M99M4 Strategy Implementation and Control

Posted: August 25th, 2021

M99M4 Strategy Implementation and Control

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M99M4 Strategy Implementation and Control

Part 1

Organizational Structure at the Coca-Cola Company

            Coca-Cola is a popular multinational that deals with beverage products. This company is the largest beverage company in the entire world. It offers over 500 brands in more than 200 countries. This magnitude calls for efficiency in leadership and the corporate structure as the cost of making poor decisions is high. Notably, growth-hungry companies ought to integrate their organizational structures with theirorganizational strategies (Ketchen & Short, 2011).Commendably, Coca-Cola has moved from its previous centralized organizational structure to a more decentralized leadership arrangement. In particular, this multinational embraces a divisional organizational structure. This form of organizational structure organizes business activities around different geographical markets. While the important decisions are reserved for the top management, regional managers are allowed to make decisions appertaining to the marketing needs of their respective commercial blocks. This change was brought about by Coca-Cola’s desire to meet the ever-changing customers’ demands.

            Bottling management and corporate operations are the two main operating groups for Coca-Cola. Corporate operations are further divided into different geographic regions rather than generalizing the entire beverage landscape. Manuel Arroyo, Nikos Koumettis, Alfredo Rivera, and James L. Dinkins are the heads of the Asia Pacific Group; Europe, Middle East and Africa Group; Latin America Group; and North America Group respectively (The Coca-Cola Company, 2018b). These regional heads work under James Quincey, the chairman and CEO of Coca-Cola.In any case, different regions are characterized by unique local tastes and preferences. Under this organizational structure, Coca-Cola is well-versed to address the demands of customers based in different localities. When the decisions are made at the local level, the precise concerns of a given block of customers are sufficiently addressed. The regional heads and other managers below the executive leadership pay particular attention to the little and short-term issues. This organizational structure works for Coca-Cola as it paves the way for the upper management to focus on long-term planning.

Chart 1: Organizational structure at Coca-Cola

            Coca-Cola’s top management is also run by a board of directors who oversee the interests of the shareholders. The board not only enhances the corporate governance, but also work towards attaining both financial strength and overall success of the company. The board reviews business decisions and determine whether they are in the best interests of the brand or otherwise(The Coca-Cola Company, 2018a). The CEO and other top leaders work closely with the directors as they provide counsel and advice. To help the board fulfil its responsibilities are the company’s committees. A myriad of committees looks into different company operations and report to the board for further action. The finance committee, the compensation committee, the management development committee, the audit committee, and the executive committee are examples of teams that supplement the board in its endeavors.

Coca-Cola’s Culture

            The importance of a positive organizational culture for big multinationals like Coca-Cola cannot be underestimated. The values, ideologies, principles, and beliefs furthered by a given company comprise its culture. Most importantly, the workplace’s culture controls the behavior of the employees. Coca-Cola promotes an inclusive culture (Ketchen & Short, 2011). Considering that it operates on a global scale, Coca-Cola has no choice but to embrace diversity. Coca-Cola’s leadership structure sets an excellent example as top managers come from different descents. Core values that define Coca-Cola’s corporate culture include integrity, leadership, quality, accountability, collaboration, diversity, and passion.

            The culture and strategy of a particular organization are intertwined. Culture is an important player in the game of strategy and progressive performance. Important to note, corporations exploit the power of organizational culture to gain a competitive advantage (Coffman& Sorensen, 2013). Coca-Cola promises to refresh the spirit, the mind, and the body. Moreover, this corporation aims to inspire optimism and make a difference in the lives of its consumers. Coca-Cola is alive to the fact that the people working for it are essential to the realization of its promises. The multinational understands that its sustainability is predicated upon how it chooses to operate in a world full of diverse cultures (The Coca-Cola Company, 2018d). Thus, Coca-Cola leverages a strong, talented, and diverse team. Coca-Cola’s culture is underscored by its support for multiculturalism bot at the workplace and the marketplace. This culture is evident in Coca-Cola’s adverts and promotional campaigns. For instance, the Coke Zero commercial celebrates everyone including the LGBTQ community (Verhoeven, 2018). Coca-Cola goes a step ahead to not only attract, but also retain and develop dissimilar flairs.

What is more, this company supports groups that embrace the similarities and differences of ideas, people, and cultures. Among these groups include the Multicultural Leadership Council (MLC), the Coca-Cola Lesbian, Gay, Bisexual, Transgender and Ally (LGBTA) Business Resource Group, and the Women’s Leadership Council (WLC), just to mention but a few (The Coca-Cola Company, 2018cThrough its inclusive culture, Coca-Cola delivers passion and freedom at the workplaces. As a consequence, the employees give their best input through creativity and hard work. In light of everything, it is easy to see that Coca-Cola’s culture is in line with its company values.

Coca-Cola’s Control Systems

            Corporations of the stature of Coca-Cola must endeavor to establish efficient control systems that institute particular standards and promote goal achievement. Whenever things seem to head astray, the company can refer to its control systems and apply corrective measures (Ketchen & Short, 2011). In the case of Coca-Cola, there are several long-standing control systems that have maintained it at the top league in the beverage industry. Firstly, The Coca-Cola Quality Control System (TCCQS) is a renowned paradigm that ensures that the brand’s product inventory retainsits top-notch quality and environmental standards everywhere (Lowe, 2008). Being a global brand, Coca-Cola has to ensure that no matter what country its products are produced in, the intended tastes remain constant. Coca-Cola has its strict TCCQS to thank for consistency and lack of poor-quality vulnerabilities. As a result, TCCQS has enabled Coca-Cola to remain in the frontline over the years.

            Coca-Cola Operating Requirements (KORE) is a safety control system that aims to ensure food safety and quality throughout Coca-Cola’s operations. KORE pays attention to food safety as Coca-Cola deals with beverages (Journey Staff, 2012). By complying to the stipulations outlined in KORE, Coca-Cola makes sure that it complies with international food manufacturing standards such as those outlined by the Global Food Safety Initiative (GFSI) (Lupo, 2013). Thanks to KORE, Coca-Cola has never found itself on the wrong side of food requirements no matter how stringent those regulations may be.Consequently, KERO has attracted good health repute around Coca-Cola. Performance appraisal is another control system that Coca-Cola utilizes. Every year, Coca-Cola appraises its employees to ensure that they work in line with the organizational goals (Zempiliadou, 2011). Before the year begins, the workers are informed about the goals that Coca-Cola wants to achieve before the end of the year. Therefore, year-end appraisals are conducted according to the standards set at the start of the year. This performance appraisal control system not only suppresses career stagnation, but also promotes career progression among employees.

Grand Strategy

            As determined in module 3, Coca-Cola should adopt several grand strategies including innovation, product and market development, concentric diversification and strong growth. For Coca-Cola to remain in the steering wheel, it has to work on these approaches as they give it a boost as regards attaining its vision and mission.Developing new healthier brands through concentric diversification and product development are promising grand strategies as they are in tandem with the modern-day health-conscious consumers. Exploring new markets and expanding to new horizons are also imperative strategies. Overall, the organizational structure, culture, and control systems discussed above align well with the listed grand strategies.

            Coca-Cola’s organizational structure facilitates bespoke decision-making for regional and low-level managers. This arrangement sparks innovation as low-level leaders are at liberty todevise and implement initiatives that hold potential. Moreover, the separation of responsibilities in the organizational structure creates a conducive environment for the executive management to channel their attention to long-term planning and implementation of promising strategies. In addition, Coca-Cola’s inclusive culture ensures that every talent is able to contribute to the progression of the brand. All employees are motivated to perform to their optimal levels rather than spending time worrying about discrimination and prejudice. The prevalence of diversity, passion, collaboration, quality, leadership, and accountability values drives Coca-Cola towards its desired destination. Lastly, the control systems deployed by Coca-Cola works in favor of the company’s grand strategies. Quality control and other regulations ensure that Coca-Cola does not perform below par. Thus, it can focus on growth strategies without worrying about noncompliance to food and quality standards.

Part 2

The essence of commercial enterprises existing in in any market is to make a profit and expand their market share. That is the primary goal of the video game hardware platform producer. As the CEO, meeting or achieving the outlined goals depends on three factors: the price of the video game console, the number of video games that the company will subsidize to enhance the development of new video games, and the royalty percentage the game makers will have to pay. Each of these variables is required to have an acceptable impact on the total market share, revenue per year, and net profit per year. Running the web-based simulation provides answers regarding the right number, amount, or percentage of each variable that must be embraced for the desired goals of the company to be attained.

Price of the video game console is the first variable under consideration. Based on the law of demand, a high price discourages consumption (Amadeo, 2012). Besides, it lowers the acceptance of a brand in the market, thus, a decrease in market share. This simulation with three different prices-$340, $400, $250- is meant to validate or invalidate these theories. The web-based simulation is observed for a period of one year. This means observations made are for the first year. When starting the simulation, the price set was $340. At the end of year 1, market share decreased to 34% form 50% and revenues and net income increased to $380.1 million and $79.4 million respectively (MIT Management, n.d.). After adjusting the price to $400, the market share, revenues, and net income decreased to 27%, $336.7 million, and $76.5 million respectively. When the price is adjusted to $250, the market share, revenues, and net income changes to 46%, $388.8 million, 28.3 million respectively (MIT Management, n.d.). From the simulation, none of the prices gives desirable results given the three objectives. However, it appears that a console price of $340 provides none extreme or average results, and thus, it is the most suitable price.

The number of video games that the company will subsidize to enhance the development of new video games is the second variable under consideration. Before the simulation, two variables-price and royalty paid- were assumed to be constant. At 3 game titles, the market share, revenues, and net income changed to 34%, $380.1 million, and $79.4 million respectively (MIT Management, n.d.). When game titles were increased to six, both market share and revenues remained unchanged, but the net income decreased to $30.8 million. When decreased to 1 game title, both market share and revenues remained unchanged, but the net income rose to $111.8M. Based on the three simulations, decreasing the game titles to 1 seems to have the most desirable impact.

The third variable considered during the simulation process is the royalty percentage. Assuming the console price and game titles are held constant, a 15% royalty decreases the market share to 34%. Both revenues and net income realized are $380.1 million, and $79.4 million respectively (MIT Management, n.d.). When royalty is increased to 30%, the market share remains the same, but revenues and net income increased to $398.9 million and $97.4 million respectively. A decrease in royalty to 5% leads to no change in market share but revenues and net income decreased to $367.5 million and $67.3 million (MIT Management, n.d.). These changes suggest that a high royalty percentage of 30% is the best since it produces the most desirable results.   

The three-tier web-based simulation provides critical insights that may help the company in setting the most optimum console price, game titles, and royalty paid. A console price of $340 does not decrease the market share significantly, and besides, it leads to an increase in both revenues and net income. Unlike price which affects all the three objectives considerably, game titles have limited impact. However, one game title results in the most desirable outcome. Like game titles, royalty percentage has a limited influence on the three variables. Nevertheless, it leads to a sizable increase in both revenues and net income. The company, thus, needs to adopt a console price of $340, 1 game title, and a 30% royalty paid (MIT Management, n.d.). The following chart shows the results associated with the implementation of this recommendation.

References

Amadeo, K. (2012, July 1). The law of demand explained using examples in the U.S. economy. The Balance. Retrieved June 24, 2019, from https://www.thebalance.com/law-of-demand-definition-explained-examples-3305707

Coffman, C., & Sorensen, K. (2013). Culture eats strategy for lunch: The secret of extraordinary results, igniting the passion within. Pennsauken, NJ: BookBaby.

Journey Staff. (2012, January 1). Product and ingredient safety. Coca-Cola Journey. Retrieved June 20, 2019, from https://www.coca-colacompany.com/stories/quality

Ketchen, D., & Short, J. (2011). Mastering strategic management. Boston, MA: FlatWorld.

Lowe, A. (2008). Quality system implementation in the Caribbean with focus on Caribbean bottlers (Unpublished doctoral dissertation). California State University Dominguez Hills, Carson, CA.

Lupo, L. (2013, April 9). Coca-Cola: Keeping “the real thing” local across the globe. Quality Assurance and Food Safety. Retrieved June 20, 2019, from https://www.qualityassurancemag.com/article/qa0413-coca-cola-company-profile/

MIT Management. (n.d.). Platform wars: Simulating the battle for video game supremacy. Forio.com. Retrieved June 24, 2019, from https://forio.com/simulate/mit/video-game/simulation/index.html

The Coca-Cola Company. (2018a). Corporate governance guidelines. Coca-Cola Journey. Retrieved June 20, 2019, from https://www.coca-colacompany.com/investors/corporate-governance-guidelines

The Coca-Cola Company. (2018b). Coca-Cola leaders. Coca-Cola Journey. Retrieved June 20, 2019, from https://www.coca-colacompany.com/our-company/leadership

The Coca-Cola Company. (2018c). Diversity councils and business resource groups. Coca-Cola Journey. Retrieved June 20, 2019, from https://www.coca-colacompany.com/our-company/diversity/diversity-councils-and-business-resource-groups

The Coca-Cola Company. (2018d). Workplace culture. Coca-Cola Journey. Retrieved June 20, 2019, from https://www.coca-colacompany.com/our-company/diversity/workplace-culture

Verhoeven, A. (2018, May 16). Coke’s diversity in the Coke Zero commercial (2018) [YouTube]. Retrieved from https://www.youtube.com/watch?v=5vwVn4eTLeM

Zempiliadou, S. (2011). The adoption of employee performance appraisal systems and their effectiveness in corporate Greece (Unpublished master’s thesis). International Hellenic University, Thessaloniki.