The basis for the success of any organization in a market economy is the high quality of management. The core of any management strategy is each employee’s clear awareness of their responsibility and their role in the company’s achievement of desirable results. Companies create managerial structures in order to ensure coordination and control of the activities of their departments and employees. Therefore, a modern manager must know the main principles and methods of building organizational structures, in order to then apply the received tools in practice and help the company to function successfully in the market. Changes in the global management paradigm have affected one of the most important components of management – the organizational culture.
The technological and information revolution has led to the fact that most businesses have the ability to scale their activities to a global scale. This gave the managers, on the one hand, the opportunity to enter global markets. On the other hand, it led to the need to design business changes in such a way that the company was ready to win against an unlimited number of competitors at every stage of development. This paper examines a specific management issue that has arisen within The Coca-Cola Company regarding its organizational culture, and the strategies to resolve it.
The History of The Coca-Cola Company
The Coca-Cola drink was invented in Atlanta, USA on May 8, 1886 by pharmacist John Stith Pemberton, a former officer of the American Confederate Army. The name for the new drink was invented by Pemberton’s accountant Frank Robinson, who also designed Coca-Cola’s trademark logo. At first, only 9 people bought the drink every day, thus, the sales for the first year were only $50. Pemberton spent $70 on the production of Coca-Cola, thus, in the first year the drink did not bring him any profit. However, gradually, the popularity of Coca-Cola increased, as well as the profits. In 1888, Pemberton sold the rights to the beverage to the immigrant businessman Asa Griggs Candler. In 1892, Candler founded The Coca-Cola Company, which is still producing the drink.
The core sector of the company is consumer goods, the industry is food, and the market niche is carbonated drinks. This giant of the consumer market is the world leader in the production of non-alcoholic beverages. The main brand of the manufacturer is the eponymous carbonated drink Coca-Cola. The company’s share in the specialized segment of carbonated drinks is exceptionally big, and its products are represented all over the world. The company also sponsors numerous international non-profit organizations such as FIFA, IIHF, as well as the World Olympic Games.
The Coca-Cola Company’s Primary Competitors
The most important element of strategic management and planning in the company is the analysis of the external environment, as well as the monitoring of the industry market. Recently, competition in the soda industry has intensified. While the last few years have seen some growth, all brands became very aggressive about maintaining their market share. The Coca-Cola Company’s main competitor PepsiCo invests heavily in marketing and customer relations, as well as research and development.
It is also worth noting that PepsiCo makes more money than Coca-Cola due to the wider variety of products the company offers. The consumer knows Pepsi and Mountain Dew soda, Lipton tea, Lay’s and Cheetos chips, but the list is not limited to this: PepsiCo produces many other soft drinks and various snacks.
Moreover, PepsiCo still continues to expand further its product portfolio. At the beginning of 2021, it became known about PepsiCo’s partnership with the company Beyond Meat. Companies are going to work together to create new snacks under the Frito-Lay and Tostitos brands using plant-based meats (PepsiCo 2021). Also, their plans mention drinks based on vegetable protein. It can be assumed that PepsiCo will have protein drinks for the fast-growing health and fitness food market, inevitably gaining a bigger market share than The Coca-Cola Company.
Analysis of a Current Management Issue
In the case of The Coca-Cola Company, the main problem that the company has encountered is the misalignment of its current organizational culture. From there, a management issue has arisen: despite its wide popularity and high income levels, The Coca-Cola Company experiences corporate reputation problems. The company’s organizational culture does not align with its vision and mission due to the changing trends and the rapid globalization of the world.
Organizational culture can be considered as one of the main tools of any modern management organization and staff development. It implies a certain set of values, norms and rules that form the guidelines for behavior and actions taken by employees. It is through the organizational culture that every staff member knows how to interact with others and with the external environment. Ji and Yoon (2021) also suggest that organisational competitiveness comes from the utilization of strategic human resources nowadays.
Organizational culture can also be considered as a kind of result of the development of an organization that allows consumers and employees to identify it among the others. Modern management views organizational culture as a powerful strategic tool that allows all departments and employees to be focused on the same goals. Thus, as the organizational culture of The Coca-Cola Company started to misalign with the company’s long-term goals, the inner structure of it also began to suffer.
Informed Ethical Approaches to Solving the Issue
No organization can work only on the basis of technology or management hierarchy, the company must actively form an internal culture of behavior. In their activities, employees are guided by very specific motives, build relationships with each other and with the company, and perform rituals that are well-established among them. Moreover, Allen et al. (2018) suggest that in culturally enhanced work environments employees show better commitment to their organization, even if they do not perceive their job as personally meaningful.
Subsequently, the behavior that the staff demonstrates and which the manager can evaluate through visible signs can be due to a deep layer of needs, beliefs, values of a person. These are formed under the influence of external stimuli. In order to successfully change the behavior of its employees, the company must be one of the effective external stimuli. Thus, it has to actively form a specific organizational culture.
A great example of a modern model of ethical management approach is the concept of servant leadership. According to Kumar (2018), “servant leadership is about finding satisfaction and motivation by prioritizing and serving other’s needs” (p. 44). A servant leader sees their purpose in the role of a helper, therefore, making the principle of service his leadership behavior base. Langhof and Güldenberg (2019) claim that “this servant-led culture, in turn, positively influences team performance and employees work’ engagement” (p. 45). Thus, transforming the approach to leadership is an essential prerequisite for establishing or changing the culture in a company.
Organizational culture is rightfully considered one of the main components of a complete and effective management system of team motivation. The culture of a company allows it to manage its development more efficiently using the employees’ ambitions and goals. Moreover, it is also a powerful tool to create a positive microclimate in the team, which will help unleash the creative potential of the workers and motivate them to use innovative methods when solving emerging problems. In the corporate motivational system, a healthy and proper culture establishes a rational and fair structure for remunerating employees’ labor depending on their professional level and qualifications, as well as the results of their work. It also gently pushes employees to constantly improve and develop, which is the main task of the organization’s motivational policy.
It would be wise for the top management of The Coca-Cola Company to actively engage in the development and adjustment of existing guidelines for the employees, providing them with the best working experience. For example, Coca-Cola’s top management could support the workplace improvement initiatives that come from the employees. Additionally, the managing lead needs to take into account the opinions of employees – using surveys and polls to evaluate their reactions to changes in the management strategy.
This will allow the management to continuously analyze the results of the implemented changes, and adjust them when needed. Communication, information, and awareness raising for employees of all levels is also an ethical approach that helps establish a healthy organizational culture in a company. This can be achieved through inclusion of quality and safety culture issues in the agenda of regular meetings of managers of various levels.
Prior Issue Solving Efforts Analysis
The Coca-Cola Company tried a variety of approaches to solve the issue of unsuccessful strategic management. In 2017, the newly admitted CEO of Coca-Cola James Quincy decided to ultimately change all top management teams, replacing almost every top manager here. Moreover, he also offered quite a dubious decision to abolish the position of the chief of marketing department.
However, Quincy’s most radical move was to fire almost a fifth of the total staff – about 1,200 employees. Finally, changing the strategy of launching new products, Quincy also suggested using the approach practiced in technology companies – prototyping products and then supporting only proven projects.
These changes, however serious, still did not prove to be effective in the long run. The massive firing, as well as sudden replacements in the already working teams did not eradicate the problem of Coca-Cola’s goals misaligning with the company’s organizational culture. Quite the opposite, these drastic measures further highlighted the issues that the Coca-Cola’s inner structure was experiencing.
The employees’ trust towards the company has decreased, and overall, it did not improve the organizational culture in the company. The company encountered a significant challenge, where the newly formed management teams did not have a comprehensive knowledge of the company’s inner structure and operational strategy. This led to the destabilization of the already unstable situation within the company.
The abolition of the chief of marketing department position also had little positive effect on the issue. The lack of managerial guidance for the employees led to the decreased success of the subsequent marketing campaigns. The challenge here lies in the fact that Quincy had brought radical and sudden changes into an already established process, disturbing it significantly. Moreover, his decision to support only proven prototypes has resulted in stagnation of the research and development process, which has also became a challenge the employees of the company had to overcome.
Strategies to Address the Issue
The complexity and turbulence of modern markets, as well as an increase in the speed of obtaining information and new knowledge determine the need to develop new methods and tools of management activities. A distinctively new approach has to ensure economic growth, increase production and competitiveness of enterprises on both domestic and global markets.
Therefore, the most important resource capable of creating a flexible, adaptive and effective socio-economic system is the organizational culture of an enterprise. Jankoff (2021) states that “a culture that is risk averse, or very process driven, is almost by definition discouraging employees from acting in an entrepreneurial manner” (p. 31). New approaches to management presuppose, first of all, the creation of a strong organizational culture of the appropriate type. This culture would specifically contribute to the growth of personnel, and, through it – to the innovative potential of the organization as a whole.
As a possible strategy to resolve its current organizational culture issue, Coca-Cola could implement several practices in its businesses that prove to be important and critical for improving the situation. First step, as has already been mentioned earlier, would be the support of employees’ initiatives from the top management of the company. Stollberger et al. (2019) demonstrate that “manager behaviors have an extended reach and not only influence their direct reports, but act through them, and affect the work performance of employees at lower levels” (p. 13253).
It should also be visible to ordinary employees that in The Coca-Cola Company, the priority and importance of ensuring workplace safety and stability are communicated by senior management at regular meetings, and at official events. Next, an effective communication campaign should be implemented to ensure the employees’ awareness of the latest changes in the workplace guidelines, as well as any other corporate news. In addition to strong visual associations, Coca-Cola should maintain a constant flow of information on current corporate politics using internal communication resources, such as local intranet communication platform and corporate television. These communications should be aimed at all employees of the company.
The first step of this strategy refers to the organizational culture adopted in the company – it should seeks to establish an effective culture that supports innovation and motivates better performance. Kraśnicka et al. (2017) state that “innovation supportive culture stimulates the generation of new solutions or their absorption from the outside and contributes to the more effective implementation of creative ideas” (p. 745). Thus, organizational culture is rightfully considered one of the main components of a complete and effective management system of team motivation. Mitra (2020) supports this claim, stating that the diversity of approaches, based on communication, is the key to understanding the concepts of entrepreneurship, innovation, and development, as they are linked with people, organizations, and environment. Thus, it is safe to conclude that adopting an innovation supportive culture would be a wise choice for Coca-Cola.
An alternative strategy could also prove to be beneficial for The Coca-Cola Company. First, regular briefings should be an essential part of this strategy. These are short conversations at the workplace of an employee, where an immediate supervisor conducts with them on a very narrowly specialized topic. Delegach et al. (2017) claims that “a transformational leadership style can enhance followers’ promotion motivation and in turn can contribute to employees’ affective commitment in general” (p. 737).
This approach is aimed at providing the employees with opportunities to voice their opinions and propose improvements or adjustments. Additionally, the managers should educate the employees on their understanding of the risks that may arise for their products if they do not comply with certain rules. According to Williams et at. (2018), “the true benefit for a firm appears to lie not in any one particular action but in a conglomeration of strategic thinking approaches” (p. 43). The questions that would be asked to the employees at the end of the conversation should prompt them to evaluate their workplace, their work, and behavior. Moreover, the employees should also be encouraged to think about what they could change in their work in order to avoid such risks.
Finally, the learning process for new and experienced employees should also be updated. The necessary training on safety and quality issues, which is required by all management system standards, should always be up to date with the latest global guidelines. For example, Shahbazi et al.’s (2019) study results show “a significant improvement in the career development of workers, with on average 8.6% improvement in employees’ closeness to their ideal skill set” (p. 1). The employees need to keep pace with the trends in digitalization of processes, thus, the company could introduce the training in the format of electronic modules. Any employee will be thus able to undergo training at a convenient time. This would streamline the process of training and checking the competence of personnel.
Managing personnel in such a large corporation is, indeed, proving to be difficult; still, it is safe to say that the strategic management implemented in The Coca-Cola Company serves its purpose well. However, certain aspects of the current organizational culture of the company need to be adjusted to the actual trends of the world market.
Complex interaction and integration of corporate and personal concepts of motivation involves combining them into a single whole to carry out joint practical actions and educational activities that lead to a synergistic effect. However, the new business reality requires new approaches and new solutions to every aspect of entrepreneurship. An innovative entrepreneurship requires a continuous improvement of employees’ qualifications and perpetual training. The desire for constant development can truly become a secure basis for creation and implementation of innovations.
The organizational culture remains the most effective lever of influence on the employees of any enterprise and a means of ensuring the required comfort for their labor. Moreover, the culture connects employees’ inner ambitions and aspirations with the goals of the company they are working for in order to maintain a thriving business. An organizational culture concerns all activities of an innovative organization and influences the efficiency of its work by affecting human innovation potential. Thus, with the skillful use of organizational culture, The Coca-Cola Company can support its innovation sensitivity and secures commercialization of existing, as well as potential projects.
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