Coca-Cola is a multinational organisation that has business activities in different regions of the globe. The company has separate divisions that are set in five continental divisions that are managed differently. This means that each of the divisions runs its own activities that are tied to the head office run by the president. To manage global activities the organisation has split its functions but using regional centres and at the same time division of labour to manage the numerous activities that make the products of the organisation. This essay seeks to analyse the organisational structure of Coca-Cola to show its effectiveness in meeting organisational objectives (The Coca-Cola Company 2016).
Question one: Organisational structure of Coca-Cola
The Company has a tall hierarchical structure due to the number of business operations that exist within. The company, therefore, uses a functional structure where the president, of the company is at the heart of the organisation. Under the president, there are different roles that control overall business activities of the company like marketing, finance, operations, human resource, administration and research and development (Oliveira & Takahashi, 2012). The company runs a chain of command full of numerous layers in company offices worldwide. Further, the company has two operating groups that are regionally and geographically divided to allow decision-making at a local level and at the same time allow the ability to respond to the ever-changing needs of local market.
The functional structure allows the organisation to group portions of the company according to the purpose or function that they play. Companies that choose the functional structure use factors like size, geographical dispersion and the number of products that they have in the market. This allows relationships among different entities to be grouped according to functions or specializations (Montana & Charnov, 1993). In understanding the way, the structure works chain of command is used vertically positioned with the person above the hierarchy being in charge of the decisions making. To minimise the level of bureaucracy and reduce the chain of command, regional heads span of control has been limited to the regions that the company operates in.
Mcshane & Glinow (2014) suggests that to achieve the function well work is divided using global and local strategies. In the global function, the head office control critical functions like technology to maintain standards and competitive advantage, while a local strategy is based on dividing operations in local environments. Further work is divided into components that fall within the specific function that is needed. For example, each of the functions within the organisation is run differently. In each of these regions business operations are decentralised in such a way, that the company relies on other external companies to run its business activities like bottling and distribution.
Question two: presentation of the structure using Mintzberg's theorem
Mintzberg argues that organisations are formed of five main parts; strategic apex, techno structure, support staff, middle line and operating core. Each of the five parts experiences pressure that pulls the organisation in a particular direction. The forces that come from these main part forms the types of structures that the organisation exhibits. To Mintzberg organisational structures are a matter of time and depend on both internal and external factors in their evolution (Lunenburg, 2012). Therefore the blend strategy of the organisation, organisational structure and environmental forces determine the structure of the organisation.
In understanding the evolution of organisational structure, the theory suggests that organisation can be differentiated in three dimensions; the key part of the organisation that determines the success and failure of the organisation, prime coordinating mechanisms and the type of decentralisation within the organisation. The theory presents five types of structures that the organisation may have; Entrepreneurial; Machine; Divisional and Innovative structures. Coca-Cola is a global company with business operations around the world; the company has to ensure that all operations across regions are similar and standards are set at the highest level (Lunenburg, 2012). This requires high-level bureaucracy that establishes standards across the organisation to maintain standards and consistency in the products.
The professional bureaucracy structure is based on skills standardisation as a prime coordinating mechanism based on vertical and horizontal decentralisation. This allows relative formalisation with decentralised bureaucracy to allow autonomy among professionals. Hall & Tolbert (2009) suggests that through clear lines of authority and standard administrative practices, tasks are shared not among employees within the organisation who report to those above them. The company runs a decentralised bureaucracy where the activities are divided along components and regions across the globe. Each region runs its own activities with similar divisions within individual countries where coca-Cola exists. This ensures that routine tasks are met at a local level without the need to involve the overall management (Campbell, Kunisch, & G, 3). In horizontal decentralisation, key products like ingredients and technology are controlled by the head office and only send to regional locations as complete products.
Machine bureaucracy is based on the use of standards for work processes through coordination and limited horizontal decentralisation. This method borrows from Weber’s account of bureaucracy to use rules and formal authority to achieve organisational performance. Decisions are centralised while the span of management is narrow making the organization structure tall (Miles, Snow, Meyer, & Coleman, 2011). The company controls and regulates behaviour through statistical reports, performance appraisals and budgets to achieve organisational objectives. The head office or the international The unit controls all activities through regional heads. Having standardised rules ensures that key performances within the organisation follow a certain standard of procedures and decision-making is top down. This structure is applied internally by Coca-Cola to achieve efficiency in business processes and key results for the organization.
Divisional structure entails creating divisions to handle different activities within the organisation. This creates high autonomy within the company and allows employees to address particular situations that relate to the level of management that they hold. According to Brickley, Smith, Zimmerman, & Willett (2002) the structure uses standardisation and decentralisation as core management perspectives. Division of labour allows globalization of products and creating of local structures that fit the countries that it operates in. Since the company has a wide range of products, capitalising on each market gives competitive advantage through responding and interacting with the needs of changing markets only to introduce new products that meet the needs of the particular environment (Brickley, Smith, Zimmerman, & Willett, 2002). For example, the distribution system has been broken down into divisions with independently distributors and bottling centres to achieve global and local markets.
Question three: effectiveness of functional structure
The structure enables the company to organise internal and external relationships to streamline business processes. The company has a well structured functional structure through coordinating the activities from above and implementing them at the regional level (Wholey, Hatry, & Newcomer, 2010). The company prepares syrups at the head office and distributes them to regional branches that are authorised to manufacture for the main. This structure enables the company to have business processes running all over the regions and at the same time controlling quality of the product. Through specialised units, the company allows for specialization of staff to improve performance. The resources that are needed for a single activity are pooled together to maximise performance. The unit great potential is achieved through and maximise utilization of resources (Taylor, 2000). The structure allows for means focuses strategy rather than end focussed to achieve all its objectives. The success of Coca-Cola has been attributed to its global and local management strategy to enable a flexible structure that integrates all core business components.
Question four: the Coca-Cola evaluate its effectiveness
Bhandari & Verma (2013) states that organizational effectiveness is used to determine the extent to which the organization meets its objectives through producing intended outcomes. The outcomes are measured in several key areas of leadership development, organization design, structure, implementation of change and talent management. When carrying out the process organisational areas of accomplishing resources, their acquisition and use, satisfaction of employees, adaptation to opportunities and capability for survival are some of the measures that can be used to determine effectiveness. Several models have been used in the approach like; the score card approach, strategic constituents approach, goal attainment and Systems Resource processes.
The rational goal attainment aims at understanding the ability of the organization to achieve set goals. It borrows from Weber’s functional rationality where organizations are described as a network of roles and labour that is divided through hierarchies to define the relationship that each activity has to the overall goal (Cunningham, 2004). Goals are identified through establishing a general goal that each activity is linked to, and then targets are set for each employee and component to be achieved about the goal. When evaluating the organization, a comparison between the set goals and the achieved objectives is determined to understand the extent that the organisation has achieved. Coca-Cola utilises this approach through a system of appraisal where each the organization sets goals and targets for line departments to achieve. The goals are passed down to the employees to ensure that they achieve them in the desired way, possible.
The systems resource model descries the organizations a system of interrelated parts and elements which play a critical element in the survival of the whole system. The activities of the system are related in such a way, that the outputs of one subsystem may become the inputs of another subsystem. This means that effectiveness of one part leads to effectiveness of another part and thus harmony is an important function in achieving effectiveness. Coca Cola ensures that the whole organization functions through allocating resources to every dividing within the organization. The measures of effectiveness for the organization are therefore base on sustainability which is the ability of the organization to survive within the market (Food Beverage Media, 2016). Through profitability index, controlling the market and research and development, the organisation is sure of surviving the market forces and thus achieving effectiveness.
The balanced score card is used to measure critical processes, it allows covering of organizational finances, customers, internal business processes and growth. The goals and measures of the organisation have to be defined and targets set to easily apply the score card. Through the scorecard the company sets objectives in areas of customers; employees; operations; business ethics and finances (Chan & Ho, 2000). Then indicators for measuring each of the objectives are defined with the required time frame and the person responsible for achieving the objectives. This strategy is mostly used because it enables management to design and implement processes that enhance organizational objectives.
Strategic constituent approaches are based on system efficiencies to fulfil demands and threats posed by the environment for survival. Organisations exist to satisfy multiple strategic constituencies that are both internal and external. Thus each of the constituents that make up the organisation is supposed to have different interests to meet the needs of the ever-changing environment. The strategy has been highly related to measuring feedback in organisational processes as a way, of meeting business needs (Davidson, 2005). This feedback system enables the organisation to learn the areas that need to be changed in the organisation.
Question five: structural problems faced by coca-Cola
The company runs a functional structure with different responsibilities that are assigned at each management level. The management is split into regions that operate independently through oversight by the head office. The structure is uniform with each region having a vice president, in charge of all the components. The structures are similar across all the regions and business activities that place are similar all over. However, Smith (2016) suggests that the company faces challenges in meeting the needs of local and regional markets since the factors vary from region to region. Market challenges and external environment problems vary from region to region. However, structure is tall making it more complex and highly vertical, with decision-making residing in the upper management. The company has over 700,000 employees with operations in over 200 countries. To reduce the vertical hierarchy in the company, a horizontal structure has also been implemented to minimise and lower decision-making levels within the organisation. Each division in the company has a manager but seeks approval from the head office.
Despite coca-Cola having a tall vertical structure that has many business units in different regions, its geographical positioning of business components to cater for different local needs ensures that the company can satisfy local market needs and satisfy customers. This structure allows the company to operate efficiently and effectively to achieve its business objectives. The choice of this structure is based on the complex nature of the environment that Coca-Cola operates in. The environment has low to moderate uncertainty levels which needs a flexible environment. Since business operations are structured around basic business functions that are straight forward and easy to manage. This enables the company to achieve effectiveness and efficiency in its systems through an ability to easily manage all the business operations along all the regions. However, the company faces challenges in delayed decision-making due to the tall vertical structure.
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