BMGT 500 GMB/NE/0645/05/14

BMGT 500 Principles of Management

Management styles & Leadership practices at Coca-Cola.

Report submitted to
Prof. Chepkilot

In partial fulfillment for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION (MBA)

By
Jesse G. Munyua
GMB/NE/0645/05/14

Kabarak University Nakuru Town Campus

Management styles & Leadership practices at Coca-Cola. I

 BMGT 500 GMB/NE/0645/05/14

Table of Contents
1.0 Introduction .......................................................................................................................... 2
2.0 History of the Company ....................................................................................................... 2
3.0 Mission and Vision .............................................................Error! Bookmark not defined.
4.0 Culture and values...............................................................Error! Bookmark not defined.
5.0 Organizational Design ........................................................Error! Bookmark not defined.
6.0 Organization Structure ......................................................................................................... 2
7.0 Organizational goals ............................................................................................................ 4
8.0 Leadership Style................................................................................................................... 4
8.1 Core Capabilities .............................................................................................................. 5
9.0 Management Styles .............................................................................................................. 6
9.1 Democratic ....................................................................................................................... 7
9.2 Autocratic ......................................................................................................................... 7
9.3 Laissez-faire management style ....................................................................................... 8
9.4 Consultative democratic ................................................................................................... 8
9.5 Team Work....................................................................................................................... 9
9.6 Employee Engagement .................................................................................................. 10
10.0 Management Functions of Coca-Cola Company ................Error! Bookmark not defined.
10.1 Planning...........................................................................Error! Bookmark not defined.
10.1.1 Strategic Goals ........................................................Error! Bookmark not defined.
10.1.2 Tactic Goals ............................................................Error! Bookmark not defined.
10.1.3 Operational Goals ...................................................Error! Bookmark not defined.
10.1.4 Decision Making .....................................................Error! Bookmark not defined.
10.2 Organizing .......................................................................Error! Bookmark not defined.
10.2.1 Departmentalization ................................................Error! Bookmark not defined.
10.2.2 Work Specialization ................................................Error! Bookmark not defined.
10.2.3 Delegation and Accountability ...............................Error! Bookmark not defined.
10.2.4 Resource Allocation ................................................Error! Bookmark not defined.
10.2.5 Organizing the Human Resources ..........................Error! Bookmark not defined.
10.3 Leading ........................................................................................................................... 10

Management styles & Leadership practices at Coca-Cola. 0

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10.3.1 Motivation .............................................................................................................. 10

10.3.2 Communication ...................................................................................................... 11
10.3.3 Corporate Culture................................................................................................... 11
10.4 Controlling ......................................................................Error! Bookmark not defined.
10.4.1 Sales Persons Reporting System ...........................Error! Bookmark not defined.
10.4.2 Sales Person Evaluating System .............................Error! Bookmark not defined.
Reference ...................................................................................................................................... 12

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1.0 Introduction
The Coca-Cola Company, a retailer, manufacturer and marketer of non-alcoholic
beverages, is a market leader in its industry currently offering more than 500 brands in over 200
countries or territories. The company operates a franchised distribution system dating from 1889
where the Coca-Cola Company only produces syrup concentrate which is then sold to various
bottlers throughout the world who hold an exclusive territory. The Coca-Cola Company
headquartered in Atlanta, Georgia owns its anchor bottler in North America, Coca-Cola
Refreshments.

This behemoth has managed to maintain its position as a market leader for over a hundred years
and is still going strong. This paper explores the history, mission, vision, and organizational
structure and management functions of the Coca-Cola Company and tries to explain leadership
and some management styles applied by the company.

2.0 History of the Company

Coca-Cola is a multinational company who started its business on May 1886 in Atlanta as
a beverage (formal drink) industry.Dr. John Styth Pemberton made a cough syrup which he
named coke on 8th may 1886. Its price was 5 cent per glass and was available at the largest
pharmacy of Atlanta known by the name of Jacobs Pharmacy. Later on it was purchased by a
well-known businessman Asa Griggs Candler who introduced it as a carbonated soft drink in
the market and hid marketing tactics led coke to Coca-Cola and it dominated the market of
carbonated soft drinks throughout the twentieth century.

In 1895 the company started to sell their product coke in bottles which was a strategy of the
company to be recognized well in the International market. Their strategy worked and the bottled
form of coke was successfully recognized all over the world in the beginning of 1896. Now a
days Coca-Cola is the most famous and highly consumed brand in all over the world
(Wikipedia, 2014).

6.0 Organization Structure

Coca-Cola is Tall in terms of organizational complexity. Coca-Cola is controlled through a
vertical hierarchy, with decision-making authority residing with the companys upper
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management. Daily and routine decisions are made by the line managers at the middle level
(Narayan, 2010).

Coca-Cola has more than 700,000 system employees, including their bottling partners. The
companys operations reach over 200 countries worldwide, with six geographic operating
segments. Coca-Colas head office is responsible for providing the company with an overall
direction and support to the regional structure. The companys Executive Committee makes key
strategic decisions for the company. The Chair of the Executive Committee acts as a figurehead
for the company and chairs the board meetings. He is also the CEO and is the senior decision
maker (Narayan, 2010).

Each division of the company has a marketing manager, public affairs director, finance director,
etc. When one of these divisions is planning to do something, an advertising campaign for
example, the division has to communicate with their superiors to get approval. Since the
companys hierarchy is so tall, communication has to travel back to corporate headquarters in the
U.S, where the Executive Committee has the final decision making power for activities the
divisions have proposed. Below is an organizational chart of the company (Gilhuly, 2014).

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7.0 Organizational goals

Coca-Cola is both effective and efficient, as they have made it their objective to succeed in these
areas. Coca-Cola is more focused on efficiency than effectiveness, but they still achieve in both.
Regardless of what they specialize in, their organizational goal is to maximize profits for
shareholders by selling Coca-Cola products worldwide to a wide range of customers. They are
able to do this by having a very vertically hierarchical organization that allows them to take
advantage of a low cost strategy, limiting expenses and increasing revenues.

8.0 Leadership Style

For effective leadership, there can be no substitute for strategic thinking and tireless, relentless
execution. There can be no alternative for attracting and retaining the absolute best people to lead
and creating a dynamic environment for them. And there can be no job more important than
communicating effectively with your customers and all your key stakeholders. Coca-Cola
achieves this by formulating a clear and compelling vision, getting their system aligned behind it,
executing and constantly communicating intentions.

Let's face it; vision without execution is merely daydreaming. And execution without vision is
like running in the dark - you're moving but probably not in the right direction.Coca-
Colaunderstands that capturing new opportunities is going to require both vision and execution
across the company and its wonderful system of bottling partners. That's where the companys
vision which they call Vision 2020 comes into play. It's a look at where the company and its
bottling partners need to be heading in the future. The vision is centered on capturing
unprecedented opportunities emerging in futurewithin the global non-alcoholic beverage industry
(The Coca-Cola Company, 2014).

The companys vision is to harness new wealth, new beverage requirements and new innovations
to accelerate growth and create the world's most respected consumer goods system. Leaders at
Coca-Cola have created a clear and compelling vision for their organization, and work to inspire
their people to achieve that vision.Equally important is getting the bottling system leadership and
company employees aligned behind the vision.

Muhtar Kent is Chairman of the Board and Chief Executive Officer of The Coca-Cola Company.

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Mr. Kent joined The Coca-Cola Company in Atlanta in 1978 and has held a variety of marketing
and operations roles throughout his career. In 1985, he was appointed General Manager of Coca-
Cola Turkey and Central Asia. From 1989 to 1995, he served as President of the Company's East
Central Europe Division and Senior Vice President of Coca-Cola International, with
responsibility for 23 countries. Between 1995 and 1998, Mr. Kent served as Managing Director
of Coca-Cola Amatil-Europe, covering bottling operations in 12 countries (The Coca-Cola
Company, 2014).

In an interview with Management Paradise.com, the CEO states, my job is to create a climate of
success for our people and inspire them to achieve the vision we have created for our business.
That's really the true essence of leadership. At the end of the day, it all comes down to
execution. For The Coca-Cola Company, execution involves focusing on three core capabilities
of:

Consumer marketing - which generates that bond and emotional connection with
consumers.
Commercial leadership - which involves all the strategic actions taken with over 20
million retail customers who sell Coca-Cola brands around the world each day.
And franchise leadership - which is working with its 300 bottling partners around the
world to create greater system alignment (Shetty, 2011).

8.1 Core Capabilities

Consumer Marketing

Marketing investments are designed to enhance consumer awareness of and increase consumer
preference for Coca-Cola brands. This produces long-term growth in unit case volume, per capita
consumption and the companys share of worldwide nonalcoholic beverage sales. Through
relationships with bottling partners and those who sell Coca-Cola products in the marketplace,
the company creates and implements integrated marketing programs, both globally and locally,
that are designed to heighten consumer awareness of and product appeal for brands.

Commercial Leadership

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The Coca-Cola system has millions of customers around the world who sell or serve their
products directly to consumers. The company focuses on enhancing value for these customers
and providing solutions to grow their beverage businesses. Coca-Colas approach includes
understanding each customer's business and needs, whether that customer is a sophisticated
retailer in a developed market or a kiosk owner in an emerging market. We focus on ensuring
that our customers have the right product and package offerings and the right promotional tools
to deliver enhanced value to themselves and the Company.

Franchise Leadership

The Coca-Cola Company must continue to improve its franchise leadership capabilities to give
the company and its bottling partners the ability to grow together through shared values, aligned
incentives and a sense of urgency and flexibility that supports consumers' always changing needs
and tastes. The financial health and success of bottling partners are critical components of the
Company's success. The company works with the bottling partners to identify system
requirements that enable them to quickly achieve scale and efficiencies, and the company shares
best practices throughout the bottling system. Coca-Colas system leadership allows it to
leverage acquisitions to expand its volume base and enhance margins (USSEC, 2009).

Under the leadership of Muhtar Kent, its dynamic Chairman and CEO, Coke has made a strong
commitment to inclusiveness.Since Muhtar Kent took the helm of Coca-Cola, in July 2008, he
has set a course for ambitious, long-term growthwith the goal of doubling revenue by 2020. Kent
has tried to rejuvenate an inward-looking, arrogant corporate culture and has reinvested cost-
cutting dividends in brand development.

9.0 Management Styles

A management style is an overall method of leadership used by the manager. The success that
the management team at Coca-Cola has in motivating its employees to meet their objectives is
based on the management style they adopt. There are three main management styles democratic,
autocratic and the laissez-faire style.

The Coca-Cola Company uses the following management styles, but each one in different
departments. There are three main types of management styles used in businesses:

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9.1 Democratic

The democratic leadership style consists of the leader, sharing the decision making abilities with
the group members by promoting the interests of the group members and by practicing social
equality.

This emphasizes on group agreements to generate new ideas. There are two types of democratic
management styles; democratic and consultative democratic. Democratic is where all the
managers, junior managers and employees are involved in the ideas and final decision process.
Out of all the workers, no-one has a higher level than the others in this management style.

Democratic style is the management style that Coca-Cola adopts. This sort of management style
involves empowerment. In this management style individuals and teams are given
responsibilities and decisions to make, usually within a given framework. If anything wrong
happens then the individuals and teams are then held responsible for the decisions that are
chosen. With this type of management style it allows the manager to feel comfortable with other
people in the organization making some of the decisions. Democratic managers will often want
feedback from their employees on decisions being made. Democratic leaders listen and act on
the opinions of the group. This type of management is good as it makes the employees happy and
productivity is high. This is a very good method because employee's thoughts and suggestions
are listened to by the business. This makes the employees seem as if they are respected and that
their thoughts are valid.
Feedbacks from managers at Coca-Colas bottling system across the globe provide vital
information that is incorporated in their strategies.

9.2 Autocratic

The authoritarian leadership style or autocratic leader keeps strict, close control over the
followers by keeping close regulation of the policies and procedures given to the followers. To
keep main emphasis on the distinction of the authoritarian leader and their followers, these types
of the leaders make sure to only create a distinct professional relationship.

Where the leader makes all the decisions, there is no negotiation and is very prescriptive and
there is little job satisfaction. However, the job gets done quickly and there is less conflict
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between different ideas. This style is hardly used among the company as they believe that the
lack of input could lead to poor results. Autocratic does save a lot of time as quick decisions can
be made and there is no time wasted on discussion resulting in the business saving time and
money.

On the factory floor at Coca-Cola, there is an autocratic system of management where the
employees are controlled by the managers and follow their procedures.

9.3 Laissez-faire management style

The Coca-Cola Company has a culture that is run in the laissez-faire style meaning the hands
off approach.The laissez faire style is sometimes described as the "hands off" leadership style
because the leader delegates tasks to their followers, while providing little or no direction to the
followers.
If the workers are meeting their Key Business Indicators, then the managers and the directors of
the company take this relaxed style of coordinating their business. They have a vision to refresh
everyone everyday and the values to take pride in their work , to be honest , fair and
determined to win and have a passion for their actions.

9.4 Consultative democratic

This is where the managers allow the employees to make the ideas but the ideas are forwarded to
the executive's or the manager consults their team to make the final decision. Coca-Cola applies
consultative management style to the company more as there can be less conflict for what the
final decision is. The advantage of this is that it helps to motivate staff as they are aware that they
have a say in the company to some extent. The disadvantages of this that the process is very time
consuming and effort will be needed by a manager to do this.

Management encourages employees to set goals in line within the organization aims. There are
reviewed regularly in performance appraisals. The advantages of this style are that it will
increase efficiency of individuals and help to motivate them and train them so they are
productive.

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The world's premier marketer and beverage industry leader for more than 118 years, Coca-Cola
are focused on the strategic workplace programs that help assure the success of their
commitment to embracing the similarities and differences of the people, cultures and ideas. The
strategies Coca-Cola uses to achieve these objectives include the use of certain mechanisms that
facilitate such communication to take place. These mechanisms include the use of:

Diversity Advisory Council

The Companys corporate Diversity Advisory Council consists of the representative group of
employees from all the levels, functions and business units of the organization. The Council
develops recommendations for all the senior management on advancing the company's efforts,
towards achieving its diversity objectives.

Employee Forums

Coca-Colabelieves that the sense of community enhances their ability to attract, retain and
develop diverse talent and ideas as the source of competitive business advantage. Through
employee forums, the employees can connect with their colleagues who share similar interests
and backgrounds.
In these forums and elsewhere, the employees support each other's personal and the professional
growth and enhance their individual and collective ability to contribute to the company. The
success at Coca-Cola is due to their laissez-faire culture and the culture is important because it
can affect the people and the things to do with the business.

The companys culture is generally inviting and managers get along well with the staff. Staff
members have less stress to deal with and a friendly environment to work in, thus work is done
more efficiently.

9.5 Team Work

Team work is a sub culture within the Coca-Cola Company. Teams are accountable for activities
like:

Quality
Utilization and
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Yield

Within the system, there needs to be a balance of Utilization, speed the factory works at, and the
Yield. Working together in teams provides the cooperation necessary to achieve this smoothly.

9.6 Employee Engagement

Another part of the culture and the management style at the Coca-Cola Company is its employee
engagement. Employee engagement consists of the following five points:

Realizations that delivery of the hard stuff is simply not enough.

Openly acknowledging this to the workforce.
Doing what it takes to engage every employee in the space of 16 days.
Involving everyone in the design of the management style consistent with vision and the
values.
Identifying talented individuals across the operation to act as the internal facilitators to
train out the new behavioral standards (The Coca-Cola Company, 2014).

10.3 Leading

The third management function is leading. The following major steps are taken by the Coca-
Cola Company in the leading function:

Motivation
Communication
Corporate Culture

10.3.1 Motivation
Coca-Cola Company gives high attention to the motivation of the employees. Promotions of
hardworking employees are a part of the companys policy. Promotions of employees are done
on the performance basis which is a great motivation for the employee that higher his
performance there is more chance of his promotion.

Beside from promotion strategy the Coca-Cola Company also uses the compensation strategy to
motivate the employee; Coca-Cola is paying industrial average in compensation.Not only this

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different campaigns and competitions between the employees itself are also used to motivate the
employees.

Managers play a very important role in the motivation of the employees in Coca-Cola Company.
They help them in all their problems either they are personnel or professional. They give them
feedback on their performance which makes the employee feel good.Working environment and a
challenging milestone are a major factor in employee motivation in the company(The Coca-Cola
Company, 2014).

10.3.2 Communication
There is an open environment in the Coca-Cola Company which allows the employees to
communicate with each other and it allows the information to flow inside the company and
discourages the barriers between members to share information. Before making the decisions the
top level managers discuss it with the middle level managers and before decision making it is
shared till the end of the hierarchy. The Coca-Cola Company allows the employees that anyone
of them can meet the general manager if he/she is facing any kind of difficulty.

Interdepartmental communication is done in the form of formal and informal manners. To get the
feedback of the employees and get the view of the employee about the manager the grapevine is
used (The Coca-Cola Company, 2014).

10.3.3 Corporate Culture

The top management of the Coca-Cola tries to follow the prescribed culture of the organization.
Coca-Cola has formal and documented values that are communicated to all the employees. The
top level manager acts as role models to make sure that the rules and regulations are been applied
in the company and closely administrator review their employees behavior.

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Reference
The Coca-Cola Company: (2014). Mission, Vision & Values. Retrieved July 16, 2014 from:
http://www.coca-colacompany.com/our-company/mission-vision-values.

The Coca-Cola Company: (Vision 2020).Road for winning together: TCCC & aour bottling
patners. Retrieved on 17 July, from http://assets.coca-
colacompany.com/22/b7/ba47681f420fbe7528bc43e3a118/2020_vision.pdf

The Coca-Cola Company: (April, 2009). Code of Conduct: Acting with Integrity Around the
Globe. Retrieved on 17 July, 2014 from http://assets.coca-
colacompany.com/45/59/f85d53a84ec597f74c754003450c/COBC_English.pdf

The Coca-Cola Company: (2014). Chairman of the Board and Chief Executive Officer: Muhtar
Kent. Retrieved July 16, 2014 from:http://www.coca-colacompany.com/our-company/board-of-
directors-muhtar-kent

Gilhuly, J. (2014, March 1st). Coca-Cola Organizational Complexity. Retrieved July 16, 2014
from http://juliegilhuly.wordpress.com/2014/03/01/coca-cola-organizational-complexity/

Vicky, N. (2010). The Coca-Cola Company 2010: Organizational Structure of The Coca-Cola
Company. Retrieved July 16, 2014 from http://www.scribd.com/doc/37483762/Organizational-
Structure-of-The-Coca-Cola-Company

Shetty, N. (May 4th, 2011). Leadership Style at Coca-Cola Company. Retrieved July 16, 2014
from http://www.managementparadise.com/forums/foundation-human-skills-f-h-s/221096-
leadership-style-coca-cola-company.html#post453091

USSEC (2009). Annual report pursuant to section 13 or 15(d) of the securities exchange act of
1934. Retrieved 17 July, 2014 from http://www.wikinvest.com/stock/Coca-
Cola_Company_%28KO%29/Filing/10-K/2010/F46738191

The Coca-Cola Company: (2014).As Inclusive As Our Brands: 2009 U.S. Diversity Stewardship
Report. Retrieved from http://assets.coca-
colacompany.com/51/ba/c9ddc22646ca9660ee4d8f309c01/2009_Diversity_Report.pdf

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Wikipedia. (2014). Organizational culture. Retrieved on 17 July, 2014 from

http://en.wikipedia.org/wiki/Organizational_culture

The Coca-Cola Company: (2014).The Coca-Cola System. Retrieved 17th July, 2014 from
http://www.coca-colacompany.com/our-company/the-coca-cola-system

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