The Worlds Largest Beverage Company Business Essay

The report outlines the major contributing factors to the success of Coca-Cola. The report discusses how leadership, motivation and innovation have been the contributing factors in the success of Coca-Cola. Each of these factors is supported by the theory and application. It is stated that the CEO and chairman of the directors of Board of Coca-Cola, Mr Muhtar Kent has been the most effective leader the shareholders have ever had in last 25 years. There are ranges of motivational factors employed by the company which have proven effective. The report then goes on to talk about the innovation in the organisation at the products level, packaging level, equipment level and marketing level. The report generates the conclusion which provides the summary of the report.

Introduction

The Coca-Cola Company is the world’s largest beverage company offering more than 500 brands and 3500 products worldwide (Coca-Cola, 2012c). It was established in 1886 and in these last 126 years, it has expanded globally and sells its products in more than 200 countries and has a rate of service 1.8 billion servings a day worldwide (Coca-Cola, 2012c). This shows that the company has grown tremendously over the period of 126 years. It is one of the top 10 private employers having more than 700,000 system employees globally. It is the brand that is liked by majority of population worldwide. The current share price is $37.76 compared to the share price of approx $20 in 2004. Since the 2006, the growth of the share prices has been continuous and has helped the company to expand itself more (Coca-Cola, 2012c). There are many factors that have contributed to the success of the Coca-Cola Company. However, the three major factors that are discussed in this report are Leadership, Motivation and Innovation. These three factors have been significant in the success of the organisation. The report will discuss these three factors supported by the theory.

Leadership

Leadership is the process of leading or guiding a group of people working towards achieving the same goal or objectives. There are many theories of leadership. Of all, the House Path’s Goal theory, Great man theory and Trait theory are among the popular ones. House’s Path Goal Theory was developed by the Robert House and it is somewhat related to the expectancy theory of the motivation (Evans, 1996). The theory is based on the premise that the employee’s perception of expectancies between his effort and performance is greatly affected by the leader’s behaviour. The theory also suggests that there are four main leadership styles which include directive, supportive, participative and achievement oriented (Management study guide, 2012). In the directive leadership, the leader directs the subordinates through providing guidelines and informing them what is usually expected of them through setting performance standards. Supportive Leaders are friendly and take interest in the needs, welfare and well being of subordinates (Management study guide, 2012). The participative leaders are more into group decision making and involve subordinates into decision making related to tasks, goals etc. Finally, the achievement leaders set challenging goals for the subordinates and motivates them to reach to the peak performance (Wilsey, 1995). The effectiveness of the style used depends on the situation. The theory also states that the relationship between a leader’s style and its effectiveness depends on the employees’ characteristics and characteristics of the work environment in which the leadership takes place (Evans, 1996). The chairman of the Board of directors and CEO of Coca-Cola, Mr. Muhtar Kent is an effective leader. Mr. Kent has joined the company in 1970s and since then worked out his way to become the CEO and chairman of the board of directors of Coca-Cola. He resigned in between for seven years and came back to the Coca-Cola on the one condition, to expand the market to the china (Blackden, 2011). He knew how to generate the results. According to the Coca-Cola shareholders, Kent is the best CEO they have ever had in the last 25 years. The company just kept progressing since its coming back. He has set out strict guidelines for the employees. For example, employees or even CEOs who use the given cell phone for personal use must pay $15 each month (Blackden, 2011). This rule applies to CEOs as well. He thinks that looking at stock is the waste of time and he only looks at stock price once a week. He is considered as being the combination of supportive, achievement and directive leader (Blackden, 2011). He knows in which situation a particular approach will lead to an effective outcome.

Motivation

Motivation is the process of boosting the morale of the employees to encourage them to willingly give their best in accomplishing the tasks. Motivation is related to the leadership. It is not possible to succeed at leadership if the employees are not motivated. Motivated employees are more productive. The most popular theory of the motivation is the Abraham Maslow’s motivation theory. According to this theory, all the human needs can be organised into hierarchy in order of its importance (Pat, 2002). Humans are motivated through the fulfilment of the five needs: Physiological needs, Safety needs, Social needs, esteem needs and self actualisation (Pat, 2002). Each need must be satisfied before the next need becomes the dominant motivating factor in the person’s behaviour (Pat, 2002). In terms of workplace, the physiological needs of an employee is to have a fair salary and comfortable working conditions. The safety needs is considered as security of employment, right to join the union, work place insurance, emergency medical facilities and the like. The third need is the social need which covers the friendly work group and team work and social occasions for the workers. After the fulfilment of the social needs, the need for esteem arises. It includes attractive job title and praise for the work well done, fair rewards and appreciation that boost the confidence of the workers. Finally, self actualisation is about the meaningful work which is challenging that a person wants to do, allowing for career progression through education and training, to change the jobs within the business etc (Wilsey, 1995). As the person moves up in the hierarchy, the lower needs become less importance. For example, when employees are motivated by self actualisation, they are least concerned about the physiological needs. The ability or Muhtar Kent to motivate its emoplyees through various strategies has lead to the successful company today (Blackden, 2011). Coca-Cola has a corporate strategy to treat all people well. It is immaterial that a person is working as the janitor in the bottling plant or working as the senior manager. All employees are treated and motivated in such a way that all of them give their best when it comes to the work performance. It has created an environment where employees can excel in their performance, develop skills for improvement and move towards their career goals (Blackden, 2011). This fits in the self actualisation needs of the Maslow’s Hierarchy of needs discussed before. Coca-Cola believes that its success depends on the motivated and committed employees. It has implemented several different ways to measure the level of employee engagement and the effectiveness of the motivational factors employed within the business. According to Coca-Cola, the range of motivational factors employed are training and development, pay and rewards, other factors depending on the culture employee belongs to, role expansion, sponsorship to the conferences, advanced learning and development opportunities, appreciation letters/ certificate and differentiated compensation (Coca-Cola, 2012d). In addition to these, encouraging progress, recognition contribution, giving challenging tasks, fair compensation, recreational activities, individual goal settings, special assignments, promotion, designation change, annual incentive plan (AIP), Making the move (MTM) for high monthly sales target achievers, and employees of the quarter recognition, lifestyle incentives such as paid vacation and holidays, flexible time, job sharing, telecommuting and local health club discounts (Coca-Cola, 2012d). The appraisal system at Coca-Cola has three steps involved which includes define the job, appraise the performance and provide the feedback. The performance management system includes talent strategy, talent assessment & segmentation and differentiated reward & development interventions. This shows that Coca-Cola has well developed effective strategies for motivating employees.

Innovation

According to VHA Health (2006), “innovation can be defined as all the scientific, technological, commercial, organisational and financial activities that are necessary to create, implement and market new or improved products or processes”. It is basically those initiatives that can produce the value through viable new business concepts. An organisation with innovations has an ability to generate enough positive cash flows, meet business goals and objectives, maintain lead on the competitions and expand itself. Innovation can be categorised into sustaining innovations, transformational innovations, and disruptive innovations (VHA Health, 2006). Sustaining innovation helps to preserve or maintain the existing offering of products or extend the lifespan of the products or services through improvements in the products. When an organisation usually targets such innovation, it considers lowering down the cost and improving the quality of the product. Such innovations when introduced by the companies, becomes the industry standard quickly and the competition becomes stiff. Frequent flyer program from the airlines is the example of sustaining innovation. Transformational innovations involve major changes and involve several operational elements such as combining product and services that helps to differentiate organisation from its competitors. It requires the organisation to do something fundamentally different. The disruptive innovation often has characteristics that consumers do not want initially. However, in the later phase, there is a possibility of it being valued by some marginal or new segments. The sustaining innovation of the Coca-Cola can be seen in its products, packaging, equipment, and marketing and in the market place (Coca-Cola, 2012b). The company operates 500 different brands of products. The portfolio of more than 3500 drinks worldwide makes it very innovative company. This innovative beverage offers consumers with refreshing experience. The products are packaged as such that it becomes the culturally acceptable easily. Coca-Cola has considered the importance of cultural values and it ensures that its brand packaging, especially colours and local language labels are not considered as offensive (Coca-cola, 2012b). The innovation also lies in sustainable packaging which includes three R strategies. It is targeted to reduce the amount of energy and material used in packaging, Recover the used bottles or other packaging worldwide and reuse the recovered material to turn into something useful such as (Coca-Cola, 2012a) plastic chairs. The company has started to use 100% recyclable material in manufacturing the products (Coca-Cola, 2012b). The innovation also lies in the equipment the company uses as a medium to reach its customers. It includes using zero emission electric trucks, rolling out Coca-Cola free style nationwide in US, minimising the use of water, reducing diesel and gasoline use, green valpr plant and plant bottle packaging, solar powered coolers for the rural places, climate friendly refrigeration and so on (Coca-Cola, 2012b). The innovations in the marketing includes promoting the product using famous personalities, partnership in events such as Olympics, sponsoring sports events, reaching to 50 million Facebook Coca-Cola fans, partnering with music companies like Spotify etc (Coca-Cola, 2012b). Finally, it can be said that innovation is at the heart of everything Coca-Cola does and it is what keeps it thirsting for success.

Conclusion

The Coca-Cola is the well known, world’s largest beverage company offering more than 3500 different types of drinks through 500 brand names. There are many factors that have contributed to the success of Coca-Cola. The recent growth can be seen in the last 6 years when the share prices have almost doubled. The major factors that have significantly contributed to the success of the Coca-Cola and without which the organisation could not have survived are leadership, Motivation and Innovations. The leader Muhtar Kent (CEO and chairman of board of directors), since his arrival in the company took it to the new heights through his leadership abilities. Motivation is another factors identified as vital in the success of organisation. There are numerous motivational factors as discussed in the report are being used by organisation that motivates employees and helps to bring the best out of them. These factors ensure that the basic needs such as physiological needs to the highest level of self actualisation needs are satisfied for employees. Finally, the innovation is what has kept the organisation at the top of competitions. The innovation can be seen in its products such as differentiated Coca-Cola, packaging, equipment being used and in marketing. The innovation is at the heart of everything the Coca-Cola does. The company has been experiencing success and in the future, according to its targets set, the company is expected to keep performing at level best.