This paper focuses on the organizational structure of the Coca-Cola Company and its comparison with other types of organizational structure, defining the influence that the organizational functions and organizational design make on the organizational structure of the chosen company.
Coca Cola is a global company that operates on a local scale. It is represented in more than 200 countries (Coca Cola Company Official Website, 2013). Under the organizational structure of the company, it is implied the composition, subordination, interaction and distribution of tasks by functional departments depending on the strategy of the company (Daft, Murphy, & Willmott, 2010). The Coca Cola Company as a multinational company needs such an organizational structure that will be flexible to meet the specific needs of local communities.
Coca Cola Company has a divisional organizational structure. The division of responsibilities is based on the regional segmentation. In turn, the divisional offices create their own units for the supply, production, marketing, etc. Thus, there are prerequisites for liberating top executives from dealing with the current operational challenges and concentrate their efforts on the long-term strategy development. Decentralized control system ensures high efficiency within individual business units. However, such an organizational structure has several disadvantages, such as the rising cost of management staff and the complexity of information links (Griffin, 2008).
The Coca Cola Company establishes five geographic operational divisions that are called Strategic Business Units. They cover all needed operations in each world region - Pacific Group, Eurasia & Africa Group, Europe Group, Latin America Group, and North America Group. Senior functional leadership is at the top of the organizational structure and defines the strategy, sets a direction and support definite functional area (Coca Cola Company Official Website, 2013).
It is needed to underline the transnational scale of operations and desire of the top management of the Coca Cola to stay flexible on a local level and also stipulate that each Strategic Business Unit has its marketing, finance, human resources, operations departments and responsible executives. The Head Office of the Company decided to decentralize its organizational structure to meet specific local needs concerning culture differences and customers’ expectations.
Comparing Coca Cola organizational structure with other two organizational structures, it is important to point out that the matrix organizational structure appears with the aim to facilitate the pace of products and project updates. The essence of the matrix structures is that the working groups are formed inside the existing structures to implement targeted projects and programs. The group leader obtains the dual subordination of transferred resources and employees of other departments. These temporary groups are under dual subordination and control. It ensures flexibility in the allocation of staff, more effective implementation of projects. The biggest disadvantages of this type of organizational structure are the complexity of the structure; the possible arise of conflicts due to the intersection of functional responsibilities (Griffin, 2008).
It should be stated that the advantages of the matrix organizational structure comparing to the divisional organizational structure are flexibility, innovation facilitating, personal responsibility of the project manager for the results. The disadvantages of such a type of the organizational culture are the presence of dual subordination, conflicts because of dual subordination and the complexity of informational links (Roberts, 2007).
When there is the need for specialization of staff, a functional organizational structure evolves. The distribution of tasks is carried out through the functions. The organizational structure is divided into several areas, each having specific functional tasks. It is typical for organizations with a small nomenclature and stable external environment. The following hierarchy: the head - functional managers (production, HR, marketing, finance) - the performers exists. There are vertical and inter-level types of communication (Griffin, 2008).
Comparing the functional organizational structure with the Coca Cola’s multidivisional organizational structure, there are several advantages such as increasing specialization, improving the quality of management decisions, the ability to manage multi-purpose and multi-disciplinary activities. The biggest disadvantages of the functional organizational structure are lack of flexibility, poor coordination functional units, slow decision making, and lack of functional managers responsible for the outcomes of the companies (Roberts, 2007).
The multidivisional structure of the Coca Cola Company was determined by applying various organizational designs. With the aim to distribute the right of taking decisions concerning the production and marketing of wide products range of Coca Cola efficiently, product departmentalization is used. It means that operational tasks and staff are divided into separate units responsible for developing and promoting particular products or services. Coca Cola allocates such directions of its production line departmentalization inside each of the five divisions, such as beverages, soft drinks and others (Roberts, 2007).
The organizational structure of the Coca Cola is based on the geographical departmentalization that means that there are several units that operate in particular geographical areas and are responsible for the promoting of Coca Cola products on the local level. The biggest advantages are the opportunity to react quickly to the market challenges, to decrease costs due to unique organizational resources allocation closer to the local customers (Roberts, 2007).
It is necessary to underline that the organizational design of the Coca Cola Company allows divisional managers to make decisions on the local level and meet the arising local problems more efficiently. Functions that are especially decentralized are marketing, research and development/innovations. However, it is necessary to point out that some strategic decisions concerning finance are often taken in the head office and communicated to the local divisions. Multidivisional organizational structure allows Coca Cola to decentralize a decision-making process and thus decisions taken at the local levels assure that the Company will react quickly to the changing market demands. The representatives of the highest management level of the Head Office can more precisely focus on the long-term planning and strategy development.