Organizational Change in Coca-Cola Company
Category : Business Essay Samples, Change Management Case Study Sample, Change Management Topics, Internal and External Enviromental Factors, International Business Environment, Organizational Change, Softdrink Industry
The environment, people and the system in this world is constantly evolving. Just as the popular quote mentioned “change is the only constant in this world,” change and transformation is very apparent from the changes in the physical attributes and characteristics of an individual, to the changes in the environment and surroundings. Just like the people and the environment, organisations also undergo transformations; the change could be either massive or minimal. Often times change happen within the management of the organisation; in order to keep up with the competition, at the same time, improving the efficacy of the human resource. Currently, the competition for the Coca-Cola Company is for the national and international competition. Also, competition for the leading competitors such as the PepsiCo is highly considerable. Since Coca-Cola Company deals with food and beverage products, the market has shown several growth of competition within the local and the international area. Many had been trying to put up an industry that will satisfy the needs of people in eating. Basically this paper will evaluate the efforts of the company concerning social change in their external and internal environment.
Coca-Cola Company will be analysed through the use of different theoretical concepts in change management. The paper contains preparation for change wherein it includes the current stance of organisations’ internal and temporal environment. In addition, a proposed action will also be made in this paper. Basically, Coca-Cola Company is one of the most popular companies in the world. Aside from the fact that it is also one of the oldest corporations that was able to withstand World War II and further changes in the market over the past years. The truth still remains that it is one of the most famous brands of Cola in the world (The Coca-Cola company case n.d.). The Coca-Cola Company was able to defy the obstacles that happened; the company was able to utilised change management as competently as possible to survive the hindrances.
Thus, this paper will discuss and evaluate the organisational change processes that would help an organisation to achieve its mission and to survive with the stiff competition. Specifically, this paper will study the organisational change that would be imposed in Coca-Cola Company.
Evaluation of Coca-Cola Corporation’s Internal and External Social Environment
Coca-Cola was established on May 8, 1886 by Dr. John Stith Pemberton, a local pharmacist in Atlanta, Georgia. It was first sold in Jacob’s pharmacy for five cents per glass. Initially Coca-cola was sold as a drug, Pemberton during that time considers Coca-cola as a cure for diseases such as dyspepsia, morphine addiction, headache and impotence (North America Operating System, 2009).
Coca-cola Company is one of the most popular companies in the world. Aside from the fact that it is also one of the oldest corporations that was able to withstand World War II and other changes in the economy over the past years. The fact still remains that it is one of the most famous brands of Cola in the world (The Coca-Cola company case n.d.).
The Coca-Cola Company was able to resist the hindrances that occurred; the company was able to utilised change management as efficiently as possible to withstand the obstacles. As mentioned earlier, changes in management is caused by three different factors which are the external environment, internal changes and the proactive reaction to possible threats and difficulties.
External Social Environment Evaluation- over the past decades, the Coca-Cola Company has faced a number of changes in the external environment that have transformed the management of the company. One of the best examples is during the World War II. The company was able to maintain the status of the company, at the same time, was able to enter new markets despite the environment. Instead of lying-low because of the war, the company became more aggressive through providing free drinks for the GIs during the World War II. Through this the corporation was able to hit two birds at one stone. First, because the carbonated drinks sent by the company, it became a patriotic symbol by the United States soldiers in which led to consumer loyalty. Second, the company was able to take advantage of the situation and established the product in newly-occupied countries by the Ally forces and because of that the company established plants in various locations worldwide paving the way for its post-war expansion.
Another aspect in the external environment is the change of taste and expectations of the consumers. During the mid-1980s wherein the Americans favoured the sweet taste of the rival product, the company created its counterpart but became a commercial failure; however instead of backing down, Coca-Cola changed its management strategy and returned the old formula, and just renamed it as Coca-Cola Classic. And with the rise of obesity in the United States and consumers became health conscious the company released new versions of Coke in order to address the needs of these type of consumers, such products include Diet Coke and Coca-Cola Zero.
In addition, according to Bool (2009) companies such as Coca-Cola are compulsory to transform due to trends that have a huge impact on their business, and one of these trends is the health and fitness. A number of people are noe investing more in their health, and in order to keep up with the trend, Coca-Cola introduced their new product which is a calorie burning soft drink, the Enviga. Moreover, Coca-Cola is collaborating with the Swiss company Nestle. Coca-Cola is dealing with innovation and change. During the Asian Financial Crisis, Coca- Cola was also triggered to change its course of management in that particular region. The responses and reactions of Coca-Cola with the external environment are its internal changes.
Internal Changes- as mentioned earlier, Asia experienced its financial crisis in 1997. According to Barton, Newell and Wilson (2002) as the financial crisis swept the Asian region, the chief executive officer, Douglas Daft responded to this by mobilising his executives to workshops about how Coca-Cola would seize new growth opportunities. Barton et al, stated that Coca-Cola gave emphasis on acquisition opportunities, Coca-Cola bought acquired bottling business in South Korea which gave more access in retail stores in South Korea, as well as, better entry in China, Japan and Malaysia. Coca-Cola disregarded its country-defined market perspective and focused on regional strategic view and acquired local brands of tea and coffee.
In the case of health trends and changing taste of the consumers, Coca-Cola responded to this through innovation and change. Innovation is accomplished through development of new products such as the Enviga, Diet Coke, Coca-Cola Zero, and other variants of Coke. The change is incited by the trend in health and fitness and consumer tastes which had an impact on the business of Coca-Cola. During World War II, the response of Coca-Cola to the situation is to provide free drinks to the GIs in order to access new markets in which the company was able to do.
Organisational Change Management- this theory presents a general procedure for managing the change in the side of the people at an organisational level (Kotter, 1996). According to Hiatt and Creasey, the organisational change management is consists of three phases, which are, preparing for change, managing change and reinforcing change.
The theory of organisational change management was effectively utilised by Coca-Cola. Different managers in various parts of the world have used organisational change management in order to address the issues that the Coca-Cola faced. From the case study (The Coca-Cola company case n.d.) these people are:
One of the most notable CEOs of Coca-Cola Company is Mr. Gouizetta, he was the chief executive officer of Coca-Cola for seventeen years. He was able to determine the problem against other manufacturer of carbonated drinks. Mr. Gouizetta played a huge role in measuring the operation of Coca-Cola and developed strategies that aided the Coca-Cola to defeat competition. In addition, Mr. Gouizetta played important roles in planning and leading the tasks in achieving the goals and objectives. In addition, Mr. Gouizetta also appointed Mr. Ivester whom transformed the weakness of Coca-Cola into opportunities and strengths (The Coca-Cola company case. n.d.).
Furthermore, the paper of Pigseye, the following organisational management changes that occurred in Coca-Cola over the past years. Coca- Cola has distinguished various forms of its advertisements in order to target different forms of consumers instead of focusing on one group. The company changed the packaging of Coke. Coca- Cola also developed new products such as Gatorade and it extended globally which is composed of the African group, Middle and Far East group, the Latin America group and the European Group (The Coca-Cola company case. n.d.).
As part of the interventions, it is very vital to identify the leveraging changing in an organisation. In identifying the leveraging changes in the Coca Cola Company a Force Field will be used. Force Field Analysis according to Bass (2009) is a technique created by Kurt Lewin in order to analyse the forces that are opposing to change.
The current state of the Coca Cola stores in Hong Kong is pretty good and it is still one of the top distributors of softdrinks in Hong Kong. However, if it will be compared to other Coca Cola convenience stores in the world the inventory, marketing, and performance of the personnel is not equal to other Coca Cola company. The company hopes to increase the efficiency of the marketing and inventory, as well as the productiveness of the workforce through implementing management change programmes. If the changes are applied within the management and businesses, it is projected that there would be an increase in the output of the company. On the other hand, if changes will not be implemented the inventory, performance and other marketing would deteriorate and continuously be inefficient, therefore there is a possibility that the competitors might be at par or even overtake the market.
According to the presented case, the main emphasis of the Coca-Cola is to meet the needs of their customers with excellent product manufacturing and product distribution. The company’s change management is very fragile since they predicted that there are some marketing challenges in the near future that they need to face.
In order to address the changes in the Coca Cola Company, there should a concrete identification of problems present in the company. The employees and other stakeholders of Coca Cola Company will be affected of this so-called “radical changed”. Basically, the route of the change is towards the workforce development and not on the services since the company has already established a reputation of delivering good services in the market. The change is also about the possible financial problems that the company may face in the near future. From this discussion, the following figure shows the force-field analysis of the change management procedures suggested to the application of change management within Coca Cola Company.
Figure 1. Force-Field Analysis
From this force-field analysis, it can be seen that the computed forces to change is much higher compared to the forces against change. Force-field analysis is very vital in change management (Bass, I. 2009). Meaning to say, the plan is quite logical with respect to possible opposition. Actually, change management is basically defined as the formulation and assimilation of change in a methodical process (Kotter, J. P., & Schlesinger, L.A. 1979). Meaning, the major objective of change management which is the introduction of new systems in the work organisation i.e. total change project is normal to companies that are engaged in change management. This can similarly be compared to the adoption of new marketing strategies. Businesses like Coca Cola Company must normally undergo change in order to evolve to a higher level of for instance, stability, management or production. And since Coca Cola Company wanted to have an extreme development or a ‘radical change”, the CEO of Coca Cola may include changing the company’s mission, reforming business operations, application of new technologies, major group efforts, or adoption of new programs. Usually, the organisation is encouraged on settling on change management due to external influences, usually termed as the environment (Nickols, 2004). Thus, change management can alternately be defined as the response of different business to changes brought about by environmental influences in which organisations have minimal or absolutely no control over.
Perhaps the space between the new organisation design and implementing it into actuality is the whole coverage of organisation change and development. As mentioned in the introduction, people are adaptive to change. However, certain skills must be present from the initiators of change so as to successfully implement their project. Thus, managers need to have the necessary abilities not only on detecting what needs to be changed but also how to introduce the change effectively. Thus, in this review of related literature, some of the approaches, common problems, influences, case studies and best practices in change management will be analysed in relation to the research problem.
With respect to the force-field analysis that has been previously conducted, the following details are the recommended plans for managing change in Coca Cola.
Renewing Systems and Structures
The organisational form of Coca Cola is the Entrepreneurial start-up or the simple structure. According to Mintzberg (1992) the structure is described as having a little or no technostructure at all, it also has few support staffers, restrained division of labour, minimal differentiation in the work place, and a small hierarchy in management. Moreover the behaviour within the organisation, particularly in the convenience store is not that formalised wherein it utilises minimal planning, training and liaison devices.
In the new organisational form of Coca Cola businesses in Hong Kong, it would be Machine Bureaucracy. According to Mintzberg, the machine bureaucracy is an organisational structure wherein there is a clear configuration of the design parameters wherein it consistently held up researches it includes specialised routinely operating procedures, formalised procedures in the centre of operations, propagation of rules and regulations, proliferation of formalised communication throughout the company, dependence on the functional basis for tasks wherein it needs group work, comparatively centralised power for decision-making, and a complexly detailed administrative structure with sharp differences between the line and staff. In this form of organisational structure Coca Cola will be able to monitor the efficiency of the performance of the workers because there would be standard procedures and more elaborate structure of management.
Routines and Rituals- the Coca Cola, Inc. does not have any formal training with its work force particularly within the convenience stores. There are no specific routines emphasised in the organisation, and just like most companies, the managers and workers come in to the work place to perform their job and the cycle goes on. This behaviour does not encourage any worker to perform their job better and if ever changes will be implemented within the organisations it will not look peculiar. The new training programs that will be implemented will focus on customer service. In industries like in Coca Cola customer service is a very important aspect in sustaining the loyalty of the consumers. The routines can easily be changed due to the fact that there is no particular routine in the work place.
Organisational Structures- the management within the stores have limited hierarchy and the overall setting is informal because there are no strict rules and regulations within the convenience except for the usual the punctuality and absenteeism. The management structure in Coca Cola encourages collaboration with Coca Cola but competition with other organisations in the same industry. The power structure within Coca Cola is democratic because prior to the changes in the management sectors that will feel the impact of the changes directly will be educated and informed and also their opinions will be heard.
Control Systems- In Coca Cola the most closely monitored is the distribution of softdrinks. The company does not emphasise punishment and rewards to the employees, apart from the usual which is the bonus for rewards and removal from the job for punishment. There are few controls in the workplace and the control in the workplace is associated with the history of the company wherein it provides the customers fresh products.
Power Structures- the main beliefs of the senior management of Coca Cola is that the success of the company is due to the efficient evaluation of the challenges in the workplace, as well as, the market and quickly respond to the opportunities. The power is distributed to three management teams, the senior leadership team, vice presidents and the division leadership. The dominant culture of the organisation is its being practical and open to the opportunities given to them. The changes in the management programmes can be implemented easily because the proposals of the company are attainable and do not have a negative impact on its employees.
Resistance of the employees in the change management programmes in any company is inevitable however overcoming the resistance is important in order to implement the required changes in the management strategies. According to Kotter and Schlesinger (1979) there are six approaches that an organisation can use in dealing with the resistance by the workforce and these are:
Education and Communication- In order to overcome the resistance in Coca Cola the employees should be educated and informed regarding the transformations within the company before implementation to prevent incorrect information that will surround the work area.
Participation and Involvement- the employees must be involved with the planned changes in the management programmes of the company because once they become involved the employees will not resist but instead will participate in the transformations that will be undertaken.
Facilitation and Support- Some of the employees will resist the changes because they are unable to adjust with the new programmes implemented by the management to avoid resistance the management must support the employees that are having a hard time with the changes, establishing a support system will aid the employees to quickly adjust.
Negotiation and Agreement- Coca Cola should talk and negotiate with the employees, and during the talks the management must discuss the incentives they will receive once they accepted the changes in the management strategies.
Manipulation and Co-option- if the other approaches did not work inviting the union leader to participate and be a representation in the change process will aid in overcoming the resistance to change.
Explicit and Implicit Coercion- if all approaches did not work the last step would be forcing them to accept the implemented changes and threaten them that if they will not comply the employees will lose their jobs.
Change management is basically defined as the formulation and assimilation of change in a methodical process. The major objective of change management is the introduction of innovative means and systems in the work organisation. This can similarly be compared to the application of certain information technologies in the company or the adoption of new marketing strategies. Businesses must normally undergo change in order to evolve to a higher level of for instance, stability, management or production. Appointing a new head officer, for example, can greatly enhance his subordinates based on his management principles and personality. From these discussions, we may conclude that change management is a process in which all companies undergo. This is an important procedure because it enables the organisation to make decisions that will be advantageous and beneficial to the company. In addition, organisations that are open to change are generally more successful compare to companies that resist it. In a globalise market, new technologies and procedure are emerging rapidly, in order to keep up with this progress a company must be willing to adapt to management changes. The international, as well as, the local market has a very stiff competition, therefore in order to be on top change management must be utilised by companies. Coca-Cola is one of the best examples of companies that utilised change management efficiently and have yielded positive results. The evidence is the dominance of Coca-Cola in the soft drink industry not just in Asia but all over the world.
Barton, D., Newell, R. & Wilson. G. 2002, When Is a Good Time to Make Strategic Advances? during a Crisis, of Course. The McKinley Quarterly, pp. 77+
Bool, H. 2009, Change and Pressures to Innovate- The Coca Cola Case. Ezine Articles, viewed 25 March 2009, http://ezinearticles.com/?Change-and-Pressures-to-Innovate---The-Coca-Cola-Case&id=328921
Kotter, JP. 1996, Leading Change, Harvard Business School Press
North America Operating System. 2009, Coca-Cola Company, viewed 25 March 2009, http://www.thecoca-colacompany.com/investors/annualandotherreports/2003/opseg.shtml
Bass, I. (2009). Force Field Analysis, Six Sigma First, retrieved 25 March 2009, http://www.sixsigmafirst.com/ffa.htm
Kotter, J. P., & Schlesinger, L.A. (1979). Choosing strategies for change. Harvard Business Review 106-114.
Mintzberg, H. (1992) Structure in Fives: Designing Effective Organizations. Prentice Hall.
Nickols, Fred (2004). Change Management 101: A Primer.
The Coca-Cola company case. n.d., Pigseye, viewed 25 March 2009, http://pigseye.kennesaw.edu/~jmburu/case2.html