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INTERNAL AUDIT: COCA-COLA COMPANY

HERBERT AARON MOORE

Student ID#R2205D14398852
Module Name: STRATEGIC MANAGEMENT (53497)
Module Code: UU-PHD-803-53497
Date: 10/09/2023

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Table of Contents

Abstract---------------------------------------------------------------------------------------------------------3

Introduction----------------------------------------------------------------------------------------------------3

Value Chain Analysis----------------------------------------------------------------------------------------4

Human Resources--------------------------------------------------------------------------------------------5

Financial Resources------------------------------------------------------------------------------------------5

Physical Resources-------------------------------------------------------------------------------------------6

Management and Organizational Structure Strengths and Weaknesses------------------------------6

Conclusions---------------------------------------------------------------------------------------------------7

References ----------------------------------------------------------------------------------------------------9

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Abstract

An internal audit represents the evaluation of a firm’s internal controls, including its corporate and

accounting systems. This type of audit plays a crucial role in the maintenance of errorless and expedient

financial data collection and reporting, as well as compliance with laws and regulations. Large businesses or

organizations usually solicit the services of internal auditors to assist their management teams. Internal audits

allow managers to spot issues and fix them before they are found in an external audit, thereby providing

management with the resources necessary for achieving operational efficiency (Tuovila, 2022). Internal

auditing is a structured, regimental approach to assessing and refining risk management, control, and

governance procedures. The Institute of Internal Auditors defined internal auditing as, “an independent,

objective assurance and consulting activity designed to add value and improve an organization’s operations”.

This paper aims to conduct an internal audit of the Coca-Cola Company using the value chain analysis

approach.

Introduction

Coca-Cola Company is among the world's oldest beverage manufacturing companies, existing for over a

hundred years. It is regarded as the largest beverage company internationally. Coca-Cola Company’s mission

is “to craft the brands and choice of drinks that people love, to refresh them in body and spirit” (Purpose and

Vision,” n.d., para. 1). Coca-Cola has secured its position in the market as the leader in beverage

manufacturing through its rich history and has dominated the non-alcoholic beverage manufacturing market

in spite of the immense competition from similar firms in the market.

Coca-Cola faces its greatest challenge from Pepsi, which is a very aggressive beverage manufacturing

company globally. Coca-Cola's efforts to meet the needs of its customers at all times are believed to be the

hallmark of its success. This is reflected in the company’s mission statement. Coca-Cola’s ability to retain

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customers and maintain loyalty is based on its propensity to predict future market trends and to strategize

accordingly. Among the Company’s leading brands are Coca-Cola, Fanta, Diet Coke, and Stoney. The

company’s influential leadership and its appreciation of its human resources contribute to its level of success.

Coca-Cola faces a daily uphill battle to maintain its leadership position in the market due to a large number

of competitors in the non-alcoholic beverage industry, which includes Pepsi, Nestle, Cranbury Schweppes,

and many smaller companies. The company plays a significant role in the economy and society through

employment and its corporate social responsibility (Zegler, 2011). Coca-Cola has been at the forefront of

promoting corporate social responsibility, even landing awards in Shanghai in 2006. The company invests

heavily in its effort to remain transparent and aimed at maintaining quality service (The Coca-Cola Company,

2011).

Despite Coca-Cola being the leading non-alcoholic beverage manufacturing firm worldwide, in recent times

there has been a measured dwindle in its traditional brands as customers shift their focus to new brands. The

once impeccable brand is no longer flawless, and its name is now becoming tarnished due to some customers'

concerns about the nutritious aspect of the beverage which is manufactured using artificial ingredients. This

has resulted in some undermining of the product's popularity, diminished customer confidence, and a

reduction in the company’s revenues (Wiggins, 2006).

In this paper, the author will conduct an analysis of the quality and quantity of the Coca-Cola Company's

human, financial, and physical resources, employing the Value Chain Analysis (VCA) method. The author

would also take a look at the company’s management and organizational strengths and weaknesses.

Value Chain Analysis

This is an instrument for investigating business activities that create a competitive business advantage and

add value to its products. In this study, the author will use this approach to analyze the areas of human,

financial, and physical resources of the Coca-Cola Company.

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Human Resources

Coca-Cola company has a history of investing heavily in its human resources. The company spends a lot of

money on seeking to attract, train, and develop its human resources. Managing its human resources is a key

strength of the Coca-Cola company. The company frequently recruits new and talented individuals with great

potential and trains them in a comfortable environment conducive to learning. The workforce at Coca-Cola

Company is extremely diverse, coming from different backgrounds but equally interested in the company’s

growth and development. Operating in over two hundred (200) countries, the Coca-Cola Company possesses

a vast number of employees with over seven hundred thousand (700,000) worldwide of which over five

hundred (500) are upper-level managers (Amfuso, 1994). The Company’s policy facilitates the meshing of its

local workforce into its management ranking favoring the global outlook. The policy also facilitates the

procreation of ordinary human resources into mid-level executives with an international mindset to assume

senior management positions in the future. Coca-Cola Company not only possesses a very large workforce

globally, but a high-quality workforce through its recruitment, training, and development policy which

facilitates the enhancement of employee skills and knowledge.

The above chapter addressed the quantity and quality of Coca-Cola Company’s human resources. The

following chapter seeks to analyze the quantity and quality of the company’s financial resources.

Financial Resources

Zippia (2021) stated that The Coca-Cola Company has over forty-three billion dollars in revenue. The

company’s revenue is estimated to be approximately thirty-four-point six percent (34.6%) between 2008 and

2021 with a revenue-to-employee ratio of approximately five hundred million dollars ($500,000,000). The

company’s financial report for the year 2022, demonstrates the firm's ability to sustain operations with the

profits it has made, reflecting over twenty-five billion dollars ($25b) which represents a then-point-three

percent (7.3%) from 2021 (Macrotrends, n.d.). The company is in a very strong financial position allowing it
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to hire the best employees, and have well-functioning machinery. Coca-Cola’s working capital amounts to

approximately five billion dollars ($5b) which is about ninety-two percent (92%) below that of the Consumer

Goods sector, and about six hundred and forty-five percent (645%) above that of the non-alcoholic beverages

industry. This positively impacts Coca-Cola’s strong financial standing, putting it in a position to withstand

any financial or economic negativity. Essentially, The Coca-Cola Company is standing on an extremely

strong financial foundation, and this can be attributed to the company’s efficient and effective inventory

management and accounts receivable globally (Macroaxis Inc. n.d.).

Having discussed the quantity and quality of Coca-Cola’s financial resources, the paper now turns its

attention to the company’s physical resources.

Physical Resources

Physical resources refer to equipment, materials, supplies, facilities, and infrastructure that are utilized by an

individual or organization in a project, or become part of a project deliverable (PMEducation, 2019).

Resources can be tangible which are physical in nature, or intangible which are non-physical or have no

physical value but are still owned and possessed by an individual or organization (Harvey, 2020).

The Coca-Cola Company possesses a lot of physical resources globally, including land spaces that it either

leases or actually owns, and uses for the purpose of setting up offices, manufacturing centers, and

warehouses, raw materials used for product production, and other materials used to facilitate packaging,

facilities such as production units and other infrastructure.

Essentially, The Coca-Cola Company possesses a large amount of high-quality physical resources globally

which aids in the firm maintaining its position as the leader in the non-alcoholic beverage industry.

The author will now shift his attention to discussing the strengths and weaknesses of management and

organizational structure at The Coca-Cola Company.

Coca-Cola’s Management and Organizational Structure Strengths and Weaknesses

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Extensively, The Coca-Cola Company’s global performance dictates its management strategies.

Predominantly, the company enacts the modern management theory that combines rational economic and

social person views for the realization of corporate goals. There are some significant issues resonating with

Coca-Cola’s Company’s management that determine its strengths and weaknesses.

Strengths

The Coca-Cola Company’s management strengths resonate with managers' ability to respond to the need for

decentralization of management staff in recognition that the organization is a global one existing and

operating in many different cultures. There is an understanding of the company’s global values, processes,

strategies, and departments segmented into varying territories and regions. The company exposes employees

to different functions and duties enhancing their ability to perform duties in different sectors of the

organization thereby mitigating redundancies. Regional managers are allowed the freedom to make decisions

based on local needs. There exists total cooperation within the firm and an understanding of the importance

of subordination and hierarchy.

The company’s organizational structure is set up in a way that allows for employees to be closely supervised.

Supervisors are allowed not more than five persons under their supervision, and there is an absence of

bureaucracy and communication gaps.

Weaknesses

The occasional shifting of managers and other employees from one department to the next usually results in

minor setbacks since they will take some time to adjust to the new environment.

Conclusion

The Coca-Cola Company has been in existence for over a hundred years and has invested extensively in

infrastructure, human resources, training, and development. Investing in modern technology and the

formulation and implementation of modern strategies plays a significant role in the company’s global

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success. Coca-Cola’s present milestone is achieved through its commitment to remain number one in the

non-alcoholic beverages industry. The company’s human resources policy dictates that ninety-one percent of

its workforce should originate from the country it is operating in, and the next nine percent will be drawn

from other countries.

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References

Amfuso, D.A. (1994). “HR Unites the World of Coca-Cola”, Personnel Journal.

Retrieved from: https://dokume.pub

Harvey, M. (2020). Resource Based View of the Firm. Retrieved from: https://www.essay48.com

Macroaxis, n.d. Retrieved from: https://www.macroaxis.com

PMEducation, (2019). Retrieved from: https://www.pmeducation.com

Tuovila, A. (2019). Internal Audit. Investopedia. Retrieved from: https://www.investopedia.com

Wiggins, J. (2006). “World Food Business Summit.” Retrieved from: https://www.ft.com

Zegler, J. (2001). “125 Years Young.” Beverages Industry 102.6:2-13.

Retrieved from: https://steelmuseum.org

Zippia, (2021). The Coca-Cola Company Revenue: Annual, Historic, And Financials-Zippia.

Retrieved from: https://www.zippia.com

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