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“Coca-Cola Shakes Up Its Organisation”

Pablo Gómez, Bruno Lebrusan & Alejandra Duque

Business Fundamentals II

Francisco Ubierna

01/02/2022
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Summary

Coca-Cola is a beverage company with 500 brands in 200 countries and 86,200 employees. Due to

health-conscious consumers, soda sales have been declining, and the pandemic has made matters

worse. Coca-Cola has responded by reducing added sugar in nearly 1,000 beverages, introducing

smaller pack sizes, and adding SmartLabel QR codes to 40% of its labels. They have eliminated brands

such as Tab, Zico, and Odwalla to slim down their portfolio, and have restructured the company to

drive more growth. In addition, they are offering voluntary separation packages to 4,000 employees in

the US, Canada, and Puerto Rico, at a cost of $350-$550 million.

Questions:

1. What factors have contributed to declining sales for Coca-Cola?

Factors contributing to declining sales for Coca-Cola include consumer health-consciousness, the

preference for diet and sugar-free beverages, and the sudden impact of the COVID-19 pandemic.

Consumers are better educated about the harmful effects of sugar, which has caused them to opt for

drinks like sparkling water instead of soda and juice. The pandemic has caused significant closures of

restaurants, theatres, and sporting events, which have contributed to the decline in sales.

2. How will a new organizational structure benefit Coca-Cola?

A new organizational structure at Coca-Cola will help the company focus on its most popular brands

and help the company scale new products faster while eliminating duplication of resources. This

should help the company better adapt to changing markets and increased health consciousness among

consumers. Additionally, the new structure will help Coca-Cola make the most of its global scale by

creating a networked global organization with regional and local execution teams. This should help the

company optimize its resources and create a more efficient organization. The new structure will also

help the company create a platform services organization to tackle data management, consumer

analytics, and e-commerce. This should help the company increase its sales and gain a competitive
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advantage. Finally, the new organizational structure will help the company reduce its expenses and

increase its profitability.

3. How does the restructuring affect Coca-Cola employees?

The restructuring of Coca-Cola has caused some employees to be affected. The company has

implemented voluntary separation packages for 4,000 of its employees in the United States, Canada,

and Puerto Rico in an effort to reduce the number of involuntary layoffs. The company has also

reallocated people and resources, which may result in involuntary job losses. The severance packages

are expected to cost the company between $350 million and $550 million. These changes could lead to

job losses and financial hardship for some employees, but the company believes that the restructuring

will help it to remain competitive and drive future growth.