We know every Beverage company makes Swot Analysis for understanding what is the company’s week point and what is a good point?. But who are new with SWOT analysis this article is very much helpful for beginners. In this article, we share a details date about Coca-Cola’s Swot Analysis & Leading Changes.
Table of Contents
- Task 1.
- P1 Compare different organizational examples where there has been an impact of Change on an organization’s strategy and operations.
- P2 Evaluate how external and internal drivers of Change affect leadership, team, and individual behaviors within an organization.
- P3 Evaluate measures that can be taken to minimize negative impacts of Change on organizational behavior.
- Task 2.
- P4 Explain different barriers to change and determine how they influence leadership decision-making in a given organizational context.
- Task 3.
- P5 Apply different leadership approaches to dealing with change in a range of corporate settings.
Today, every organization goes through changes. From small entrepreneurship to large multinational companies, Change is the only constant. Changes in organization culture, structure, or leadership have become part and parcel of the present business world.
Organizations have many short and long-term goals that make them change their strategies or establish new procedures. And plans call for Change in the organization. Technology, Research & Development, competition, financial, and economic factors also drive Change in an organization.
Changes have a direct effect on the performance, profitability, and organization strategies and plans. Internal and external drivers cause the Change in leadership(Bouma and Ebrom, 2017). This assignment will explore the change in the direction of an organization.
It will describe the impact of changes and their influence on decision making. Various approaches to leadership change will also be described in this assignment, along with the adverse effects of Change.
To present the report, I have chosen two successful organizations that have experienced Change. I have chosen Coca-Cola and Pepsi to give the Understanding about Change in the organization structure that impacted their business. First of all, there is an introduction to both companies.
Coca-Cola is one of the largest carbonated soft-drink producing companies in the world. The company was invented in the 19th century by John Pemberton, and later on, it was sold to Asa Griggs Candler.
Coca-Cola has been the dominant soft-drink company throughout the 20th century for its fantastic taste and popularity. Coca-Cola has a unique formula, which is a trade secret(Bizzozero, 2018).
Coca-Cola is so famous around the globe that people over 200 countries drink Coca-Cola. According to the Best Brand 2015 reports, it was the third most valuable brand in the world after the tech giants like Google and Apple.
Pepsi is the biggest competitor of Coca-Cola and is a portion of American food, snack, and beverage company. Unlike Coca-Cola, Pepsi is diversified in its products because it includes various popular snacks, packaged food items, and beverages (McLarney and Chung, 2016).
The most popular product of PepsiCo is Pepsi, which is a soft drink like Coca-Cola. Pepsi has other sweet beverages like Mountain Dew, 7Up, Tropicana juice, Aquafina mineral water, etc. (McLarney and Chung, 2016).
All of the other drinks of Pepsi are separate brands. Pepsi started its journey as a soft drink company in August 1898. The founder Caleb Bradham was a Chemist. The company had its first journey from New Bern, North Carolina, United States. (Marks, 2015).
Apart from soft drinks, Pepsi also has popular snacks and food brands like Lays, Quaker Oats, Cheetos, etc. and operates worldwide with an operating income of $10.5 billion. The company has a huge asset of $79.8 billion. The company had over 2,63,000 employees until 2017, with 22 renowned product brands alongside Pepsi.
P1 Compare different organizational examples where there has been an impact of Change on an organization’s strategy and operations.
Change is the alteration of activities of strategies of an organization that may produce different output than expected. Both Coca-Cola and Pepsi have experienced a difference in the plan and structure. Here, the Change of these two organizations has experienced an impact they had.
Usually, organizations go through two types of changes, such as Structural Change and strategic changes. Structural Change is the most significant parameter of Change.
Here, the entire structure of the organization is changed along with the time series and organization infrastructure. Structural Change means changing the organization’s policy, management, or leadership style, expanding the business (Bouma and Ebrom, 2017).
Organizations implement structural Change by introducing mergers and acquisitions, policy change, etc.
On the other hand, strategic Change is the alteration of an action plan for an organization. Strategic changes often cause a massive difference in an organization, but the parameter is smaller than structural Change.
Strategic Change comes with the Change in planning, decision making, goals, vision, mission, and objectives (Bouma and Ebrom, 2017). Strategies are changed to compete differently or make more effective decisions. Strategic change forces managers to rethink their business and competitive approach in the marketplace.
Change in Coca-cola:
Figure: structural Change of Coca-Cola (Bizzozero, 2018)
Coca-Cola has been the leading carbonated beverage company in the world with complete success, but with the advent of companies like PepsiCo, they faced hard competition in the 1980s.
Pepsi had been offering soft drinks at different flavors at different prices while Coca-Cola stuck to its original taste and flavor. Finally, they started diversifying their products by including new characters like Diet Coke, sugar-free coke, and also brought Change in their recipe (Bizzozero, 2018).
The figure shows how the one-tier organization structure has been broken down into the two-tier structure and allowing manufacturing a particular spot in the organization structure.
Figure: new product development strategy of Coca-Cola(Bizzozero, 2018)
After the structural Change, Coca-Cola also added new products to its portfolio by changing the product development strategy.
They found it very difficult to stick with only one kind of product. They realized that they need to change their product development strategy and make changes in flavors of their coke to compete with Pepsi.
Change in PepsiCo:
Source: (Cante and Calluzzo, 2017)
For implementing the expansion strategy worldwide, Pepsi divided its international divisions according to different major geographic areas. Earlier it has one international division that operated in different countries, but expansion was difficult with that strategy.
Moreover, they have diversified product brands that are not popular in all areas.
So, the differentiated based on product brands like 7Up, Quaker Oats, etc. foods, beverages, snacks have individual market segments and goals to be achieved by separate teams in separate geographic areas, which increased its revenue significantly.
Earlier, Pepsi used Company Based Bottling Operation (COBO) along with Franchise Based Bottling Operation (FOBO). Now it solely changed its bottling operation to FOBO for reducing cost (Eriksson and Fagerström, 2017). Many products like beverages have high sales in the summer season and lower in the winter season.
The distribution channel needs to be adjusted according to seasons. Pepsi integrated its beverage distribution channel with food and snack distribution channels to cope with the fluctuations of demand (Cante and Calluzzo, 2017).
So, there have been significant changes in the corporate strategy of Pepsi over the last 20 years that made it stronger over its competitors.
P2 Evaluate how external and internal drivers of Change affect leadership, team and individual behaviors within an organization
Domestic drivers of Coca-Cola
To evaluate the internal and external drivers of a company have to apply some theories or methods which are applicable in the business world. The internal drivers of Coca-Cola can be assessed by making a SWOT (strength, weakness, opportunities, threats) analysis. A SWOT analysis evaluates the inner strengths and weaknesses and identifies potential opportunities and threats.
Figure: SWOT analysis of Coca-Cola (Brown, 2018)
- The most valuable strength is the brand power of Coca-Cola. It serves over 1.9 billion beverages over 200 countries daily while there are more than non-alcoholic beverage brands around the world. It is the largest non-alcoholic brand in the world.
- The brand value of Coca-Cola is 79 billion dollars, which is the largest among non-alcoholic beverage brands (Brown, 2018).
- Coca-Cola also owns 500 other brands like juice, sports drink, tea energy drinks, etc. that have enriched its brand portfolio.
- Coca-Cola also has the most massive budget for promoting and advertising the brand than its competitors. It spent $3.9 in 2017 for the advertisement, which is the largest among competitors like PepsiCo.
- The distribution network of Coca-Cola is also vast (Brown, 2018).
- Coca-Cola has been facing PepsiCo for almost three decades. PepsiCo is the biggest threat to Coca-Cola, which is currently the second most popular brand among soft drink companies.
- The product differentiation is low in Coca-Cola, where PepsiCo is ahead of the company. PepsiCo has diversified its products by introducing beverages with different tastes, while Coca-Cola missed the trick (Brown, 2018).
- Coca-Cola has not been able to expand towards healthy beverages rather than making a carbonated beverage, which is considered unhealthy because of the high amount of sugar.
- Although Coca-Cola has not expanded its business like Pepsi, it still has many other drinks brands. So, it has emphasized on diversifying the market which is profitable for the company.
- The demand for soft drinks is increasing day by day with the rise of takeaway foods and restaurants (Brown, 2018).
- The price of production materials is also decreasing, and the company can outsource many of its production activities in cheap labor countries.
- Peoples are also becoming conscious about their health, and now many of them prefer organic and healthy drinks rather than coke.
- The impact of indirect competitors like Starbucks coffee is also tightening the competition faced by the company (Brown, 2018).
- Producing carbonated beverages require a considerable amount of land, water, and other natural resources, which raises serious environmental issues.
External drivers of Coca-Cola
To evaluate the factors that affect the Change in Coca-Cola, we have to perform the PESTEL analysis.
Political policies and leaders influence business organizations. Coca-Cola has to adjust its business policies according to a country’s political change. The company has to take care of the government’s legislative reforms and make strategies according to them. A political change influences the expansion, tax, and other policies in a country.
Coca-Cola is produced and sold in over 200 countries. These countries have different kinds of financial systems. Inflation, interest rates, loans, and many other economic factors influence Change in strategies of the company. The government may impose a hefty tax or commercial regulations on the foreign company (Espedal, 2017).
Since Coca-Cola is a global company, it has to make changes according to the social and demographic factors of a country. Nationality, race, ethnicity, religions have a significant impact on the marketing and sales strategy of its products(Espedal, 2017). The taste and types of products sold also depends on cultural factors. For example, Coca-Cola made 30 different flavors for Japanese customers, but they did only a few in India.
Coca-Cola has been improving its use of technology. Better manufacturing machines are being introduced regularly. They are also using digital networking technologies to reach customers and improve their communication systems (Espedal, 2017).
Environmental factors like emission of carbon-di-oxide, use of water, and other natural resources have raised the eyebrows of many environmental organizations. An excessive amount of water is used in producing carbonated beverages (Espedal, 2017). Often the people in the neighboring areas of the manufacturing plan complain about water shortages. So, they have to use water by abiding the environment laws of using natural resources.
When making a new manufacturing plant, the legal permission from the regulatory authority should be taken to avoid legal actions that can cause significant loss. However, Coca-Cola possesses the rights of their business assets and obliges the laws in a country.
P3 Evaluate measures that should be taken to minimize negative impacts of Change on organizational behavior
After evaluating internal and external drivers of an organization, we need to take proper steps to reduce the effects of factors that negatively affect the business or cause change practices. Several theories can be used to minimize adverse effects. Two methods are explained here.
PDCA Cycle: The Plan-Do-Study-Act (PDCA) cycle is a prevalent theory to find out the problems and work on them to solve.
Figure: PDCA cycle for Coca-Cola (Blatter, 2018)
During the SWOT and PESTEL analysis, many problems have been found that must be solved by the company.
Many factors hurt the company. These factors must be reduced using a specified formula that includes a set of actions. PDCA cycle is very much suitable for the continuous development of the company.
Plan: It is the first step in the development process. Here, the company identifies the problems that cause adverse effects and strategies on how to reduce them.
The company may try to diversify its product portfolio, or they might want to bring change in their product flavor(Blatter, 2018). They have to plan these things at this stage.
Do: In this step, management takes the required actions to execute the plan they developed earlier. In this stage, they start to implement strategies or solve the problems they found.
Here, management begins to deal with the issues that create negative behavior on the company or resistance to Change (Blatter, 2018).
Check: In this step, the activities taken to carry out the plan are evaluated and or checked to ensure whether they went according to the program or not.
In this part, the success of planning is assessed, and a report is prepared for the management. They compare the expected results with actual results to see whether they are consistent or not.
Act: If everything goes well in the checking step, then the final plan is implemented, and the company progress towards a continuous development process where problems are solved in the same manner using the same cycle (Blatter, 2018).
Coca-Cola can work on its product diversification strategy to compete well in international markets and minimize negative behavior in the organization.
Figure: Systems theory (Prnewswire.com, 2018)
The system is a functional process where many parts or subsystems work together to execute a mechanism. Every order has three fundamental elements: input, process, and output.
Systems rely on their parts that must act together to make the system run smoothly and work for the organization (Prnewswire.com, 2018). System theory suggests that the organization runs as a system where people, resources, and infrastructure work as its parts, where all of these parts must work together to pull off a change in the organization.
Every piece of Coca-Cola’s systems must work together to eradicate the negative impacts of Change in the organization. Systems theory includes all other organization theories that are used for different aspects of the organization.
Finally, after finishing the first part, we can say that change practices are mandatory for organizations. Both internal and external drivers can cause a change in an organization, as shown in the Coca-Cola or Pepsi case.
Change in the organization is a good practice. The organization must change its strategy or structure to stay in the competition or progress in the business. How strategy operations have changed business organizations is also explained with examples here.
The impact of internal and external drivers is also described that has a significant effect on organizational Change (Prnewswire.com, 2018). Different theoretical aspects are also discussed to show the process of reducing the negative impact of a change in an organization.
P4 Explain different barriers to changes and determine how they influence leadership decision-creating in a given organizational context.
Changes are not made easily by an organization. Some many barriers and implications prevail before Change happens. To make changes in Coca-Cola, it is essential to understand the obstacles that might come in front of the change practices.
There are many barriers to change, like employees’ resistance to change, shortage of capacity and funds, and many more reasons are barriers to replace (Hughes, 2011).
People like to maintain the status quo rather than bringing about change in an organization. The obstacles to change and driving forces of change can be explained by using the Force Field Analysis.
Forced Field analysis:
The force field analysis is a perfect tool for identifying the driving and restraining forces from changing practice.
Curt Lewin developed it in 1951. This tool first identifies the driving and restraining forces, and they decide which effects are more potent than the others. If the driving forces are more powerful, then the Change is made.
If the restraining forces are more powerful, then Change is reserved for later action. The driving/restraining forces are given a rating based on which decisions will be made. The force field analysis of Coca-Cola is shown below:
- Driving force
- Proposed changes
- Restraining forces
- Customer expectations
- Developing new products
- Increasing market share
- Gigantic market size
- Vast marketing approach
- Source of supplier
- Global brand power
- Employee resistance to change
- Use of communication system
- The diversified trend of a market
Table: force field analysis: adapted from (Hughes, 2011)
Explaining the barriers to change
- Customer expectation: Since Coca-Cola serves carbonated beverages to 200 countries, they have massive pressure from the customer’s side. Customers expect them to provide excellent quality beverages by maintaining their original taste. They also want the company to produce other products by diversifying their portfolio. They also want changes in flavors.
- Broad marketing approach: Coca-Cola has the most significant advertisement expenditure among carbonated beverage companies. The company must also consider the competitor’s strategy. They have to add new flavors and products to their list by maintaining their quality.
- Effective use of communication system: Maintaining communication in a vast market is always difficult even for a big company like Coca-Cola. They must maintain their communication system-wide for both internal and external parties(LAI, 2015). The two-way relationship between management and employees must be enabled to welcome the ideas and opinions of employees in critical decisions. The role of communication across countries is also crucial for maintaining global quality.
- Global brand power: Since Coca-Cola was founded, it has been the top carbonated beverage brand around the world since the advent of Pepsi. Now it is still at the top but lost significant market shares to Pepsi. Pepsi introduced various flavors and added different other products like juice, chips, and snacks that allowed them to remain a fierce competitor for Coca-Cola (LAI, 2015). Now, Coca-Cola has changed its strategy and diversified its products. The demand of the customers and competitor’s strategy drives them to improve their product development strategy.
Explaining the restraints to change
- Gigantic market size: The expanding market of Coca-Cola is both an opportunity and a challenge for Coca-Cola. They can take advantage of new markets and expand their business as well as they can lose it to the competitors. Moreover, controlling the vast global market and maintaining consistent quality is not easier.
- Source of supplier: Coca-Cola depends on local suppliers who provide raw materials for their production. Sometimes the local suppliers or production company can compromise on their quality that can spoil the brand image of Coca-Cola(Lynn, 2016).
- Employee resistance to change: Employees in most organizations don’t like change in their organization. They like to work the way unless they know about the benefits of change practice (Lynn, 2016). So, the employee gets to know the changes that will take place in the organization. They should also get training and knowledge about changed processor operations to adapt to the changing conditions.
- A diversified trend of markets: If Coca-Cola sticks to its original products without diversification, they will have to lose an affordable amount of market share to competitors like Pepsi, who are diversifying their products according to the market trend. So, they have to respond to the market trend.
Impact on decision making
The barriers to change in an organization have both direct and indirect effects. Of the four driving forces, customer expectation comes first. Coca-Cola has a brand image for producing excellent quality beverages at a low price.
So, Change must be made by the company to stay at the top in the carbonated beverage industry. Whenever making any change in organization structure, culture, or leadership, these driving, and restraining forces must be evaluated.
If they want to develop new products and increase their market share, they must go with customer expectations and create different products for them (Lynn, 2016). They can take advantage of their marketing strategy to get an idea about customer preferences.
P5 Apply different leadership methods to dealing with Change in a range of or Generational contexts
To make changes in an organization like Coca-Cola, we have to apply the theoretical framework. Theories provide a conceptual foundation in a changing context. Several methods can be used in a changing context. Some of the popular leadership theories are explained below that can be evaluated before implementing a change in leadership.
Transactional leadership approach:
Transactional leadership is measured in goal attainment. Here the leader is entitled to set clear goals and objectives for the followers. Then followers have to follow the leader’s guidelines to achieve the objectives.
They get rewards or punishments based on their goal attainment success. A leader has the clear-cut authority to direct, supervise, compensation, and punish the employees for their performance (Marks, 2015).
Today’s leaders also provide incentives to employees to extract their best performance (Marks, 2015). This leadership approach is best suited for a strictly structured environment where management provides full disciplinary power to the leader.
Today’s organizations don’t directly follow the transactional leadership approach because it often becomes harsh on the employees.
In the transactional leadership approach, employees have predefined roles and responsibilities, and they want to achieve the target. For a big company like Coca-Cola, where the structured environment is not desirable, we can’t apply the transactional approach fully.
Coca-Cola can use the incentive strategy to motivate employees to carry out their duties and responsibilities well. The leaders of the company must make employees understand the need for achieving goals. They have to instill purpose in the minds of employees to make the best use of this approach.
Situational leadership approach:
As the name suggests, situational or transformational leadership is much more suitable for changing the environment. Here, leaders make decisions on the demand of the situation(Marks, 2015). Coca-Cola has to adjust their leadership based on the changing business trends, as mentioned earlier in this paper.
It is very much compatible with leading Change in an organization where the company is going through a transition period, and changes must take place to maintain the status of the company. Situation leadership is an inspirational technique for employees.
Here, the leader identifies the need for Change, the required steps for Change, provides guidelines for achieving the Change and motivates employees to bring about Change.
Here Change happens in individual and organizational levels to make the most out of the Change. Most of the time, situational leadership brings about positive change in the organization.
The concept of creative direction resides within three stages: idea generation, assessment, and implementation. Here leader allows employees to become creative in their work and find the best solution to a change.
This is a suitable approach for the unstructured environment. Here the leader motivates employees for their innovative work that can bring about significant changes in the organization rather than directing them towards a definite objective (Nkomo and Kriek, 2015).
The organization must emphasize new ideas to promote product development. Here Coca-Cola leaders can partner with other organizations and encourage innovative marketing ideas.
The leader has to ensure that employees from every level can make their creative ideas count. This approach is the right way of leading by example, where the company recognizes innovative ideas.
Coca-Cola is a global company, and it operates in over 200 countries. So, the socio-cultural factors put a significant emphasis on the change practices of the company. The company can apply this leadership approach to cope with different cultures in different countries. People’s views of a foreign company can be harmful.
So, the marketing leader must plan a marketing approach according to the culture of a country (Nkomo and Kriek, 2015). In a cross-cultural environment, cultures and customs are given the highest priority in defining and executing marketing or sales strategy (Nkomo and Kriek, 2015). Coca-Cola uses the local language of a country in its beverage bottle.
They also provide special prices in festivals like Eid, Christmas, and Puja. They also encourage local managers to employ themselves in leadership to understand the cultural factors that might affect the business of Coca-Cola. Cross-cultural administration must be developed in separate geographical areas where the artistic approach is more suitable than the global standard method (Walker, 2014).
In the end, we can say that bringing and leading Change in an organization is not easier. Many things must be evaluated before leading any change to an organization. Understanding the impact of internal and external factors of a company is very crucial for a company.
First of all, the paper analyzed the changes made in two organizations with examples and reasons that let them change. Then the impact of internal and external drivers on leading Change in an organization is given.
After evaluating the drivers by SWOT and PESTEL analysis, several adverse effects have been identified. Then the ways of reducing negative implications have been explained. Then the leadership decision making and its approaches have been defined.
Different leadership approaches have been described, and their application in an organizational context is also added. The paper provides a good understanding of managing and leading change in an organizational context.
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