Coca-Cola Company Transformation Plan

Introduction

Coca-Cola Company has dominated the global market as the preferred soft drinks brand for a long time. Today, the company continues to lose popularity as consumers cut back on consumption of soft drinks in favor of healthy diets. Last year, the company experienced severe financial challenges due to a decrease in sales. As a result, it sacked at least 2000 employees as a measure to reduce annual spending.

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According to Pendergrast (2013), the Coca-Cola Company has requested its executives to cease organizing for luxurious parties and to use fuel-efficient cars. Indeed, the officials no longer travel in limousines. Currently, the American first lady is calling on citizens to shun consuming products that expose them to dangers of contracting diseases like obesity. Her campaign has had a severe impact on the Coca-Cola Company. The company has been doing well in the North American market (Pendergrast, 2013).

However, since the campaign started, it has lost a considerable market share. People no longer buy carbonated drinks. Changes in eating habits have made it impossible for the Coca-Cola Company to expand its global market.

The company is expected to perform poorly in the future as consumers become health conscious. In spite of the company’s invaluable brand, it should embark on producing healthy beverages to remain competitive. Coca-Cola Company is already investing in healthy drinks like Honest Tea, Zico coconut water, and Core Power milk.

Company Overview

The Coca-Cola Company is an “American multinational beverage corporation and manufacturer, retailer and marketer of non-alcoholic beverage concentrates and syrups, which is headquartered in Atlanta, Georgia” (Pendergrast, 2013, p. 78). The company is known for its Coca-Cola brand that was established in 1886. According to Pendergrast (2013), Coca-Cola Company runs multiple franchises globally. Over the years, the company has acquired numerous soft drinks companies as a way to consolidate its market and stem competition.

Today, Coca-Cola Company sells its products in over 200 countries. Presently, the company sells over 1.8 billion drinks every day (Pendergrast, 2013). Since 1920, the company’s shares have been doing well on the New York Stock Exchange. Coca-Cola Company, in collaboration with its auxiliaries, only manufactures syrup concentrate and sells it to different bottlers worldwide. However, the company bears exclusive rights to the production and distribution of fountain syrup.

At the moment, Coca-Cola Company leads the soft drinks industry in most parts of the world except Middle East. The primary reason the company dominates the soft drinks market is the exceptional and secretly guarded recipe for manufacturing its products. Nevertheless, the demand for healthy beverages has led to the company’s sales volume dropping significantly. Besides, the value of the company’s shares has gone down tremendously.

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Diagnosis

The Coca-Cola Company has been doing well in good and bad times. The performance is attributed to its superior brand and the support of the prominent investor Warren Buffett. However, last year, the company started to perform poorly in the United States’ market due to a campaign that encouraged the citizens to abstain from eating sugary products. The campaign launched by the first lady Michelle Obama aimed at reducing cases of obesity in the United States (Taylor, 2014).

Consumers were warned against consuming soft drinks that contain high sugar contents. According to Taylor (2014), the Coca-Cola Company, together with other soft drinks companies witnessed a considerable drop in their sales volumes. Today, the company is at an essential crossroad in its history. Coca-Cola Company has tried to rebrand itself and use advertisement slogans that depict it as a health-conscious corporation. However, the advertisements have not been of great help.

The company continues to perform poorly in most markets, particularly in the North America. Taylor (2014) alleges, “Coca-Cola faces deep-seated problems that have been brewing for at least a decade” (p. 281).

A majority of the young people no longer buy Coca-Cola products. Instead, they prefer buying energy drinks that do not contain a lot of sugar. The majority of Coca-Cola products are highly carbonated. Consequently, young people prefer Monster, Red Bull, and other energy drinks. Besides, parents no longer introduce their children to Coca-Cola products due to health concerns.

Even though Coca-Cola Company does not do well in the American market, the company still dominates the soft drinks market in other parts of the world. However, this does not imply that the company will continue to perform well in the internal market. Coca-Cola Company has to do all it can to regain the United States’ market before the problem escalates to other markets.

The company has already started experiencing financial challenges. In fact, the management intends to layoff some employees as a way to cut down on operation costs. A recent report indicated that the company is bound to lose at least 10% of its employees if the current situation does not change (Taylor, 2014). Therefore, the company is in dire need of diversifying its products to increase revenue and salvage its brand.

Kotter’s 8-Steps Approach

Create Urgency

According to Appelbaum, Habashy, Malo and Shafiq (2012), change can succeed if it receives the support of all stakeholders. In most cases, employees resist change because they fear that it might affect their job security. Thus, for a company to initiate change, it has to begin by creating a sense of urgency among the stakeholders and allay fears. The Coca-Cola Company is in dire need of change.

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Demonstrating how poorly the company is performing or alluding to increased competition cannot persuade the employees to embrace change. The management should initiate a transparent and persuasive dialog with stakeholders. The stakeholders should understand the prevailing changes in consumer behaviors as well as the level of competition. The company’s leadership should ensure that most employees, particularly the departmental managers buy to the idea of developing healthy beverages.

Appelbaum et al. (2012) allege that one of the ways of creating urgency is highlighting the potential threats and their repercussions. Currently, the Coca-Cola Company is losing grip on the global market. Therefore, it is prone to the danger of losing sales revenue.

The management should initiate discussions that seek to develop novel and competitive healthy beverages and call on stakeholders to support the endeavor. Since most customers go for energy drinks and coffee, the company should emphasize the urgency for production of these beverages. The management should liaise with industrial stakeholders and clients to bolster its argument.

Establish a Strong Coalition

Besides creating urgency, organizational leaders should establish a strong coalition to help in advocating change. According to Appelbaum et al. (2012), the success of a change depends on the capacity of the leadership to win the support of influential people within a company. Hence, the Coca-Cola Company should come up with a coalition comprising key people. The company’s leadership does not necessarily have to source its coalition from the departmental heads.

Instead, it should select workers according to experience, status, political importance and job title. The established coalition should endeavor to institute an impetus around the need for transformation. After establishing a stable alliance, the leadership should request all members of the alliance to commit emotionally to the intended change.

Also, the leadership should help the members of the coalition to establish a strong team. According to Appelbaum et al. (2012), it is imperative to monitor a team and help it on its weak areas. Therefore, the Coca-Cola Company’s leadership should work closely with the established alliance and assist it to guarantee success.

Create a Vision

When an entrepreneur thinks about change, numerous viable solutions and ideas come to his/her mind. Entrepreneurs should select the ideas that match their visions. A vision should be easy to understand, remember and accomplish. The Coca-Cola Company should come up with a clear vision. The company should ensure that employees understand why it intends to diversify its products. Brisson-Banks (2010) argues that when workers learn the vision of an organization, they embrace the proposed changes.

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The Coca-Cola Company should create a vision by identifying the values that are core to product diversification and compiling a brief synopsis of the future of the corporation. The company’s management should also come up with a plan to implement the vision.

According to Brisson-Banks (2010), organizational leaders should ensure that individuals responsible for implementing a transformation understand a vision and can describe it adequately. Therefore, the management of Coca-Cola Company should equip the members of the coalition with requisite skills to manage the vision.

Communicate the Vision

What organization does with a vision determines its success. Brisson-Banks (2010) maintains that it is hard to articulate a vision since its message faces competition from other daily communications. Thus, a company ought to communicate its vision regularly and powerfully. The Coca-Cola Company should embed the vision to develop healthy beverages on its day-to-day operations. The company’s leadership should speak about the vision every time it gets an opportunity (Appelbaum et al., 2012).

Besides, it should make all its decisions guided by the spirit of the vision. The management should lead by example. The leadership should ensure that all its actions are aimed at realizing the vision. Employees’ worries and concerns may frustrate a vision. Therefore, the management of Coca-Cola Company should address employees’ concerns candidly and truthfully. Besides, the management should evaluate all operations and train employees based on the objectives of the vision.

Remove Obstacles

Once a company has established a vision and won the support of the stakeholders, it is imperative to lay down a transformation plan and continuously identify and remove obstacles. Brisson-Banks (2010) holds that removing barriers can encourage employees to implement a change and ensure that a vision is achieved on time. The Coca-Cola Company should hire or select change leaders who will handle barriers to formulation and development of healthy beverages.

Moreover, the company should reward employees who accomplish their goals as a way to motivate them. The vision to produce healthy beverages is bound to face resistance from some workers. Therefore, the management should identify workers that resist the change and make them understand its importance. The management should do all it can to eliminate obstacles.

Create Temporary Wins

Brisson-Banks (2010) asserts, “Nothing motivates more than success” (p. 247). Therefore, the leadership of Coca-Cola Company should come up with short-term wins to motivate workers. The company should identify the products with high demand and work on them. The Coca-Cola Company is renowned for developing energy drinks. Thus, it should start by developing healthy energy drinks. Kotter and Cohen (2002) maintain that every short-term win that an organization makes motivates employees.

Consequently, the Coca-Cola Company should ensure that all the temporary gains are achieved with minimal failure. The company should make short-term gains by identifying cheap targets. It may be hard for agents of change to persuade the management to fund expensive short-term goals. Therefore, the agents of change at the Coca-Cola Company should be careful with the short-term targets since they can thwart the entire transformation agenda.

Build On the Transformation

Kotter and Cohen (2002) argue, “Many change projects fail because victory is declared too early” (p. 112). The short-term wins are just a preamble of what an organization is supposed to do to achieve a lasting change. Kotter and Cohen (2002) posit that succeeding to produce a single product through a novel system is great.

However, if a company manages to produce multiple products using a unique system, it means that a change is feasible. Once the Coca-Cola Company succeeds to manufacture one brand of healthy energy drinks, it should embark on producing varieties of healthy beverages. The company should evaluate its successes on a regular basis to build on them and come up with superior products. Besides, the company should keep on coming up with novel ideas to maintain the momentum of change.

Affix the Changes in Organizational Culture

According to Kotter and Cohen (2002), for a change to stick, it must be at the center of all operations of an organization. Organizational culture dictates what happens in a corporation. Therefore, the Coca-Cola Company should ensure that the values of its vision are incorporated in its operations. The company should ensure that change is reflected in all its activities. The company’s leadership should continue to support the change to guarantee that Coca-Cola regains its global reputation.

The management should let the coalition team know about the progress of the company on regular basis. Moreover, the human resource personnel should ensure that they refer to the values and principles of change when recruiting workers. The Coca-Cola Company should formulate a strategy to substitute principal members of the coalition when they retire. It will help the company to preserve their legacy.

Conclusion

The increase in the fight against obesity and demand for healthy beverages has led to the Coca-Cola Company losing a significant percentage of the North American market. The company is not also performing well in a majority of the foreign markets. Therefore, the Coca-Cola Company should urgently come up with a strategy to diversify its products before the rival companies capture the market. The company’s leadership has the duty to create a sense of urgency within the employees and establish a team to spearhead changes.

The company should devise a vision aimed at helping it to venture into healthy beverages business. Also, the management of Coca-Cola Company should endeavor to address hurdles that might prevent it from producing healthy drinks. The demand for healthy beverages is expected to rise in future. Consequently, once the company ventures into this industry, it should ensure that it entrenches the change in its corporate culture.

References

Appelbaum, S., Habashy, S., Malo, J., & Shafiq, H. (2012). Back to the future: Revisiting Kotter’s 1996 change model. Journal of Management Development, 31(8), 764-782.

Brisson-Banks, C. (2010). Managing change and transitions: A comparison of different models and their commonalities. Library Management, 31(5), 241-252.

Kotter, J., & Cohen, D. (2002). The heart of change: Real-life stories of how people change their organizations. Pennsylvania: Soundview Executive Book Summaries.

Pendergrast, M. (2013). For god, country, and Coca-Cola: The definitive history of the great American soft drink and the company that makes it. New York: Basic Books.

Taylor, M. (2014). Cultural variance as a challenge to global public relations: A case study of the Coca-Cola care in Europe. Public Relations Review, 26(3), 277-293.

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