Principles of Management - Coca-Cola Company - Case Study Example

Principles of Management: Coca-Cola Company Name Professor Institution Course Date Principles of Management: Coca-Cola Company Executive Summary This essay seeks to provide an in-depth managerial analysis of Coca-Cola Company in terms of planning, organizing, controlling and leadership style. The Coca-Cola Company is multinational company with headquarters in Atlanta, US. The Company is the largest non-alcoholic beverages manufacturer, distributor and seller all over the world (Blanding, 2010). The company was established in 1886 by the pharmacist John S Pemberton. Coca Cola (2014) claims that the company has since grown and now Coca Cola operates in over 200 nations and offers employment to thousands of individuals in the different nations where the corporation has its operations. The Coca-Cola Company provides over 500 products in more than 200 countries; alongside it’s the much recognized Coca-Cola beverage (Coca Cola 2014). Table of Contents Executive Summary 2 Introduction 4 The mission of the organization 4 Planning methodologies used by Coca-cola 5 The organization's strategy 7 Customers and competitors 7 Customers 7 Competitors 8 How the firm is organized 9 Formal structure 9 Decision-making process 10 Change Management 11 Leadership style 11 Organization’s heroes 12 Motivational environment 12 Organizational communications 13 Processes for control  13 Innovative managerial practices 14 Role(s) of technology  15 Interest in joining the organization 15 Methodologies 16 Literature review (Bios of founders) 16 Employee’s interviews 16 Promotional" materials assessment (including web sites) 17 Industry Analysis 17 Conclusion 18 Introduction In the previous decades, the rate of competition amongst different companies has considerably surged. With globalization, technology advancement changing rapidly in the business environment, competition is taking a new level and managers are forced to rethink their strategies to sustain competition (Deryck & van Rensburg 2012, p.5). Managers that have been relying mostly on early theories of management have found them less relevant in the 21st century. The organizations have become too complex to run because the businesses now operate in culturally different environments. Coca-Cola has had to change its management practices to remain a market leader in spite of heavy competition in the beverage sector. By 2010, it was claimed that the company was enjoying consumers’ loyalty of nearly 90% (Blanding, 2010). To create and maintain this loyalty has taken this country several years to create. As such, this essay seek to provide an in-depth managerial analysis of Coca-Cola Company in terms of planning, organizing, controlling and leadership style that has made this company to be where it is today. The mission of the organization The mission of Coca-Cola Company works as a principle, for which the company evaluates its actions and decisions. Coca-Cola Company (2014) contends that the corporation has three key mission statements including refreshing the world in the body, sprit and mind, creating value and making a difference and inspiring moments for happiness and hopefulness. According to the company website (2014), Coca-Cola Company mission is the outline roadmap and relationship with customer for each aspect of the business of Coca-Cola. The mission assumes a vision with the six P’s, five behaviors and seven values to realize the one mission which is happiness (Blanding 2010). The mission of this company goes far much beyond the processing of beverages, and concentrate on the effect the business that is to refresh the body and mind and also to make the global customers happy who from their beverage products. Planning methodologies used by Coca-cola Some of the planning practices used by Coca-Cola Company comprise of production planning marketing plan, financial planning and strategic planning. Production planning at Coca Cola helps them know the market requirements and also serves as a basis for the decisions concerning distribution, pricing and promotion (McWilliams 2010). The company has grown over a decade and has acquired very many customers more than it had in its early years. This means they cannot manufacture the same capacity they used to back then. As such, productions planning as helped them manufacture products that can meet the market demands and ensure that they do not run out of stock (McWilliams 2010). This method has encouraged the production team to go out and carry out research on the customer base so as to know the number of bottles Coca Cola Company should manufacturing to satisfy the need of a particular market. It should be noted that production planning is not just about the number of products they should manufacture but also is creating product concept. After product concept is envisaged, managers normally start planning the features and dimensions of this product. Product planning methodologies has also enabled Coca Cola to introduce new products in the market in order to spread risks (McWilliams 2010). If the market research results prove positive, the corporation decides to sell a certain new product on small scale basis or regional. During this period, the Coca Cola will distribute these products while concentrating in one country or city depending on the sales. This reason justifies why Coca Cola makes some products for a certain region. Coca-Cola Company (2014) argues that the company also combines marketing planning and strategic planning so as to have the market advantages. Coca-Cola Company marketing planning outlines their general marketing efforts incorporating marketing mix. The company market planning has often made it stay a market leader for many years in the beverages industry (Coca-Cola Company 2014). Its marketing planning can be attributed to strong marketing mix consisting of product, price, promotion and place. The company carries out research and manufacture products beverages which aimed at fulfilling consumer needs. With intentions to include most market segments in their plans, Coca Cola manufactures over 500 brands sold all over the world and currently enjoying consumer loyalty of not less than 90% (Coca-Cola Company 2014). This depicts the effectiveness of their marketing plans as well as high quality products. In marketing planning, the company changes it prices according to state of economy and marketing mix. Therefore, they have been able to use both psychological and competitive pricing strategies to outdo its close rival PepsiCo (Clo & Baack 2007, p.165). The company also embraces new modern marketing and promotion strategies, like the application of website and social media such as Facebook, Twitter and MySpace to create it brand awareness (Coca-Cola Company 2014). The organization's strategy As the largest and the leading beverage maker, the company strategies enabled it to attain this status. The company has dwelled in building business model that revolves soft drinks and continue to expand and develop beverage portfolio through innovation and strategic acquisitions (Clow & Baack 2007, p.166). The company stated with its namesake Coca Cola brand which today the company is well known for. As the competition take shape, the company has developed its business model which continues to explore and participate in creating new lines of beverages, expanding existing brands and efficiently marketing and advertising them. Coca Cola have proved to be a strong brand ahead of its rival’s product Pepsi giving it a market advantage across the world (Forbes 2012). In several years that Coca Cola brand have existed, the company have managed to develop it through packaging, ingredient and marketing. Currently, it remains their strongest brand across the globe. Customers and competitors Customers Coca-Cola Company (2014) argues the largest and the leading beverage manufacturer in the world and operating in more in more than 200 countries is an indication that the company serves a large customer base across the world. All over the years, Coca-Cola Company has been creating new products which would satisfy customer expectations and needs. The company has been serving people of different ages buts has had to carry out market segmentation time and again due to ever changing customer needs (Kendall 2007). The company segmented its customer and market based on demography, behavior and psychographic factors. Demographics factors involve the population according to age, gender, nationality and family size among other (Kendall 2007). However, this has been easy to Coca-Cola Company since it manufactures non-alcoholic products which are acceptable amongst all age groups and gender. The coke products bearing low levels of sugars have been manufactured to serve elderly people and children (Coca-Cola Company 2014). Similarly, the coke with high levels of energy has been produced for students since they take part in several activities which need lots of energy like studying and sports. Customers have become health conscious and Coca Cola has also been criticized for making unhealthy products in the recent past (Välikangas & Merlyn 2005, p.55). Due this negative image, the company now makes coke zero or diet coke to serve customers who are sick and are under dietary checks. Based on behavior more so in relation to energy; the company makes products which can be utilized when tired to provide energy. This is where company include sport category in their customer lists. Lester (2009) claims that one noticeable thing is that Coca Cola brands are bought by every different social class, but majorly by the high and middle class citizens because of disposable income to use on luxury products. Competitors In spite of holding a market share of more than 50 percent, it is clear that Coca-Cola Company undergoes a strong competition from different well-recognized beverage firms across the world (Lester 2009). There is stiff competition which the company faces from both regional or local including global market players. Additionally, it faces strong competition from different non-alcoholic drinks such as nectars, juices and fruit drinks. The major rival to the Coca-Cola in its field of operations both locally and internationally is PepsiCo. Other notable competitors comprise of Nestle, Kraft Foods and Cadbury Schweppes (Forbes 2012). Forbes (2012) posits ever since 2008, the Coca-Cola Company stocks have been on the continuing rise compared to its main rival PepsiCo. For instance, share prices of PepsiCo have gone up from US$45.78 to US$ 63.56 from 2008 (Forbes 2012). Another close rival of Coca-Cola Company is FIZ which serves North American region which Coca-Cola’s major stronghold. This requires the need for constant market research to facilitate invention and innovation, and develop new products which will satisfy consumers’ needs internationally currently and in future. How the firm is organized Formal structure At the top of Coca-Cola organizational is the CEO who heads the company globally. Currently, its CEO Muhtar Kent is also the chairman (Coca-Cola Company 2014). The next in the structure are the board of directors consisting of 15 individuals who make the company decisions. The company also has an International Division Structure due to its global personnel who operate in isolation and separately from the head office. It has different divisions in all the continents of the globe with presidents which control and manage every continental division. Coca-Cola Company has five continental divisions comprising of Eurasia & Africa Group, Europe Group, Latin, America Group, North America Group and Pacific Group (Coca-Cola Company 2014). Every continental division has a vice president which control sub-divisions who are based on regions. As such, Coca-Cola organization structure or chart can be said to be tall which experience long time of decision making. The tall structure also faces communication problems due to its hierarchy of authority. As big company it also has informal structure such as the positions of various supervisors within several distribution centers across the world. Decision-making process Most decisions made by company are carried out so by employing the incremental mode. Every year, Coca-Cola analyzes its results and makes slight adjustments in operations to generate better performance the following year (Coca-Cola Company 2014). The Coca-Cola does not just rapidly decide to develop a new product and change its operations. Drastic adjustments take time. The process and effectiveness of decision making depends on the organization structure of the organization. Deryck & van Rensburg (2012, p.7) asserts that Coca cola has tall organization which enables the decision making to take a longer time to be implemented. However, some decisions are delegated to the regional CEOs to make. For such reason, organization structure at the country level has been made to be flat and flexible to encourage teamwork and employee involvement in various decisions. For global decision the decisions has to go through the board of directors who discuss it and communicate it the regional CEOs for further communication middle level managers. The middle level managers’ opinions are communicated back to the directors who have the final decision. One of the major inefficiency of the Coca-Company Company is that board of directors is in charge of some non-programmed decisions which take a lot time to be adopted (Clow & Baack 2007, p.166). For instance, when the company was looking forward to acquire Quaker Oats Company, the agreement was nearly finalized, but it had to be stopped since the board of directors felt the price was much higher. Change Management The workforce is the most valued stakeholders at Coca-Cola Company since they communicate their product to the company's customers. Brennan, Tunisini, Harrison & Baraldi (2007) affirm that the quality of product depends of the employee’s expertise and experience. With the ever changing business environment, the management has to re-adjust their strategies to sustain competition (Brennan, Tunisini, Harrison & Baraldi 2007). Therefore it its better stated that change takes time quite often. To manage change, Coca-Cola Company offers training to its employees to remain up to date with the current happenings. They also organize employees into groups to work on various projects of developing new products. Group setting and training ensure that employees do not resist change. Leadership style According to McWilliams (2010) the success Coca-Cola in the past has been due to its effectiveness leadership style. For a long time the CEO of Coca-Cola Company has been using transformational and visionary leadership to run the company (McWilliams 2010). Similarly most of the middle levels managers are encouraged to use transformational leadership to motivate workers to shelve their own personal aspirations for the great good of the company. Leadership style is enshrined in their company mission and vision which consider values and ethics in running the affairs of Coca-Cola (McWilliams 2010). The official websites claim that Coca Cola managers are leaders who are morally responsible and focuses on building the moral values and principles of their subordinates and growing their devotion to serve for the well-being of customers, the society and organization beyond self-interest (as cited in Olsen & Johnsen, 2006). In fact, the current Muhtar Kent is regarded as visionary and transformational leader who aims at both maintaining Coca-coal as a market leader but also seeking new opportunities. The company hires qualified individuals to work in their companies as plant engineers, produces and marketers to deliver customer value. Organization’s heroes The history of Coca-Cola Company began 1886 in Atlanta when John S Pemberton and pharmacist and doctor developed caramel syrup and sold (Coca-Cola Company 2014). After a few days, Pemberton’s business partner Frank Robinson developed Coca-Cola logo which has remained a well recognized trademark until today (Coca-Cola Company 2014). Just after two years businessman Asa Candler bought the rights of the Coca-Cola product and together with his brother John Candler and Frank Robinson formed Coca-Cola Company (Coca-Cola Company 2014). These people together with the first president Ernest Woodruff are the first Coca-Cola heroes who started the journey to make the company what it is today. Motivational environment Coca-Cola Company (2014) argues that besides from building a successful enterprise, the company most significant responsibility is to an environment which motivates and inspires employees. Coca-Cola put forth some motivation practices to curb employee turn-over. The company uses training and mentoring, financial rewards and some leisure activities to create motivation environment. Enabling staff the opportunity to develop in their skills, competency and offer training to improve is one of key agenda at Coca-Cola (McWilliams 2010). The company provides several development initiatives to support and motivate staff. McWilliams (2010) maintains that Coca-Cola also provides financial rewards in away to motives its employees to reach great heights. Compensation at the company is competitive. Each year, staff undergoes performance evaluations which give them an opportunity to get merit increase. Coca-Cola also aims to provide an energizing and enjoyable environment which motivates workers on a daily basis (McWilliams 2010). Organizational communications When Coca-Cola workforce is inquired about their opinions, they recognize that somebody's listening; Coca-Cola created its mission statement and key values around staff input. Each year, it submits an international Employee Insights Survey, looking for employee views on how the business is run and how operations can be enhanced (McWilliams 2010). The company also has press quite often to update the stakeholders on operations and performance. Internal communication are carried through email or some new technologies such as team view to ensure that middle management levels managers are at par with projects going at the organization (Kendall 2007). As for the line managers and subordinates, the company uses memo to inform them of the assigns and meetings. Processes for control  Coco-Cola is one of the biggest companies in the world with over 700,000 employees doing different jobs (Coca-Cola Company 2014). This means a lot of departments, processes and employees depend on each other to deliver to customers. The company uses two types of control measure in managing its employee. They include Feedforward controls, Concurrent controls and Feedback controls. Kumar (2010) postulates that Feedforward controls are used mainly to monitor employees hiring to ensure that the hired employees have the required skills for the job. Similarly this type of control system is used to monitor finances to curb deviations. Concurrent controls check continuing employee activities to make sure there is consistency with high quality standards (Kumar 2010). These forms of controls rely on the Coca-Cola rules and regulations and performance standards for guiding staff behaviors and tasks. Their function is to make sure that activities generate the needed results. Across the various types of controls with regards to level of proactivity and result against behavioral, it is critical to understand that Coca-Cola Company controls also assume one of two major forms; financial and non-financial controls. Financial control entails the management of the costs and expenses by Coca-Cola to check them against the budgeted amounts. They use their auditing department to establish accountability. On the other hand, operational control is concerned with implementing the company’s strategy to reach a certain goal. Usually, these standards, objectives and goals are set for key subsystems in the organization like business units, functions, products, projects and responsibility center (Kumar 2010). Innovative managerial practices The company itself started as an entrepreneurship activity, and as such, it has encouraged this activity among its customers and employees. McWilliams (2010) maintains that Coca Cola encourages entrepreneurship by asking some its customers to start depots where they can stock the company brands and sell it to wholesaler and retailers. While operating in these years, the company also has faced several ethical dilemmas. The key ethical issue which the company underwent was associated with the sale of dangerous product in Belgium that was unsafe for the health of customers. In this incident, Coca-Cola was criticized for selling poorly manufactured batch of carbon dioxide making nearly 30 Belgian kids ill in 1999 (McWilliams 2010). They were also accused of being profit oriented rather than ensuring safety of the consumers. Over the years there have been rare cases of employee turnover at Coca-Cola unlike other big companies. Many have been wondering about their secret to this vice. However, researchers claim it is due to employee’s empowerment. Coca-Cola has been involving employees in various decisions which affect their lives to do away with employees resistant to change (McWilliams 2010). Coca cola also uses sharing information, rewards, training so as to empower it employees. Role(s) of technology  Whilst it's majorly believed of as a simple beverage firm, other companies could assume a page from Coca-Cola handbook as far as technology is concerned. Kumar (2010) holds that since the beginning of the social networking, the capability to remain constantly connected to Internet, Coca-Cola has repeatedly harnessed the new technologies in man ways to improve its brand. In 2009, Coca-Cola launched the greener bottles and the packaging in 2009, manufacturing 2.5 billion products employing less petroleum (Coca-Cola Company 2014). The process has been so effective that other firms like Heinz, have used technology to develop greener packaging. Coca-Cola holds a noticeable appearance on social media such as Facebook, Twitter and other social media sites. With more than 34 million following on these social networking by 2011, Coca-Cola use the power of social media not only socialize but also to market and create brand awareness (Coca-Cola Company 2014). Interest in joining the organization Coca-Cola is one of the strongest brands existing today with a grate working environment that most people would want to join. It has been my wish for a long time to join this team one staff once I am through with my undergraduate studies. What of more interest for me an Information technology student is that the company is now embracing IT in both production and packaging. Joining IT department and system will not only hence my wealth of experience but also interact with some the IT gurus who came up with such systems. Methodologies Literature review (Bios of founders) As mentioned earlier, Coca-Cola brand was first made by the pharmacist John S Pemberton in Atlanta in 1886 (Coca-Cola Company 2014). In the same year, his partner Frank Mason Robinson, a marketer, designed a logo for Coca-Cola, what has remained as its trademark up to today. Two years later he sold its right to Atlanta businessman Asa Candler. Asa and Robison had a vision for Coca-Cola, and the two formed Coca-Cola in 1888 (Coca-Cola Company 2014). In 1892, the two appointed themselves as secretary and treasurer respectively in a bid to manage the operation and fiancés of the company. Employee’s interviews Today most of the Coca-Cola company employees are happy and motivated based on the fact that the company normally seeks their opinions whenever decisions regarding is being made (Coca-Cola Company 2014). Each year, the company distributes an international Employee Insights Survey which seeks employee opinions on how the firm is being run and how the management can improve operations. The assessment is not only a pen-and-paper form but include other assessments. It normally comes in form of a private blog or website, open for just a limited duration of time, where staff can answer and provide concepts and criticisms on the management issues (Kamm 2012). Another situation is where the management allows one of their employees is interviewed by journalist and his opinions are respected (Kamm 2012). One of such interview was published on the website in 2012 (http://www.coca-colacompany.com/history/get-a-glimpse-into-coke-archives-interview). Promotional" materials assessment (including web sites) Coca is one of the companies which run effective promotions so as to create brand awareness. The companies have had several promotion strategies since it early days. In 2011, Coca-cola's promotion expenditures accounted for up to 3.256 billion dollars (Forbes 2012). It is promotional strategies; the company sponsored English Football League from 2004–05 seasons to 2010/2011 (Coca-Cola Company 2014). It also sponsored FIFA World Cup in South Africa in 2010. Some of its promotions are done it is websites and social media (http://www.coca-colacompany.com/stories/coke-lore-slogans) (https://www.facebook.com/TheCocaColaCo). Industry Analysis The beverage industry has transformed considerably in the most recent years. The increase of new entries is minimal due medium barrier to entry created by established companies like Coca-Cola (Välikangas & Merlyn 2005, p.57). However, that does not mean there is no competition. In fact, because of minimal taxations from the governments, the situation has boosted many firms to consider getting into beverage market. This has made the Coca Cola Company and PepsiCo to improve their strategies and who they carry out their business across the world (Välikangas & Merlyn 2005, p.58). Major players have adopted use of new technologies to manufacture, market and sale products so as to be efficient and have market advantages. Nevertheless, the industry does not escape challenges including political instability and the rising operation costs resulted by high raw materials costs in the global market. Conclusion Coca-Cola Company enjoys the beverage market dominance in both locally and internationally. The company dominates in the product innovation platforms such as soft drink water, juice and energy drinks due to its strong brand. However, it faces constant complains regarding is ethical issues in relation to product content and labor laws violation. Nevertheless, there are several opportunities which can exploit as to sustain this market dominance, most if it partners with other different brands and involvement in several CSR activities. To realize this, Coca-Cola must get rid of competition posed by PepsiCo including other upcoming beverage companies. References Blanding, M 2010, The Coke Machine: The Dirty Truth Behind the World’s Favorite Soft Drink, New York, Avery Brennan, R., Tunisini, A., Harrison, D & Baraldi E 2007, Contemporary Strategic Marketing, (2nd Ed.), New York, Palgrave Macmillan Coca-Cola Company 2014, Coca-Cola Company Official Website, viewed May 13th, 2014 From http://www.coca-colacompany.com/ Clow, KE & Baack, D 2007, Integrated Advertising, Promotion, and Marketing Communications 3rd edition, Pearson Education, pp. 165–7. Deryck, J & van Rensburg, 2012, Strategic brand venturing: the corporation as entrepreneur, Journal of Business Strategy, Vol. 33, pp.4 – 12. Forbes 2012, Coca-Cola profit beats as brand grabs global market share, viewed May 13th, 2014 From www.forbes.com/sites/heatherstruck/2011/07/19/coca-cola-profit-beats-as-brand- grabsglobal-marketsgare/ Kendall, S. D 2007, Customer Service from the Customer's Perspective. In Fogli, Lawrence. Customer Service Delivery: Research and Best Practices. J-B SIOP Professional Practice Series 20, John Wiley and Sons. Kumar, D 2010, Enterprise growth strategy: Vision planning and execution, England, Surrey, Gower Publishing Ltd. Kamm, K 2012, Get a Glimpse into Coke Archives (Interview), viewed May 13th, 2014 From http://www.coca-colacompany.com/history/get-a-glimpse-into-coke-archives-interview Lester A 2009, Growth Management: Two hats are better than one, Hampshire, Palgrave Macmillan McWilliams, J 2010, Coca-Cola searches the globe for the next billion-dollar brand, The Atlanta Journal – Constitution, No.22 August, pp.D1-D4. Välikangas, L & Merlyn, P 2005, Strategic resilience: staying ahead of a crisis, Handbook of Business Strategy, Vol. 6, pp.55–58. Read More