Change Management Process for Coca Cola
How it works
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. before the change, during the change and after the change.
Before the Chang need to prepare for phase includes assessment of change capabilities and capacity and developing a strategy that fit to those capabilities. Second phase i.e. during the change; “managing change” phase includes processes like planning and implementation of strategies made in the first phase. Last phase which is after the change; 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).
How it works
- 0.1 A Case of Coca Cola Corporation
- 0.2 Why Change Management is Important for Coca Cola?
- 0.3 Factors Affected the Need for a Change
- 0.4 SWOT analysis of Coca Cola (6 Key Strengths in 2019)
A Case of Coca Cola Corporation
On May 8, 1886, Dr. John Pemberton served the world’s first Coca-Cola at Jacobs’ Pharmacy in Atlanta, Georgia of United States of America. From that one iconic drink, they’ve evolved into a total beverage company.
Since then 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 had total net income of approximately $2.6billion US dollars in year 2019 third- quarter report with total number of employees 700,000+ across company and bottling partners.
Why Change Management is Important for Coca Cola?
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 changes that have been implemented at Coca-Cola Corporation have made the company maintain competitiveness in the industry.
The various assumptions of managing change have been taken into consideration by the Coca Cola such as Fashion Pressure, Reputation and Credibility Pressure, Growth Pressure and Diagnosis process (Tabije, 2010)
Over the years, people, systems, and environments have evolved; the only thing that has remained constant is change. Change is evident from the physical, environmental or situational attributes of the business environment.
It is enacted in either internal or external attributes of a business. Changes that have occurred at Coca-Cola can be classified products change, process change, internal structure, and processes changes and changes in markets (Coca-Cola Official Website).
When adopting new strategies and policies, the company engages the services of its change management team. Change management is a structured approach which aims at translating/shifting an organization, functional teams, or individuals from current/past state to a desired future state.
The process of change starts by systematic diagnosis of the situation to transform and gauging the capability to change; the process involves all stakeholders at different levels (Newman 12-78). This paper examines the various changes that have occurred at Coca-Cola Corporation; it will further discuss the change management approach that the company has undertaken.
Factors Affected the Need for a Change
After the invention made by John Pemberton, Coca-Cola has been on the forefront coming up with products that fit the market effectively and beat its rivals. In 1961, the company was facing fiancé competition from a brand by Pepsi called 7 Up and decided to develop a product that specifically addressed the competition; they came up with Sprite.
With the product performing well in the competitive environment, the company in 1974 rebranded the brand to Sugar Free Sprite” in 1974, then was renamed to “Diet Sprite” in 1983, the rebranding was in the effort of creating more customer satisfaction and creating the impression that the product is superior than the original one.
In 2008, the company introduced a different taste of Sprite and named it as Sprite Green, the product was sweetened with Truvia in the effort of improving customer satisfaction.
The new changes and brand improvements that have been made at Sprite is an indication of how the company uses change to develop and improve quality of its products.
In the year 1985, Coca-Cola was facing fiancé and aggressive competition from its rival Pepsi; the then management decided to reformulate its popular carbonated drink to suit their consumers. The decision that was arrived at is making of a sweeter soda which was named as new Coke.
Surprisingly even after the invention, the products was a market failure and the company had no option than revert back to its original product. With the revert to the older version, the management was determined to change and make the product look superior than the original product, they named the product as Coca-Cola Classic although it was the same product they had packaged earlier (Sadler and James 56-123).
The move of 1985, by the company to change and invent another products to fight its competition rhythms with the need for change; change is enacted to improve an organization’s competitiveness and improve its internal process.
The failure of the company’s change was an eye opener to the management on the quality and loyalty that its customers had with the products.
In a manner likely to boost consumers’ satisfaction, the management rebranded the consumer preferred products to Coca-Cola Classic, the rebranding was aimed at creating an impression that the product was superior to the other one. This was a psychological approach to customers through a change process.
In the year 2005, the United States was concerned about their population health situation; there was much advocacy on the kind of foods and drinks the people were eating.
Coca-Cola management realized the campaigns and the effects they had in the carbonated drinks markets and invented the Diet Coke and Coca-Cola Zero brands.
The brands were manufactured in a more special manner to enhance their quality and reduce any risk on human health and fitness. The move to Diet Coke and Coca-Cola Zero is seen as a responsive approach to changes affecting the industry; it came at the time that campaigners of good health and fitness were advocating for avoiding taking such carbonated products.
The attempt can be seen as a strategic management approach where the company sort to respond to changes in the market and devised products that were responding to the needs of its customers (Coca-Cola Official Website).
SWOT analysis of Coca Cola (6 Key Strengths in 2019)
This Coca Cola SWOT analysis reveals how the company controlling one of the most iconic brands of all time used its competitive advantages to become the world’s second largest beverage manufacturer.
It identifies all the key strengths, weaknesses, opportunities and threats that affect the company the most.
Strengths in the SWOT of Coca Cola
- BRAND EQUITY – Interbrand in 2011 awarded Coca cola with the highest brand equity award. Coca cola with its vast global presence and unique brand identity is definitely one of the costliest brands with the highest brand equity.
- COMPANY VALUATION – One of the most valuable companies in the world, Coca cola is valued around 79.2 billion dollars. This valuation includes the brand value, the numerous factories and assets spread out across the world and the complete operations cost and profit of Coca cola.
- VAST GLOBAL PRESENCE – Coca cola is present in 200 countries across the world. Chances are, any country that you go to, you will find coca cola present in that market. This vast global presence of coca cola has also contributed to the building of the mammoth brand name.
- LARGEST MARKET SHARE – There are only 2 Big competitors in the beverage segment – Pepsi and Coca cola. Out of these 2, coca cola is the clear winner and hence has the largest market share. Amongst all beverages, Coke, Thums up, Sprite, Diet coke, Fanta, Limca and Maaza are the growth drivers for Coca Cola.
- FANTASTIC MARKETING STRATEGIES – Coca cola unlike Pepsi always tries to win peoples heart. Where Pepsi’s target is continuously changing, and is targeted towards youngsters, Coca cola targets people of all ages. The targeting is also done by celebrities who are well liked – for example – Amitabh Bacchan, Sachin tendulkar, Aishwarya Rai, Aamir Khan etc
- CUSTOMER LOYALTY – With such strong products, it is natural that Coca cola has a lot of customer loyalty. The products mentioned above like Coca cola and Fanta have a huge fan following. People will prefer these soft drinks over others. Because of the good taste of Coca cola, finding substitutes becomes difficult for the customer.
- DISTRIBUTION NETWORK – Coca cola has the largest distribution network because of the demand in the market for its products. On the other hand, due to this successful distribution network, Coca cola has been able to command such a high market presence.
Weaknesses in the SWOT of Coca Cola
- COMPETITION WITH PEPSI – Pepsi is a thorn in the flesh for Coca cola. Coca cola would have been the clear market leader had it not been for Pepsi. The competition in these two brands is immense and we don’t think Pepsi will give up so easily.
- Product Diversification IS LOW – Where Pepsi has made a smart move and diversified into the snacks segment with products like Lays and Kurkure, Coca cola is missing from that segment. The segment is also a good revenue driver for Pepsi and had Coca cola been present in this segment, these products would have been an additional revenue driver for the company.
- ABSENCE IN HEALTH BEVERAGES – If you watch the news, you would know that obesity is a major problem affecting people nowadays. The business environment is changing and people are taking measures to ensure that they are not obese. Carbonated beverages are one of the major reasons for fat intake and Coca cola is the largest manufacturer of carbonated beverages. The inference is that the consumption of beverages in developed countries might go down as people will prefer a healthy alternative.
- WATER MANAGEMENT – Coca cola has faced flak in the past due to its water management issues. Several groups have raised lawsuits in the name of Coca cola because of their vast consumption of water even in water scarce regions. At the same time, people have also blamed Coca cola for mixing pesticides in the water to clear contaminants. Thus water management needs to be better for Coca cola.
Opportunities in the SWOT of Coca Cola
- DIVERSIFICATION – Diversification in the health and food business will improve the offerings of Coca cola to their customers. This will also ensure that they get better revenue from existing customers by cross selling their products. The supply chain which is distributing their beverages can also distribute these snacks thereby sharing the load of Supply chain costs.
- DEVELOPING NATIONS – Although developed nations have a high presence of Coca cola, these countries are slowly moving towards healthy beverages. However developing countries are still being introduced to the delight of carbonated drinks and soft drinks. Countries like India which are developing and have a hot summer, find the consumption of cold drinks almost doubled during summers. Thus the higher consumption in developing environments can be a good opportunity to capitalize for Coca cola.
- PACKAGED DRINKING WATER – With hygiene becoming a major factor in the consumption of water, packaged drinking water has found its way into peoples mind. Coca cola has a presence in the packed drinking water segment though Kinley. Although Kinley’s expansion is slow as of now, Kinley has a huge potential of expansion. Thus Coca cola as a company should focus on the expansion of Kinley as a brand and take it up to Bisleri‘s level of trust.
- SUPPLY CHAIN IMPROVEMENT – Supply chain can be a major cost sink hole with the transportation costs always rising. Coca cola’s complete business is based on transportation and distribution. There will always be possible improvements in this area. Thus Coca cola should keep strict watch on its Supply chain and keep improving to bring the cost down.
- MARKET THE LESSER SELLING PRODUCTS – In the product portfolio of Coca cola, there are several products which have not found acceptance in the market. Coca Cola needs to concentrate on the marketing of these products as well. It is understood that Coca cola has made several expenses to launch these products. Thus, the marketing and subsequent rise of sale of these products will help revenue of Coca cola.
Threats in the SWOT of Coca Cola
- RAW MATERIAL SOURCING – Water is the only threat to Coca cola. The weakness of Coca cola was the suspected use of pesticides or vast consumption of water. However, the threat here is that water scarcity is on the rise. With the climate changing, and regions of various countries facing scarcity of water, sooner or later someone might raise fingers on beverage companies. Thus, Water sourcing is an axe which can fall anytime on the head of Coca cola. If water is limited or rationed, Coca cola can experience a major downfall in their revenue and capacity of distribution. The same can affect its arch rival Pepsi as well.
- INDIRECT COMPETITORS – Coffee chains like Starbucks, Café coffee day, Costa coffee are on the rise. These chains offer a healthy competition to Coca colas carbonated drinks. They might not be a big competition for Coke, but they do give a dent to its beverage market. Similarly, health drinks like Real and Tropicana as well as energy drinks like Red bull and Gatorade are stealing away the market share indirectly.
How Innovation Helped Coca Cola
Innovation is at the centre of everything Coca Cola does. It is the powerful force behind their 3,000 juices, waters, sports drinks, sparkling beverages and energy drinks. It is the motivation behind their environmentally-friendly packaging and refrigeration equipment. Innovation is what makes Cokes cutting-edge marketing connect with consumers around the world every day. Innovation is what keeps them thirsting for success.
There are many factors, internal as well as external that impact the planning function of management within an organization, and Coca-Cola is no exception. More than a billion times every day, thirsty people around the world reach for Coca-Cola products for refreshment. Coca-Cola is the most popular and biggest-selling soft drink in history, as well as the best-known product in the world. The Coca-Cola franchise covers a population of approximately 398 million people. Coca-Cola Enterprises employs approximately 72,000 people who operate 463 facilities, 54,000 vehicles and approximately 2.4 million vending machines, beverage dispensers and coolers.
The change process are relied on the whole organization, which means various parties likely affected by change involving the increase in efficiency of marketing and inventory, as well as the effective work-force of employees. Stakeholders pertain to the parties linked to the business firm who stand to experience benefits or adverse effects from the change (Friedmand, 2007, p. 172). Identifying the stakeholders and the respective interests is important to develop ways of wining over these various stakeholders who are likely to contribute to the success of the planned change. Determining stakeholders or the parties affected by the change together with the impact of the change to these parties is also important in prioritizing stakeholder interests as well as the resolution of issues faced by the stakeholders. (French & Delahaye, 1996, p. 22)
The market today is always changing. A company must be in tune with what consumers want. Consumers get bored, and often want new products. In order to meet the wants and needs of customers a company must introduce new products or services (Bateman &Snell, 2003). Coca-Cola in an effort to meet customer’s needs created C2 which is a low carb soft drink. This was in response to the low carb diets and the demands of consumers. They also intend to launch a new soft drink called Coca-Cola Zero. This is a zero calorie soft drink. Knowing the importance of innovation the Coca-Cola Company has always strived to create new products. They already have Coke with Lime, Lemon, Vanilla and Cherry. Raspberry will be the new flavor added to Coke coming soon. They also have plans to sweeten Diet Coke with Splenda, a sugar substitute that is safe for diabetics.
Before the 200 Olympics, there was a concerted online campaign which showed Coke in a bad light environmentally and pushed Coke to buy green refrigeration for new units. The E-card was used by the Coke spotlight campaign, a joint Greenpeace/Ad busters effort, which successfully changed Coke’s policy on climate-killing refrigerants. Coke announced phase out plans for damaging refrigeration technologies by the time of the 2004 Olympics. In 2008, Coke installed no less than 6350 climate friendly coolers and vending machines in the Olympic Games venues in Beijing and six co-host cities.
This approach of combining natural refrigerants and energy efficient technology is a great example of how a business can innovate and turn a challenge into an opportunity. 40 million dollars was invested to the research for the HFC-free machines, and more is continually poured into developing green technologies today. The company is also involved in the wellbeing industry through proper investments in The Beverage Institute for Health and Wellness