Aligning structure with strategy is fundamental to the success of any business. Fortuin (2007) defines strategy as “plan for the whole business that sets out how the company will use its major resources” (54). Structure, on the other hand, is “the way the pieces of the organization fit together internally” (54).
Managers of companies must link structure and strategy in a seamless manner that allows for optimum utilization of resources, high productivity, and efficiency in service delivery. Coca-Cola Company has managed to gel structure and strategy in a fluid manner that has led to tremendous growth.
This paper will demonstrate that the key to business success lies in the ability to align structure with strategy. It will also evaluate the importance of strategy-critical activities and assess how much authority to delegate in an organization.
To understand how Coca Cola Company aligns structure with strategy, it is important to review the company’s strategies. The first strategy is to achieve growth by increasing production of soft drinks. The second is to broaden the products varieties and grow profits. The third is to serve customers with creativity and grow market share. Fourth and last, Coca Cola intends to embrace technology to reduce cost and enhance efficiency.
Wit and Meyer (2005) identify three main ways to structure a company. The first reflects the function in whereby a company creates specialized departments. The second reflects products whereby a company creates departments according to what they produce. The third reflects process in which case a company tailors its departments to the processes that they execute.
Proper structures should facilitate achievement of a company’s goals and objectives. Aligning structure with strategy facilitates the process of decision-making. Good structures allow dynamism, creativity, and innovation and at the same time foster exchange of ideas, both horizontally and vertically. Coca-Cola Company has aligned its structure to strategy and thus allowed a spirit of teamwork, sharing of ideas, and collective responsibility.
In United Kingdom for instance, Coca-Cola is flexible enough to allow fruitful interaction between departments in order to meet its first strategy of broadening their products base (Wit & Meyer, 2005). The company brought together staff from all departments to develop Coca-Cola Vanilla. Such a move illustrates that structure and strategy are inseparable in the modern corporate world.
Coca-Cola Company does not just show the harmony between structure and strategy at the business unit level but also at enterprise level. The company understands that different geographical markets are at different developmental stage and the taste and preference of locals may vary from one place to another. It has thus allowed companies in different regions to develop specific products for their markets.
In Great Britain for instance, Coca Cola has Lilt, a product that is not available in Africa (Wit & Meyer, 2005). Such levels of autonomy allow the company to suit its products to local needs, and thus meet the company’s general strategy of increasing market segment all over the world. Allowing its company’s subsidiaries to develop products for local markets is a strategy-critical activity.
Coca-Cola Company holds regular meetings in which employees from various departments meet to exchange ideas. Those from marketing department extrapolate their findings on the market trends. Specialists in food and nutrition expound on what improvements and changes to make. Those from finance department explain how the various activities will affect the company’s balance sheet.
Coca-Cola Company hierarchy has the executive committee at the helm. This is where the company derives its strategic direction (De, 2009). The strategies enumerated earlier have originated from this committee. The chair of this committee also doubles as the company’s chief executive officer.
Coca-Cola use both centralization and decentralization in order to reach local consumers (Fortuin, 2007) Decentralization involves business strategic units that are under regional heads. These regions conduct market research within their regions and carry out the advertising functions.
The company has allowed strategic business units to develop their marketing structure so that they contribute to the critical activities of meeting the overall strategies. Additionally, regional heads make decisions on advertising. An advertisement from the United Kingdom for instance cannot work in Asia because of language barriers. However, the company encourages meeting of regional heads so that they can exchange best practices.
In conclusion, aligning a company’s structure to strategy is very important. It facilitates the process of decision-making and thus enhances efficiency. It makes exchange of ideas and good practices easier and thus contributes to higher productivity. It also assists in harmonizing the roles of different departments so that they can work in tandem to achieve the overall organizational goals.
Coca-Cola provides a good example of seamless alignment of structure to strategy and has enabled the company cement its global leadership in the beverage sector. Use of strategic business units achieves decentralization while at the same time keeping the focus on the common strategies. Companies with proper operational model that integrates structure to strategy perform better than those that do not have.
References
De, K. M. (2009). Profit power economics: A new competitive strategy for creating sustainable wealth. Oxford: Oxford University Press.
Fortuin, F. (2007). Strategic alignment of innovation to business: Balancing exploration and exploitation in short and long life cycle industries. Wageningen: Wageningen Academic Publishers.
Wit, B.., & Meyer, R. (2005). Strategy synthesis: Resolving strategy paradoxes to create competitive advantage. London: Thomson Learning.