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Organizational Structure of The Coca Cola Company
Organizational Structure of The Coca Cola Company
Group O2: Harini Valluri Soman Nahata Ankit Jangalwa Gandharv Raj Sethi
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
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:
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 joint juice. by introducing several new non-carbonated drink beverage brands. These In included Minute Maid Juices to Go, PowerAde sports beverage, flavoured tea Nestea (in a venture with Nestle), Fruitopia fruit and Dasani water, among others. 2001, Minute Maid division launched the Simply Orange brand of juices including orange
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. 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. f. Productivity: Be a highly effective, lean and fast-moving organization
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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 organizations 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/research and development, marketing, and public affairs and communication. The two functions most critical in taking advantage of the companys competitive advantages are marketing and innovation/research and development. As stated time and time again, the organization tries to capitalize on its brand name as much as possible, which is why the marketing function is so important to the company. The Innovation/research and development department must come up with the products that the marketing function demands. The majority of the top level managers at The Coca-Cola
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ORGANIZATIONAL DESIGN
The Coca-Cola Company realizes that it needs to be able to meet the ever changing demands of its customers. This is why the company pushed towards decentralization in the nineties, and even more so recently. The organization has two operating groups called Bottling Investments and Corporate. There are also operating groups divided by different regions such as: Africa, Eurasia, European Union, Latin America, North America, and Pacific. Each of these divisions is again divided into geographic regions. By allowing decisions to be made on a more local level, the organization can quickly respond to changing market demands, and higher-level management can focus more on long-term planning. Certain divisions of the company, such as finance, human resources, innovation, marketing, and strategy and planning are centrally located within the corporate division of the company. Some of these functions take place at lower levels in each of the regions of the company; however, most decisions are made at the top of the hierarchy. For example, in 2002 the decision to sponsor the World Cup was done at the corporate level. Corporate headquarters, however, allowed the local divisions to make the advertising decisions. This allowed each division to specifically design commercials and ads that would appeal to the local market. When Neville Isdell took over as CEO and chairmen of The Coca-Cola Company in 2004, he began to using more complex integrating mechanisms. In order to deal with organizations extremely low growth rate, Isdell used teams of top managers to create solutions to the organizations most pressing problems. Face-to-face meetings were held regularly at the local levels so employees could remain informed. Besides the use of teams and meetings, the intranet was overhauled to provide a source of real-time sharing of information. The use of complex integrating mechanisms is important in such a tall and wide organization. It is important that each function of the company is able to share up-to-date information quickly with each other. The organization seems to be doing an excellent job of balancing standardization and mutual adjustment. The Code of Conduct for the organization is a guidebook for how every employee should act. Should an employee act improperly, they are
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For example: the head of the Canadian division reports to the president and COO of the North American Group. That president reports to the CFO, who reports to the Office of the
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ORGANIZATIONAL TECHNOLOGY
Currently, output processes are the greatest source of uncertainty for the organization. As previously stated, The Coca-Cola Company does not produce the end product. Distributors and bottlers mix other ingredients (mainly carbonated water) with syrups and concentrates and then sell the products. The Coca-Cola brand name is on the end product, regardless of who bottles it. The company must keep pressure on the bottlers to maintain high quality outputs, or it could have negative consequences for The Coca-Cola Company. There exists very little information about the production of the Coca-Cola syrup. Even at The World of Coca-Cola, a museum for the company, there is no mention of how the syrup is produced. The production of Dasani, the companys bottled water, is extremely mechanized, and it is fair to assume that the production of every Coca-Cola product is the same. This mass production and high mechanization leads to a high level of technical complexity. Classification Level of Technical Complexity a. Small-Batch and Unit Production Low to Medium b. Large-Batch and Mass Production Medium to High Continuous Process or Flow Production High The typical structure of a manufacturing company that uses mass production is a mechanistic structure, in which efficient production is the desired end. The Coca-Cola Companys structure is unique in that it has a lot of the characteristics of an organic structure. This is due to its focus on marketing and local appeal. The structural mismatch means that production in the organization may not be as efficient as possible; however, the benefits of the organizations structure outweigh the consequences.
ORGANIZATIONAL TRANSFORMATIONS
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DECISION MAKING
The majority of decisions made by The Coca-Cola Company are done so by using the incremental method. Each year, the company would analyze results, and then make slight changes in operations to create better results next year. The company does not just quickly decide to create a new product, or change operations. Drastic changes take time. Recently, realizing that the company was in desperate need for a drastic change, Isdell sought to figure out why the company performance was declining. By starting at the lower levels of the organization to find solutions, the company was able to make some drastic changes to the companys culture, how employees were rewarded, and made efforts to get employees more involved. The changes brought on by using the unstructured decision making model created much better results for the company. One of the biggest flaws in the organization is that the board of directors is responsible for some of the non-programmed decisions made by the company. When The Coca-Cola Company was seeking to purchase Quaker Oats, the deal was almost finalized, but then stopped because the board felt the price was too. When decisions are made by the board, it means they lack confidence in the upper management of the company to make vital decisions. This is problematic for the company for a few reasons. Because members of the board have so much money invested in company stock, they want to minimize risk, and thus, are extremely prone to take fewer chances. The members of the board do not or have not worked for the company, so they are not close enough to know all the pertinent information required to make complex decisions.
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