Question: CASE STUDY The Coca-Cola Company Announces Strategic Steps to Reorganise its Business for Future Growth The Coca-Cola Company today announced strategic steps to reorganize and better enable the Coca-Cola system to pursue its Beverages for Life strategy, with a portfolio of drinks that are positioned to capture growth in a fast-changing marketplace. TheCASE STUDY
The Coca-Cola Company Announces Strategic Steps to Reorganise its Business for Future Growth The Coca-Cola Company today announced strategic steps to reorganize and better enable the Coca-Cola system to pursue its Beverages for Life strategy, with a portfolio of drinks that are positioned to capture growth in a fast-changing marketplace. The company is building a networked global organisation, combining the power of scale with the deep knowledge required to win locally. The company will create new operating units focused on regional and local execution that will work closely with five marketing category leadership teams that span the globe to rapidly scale ideas. This structure will be supported by the company’s newly created Platform Services organisation, which will provide global services and enhanced expertise across a range of critical capabilities. “We have been on a multi-year journey to transform our organisation,” said Chairman and CEO James Quincey. “The changes in our operating model will shift our marketing to drive more growth and put execution closer to customers and consumers while prioritizing a portfolio of strong brands and a disciplined innovation framework. As we implement these changes, we’re continuing to evolve our organisation, which will include significant changes in the structure of our workforce.” Operating units The company’s nine new operating units will help streamline the organisation by replacing current business units and groups. The operating units will be highly interconnected, with more consistency in structure and a focus on eliminating duplication of resources and scaling new products more quickly. The company’s current model includes 17 business units that sit under four geographical segments, plus Global Ventures and Bottling Investments. Moving forward, the operational side of the business will consist of nine operating units that will sit under four geographical segments, along with Global Ventures and Bottling Investments. The company’s operating leaders will report to President and Chief Operating Officer Brian Smith. Global category leads Innovation, marketing efficiency and effectiveness are top priorities for the company. The Coca-Cola Company is conducting a portfolio rationalization process that will lead to a tailored collection of global, regional and local brands with the potential for greater growth. To drive these initiatives and support the operating units, the company is reinforcing and deepening its leadership in five global categories with the strongest consumer opportunities: • Coca-Cola • Sparkling Flavours • Hydration, Sports, Coffee and Tea • Nutrition, Juice, Milk and Plant • Emerging Categories The leaders of these categories will work across the networked organisation to build the company’s brand portfolio and win in the marketplace. Global category leads will report to Chief Marketing Officer Manolo Arroyo. Platform Services The company today announced the creation of Platform Services, an organisation that will work in service of operating units, categories and functions to create efficiencies and deliver capabilities at scale across the globe. This will include data management, consumer analytics, digital commerce and social/digital hubs. Platform Services is designed to improve and scale functional expertise and provide consistent service, including for governance and transactional work. This will eliminate duplication of efforts across the company and is built to work in partnership with bottlers. Platform Services will be led by Senior Vice President and Chief Information and Integrated Services Officer Barry Simpson. Aligning the company’s workforce to new priorities The company’s structural changes will result in the reallocation of some people and resources, which will include voluntary and involuntary reductions in employees. The company is working on this next stage of design and will share more information in the future. In order to minimize the impact from these structural changes, the company today announced a voluntary separation programme that will give employees the option of taking a separation package, if eligible. The programme will provide enhanced benefits and will first be offered to approximately 4,000 employees in the United States, Canada and Puerto Rico who have a most-recent hire date on or before Sept. 1, 2017. A similar programme will be offered in many countries internationally. The voluntary programme is expected to reduce the number of involuntary separations. The company’s overall global severance programmes are expected to incur expenses ranging from approximately $350 million to $550 million. Source:
The company’s structural changes will result in the reallocation of some people and resources…” With regard to this statement and your analysis of the article above, critically discuss four (4) factors that the Coca-Cola Company should consider when determining the necessary changes to their organisational structure.