Structure of the Organisation

Varsha Dua 92077

CONTENT
#1 Organizations and Organizational Effectiveness #2 Stakeholders, Managers, and Ethics #4 Organizational Design #5 Designing Organizational Structure: Authority & Control #6 Designing Organizational Structure: Specialization & Coordination #3 Managing in a Changing Global Environment #8 Organizational Design & Strategy #7 Creating & Managing Organizational Culture #9 Organizational Technology #10 Decision Making #11 Managing Conflict, Power, and Politics

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 companys domain, the move would make their core business more profitable. The CocaCola 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 Companys 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. This will also enforce a learning organization and in still the organic culture into everyones 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 companys 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 Companys incorporation in 1892 a strong focus on growth and marketing has existed. Besides traditional advertisements in the local newspaper, the companys 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 (The coca-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 Companys 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 (Thecocacolacompany.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 companys 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 nonalcoholic 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, unrivalled distribution system, global reach, and a strong commitment by our management and employees worldwide-to achieve longterm sustainable growth . 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 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 (The coca-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 anticarbohydrate 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. 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 companys 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 Companys 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 organizations 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.

#2 Stakeholders, Managers, and Ethics The stakeholders for The Coca-Cola Company as stated in the companys 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 organizations corporate structure is located in the appendices (Reuters.com) The organizations 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 companys 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 (thecocacolacompany.com). The fact that members of the top management team have well rounded backgrounds allow for problems to be looked at from multiple angles. #3 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 , 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. 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. 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 organizations extremely low growth rate, Isdell used teams of top managers to create solutions to the organizations 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. Isdells 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 Companys 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 (Thecocacolacompany.com). Centralization and high standardization are associated with a mechanistic structure. 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 organizations flexibility and responsiveness. The recent shift towards a more decentralized and organic structure corresponds with the uncertainty of the organizations environment, which will be discussed later.

#4 Designing Organizational Structure: Authority & Control The Coca-Cola Company currently employs approximately 71,000 employees. According to a general organizational chart obtained from the companys 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 companys intranet will greatly increase the communication between every level of employees, and allow upper management to effectively communicate to the front line employees. 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 companys 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. #5 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 companys 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. #6 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 Companys 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 organizations 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 companys 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 . 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 tenyear deal with Burger King to be the restaurants only supplier of beverages. Even though PepsiCo was willing to give Wendys 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. #7 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 Wendys restaurant chain. Wendys 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 companys 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 Companys 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 . 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. #8 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 (thecocacolacompany.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 companys bottled water, is extremely mechanized, and it is fair to assume that the production of every Coca-Cola product is the same (thecocacolacompany.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 Companys 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 organizations structure outweigh the consequences. #10 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 companys culture, how employees were rewarded, and made efforts to get employees more involved. 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. 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. #11 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. 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. This type of conflict can drastically affect the organizations ability to change and adapt quickly, a necessity in the companys 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 The (Coca-Cola Companys) marketing department has considerable power because it is the department that can attract customers the critical scarce resource. 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 on the market, research indicated that by simply using the name Diet Coke, preferences for the same tasting beverage increased dramatically. 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. 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.