Running head: MANAGEMENT AND LEADERSHIP THEORIES – CASE STUDY
Management and Leadership Theories – Case Study
Student’s Name
Institution Affiliation
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MANAGEMENT AND LEADERSHIP THEORIES – CASE STUDY
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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 performance 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 performance. The article also
addresses the management tools applied by Coca-Cola such as benchmarking, strategic planning,
mission statement and total quality management.
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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
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Introduction
Various management theories have been put forward by various scholars. Management
plays a crucial role in steering an organization towards achieving its goals and objectives (Groth,
2013). Besides, the approach to management is considered to impact on the performance 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 syrup 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.
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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 manufacturing and selling of carbonated soft
drinks in various parts of the world. In return, the company shares the profits with the franchisees
at agreed terms ("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.
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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 Henry 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
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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 crucial 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-term 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
Henry 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’ performance as
well as incentivizing franchise operations for increased productivity ("Investors Info: SEC
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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 information 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,
performance 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 performance 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 performance, improved quality of products and decisions,
gaining a strategic advantage, understanding the relative cost status, and increasing the rate of
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organizational learning among other factors (Kádárová & Durkáčová, 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 performance of the product externally and internally. The
external performance evaluation involves comparing the company’s processes and products to
the competitors in the industry. An internal evaluation involves evaluating the performance of
franchise against each other (Kádárová & Durkáčová, 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 (Kádárová & Durkáčová,
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
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issues concerning the company. Strategic planning also facilitates effecting changes on
company’s direction on performance 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 firm’s business as well as its objectives and the approach
to meeting the objectives (Kádárová & Durkáčová, 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 (Kádárová & Durkáčová, 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.
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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 2017/2018", 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 2017/2018", 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
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Report 2017/2018", 2018). The company operates in various countries and thus, the currency
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 situation 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
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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 (Ahmed, 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
performance 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.
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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 form 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. CocaCola 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).
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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 perform 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
performance. Laissez-faire and democratic leadership styles are recommended for increased
productivity and performance 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.
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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
underperforming 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 performance 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 crucial 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 performance 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
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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 nonalcoholic 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.
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