Change Management: Coca-Cola

Introduction of the Company

Coca-Cola is an American multinational company that specializes in non-alcoholic drinks. The company was founded in 1886 in Atlanta, Georgia, New York. John Pemberton, a pharmacist, designed the first product in his laboratory from extracts from Coca and Kola with water. It has continued to grow and acquired the status of the most valuable brand.

Coca-Cola is one of the oldest and most successful enterprises around the globe. It has expanded its operations over the years and is currently operating in 200 countries around the globe. The firm has implemented change management to sustain itself over the years in the beverage industry.

Coke was originally intended to be a patent medicine by its inventor John Pemberton in Atlanta, Georgia. He was a Colonel and held a medical degree. During the American Civil War, he was wounded and addicted to morphine, making him develop a substitute for the drug. The initial drink was sold for five cents a glass at Jacob’s Pharmacy in Atlanta, Georgia. In 1888 he sold the Coca-Cola ownership rights to a businessman known as Asa Candler, whose marketing skills led to the brand’s dominance as the world’s soft drink in the 20th and 21st centuries.

The ingredients of the drink include coca leaves and the kola nuts, which has lots of caffeine. The formula for preparing the drink is a guarded secret, which has played a critical role in keeping the brand alive and dominating the global soft drink industry. The company has used the secrecy behind the formula as a marketing tool. Those who have knowledge on the formula are anonymous people. The company produces the concentrate, which is distributed to contracted bottlers around the world. The concentrate is mixed with water and sweeteners before being bottled.

In 1919, the company went public and was establishing itself in the market leadership position. The company has acquired most of its competitors, and its shares kept rising at 11% annually. In this paper, change management in Coca-Cola will be discussed together with the effect on the company.

Introduction of the Change Project

When implementing new strategies, the company utilizes the expertise of the change management team. Change management is a structured approach whose aim is to translate an organization’s functional teams or individuals from the present state to the future state.

Over the years, people’s systems and environment have changed. The only thing that has remained constant is change. The changes in Coca-Cola have happened in products, processes, and market changes. The status of Coca-Cola before change varies with the market change. The main triggers for change at the company have been attributed to market forces and legislation. Competition from companies such as Pepsi has necessitated the change in the company through the development of new brands such as Sprite.

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Why Change was Needed

Various reasons have sparked the need for change within the Coca-Cola Company. They include the technology used, administrative structure, cultural pattern prevailing among the employees and the environmental conditions. In addition, the market forces and legislation are important factors in influencing change within the company. In this case, the stiff competition faced by the company from rival companies such as Pepsi and the changing consumer needs that are more cautious about physical health and diet products.

Identification of the Type of Change

Since the first product was developed, John Pemberton Coca-Cola has been at the forefront of coming up with products that meet the market needs and stay ahead of its competitors. Coca-Cola faced fierce competition from Pepsi’s brand 7 Up. In response, Coca-Cola developed a product that counteracted this competition and came up with the Sprite brand.

The results were successful, and the company introduced a sugar-free brand of Sprite known as Diet Sprite. This was all an effort to increase customer satisfaction and create an impression that the product was superior to the previous one. Later the company made new improvements to the brand introducing a different taste of Sprite known as Sprite Green. All this is to improve customer satisfaction by meeting their needs. All these new changes and brand improvements illustrate how the company uses change to develop and improve the quality of its products.

Again, Coca-Cola faced aggressive competition from its main rival Pepsi, and the management decided to reformulate its popular brand Coke to attempt to meet the changing customer needs. This involved making the soda sweeter, which was renamed new Coke. However, the new invention did not entice the market, and it was a complete failure. This forced the management to revert to the previous version of the Coke brand. The management was determined to make changes to the product and make it look superior to the original product. The product was named Coca-Cola Classic; however, it was the same product they had packaged previously. The change failure of the company was an eye-opener to the management on the loyalty and quality of its customers and their products. The rebranding of the previous brand to Coca-Cola Classic aimed to give the customer an impression that it was superior instead of the previous one. This was a psychological approach to customers through the rebranding.

Consumer needs are constantly evolving and shifting towards health. This saw the consumers get concerned about the kinds of foods and drinks they were eating. The management realized these shifts and their effects on the beverage market and introduced the Diet Coke and Coke Zero brand. These brands were manufactured to enhance their quality and reduce the adverse effects of sugar on health. All these are change management approaches as the company sort to respond to market changes by trying to give the customers what they need.

Change Implementation Process

For any change process to succeed, the implementation process plays a vital role. The implementation process starts with planning and enactment methods that will consider adjustments. The following process was implemented for the changes at Coca-Cola.

Planning Phase

The leaders at the company are at the forefront of determining the need for change. They analyzed the situation and realized their market share was diminishing. This necessitated the need for change. The management analyzed the fierce competition situation and tried to brainstorm the best method to counteract it.

Pilot Study and Management Sensitization

As soon as the changes had been recognized, the change agents discussed their findings and recommendations with the top management. This is essential as it gives the top management a better understanding of the change. Once the change was determined, the company picked a suitable pilot study. Since this case involved the development of a new product, tests were carried out on the market to get the people’s response.

Stiff Sensitization and Involvement

The success of any change requires implementation by the human resource. This is because they are the ones who influence whether the change will be successful or not. From the planning stage, the management attempted to involve some subordinates to contribute to the process. This ensures their questions are answered and they feel part of the process.

Consolidation Stage

This is the last stage and is only executed when things are set, and there is a positive attitude from the employees.

Introduction to Resistance to Change

Resistance to change has been attributed to an individual’s comprehending of the respective objectives. One of the prevailing resistance is worker’s resistance. Coca-Cola faced employee resistance in their change management because they believed the change was not going to be successful and that staying at the current state was much better. This was mainly attributed to the fact that most workers did not understand the prevailing situation and the inability to comprehend the changes likely to come with the new changes.

Other factors contributing to the resistance include inadequacy of information, poor participation and the lack of awareness. Also, an informal organization tended to doubt the management’s intention.   

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How Resistance was Overcome

Coca-Cola devised a four-stage process to reduce the resistance faced.

  1. Preparation for Change Phase

This stage involved determining the need for change by diagnosing the present situation and identifying the potential problems. It also involved ascertaining the causes of resistance to change and ways to neutralize them.

  1. Change Planning Phase

The company has identified the areas of change, determined its objectives, and formulated a strategy for implementing the tasks to the various implementing teams.

  1. Implementation Phase of the Change Plan

This stage involved carrying out the change on a small scale. The second step of this stage involves implementing the change according to the scope of the established procedure. In addition, explanation to employees is carried out to ensure the whole team, right from the management to the subordinates, is on the same page and in agreement.

  1. Evaluation Phase

This stage involves various activities that help ensure that the goals are achieved and analyzes the causes of failure. Employees were taken into advanced training to raise sufficient awareness of the change benefits and answer any inquiries concerning the change. To achieve this, several workshops were held to develop employee career paths and improve performance quality.

The company has also tried to simplify processes and develop that enhance cooperation between the different organization’s department to make the goals a reality. The company has tried to cultivate a culture of creativity among the employees and eliminate issues that may cause conflict to unify their efforts and achieve goals. The company has also focused on the concept of teamwork, setting common goals to ensure the tasks are not replicated using the RACI chart.

Introduction to Change in Communication

Coca-Cola has continuously updated its communication systems to ensure information is relayed to all parties within the shortest time possible and efficiently. The company has also strived to get the opinions of its employees and customers through surveys using various communication channels. Attempts were made to involve employees in the decision-making process as the company realized that the change was not limited to the management but extended to all administrative levels of the organization. Change to be successful in an organization requires participation and efficient distribution of tasks and responsibilities. Implementing the above strategy increased the company’s efficiency and increased its competitive advantage.

Driving and Restraining Forces

According to the Force-Field model, several forces either support or hinder changes. The restraining forces need to be weakened, and driving forces need to be strengthened. The company’s culture of innovation and the management’s flexibility are some of the driving factors for the company. This has enabled the company always have a solution to the current problems. In addition, the resilience of the company’s management has enabled it to come up with new products despite experiencing failures. On the other hand, the restraining force for the company is employee resistance. Since they are accustomed to conventionally doing things, any form of change disrupts the normal way of doing things.

Guiding Conditions, Changing Agents

Change agents refer to individuals that introduce and manage change within an organization. The main change agent within the company is its management. The leaders at the company analyze the prevailing conditions in the industry and identify the areas that need to be improved.

Evaluation of the Change

The company’s changes have made it have an edge in the market. Coca-Cola has been successful or the number of decades it has been in operation. The high quality of its product and attention to consumer needs has made it feature in S&P 500, Russell 1000 Index and Russell 1000 Growth Stock Index.

Conclusion

In conclusion, we can see that the changes in Coca-Cola, especially through the invention of new brands and products, have enabled the company to remain competitive in the beverage industry. Also, we can see the importance of competition in providing customers with what satisfies their needs. Companies need to have a change management team to implement successful plans.

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