Change Management in Coca Cola | Case Study
According to a Greek philosopher Heraclitus “there is nothing permanent than
change”. He believed that change is the core of universe. This quote describes the
importance of managing change in human as well as organizational life.
A structured approach to transfer organization, its people and processes from
current state to a desired future state is called change management. This process
gives employees the ability to accept changes in the existing environment of the
business. Change can be of different type for example, change in technology,
operations or strategies etc. company needs to implement individual strategies to
cope with each type of change.
Organizations need to change and adopt dynamic survival strategies to stay alive in
uncertain political, social and economic environment (Hiatt and Creasy, 2003). All
environmental factors present in the nature experience change on continuous basis.
Human nature resists change, so managing that resistance requires well planned
change management strategies.
This report is aimed at describing the importance of change management for
organization its motives and objectives, change management processes, how
company can involve all the stakeholders for successful implantation of change
management and the strategies that an organization can adopt to implement the
successful change.
Reasons for adopting change
Organizations need change for the following reasons:
To respond to the rapidly changing environment
To improve the overall performance of the company
To rapidly respond to the customers’ demands
To improve the effectiveness and efficiency
To increase the employee performance
To create the best practices inside the organization and setting standards for
the industry
To improve profitability and return on overall investment
Change management is needed for organizational survival. So the company should
adopt to change management techniques in order to maintain its worth in the
industry.
Importance of change management
In a study 327 project managers had responded to the question that “if you had a
chance to do it again, what would you do differently?” Most of them responded that
we will implement an effective change management program planned way before
starting the project. This study highlights the importance of change management in
an organizational perspective. Change management moderates the risks that can
cause failure (Jeff and Creasey, 2003).
The change management process
Change management is being studied by the philosophers, researchers and business
experts for many years. A number of change management theories, approaches and
philosophies are developed by psychologists and management professionals to
implement successful change in the organization (Paton and MacCalman, 2008).
There are three phases of change management i.e. preparing for change, managing
change and reinforcing change. Preparation for change phase includes assessment of
change capabilities and capacity and developing a strategy that fit to those
capabilities. Second phase i.e. “managing change” phase includes processes like
planning and implementation of strategies made in the first phase. Last phase which
is the reinforcement of change includes the processes like collection and analyzing of
feedback data, finding out gaps and coping with determined degree of resistance
from inside and outside the organization and taking corrective actions to successfully
conclude the change management process (change management learning center,
1996-2011). According to “Lewin’s 3 step model”, change is “episodic” i.e. it can be
easily planned into three stages:
1. “Unfreezing
2. Changing
3. Freezing
Managers at Coca Cola Company can motivate workforce in the “unfreezing” stage
by informing them about the vitality of change being planned in context of
organization benefits. Training to the staff members can make them more adept at
accepting the transformational stage.
In the “changing phase” the company can initiate practical steps with regard to the
strategic plan for change. It can be achieved by developing strong relationships and
offering rewards.
“Refreezing” phase allows Coca Cola Corporation to make recently innovated change
a part of their strategy so that workforce does not get back to the previously used
operational methods of the organization (Robbins and Coulter, 2008).
Change management—–A case of Coca Cola Corporation
Coca Cola is a retailer, marketer and manufacturer of non-alcoholic drinks and is
known worldwide for it coca cola beverage. In addition to its coca cola brand, Coca
Cola Company offers 500 beverages and non beverages brands in about two
hundred countries. The company was founded by Asa Candler in year 1892. It’s
headquarter is located in Atlanta, Georgia of United States of America. The company
had total net income of approximately 11.8 billion US dollars in year 2010 with total
number of employees 139,600 worldwide. Company’s brand i.e. Coca Cola stands
number one in the list of most well known brands of the world (Coca Cola company,
2006-2011).
Coca Cola is a type of company that requires making changes in its products and
business strategies according to the consumer expectations and external
environment. Here in this study we would quote different examples from coca cola
corporation’s history and will examine that what were the triggering events for
opting the change and what strategies the company developed and implemented in
order to successfully going through the transitioning process.
The need for change in an organization is often created by external and internal
factors, where external ones encompass governmental laws, labor markets, market
conditions, economin scenario etc. and internal factors are the workforce, resources,
attitudes of workers and strategy adopted by the organization (Robbins and Coulter,
2008). Coca Cola Corporation is among one of the oldest corporations of the world. It
has gone through many internal and external changes since it has been in existence.
The company has used techniques of change management in order to survive from
the consequences of those events.
The company has faced a lot of external changes, for example in world war II, the
company was able to manage its existing position at that time and also entered in
many new markets and discovered new niches (Coca Cola company, 2006-2011). The
company also provided free drinks to soldiers which were the part of its strategy to
become a patriotic symbol for the people of the country. Also it boosted the sales, so
the company achieved two objectives by carefully planning to respond to that
external environmental change. The plants developed by the company in war era
helped its expansion after the war.
Barton et al (2002) reported that Coca Cola Corporation adopted acquisition strategy
in time of Asian financial crisis. The company acquired bottling, coffee and tea shop
businesses in Korea and Malaysia. Beverage is a type of industry where tastes and
preferences of the consumers change on continuous basis. Coca Cola Company also
responded to such consumer changing behaviors in an effective way by developing
new products like Diet Coke and Coca Cola Zero. The company also committed a
marketing blender when a rival company launched a black beverage with
comparatively sweet and smooth taste. The product was named as new Coke. But
the sales gradually went down and company faced severe consumer critics and
protests. The company managed this situation very commendably by restoring the
old formula and naming the bottle as diet coke (Kotler and Armstrong, 2010). As
people are becoming more health conscious and willing to invest on health based
products, coca cola is developing juices and various energy drinks as well. This shows
the company’s strategy to responding varying consumer tastes and expectations and
changing itself according to it.
The coco cola company used theory of organization change presented by Kotler
(1996) which elaborated the procedure to manage change on the people dimension
of the organization. In addition to making operational and strategic changes, the
company also changed its advertising strategy by targeting various groups of
consumers like American consumers, African consumers, Middle and far eastern
consumers and European consumers. The company altered the packaging of its coca
cola brand and developed more product lines and broadened them globally (The
Coca-Cola company case. n.d.).
The present condition of Coca cola Company worldwide is very good. The company is
selling its beverages throughout the world successfully. But in some countries, coca
cola stores are not as according to the company’s main marketing, inventory and
efficiency theme. The company is planning to align its performance standards
according to its own corporate culture and strategies with the help of a
comprehensive change management plan. These changes will be implemented
within the business operations and management of the company.
Change Management at Coca Cola
Organizational change might be referred to as any change brought about in structure
technology or people of an organization. Change in structure is maintaining the span
of control, specifying different work roles, redesigning job scenarios etc. Change in
technology could be an introduction to new innovative methods for improving the
product’s quality launched by the organization. While change in people is to bring
about alterations in the way people think and act. It means to modify their behavior
towards the betterment of organization (Robbins and Coulter, 2008, p.364).
Employee engagement
The recent change management at coca cola is directed towards the intrinsic values
and motivations of the employees and can be referred to as ’employee
engagement’. The change management process, together with internal branding
programs is expected to bring about ideal behaviors in employees, which would align
the operations of coca cola worldwide, and bring about efficiency throughout coca
cola across all its business segments.
Coca cola hopes to bring about a thoroughly integrated system of communications,
and focus on creating brand relationships with their employees. This would enhance
the operations of Coca cola, as an integrated approach would mean all employees
believe in engaging fully in the values, and this would become an inherent part of the
employees at a personal level. Coca-cola is actively seeking to incorporate the
change into its company for “building capability in engagement, maintaining
engagement momentum and ensuring that engagement is integrated into CCR’s
people practices” (Samdahl,2011). For this purpose, employee engagement surveys
are conducted twice every year for all the coca cola associates, which serve to
highlight the areas where action is required, and further actions and
implementations can henceforth be executed.
Coca-cola believes that their business results hinge on the dedication of their
employees to operational excellence. The company truly recognizes the importance
of the people to the business, and knows that to continue to bring about
tremendous results it is bringing in, employees throughout the world should believe
in the values intrinsically, and therefore the employee engagement is being focused
on all the countries the company serves to align, thoroughly integrate and align the
company so that operational efficiency can be achieved.
Importance of change to coca cola
Employee engagement is very significant to all segments of operations at coca-cola
and has translated into performance in areas where employee engagement is higher.
For coca-cola, an engaged workforce means:
A more committed workforce
Employee performance aligned with organizational objectives
Employees have a clear idea of what is expected of them and what are the
deliverables
Customer experience focuses an inherent part of employees’ values, who strives to
provide a better experience to the customers. Customer focus was identified as a
central tenant of the multi-year engagement strategy to be implemented in
2011(Gee,2011)
When employees are aligned with company goals, they themselves adopt a
proactive approach towards issues such as waste elimination
Employees awareness gives them a voice which helps to influence legislations at
local levels
An integrated system of communication is very helpful in the volatile and dynamic
markets of today, where conditions change very often and the company has to be
responsive at all times
Therefore, for all the business segment of coca-cola wherever they are located
across the world, the change towards employee engagement is justified if they have
to reap the fruits gained by an effective system of integration.
Ensuring the Involvement of Required Stakeholders
Coca Cola Company can use two change management tools to make sure that all
people who are required to be the part of change management process. These tools
are Force Field analysis and AKADAR model. Force field analysis is a technique
developed by Kurt Lewin to scrutinize the forces that are causing an opposition to
change process (Bass, 2009). By doing Force Field Analysis, Coca Cola Company will
be able to induct people who are in need of appropriate training. Another useful tool
is AKADAR model which stands for Awareness, Desire, Knowledge, Ability and
Reinforcement. Through AKDAR model, firm creates awareness about the need of
change, generate desire in the people to help in transitioning process, give
knowledge to the people that how they can help the change process, develop an
ability in the people to go through the change and provide them with continuous
reinforcement to withstand the change (CMLR, 2011).
Ensuring that change is successful
Some considerations that will facilitate the change management process include:
productive and consequential dialogues and talks with employee representatives
Online and paper surveys from all the stakeholders involved in the ‘change’
throughout the world, and with associates to gain an insight on their perceptions
Effective communication at this stage for informing the stakeholders the reasons for
change and the benefits it would bring
Overcoming the ‘inertia’ by taking all stakeholders in confidence. The surveys can
serve as a pre requisite to gain an insight on the stakeholder perspective
Details of the action planning process communicated to all those who would initiate
the change
Recommendations for Coca Cola Company
In the volatile dynamics with which companies operate today, change is inevitable.
Therefore, the focus should not be on avoiding change, rather bringing about a
smooth transition towards the new change by communicating about the change, and
ensuring all parties of the change that it is for the best of all those involved. To
successfully implement organizational change of any nature, a specific regards to
organizational structure, design, culture, management and leadership is required to
see whether the change would make a best fit with the organizational goals and
objectives.
First of all the company should ascertain the core problems exist in the company for
the change management. The company may develop a change management
program for responding to financially uncertain environment of the world. It can also
develop change management programs for better operations and logistics. The
company can introduce new procedures and technological systems to carry out
operations. Programs can be introduced in forms changing company’s mission and
corporate culture enhancements. For all that, the most essential thing is to train
upper management to provide them with specific skills necessary to effectively going
through the transitioning process. Following is the brief expression of plans that the
company can adopt.
Systems thinking
Systems thinking can be used to guide the successful change in the organization. The
model is based on an integrative and interactive open system which consists of the
variables, attributes, internal relations and environment. The system is based on
characteristics like wholeness, interdependence, chain of influence, need for balance
and adaptability etc in an open system where communication is seen as an
integrated process that facilitates change within the organization.
Several system characteristics are: wholeness and interdependence (the whole is
more than the sum of all parts), correlations, perceiving causes, chain of influence,
hierarchy, supra-systems and subsystems, self-regulation and control, goal-oriented
interchange with the environment, inputs/outputs, the need for
balance/homeostasis, change and adaptability (morphogenesis) and equifinality:
there are various ways to achieve goals. Different types of networks are: line,
commune, hierarchy and dictator networks. Communication in this perspective can
be seen as an integrated process – not as an isolated event.
Establishing new structure
It is a well known fact that Coca Cola Corporation was an entrepreneurial venture
started by one person who bought the formula from another firm and laid
foundations of that beverages manufacturing firm. Current structure of the coca cola
company is simple with minimal labor and management division. New system that
can be adopted by the company may be the “machine bureaucracy” which Henry
Mintzberg (1992) defined as an organization with clearly defined hierarchy, well
defined area of operations, standard operating procedures, proper rules and
regulations, well division of labor, formal relationships among the member of
organization, centralized decision making, technical competence and standardization
of work.
Reducing employee defiance
Opposition of change is a common human behavior. Particularly, in the workplace
people resist the change in organizational culture, structure and policies. But in
order to successfully and effectively implement the change management program, it
is important for Coca Cola Company that it should develop strategies to reduce
employee defiance to change. Kotter and Schlesinger (1979) explained six strategies
which can be useful for coca cola Company in employee defiance management.
First strategy is to involve the employee in change process and make them
participate as far as they can.
Second strategy is to communicate the change management programs to the people
effectively to educate them about the benefits the programs would bring. This will
make them comfortable in adopting the change.
Third strategy is negotiation and agreement. The company should create a
consensus on important change issues and with the agreement of all important
stakeholders; it should launch the change management program. The resistance
level will be zero on change programs that are being launched with the mutual
agreement of all relevant stakeholders.
Fourth strategy is that to support the employees who are due to some disability or
emotional or psychological issue or some other threat unable to adapt to the
change. If the company develops proper channel for such people, they would adjust
gradually to the change management program.
In case of failure of above mentioned four strategies, company can manipulate the
employees by calling union leader other than relevant ones as fifth strategy.
Sixth strategy is to force the employees with articulate or non-articulate methods
but this is not a very good approach.
Conclusion
To conclude, it may be said that communication can be a key element to successful
change management. Communicate the changes to the employees; tell them why
the change was inevitable and how they will benefit from the change. The
management should itself adopt a positive attitude towards the change so that
employees can follow their lead and welcome the change. Coca-cola as a company
has a heritage of embracing change rather than resist it and it should translate into
their future endeavors towards change management to ensure that the organization
is best poised to market under all sorts of environmental conditions.
