ORGANIZATIONAL THEORY

(A CASE OF COCA COLA)

Question: Discuss organizational theory perspectives and how and why they provide us with
alternative ways of understanding and analyzing Coca-Cola and its relationship with its
organizational environment.

ORGANIZATIONAL THEORY (A CASE OF COCA COLA)

Introduction

According to Gready (2013) organizational theory is based on four major perspectives namely the
Classical, modern prospective, symbolic interpretive and postmodern perspectives. Management at
Coca Cola focuses in adopting modern and postmodern perspectives in order to maintain the
relation with business environment. Gill (2007) opined that adoption of modern perspective has
enabled managers at Coca Cola to focus on reality of market situation based on the concepts and
theories. Moreover, the adoption of the postmodern perspective helps the organization to increase
the productivity of the different geographical operating division and focus on local and international
customer satisfaction.

The company faces various external problems due to lack of appropriate adoption of organizational
perspectives. In US, the company is facing low market share due to lack of appropriate modernism
by the company to provide healthy soft drink to the health conscious customers. Moreover, the post
modernists have criticized Coca-Cola for the lack of its environmental sustainable activities. Hence
the adoption of the modernist and the post-modernist perspectives will help Coca Cola to enhance
its activities and productivity levels (Gopinath and Prasad, 2012).

Exploration of the organizational perspectives

Organizational perspectives are based on two philosophies namely ontology and epistemology. Ravi
Raman (2007) opined that ontology is concerned with identifying the truth of a situation based on the
actual existence of the fact and epistemology is concerned with the methods used to figure out the
truth. The organizational complexities can be expressed with the help of ontological perspective and
the epistemology perspective will help the managers within the organization to deal with the
organizational complexities by devising the different methods.

Modernist perspective

The modernist perspective of the organizational theory is based on management theories of Weber
and Taylor. The modernist perspective states that the rational modern mind is trained for progress
and hence the organizations adopting this perspective will be able to attend progress scientifically.
The modernism perspective includes four core concepts namely capitalism, industrialism,
surveillance and control of violence. The capitalism refers to the fact that the organizations should
make competitive productions and private ownership is encouraged. The industrialism states that the
organizations should use inorganic power sources and surveillance states that the constant
monitoring and supervision of workers within the industry should be done in order to continue
smooth workflow. Regassa and Corradino (2011) opined that modernists also prefer having strong
organizational culture where the priority is given on organizational interest over the individual
interests. Moreover, the modernists believe that the presence of an appropriate organizational
structure is essential to increase the productivity of the workers.

Postmodern perspective

The postmodern theory states that the organizations should comprise of a set of diverse, self-
managed and self-controlled team with controlling centers to advice and monitor them when
necessary. Myers, Hulks and Wiggins (2012) added that this perspective believes in providing equal
rights to all employees within the organization. The post modernism focuses on the need to adopt
only approaches that guarantees positive changes. However, Moses and Vest (2010) argued that
the sole adoption of post modernism perspective by the organizations would restrain the
organizations from conducting deep research on any external business environment. Moreover,
Colella and Miller (2009) further argued that the post modernism suggests that the internal
organizational information should be given to all employees within the organization so that they can
be responsible for increasing their part of productivity. However, access to internal information may
at times result in occurring of insider trading. In adopting post modernism, the organizations also
have to make changes in branding and adopt a personalized customer centric approach.

Adoption of different organizational perspectives by Coca Cola

Coca Cola adopts both mechanistic and organic models of organizational control and hence
incorporates both modernist and post-modernist perspectives in the organizational management.
Previously Coca Cola followed a centralized organizational structure with chain of command. The
company at that time followed McGregor‟s theory X Y to devise motivational techniques for the
employees. However, the lack in the productivity of the employees provoked the company to adopt a
post-modernist perspective (Fellenz and Martin, 2010). Coca Cola then adopted the post modernist
perspective by maintaining decentralized organization structure with two main operating groups
namely bottling investments, the corporate group. The two operating groups are further divided
based on geographical location. This ensured constant monitoring and increased productivity of
labor in Coca Cola. With the decentralization of the authority and tasks, the employees became
more responsible and accountable and the productivity increased. The Company employs around
31,000 people from all kinds of cultural diversities in order to maintain organizational diversity within
the work culture and to generate high employment opportunity (Barkay, 2011). This shows the
adoption of post modernism perspective by the company. Ciafone (2012) opined that majority of the
problems of Coca Cola arises due to diversities in the prices of the raw materials in global market
conditions. Depending on the geographical demand and supply chain the prices of the raw materials
and supplier costs increases. Consequently, the cost of production and the bottling costs also
increase. Hence, the decentralization of the organizational structure of Coca Cola has helped the
company to concentrate on the pricing, marketing and branding strategies separately for the
separate geographical regions (Aritz and Walker, 2012). Hence by decentralizing the organizational
structure and commencing the responsibility of the separate locations on the location head has
helped Coca Cola to identify the unique target market (like diet coke for US customers). The
company can is also able to adopt appropriate pricing strategy for the target market (low pricing
strategy in India) and promote the product to suit the local customers (story telling experiences in
developing countries).

The company‟s flexibility, stability and high degree of standardization are the mechanistic features of
the company and on the contrary, the high degree of responsiveness, efficiency and top down
communication channels are the features of the organic model of Coca Cola. With the progress in
the consumer markets, the consumers have also adopted post modernism perspective instated of
modernism perspective in relation to the acceptance of a particular brand (Benedict, 2009). The
postmodern consumer is focused on customer experience, meaning of the product rather than the
product features, brand name and brand image. Hence, the consumption of Coca Cola by the
postmodern consumers depends on the meaning that the consumers make out about the Coke
brand. Thus, Coca Cola adopts a unique branding strategy to in influence the emotions of the
consumers so that the consumers are able o connect with the brand and product. Coca Cola for the
purpose of globalization produced local advertisement in countries like India. The “Thanda matlab
Coca Cola” campaign showed various stories of the Indian customers in a social setting where the
consumption of Coke made a pleasurable experience for the consumers. This made the product a
meaningful product in the eye of the Indian target customers and coke as treated as a substituted for
all local drinks like nimboo pani, water, soda and lassi. However, the adoption of modernist approach
in terms of pursuing cheap and abundant labor from the developing countries made the company
lose its market share drastically (Hannan and Carroll, 2007).

Coca-Cola since the time of its inception has faced numerous problems in relation to the effective
management of labor within the organization. The labor policy of Coca Cola in 2005 showed a
situation of unrest in the organizational structure. The policy introduced by the company in 2005
compelled the employees to pay for their medical bill more than the employer‟s contribution. The
high demand of Coca Cola indicated that the labor unrest will result in lowering of the production of
coke and the company will not be able to meet the consumer requirements. The company went
against the negative side of the modernist approach.

Further, the company adopts the modernistic X and Y theory of motivation in order to assess the
productivity levels of the employees and accordingly generate the motivational techniques. Baligh
(2007) opined that the theory divides the managers within an organization into two parts namely X
mangers and the Y managers. The X managers assume that the employees are lazy and are
devising strategies to avoid hard work. On the contrary, the Y managers assume that all employees
are productive and smart to handle all organizational situations with proper care. Although from the
organization point of view theory Y managers, create more congenial working environment however,
Coca Cola adopts theory X strategies to increase the productivity of the employees.

Bansemir (2013) suggests that theory Y managers believe that the employees are capable of
displaying self-direction and self-control and are capable of providing important suggestions that will
help to increase organizational effectiveness. On the contrary the theory X managers do not take
into account the views, creativity and ideas of the employees and creates a situation of dictatorship
within the organization. Sagie and Koslowsky (2000) however commented that in Coca Cola the
employees are required to undertake activities in a structured manner. The overall activity of the
company is divided primarily into production, marketing and human resource segments. The
employees of these divisions are required to perform similar activities for the total life span of the
organization. The employees in the production segment are required to manufacture bottle, the
employees in the packaging departments are required to bottle the products along with labels.
Hence, these are some of the repetitive activities engaged in by the employees of Coke. Hence, the
adoption of theory X in management of these segments helps the managers in Coca Cola to
supervise the progress and monitor the work process. However, Coca Cola has switched over to the
adoption of theory Y technique in case of managing the employees in the marketing division. The
marketing division particularly employees connected with branding development needs to device
creative strategies in order to attract the customers. Hence, the management of Coca Cola adopts a
theory Y motivation technique in order to monitor their performance levels. The employees of this
division are given the freedom take their own decisions and are equally accountable for any creative
failure. Bukovsky (2011) suggested that the dual adoption of the combined leadership and
motivational technique has helped Coca Cola in building a competitive work culture.
The company also faces difficulty in maintaining and controlling the suppliers. Free flow of raw
materials is hampered due to the lack of reliable suppliers in all geographical regions. Moreover
depending upon a single supplier has also contributed to the inefficient supply chain system of the
company especially the company faces geographical issues in regard to the supply of raw materials.
Gill (2007) suggested the adoption of modernistic approach of ownership would help the company in
resolving the supply issues. If the company adopts ownership strategies and instated of controlling
suppliers, owns or purchases a supplier company then the company can develop its own supply as
and when required. The owning of a supplier will enable Coca Cola to reduce the supplier costs and
increase the make the business profitable.

Conclusion

The organizational theory perspectives are the philosophical viewpoints of the individuals within an
organization the adoption of which makes the organization profitable. The above essay shows the
adoption of the two conflicting organizational perspectives namely the modernist theory and the post
modernism by Coca-Cola in the different segments of its organization. The company successfully
adopted the modernist theory in its organization structure initially and with the changes in the
consumer‟s demand and preferences in order to increase the productivity the company switched
over to the post-modernist theory. Coca Cola follows modernist approach in effectively managing the
leadership style within the different organizational divisions. However, for the creation o
advertisements and branding the company adopts the post modernism techniques so that it can
keep pace with the changing needs o the customers. Thus the essay shows how effectively the
company is able to manage the organizational changes, labour relations, product management and
brand management by adopting various different perspectives.

Reference list

Aritz, J. and Walker, R. (2012). Discourse perspectives on organizational communication. Madison

[N.J.]: Fairleigh Dickinson University Press.

Baligh, H. H. (2007) Organization Structures: Theory and Design, Analysis and Prescription, 5th ed.
Heidelberg, New York: Springer Verlag.

Bansemir, B. (2013). Organizational innovation communities. Wiesbaden: Springer Gabler.

Barkay, T. (2011), “When Business and Community Meet: A Case Study of Coca Cola” Critical
Sociology 39(2), pp.277-293.

Benedict, R. (2009) Patterns of Culture, 5th ed. Boston: Houghton Mifflin.

Bukovsky, L (2011) The Structure of the Real Line, 5th ed. Berlin: Springer

Ciafone, A., 2012 “If „Thanda Matlab Coca Cola‟ Then „Cold Drink Means Toilet Cleaner‟:
Environmentalism of the Dispossessed in Liberalizing India” International Labour and Working-Class
History, v.81, pp.114-135

Colella, A. and Miller, C. (2009) Organizational Behavior A Strategic Approach, 5th ed. New York:
Leadership Press.

Fellenz, M. and Martin, J. (2010) Organizational Behaviour & Management, 3rd ed. London:
Harvester Wheatsheaf
Flamholtz, E. and Randle, Y. (2011) Corporate Culture: The Ultimate Strategic Asset, 3rd ed. New
York: Harper Collins.

French, R., and Rayner, C., (2011). Organizational Behaviour. 6th ed. Norwood: Artech House

Gill, L. (2007) “„Right There with You‟ Coca Cola, Labor Restructuring and Political Violence in
Colombia” Critique of Anthropology Vol 27(3), pp. 235-260.

Gopinath and Prasad (2012) “Toward a critical framework for understanding MNE operations:
Revisiting Coca Cola‟s exit from India, Organization 20(2), pp.212-232

Gready, P. (2013). Organisational Theories of Change in the Era of Organisational

Cosmopolitanism: lessons from ActionAid‟s human rights-based approach. Third World Quarterly,
34(8), pp.1339-1360.

Hannan, M. T. and Carroll, G. (2007) Logics of Organization Theory: Audiences, Codes, and
Ecologies, 3rd ed. New York: John Wiley & Sons.

Moses, C.T., Vest, D., (2010) “Coca Cola and PepsiCo in South Aftrica: A Landmark Case in
Corporate Social Responsibility, Ethical Dilemmas and the Challenges of International Business”
Journal of African Business v.11, pp.235-251.

Myers, P., Hulks, S. and Wiggins, L. (2012). Organizational change. Oxford: Oxford University
Press.

Ravi Raman, K., (2007), “Community – Coca Cola Interface; Political-Anthropological Concerns on
CSR” Social Analysis 51(3) pp. 103-120

Regassa, H., and Corradino, L. (2011). Determining the value of the Coca Cola–A Case Analysis.
Journal of the International Academy for Case Studies, 17(7).

Sagie, A. and Koslowsky, M. (2000). Participation and empowerment in organizations. Thousand

Oaks, Calif.: Sage Publications.