Coca-Cola’s Management change

Most organizations practice continuous change management, which may entail using the same or various regular processes. The goal of change management is to create effective strategies, train the right human resources, and create a process that will make it easier for a business to adapt to changing surroundings. Due to the intense rivalry in the industry they operate in, the majority of firms typically adapt change. Organizations are compelled to accept change by adopting contemporary innovations, technology, demographic trends, as well as other new methods required by globalization in order to stay relevant and keep their market share (Reiß, 2012). Arguably, very few scholars have disagreed with this concept, but some espouse that organizations enhance their performance if they can effectively manage the internal and external changes affecting their operations. The need for organizations to survive and maintain their market share, they are required to anticipate probable long-term or short-term changes. Anticipation helps organization plan in advance on how they can adopt or embrace future changes when they occur (Weiss, 2016). The adoption or embracement of changes eventually leads to the transformation of the organizational culture to suit the new environment in which the organizations operate. Organizations that are reluctant or fail to embrace or adopt a change promptly expose themselves to the risk of losing their current market share to rivals. Moreover, they can ultimately lose their essential and highly skilled employees and the support of their major shareholders, which could drive such organizations out of business. However, there are two critical challenges that organizations often face when strategizing for change. Firstly, the potential to realize that change is required in the organization. Secondly, is deciding the manner in which the change should be effected in terms of organizational strategies. In this regard, this essay explores the need for change management in the Coca-Cola Company by applying Kotter’s 8 step change model. When change initiatives are meticulously planned, the possibilities of failure are significantly reduced, which also assists in the reduction of negative effects associated with a change in most organizations such as high employee turnovers, low morale, and a decline in employee commitment.

Company Overview

Coca-Cola was initially founded by Dr. John S Pemberton, who was a pharmacist operating in the city of Atlanta in 1886. The company was later sold to Jacob’s Pharmacy group. However, the Coca-Cola product was previously sold a drug to manage various complications such as morphine addiction, dyspepsia, as well as minor headaches. When Asa Griggs Candler managed to acquire a considerable stake in the company, the organization was eventually incorporated as the Coca-Cola Company during 1888 (MarketLine, 2015, p. 1). Currently, Coca-Cola is arguably one of the largest distributors, manufacturers, and marketers of non-alcoholic syrups and concentrates across the globe. Products bearing the Coca-Cola trademark are sold in more than 200 countries all over the world. The company since its inception has licensed more than 500 brands that include sparkling beverages, enhanced water, juices and pure water, ready to drink coffee, as well as sports and energy drinks.

The organization is headquartered in Atlanta, Georgia. By December 2014, the organization employed more than 129,200 employees in all its franchises all over the globe. In the same financial year, the organization recorded a decline in revenues amounting to $45,998 million, which represented a drop of 1.9% as compared to the results obtained in 2013. During the same financial year, the organization’s operating profit stood at $9,708 million, which was a decline from the results obtained in 2013 (MarketLine, 2015, p. 1). Despite its dominance in the non-alcoholic beverage sector, the companies’ profits have been declining in the recent past due to stiff competition from new entrants in the market and its long term fierce rival Pepsi. Nonetheless, Coca-Cola has been able to assert its dominance in the non-alcoholic beverage industry for a long period because of its capacity to embrace and plan for change.

Coca-Cola is an excellent example of an organization that has been successful in embracing change in the past. During the 1980s, the company reevaluated the products it offers to its customers, and hence invented a new brand known as New Coke, which was sweeter in taste in comparison to the traditional brand of Coca-Cola. Nonetheless, the new product was not well accepted by its customers, and hence the management moved quickly to retract New Coke and replaced it with another brand labeled Coca-Cola classic. While faced with the challenge of a rejected product, Coca-Cola was able to implement changes relatively quickly to satisfy the demands of its customers, which ensured the company maintained not only its market share, but market dominance as well. In addition, Coca-Cola has constantly been expanding into new markets using its diversification strategy in its products. Currently, the company sells more than 500 branded products across an extensive distribution network. The company as ta December 2016 had a market capitalization of about $192.8 billion (Son, 2016; Forbes, 2016).

Diagnosis

Although Coca-Cola is a dominant company in the non-alcoholic beverage manufacturing sector, it operates in an industry that is very volatile and characterized by fierce competition. In this contemporary era, competitors of Coca-Cola are employing modern technology and strategies to ensure that they reach more customers with their products and take advantage of the opportunities presented by the globalization phenomenon. In this regard, Coca-Cola needs to formulate a new change process that will help the organization sustain itself in the global market and wade off fierce competitors (Weiss, 2016). The current state of Coca-Cola’s operations in the US and Europe is relatively good, but the situation is not the same in emerging countries in Africa and South America. Therefore, the management of the company decided to enhance the efficiency of the inventory, marketing, as well as the productiveness of its human resources through the introduction of change management processes that will ensure it sustains high standards and its market dominance.

The primary goal for the Coca-Cola Company is to satisfy and meet the demand of its customers’ preferences through the manufacturing and distribution of quality products. The change management policies in the organization appear to be relatively fragile because there are certain challenges that have been identified that could affect the organization’s marketing in the future. However, for any organization to successfully implement changes, there should be a precise process of identifying the issues or problems affecting the company. Radical change processes often have an impact on the employees and other stakeholders in an organization (Reiß, 2012). In this regard, the change process should encompass the development of the workforce and less focus on enhancing the services. Coca-Cola has already established its reputation and image in the delivery of high-quality products in the non-alcoholic beverage industry. Therefore, there is no need to focus its resources on service improvement, but rather emphasizes on financial management, distribution, and marketing of its products. In this regard, the force field analysis model should be used to assess the procedures of implementing change management at Coca-Cola.

According to the force field analysis model, it is evident that the drivers of change in Coca-Cola are more in comparison to forces resisting the change. Force field analysis is among the most critical tools used in the evaluation of change management (Bass, 2009). Arguably change management is described as the designing and assimilation of transformations in a predefined process (Kotter & Schlesinger, 1979). This implies that the priority of change management is the introduction of new methods and strategies in the manner in which operations and business are conducted in any organization. This could include the adoption of modern marketing strategies, employee relations, or seek new forms of capital. Organizations such as Coca-Cola are required to often go through changes so that they retain their ability to evolve and adapt to the ever changing global business environment that has an impact on the business stability and production management. Since its inception, the Coca-Cola Company has always envisioned itself to have an extreme development mechanism. This could imply allowing the management to reform the current business operations, revise the mission and vision of the organization, employing the use of modern technology, forming new alliances and partnerships, or using new strategies to drive the business.

In most cases, organizations are driven to accept change due to transformations in the external factors commonly referred to as environmental determinants that firms are unable to control. In this regard, change management is the response of different organizations to environmental changes. Arguably, the gap between the desired organizational design and the implementation of the new system to maturity. Nonetheless, several skills are required in the implementers and planners of the desired change to ensure that the process is successful (Weiss, 2016). This implies that the management and managers should have certain capabilities not only in the detection of the challenges affecting the organization, but also device the relevant strategies to be used to introduce the desired changes in the firm. Kotter’s 8 step model is a critical tool used in the assessment and determination of the course of change management that an organization should follow.

Kotter’s 8 Step Approach

Kotter’s 8 step approach offers eight critical areas where change processes often fail in most organizations. This implies that if the eight reasons that cause failures can be eliminated or their impact significantly reduced, most organizations will realize a successful change process. Kotter divided these steps in three broad classifications that include the preparation (step 1-4), action (5-7), as well as the grounding (8) stage (Weiss, 2016). In this regard, Kotter’s 8 step approach can be used as a vital tool to evaluate the change process required at Coca-Cola.

Step 1: Creating a Sense of Urgency

The senior management team has realized that Coca-Cola needs to review its operational systems, particularly in Africa and South America (Bool, 2009). In this regard, the management should move with haste and urgency to address the challenges facing the organization’s business. Technological innovation and modern marketing dynamics have been identified as the main problems affecting the business. These are the internal aspects of the organization that the management was tasked with solving after evaluating the financial reports of its subsidiaries in Africa and South America.

Step 2: Establish an Effective Guiding Coalition

The second phase of Kotter’s 8 step model entails establishing a strong team to guide the organization through the change process (Weiss, 2016). In this respect, the management of Coca-Cola has to set up a team of experts and technocrats to steer the organization through the change process. The team can be comprised of top level officers as well as other influential individuals in the organization. The optimum size of membership should be about two to five people.

Step 3: Involves Formulating a Shared Vision

The team of experts appointed by the management should formulate a new vision that would foster the growth and success of Coca-Cola. While developing the new vision for the organization, the guiding team should also explore and suggest different strategies and approaches through which the change process can be implemented (Weiss, 2016).

Step 4: Conveying the Vision

Since its inception, the management of Coca-Cola has always planned and had provisions for change in its corporate strategy (Bool, 2009). However, it is vital that the company communicates effectively to its employees about the process and manner in which such changes should be implemented. Coca-Cola has plans to enhance its productivity through the improvement of its workforce skills. This could lead to conflict and misunderstandings between employees and their managers. Therefore, it is vital that the top management and the team guiding the change should communicate effectively about the changes they wish to introduce, and how each member is expected to respond.

Step 5: Empowering the workforce to act towards attaining the vision

This phase involves empowering the employees of the organization to take a considerable amount of risk as they work to attain the company’s vision (Weiss, 2016). However, in the past Coca-Cola has often failed in this aspect because it rarely gives its employees the permission to try out new ideas or strategies as they attempt to help the organization attain its vision. In most cases, innovations and ideas need approval from the top management before they can be implemented or explored. This tends to stifle creativity and innovation within the workforce.

Step 6: planning and scheduling short run achievements

In planning for change, the team of experts should also formulate short-term goals that can be attained by the employees as they strive to attain the desired change in the organization. Short term goals are critical in motivating employees to enhance their performance and productivity (Weiss, 2016). In most cases, Coca-Cola rarely has short term goals. Instead, most of its targets are annually based and often determined by annual targeted profits. This implies that most employees are usually ignored in the change process since no steps are taken to appreciate their efforts such as provisions for bonuses or salary increases.

Step 7: Consolidating Recent Developments and Innovating More Change

To create a new vision for the company, the top management is required to alter some of the systems or policies used in the organization that are not favorable to the change being proposed (Weiss, 2016). However, in the past, this has rarely been the case at Coca-Cola. The company rarely promotes employees involved in the implementation of change. Neither does the company hire new labor to drive the change process, which means that Coca-Cola mostly relies on its existing workforce to drive change. Sometimes new blood and offering rewards such as promotion and higher remuneration are need to enhance and hasten the change process.

Step 8: Institutionalizing New Strategies

Coca-Cola is cognizant of the need to review its business approach in Africa and South America to enhance its profitability in the regions (Bool, 2009). It is essential that the company also introduces employee incentives, especially for those involved in implementing the change process. It is also critical that the company should always communicate the reviewed vision and desired change to all its employees in due time to avoid conflicts and misunderstandings.

Conclusion

When change initiatives are meticulously planned, the possibilities of failure are significantly reduced, which also assists in the reduction of negative effects associated with a change in most organizations such as high employee turnovers, low morale, and a decline in employee commitment. Change management is a critical process because it allows organization make decisions that will benefit their business. Moreover, organizations that embrace change are often more successful in their business operation and Coca-Cola is a good example. In contrast, those that oppose or resist change are often left behind and subsequently lose their market share to competitors. Globalization is accompanied by various challenges that organizations need to maneuver through to fend off competitions from other rivals. Coca-Cola is a company that has strategically benefitted from embracing and adopting change when it is required.

References

Bass, I. (2009). Force Field Analysis, Six Sigma First. Retrieved from http://www.sixsigmafirst.com/ffa.htm

Bool, H. (2009). Change and Pressures to Innovate- The Coca Cola Case. Ezine Articles. Retrieved from http://ezinearticles.com/?Change-and-Pressures-to-Innovate---The-Coca-Cola-Case&id=328921  

Forbes (2016). The World’s Most Innovative Companies. Retrieved from http://www.forbes.com/companies/coca-cola/>

Kotter, J. P., & Schlesinger, L.A. (1979). Choosing strategies for change. Harvard Business Review 106-114.

Marketline. (2015). Company Profile: The Coca-Cola Company. Retrieved from http://content.ebscohost.com/contentserver.asp?T=P&P=AN&K=108385604&S=R&D=bth&ebscocontent=dgjymmvl7eseqle4zox0olcmr02eqlfssam4sk%2bwxwxs&contentcustomer=dgjympgntumxrbrmuepfgeyx44dt6fia

Reiß, M. (2012). Change management: A balanced and blended approach. Norderstedt: Books on Demand.

Sharma, R. R. (2007). Change management: Concepts and applications. New Delhi: Tata McGraw-Hill.

Weiss, J. W. (2016). Organizational change (Second Edition). Bridgepoint Education.