All organizations understand the complex feedback loops between themselves and their stakeholders. Not all of them, however, have the capacity or the vision to use their stakeholders, major or minor as the foundation for their sustained business operations. As the market leader in non-alcoholic drinks worldwide, the Coca Cola Company is an example of the former. Its primary products; Cole, Sprite, and Fanta have faced little to no competitive pressure over the decades. Two things are responsible for Coca Cola’s continued success. First, the company’s good management. Secondly, and more importantly, is how the company has created and sustained a good relationship between different stakeholders and the code of ethics that governs their interaction and daily operations. This paper is a brief overview of Coca Cola’s stakeholder management strategy, such as the code of ethics, and why it made the company successful.
Stakeholder Analysis
As a multinational corporation, Coca Cola depends on and interact with numerous stakeholders, inside and outside. Inside stakeholders are those closest to the company as they have a significant claim on the company’s resources (Andriof et al., 2017). Using this definition, it can also be said that inside stakeholders are those to whom the company owes an obligation. These include shareholders, the company’s management, and workforce (Martin et al., 2015). For instance, shareholders, as one of the largest inside stakeholder, contribute to the company’s success by investing resources to perform daily operations. However, shareholders do not run the organization, per se. This job is left to the management. Therefore, while shareholders set the organizational goals, short and long-term, it is the job for the management to interpret and implement them. Lastly, the workforce, defined as all non-managerial staff, is the most invisible stakeholder but with the greatest impact on the company’s performance. They are the lowest rung and are responsible for carrying out the daily task that runs the company.
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While internal stakeholders have an inside claim on Coca Cola, external stakeholders influence its success. The customers are the biggest external stakeholder whose acquisition and retention are key to the company’s profitability. Coca Cola understands the value of its customers and builds its brand towards attracting them. For instance, when viewing advertisements made by Coca Cola, it is clear to see that the company is not selling its products but its well-crafted brand using messages that are relatable to the customers. Secondly, the government, through its legislation, regulations, and policies, is another significant external stakeholder. The government, for instance, sets rules like a fair competition to protect companies while sustaining competition. Lastly, vendors and suppliers are the other types of external stakeholder whose continued cooperation and good relationships ensure that high-quality raw materials are sourced and used to make beverage drinks. For instance, with the disruption caused by the covid19 pandemic, Coca Cola has been affected because its supply chains were broken, and the suppliers could not deliver the raw materials to the manufactories.
Coca Cola’s Top Management Structure
The company’s top management structure is hierarchical, where the shareholders hold the most authority and set organizational goals. However, the shareholders do not interact with any management level or workforce. Instead, they work with the company’s board of directors who in turn work with the executive level. The executive level is responsible for allocating and distributing the company’s resources, like investor money, to achieve the company’s goals (Skipper, 2009). The executives, therefore, provide unity of direction for the entire company. The roles and responsibilities cascade down to the workforce. Every step down the hierarchy involves the interpretation and issuance of commands to achieve set objectives.
Code of Ethics
The code of ethics is a formal and informal guideline to govern individual and organizational behaviour when interacting with others. According to Carroll & Buchholtz (2014), the code of ethics comes into play when interacting with the stakeholders, especially when any individual representing Coca Cola has to abide by strict and functional behaviour. However, the real value of ethics is to help the management or any other stakeholder during ethical dilemmas. The dilemma might come out of a conflict of interest between a manager and the organization. Therefore, Coca Cola’s code of ethics guides its managers by ensuring they sell the correct and high-quality products, do not defraud investors or use illegal means, and prioritize on customer safety when they consume their beverages. It should be noted that Coca Cola’s code of ethics is more comprehensive than presented in this paper. Comprehensive analysis and discussion, however, is not possible as it is outside the scope of this paper.
Based on the code of ethics, a chain of command is set where its implementation governs the company’s daily operations. For instance, it is the ethical responsibility for the executive officers to ensure that all beverages sold to customers have been quality tested and are fit for consumption. Additionally, the workforce should adhere to the code of ethics to improve the organization’s efficiency.
Reward Systems and Organizational Goals
Different stakeholders contribute differently to the company’s growth and success. For instance, by using their knowledge and experience, executive officers and the management level contribute by navigating and managing the risks faced by Coca Cola during its operations in pursuit of organizational goals. The workforce, on the other hand, contributes by carrying out the daily tasks required of them. It is, therefore, rational to conclude that companies should compensate its internal stakeholders adequately. However, the reward systems should go beyond compulsory obligations and offer benefits.
Rewarding employees is a good strategy when motivating them to focus on organizational goals. It is, therefore, rational to say that there is no difference or conflict between reward systems and organizational goals because the former is implemented to achieve the latter. Reward systems, however, vary from simple to complex. Incentives, for instance, could be used to motivate the management to achieve sales objectives while benefit packages, like flexible working hours and extended leave, could be used to minimize turnover and improve employee commitment.
Conclusion
In conclusion, this paper, using Coca Cola as a case study, has established that the success of a company depends on forming a good relationship between all stakeholders, internal and external. Stakeholder behaviour, on the other hand, is regulated by the code of ethics.
References
Andriof, J., Waddock, S., Husted, B., & Rahman, S. S. (2017). Unfolding stakeholder thinking: Theory, responsibility and engagement. Routledge.
Carroll, A., & Buchholtz, A. (2014). Business and Society: Ethics, Sustainability, and Stakeholder Management. Massachusetts: Cengage Learning.
Martin, G., Farndale, E., Paauwe, J., & Stiles, P. G. (2016). Corporate governance and strategic human resource management: Four archetypes and proposals for a new approach to corporate sustainability. European Management Journal, 34(1), 22-35.
Skipper, J. B., Hall, D. J., & Hanna, J. B. (2009). Top Management Support, External and Internal Organizational Collaboration, and Organizational Flexibility in Preparation for Extreme Events. Journal of Information System Security, 5(1).
