CASE STUDY OF CHANGE MANAGEMENT IN THE COCA COLA CORPORATION

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:

“Unfreezing

Changing

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.