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Table of Contents
Abstract 2
Recommendations 3
Recommendation 1 3
Recommendation 2 4
Recommendation 3 5
Analysis 6
#1 – Organizations and Organizational Effectiveness 6
#2 – Stakeholders, Managers, and Ethics 9
#4 – Organizational Design 10
#5 – Designing Organizational Structure: Authority & Control 13
#6 – Designing Organizational Structure: Specialization & Coordination 15
#3 – Managing in a Changing Global Environment 16
#8 – Organizational Design & Strategy 19
#7 – Creating & Managing Organizational Culture21
#9 – Organizational Technology 21
#11 – Organizational Transformations: Birth et al. 23
#12 – Decision Making 25
#14 – Managing Conflict, Power, and Politics 26
Works Cited 28
Appendices 32

Abstract
The subsequent paper contains a comprehensive analysis of The Coca-Cola
Company and addresses several organizational theory issues. Three recommendations
are proposed based on the problems that were discovered during the analysis. The
goals of the recommendations are to address uncertainty with suppliers and
distributors, and also align company decision-making with the structure of the
organization.

Recommendations
Recommendation 1
The Coca-Cola Company has a high level of uncertainty when it comes to the
raw materials it uses. For a few of the ingredients, the company only has one or
two viable suppliers. This could be extremely problematic for a variety of
reasons. The Coca-Cola Company has less bargaining power if there is little
substitutability in suppliers. Another problem could arise if a supplier
experiences an event that economically devastates them. If a supplier goes
bankrupt, or is in some type of natural disaster, The Coca- Cola Company would
suffer greatly as well.
The Coca-Cola Company can improve and secure relationships with suppliers using a
few tactics such as minority ownership or strategic alliances. The most optimal
method would be to use backward vertical integration and purchase a supplier. The
results of such a strategy would allow the company to keep profits that used to be
earned by the supplier, save on costs, and have a reliable source of supplies.
Besides the actual purchase of the organization, another costly aspect of vertical
integration is high bureaucratic costs (Jones, 2007).
The Coca-Cola Company should look at buying the following companies: The
NutraSweet Company, Ajinomoto Co., Inc., Nutrinova Nutrition Specialties & Food
Ingredients GmbH, or Tate & Lyle. These companies are one of two possible
suppliers for important raw materials (Annual Report, 2006). Although the company
has not experienced significant problems, future events are always uncertain. The
most secure way to control suppliers for a company is through ownership. While
ownership of a sugar/sweetener company is clearly out of the company’s domain, the
move would make their core business more profitable. The Coca-Cola Company would
be able to purchase one of these companies through financing. The organization
has a high credit rating and, therefore, would be able to raise money for the
acquisition at a low cost.
Recommendation 2
The Coca-Cola Company’s decision making process does not fit into its structure or
mission, vision, and values. Their decision making process is more centralized,
and when compared to everything else going on at The Coca-Cola Company, it does
not match. The Coca-Cola Company has a more organic structure and their mission
and values preach creativity and employee involvement. They would improve their
decision making and enforce their organic structure by implementing a strategy for
organizational learning. They can begin by shaking things up more often by
changing managers for different departments on a periodical basis. This will force
managers to think outside the box when making decisions (Jones, 2007). This will
also enforce a learning organization and instill the organic culture into
everyone’s mind frame. Because of this, The Coca-Cola Company will have the
ability to solve large problems more quickly and become a stronger community as a
result.
Another way The Coca-Cola Company could match their decision making skills
to their structure is by making sure employees do get involved. They should
implement an open door policy in which any employee can go to their manager and
suggest ideas for solving different problems. This will allow the management to
become aware of small problems before they become large ones.
By changing their decision making process, they will also become more
accustomed to their recently adopted mission, vision, and values. They will
inspire optimism in all stakeholders by making decisions in a timelier manner.
This will show stakeholders that The Coca-Cola Company has a great outlook for the
future because problems will seem like less of an obstacle for them. By including
more, lower level employees in their decision making process, they are promoting
leadership and inspiring collaboration and innovation.
Recommendation 3
The Coca-Cola Company has become highly criticized for the actions of its bottling
partners in Colombia. The bottling company is alleged to have killed employees due
to their ties with a union, and even while The Coca-Cola Company does not own that
plant, The Coca-Cola Company has been the target of boycotts and lawsuits.
Even if The Coca-Cola Company was unaware and uninvolved in what happened, their
name is attached to the product. In order to make the situation better, The Coca-
Cola Company should buy the bottling partners in Colombia. The company can use its
resources to create stable bottling plants. Managers would need to work with union
leaders to create an agreement that was fair for both sides. While taking over and
running the plants would cost the organization money, the company would have full
control over the activities of managers. This increased accountability and
dedication to correcting any wrong doings would garner some positive publicity for
the company’s operations, and provide the benefit of having a stable distribution
channel in the region.
Although the organization does not own most of their bottling plants,
acquiring the Colombian bottlers would provide The Coca-Cola Company with the
ability to foster better relationships with the citizens of the country. This
acquisition would cost the company money in the short-term, but it could provide
fruitful benefits in years to come.
Analysis
#1 – Organizations and Organizational Effectiveness
What allows an organization to continue to operate for over 125 years, and
along the way, become one of the most globally recognizable brand names? The
ability to adapt and find new markets has helped Coca-Cola© become an icon of the
American culture. Coca-Cola© was invented in 1885 and since The Coca-Cola
Company’s incorporation in 1892 (Coca-Cola, 2007), a strong focus on growth and
marketing has existed. Besides traditional advertisements in the local newspaper,
the company’s founder, Asa Candler, distributed thousands of coupons for free
glasses of Coca-Cola© so that many more people would be inclined to taste the
product (Thecoca-colacompany.com). He also distributed countless souvenirs that
depicted the Coca-Cola© trademark logo. By 1900, the organization, already, had
operations in the United States and Canada. This focus on aggressive marketing is,
still, the cornerstone for The Coca-Cola Company’s strategy and culture.
The Coca-Cola Company was eager to take advantage of new markets, and
expansion efforts quickly led to Cuba, Puerto Rico, Guam, and the Philippines
(Thecoca-colacompany.com). Before long, Coca-Cola© was being sold in Europe. When
The United States entered World War II, Coca-Cola© was being sold to both sides.
The Coca-Cola Company turned what many would view as a threat, into an enormous
opportunity. In 1941, the company’s president, Robert Woodruff made an order to
provide American troops with Coca-Cola©, regardless of where they were, and what
it cost to the company. During the war, 64 bottling plants were set up in Europe
and the Pacific. This not only allowed American troops to acquire a taste for the
drink, but it left Coca-Cola© with a solid foundation to greatly expand its
operations overseas.
Over time, The Coca-Cola Company has remained adamant about staying in the
non-alcoholic beverage industry. Besides soft drinks, The Coca-Cola Company sells
energy drinks, juice drinks, sports drinks, tea, and water. The current focus of
The Coca-Cola Company is still that of growth. The current objective of the
organization “is to use our formidable assets-brands, financial strength,
unrivaled distribution system, global reach, and a strong commitment by our
management and employees worldwide-to achieve long-term sustainable growth (Annual
Report, 2006, p.33).”
The key inputs for production are the raw materials used in the beverages.
The company uses different types of sweeteners depending on where the concentrate
is being produced (Annual Report, 2006). Water is one of the main ingredients used
in every beverage. Since the organization greatly focuses on marketing, human
capital is an important asset to the company as well. Without its employees’
knowledge and abilities, The Coca-Cola Company would not be nearly as successful.
The secret formula for Coca-Cola© is another key input for the company.
The Coca-Cola Company does not actually produce soda. They produce the
concentrate or syrup, which is then sent to distributors (Annual Report, 2006).
Distributors add carbonated water and any other ingredient necessary to create the
final product. The production process of Coca-Cola© is a secret; however, it
mainly consists of adding the correct amount of ingredients, and mixing them. The
process to create each beverage is extremely mechanized in order to achieve quick
and efficient production (Thecoca-colacompany.com). The outputs of The Coca-Cola
Company are the syrups and concentrates of its beverages.
The Coca-Cola Company faces a number of challenges, many of which stem from
the fact that the organization operates on such a large level. Each market has its
own trends and demands. Consumers in some markets have become more heath conscious
(Annual Report, 2006). In order to react to this trend, many diet and low-calorie
drinks have been created. The Coca-Cola Company is always trying to find ways to
be innovate. Due to the anti-carbohydrate trends created by the Atkins© diet,
Coca-Cola C2© was introduced. It is supposed to have the same taste as Coca-Cola©,
but contain half the carbohydrates (Coca-Cola C2, 2007).
Another problem The Coca-Cola Company faces is derived from the social and
political differences of each market. For example, different countries have
different laws. Most developing countries have more relaxed pollution
requirements. In some countries, bribes of government officials are considered
normal and expected. While it is company policy that The Coca-Cola Company will
follow the laws of every country that it operates in, it still has strong
criticism from other parts of the world for its actions (Thecoca-colacompany.com).
The company has recently been the subject of strong criticism the company’s
bottling plants in Colombia are alleged to have killed workers who were attempting
to unionize (“Online extra,” 2006). Even though the bottling plants are
independently owned and operated, and nothing has happened legally to the bottling
plants in Colombia, The Coca-Cola Company has been facing strong criticism for it
in the United States.
The Coca-Cola Company’s structure has characteristics of both organic and
mechanistic models. The organization has a more centralized structure, however in
recent years there has been a movement towards decentralization. A more in-depth
analysis of the organization’s structure will be discussed later.
The Coca-Cola Company measures success in many ways. The Coca-Cola Company
believes that if they analyze sales based on volume growth (gallons and units
sold), it is an indicator of trends at the consumer level (Annual Report,
2006).The company obviously looks at profit as a way to measure success. Recently,
The Coca-Cola Company has been focused on being a more responsible global citizen.
The company has over 70 clean-water projects in countries all across the globe
(McKay, 2007). Attached in the appendices is a performance chart that the company
uses to measure success in terms of people, portfolio, partners/planet, and
partners/profit (Corporate Responsibility Review, 2006).
#2 – Stakeholders, Managers, and Ethics
The stakeholders for The Coca-Cola Company as stated in the company’s
Corporate Responsibility Review (2006) are “shareowners, our people, bottling
partners, governmental agencies, suppliers, retail customers, consumers, and local
communities (p.16).”
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 labor 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 labor costs down,
while employees want raises and increased benefits.
A hierarchy of the organization’s corporate structure is located in the
appendices (Reuters.com) The organization’s 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 (Reuters.com). The
two functions most critical in taking advantage of the company’s 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 Company have worked
in many different regions and areas of the company. Many have worked for or ran
the bottling companies that partner with the organization (Thecoca-
colacompany.com). The fact that members of the top management team have well
rounded backgrounds allow for problems to be looked at from multiple angles.
#4 – 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. “Country Managers
(2),” an article that appeared in Business Europe (2002) had the following
information: “According to Jon Chandler, director of communications for Europe,
the responsibility for getting it right – and for profit – is firmly at the local
level (p.3).”
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 (“Country managers (2),” 2002).
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 organization’s extremely low growth rate, Isdell used teams of top managers
to create solutions to the organization’s 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 (Fox, 2007). 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 (Thecoca-colacompany.com). Should an employee act
improperly, they are subject to disciplinary actions. Due to the changes
implemented by Isdell, mutual adjustment has started to play a larger role in the
organization. Employees feel more engaged and turnover has been reduced. Isdell’s
changes have led to increased growth rates for the organization, and return on
equity for stockholders went from a negative return to a 20 percent return (Fox,
2007). This balance is essential, because it allows employees some flexibility,
but also gives the organization some predictability (Jones, 2007).
The Coca-Cola Company’s structure is a hybrid of both mechanistic and organic
models. The focal point of The Coca-Cola Company is on responsiveness. The complex
integrating mechanisms previously discussed are characteristic of an organic
structure. The surveys and interviews used by the company allowed information to
flow from the bottom-up, and the intranet allows for information to be exchanged
laterally. The surveys have also caused The Coca-Cola Company to pursue
simplification and standardization (Thecoca-colacompany.com). Centralization and
high standardization are associated with a mechanistic structure.

Mechanistic Organic
Focus Efficiency, stability Flexibility, responsiveness
Specialization High Low
Integrating Mechanisms Simple Complex
Centralization High Low
Standardization High Low
Communication Top-down Network (top-down, bottom-up, lateral)

The blending of both types of structures seems to be ideal for the organization.
Flexibility is essential when trying to appeal to such a vast number of
independent markets, however, high standardization is important to remain
efficient in production. The use of complex integrating mechanisms allows for
easier coordination for the global company. Centralization keeps organizational
choices aligned with organizational goals. Now that information in the company is
flowing in every direction, upper-management will have access to information more
quickly, adding to the organization’s flexibility and responsiveness. The recent
shift towards a more decentralized and organic structure corresponds with the
uncertainty of the organization’s environment, which will be discussed later.
#5 – Designing Organizational Structure: Authority & Control
The Coca-Cola Company currently employs approximately 71,000 employees.
According to a general organizational chart obtained from the company’s website,
there are at least 5 hierarchical levels at the corporate level. 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 General Counsel. The General Counsel then reports to the CEO. It is fair to
assume that there are at least a few more steps in the hierarchy at the local
level.
Due to its tall structure, the organization has experienced communication
problems. One of the problems discovered through the survey mentioned before was
that the people and the company lacked clear goals (Fox, 2007). Tall hierarchies
also cause motivation problems, which is why the organization is attempting to get
employees more engaged (Arendt, Ch.5). The increased usefulness of the company’s
intranet will greatly increase the communication between every level of employees,
and allow upper management to effectively communicate to the front line employees.
Based on information from Re This span of control seems somewhat slim for
the CEO of such a large organization. The CEO is also a member of the Senior
Leadership Team. This team consists of each head of the eight operating groups
aforementioned, and also has other top executives in areas like innovation and
technology and marketing. Although there are only six people that answer directly
to the CEO, the CEO is able to receive input from a wide variety of divisions
because of this leadership team. Since the team is comprised of members from
various divisions, the CEO is able to obtain a wide variety of information.
The move to decentralization has caused structural changes for The Coca-Cola
Company. New offices have been opened to facilitate decisions being made closer to
the local markets (Annual Review, 2006). The organization has also undergone
centralization of some of the company’s departments. In 2006, the Bottling
Investments division was created to “establish internal organization for our
consolidated bottling operations and our unconsolidated bottling investments
(Annual Report, 2006, p.2).” It appears that the organization is striving for a
hybrid structure, which allows them to have advantages of both mechanistic and
organic structures, while trying to minimize the negative consequences of each.
The strategic structural changes that the organization has gone through in
recent years have created a much needed positive impact on the company. Sales
growth increased and employees are much more satisfied (Fox, 2007). The
organization is trying to create a more innovative culture by pushing towards
decentralization. It looks as if the company is not content with following trends
in the beverage industry, but looking to be on the forefront of new and exciting
products.
#6 – Designing Organizational Structure: Specialization & Coordination
The Coca-Cola Company realizes that a divisional structure gives the
organization the best opportunity to react to the changes in its uncertain
environment, but also allow it to maintain a level of stability.
The multidivisional structure is beneficial for the organization for a variety of
reasons. The division based on geographic region allows certain aspects of the
company’s operations to be tailored to the individual market. One advertising
campaign or slogan may not be appropriate for another market, so decisions about
specific ads are made closer to the individual markets. Multidivisional structures
allow divisional managers to handle daily operations while corporate managers are
free to focus on long-term planning (Jones, 2007).
There are also problems associated with this type of structure. If the company
creates divisional competition, coordination may decrease because each division
wants to have an advantage over everyone else. Communication problems may also
exist because information can become distorted when it has to travel up and down
tall hierarchies (Jones, 2007).
A multidivisional matrix structure may be better suited for The Coca-Cola Company.
This would increase coordination between corporate and divisional levels, and
managers at each level would work together to create solutions to problems. While
such a structure may be too complex for a global organization, the company may
want to look into it.
#3 – Managing in a Changing Global Environment
 Due to its tremendous global presence, The Coca-Cola Company operates in an
extremely uncertain environment. Increased competition from global and local
companies has led to competition over the most important resource: customers. The
Coca-Cola Company must not only compete for customers, but also raw materials
needed for each product. In some parts of the world, clean water is becoming
increasingly hard to come by. The Coca-Cola Company has only one or two suppliers
for some of its raw materials. For example, they view The NutraSweet Company as
one of only two viable sources for the ingredient aspartame (Annual Report, 2006).
The Coca-Cola Company is at a strong disadvantage if they cannot decrease their
reliance on a small number of suppliers. If relations with suppliers deteriorate,
or if the suppliers go bankrupt, it would have dire consequences for The Coca-Cola
Company.
The Coca-Cola Company must also compete to get the best employees possible. The
production of the beverages does not require skilled labor, but the organization
has had problems finding the proper personnel to run the organization. In 2004,
The Coca-Cola Company’s top choices for the open CEO position decided not to join
the company because they did not like the actions of the Board of Directors (McKay
and Terhune, 2004).
Due to the organization’s high credit rating, the company has the ability to raise
funds at a lower cost (Annual Report, 2006). This allows the organization the
opportunity to finance operations such as expansion through the issuance of debt.
This may be necessary if The Coca-Cola Company looks to expand into new markets,
or purchase new brands.
The environment in which The Coca-Cola Company operates in is extremely
dynamic. The environment is difficult to predict and control due to the global
nature of the operations. The Coca-Cola Company faces the threat of reduced
production or disruption in distribution if there is a problem in a market. The
Annual Report (2006) lists risks, such as worker strikes, work stoppages, and the
chance a distributor falls on harsh economic times. Another reason the company’s
environment is tremendously dynamic is due to the nature of their raw materials.
Some of their key raw materials are dependent on specific climates (Annual
Report). Climate changes may impact the price of the materials they need to obtain
and, in turn, affect the cost of production.
The strength and interconnectedness of the general forces that The Coca-Cola
Company must deal with make the environment extremely complex. Recently in the
United States, two forces have started to become inter-woven: cultural/social
values and political/environmental forces. Many American companies are now being
lambasted if they do not try to be more environmentally friendly, and The Coca-
Cola Company is no different. The company has received plenty of criticism for its
operations in India, with claims that they cause a great deal of pollution and
have damaged local water supplies (“Online extra,” 2006).
Dynamism Low (stable) High (dynamic)
Munificence Abundant Scarce Abundant Scarce
Complexity Few Many Few Many Few Many Few Many

Environmental Uncertainty
Low High

The Coca-Cola Company uses a wide variety of techniques to manage

relationships with its stakeholders, the most useful tool being strategic
alliances. A former CEO of the organization claimed that 100 percent of its
revenues came from strategic alliances (“The science of alliance,” 1998). The
company uses exclusive contracts with its bottling partners and other customers as
well (Annual Report, 2006). In 1999, the organization signed a ten-year deal with
Burger King to be the restaurants only supplier of beverages. Even though PepsiCo
was willing to give Wendy’s a much better deal, the restaurant signed a ten-year
deal with The Coca-Cola Company (Deogun & Gibson, 1999). This example shows how
powerful the Coca-Cola© brand name really is.
The Coca-Cola Company has done an excellent job managing some aspects of the
environment, but done a poor job at managing other parts of the environment. The
negative publicity received from its operations in India and the actions of its
bottling partner in Colombia has led to boycotts of Coca-Cola© products on some
campuses (“Online extra,” 2006). While this is clearly bad for the company, the
average consumer is completely unaware of these allegations. This means that The
Coca-Cola Company is doing a decent job of damage control.
While the company has not had any trouble with suppliers lately, the future is
always uncertain. It does not seem like the company is not actively trying to
secure supplies, which is why vertical integration was recommended.
#8 – Organizational Design & Strategy
The core competences that give the organization its best competitive
advantages are its strong brand name and its network of bottlers and distributors.
Along with its marketing capabilities and broad portfolio of products, The Coca-
Cola Company has core competences which are extremely difficult, if not impossible
to duplicate.
The strong Coca-Cola© brand name gives the company a great deal of
bargaining power and leverage. In 1999, PepsiCo and The Coca-Cola Company were
fighting to become the supplier of beverages for the Wendy’s restaurant chain.
Wendy’s opted to partner with The Coca-Cola Company even though PepsiCo was
offering much more money (Deogun & Gibson, 1999). The brand name recognition that
the company enjoys is a powerful bargaining tool. The Coca-Cola name even has an
influence on consumer tastes. When The Coca-Cola Company was looking to launch
Diet Coke©, they performed some blind taste tests with consumers. The consumers
preferred a glass labeled Diet Coke© over a glass labeled Tab© by 12 percent, even
though the liquids in each glass were identical (Plasketes, 2004). It has taken
the organization over 120 years to build such a strong brand preference, and this
cannot be imitated by competitors.
The relationships that the organization has with its distributors are
another competitive advantage that cannot easily be imitated. The contracts and
relationships between the two groups create symbiotic interdependencies, which
mean that the success of both companies has a direct impact on each other (Arendt,
Ch.3). The Coca-Cola Company agrees not to sell to other parties in the local
market, and the bottler agrees to only purchase the syrup and concentrate from the
company’s authorized dealers. The Coca-Cola Company at times provides the
retailers and distributors with promotions, and capital at times (Annual Report,
2006). Because the organization does not have to worry about the distribution in
the local markets, it allows the company to focus on more important issues.
The Coca-Cola Company’s business-level strategy is one of differentiation.
This is evident in the previous example of consumers preferring identical
beverages just because the Coke© brand name was attached. They have been
successful pursuing differentiation because the focus of the company has always
been on marketing. The Coca-Cola Company is “known for innovative marketing that
constantly promotes their brand names and protects their domains from competitors
(Jones, 2007, p.211).”
The Coca-Cola Company needs to improve upon its portfolio of brand names.
More specifically, the organization needs to start introducing new types of
beverages, as opposed to entering markets late. The company was late to enter the
sports and energy drink markets, as well as the blossoming coffee drink market
(Morris, 2006). If The Coca-Cola Company were able to create an entirely new type
of beverage, it would be alone in the market for a period of time and force
competitors to react instead of act.
The hybrid structure of The Coca-Cola Company is ideal for its
differentiation strategy. The centralization of the marketing and innovation
functions allows the company to retain control over development, marketing and
production. By performing extensive market research and creating more local
offices, the company is always looking for new ways to serve new customers. The
use of complex integrating mechanisms allows coordination between all levels and
divisions of the company.
#7 – Creating & Managing Organizational Culture
The culture of The Coca-Cola organization is mission driven; focused on
refreshing the mind, inspiring optimism, and making a difference (Thecoca-
colacompany.com). The rich history of the organization has allowed the company to
compile hundreds of stories of consumers and employees. These stories share real
life examples of what Coca-Cola© means to their consumers and gives employees a
sense of pride to be apart of something that means so much for so many people.
They also inspire new employees to make a positive impact on the world. Stories
are so important to The Coca-Cola Company that they created a museum in Las Vegas
that focuses on the stories of customers. After visitors heard others’ stories,
they could record their own, which the company could use in the future (McLellan,
2006).
As stated previously, the company has been trying to change the culture by
allowing employees to essentially shape and reform the goals of The Coca-Cola
Company (Fox, 2007). The positive stories that the company chooses to focus on
provide a foundation to encourage employees to be not only model workers, but
model citizens.
#9 – 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 (Friedman, 1992). Based on assumptions, and
some available information, the organization has a moderately high level of
complexity due to the fact that it uses mass production. Task variability in
production is low because it is extremely mechanized and routine. As a result,
task analyzability is high. When a problem occurs, it is not hard to find
solutions.
The production of Dasani©, the company’s bottled water, is extremely
mechanized, and it is fair to assume that the production of every Coca-Cola©
product is the same (Thecoca-colacompany.com). This mass production and high
mechanization leads to a high level of technical complexity.
Classification Level of Technical Complexity
Small-Batch and Unit Production Low to Medium
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
(Arendt, Ch.9). The Coca-Cola Company’s 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
organization’s structure outweigh the consequences.
#11 – Organizational Transformations: Birth et al.
The Coca-Cola Company was founded in 1888 to take advantage of the already
popular Coca-Cola© name. Of the four life cycle stages (birth, growth, decline,
death), after 120 years, the company remains in the growth stage because the
company’s value creation skills continue to evolve (Arendt, Ch.11).
The company has faced a variety of internal problems over the years. A
constant struggle in any organization is trying to meet employees’ demands while
trying to keep labor costs low. In 2005, workers went on strike because management
wanted to institute a policy where employees would pay a greater portion of their
health benefits (Business Insurance, 2005). If the organization experiences any
work stoppage, the company may not be able to meet customer demand and lose out on
revenue. Another internal problem within the company is that the board exercises a
great deal of power and influence. As previously stated, the company failed to
attract its top choices for CEO in 2004, and the board has even pulled ads because
they thought the commercials did not fit the company’s image (MacArthur, 2004).
Uncertainty in the environment has caused many external problems for the
organization, ranging from uncertainty with its suppliers and distributors to
political and societal pressures. These issues were discussed in section 3.
The Coca-Cola Company experienced overwhelming growth in its early years. As
previously stated, Coca-Cola© was being sold in Canada just eight years after the
organization was founded.
While progressing through each stage in Greiner’s Model of Organizational
Growth, The Coca-Cola Company experienced a myriad of problems. The progression
through each stage is detailed in Analysis Module #11, located in the appendices.
What will be discussed here are the changes in the organization which came as a
result of the challenges.
The board of directors has pulled ads from running because they felt the ads
did not fit with the company’s image (MacArthur, 2004), which created a crisis of
autonomy. While there was not information regarding policy changes because of
this, many believe that the power of the board will diminish because longtime
director Warren Buffet has stepped down. Buffet has been viewed as rather
conservative and also involved himself in the decision making of the organization
(Santioli, 2006).
As the company has continued to grow, top managers have pushed operational
responsibility and decision making down to the local levels. This move allows the
company to react better to each market, and it also allows corporate managers to
concentrate on strategic and long-term planning.
By allowing lower level managers to become intricately involved in the
company’s growth efforts, Neville Isdell (the current CEO) created an environment
in which everyone felt responsible for the company’s performance (Fox, 2007). He
has also promoted employees within the organization, which aligns both the goals
of the managers and the organization (Jones, 2007). The fifth and final stage of
Greiner’s model is focused on reducing bureaucracy to speed up decision making
(Jones, 2007). In April 2007, COO Muhtar Kent stated that the company is focusing
on simplifying the structure to reduce bureaucracy (Seekingalpha.com).
The text book postulates that an organization in this stage would be wise to
pursue a product team or matrix structure. Because The Coca-Cola Company only
operates in one domain and has over 400 products, the product team structure would
be too costly and unrealistic. A matrix structure would be an idea worth
considering; however the organization uses divisions based on geography, not
product. Due to lack of information about the company’s regional structure, it is
hard to say whether the company should pursue a matrix structure or remain as a
multidivisional structure.
#12 – 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 company’s
culture, how employees were rewarded, and made efforts to get employees more
involved (Fox, 2007). 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 high (Deogun,
Eig, McKay, & Spurgeon, 2000). 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
(except the CEO) 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.
#14 – Managing Conflict, Power, and Politics
Conflicts can be a healthy way for an organization to improve decision
making, and create new ways for looking at problems. Conflicts can also be a
significant source of trouble for an organization when they cause production
declines or important decisions cannot be made. (Jones, 2007). When the
organization sought a new CEO in 2004, their top choices turned them down because
the prospects felt that the board had too much power (McKay and Terhune, 2004).
This type of conflict can drastically affect the organization’s ability to change
and adapt quickly, a necessity in the company’s extremely uncertain environment.
The example also shows that it can prevent the organization from acquiring
important human resources.
The marketing department is the most powerful subunit in the organization.
According to the text (Jones, 2007), “The (Coca-Cola Company’s) marketing
department has considerable power because it is the department that can attract
customers – the critical scarce resource (p.406).” The heavy emphasis on marketing
could prevent the company from finding ways to become more efficient in production
or distribution. The benefits derived from the power allocated to the marketing
function greatly outweigh any negative consequence. By providing the department
with more resources, the company can conduct greater market research. For example,
even though the organization had a diet beverage (Tab©) on the market, research
indicated that by simply using the name Diet Coke©, preferences for the same
tasting beverage increased dramatically. (Plasketes, 2004). Allocating more
capital to the department also allows for each marketing campaign to be tailored
to specific markets, making advertisements more effective.
Market research also saves money for the company. If consumer data shows the
company that one of their ideas would not do well, the company can decide not to
produce that beverage. The strong emphasis on marketing has allowed Coca-Cola© to
become one of the most recognized brand names in the world, which gives the
company an advantage over its competition and gives it more bargaining power.
One negative consequence of putting such a great emphasis on marketing research is
evidenced in what has become known as one of the greatest flops in history. Taste
tests indicated that consumers would prefer a new, sweeter version of Coca-Cola©,
which lead to the creation of New Coke© in 1985 (New Coke, 2007). The strong brand
attachment that the company worked so hard to achieve with consumers caused a
severe backlash towards the reformulation of Coca-Cola©. This example proves that
market research cannot always be an indicator of what will actually happen.

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Appendices

Analysis Module #1 – Organizations and Organizational Effectiveness

1. What is the name of the organization? Give a short history of the company.
Describe how it has grown and developed. Be sure to identify when your
organization was founded, and who founded it.

Coca-Cola was invented 1885 by a pharmacist, John Stith Pemberton (Coca-Cola,

2007). It was initially an alcoholic beverage intended to cure morphine addiction,
but the alcohol was removed when the temperance movement gained momentum. In 1886,
Pemberton began to sell the product at a local pharmacy. Pemberton’s partner and
bookkeeper actually came up with the name Coca-Cola, and was also the creator of
the famous Coca-Cola script that is still used today. Coca-Cola was named after a
main ingredient: coco leaves, which cocaine comes from. Coca-Cola was initially
marketed as a fix-all tonic, used to cure morphine addiction, headaches,
impotence, and many other ailments (Coca-Cola). In 1887, Pemberton sold it to Asa
Griggs Candler, who incorporated it as The Coca Cola Company a year later. In the
same year Pemberton also sold it to two other businessmen, while his son also sold
his own version. After some legal actions, Candler once again incorporated the
company in 1892, this time using the name The Coca-Cola Company.

Candler was an aggressive marketer, and increased syrup sales over 4000 percent
from 1890-1900 (Bellis). At the turn of the century, Coca-Cola was being sold
across the United States and Canada. In the early 1900s, the cocaine was removed
from the recipe (Coca-Cola, 2007). The Coca-Cola Company even started production
internationally in countries such as Guam, Cuba, Puerto Rico, and the Philippines.
In 1920 it established its first bottler in France, Coca-Cola’s first European
plant (Thecoca-colacompany.com). During World War II, The Coca-Cola Company set up
64 bottling plants in Europe and the Pacific which led to easy post World War II
expansion. When supplies to produce Coca-Cola ran out in Germany, Fanta was
created. The 1960s saw the creation of Sprite, Tab, and Fresca. In 1960, Minute
Maid marked Coca-Cola’s venture into the juice market. In the 1980s, taste tests
suggested that consumers preferred a sweeter version of Coca-Cola. This led to the
launch of New Coke. Consumers were angry because they had a strong emotional
attachment to the original Coca-Cola. The company listened to consumers, and Coca-
Cola became Coca-Cola Classic, and New Coke ultimately failed.
The 1990s saw The Coca-Cola Company’s expansion into the bottled water industry
(Dasani) and the sports drink world (Powerade). The famous Coca-Cola bears and the
“always Coca-Cola” ad campaign were launched in 1993 (Thecoca-colacompany.com).
Today, The Coca-Cola Company has over 400 different brands, and operates in even
the most remote places of the globe.

2. What does the organization do? What goods and services does it
produce/provide? What kind of value does it create? What does the company’s Annual
Report describe as the organization’s mission?

“Our business is nonalcoholic beverages—principally carbonated soft drinks, but

also a variety of noncarbonated beverages. We manufacture beverage concentrates
and syrups, which we sell to bottling and canning operations, fountain wholesalers
and some fountain retailers, as well as some finished beverages, which we sell
primarily to distributors. We also produce, market, and distribute certain juice
and juice drinks and certain water products. In addition, we have ownership
interests in numerous bottling and canning operations, although most of these
operations are independently owned and managed.
The organization produces a product widely known, Coca-cola or Coke. Besides the
namesake, it also has approximately 400 other brands, including an array of other
Coke variations. Another facet of the organization bottles and distributes the
products. The value it creates for its consumers is that it is a good tasting
drink that consumers would like to have. For some, it may give more energy to do
to the caffeine, for others, it may just be the taste that they enjoy.
We believe that our success depends on our ability to connect with consumers by
providing them with a wide variety of choices to meet their desires, needs and
lifestyle choices. Our success further depends on the ability of our people to
execute effectively, every day.
Our goal is to use our Company's assets—our brands, financial strength, unrivaled
distribution system, and the strong commitment of management and employees—to
become more competitive and to accelerate growth in a manner that creates value
for our shareowners (Annual Report, 2006, p.33).”

3. Describe the organization’s inputs, processes, and outputs.

The inputs for The Coca-Cola Company’s beverages include raw materials, the
employees, and of course the secret recipe. The principal raw materials used by
Coca-Cola are water, nutritive and non-nutritive sweeteners. High fructose corn
syrup is the primary nutritive sweetener used in the United States. Sucrose is
used outside of the United States. Non-nutritive sweeteners used by Coca-Cola are
aspartame, acesulfame potassium, saccharin, cyclamate, and sucralose. Purified
water is also one of the key ingredients in every beverage produced. In regards to
the juice products, orange juice concentrate is the primary raw material (Annual
Report, 2006)

The processes for producing the organization’s products are mixing the ingredients
together in a specific order after measuring them. First, they must make the
flavoring, and then the concentrate. Many of the ingredients are very toxic
(caffeine) or skin irritants so while producing Coca-Cola they must be very
cautious as to not come into direct contact with some of the ingredients (How to
make opencola, 2007). The company must also treat their water before using it
(worldofcocacola.com). Other processes exist with-in the organization that do not
relate to production. Such processes are financing, accounting, managing,
marketing, supply chain management, distribution, maintenance, etc;

Outputs for The Coca-Cola Company are the concentrate and syrup for each of the
many non-alcoholic beverages.
4. Do an initial analysis of the organization’s major problems or issues. What
challenges confront the organization today? How does its organizational design
relate to these problems?

The Coca-Cola Company faces a wide variety of problems. In the United States,
consumers are becoming more health conscious, which has hurt the sales of Coca-
Cola. Due to The Coca-Cola Company’s global presence, the company must deal with
many political challenges. They have been criticized for causing a great deal of
pollution, damaging town’s water supplies, and have been highly criticized for its
alleged anti-union actions. Coca-Cola also faces increased competition from well-
established global companies, and local organizations as well (Annual Report,
2006). The Coca-Cola Company also faces challenges with its supply of raw
materials. The prices for many of its raw materials fluctuate based on market
conditions. When these prices rise, so do production costs. Some of the raw
materials are available only from a few limited suppliers (Annual Report, 2006).

Coca-Cola has more of a decentralized structure, separated by region. Since the

majority of the company’s problems are based geographically, the decentralized
structure is ideal. Each region has different regulations, different consumer
needs, and different problems to deal with. With a decentralized structure,
problems can be solved quickly and effectively. Some functions remain centrally
located, such as marketing and innovation. This allows the company to formulate
one global message, but also allow that message to be tailored at the local level.

5. Read the organization’s annual report or other documentation and determine

which kinds of goals, standards, or targets the organization is using to evaluate
its organizational performance. How well is the organization doing when judged by
the criteria of control, innovation, and efficiency?

The Coca-Cola Company measures success by volume growth. This measurement is used
because the company believes it measures product trends at the consumer level.
This is not always equal during any period because of some seasonal products,
supply changes, and price increases (Annual Report, 2006). The organization has
also undertaken many initiatives to boost its image as a responsible global
citizen. It currently has over 70 clean-water projects in many countries across
the world (McKay, 2007). Attached in the appendices is a detailed performance
chart from the 2006 Corporate Responsibility Review.
The Coca-Cola Company is doing fairly well when judged in terms of control.
Considering the dynamic nature of their environment, they have been able to keep
sales and net income increasing. Their cost to produce these goods actually
decreased last year, showing that they were able to control their suppliers more
than the prior year (Annual Report, 2006). The organization has done an alright
job controlling the political aspects of their external environment. One problem
that will be discussed later is increased scrutiny of their operations in India
and Colombia. Although organizations have boycotted the company and lawsuits have
been filed, the average consumer is completely oblivious to the allegations
against the company, and growth has continued.
The Coca-Cola Company’s primary focus is marketing (Jones, 2007). Due to this
focus, the company is constantly trying to find out what consumers want, and then
trying to produce it. The Coca-Cola Company is always looking to strategically
launch new products in each of the countries it operates in. From 2005 to 2006,
the organization launched over 1,000 products (Foust, 2006). It would be a mistake
to call the organization highly innovative though. While they are always launching
new products, they are usually not the first to create a new type of beverage.
“The company was late to the game in sports drinks, energy drinks, and coffee,
regarding them as low-volume distractions (Morris, 2006, para. 6).” CEO Neville
Isdell said (as cited in Morris, 2006) "I don't believe we've done more in the
past than dabble outside carbonated soft drinks. We have not been able to think
creatively enough (para. 9).”
The Coca-Cola Company is very efficient in their efforts to produce their
products. They use their assets to stay on top of the market to grow and create
value for shareholders. They also are very good at connecting with their customers
(Annual Report, 2006).

Analysis Module #2 – Stakeholders, Managers, and Ethics

1. Identify the organization’s major stakeholder groups. What kinds of

conflicts between its stakeholder groups would you expect to occur the most?
The organizations major stakeholders in the company are: shareowners, associates,
bottling partners, suppliers, government, NGOs, customers and consumers and their
local markets (Corporate Responsibility Review, 2006).
The most expected major conflicts are between the shareowners of the organization
and the local markets’ governing bodies and consumers. The main goal of a
shareowner is obviously profit. Lawmakers and consumers in every market have
become increasingly demanding of corporations to become more environmentally
friendly, and adhere to certain labor standards. The reduction of pollution and
improving working condition reduce the ability of the shareholders to profit. The
Coca-Cola Company has received a great deal of criticism for pollution and water
consumption, which will be discussed later.
Conflicts with suppliers also result from the fact that each party’s goal is to
maximize profit. The supplier wants the most money for their products, while The
Coca-Cola Company wants to pay the least amount possible for high quality inputs.
Different divisions may also become in conflict with each other over resources.
Two regional plants may want to invest in new technology, but the organization may
not have the money spend on both divisions.

2. Draw a picture of the organization’s hierarchy of authority. Try to identify

the members of the top management team. Is the CEO also the chair of the board of
directors?

A hierarchy of the top management team is located the appendices. The CEO is also
the chairmen of the board (Reuters.com).

3. Does the organization have divisional managers? Which functional managers

seem to be most important to the organization in achieving a competitive
advantage? What is the functional background of each member of the top management
team?

The organization has divisional managers that are the heads of each regional
division. Along with the divisional managers, important functional managers
include the head of Human Resources, Innovation and Development, Marketing, and
Public Affairs (Thecoca-colacompany.com).

A lot of the functional managers seem to have worked for or ran bottling companies
in various parts of the world. The knowledge gained from doing this will give the
organization a better understanding of its bottling partners, and give the company
a better chance to establish and maintain strong relationships with its bottlers.
COO Muhtar Kent has had roles in both marketing and operations. This gives him a
broad understanding of two important functions of the organization.

The following information was all found at Thecoca-colacompany.com.

CEO Neville Isdell started at a bottling company in Zambia in 1966. He has been a
general manager of a bottling plant, regional manager for Australia, president of
a European Division, and president of what it now the Northeast Europe/Middle East
Group.

COO Muhtar Kent has had various roles in marketing and operations. Besides running
a few different regional divisions within The Coca-Cola Company, he also worked
for a few bottling companies. Kent will actually become the CEO of The Coca-Cola
Company on July 1, 2008.

Executive Vice President and CFO Gary Fayard were the vice president and
controller of the company, and serves on the board of the company’s two largest
bottling partners. Besides being a partner, he was a director of audit services
and of manufacturing services at Ernst & Young.

Executive Vice President and President of Bottling Investments and Supply Chain
Irial Finan has done a wide variety of international work. He has worked for three
different bottling partners, having positions such as CEO, managing director, and
finance director.

Senior Vice President and Chief Marketing and Commercial Officer Joseph Tripodi
has been the chief marketing officer at the following companies: Allstate
Insurance Co., The Bank of New York, and Seagrams Spirts & Wine Group. He also was
an executive vice president for MasterCard International and created the
“priceless” campaign.

Analysis Module #4 – Organizational Design

1. How has your organization responded to its design challenges?

a. Is it centralized or decentralized? How do you know?

The Coca-Cola Company is moving towards a more decentralized structure. The

company is divided by region. Groups are as follows: Africa, Eurasia, European
Union, Latin America, North America, and Pacific. (Thecoca-colacompany.com)
Changes in structure freed up the Chief Marketing Office from the day to day
operations so she could focus on the direction of the company (Rayasam, 2007). In
2006, the organization moved the Africa operating group from the United Kingdom to
South Africa (Annual Review, 2006). Since its inception, the organization believed
that the love for Coca-Cola was universal. This led to a strong centralized
organization. In the 1990’s, Coca-Cola’s growth slowed significantly. The CEO at
the time, Douglas Daft pushed power down the organization, and let the countries
have more autonomy. For example, the decision to sponsor the 2002 world cup was
made at the corporate level. The implementation however was up to the local
markets. Each type of advertisement was tailored to each specific market (“Country
managers (2),” 2002).

b. Is it highly differentiated? List the major roles, functions, or departments

in your organization. Does your organization have many divisions? If your
organization engages in many businesses, list the major divisions in the company.

The operating groups are divided into the following regions: North America, Latin
America, European Union, Africa, North Asia, Eurasia & Middle East, and East,
South Asia & Pacific Rim. Non-geographic operating groups include Bottling
Investments and Corporate (Annual Report, 2006). The corporate segments in 2003
had the following nine functions: “Corporate External Affairs; Customer
Management; Finance; Human Resources; Innovation/Research and Development; Legal;
Marketing; Quality; and Worldwide Public Affairs and Communications (Annual
Review, 2003).”

The organization is extremely differentiated, both vertically and horizontally.

The horizontal differentiation is evident because they have different departments
for finance, human resources, marketing, etc. The vertical differentiation can be
seen with how many levels the organization has. The company is also spatially
differentiated, with divisions based upon geographic location.

c. Can you identify any integrating mechanisms used by your organization? What
is the match between the complexity of the differentiation and the complexity of
the integrating mechanisms that are used?

The organization has used teams as an integrating mechanism in the past. Teams of
specialists analyzed consumer research to create new beverages (Rayasam, 2007).

In 2004, Neville Isdell took over as CEO and chairmen of The Coca-Cola Company.
Not being pleased with the 2% growth rate for the company in 2004, Isdell realized
drastic measure needed to be taken. HR first surveyed 400 of the company’s
managers to help assess the company’s troubles. Then 70 of those managers were
interviewed. Isdell had 150 of the company’s top managers from around the globe
meet 3 times in a 4 month span. These managers formed task forces, and each one
analyzed and came up with solutions to the problems that were brought forth in the
surveys. Face-to-face meetings began being held regularly, and the intranet
underwent drastic changes to provide real-time news (Fox, 2007).

d. Is behavior in the organization very standardized, or does mutual

adjustment play an important role in coordinating people and activities?

Because The Coca-Cola Company must produce the same high quality final product,
behavior must be standardized. The organization has a very strict Code of Conduct,
which outlines how employees at all levels of the organization should act
(Thecoca-colacompany.com). However, mutual adjustment does play a role in the
company. In 2006, in the United Kingdom, the organization emphasized trying to
encourage employees to improve the working environment (Coca-cola.co.uk).

With the push towards a more decentralized and organic structure, the organization
has made strides to increase the role that mutual adjustment plays. In 2004, the
organization created the Manifesto for Growth. This was based on the developments
made by the surveys and the management meetings. One worker said “The manifesto is
a framework that gives a direction and helps me in my role to see the
opportunities where I can make a difference and put my ideas into action (Fox,
2007, para.17).”

e. What can you tell about the level of formalization by looking at the number
and kinds of rules the organization uses?

The organization is extremely formal. There is a strict code of conduct which

Coca-Cola rigidly enforces. The code of conduct is expansive, and if violated,
employees will be disciplined. Every employee hired is trained on the code
(Corporate Responsibility Review, 2006).

The company also has voluntary agreements with the largest bottling partners. This
agreement measures their corporate responsibility in the workplace, marketplace,
environment, and then community (Corporate Responsibility Review, 2006).

f. How important is socialization in your organization?

Socialization is very important in the organization. The company uses a variety of

training methods to create a culture that is open to diversity. The organization
also uses its rich history to instill a sense of pride and purpose into its
employees.

g. In general, does your organization conform more to the organic or to the

mechanistic model of organizational structure? Explain why you think it is organic
or mechanistic.

Mechanistic Organic
Focus Efficiency, stability Flexibility, responsiveness
Specialization High Low
Integrating Mechanisms Simple Complex
Centralization High Low
Standardization High Low
Communication Top-down Network (top-down, bottom-up, lateral)

Due to changes that have been made recently to the organization’s structure and
philosophy, it is hard to say with certainty that the company has a definite
mechanistic or organic structure. Even though decision making has increased in the
lower levels of the organization, it still seems to be more centralized. According
to the company’s website, the organization is making efforts to increase
simplification and standardization. These are characteristics of a mechanistic
structure (Arendt, Ch.4). With the strong approach to marketing and consumer
research, the focal point of the organization is on responsiveness and
flexibility. As stated earlier, complex integrating mechanisms are being used, and
with the use of surveys, information has been flowing from the bottom-up as well
as the typical bottom-down (Fox, 2007). When employees are trained, they learn
multiple skills so they are able to provide back up and are able to rotate,
decreasing specialization (Phillips, 1996). These are characteristics of an
organic structure (Arendt, Ch.4). Based on the chart presented, of the two
structures, the organization is slightly more organic.

Analysis Module #5 – Designing Organizational Structure: Authority & Control

1. How many people does your organization employ?

The Coca-Cola Company employs 71,000 people

2. How many levels are there in the organization’s hierarchy?

We were unable to obtain exactly how many levels there are in the organization,
however according to an organization chart found on the company’s website (located
in the appendices) there are at least five levels. We were not able to find
information on the structure of the regional operating groups.

3. Is the organization tall or flat? Does the organization experience any of

the problems associated with tall hierarchies? If yes, which ones?

The organization is tall. There are at least 5 levels, but it is safe to assume
there are at least a few more on the regional level. One of the larger problems
the company has been trying to deal with is motivation problems, more specifically
trying to get the workers engaged. Another problem indicated by the survey
performed in 2004 was that “The business and its people lacked a clear direction
and a common purpose (Fox, 2007).” This problem is the result of poor
communication from upper management.

4. What is the span of control of the CEO? Is this span appropriate, or is it

too wide or too narrow?
The span of the CEO according to the hierarchy is two (The CFO/Executive Vice
President Gary Fayard, and Executive Vice President/President of Bottling/Supplies
Irial Finan). This may seem like a slim span of control, however but the CEO is
able to obtain information from other divisions with the use of the Senior
Leadership Team. This team consists of the presidents of each regional operating
group, and also other high executives like the Chief Marketing Officer and
Commercial Officer, and the Chief Innovation and Technology Officer (Thecoca-
colacompany.com)

5. How do centralization, standardization, and horizontal differentiation

affect the shape of the organization?

Because of the push towards decentralization, The Coca-Cola Company’s structure

has changed over the recent years. In 2006, the company opened a new office in
Cairo, so that decisions could be made on a more local level (Annual Review,
2006). The organization has also decided to centralize some functions, such as
marketing. Due to problems in Asia, the organization moved the central marketing
functions back to the company headquarters in 2003 (Ghemawat, 2003).

Based on employee surveys, the organization is making more efforts to increase

operational effectiveness by increasing standardization (Thecoca-colacompany.com).
There was not much information on how standardization has shaped the structure of
the company.

Horizontal differentiation has a major affect on the shape of the organization.

They are divided into separate subunits for each of their operating groups (i.e.
Eurasia, Pacific, North America, etc.). Each manager for an operating group is
responsible for everyone else in their division, and they report to the CFO of
corporate headquarters. This helps them keep a more organic perspective because
each operational group is basically run by itself.

6. Do you think your organization does a good or a poor job in managing its
hierarchy of authority? Why or why not?

Overall, The Coca-Cola Company does a good job of managing its hierarchy of
authority. Considering they have a tall structure, they are still able to keep a
slightly more organic style of management, allowing them to be more adaptable to
changing conditions. The CEO and CFO both have six people that report to them.
With the exception of the North America, which has ten divisions, each operating
group has six or less divisions. By pushing the day to day decisions down the
hierarchy, upper management can focus on long-term strategy and planning. In order
to help facilitate the flow of information, the organization conducts surveys of
its employees, and also has frequent meetings, and uses a more sophisticated
intranet (Fox, 2007)

Analysis Module #6 – Designing Organizational Structure: Specialization &

Coordination

1. What kind of structure does your organization have, e.g., functional,

divisional, matrix? Draw a diagram showing its structure, and identify the major
subunits or divisions in the organization.

The Coca-Cola Company has a multidivisional structure based on geography.

A general organizational chart showing these geographic divisions can be found in
the appendices (Thecoca-colacompany.com).

2. Why does your organization use this kind of structure? What are the
advantages and disadvantages associated with this structure for your organization?
Is there a more appropriate structure for your organization to use?

This structure is used because it allows each division to be independent and have
its’ own set of support functions. This structure works well because it gives the
company more flexibility to help deal with its uncertain environment and it allows
each product to be tailored to each individual market in some way. The
multidivisional structure allows each division to be accountable for its results
and responsible for creating profits (“Country Managers (2),” 2002).

Disadvantages associated with a multidivisional structure are coordination

problems between divisions, high bureaucratic costs, and communication problems
(Jones, 2007). As stated in Fox (2007), the company’s goals were unclear, which is
a sign of poor communication from upper management.

A multidivisional matrix structure may be more fitting for the organization. In

these structures, corporate-level specialists would evaluate an individual
division and then create a functional plan (Jones, 2007). This structure would
increase coordination between levels, and decisions would be made by both
divisional and corporate managers. Some weaknesses of a matrix structure include
its complexity and it may be too time-consuming (Arendt, Ch.6). The Coca-Cola
Company has plants all around the world, so it would be complicated to set up the
required meetings, and travel is also expensive.

Analysis Module #3 – Managing in a Changing Global Environment

1. List the organization’s products/services and customers and the forces in

the specific (task) and general environments that affect it. Which are the most
important environmental forces that the organization has to deal with?

The Coca-Cola Company has over 400 brands and operates in 200 countries. The main
products that offered are energy drinks, juices/juice drinks, soft drinks, sports
drinks, tea and coffee, water, and “other.” The organization operates specifically
in the non-alcoholic beverage domain (Thecoca-colacompany.com)

Some of the energy drinks the company offers in the United States are Full
Throttle, TaB Energy, and KMX. There are over 20 juice drink brands including Five
Alive, Fuze, Hi-C, and of course Minute Maid. Besides the various types of Coca
Cola soft drinks, they also produce Barq’s root beer, Citra, Fanta, Mellow Yellow,
Mr. Pibb, Fresca, Sprite, and Tab. Powerade is there lone brand of sports drink.
Nestea is their most popular tea beverage, and they also have Enviga and Gold
Peak. Dasani and Dannon make up their two brands of water (Thecoca-
colacompany.com).

The customers of The Coca Cola Company are actually not the people that consume
the beverages. The customers for the organization are bottlers, fountain
wholesalers and retailers, and distributers (Annual Report, 2006). The bottlers in
turn sell the finished product to supermarkets, retail chains, restaurants, etc.

The forces in the general environment are as follows: demographic and cultural,
international, political, technological, economic, and environmental.

The forces in the task environment that affect the company are as follows:
customers, distributors, unions, competitors, suppliers, and governments.

The organization is most greatly affected by the general environment. Political

and environmental forces and demographic, cultural and social forces all have the
strongest impact on the company. The broad portfolio of the organization actually
limits the effects of economic forces on the company. In 2006, for North America,
there was no growth in case volume, and in the Philippines, consumption actually
declined. This was offset by double digit volume growth in countries such as
Russia, Argentina, and China. (Annual Report, 2006).

An extremely important force is the political consequences of operating on such a

large scale, in so many countries. The organization must be aware of the different
laws of each area of the world they operate in. Since the company strives to be an
ethical company, they must also be aware that although some things may be legal in
one country, they may be frowned upon in other parts of the world (Fisher, 2007).
The Coca-Cola Company actually operates in more countries than there are in the
United Nations. It has also made it into countries in which U.S companies are not
allowed to do business in, like Cuba and Iran. The organization is able to do this
because it does not actually operate there. Third parties do the selling.

One extremely interesting piece of information that deals with both political
factors and social/cultural factors is the recent criticism of Coca Cola in a few
different aspects of the company’s operations. Recently the company has been
strongly criticized for its pollution and contamination of groundwater and soil in
India (Walters, 2006).

The main focus of The Coca-Cola Company is on their consumers. Since Coca Cola
operates in so many diverse areas in the world, they must be aware of what each
region’s consumers desire. Coca Cola has a very “local” oriented focus. Nearly all
of Coca Cola’s beverages are produced by local people and local resources
(Thecoca-colacompany.com). Because the production and distribution are so
intertwined in each market, the organization is more able to meet and adapt to
what the consumer wants.

2. Analyze the effect of the forces on the dynamism, munificence, and

complexity of the environment. How would you characterize the level of uncertainty
in your organization’s environment?

The environment that the organization operates in is extremely dynamic. Once again
this can be attributed to the global nature of the company. As stated in Jones
(p.63, 2007), “global expansion makes the environment more difficult to predict
and control.” One example of an unpredictable event occurred in 2004. A region in
India faced a severe water shortage, and thus ordered both The Coca-Cola Company
and PepsiCo. to shut down their operations. PepsiCo. decided to build a well with
the help of the locals, and was able to begin operations again within a month.
Coca Cola’s plant was still shut down after 5 months, and it cost the organization
millions of dollars (Bogomolny, 2004).

The previous example also ties in with the environment’s munificence. In certain
areas, PepsiCo., The Coca-Cola Company, and other beverage makers (including local
companies) must compete for resources. The example of the water shortage in India
shows that the certain regions may not be able to support multiple beverage
makers. The Coca-Cola Company must compete with other organizations for human
resources as well. In 2004, the organization was having a difficult time finding a
new CEO. Their top choices would not take the position because they felt the board
had too much control (McKay & Terhune, 2004).

The organization not only faces global competition from companies like PepsiCo and
Cadbury Schweppes, they face competition from local beverage producers as well.
They all compete for the most scares of all resources: customers.

The company has pretty high credit ratings (Annual Report, 2006), which would
allow the company to finance projects and expansions through the use of debt if
needed.
There is a great deal of complexity in the company’s environment. According to
Jones (p.62, 2007), “complexity can increase greatly when specific and general
forces become interconnected.” Two factors that have become interconnected are the
social and political factors. Coca Cola has been increasingly criticized for how
it handles business in certain countries. One such country is Colombia in South
America. Bottling plants in Colombia have been accused of participating in
numerous terrible acts against its employees to prevent and scare people from
being unionized. The pressure and attention generated by public outcries have led
to two different judicial inquiries in Colombia, and also a lawsuit was also filed
in the U.S Courts system. The increased pressure has even led some universities
like NYU and the University of Michigan to ban the sale of Coca-Cola on their
campuses. (Blumenstyk, 2006; Online extra, 2006)

Because of these factors, the environment in which Coca Cola operates in is

extremely unstable.

Dynamism Low (stable) High (dynamic)

Munificence Abundant Scarce Abundant Scarce
Complexity Few Many Few Many Few Many Few Many

Environmental Uncertainty
Low High

3. What mechanisms does your organization use to manage relationships with its
stakeholders, e.g., long-term contracts, strategic alliances, mergers? Do you
think the organization has chosen the most appropriate mechanisms? Why or why not?

The main tool the company uses to manage its relationships with stakeholders is
strategic alliances. “Asked what proportion of Coca-Cola's revenues come from
alliances, Mr. Ivester used the term ‘100%’ when explaining that every dollar
which the soft-drink giant earns comes from some form of partner-a bottler, a
distributor, and so on (“The science of alliance,” para.6, 1998).” The company has
no formal alliance with McDonald’s; however they have a strong alliance based on
“a common vision and a lot of trust (“The science of alliance,” para.8, 1998).”
The Coca-Cola Company has supplied McDonald’s with their cola since the 1950s, and
has helped McDonald’s set up new operations around the world, and has even helped
them with banking relationships and equipment design. The Coca-Cola Company also
has an alliance with Disney. Since 1955, they’ve been the sole provider of
beverages in the theme parks (“The Science of alliance”).

The Coca-Cola Company also uses long-term contracts in order to become the sole
provider of beverages for certain organizations. In 1999, in order to prevent
PepsiCo Inc from stealing some business with Burger King, Coca Cola signed a ten
year deal with the company. Coca Cola also signed a five year deal with Domino’s
Pizza. Coca Cola also signed a ten year contract with Wendy’s, even though PepsiCo
Inc was willing to pay much more. This example shows what kind of power Coca Cola
has simply because of its brand name (Deogun & Gibson, 1999).

The organization also uses exclusive contracts with its bottlers in their regions,
using a franchise model. The Coca-Cola Company ships the bottler the syrup, and
the bottler creates the finished product by adding filtered water and sugar, along
with carbonation. The bottlers then handle the distribution of the finished
product.

Because of how well known and respected the Coca-Cola brand name has become, the
use of strategic alliances is ideal for their strategy. The strategic alliances
help generate a great deal of revenues without having to invest in new capital, or
trying to expand into new industries.

There are examples of cooptation within the organization as well. The chairmen of
the board and CEO of SunTrust Banks, Inc. is a member of the board of directors
for Coca-Cola. SunTrust is the second largest stockholder of Coca-Cola stock and
also houses the secret formula for Coca-Cola (Coca-Cola, 2007; Donovan, 2006).
Such a relationship could allow the organization to obtain financial resources
because it would be in the best interests of SunTrust for the company to do well.

The organization should possibly look at using mergers or acquisitions in

strategic locations. In order to fix the problems in Colombia and India, The Coca-
Cola Company needs to be able to exercise greater control of those situations,
which could be done with a merger or acquisition. Franchises do not allow the
company as much control as it sometimes may need.

4. Overall, do you think your organization is doing a good job of managing its
environment? What recommendations would you make to improve its ability to obtain
resources?

Overall the company has been doing an alright job of managing its environment.
Strategic alliances and long-term contracts will help secure the most important
resource, customers. The Coca-Cola Company also has control over its most
important input which makes the product unique, its secret formula.

The Coca-Cola Company must figure out some type of way to deal with the political
problems that arise from doing business in so many parts of the world. In the
Middle East, The organization initially decided not to operate in Israel, for fear
of losing its customers in the Arab world. Criticism arose, with the claim that
The company boycotted Israel to appease the Arab market. The Coca-Cola Company
then promised to open a bottling plant in Tel Aviv. This caused the Arab League to
boycott the product for over 20 years (Criticism of Coca-Cola, 2007).

The Coca-Cola Company may face some significant challenges when it comes to
obtaining resources. Some raw materials such as saccharin and sucralose are
readily available. Aspartame, which is an extremely important non-nutritive
sweetener, is primarily supplied by the NutraSweet Company and Ajinomoto Co., Inc.
The ingredient acesulfame potassium is primarily supplied by Nutrinova Nutrition
Specialties & Food Ingredients GmbH (Annual Report, 2006). Although The Coca-Cola
Company has not had any problems obtaining ingredients from these companies, the
fact that there are an extremely limited number of suppliers could cause problems
for the company in the future. Vertical integration would be a way for the company
to improve the reliability to obtain resources.

Orange juice concentrate is the main ingredient for a lot of the organization’s
juice drinks. The citrus industry is obviously impacted on weather conditions,
which are of course not controllable. Harsh weather could lead to increased costs
to produce some of their beverages. Some of the orange juice concentrate comes
from the Southern Hemisphere, so it does not have to rely solely on Florida
(Annual Report, 2006).

5. Does your organization’s environment match its structure (in terms of

organic vs. mechanistic)? What are the consequences of this match or mismatch?

The extreme uncertainty of the environment matches the organization’s efforts

towards a more organically structured company. The use of complex integrating
mechanisms has led to increases in employee satisfaction, and also increased sales
growth (Fox, 2007). The decentralization of specific parts of the organization
gives the company more flexibility when trying to deal with the uncertainty of its
environment. The company did experience problems in communication with its
employees because of its tall hierarchy.

Analysis Module #8 – Organizational Design & Strategy

1. What core competences make your organization unique or different from other
organizations? What are the sources of the core competences? How difficult do you
think it would be for other organizations to imitate these distinctive
competences?

The competitive advantages outlined in the annual report are “powerful brands with
a high level of consumer acceptance; a worldwide network of bottlers and
distributors of Company products; sophisticated marketing capabilities; and a
talented group of dedicated employees (Annual Report, p.10, 2006).” The secret
formula for Coca-Cola has not be duplicated, even though it’s been tried several
times. This has become less important however because competitors are creating new
formulas and flavors that compete with the sale of Coca-Cola. It’s not easily
copied, but it is easily imitated.

The most unique competence for the organization is its high level of brand
acceptance. The Coca-Cola Company has worked for over 120 years to achieve such a
high level of brand name recognition, so this is cannot be imitated. As previously
stated, Wendy’s was offered a better contract by PepsiCo, but took the contract
with Coca-Cola instead (“Wendy’s says no to Pepsi,” 1998).

Another unique core competence for The Coca-Cola Company is its relationship with
its 300 bottlers and distributors. The relationships are symbiotic
interdependencies, meaning that both organizations have a stake in how the other
is performing (Arendt, Ch.3). Coca-Cola agrees not to sell to third-parties in the
area, and the bottler agrees to purchase the concentrates from the Company or
Company-authorized sellers (Annual Report, 2006). The fact that The Coca-Cola
Company does not have to worry about distributing the end product allows the
organization to focus on its marketing strengths.

The fact that the company has over 400 brand names is a core competence. The
organizational offers a wide variety of beverages, not just soft drinks. This core
competence can be imitated by large companies. Coca-Cola does develop its own
flavors and products; however it also purchases products as well. Companies like
PepsiCo could easily purchase a company if they wish to expand into that market.

2. What is your organization’s principal business-level strategy: low-cost or

differentiation? How successfully is the organization pursuing this strategy? In
what ways does it need to improve its core competences to improve its competitive
position?

Coca-Cola’s business level strategy is differentiation. They are successful using

this strategy because their focus remains on marketing. Coca-Cola is “known for
innovative marketing that constantly promotes their brand names and protects their
domains from competitors (Jones, p. 211, 2007).”

The core competence that the company needs to improve on is related to the
beverages and brands it offers. Any company can compete with Coca-Cola; maybe not
on a global scale, but certainly on a local level. Because of the high
competition, the organization needs to do a better job of beating competitors to
the market with new types of beverages. As previously stated, Coca-Cola has
entered many different markets late, like the diet and sports drink market. If the
company wants to dominate at the local levels, it needs to become more innovative
and introduce new brands before competition exists.

3. Does your organization’s business-level strategy match its structure (in

terms of organic vs. mechanistic)? What are the consequences of this match or
mismatch?

The organization’s structure is extremely suited for their differentiation

strategy. The outline says that three factors affect a firm’s choice of a
structure to create a competitive advantage. An organization that produces a
greater number of products will need control over development, marketing and
production (Arendt, Ch.8). As previously mentioned, the organization’s marketing
function is mostly centralized, to make sure the message being sent is constant.
The chapter 8 outline also says that an organization seeking new customers will
need a structure that will serve the new customers’ needs. With divisions based
upon region and the extensive market research the company does, the organization
is always looking to serve its customers. The third factor says that as the need
for new product development increases, an organization will need to be able to
coordinate all of its functions. The integrating mechanisms that Isdell began
using in 2004, especially the revamped intranet, allows the entire organization to
coordinately quickly and effectively (Fox, 2007). The benefits of such a match are
evident in the fact that return on equity went from being negative to being 20
percent (Fox, 2007).

4. Is your organization operating in more than one domain (the set of

goods/services that an organization produces and the customer groups that are
served)? If yes, what corporate-level strategies is it pursuing? How is it
creating value from these strategies? Is it successful?

The-Coca Cola Company operates only in the nonalcoholic beverages domain; however,
because they are a global company, they need to serve many different customer
groups. One way in which they do this is by applying its high quality marketing
skills globally. Coca-Cola has a corporate-level strategy of vertical integration.
They have already entered into the bottling industry with Coca-Cola Enterprises
using forward vertical integration. The value created by this is that it has
significant control over the bottling and distribution over their product. This is
very successful because they have been able to distribute their product
successfully to many countries. It is also proved to be successful because their
competitors do not have the ability to be as widespread.

They also use vertical integration by controlling their inputs, such as their
recipe, from competitors. This calls attention to their product’s uniqueness and
defends the fact that no one else in the industry has the same tasting soft drink
(Jones, 2007).

Analysis Module #7 – Creating & Managing Organizational Culture

1. Do managers and employees use certain words and phrases to describe the
behavior of people in the organization? Are any stories about events or people
typically used to describe the way the organization works?

One common word that is used by the company is diversity. They organization
strongly emphasize diversity. Employees are regularly trained to handle diversity.
According to their website, diversity means “1) respecting individuals, 2) valuing
differences, and 3) representing our consumers and the markets where we do
business (Thecocacolacompany.com).”

The organization also commonly refers to its employees as associates. The word
associate gives an employee the feeling that they are not working for someone, but
with someone, on an equal level.

Stories are extremely important to The Coca-Cola Company. On the company’s

website, there are probably a hundred different stories that are separated in
categories. Many of the stories are memories people have about how just the image
of the company can take them back to a special time in their lives. All of these
stories show just how embedded Coca-Cola is in the American culture. Stories about
how previous employees helped someone create a sense of pride in an organization,
and also inspire current employees to do the best they can do.

Besides posting stories on the website, The Coca-Cola Company has two museums
called The World of Coca-Cola Atlanta and The World of Coca-Cola Tokyo. There was
also one in Las Vegas, but it closed in 2000 (World of Coca-Cola, 2007). The
museum in Las Vegas was centered on storytelling. Visitors would listen to other
consumers’ story about the beverage, and then afterward, guests could record their
own stories which the company could later use (McLellan, 2006).

2. How does the organization socialize employees? Does it put them through
formal training programs? What kind of programs are used, and what is their goal?

To socialize employees, The Coca-Cola Company offers an array of different forums

for their employees to go to. At these forums, employees are able to associate
with colleagues that are interested in similar things. This allows each employee
to support another’s growth, personally and professionally
(Thecocacolacompany.com).

Employees are put through a formal training program. Much of their training
involves diversity education. In this they focus on minimizing differences and
amplifying, respecting and valuing each other to help get better results. The
Coca-Cola Company believes that this training helps power employee commitment, and
creates a work environment that values diversity and improves productivity
(Thecocacolacompany.com).

The Coca-Cola Company also uses a lot of team training. This team training allows
new employees to get to know one another and learn how to respond to certain
situations. According to Earl Bensinger (as cited in Phillips, para.2, 1996), a
maintenance mechanic in the Baltimore Syrup Plant, teams “are the best tools
organizations can use to ensure employees are well-informed.” His statement shows
that using teams for training helps employees retain information they learn. This
same article states that through the team training, employees learn a variety of
different skills (Phillips, 1996). An objective of this training is to reduce
specialization to help employees get a better grasp of other jobs. One way this
training achieves these objectives is by training the employees in at least four
different jobs.

The organization also provides all new hires with guidelines on conduct and
employee involvement in the political process in the business code of conduct.
This code is communicated through orientation of new-hires to ensure all employees
will conduct themselves with honesty and integrity that governs the company’s
culture. They also mandate training on the “code” to ensure their employees are
continuously improving their knowledge through web-based or in-person training at
least every three years (Corporate Responsibility Review, 2006).

3. What beliefs and values seem to characterize the way people behave in the
organization? How do they affect people’s behavior?

The driving forces in the organization are the values of honesty and integrity.
These characteristics are the expectation for each individual. Honesty and
integrity are the chief expectations for employees to uphold and carry out in all
matters. This concerns employees behaviors within the company and their personal
life because The Coca-Cola Company needs to make sure employee actions and
behaviors will not negatively effect the company directly or indirect. These
concerns of potential problems are conveyed through the code of business conduct,
such as conflict of interest, financial interest or use of company assets.

4. Overall, how would you characterize the organization’s culture and the way
it benefits or harms the organization? How could the culture be improved?

The changes implemented in 2004 helped the culture to be more open to all
employees. As Alba Adamo, an employee stated (as cited in Fox, para.8, 2007),
“prior to 2004, it ‘felt we were all working independently of each other. The
company as a whole didn’t have a clear direction.” She implies that after the
manifesto was set in place, Coca-Cola has been able to change their culture to
create an environment in which employees are comfortable to work together. Since
the organization started to revolutionize its culture in 2004, the company has
benefited from less turnover and greater growth (Fox, 2007).
The company should keep its focus on employee involvement and enrichment. The
culture could be improved with increased decentralization. By allowing divisions
to be even more independent, it would further push the culture towards more
innovation.

5. Does your organization’s culture match its structure (in terms of organic
vs. mechanistic)? What are the consequences of this match or mismatch?

The company’s culture tends to be more of a mission culture, where there is a

shared understanding of the mission and vision. The mission and vision are
communicated throughout the company and have the employees collaboratively
involved in the culture. The aspect of employees being involved in the creation of
a new vision and mission shows that the company is trying to keep its employees
involved. The push towards decentralization goes hand in hand with the culture
that the organization is trying to create.

When the culture matches the structure of the company, it leads to growth and
success of the company. In a decentralized organic organization, employees cannot
be afraid to make decisions or take risks everyone once in awhile. If the company
creates a culture that punishes risk taking, lower level employees will not want
to make important decisions, even if given the power to.

Analysis Module #9 – Organizational Technology

1. Are input, process, or output activities the source of greatest uncertainty

for your organization? Choose one and explain.

Output activities provide the greatest uncertainty for the Coca-Cola Company. The
reason for this is because of the relationships with Coca-Cola’s bottling
partners. Coca-Cola sells the concentrates and syrups for the beverages to
bottlers. The product that is sent is constant and does not provide uncertainty.
The uncertainty exists from the time the bottler receives the concentrate to the
time the end consumer drinks the beverage. “In 2006, approximately 83 percent of
our worldwide unit case volume was produced and distributed by bottling partners
in which the Company did not have controlling interests (Annual Report, p.14,
2006).” The annual report also talks about how a disruption at a bottling plant
(such as strikes and stoppages) could indirectly and negatively affect the results
of the Coca-Cola Company. Inputs could be viewed as uncertain, due to the minute
number of suppliers, and the climate-dependent nature of some ingredients; however
in the past; these have not been a problem (Annual Report, p.14, 2006).
2. Does your organization use service or manufacturing technology? What is the
level of the organization’s technical complexity? If the organization uses service
technology, does it use service factory, service shop, mass service, or
professional service technology? If the organization uses manufacturing
technology, does it use small-batch, mass production, or continuous process
technology?

The Coca-Cola Company uses mass production manufacturing technology, which has a
moderately high technical complexity. “Examples of such organizations (companies
that use mass production) include Ford, Gillette, Crown Cork and Seal, and Coca-
Cola (Jones, p.242, 2007).” It was extremely hard to find any information on how
the syrup for Coca-Cola is actually made. Even at The World of Coca-Cola, the
company’s museum, there is no information presented that describes how it is
created. “Nowhere in any exhibit is there a word about the most fundamental
function of the Coca-Cola Corporation: making Coca-Cola syrup (Friedman, 1992).”
In the appendices are two diagrams that show how basic production of Coca-Cola
works, however only at the bottling level (Coca-colaindia.com). These diagrams
still indicate how mechanized the processes are. Production for Dasani, the
organization’s bottled water product, is extremely mechanized, and it is safe to
assume that the production each beverage is the same.

Classification Level of Technical Complexity

Small-Batch and Unit Production Low to Medium
Large-Batch and Mass Production Medium to High
Continuous Process or Flow Production High

3. Use the concepts of task variability and task analyzability to describe the
complexity of your organization’s activities. Which of the four types of
department-level technology identified by Perrow does your organization use?

Because the organization uses mass production, task variability is low. Tasks are
highly standardized, and few exceptions occur. Task analyzability for the company
is high. The tasks performed to produce Coca-Cola’s beverages are extremely
routine, thus little search activity is required to find a solution when a problem
does arise. It is not surprise that The Coca-Cola Company uses routine
manufacturing. Standardization and simple tasks minimize the possibilities for
problems to occur.

4. What forms of task interdependence between people and between departments

characterize your organization’s work process? Which of the three types of
technology identified by Thompson does your organization use?

The Coca-Cola Company is characterized by sequential interdependence. Marketing is

the central function for the organization. Once they determine what opportunities
the company should pursue, it is up to research and development to find ways to
create the beverage. When this is finished, manufacturing needs to manufacture the
product at the lowest cost. Because the Coca-Cola Company is characterized by
sequential interdependence, the organization uses long-linked technology.

5. Does your organization’s technology match its structure (in terms of organic
vs. mechanistic)? What are the consequences of this match or mismatch?

According to the class outlines (Arendt, Ch.9), a company that uses long-linked
technology and uses mass production should generally use a mechanistic structure.
As previously stated, The Coca-Cola Company uses a structure that is slightly
organic. There is not a definite match between the technology used and the
structure. Although there was no evidence to suggest it, production may not be as
efficient because of the mismatch between structure and technology.

Analysis Module #11 – Organizational Transformations: Birth et al.

1. When your organization was founded, what opportunity was it founded to

exploit?

The Coca-Cola Company was originally founded in 1888. Because there were three
different formulas being used, Asa Griggs Candler wanted to establish a legal
claim to the beverage. He had used two other names for the drink, but none caught
on, so he wanted to use Coca-Cola because it was already popular (Coca-Cola,
2007).

2. What stage of the life cycle is your organization in now? What internal and
external problems is it encountering? How are managers trying to solve these
problems?

Currently, The Coca-Cola Company is in the growth stage. Although their revenues
and growth have fluctuated slightly through the years, they remain in the growth
stage because their value creation skills have continued to evolve (Arendt,
Ch.11).

One struggle that is always present internally is the conflict between low-level
employees and management. Labor costs could increase for the organization if they
are not able to renew collective bargaining agreements with employees at its
manufacturing plants (Annual Report, 2006). For example, workers went on strike in
2005 because management wanted employees to contribute more to their heath benefit
plan (Business Insurance, 2005). Another struggle that exists within the company
is trying to balance power between the board and the corporate managers (McKay &
Terhune, 2004). The board also has the power to decide what ads get shown. This
has caused a power struggle with the marketing function (MacArthur, 2004).

The company’s main external problem is the uncertainty of its environment.

Uncertainty with supplies, intense competition, and the political and social
pressure that exist were discussed in Analysis Module #3.

Managers are trying to solve these problems through a variety of ways. In order to
do a better job of keeping its employees happy, the company is trying to get
employees more involved in decisions processes, and used input from them to create
the company’s growth initiative. Current CEO Isdell’s changes have created greater
sales growth and better return on investment, which should give the CEO more power
when dealing with board members (Fox, 2007).

3. How rapid was the growth of your organization, and what problems did it
experience as it grew? Describe its passage through the stages outlined in
Greiner’s model. How did managers deal with each crisis that the organization
encountered as it grew?

The company’s growth was very rapid. It grew from not being known at all to having
the first celebrity spokesperson for a product ever in about 15 years (Thecoca-
colacompany.com). The Coca-Cola Company experienced many problems as it grew, the
first was Asa Candler not realizing the full potential of Coca-Cola becoming a
portable amenity. After the second offer by two lawyers, Asa sold the rights to
bottle the beverage for a dollar (Thecoca-colacompany.com).

Stage 1- Candler marketed Coca-Cola relentlessly. His creativity in his marketing

caused the market to expand rapidly. Three years after the company was created,
manufacturing plants existed on each coast and in the Midwest (Thecoca-
colacompany.com). When Candler decided to stop running the company, he appointed
his son Charles Howard Candler the new president. He was fired twice, and has been
called one of the worst American business men in history (Butler, 2000). This
could be viewed as a crisis of leadership. The issue was not solved by the company
itself. Asa Candler’s nephew was furious that was he not given the company, so he
organized the first ever buyout in U.S. history. (Butler, 2000)

Stage 2 – The 1920s and 1930s were a period of great expansion for the company.
The organization created a “Foreign Department.” Its main purpose was to market
the product outside of the United States (Thecoca-colacompany.com). The focus of
finding new markets still exists in the company today.
A crisis of autonomy has existed within the organization because the board has
been so controlling. According to the text, a crisis of autonomy exists when
creative functions of the organization feel frustrated because they lack control
(Jones, 2007). The board has had some oversight as to what ads get shown, and this
has created frustration in the marketing department (MacArthur, 2004).

Stage 3 – In recent times, decision making has been pushed further down the
organization. Since the company cannot use the same campaign ad for every market,
these decisions have been pushed down to the regional divisions (“Country managers
(2),” 2002). There was not any information to indicate a crisis of control. There
was very little information about conflicts between corporate and functional
managers.

Stage 4- According to the text (Jones, 2006), companies in this stage “must
initiate company-wide programs to review the performance of the various divisions
(p.317).” This is exactly what Isdell Neville did when he became CEO in 2004. By
polling 400 managers throughout the company, he was able to create an initiative
that the employees felt they were involved in (Fox, 2007) Isdell also has used
promotion within the company to help align mangers’ goals with that of the
company. Muhtar Kent was promoted to COO of the organization because he did so
well as the COO of the North Asia, Eurasia, and Middle East group (Ward, 2006).
There were not specific bureaucratic problems available; however the company must
have experienced some type of crisis of red tape, because one of the company’s
main goals is to cut down on the bureaucracy as will be demonstrated in the next
stage.

Stage 5- According to the Coca-Cola Q1 2007 Earnings Call Transcript (Seeking

Alpha, par.30, 31), Muhtar Kent stated that the changes being made to the company
was an “effort to enable the organization to be more effective, efficient and to
remove bureaucracy…These initiatives will result in some cost savings, but
importantly will improve clarity on decision-making which will allow for more time
to be focused on revenue-generating activities.”

4. Has your organization ever shown any symptoms of decline? How quickly were
managers able to respond to the problem of decline? What changes did they make?
Did they turn the organization around?

The Coca-Cola Company showed signs of decline in the 1990s and in 2004. 1998,
capped off a five year run of having significant growth. This was due to the
prices being locked for many years at a time. Prices were actually below what they
had been four years earlier. Growth decreased rapidly as prices rose in ’99.
Managers tried to respond quickly to the initial immobility of growth, but they
did not notice immediately. When they did respond with what the company needed to
do, the response was not accepted well by the market. Eventually, the rest of the
market raised their prices as well and The Coca-Cola Company reclaimed their
regular growth (Halpert & Dawson, 1999).
Changes have been made which has turned the company around. These changes have
been previously discussed, but include the push towards decentralization, creating
more employee involvement, attempting to change the company’s culture, and the
elimination of bureaucracy.

5. Does the organization’s structure appear appropriate given its stage in its
life cycle? Explain.

The company’s structure is appropriate given its stage in the life cycle. The
Coca-Cola Company has gone through all of the growth stages, and has been able to
meet each challenge along the way. The company has not moved towards a product
team or matrix structure as suggested in the text (Jones, 2007), however given
that the organization operates in one domain, this is not necessary for the
company to grow and succeed.

Analysis Module #12 – Decision Making

1. Given the pattern of changes made by your organization over time, which of
the decision-making models best characterizes the way it makes decisions?

The Coca-Cola Company uses the incremental method in decision making. Especially
in the last 20 years or so, the board was extremely conservative and looking to
avoid any drastic changes. However, recently they used the unstructured decision-
making model. This is demonstrated through the process that CEO Isdell used when
creating the company’s Manifesto For Growth in 2004 (Fox, 2007). Rather than
slightly modifying what the company has been doing, the company surveyed 400 of
their top managers about what they thought was problematic in the company. Based
on information in the surveys, 150 leaders in the company met to create solutions
for the problems. The alternatives were analyzed and all final decisions were made
by groups (Fox, 2007). This was a non-programmed decision because there is no
procedure to fix this certain problem (Arendt, Ch 12). The top executives and
board members created the manifesto which specifically outlined its future plans
for the company’s goals and corporate culture. Today many employees have accepted
this new culture (Fox, 2007).

For The Coca-Cola Company, the use of the unstructured decision-making model, in
theory, is appropriate for Coca-Cola because they are in a very uncertain
environment and any major problems need to be solved from the bottom up (Arendt,
Ch 12). This is how the “Manifesto for Growth” was developed. This was the only
example of the company using the unstructured decision-making model. It seems that
the majority of decisions are made using the incremental method.

1. At what hierarchical level does responsibility for non-programmed decision

making seem to lie in your organization? What problems do you see with the way
your company makes decisions?

For non-programmed decision making, the solutions are generally brought about by
senior level executives. When decisions are made at this level in an organization,
problem solving is often slowed. Another potential problem is that upper
management may propose an extremely complex solution, whereas someone closer to
the problem may know a simple fix. One last problem is that decisions made could
potentially be biased in respects to the specific manager’s thoughts. Top
management may lack international experience, and therefore, harm the company’s
global strategy.

As stated earlier, the board of directors is responsible for some of the decision
making in the company. When the company was moving in on purchasing Quaker Oats,
the board decided the deal was too expensive and put a stop to it (Deogun, Eig,
McKay, & Spurgeon, 2000). This is a significant problem for the company, because
in such a dynamic environment, the company cannot afford to let outsiders make
such important decisions. The board members do have a great deal of money invest
in the organization; however no one (except the CEO) actually worked for the
company. They are not nearly informed about decisions as the senior managers at
the company.

Analysis Module #14 – Managing Conflict, Power, and Politics

1. What do you think are the likely sources of conflict that may arise in your
organization? Is there a history of conflict between managers or between
stakeholders?

Due to the immense size of The Coca-Cola Company, the most likely sources of
conflict that could arise in the organization arise from incompatible performance
criteria and competition for resources. These two sources of conflict are
intertwined because if the goals of each geographical division conflict,
competition for resources amongst the divisions will exist. If the organization
creates a competitive climate amongst the divisions, (ex: whatever division shows
the greatest sales growth gets more rewards) divisions may stifle information that
it normally would have shared with other divisions of the organization. While
perhaps benefiting that division, it ultimately hurts the entire organization.
Another source of conflict could develop if resource allocation angers people.
Production managers would obviously want the company to invest in technology that
would reduce costs. The marketing department would want to increase spending in
order to increase sales.

When the organization was developing a calorie free soda, there was even conflict
within top managers was to what it would be called. Eventually Tab was created,
and this leads to more conflict. Market research indicated that consumers
preferred Tab narrowly over Diet Pepsi. When researchers labeled Tab as Diet Coke,
the preference sky rocketed. Managers within the organization butted heads about
the decision to create another diet drink. “Tab loyalists believed a new diet
drink would cannibalize its proven product… Another product with the Coke name
would likely dilute the brand, confuse consumers, and contribute to already
strained relations with bottling companies (Plasketes, p.59, 2004).”

There has been a history of conflict between top-level executives at The Coca-Cola
Company and the board of directors. In early 2004, the organization was having
difficulty filling its vacant CEO position because there were “concerns that its
star-studded board is wielding too heavy a hand in operations (McKay & Terhune,
2004).”
"The sense among investors right now is that the Coke board is meddling in the
operations of the company instead of choosing the right leader and letting him or
her do their job (McKay & Terhune, 2004).”

2. Which subunit (department, division) of your organization is the most

powerful? How do you know? What are the consequences of this subunit being the
most powerful?

The marketing department of The Coca-Cola Company is clearly the most powerful
subunit of the organization. “The (Coca-Cola Company’s) marketing department has
considerable power because it is the department that can attract customers – the
critical scarce resource (Jones, p.406, 2007).”
There are positive and negative consequences that result from the marketing
department being the most powerful division in the organization. Since marketing
is the key focus of The Coca-Cola Company, the organization may overlook chances
to reduce costs in the manufacturing or distributing processes. The heavy emphasis
on marketing may also take away resources that could be used to invest in new
technology for other aspects of the company.

The benefits that derive from the organization’s marketing focus greatly outweigh
the negative consequences. By focusing on marketing, The Coca-Cola Company has a
much greater chance to find out each market demands. This allows them to beat
competitors in releasing new products, or avoid the introduction of products that
could flop. The emphasis on marketing allows the company to save money by not
investing millions of dollars on the development of a product that consumers do
not actually want. The strong marketing position of Coca-Cola is also the reason
why the brand name is globally the most recognized. This positioning allows Coca-
Cola to have a strong advantage over lesser known brand names, and also helps when
dealing with potential partners.