Essay on "Organizational Design Analysis There Are Several Factors"

Essay 9 pages (2464 words) Sources: 12

[EXCERPT] . . . .

Organizational Design Analysis

There are several factors that can influence companies' success and well functioning. Their organizational structure is one of them. Companies' organizational structure relies on their processes and systems, but also on the organization of human resources.

Specialists in the field have focused on developing theoretical models intended to address the problems that companies face in their attempt to strengthen their organizational structure in accordance with the requirements of the business environment. Such attempts are reflected in several organizational design and development models. Therefore, it is important to understand how these models can be applied to the numerous problems determined by the environment in which companies develop their activity.

Company Presentation

Coca Cola is one of the most well-known brands on international levels, and the owner of the best selling non-alcoholic beverage (the Times, 2005). The company's success on the U.S. market has helped Coca Cola initiate and strengthen its presence in Europe, and in Asian countries also. This strategic success can be attributed to the organizational structure that has allowed the company to expand on international level, while not neglecting its U.S. market.

However, Coca Cola had to address several problems in its international development. These problems are determined by the differences between the markets that Coca Cola wants to conquer. The culture of the countries addressed by Coca Cola are different, they determine numerous requirements that make it difficult for companies to develop centralized strategies intended to target them.

The company's managers understand that in order to reach Coca Cola's objectives in numerous different markets it is important to develop a flexible organizational structure. Therefore, the strategy developed by the company focuses on decentralization of systems and processes. In order to decentralize most of its processes and systems, Coca Cola has developed two operating groups, Bottling Investments and Corporate. In addition to this, the company has several operating groups in the U.S., Europe, Asia, and Africa.

These divisions are intended to improve the decision making process. This is because decisions are made on local level, they are made faster and with fresh information from the market. Managers making such decisions have thorough knowledge on the markets they serve, they are able to identify market trends, and can make these decisions in accordance with the requirements of the environments in these different countries.

However, certain processes are centralized. This refers to finances, human resources, innovation, marketing, and strategy. These are important divisions that develop the strategic direction that Coca Cola must follow. The strategy developed by these divisions is communicated to the managers of Coca Cola's international divisions. Based on this strategy, the managers of international divisions decide how to reach the established objectives.

Smaller divisions usually develop the strategy focused on improving the supply chain management, financial resources distribution, and the motivational strategy of human resources. The decentralization of systems and processes has a significant impact on the communication process within the company. It helps reduce many communication problems, and this improves relationships between employees and improves their performance.

Issues that arose during recent years

Globalization poses a major threat for Coca Cola when considering the numerous strategies that need to be implemented in order for individuals belonging to particular communities to be able to accept this brand. "Marketing efforts have also changed, Coca Cola has a new business strategy that attempts to improve its understanding of the unique cultural and economic issues in many nations of the world" (Morley, 107).

Even with the fact that the company's previous 'one product, one global strategy' campaign was particularly successful, its CEO recently acknowledged that it is essential for him and for the company as a whole to listen to people's needs in order to be able to provide them with what they want while selling their products.

While it might seem that changing strategies in order to satisfy a wider public is a good strategy, this is not always the case. "A classic example of a change strategy gone wrong was the 1985 decision of the Coca Cola Company to end production of its classic drink and introduce New Coke" (Mills, Helm, Mills, Bratton, & Forshaw, 62). Consumers responded rapidly and emphasized the fact that they were unsatisfied with the new beverage. This virtually demonstrated that the drink was appreciated precisely for its taste, as the company was not necessarily important for consumers, even with the fact that it was one of the best known companies in the world. Innovation is not always the answer and in some cases it can generate devastating effects on a company. The finances invested in the new drink and the fact that the company's image had been damaged have certainly produced serious problems for the Coca Cola Company (Mills, Helm, Mills, Bratton, & Forshaw, 62).

What is impressive about the New Coke campaign was that approximately four million dollars were spent in the process of researching whether or not it would have a positive effect on the company's earnings. Even with this, research failed to highlight that people in the U.S. practically had an emotional bond with the old beverage. All things considered, this new beverage also had a positive effect on the company because it made people understand that they really loved Coca Cola. "New Coke ultimately increased Coca-Cola's shelf space and market share by allowing bottlers to provide two cola tastes and made consumers realize how precious Coke classic was to them" (Going, Going, Gone 19-21).

The Coca Cola Company considered that taste was an important factor in determining people's appreciation of the brand. However, they failed to focus on a series of other issues that the company dealt with in certain areas from around the world. Unions in Colombia lobbied with regard to how the company was reluctant to act in agreement with its workers' principles. "Coincidentaly, at the same time, eight Coca-Cola workers died, forty-eight went into hiding, and sixty five received death threats" (Ferrell, Fraedrich, & Ferrell, 314).

The Union considered that the company was somehow involved in the deaths of these people and that it needed to compensate their families as a result. Even though the Coca Cola Company emphasized that the critical conditions in Colombia regarding its four-decade-long civil war also played a major role in its problems, the fact that it did not previously devise an agenda that could prevent such accusations from taking place made it difficult for the company's leaders to effectively combat all charges.

One of the Coca Cola's company most important problems is its failure to deal with change. The company actually appears to have problems understanding the concept of change and it is essential for it to implement strategies that would assist it in situations when it needs to demonstrate that it can actually change. The 1998 case when a student was suspended because he was wearing a Pepsi T-shirt during a Coca Cola advertising event brought significant attention from the general public as people came to understand the company's aggressive agenda.

The company actually appears to consider that there is no difference between students and promotional campaigns and thus came to use students as a tool to advertise its products. Although such marketing techniques are effective, Coca Cola is likely to lose serious supporters as a result of the fact that the masses gradually become better acquainted with the lengths that the company is willing to go in order to advertise its product. It actually seems that the organization is unwilling to accept change as an essential part of their business and that they simply want to continue using every means available with the purpose of promoting their image (Saltman 156).

The Coca Cola Company has experienced significant problems in countries like China and India because it had the tendency to use the same marketing techniques they used in other countries. The company used aggressive marketing in China by attempting to buy the Huiyan Juice Group, the largest fruit juice organization in the country. Coca Cola seems to express more appreciation in having monopoly over affairs in a country than in experiencing success there by following a series of steps that take more time. The Chinese Ministry of Commerce's answer was to install an innovative anti-monopoly law that prevents large corporations from exercising their influence in a country.

When companies experience significant success it is difficult for them to focus on their customers and their needs. The fact that Coca Cola saw graduate progress in recent years reduced its ability to put across a supportive nature with regard to problems experienced by its customers.

When considering the Huiyan situation, it was only natural for the Chinese public and government to be reluctant to allow Coca Cola to buy a company they considered to be popular and an important part of their culture. Even though one might be inclined to consider that the company would actually assist a country and its inhabitants by investing there, the reality is that such an organization obviously wants to exploit the respective… READ MORE

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