Structure Of The Coca Cola Company example essay topic

Introduction The Coca-Cola Company is a very successful and extremely large company. However with their size they are not subject to inflexibility, this is partly owing to an extremely efficiently structured business. In this report the internal structure of the company and ways that it may be improved upon will be analysed. Description of Structure The Coca-Cola Company has a tall hierarchical and fairly complicated management structure. However they, like every other large multinational company, have a Chief Executive Officer (C.E.O.) at the helm. The C.E.O. is elected by the shareholders at the annual general meeting (A.G.M.) to safe guard their interests in the running of the business.

The C.E.O. of Coca-Cola is Mr Douglas Daft, he is also head of the board of directors. As the C.E.O. he will provide, along with the board the aims and objectives for the business. These points will then be listed in the Coca-Cola mission statement. The Board of Directors is the next step down the hierarchy. It comprises of a majority of independent personnel that have been elected by the shareholders to oversee their interests and to ensure the financial strength and overall success of the business in the long term. When elected by the shareholders a director will serve a term of three years.

However there is no limit on the amount of terms that a particular director may serve. This may be because term limits may lead to a loss in experience and expertise. Every director is very experienced in business and most are on the boards of other company's. This means that they can bring valuable experience to the board and also knowledge of other business practices.

Enabling them to make reliable and informed decisions on behalf of the company. There are guidelines laid down by Coca-Cola as to the role and responsibilities of the board, also the regulations of the New York Stock Exchange must be abide by. Some of the points laid down by Coca-Cola are that the board serves as the ultimate decision making body for the firm. They will offer advice and council to the C.E.O. In discharging of their duties they may rely upon senior executives and outside advisors and auditors and the board must perform an annual self-evaluation procedure to determine whether the board and the committees are functioning effectively. The structure of the company is under constant review, the C.E.O. and the board of directors are no exception. The board must frequently review the performance of the C.E.O., under the guidance of the Directors and Corporate Governance Committee.

This committee is also charged with the responsibility of analysing the performance of all board members, putting forward recommendations forward for new members of the board. Every director is a member of at least one of the Committees of the Board. The six standing committees are: Audit, Compensation, Directors and Corporate Governance, Executive, Finance and Public Issues and Diversity Review. Coca-Cola has outlined all the responsibilities for the individual Committees.

However they all have to follow the laws set by the New York stock exchange and have similarities in the roles laid down by Coca-Cola; they all have to report to the board on their own performance, each committee will have its own chairman, they will comprise of no fewer than three members and can all gain access to outside assistance if required. These committees can delegate responsibility to the sub-committees when assistance with the workload is needed. The sub-committees comprise of members of the senior management team. Coca-Cola is one of the worlds largest multinational firms and therefore their structure needs to be efficient to enable them to coordinate their objectives in each area. The different areas of the world, for example East and South Asia, North America, Europe, and the Pacific Rim. Each of the divisions has a president backed up by an experienced management team, which are responsible for the managerial issues concerning the area as a whole.

These divisions are subdivided into countries, for example Europe is divided into further areas, western, central and eastern Europe. Areas like the East and South Asia Group however are divided into separate countries, i.e. China, India, Thailand and Vietnam. The Countries and further divided areas also have their own presidents and managerial teams. Presidents and managerial teams of the countries and the further divided areas therefore have there own departments within these zones: Marketing, Finance, Sales, Manufacturing, Personnel and Research and Development. Every department then has senior and junior management, apart from the Manufacturing department, which has managers, foremen and then the bottlers.

To span the gaps between the different divisions Coca-Cola have recently employed a World Wide Operating team. It is comprised of experienced staff that have been with the coca-cola company for many years, so they know how the business should be run, and how to solve problems that they come across effectively and quickly. It consists of four members, A.R.C. Allen, President and Chief Operating Officer, Europe Group, Alexander B. Cummins Jr., President, Africa Group, Mary E. Min nick, President and Chief Operating Officer, Asia Group and Jeffrey T. Dunn, President and Chief Operating Officer, The Americas Group. Analysis Of The Management Structure The mission statement of Coca-Cola states that: "The Coca-Cola Company exists to refresh everybody who is touched by it" web It also states that when they reliably deliver refreshment, value, fun and joy to their stakeholders then they uphold and protect their brands with the ultimate obligation of providing consistently 'attractive' returns for their shareholders. One of the largest stakeholders in a company is its employee's. Motivation can be increased in the workforce lower down the hierarchy by the passing down of responsibility, i.e. delegation.

Increased delegation from the Board to the senior executives will increase motivation, however it is sometimes the thought of executives higher up the hierarchy that the personnel lower down can not perform these tasks to their standards so are reluctant to delegate. In accordance with this Coca-Cola states that 'skill and integrity will be important factors in the selection of senior executives. ' The committees provide an important dimension to the structure. Breaking down the tasks of management into several select committees will help the companies productivity, as they can have specialists in each of these fields working together in a close knit team. Thus increasing the efficiency of the business processes.

Furthermore separate committees dealing with different issues will provide valuable flexibility, enabling them to acquire competitive advantage when it comes to keeping up with changes in the market. Also the committees promote teamwork, this can enable tasks to be completed quickly and to a high standard. It will also improve moral, because humans are social creatures they need to interact. According to A.H. Maslow it is the third need in his hierarchy, 'love and belonging'. When these committees delegate responsibility to the sub-committees this will have a positive effect on the moral of the executive managers that make up the sub-committees, as they will feel more important, they will be empowered. The C.E.O., the Board of Directors and the Committees for the backbone of the Coca-Cola company's management structure, this is one attribute of a centralised business structure.

However when we look more deeply into the structure we find evidence of decentralisation. Coca-Cola has products in over 200 different countries around the world. Therefore it needs a structure that can withstand the pressures that this brings. Its system of splitting the group up into divisions and further segmentation into further divisions is the most efficient way of doing this. These self-sufficient divisions operating away from the 'backbone' are evidence of decentralisation. Having products in many parts of the world mean many different markets, all acting independently of one another, this means the most effective solution would be an independent body acting in each of these markets.

It makes it easier for the company to change more rapidly and effectively to consumer opinion on a worldwide scale. This is in keeping with their mission statement to deliver a good quality product at a competitive price. However when a company grows to the size of Coca-Cola then communication becomes a more integral part of the structure. As Charles Handy puts it: "The basic forms make up what might be called the skeleton of the organisation. They need to be joined by muscles, nerves and flesh if they are going to work" Charles Handy, Understanding Organisations Recent developments in technology have made communication a lot easier within a business. The introduction of the Internet as a key tool in business is a decisive factor.

Businessmen may converse with colleagues across the other side of the world via net meetings. Email is a more practical and simpler way of sending a letter, you will always have a hard copy, for example. The world wide operating team that was put in place on July 30th 2001 has the objectives of 'effectively executing business strategy, furthering the growth in their core carbonated business, quickly addressing remaining operational issues and to spur growth across all geographies and categories'. This is an important example of the structure reflecting the companies objective. In pursuing the optimal structure, organisations turn to a re-formulation of Occam's Razor: "As simple as you can, or as complex as you must" Charles Handy, Understanding Organisations In other words companies must find a happy medium between Uniformity and Diversity. Uniformity implies standardisation and common procedures that are centrally administered.

Interchangeability relates to uniformity and is a key factor in Coca-Cola's operations. They have many offices in different countries and a procedure needs to be established that is most the efficient, cost effective and more importantly universal. This approach can be linked to Taylor's Scientific Management Theory. Also the C.E.O. and the Board are the final decision making bodies in the company ensuring one set of objectives to govern the company, thus ensuring uniformity in policy. The other set of pressures in any company are for diversity. Coca-Cola has regional diversity, in that it operates in more than one geographical area, with independent groups of managers.

As a company develops the structure of the company develops with it. The hierarchical structure, with regional departments is the best form of structure for this company, as it gives a certain amount of independence within each department. However it has a certain amount of control from the C.E.O. and the Board of Directors, which benefits the company because their vast experience enables them to make informed decisions about the market they are in. There are not many possible ways of possibly improving the structure of the Coca-Cola Company, as there is a constant review process for the C.E.O., the Board, The Committee and all the way down to the senior management. Shortening the chains of control between the top of the hierarchy and the bottom would lessen communication problems and also make the company more flexible, in that they would be able to react from changes in policy from decisions from the top more easily and quickly.

However the chains of control are already quite short that they have many divisions, communicating on a parallel with the other divisions. So the managers have totally different division leaders to report to. De-layering is a good way of reducing chains of command, as it will remove the middle managers. This would leave more work for the senior and junior managers that are left. This may serve to motivate them as they are more challenged, however it may de-motivate because of the stress factor increasing.

Another possible change to the structure is if the spans of control could be narrowed then employees would get clearer lines of control, they would know more clearly who they are responsible to. Narrowing the spans of control would suggest hiring more managers, so this would create another communication problem of its own. Conclusion In conclusion the best way of describing the structure of the Coca-Cola Company was stated by Mills, he constructed the metaphor of a business being compared to a set of 'clusters'. He saw an effective organisation being made up by a set of self-contained 'clusters', which may be called business units. These 'clusters' are coordinated by a central cluster, which administers the business as a whole. In this organisation the Divisions are the 'clusters' that are acting with some independence, but knowing the companies mission statement, from the coordinating cluster and the main direction of the C.E.O. and the Board.

As a firm the Coca-Cola Company has a very good structure, this is clearly displayed in the success of the business.