Strategic leadership at Coca-Cola

Strategic Leadership at Coca-Cola

The Coca Cola Company is the epitome of corporate success. It virtually sells its products all over the world and has been the undisputable leader of the non-alcoholic beverages industry since its launch in 1892.

The organization is a financially strong player, with strategies that ensure corporate success. The company plays an increased emphasis on the managerial act and strives to integrate all strategic efforts into a single and unified vision of the company and its role within the communities in which it operates.

The Coca Cola Company has evolved in time and it now hopes to attain its financial objectives not only through the sale of its beverages to consumers, but through an overall business model which ensures the satisfaction of as many stakeholder categories as possible (employees, business partners, governmental and non-governmental agencies, the general public and so on). In the implementation of this business model, the managerial team at the company make intense use of strategic leadership as a valuable tool.

2. The nature of strategic leadership at the Coca-Cola Company

At the beginning of its competition with PepsiCo, the Coca Cola Company changed its recipe for their top beverage, making it sweeter and more like the Pepsi soft beverage. The customers rushed into the stores to purchase the older bottles of the Coke made with the traditional recipe. The new recipe was not embraced by the population, but it was at that moment in time that the company understood just how cherished their beverage was. They switched back to the older recipe and witnessed a tremendous increase in their sales levels.

This story is not an isolated one regarding the strategic leadership at the company, but it reveals the essence of the strategic leadership model -- stability, safety, high reticence for risk and brand strength. This model was implemented by most of the company's managers and executive leaders.

The most notable of the company's leaders was Robert Goizueta, who is mostly recognized as the leader who created the most value for the company. During his mandate, the Coca Cola share increased at the rapidest rate and the company raised interest from investors, consumers and business ventures from all over the world.

Goizueta's strategic leadership had multiple dimensions, including the detailed analysis of the tasks and roles of the chief executive officer, the responsibilities which could be delegated and those which had to be completed by the CEO and so on. His model was based on the implementation of change, as he came to believe that the company had become too conservative and he tried to integrate innovation and a new approach to business.

Then, he divided the operations based on the profitability returns they generated; he redesigned the distribution system in the sense of upgrading it and he borrowed billions of dollars, in a context in which the company's management had traditionally frowned upon borrowing. Overall, Goizueta was a visionary and he made an effort to change the company and align it to the new trends in the industry, the market and the global community.

"It took us a little bit longer to change than it should have. The world was changing and we were not changing with the world" (Goizueta).

The managers that followed on the position of chief executive officer implemented fewer changes as compared to those implemented by Goizueta. They assumed fewer risks and focused more on consolidating the strategies which had already been implemented, and which proved successful. In other words then, Robert Goizueta is understood as a visionary leader, who had the courage to assume risks and to implement his vision of the Coca Cola Company. The managers that followed were more of strategic leaders, who focused on the implementation of the vision through strategic efforts and the consolidation of the gains attained by Goizueta.

3. Problem statement

After numerous leaders had occupied the position of chief executive officer at the Coca Cola Company, it was the time for Muhtar Kent to embrace this new role. But the future CEO was concerned over the direction his leadership style should embrace.

"Muhtar Kent had just been promoted to the CEO position in Coca-Cola. He was reflecting upon the past leadership of the company, in particular the success that Coca-Cola enjoyed during Robert Goizueta's leadership. The CEOs that had followed Goizueta were not able to have as positive an impact on the stock value" (Rowe and Riaz, 2008).

4. Alternative solutions to the identified problem

The future CEO of the Coca Cola Company, Muhtar Kent, is at a loss regarding the future direction of his leadership style. He is uncertain whether he should implement an aggressive style of change, as had Goizueta, or whether he should be more prudential and conservative, as the managers that had followed Goizueta. Based on this dilemma, Kent is faced with three alternative solutions:

Maintaining the status quo and focusing on strategic consolidation

Implementing radical change processes, and third

Preserving the same general direction, but adding smaller changes.

Each of these alternative solutions is characterized by its own shortages and benefits, revealed throughout the following lines:

a) Maintaining the current status quo

Pros:

No additional investments and risks

Cons:

The world continues to change and the Coca Cola Company has to change alongside

b) Implementing radical change

Pros:

Ability to generate additional gains

Cons:

Immense risks and financial investments, in a time in which financial resources are scarce due to the internationalized economic crisis