Running head: MANAGEMENT AND LEADERSHIP THEORIES - CASE STUDY 1

Management and Leadership Theories - Case Study

Student's Name

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MANAGEMENT AND LEADERSHIP THEORIES - CASE STUDY 2

Abstract

The purpose of this article is to identify the application of management theories at Coca-Cola

Company. Management and leadership play an essential role in the perfom1ance of an

organization. Various theories have been put forward to explain management and leadership.

This paper analyzes the effectiveness of management theories in Coca-Cola Company, one of the

largest companies in non-alcoholic soft drinks. The paper focuses on Henry Fayol's and

McClelland's contributions on management. Further, the paper discusses the leadership styles

applied by Coca-Cola and their impact o the company's level of perfonnance. The article also

addresses the management tools applied by Coca-Cola such as benchmarking, strategic planning,

mission statement and total quality management.

MANAGEMENT AND LEADERSHIP THEORIES - CASE STUDY 3

Contents
Introduction.............................................................................................................................................4

Company Description................................................................................................................................... 4

Legal and Organizational Structure.......................................................................................................... 5

The Effectiveness of the Management Theories to the Company's Management.......................................5

Management Function at Coca- Cola Company.......................................................................................6

Organizing............................................................................................................................................ 6

Planning............................................................................................................................................... 7

Leading Function.................................................................................................................................. 7

Control Function..............................................................................................................................8

Management Tools Used by the Company..................................................................................................8

Benchmarking....................................................................................................................................9

Strategic Planning.................................................................................................................................... 9

Total Quality Management..................................................................................................................... 10

Mission Statement.................................................................................................................................. 10

Competitive Challenges Faced by the Company................................................................................................11

Health-Related Concerns....................................................................................................................... 11

Decreasing Agricultural Productivity....................................................................................................... 11

Economic Factors.................................................................................................................................. 11

Environmental Regulations.................................................................................................................... 12

Types of Leadership Styles of the Company.......................................................................................................12

Transactional and Transformational Leadership Styles..........................................................................12

Democratic Leadership in Coca-Cola..........................................................................................................14

Autocratic Leadership in Coca-Cola............................................................................................................14

Laissez-Faire Leadership in Coca-Cola........................................................................................................15

Current Business Strategies and Recommendations.................................................................................15

Promotional and Marketing Support to the Company's Bottlers............................................................15

Investment in Bottling Operations.......................................................................................................... 16

Recommendations..................................................................................................................................... 16

Conclusion................................................................................................................................................. 16

References................................................................................................................................................. 18
MANAGEMENT AND LEADERSHIP THEORIES - CASE STUDY 4

Introduction
Various management theories have been put forward by various scholars. Management

plays a crncial role in steering an organization towards achieving its goals and objectives (Groth,

2013). Besides, the approach to management is considered to impact on the perfonnance of an

organization significantly (Gachingiri, 2015). Companies compete on management competencies

in identifying and implementing relevant strategies that can position a company competitively in

an industry and a market it carries out its activities. This paper examines the application of

theories of management at Coca - Cola Company by evaluating the management function and,

leadership approaches and strategy formulation with reference to the management theories put

forward.

Company Description
Dating from 1892, Coca-Cola Company has been the leader in the manufacturing and

retailing nonalcoholic soft drinks in the retail industry ("Investors Info: SEC Filings: Annual

Report 2017/2018", 2018). The company is headquartered in Atlanta, Georgia and has

operations in over 200 countries trading in more than 500 brands. Coca-Cola Company operates

a franchised distribution system the company engages in the production of syrnp concentrate

which is sold to bottlers globally ("Investors Info: SEC Filings: Annual Report 2017/2018",

2018). The firm has sustained its competitiveness in the carbonated soft drinks industry over

years and continues to gain a significant market share in the industry.

MANAGEMENT AND LEADERSHIP THEORIES - CASE STUDY 5

Legal and Organizational Structure

Coca-Cola Company is legally registered as a limited liability company and assumes a

franchise organizational structure on its operations. The company offers rights to franchisees

who trade under the company's brand name in manufachiring and selling of carbonated soft

drinks in various parts of the world. In return, the company shares the profits with the

franchisees at agreed tenns ("Investors Info: SEC Filings: Annual Report 2017/2018", 2018).

Franchises are considered to be an effective approach to internalization in increasing sales volume

and diversification of risks associated with carrying operations solely. However, initially, the

company had a centralized approach to control over its operations but later engaged in franchise

business to meet the growing demand for the company's products. thus, the authority of making

strategic decisions is shards between franchisor and the franchisees in with an objective of

meeting organizational goals and objectives.

The Effectiveness of the Management Theories to the Company's

Management
Management has an essential function since when social organizations were formed to

ensure coordination of individual efforts with an objective of accomplishing goals and objectives

collectively. Besides, the complexity of organized groups has resulted in the increased

importance of management. thus, the managerial theory is considered essential in the approach

of managers in managing complex organizations such as Coca-cola. Henry Fayol (1841-1925)

described the management function to comprise organizing, coordinating, planning, directing

and controlling (Groth, 2013). His contribution to the classical organization theories has been

significant in describing the role of managers in a social organization (Groth, 2013). His theory

has been implemented by the organization in defining the functions of managers in the corporate

world.
MANAGEMENT AND LEADERSHIP THEORIES - CASE STUDY 6

McGregor put forward Theory X and Theory Y explaining the types of employees and

the role of an organization in influencing their behavior. In his contribution to management

theories, he categorized employees into two categories, Y, and X (Groth, 2013). According to his

research, he discovered that employees under Theory Y perceive work as natural, employees

become committed to their jobs if they are satisfied, employees can learn to appreciate

responsibilities, the intellectual potential of employees is only partially utilized among other

factors (Groth, 2013). On the other hand, Theory X asserts that human beings are generally lazy

and they avoid work at all cost, humans need direction and security and often hate

responsibilities, and humans should be controlled and be challenged to work hard. McGregor's

contribution was reinforced by McClelland's motivation theory in getting people to work (Groth,

2013). This section discusses the Hemy Fayol's contribution to management function and

McClelland's contribution on motivation theory in the context of Coca-Cola management.

Management Function at Coca- Cola Company

As mentioned, the management function comprises of organizing, planning, leading,

controlling and directing. These are the main functions of management used in contemporary

organizations function of management (Olum, 2004).

Organizing
The organization is an essential management function in creating coordination in an

organization (Olum, 2004). This function exhibits itself in various aspects of Coca-Cola

Company including resource allocation, work specialization, departmentalization, human

resource management, and delegation and accountability.

Departmentalization is a functional approach of subdividing the entire organization into

different functions .the success of organizing is exhibited by smooth coordination of the different
MANAGEMENT AND LEADERSHIP THEORIES - CASE STUDY 7

organizational units with an objective of attaining a common goal. ("Theories of Leadership and

Management", n.d.) Coca-Cola Company has five major departments including production

department, sales and marketing, finance department, industrial relations department, and human

capital department. The company's general manager heads all the department and hence each

department reports to a general manager. Thus, the general manager has the role of organizing

the departments a crncial managerial function to the company.

Planning
Planning is an important management function for a company. The role includes

positioning an organization competitively in an industry through strategic management and

allocating resources accordingly ("Theories of Leadership and Management", n.d.). The role of

planning is a prerogative of the upper-level managers at Coca-Cola Company, especially where

the goals are long-term in nature. They are responsible for setting strategic goals, tactic goals,

operational goals, making forecast and decision making. The strategic goals are long-tenn in

nature in the company and an annual meeting forms the basis of evaluating the company's

degree of attaining the strategic goals. The tactic goals operational goals involve engaging the

employees in developing them. The company applies management by objective in setting

operational goals and engaging the employees on the same.

Leading Function
Hemy Fayol considered the leading function of management as a role of managers in

influencing the workers in believing in their vision (Olum, 2004). This achieved by Coca-Cola

through effective communication, employee motivation, and demonstrating the cooperate

culture. Motivation is an important element in influencing employees' commitment to attaining

organizational goals and objectives. Coca-Cola Company rewards employees' perfonnance as

well as incentivizing franchise operations for increased productivity ("Investors Info: SEC
MANAGEMENT AND LEADERSHIP THEORIES - CASE STUDY 8

Filings: Annual Report 2017/2018", 2018). The company also offers competitive packages to

attain employee satisfaction and motivation. Effective communication is considered instrumental

in the leading function of the company. Employees are encouraged to share infonnation freely

for smooth operations of day to day activities. The top-level managers are the role model to

employees' code of conduct and influencing a corporate culture.

Control Function
Control plays a significant role in the performance of resources. The function defines the

scope of resource allocation, operational goals, reporting, and evaluation of performances among

other roles (Olum, 2004). The control function also enables an organization in identifying areas

that fall short of target and mitigating possible risks that an organization can face (Gachingiri,

2015). Coca-Cola control function is exhibited by reporting systems among the salesperson,

perfom1ance evaluation system, quality management among other areas ("Investors Info: SEC

Filings: Annual Report 2017/2018", 2018). The sales report enables the company to remunerate

the sale person and evaluating their performance against set targets.

Management Tools Used by the Company

Organizations apply various tools in evaluating various performances (Anna, 2015).

Analysis of the performance is critical to an organization in establishing areas that require

improvements. Various management tools are used by corporations in assessing perfonnance and

management of key issues that concerns an organization such as benchmarking, balanced

scorecard, total quality management, strategic planning among other tools (Ware, 2014). Various

researchers have established that the use of management tools has many benefits to an

organization including improved perfonnance, improved quality of products and decisions,

gaining a strategic advantage, understanding the relative cost status, and increasing the rate of
MANAGEMENT AND LEADERSHIP THEORIES - CASE STUDY 9

organizational learning among other factors (Kadarova & Durkacova, 2012). Coca-Cola

Company applies four management tools including benchmarking, strategic planning, total

quality management, and a mission statement. ("Investors Info: SEC Filings: Annual Report

2017/2018", 2018).

Benchmarking
Benchmarking is a critical management tool used in identifying and use of best

practices to sales and operations (Anna, 2015). Benchmarking at Coca-Cola Company

facilitates evaluation and comparison of the perforn1ance of the product externally and

internally. The external perfom1ance evaluation involves comparing the company's processes

and products to the competitors in the industry. An internal evaluation involves evaluating the

perfonnance of franchise against each other (Kadarova & Durkacova, 2012). The company uses

benchmarking to establish superior performance and facilitates understanding the practices and

processes behind such performance. Thus, the company is able to tailor and implement the best

practices that enhance the company's operations.

Strategic Planning
Strategic planning is a complex process that seeks to establish what the business should

achieve and the best approach to achieve the goals (Anna, 2015). The management tool

determines the full potential of a company by linking the company's objectives to the resources

and actions necessary to achieve them. Strategic planning challenges the management in

undertaking strategic decisions towards achieving the desired goals (Kadarova & Durkacova,

2012). Coca-Cola company strategic planning is aimed at training managers to develop skills

that facilitate better decision making. The approach also facilitates fact-based discussions to

sensitive
MANAGEMENT AND LEADERSHIP THEORIES - CASE STUDY 10

issues concerning the company. Strategic planning also facilitates effecting changes on

company's direction on perfonnance such as launching aggressive advertisement campaign.

Total Quality Management

The food and beverage industry has attracted concern regarding the quality of food and

beverages provided in a market due to health concerns (Anna, 2015). Total quality management

is aimed at improving the overall business. This management tool facilitates continuous

improvement of products and services. Besides, the tool facilitates enhanced efficiency among

individuals and machines and consequently results to improved quality and enhances satisfaction

to customers. Coca-cola benefits from total quality management in various aspects including

reduced customer and warranty support costs, elimination of redundancy in work, elimination of

reworks and repairs, elimination of reject products among other benefits ("The Coca-Cola

Company - Quality", 2012). Use of total quality management at Coca-Cola facilitates freeing up

management time and resources in solving problems and facilitates concentration on increasing

production, improving the existing products and increasing the range of products.

Mission Statement
A mission statement explains a finn's business as well as its objectives and the approach

to meeting the objectives (Kadarova & Durkacova, 2012). Further, a vision statement defines the

desired future goals and status of a company. These statements are essential management tools

that define a company's values, purpose, and goals (Kadarova & Durkacova, 2012). Coca-Cola

mission and vision defines the performance standards, guides employees in the process of

making a decision and guide the management decision on strategic issues.

MANAGEMENT AND LEADERSHIP THEORIES - CASE STUDY 11

Competitive Challenges Faced by the Company

Challenges are inherent in operations of a business that hinders smooth operations of a

business. Besides, the challenges can limit a company's competitiveness in an industry it

operates. Most competitive challenges facing Coca-Cola Company concerns the business'

external environment where the company has limited control ("Investors Info: SEC Filings:

Annual Report 20l7/2018", 2018). However, mitigation strategies for combating such challenges

define company's success or failure. Some of the competitive challenges facing Coca-Cola are

discussed below.

Health-Related Concerns
The increased health awareness has changed the consumer attitude to sugar-sweetened

beverages. This is attributable to increased cases of obesity ("Investors Info: SEC Filings:

Annual Report 20l7/2018", 2018). Therefore, the changes in lifestyle have a competitive threat

to the demand for the sweetened company's products. The reduced demand causes a decrease in

the company's revenue as well as its profitability in the industry.

Decreasing Agricultural Productivity

The company faces a competitive threat on the agricultural inputs used in the production

of its products. Agricultural productivity has decreased whereas the demand for agricultural

produce is on an increasing trend ("Investors Info: SEC Filings: Annual Report 2017/2018",

2018). Besides, the increased demand for agricultural products has resulted in increased prices

which increase the cost of production and thus, reducing its profitability.

Economic Factors
The macroeconomic factors impact significantly on the operations of a business. for

instance, the fluctuations in the foreign exchange rates affect the company's level of earnings

when the rates move against the company's expectations ("Investors Info: SEC Filings: Annual
MANAGEMENT AND LEADERSHIP THEORIES - CASE STUDY 12

Report 2017/2018", 2018). The company operates in various countries and thus, the cun-ency

denomination and valuation varies diversely. A movement against the company's expectations

has possible consequences of reducing the firms' profitability.

Environmental Regulations
The increased awareness of the importance of the use of eco-friendly packaging poses

threat to Coca-Cola competitiveness ("Investors Info: SEC Filings: Annual Report 2017/2018",

2018). The company uses non-biodegradable bottles which have received a lot of criticism

globally. Governments and environmental bodies have emphasized on the biodegradable

packaging with an objective of conserving the environment. Besides, the consumers' behaviors

have changed to a variety of values they derive from products such as the value of packaging to

the environment. (Ware, 2014) Thus, the company's packaging impacts significantly on the

demand for the company's products.

Types of Leadership Styles of the Company

A leadership style used by a company impacts significantly on its performance and

competitiveness in the market it carries out its operations (Ahmed, Nawaz & Khan, 2016).

However, the relevance of a leadership style varies from one sih1ation to another. For instance,

the leadership style applied in activities that require high confidence level, technical expertise, a

high degree of accuracy differs when managing simple oriented portfolios. Various styles are

applied in the management of organizations which can be categorized as either transactional

leadership style or transformational leadership. Style (Knies, Jacobsen & Tummers, 2016).

Transactional and Transformational Leadership Styles

A transactional leader puts emphasis on a scheme of reward in explaining to the followers

what an organization expects of them. Besides, this type of leader appreciates god performance
MANAGEMENT AND LEADERSHIP THEORIES - CASE STUDY 13

by rewarding the employees who exhibit exemplary performance (Gachingiri, 2015). The

transactional type of leadership involves three components namely management by exception

either actively or passively and contingent reward (Ahmed, Nawaz & Khan, 2016).

Transactional leaders focus on contractual agreements in motivating the workers.

Besides, they use extrinsic rewards on employees as a motivation factor. Various researchers

have established the adverse effects of this type of leadership. The leadership style is considered

to retard creativity among employees and thus, cause dissatisfaction in their jobs. However, as

mentioned, the type of leadership can be effective in one organization while it cannot work in

another organization. Thus, this type of leadership is applicable, especially where the scope of

work is simple and does not require some expertise (Aluned, Nawaz & Khan, 2016). Autocratic

leadership falls under the transactional leadership style where the process of decision making is

a prerogative of the leaders without the concern of the employees.

On the other hand, a transformational leadership style involves linking the individual

worker's contribution and the organizational level (Ahmed, Nawaz & Khan, 2016). This type of

leadership is considered to influence positively worker's self-esteem, self-actualization among

other benefits. Transformational leadership advocates for the need for self-sacrifice for the better

perfom1ance of an organization relative to individual interests (Gachingiri, 2015). Thus, the

employees have an element of risk-taking on their commitment to organizational operations.

These types of leaders value a strong employee-employer relationship where employees are

empowered not only to serve the organization but to also achieve their personal goals.

Transformational leaders can be further be classified as democratic, and Laissez-faire.

MANAGEMENT AND LEADERSHIP THEORIES - CASE STUDY 14

Coca-Cola applies a variety of leadership styles depending on the situation and the

department concerned (Ahmed, Nawaz & Khan, 2016). Thus, although the organization has a tall

organizational structure, the leadership employed by the company include democratic leadership,

autocratic leadership, and Laissez-faire leadership styles. Every type of leadership has both pros

and cons and is dependent on the level of management (Ahmed, Nawaz & Khan, 2016).

Democratic Leadership in Coca-Cola

Democratic type of leadership assumes a transformational style where the leaders engage

with the followers in the process of decision making (Ahmed, Nawaz & Khan, 2016). This is an

essential fom1 of leadership to the company given its complexity and relationship to franchises.

Franchises assume an employee role in the execution of the company's operations towards a

common goal of maximizing the shareholders' value as well as the company's market share. A

democratic leader does not only focus on the performance of an organization but also focus on

the development of the interest groups (Gachingiri, 2015). Thus, the management of Coca-Cola

values the positive performance of the company as well as the well being of the workers. Coca

Cola assigns responsibilities to the employees as well as the franchisees for the overall good of

the company ("Investors Info: SEC Filings: Annual Report 2017/2018", 2018).

Autocratic Leadership in Coca-Cola

An autocratic leader focuses on the procedure and requirement and requires no

contribution in the process of decision making. This type of leadership is authoritarian where

employees are obliged to follow the laid dome procedures without questioning (Ahmed, Nawaz

& Khan, 2016). The leaders make all decision with limited or no negotiation from the lower level

managers and workers. Coca-Cola applies this type of leadership on its manufacturing plants

where employees are obliged to follow a prescribed procedure for conducting their job

("Investors Info: SEC Filings: Annual Report 2017/2018", 2018).

MANAGEMENT AND LEADERSHIP THEORIES - CASE STUDY 15

Laissez-Faire Leadership in Coca-Cola

Laissez-faire type of leadership is focused on delegation of responsibilities with a limited

approach to micro-management of the followers (Ahmed, Nawaz & Khan, 2016). Followers or

workers are held accountable for their action and they perfom1 their duties according to their will

and for better performance of the organization (Gachingiri, 2015). This type of leadership has

gained popularity in many organization in enhancing employees' motivation and job satisfaction.

Employees' perception of their value to the company is enhanced and become more committed

and productive in their duties (Knies, Jacobsen & Tummers, 2016). Coca-Cola embraces this

type of leadership given its complexity in influencing the employees and franchisees

perfom1ance. Laissez-faire and democratic leadership styles are recommended for increased

productivity and perfom1ance of the company (Ahmed, Nawaz & Khan, 2016).

Current Business Strategies and Recommendations

Business strategies are aimed at enhancing an organization's performance in various

aspects including economic, social, and technological growth (Gachingiri, 2015). Besides,

successful implementation and execution of a corporate strategy position an organization

competitively against the competitors. Coca-Cola Company has various business strategies

aimed at achieving various goals and objectives as discussed below.

Promotional and Marketing Support to the Company's Bottlers

Although promotional and marketing support is not an obligation of the company to the

bottlers, Coca Coal company promotes the bottlers marketing strategy for enhanced

performance of the bottler as well as the company in general ("Investors Info: SEC Filings: Annual

Report 2017/2018", 2018). This an essential strategy in enhancing demand for the products as

well as enhancing product acceptance in various markets that the company carries out its

operations.
MANAGEMENT AND LEADERSHIP THEORIES - CASE STUDY 16

Investment in Bottling Operations

The company's products are mostly manufactured, distributed and sold by independent

bottlers. Coca-Cola however, gets control of the bottling operations especially in

underperfonning markets ("Investors Info: SEC Filings: Annual Report 2017/2018", 2018). This

strategy eliminates the challenge of resources requirement where the company utilizes its

resources in and expertise in enhancing perfonnance in the underperforming markets.

Recommendations
• Exploration of other markets that the company does not have operations to enhance sales

revenue

• Expansion of the product range to include health friendly products such as fresh juice

• Improvising a new packaging material that replaces the non-biodegradable bottles

• Increasing company's engagement to corporate's social responsibility to enhance

corporate image

• Own production of agricultural produce to mitigate the risk of supplies stock outs

Conclusion
Management theories put forward by various individuals have crncial roles in the

management of organizations in the contemporary social setting including groups, corporations,

political parties, not for profit organizations among other social groups (Groth, 2013). The

approach to leadership and management impacts significantly on the perfonnance of an

organization. Further, the employer-employee relationship is considered to impact significantly

on the employee contribution and commitment to an organization. Coca-Cola applies classical

approaches to management and leadership where employees are considered as valuable assets

to an organization especially in the process of decision making. Thus, Coca-Cola applies the
MANAGEMENT AND LEADERSHIP THEORIES - CASE STUDY 17

leadership styles that do not only enhance the company's performance but also considers

employees development. Understanding the various needs of followers or employees and

implementing an appropriate management and leadership style is essential in enhancing

cooperation and collaboration in achieving a common goal. The effectiveness of Coca-Cola

management approach and leadership styles have seen the company being a leader in the non

alcoholic soft drinks industry. This is significantly attributable to the freedom given to the

employees and franchisees in taking account of their responsibilities as well as engaging them

in the process of decision making.

MANAGEMENT AND LEADERSHIP THEORIES - CASE STUDY 18

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