37483762 Organizational Structure of The Coca Cola Company PDF

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The Coca-Cola Company 201 0

Group O2: Harini Valluri Soman Nahata Ankit Jangalwa Gandharv Raj Sethi Vishwajeet Narayan

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The Coca-Cola Company 201 0 CONTENT S Introduction............................................................................................................................................................................. 3 Coca cola’s Global coverage..................................................................................................................................... 3 History......................................................................................................................................................................................... 4 Revenues.................................................................................................................................................................................. 4 Products and Brands....................................................................................................................................................... 6 Mission, Vision and Values.......................................................................................................................................... 8 Organizations and Organizational Effectiveness...................................................................................... 10 Stakeholders, Managers, and Ethics.................................................................................................................. 12 Organizational Design.................................................................................................................................................. 14 Designing Organizational Structure: Authority & Control..................................................................15 Designing Organizational Structure: Specialization & Coordination.........................................17 Managing in a Changing Global Environment............................................................................................ 18 Organizational Design & Strategy........................................................................................................................ 20 Creating & Managing Organizational Culture.............................................................................................. 21 Organizational Technology....................................................................................................................................... 21 Organizational Transformations............................................................................................................................ 22 Decision Making................................................................................................................................................................ 23 Managing Conflicts, Power and Politics.......................................................................................................... 24

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The Coca-Cola Company 201 0 INTRODUCTION The Coca-Cola Company is a beverage company, manufacturer, distributor, and marketer of non-alcoholic beverage concentrates and syrups. The company is best known for its flagship product Coca-Cola, invented by pharmacist John Stith Pemberton in 1886. The Coca-Cola formula and brand was bought in 1889 by Asa Candler who incorporated The Coca-Cola Company in 1892. Besides its namesake Coca-Cola beverage, Coca-Cola currently offers more than 400 brands in over 200 countries or territories and serves 1.6 billion servings each day. The company operates a franchised distribution system dating from 1889 where The Coca-Cola Company only produces syrup concentrate which is then sold to various bottlers throughout the world who hold an exclusive territory. The Coca-Cola Company is headquartered in Atlanta, Georgia. Its stock is listed on the NYSE and is part of DJIA, S&P 500 Index, the Russell 1000 Index and the Russell 1000 Growth Stock Index. Its current chairman and CEO is Muhtar Kent.

COCA COLA’S GL OBAL CO VER AG E.

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The Coca-Cola Company 201 0 HISTORY The Coca-Cola Company was originally established in 1891 as the J. S. Pemberton Medicine Company, a co-partnership between Dr. John Stith Pemberton and Ed Holland. The company was formed to sell three main products: Pemberton's French Wine Cola (later known as Coca-Cola), Pemberton's Indian Queen Hair Dye, and Pemberton's Globe Flower Cough Syrup. In 1884, the company became a stock company and the name was changed to Pemberton Chemical Company. The new president was D. D. Doe while Ed Holland became the new Vice-President. Pemberton stayed on as the superintendent. The company's factory was located at No. 107, Marietta St. Three years later, the company was again changed to Pemberton Medicine Company, another co-partnership, this time between Pemberton, A. O. Murphy, E. H. Bloodworth, and J. C. Mayfield. Finally in October 1888, the company received a charter with an authorized capital of $50,000. The charter became official on January 15, 1889. By this time, the company had expanded its offerings to include Pemberton's Orange and Lemon Elixir.

REVENUES According to the 2005 Annual Report, the company sells beverage products in more than 200 countries. The report further states that of the more than 50 billion beverage servings of all types consumed worldwide every day, beverages bearing the trademarks owned by or licensed to Coca-Cola account for approximately 1.5 billion. Of these, beverages bearing the trademark "Coca-Cola" or "Coke" accounted for approximately 78% of the Company's total gallon sales. Also according to the 2007 Annual Report, Coca-Cola had gallon sales distributed as follows: a. 37% in the United States b. 43% in Mexico, India, Brazil, Japan and the People's Republic of China c. 20% spread throughout the rest of the world

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The Coca-Cola Company 201 0

United States Mexico, India, Brazil, Japan and the People's Republic of China Rest of the world

In 2010 it was announced that Coca-Cola had become the first brand to top £1 billion in annual UK grocery sales. The data for the year 2009 is given in the table below:

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The Coca-Cola Company 201 0 PRODUCTS AND BRANDS The Coca-Cola Company offers nearly 400 brands in over 200 countries, besides its namesake Coca-Cola beverage. Tab was Coca-Cola's first attempt to develop a diet soft

drink, using saccharin as a sugar substitute. Introduced in 1963, the product is still sold today, however its sales have dwindled since the introduction of Diet Coke. The Coca-Cola Company also produces a number of other soft drinks including Fanta and Sprite. Fanta's origins date back to World War II when Max Keith, who managed Coca-Cola's operations in Germany during the war, wanted to make money from Nazi Germany but did not want the negative publicity. Keith resorted to producing a different soft drink, Fanta, which proved to be a hit, and when Coke took over again after the war, it adopted the Fanta brand as well. The German Fanta Klare Zitrone ("Clear Lemon Fanta") variety became Sprite, another of the company's bestsellers and its response to 7 Up. During the 1990s, the company responded to the growing consumer interest in healthy beverages by introducing several new

non-carbonated beverage

brands. These

included Minute Maid Juices to Go, PowerAde sports beverage, flavoured tea Nestea (in a joint venture

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with Nestle), Fruitopia fruit

drink

and Dasani water, among

others. In

The Coca-Cola Company 201 0 2001, Minute Maid division launched the Simply Orange brand of juices including orange juice. Coca-Cola is the best-selling soft drink in most countries. While the Middle East is one of the only regions in the world where Coca-Cola is not the number one soda drink, Coca-Cola nonetheless holds almost 25% market share (to Pepsi's 75%) and had double-digit growth in 2003. Similarly, in Scotland, where the locally produced Irn-Bru was once more popular, 2005 figures show that both Coca-Cola and Diet Coke now outsell Irn-Bru. In Peru, the native Inca Kola has been more popular than Coca-Cola, which prompted Coca-Cola to enter in negotiations with the soft drinks company and buy 50% of its stakes. In Japan, the best selling soft drink is not cola, as (canned) tea and coffee are more popular. As such, the Coca-Cola Company's bestselling brand there is not Coca-Cola, but Georgia. Some claim Coke is less popular in India due to suspicions regarding the health standards of the drink. On July 6, 2006, a Coca-Cola employee and two other people were arrested and charged with trying to sell trade secrets information to the soft drink maker's competitor, PepsiCo for $1.5 million. The recipe for Coca-Cola, perhaps the company's most closely guarded secret, was never in jeopardy. Instead, the information was related to a new beverage in development. Coca-Cola executives verified that the documents were valid and proprietary. At least one glass vial containing a sample of a new drink was offered for sale, court documents said. The conspiracy was revealed by PepsiCo, which notified the authorities when they were approached by the conspirators. The company announced a new "negative calorie" green tea drink, Enviga, in 2006, along with trying coffee retail concepts Far Coast and Chaqwa. On May 25, 2007, Coca-Cola announced it would purchase Glaceau, a maker of flavoured vitamin-enhanced drinks (vitamin water), flavoured waters, and energy drinks, for $4.1 billion in cash. On September 3, 2008, Coca-Cola announced its intention to make cash offers to purchase China Huiyuan Juice Group Limited (which has a 42% share of the Chinese pure fruit juice market for US$2.4bn (HK$12.20 per share). China's ministry of commerce blocked the deal on March 18, 2009, arguing that the deal would hurt small local juice companies, could have pushed up juice market prices and limited consumers’ choices.

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The Coca-Cola Company 201 0 In October 2009, Coca-Cola revealed its new 90-calorie mini can that holds 7.5 fluid ounces The first shipments are expected to reach the New York City and Washington D.C. markets in December 2009 and nationwide by March 2010.

MISSION, VISION AND VALUES Following are the mission, vision statements and company’s core values taken from the company’s official website:The world is changing all around us. 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 what's to come. We must get ready for tomorrow today. That's what our 2020 Vision is all about. It creates a long-term destination for our business and provides us with a "Roadmap" for winning together with our bottling partners. Mission Our Roadmap starts with our mission, which is enduring. It declares our purpose as a company and serves as the standard against which we weigh our actions and decisions. a. To refresh the world b. To inspire moments of optimism and happiness c. To create value and make a difference.

Our Vision Our vision serves as the framework for our Roadmap and guides every aspect of our business by describing what we need to accomplish in order to continue achieving sustainable, quality growth. a. People: Be a great place to work where people are inspired to be the best they can be. b. Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and satisfy people's desires and needs.

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The Coca-Cola Company 201 0 c. Partners: Nurture a winning network of customers and suppliers, together we create mutual, enduring value. d. Planet: Be a responsible citizen that makes a difference by helping build and support sustainable communities. e. Profit: Maximize long-term return to shareowners while being mindful of our overall responsibilities. Productivity: Be a highly effective, lean and fast-moving organization

f.

Our Winning Culture Our Winning Culture defines the attitudes and behaviours that will be required of us to make our 2020 Vision a reality. Live Our Values Our values serve as a compass for our actions and describe how we behave in the world. a. Leadership: The courage to shape a better future b. Collaboration: Leverage collective genius c. Integrity: Be real d. Accountability: If it is to be, it's up to me e. Passion: Committed in heart and mind Diversity: As inclusive as our brands

f.

g. Quality: What we do, we do well Focus on the Market a. Focus on needs of our consumers, customers and franchise partners. b. Get out into the market and listen, observe and learn c. Possess a world view d. Focus on execution in the marketplace every day e. Be insatiably curious Work Smart a. Act with urgency b. Remain responsive to change c. Have the courage to change course when needed

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The Coca-Cola Company 201 0 d. Remain constructively discontent e. Work efficiently Act Like Owners a. Be accountable for our actions and inactions b. Steward system assets and focus on building value c. Reward our people for taking risks and finding better ways to solve problems d. Learn from our outcomes -- what worked and what didn’t Be the Brand Inspire creativity, passion, optimism and fun.

ORGANIZATIONS AND ORGANIZATIONAL EFFECTIVENESS What allows an organization to continue to operate for over 125 years, and along the way, become one of the most globally recognizable brand names? The ability to adapt and find new markets has helped Coca-Cola become an icon of the American culture. Coca-Cola was invented in 1885 and since The Coca-Cola Company’s incorporation in 1892; a strong focus on growth and marketing has existed. Besides traditional advertisements in the local newspaper, the company’s founder, Asa Candler, distributed thousands of coupons for free glasses of Coca-Cola so that many more people would be inclined to taste the product. He also distributed countless souvenirs that depicted the Coca-Cola trademark logo. By 1900, the organization, already, had operations in the United States and Canada. This focus on aggressive marketing is, still, the cornerstone for The Coca-Cola Company’s strategy and culture. The Coca-Cola Company was eager to take advantage of new markets, and expansion efforts quickly led to Cuba, Puerto Rico, Guam, and the Philippines Before long, Coca-Cola was being sold in Europe. When The United States entered World War II, Coca-Cola was being sold to both sides. The Coca-Cola Company turned what many would view as a threat, into an enormous opportunity. In 1941, the company’s president, Robert Woodruff made an order to provide American troops with Coca-Cola, regardless of where they were, and what it cost to the company. During the war, 64 bottling plants were set up in Europe and the Pacific. This not only allowed American troops to acquire a taste for

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The Coca-Cola Company 201 0 the drink, but it left Coca-Cola with a solid foundation to greatly expand its operations overseas. Over time, The Coca-Cola Company has remained adamant about staying in the nonalcoholic beverage industry. Besides soft drinks, The Coca-Cola Company sells energy drinks, juice drinks, sports drinks, tea, and water. The current focus of The Coca-Cola Company is still that of growth. The current objective of the organization “is to use our formidable assets-brands, financial strength, unrivalled distribution system, global reach, and a strong commitment by our management and employees worldwide-to achieve long-term sustainable growth” The key inputs for production are the raw materials used in the beverages. The company uses different types of sweeteners depending on where the concentrate is being produced. Water is one of the main ingredients used in every beverage. Since the organization greatly focuses on marketing, human capital is an important asset to the company as well. Without its employees’ knowledge and abilities, The Coca-Cola Company would not be nearly as successful. The secret formula for Coca-Cola is another key input for the company. The Coca-Cola Company does not actually produce soda. They produce the concentrate or syrup, which is then sent to distributors. Distributors add carbonated water and any other ingredient necessary to create the final product. The production process of Coca-Cola is a secret; however, it mainly consists of adding the correct amount of ingredients, and mixing them. The process to create each beverage is extremely mechanized in order to achieve quick and efficient production. The outputs of The Coca-Cola Company are the syrups and concentrates of its beverages. The Coca-Cola Company faces a number of challenges, many of which stem from the fact that the organization operates on such a large level. Each market has its own trends and demands. Consumers in some markets have become more heath conscious. In order to react to this trend, many diet and low-calorie drinks have been created. The Coca-Cola Company is always trying to find ways to be innovate. Due to the anti-carbohydrate trends created by the Atkins diet, Coca-Cola C2 was introduced. It is supposed to have the same taste as Coca-Cola, but contain half the carbohydrates. Another problem The Coca-Cola Company faces is derived from the social and political differences of each market. For example, different countries have different laws. Most

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The Coca-Cola Company 201 0 developing countries have more relaxed pollution requirements. In some countries, bribes of government officials are considered normal and expected. While it is company policy that The Coca-Cola Company will follow the laws of every country that it operates in, it still has strong criticism from other parts of the world for its actions. The company has recently been the subject of strong criticism the company’s bottling plants in Colombia are alleged to have killed workers who were attempting to unionize. Even though the bottling plants are independently owned and operated, and nothing has happened legally to the bottling plants in Colombia, The Coca-Cola Company has been facing strong criticism for it in the United States. The Coca-Cola Company’s structure has characteristics of both organic and mechanistic models. The organization has a more centralized structure, however in recent years there has been a movement towards decentralization. A more in-depth analysis of the organization’s structure will be discussed later. The Coca-Cola Company measures success in many ways. The Coca-Cola Company believes that if they analyze sales based on volume growth, it is an indicator of trends at the consumer level. The company obviously looks at profit as a way to measure success. Recently, The Coca-Cola Company has been focused on being a more responsible global citizen. The company has over 70 clean-water projects in countries all across the globe.

STAKEHOLDERS, MANAGERS, AND ETHICS The stakeholders for The Coca-Cola Company as stated in the company’s Corporate Responsibility Review are: a. Shareowners b. Employees c. Bottling partners d. Governmental agencies e. Suppliers f.

Retail customers

g. Consumers h. Local Communities i.

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NGOs

The Coca-Cola Company 201 0

Because each group of stakeholders has a different goal, conflicts arise. The shareowners are concerned with earning a profit, while local communities care deeply about environmental issues and labour standards. Suppliers want to charge as much as possible to create more revenues, and The Coca-Cola Company wants to get the lowest prices to decrease costs. Management wants to keep labour costs down, while employees want raises and increased benefits. The organization’s divisional managers run company operations in a general region of the globe. The functions of each vice president are divided into functions such as human resources, innovation...