Building Quality Organisations - Coca-Cola Company - Case Study Example

Building Quality Organisations Name Institution Course Date Table of Contents Table of Contents 2 Introduction 3 Basic Elements of Organisational Structure 3 Dimensions of Organisation Structure 5 Simple Structure 5 Machine Bureaucracy 5 Professional Bureaucracy 6 Divisionalised 6 Adhocracy 6 The Determinants of Structure 6 Organizational Effectiveness 7 Goal Attainment Model 8 System Model 8 Strategic-constituencies Model 8 Balance Scorecard Model 8 Organisational Issues and Ways of Addressing Them 9 Conclusion 10 Building Quality Organisations Introduction Organisational structure in any organisation determines how people communicate in the workplace, the managerial hierarchy, geographical operations and designs a strategic plan for effective organisational growth and development (Ghurman and Aswathappa, 2010). The organisational structure creates a blueprint on the layout of an organisation and determines how management may impact change in the company. Overall, for an organisation to deliver plans, the structure as well as the strategy must be connected together seamlessly (Nakamura, 2003). One multinational company that has established an effective organisation structure is Coca-Cola Company. The main objective of the Coca-Cola Company is to be the world’s leading Beverage Company, to achieve profitable growth and to offer the highest quality to the customers (Nakamura, 2003). The company has been able to achieve this by the establishment of effective, flexible and efficient organisation structure. The structure of the organisation is built around function, product and process. This paper will highlight Coca-Cola’s elements of organisational structure, the dimension of the structure, evaluation of the organisational structure, organisational effectiveness and structural problems that may have an effect of the organisation and probable solutions of the same. Basic Elements of Organisational Structure There are three basic elements of an organisational structure namely, formalization, centralization and complexity (Ghurman and Aswathappa, 2010). Centralization can be termed as the location in an organisation where plans are established through decision making and are in the context of a formal authority only. There are two types; vertical centralization and horizontal centralization. Vertical centralization is considered high when decisions are made by the management and is low when employees are given the mandate to make decisions. On the other hand, horizontal centralization takes place when employees from different business units take part in decision making (Ghurman and Aswathappa, 2010). Formalization is the degree of job definition and control using rules. An organisation with more rules in relation to how employees carry out their work and how decisions are made is considered formal (Ghurman and Aswathappa, 2010). Complexity on the other hand is the extent of vertical and special differentiation in a company. Vertical departmentalization measures the degree of a structure. Horizontal differentiation is the extent to which employees in different organisational units differ in the task they perform and level of training. The greater the separation of differentiation, the more complex an organisation becomes. The larger the number of department occupations, the greater the horizontal complexity (Ghurman and Aswathappa, 2010). A company that is highly formalized, centralized as well as specialized is considered to having a tall hierarchy of authority. Tall hierarchy of authority mean high degree of bureaucracy and a mechanistic structure. The key decisions in Coca-Cola Company are made by the management and the employees are involved less in decision making (Campbell, Kunisch and Stewens, 2011). For a company whose success has been attributed to its connection with the customers, it is justified for Coca-Cola Company to be structured into a regional unit that make use of centralization coupled with localization (Campbell, Kunisch and Stewens, 2011). The company does not have many rules that guide employees in their work. But rules are embedded on how decisions are made by the management. Coca-Cola Company can be considered formalized since it has a greater hierarchy of authority. Dimensions of Organisation Structure Different organisations have different organisational structures. An organisational structure can have a greater performance through strict rules and regulations, but others may fail as a result of duplicating the structure of another company (Dalton and Best, 2006). Successful companies are the ones that establish their effective ways of integrating and coordinating different elements. With so many factors and combination, it may prove to be difficult for an organisation to establish the best structure for its business. Mintzberg has established five major structure configurations that can enable organisations determine whether their structure is suited to the conditions available (Dalton and Best, 2006). Simple Structure According to Mintzberg, a simple structure is centralized that emphasizes on high autocratic supervision. Normally, control is initiated by the executive team or the chief executive. The struture is considered flexible and most at time it is informal but with a highly executed sense of mission (Dalton and Best, 2006). However, simple structures can be vulnerable to business attacks that can wipe the coordinating mechanism. Machine Bureaucracy Machine bureaucracy is founded on a strong technostructure. This means that the strategic planners as well as the financial controllers have some powers which may lead to the development of multiple segments of management and formal procedures (Dalton and Best, 2006). As a result of its high degree of standardization, the functions of the operating core may be rigid that supports discretion of operational plan from the employees. Such as structure does not emphasize n motivation and may be unreceptive to any plan of change. Professional Bureaucracy This structure is founded upon clear lines of authority practices. Nevertheless, these practices may be based on set of rules and regulations from external bodies. Professional bureaucracy is considered democratic and emphasizes on the motivation of employees (Dalton and Best, 2006). Divisionalised A small central unit offer guidelines and plans for organisational units. This central unit enjoys a higher degree of autonomy (Dalton and Best, 2006). It is considered an extension to machine bureaucracy and develops a rigid coordinating influence. Adhocracy This structure is task or project oriented and as the ability to respond fast to changing demands. Adhocracy has little formality and thus control and power are less important in a company (Dalton and Best, 2006). Coca-Cola Company has a divisionalized structure that entails a central body of control that oversees operations of different business units (Campbell, Kunisch and Stewens, 2011). The use of this structure by Coca-Cola Company can be attributed to its large size and multinational nature. The Determinants of Structure Organisational structures should be developed in order to meet aims, goals and objectives (Ghuman and Aswathappa, 2010). Organisational structures involve the coupling of flexibility of decision making and communication and sharing of best ideas and plans within the organisation with effective control from the center. The Coca-Cola Company has designed an organisational structure that ensures work is performed effectively and objectives and goals are achieved (Campbell, Kunisch and Stewens, 2011). Structures are important since ideas become fruition and organisations can be able to coordinate its operations and functions. In Coca-Cola Company, the structure is central and is interconnected with every aspect of its organisational functionality (Campbell, Kunisch and Stewens, 2011). Coca-Cola Company encourages motivation of employees and leadership that form the basis of organisational success. Coca-Cola Company has clear hierarchy of authority that coordinate different functions in different locations. The company’s head office is responsible for offering support to regional structures in different areas (Campbell, Kunisch and Stewens, 2011). Coca-Cola structure has enabled it form a good relationship with its bottlers that is one source of its strength (Campbell, Kunisch and Stewens, 2011). The company works with its bottlers which enable them distribute its products around the world with unmatched quality. Its structure also emphasizes on empowerment, motivation and teamwork (Nakamura, 2003). Coca-Cola perceives its employees as important assets and thus strives to motivate them. Employee motivation is one of the reasons that have driven the company’s growth. Motivating employees has enabled them feel valued and enhances their innovativeness and engagement. The Coca-Cola Company has designed an organisational structure that supports the achievement of organisational goals and objectives. For instance, regional and divitionalized structures are the best strategy that encourages its growth and focuses attention to local requirements and create effective strategic direction originating from the core center (Nakamura, 2003). Organizational Effectiveness Organizational effectiveness can be measured using four organizational effectiveness models namely: goal attainment models, system models, strategic-constituencies models and balance scorecard models. These models have been created to get ahold of the richness bore in the organizational effectiveness construct (Rojas, 2000). Goal Attainment Model This model is a traditional kind of model which depends on the vision of an institution as a rational group of schedules directed towards the attainment of goals. Therefore, a company’s effectiveness can be determined in terms of accomplishment of results. The main focus is on the end (Rojas, 2000). System Model This model highlight on the specific means required for the attainment of a precise outcome based on its input, acquisition of assets as well as the individual processes. Therefore, the conception of an institution is founded upon the open system method whereby inputs and processes are considered as a whole (Rojas, 2000). Strategic-constituencies Model This model adds the aspect of expectation of a number of interest groups that hover around the organization. An organization is perceived as a group of both internal and external constituencies that pulls off a complicated group of constraints and goals. These interest groups include the owners, employees and suppliers to name a few whose satisfaction ensures both the effectiveness as well as the survival of the organization (Rojas, 2000). Balance Scorecard Model This model offers a framework that focuses on an organization from different perspectives for instance; it looks into the customers’ perspective, innovation and learning perspective, financial perspective and internal business perspective (Rojas, 2000). Using the organizational strategy as a guide, it derives goals linked to each perspective and hence develops certain measures to support each goal. Therefore, Coca-Cola organization utilizes balance scorecard to evaluate the effectiveness of their organization. This model has assisted managers in Coca-Cola to elucidate the vision for their organization and interprets into quantifiable actions which can be followed by their employees (Nakamura, 2003). In addition, it has guided managers within the organization to balance the interests of the stakeholders so as to enhance the overall performance of the company. Organisational Issues and Ways of Addressing Them A company with an effective and rigid organisational structure may reap numerous benefits from unification of business unit, open communication and definite hierarchy (Dalton and Best, 2006). However, there are a number of organisational issues that may affect the effectiveness of an organisational structure. In order maintain an effective organisational structure, one need to identify these challenges and deal with them accordingly. One major organisational issues affecting structures include company goals and objectives (Dalton and Best, 2006). An organisational structure can be effective only if it is used properly in reference to the management consultants. Sometimes the upper management and control tend to design departmental goals of an organisation without consulting with departmental managers (Dalton and Best, 2006). This may hinder an organisation from achieving its goals. For an organisational structure to be operational, the goal-making process should engage everybody in the organisation and avoid discretion. When an organisation does not involve the rest of the company, it may lead to employees’ morale drop and failure of an organisational structure. Lack of communication can be another organisational issue affective organisation structures. A company need to have an open and effective communication in order for its structure to run smoothly (Ghuman and Aswathappa, 2010). Lack of effective communication will inhibit the sharing of new ideas and strategies and may lead to confusion. Communication is used in issuing directions to the rest of the employees in an organisation. Different departments with a company may not know exactly what their responsibilities are (Ghuman and Aswathappa, 2010). This may lead to confusion that can potentially slow down productivity and performance. In order to address this issue, an organisation should improve its modes of communication through occasional training and educational seminars. This will encourage a more open environment where there is effective flow of information both vertically and horizontally. Conclusion To sum up organizational structure determines how individuals in a work environment communicate as well as design strategic plan for effective organizational growth and development. For instance, Coca-Cola has been able to achieve profitable growth because of its effectiveness, flexibility and efficient organizational structure. Organizational structure can be divided into three fundamental components: formalization, centralization and complexity. In addition, organization is characterized by their different forms of dimensions within their organizational structure for example, simple structure, machine bureaucracy, professional bureaucracy, divisionalised as well as adhocracy. Coca-Cola has been able to utilize divisionalised dimension. Furthermore, organizational structure ought to be created so as to meet aims, goals and objectives. Coca-Cola has designed a structure that ensures achievement of goals and objectives. Finally, organizations have in place measures which can be used to evaluate the performance of their organization. They use tools such as goal attainment models, system models, strategic-constituencies models and balance scorecard models to ensure proper organizational performance. References Campbell, A, Kunisch, S, & M. Stewens G 2011, ‘To Centralise or Not to Centralise”, McKinsey Quarterly, vol. 3, pp97-10 Dalton, C & Best, N 2006, CIMA Exam Practice Kit Integrated Management, Burlington, Elsevier Science & Technology. Ghuman, K. & Aswathappa, K 2010, Management : concept, practice and cases, New Delhi, Tata McGraw Hill. Nakamura, L 2003, ‘Let a Hundred Flowers Bloom! Decentralisation and Innovation. Business Review, p.21 Rojas, R 2000, "A review of models for measuring organizational effectiveness among for profit and nonprofit organizations." Nonprofit management & Leadership, 11(1), 97-104. Read More