an impact on the company’s profits. For example, the company now relies on online advertisement that has proved to be more effective in promoting its products. Online advertisement makes it easier for the company to attract more customers because the Coke ads appear in most of the sites visited by internet users. Innovativeness also helps the firm to invent technologies necessary to speed up the production of its products. This includes, for instance, the improvement of infrastructure used by local bottlers that partners with the company. As such, the company is in a position to hasten the delivery of its products and services on time, and meet the demands of customers (Pfitzer et al., 2013). Conclusion The globalization of the business environment has created a situation where there are constant changes in the marketplace. As such, companies need to adapt to these changes in order to remain competitive in the marketplace. In this regard, a leading company in the beverages industry such as Coca-Cola has to review its business strategies on a frequent basis in order to gain competitive advantage. For instance, the company has to change its structure to meet the market demands, evaluate market opportunities to increase its sales revenues and embrace innovation to remain relevant in a competitive and globalized business environment. In addition, the stiff competition in the beverages market means that The Coca-Cola Company has to continue introducing new products and services as a way of developing a differentiation strategy. References Gilhuly, J., 2014. Coca-Cola Organizational Complexity. Juliegilhulywordpress. [Online] Available at: https://juliegilhulywordpress. com/2014/03/01/coca-cola-organizational-complexity/ [Accessed 22 Oct. 2015] Kesler, G., 2008.How Cokes CEO Aligned Strategy and People to Re-Charge Growth: An Interview with Neville Isdell. People & Strategy, 31(2), 18-21. Koster, K, 2012.Coca-Cola builds centralized HR resource with call center structure. Employee Benefit News, 26(11), 12-14. Pfitzer, M., Bockstette, V., & Stamp, M., 2013.Innovating for shared value. Havard Business Review, 91(9), 100-107. Madhavan, A., 2012.CSR at Coca-Cola. The Journal for Decision Makers, 37(2), 94-98. MarketWatch, 2006.Company spotlight: The Coca-Cola Company. Drinks, 51(10), 19-24. Read More