Change Management: Coca-Cola and Pepsi-Co's Strategic Approaches

This report provides a comprehensive analysis of change management strategies within Coca-Cola and Pepsi-Co. It explores the impact of change on organizational strategy, operations, and individual behavior. The report examines both internal and external drivers of change, including technological advancements, organizational culture, political and economic factors. It further investigates leadership approaches in dealing with change, barriers to change, and strategies for reducing negative impacts on organizational behavior. The report uses various theories, such as the System Theory and Complexity Theory, to explain how the companies manage change. The report also discusses the importance of adapting to market trends, customer needs, and competitive pressures. The report concludes by highlighting the key factors that influence the successful implementation of change within these multinational corporations.

Understanding and leading
change

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Impact of change in an organization's strategy and operations..............................................1
P2 Internal and external drivers of change impact leadership, individual behaviour and change
.....................................................................................................................................................3
P3 Reduce negative impacts of change on organizational behaviour.........................................5
TASK 2............................................................................................................................................6
P4 Various barriers for change and their influence on leadership decision making...................6
TASK 3............................................................................................................................................8
P5 Different approaches of leadership dealing with change.......................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Change has been a very crucial driver in the growth and success of any organization,
without adapting to change in the market and in the environment the organization can not grow
or might grow slowly or may even fail (Alkahtan and et. al., 2011). There is an ever growing
customer needs which cant be fulfilled by convention way of operating in business. Changing
dynamics of the market and economy is making an impact on organizations. The change drivers
in an organizations are employees,management,customers etc. The report will consider two
different organizations in the same sector of food and beverages these are coca cola and Pepsi-co
Inc. The given report will consider the key change drivers within the organization and the impact
of change on the workings of individuals and groups within the organization. Why change is
important and how it is implemented in an organization and its wide spread impact is discussed
in the Report.
TASK 1
P1 Impact of change in an organization's strategy and operations
Change in an organization basically means change in its business processes and structure
so that the company can adapt to external environment and trends and accordingly enhance its
performance and efficiency (Aslan and Reigeluth, 2013). Change is an essential part of any
business, While implementing change the company has to take care of various factors that are
involved which are manpower of the company like employees and workers and their reaction to
change. Coca cola and pepsico both are a multinational giant operating in more than 100
countries. Due to such a big size of these companies they reap the benefits of economies of scale.
The company should have proper knowledge of its external factors for growth and development
of organization these are called PESTLE analysis, Political, Economical, social, technological,
legal and Environmental factors. A knowledge of these factors are helpful for management of
coca cola and Pepsi to take decisions with regards to implementation of change. The benefits of
change implementation are as follows:
 Better services to customers: There is an ever increasing demand of consumers for
various goods and services around the world,These demands can be responded by the
company in a faster manner which will help organization to achieve its target of sales as
well as profitability easily.
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 Effectiveness and efficiency : Change improves the efficiency of the organization as the
resources available within the company are better utilized through effective
implementation of technological advancement in the market along with improvement in
the skills of labours and workers through proper training and skill development
programmes.
 Encourage innovation: Acceptance and identification of change develops innovative
ideas in member and co-workers of the organization which is beneficial for the company
in the long run and it also raises the efficiency level of the firm.
 Brief Description of Coca-cola and Pepsi-co :
Coca-cola : It is incorporated on September 5, 1919. It is a beverage company which owns or
licenses and markets non-alcoholic beverage brands such as flavoured drinks juices and juice
drinks, Ready to drink coffees etc. The company's operations are spread all over the world
including Europe, Middle East and Africa, Latin America, Asia etc. some of the best known
brands of the company are Fanta, Coca cola, Diet coke, Sprite etc. The company owns more than
500 non-alcoholic beverages brands. The company believes in implementing change within the
organization at the earliest and include all the members of the company like employees and co-
workers to implement such change.
Pepsi-co : Pepsi-co Inc. is an U.S Multinational food snack and beverages company it
manufactures markets and distributes its products in more than 200 countries all over the world.
The. company enjoys a good brand reputation and leadership in its market segments and are
growing significantly in all of its markets. The company has an annual sales of more than 43
billion dollars. It is regarded as the second largest food and beverages company in the world.
Both of these firms provides their products all over the world. There are some factors
which impacts on changes of both the firms and company uses different strategies to enhance its
business operations, These are :
Strategies Coca-Cola Pepsi-co
Competency based strategies Coca-cola has its core
competencies in its brand
name and the different kind of
taste that the company offers
in its beverages which are
Pepsi also enjoys brand
reputation and it is regarded as
its core competency which
enable it grow in the market
the company believes in
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unique in itself and therefore it
give a competitive edge to the
company among its peers.
Company constantly monitors
its environment and
implements change to achieve
constant growth.
observing the change in tastes
and preference of consumers
and market in general and
implementing those changes in
the organization with the help
of its members.
Pricing based strategy The company believes in
keeping the prices of its
products reasonable and are
mostly demand driven prices
are set keeping in mind the
target market.
Pepsi-co receives a stiff
competition from coca cola in
terms of pricing therefore not
much room left for the
company for a liberal pricing
of its products.
Due to increase number of health conscious customers coca-cola introduce a change in its
drinks and introduce a drink with no calorie known as diet coke.
Pepsi-co face a tough competition for Coca-Cola and dur to this, it introduce so many
changes in its pricing policy and strategy for maintain its market share.
P2 Internal and external drivers of change impact leadership, individual behaviour and change
An organization is constantly affected by the change which takes place within an
organization. In order to efficiently implement those changes the company and its management
should continuously scan its internal as well as external environment to monitor whether any
change is required in the processes of the company and what are its opportunities and threats
(Clarke and Persaud, 2011). Coca cola and Pepsi co both the company scans its internal change
drivers for any change that may be needed,such scan includes analysing morale of employees,
technology, organizational culture etc. External scan includes analysis of external change drivers
to monitor their positive or negative impact. Key external change drivers are Political, Legal,
Technological, Social etc. Coca-cola and Pepsi both are multinational giants and have a
significant impact of changes in external environment of the company. These factors also
influence the leadership decision making, Individual and group behaviours etc.
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Effect of internal change drivers on coca-cola and Pepsi-co
Technological changes- Coca-cola and Pepsi both are multinational giants and operates
all over the world, in order to remain at the top the company needs to make their business
processes up to date as per market demand of consumers. No company can grow without
adequate technological up gradation as per market requirements and hence both the companies
should constantly focus on new and improved ways of manufacturing and distributing their
products world wide.
Organizational culture – Both are multinational companies which employs people of various
different cultures therefore both the companies have a diverse organizational culture these
companies needs to frame effective policies to incorporate any cultural changes and should
create a healthy environment for individuals to work in the this will result in efficiency and
enhanced productivity for the company.
Satisfied customers - Both companies have billions of customers world wide. There is a huge
challenge in front of both the companies to cater to their customers well and respond to their
demands as soon as possible (Doppelt, 2017). The companies should also incorporate necessary
changes in their products to suit the demand and needs of customers of different nations and
cultures.
Effect of external change drivers on coca-cola and Pepsi-co
Political- As both the company operates in different countries of the world they faces
certain political pressure in different countries especially in developing countries, to modify their
products and pricing according to the needs and requirements of people (Foltin and Keller,
2012). Due to lack of capitalism mindset in most of the political class all over the world both
companies faces difficulties in their operations, the company should incorporate all the political
changes and turmoil that takes place within those countries around the world before framing
strategies for the company.
Legal – There is a continuous change in various legal laws which are being framed by various
countries. The legal implications is quite high on beverage industry related to used water,
chemicals, process and impact on health of customers and overall environment in general. FDA
norms are quite stringent for beverages sector as it is directly linked with health of consumers all
over the world. The companies should in calculate all the changes in legal laws and policies
while framing strategies for the company.
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Economic – Economic conditions are one of the most important external factor that have a
influence on the workings of the company (Fullan, 2014). Economic upturn and downturn
continuously affects these companies and their pricing and marketing strategy. The downsizing
and upsizing decision of the business is affected by economic conditions prevailing and hence
management should take care of the economic indicators before implementing any strategy for
the company.
Impact of change drivers
 Leadership: This is known as one of the factor that also get affected by when a change
take place in internal and external drivers of change. For example in situation of
contingency arise then leader require to adopt the approach of leadership as per that
conditions as this support entity in achieve set goals.
 Behaviour of individual and team: Whenever a change take in business environment then
it affect the behaviour and actions of team. For example, if technology changes through
which enterprise execute its business operations and through which employees perform
their roles then proper training is offer to workers and change the way their perform their
roles and actions.
P3 Reduce negative impacts of change on organizational behaviour
There is a need for continuous change in the organizational culture and workplace for
delivering effective and efficient performance (Hallinger and Heck, 2011). But its not that easy,
There is always resistance for change within the organization and these changes act as a barrier
for a company to transform itself and get updated according to the market needs and demands.
The management of Pepsi-co and coca cola uses various theories to reduce the impact of such
change on business model of the company. These theories are discussed are as follows:
System Theory – It is theory used by management of both the companies in order to
implement any changes that takes place within the organization (Hrebiniak, 2013). Under this
theory the company implements changes in one of the system of the organization and other parts
and systems of the organization adapts itself and mould according to the changes which are
being implemented. This strategy is used by both the companies in order to reduce negative
impacts of changes on business operations.
Complexity theory – This theory is used by both the organizations in their strategies framing and
decision making processes. This theory suggests that organizational managers promote bringing
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their organizations till a point of chaos this helps in developing skills among individual workers
to make their work and communication effective to solve problems and self organize themselves.
This theory encourages workers to go with flow instead of following same scripted policies and
procedures, it gives independence to workers and staffs.
Continuous improvement model – It is a continuous process of analysing business operations
and processes and identifying where changes are required and how they should be implemented
(Johnson, 2015). Both coca cola and Pepsi-co follow this strategy for improvement in their
business processes and services. There is a four step quality model which are being widely used
by managers it is called PDCA (plan-do-check-act) cycle.
 Plan : In this identification of an opportunity is done and a plan is made to effectively
incorporate all the changes.
 Do : Under this, changes are first implemented on a small scale.
 Check : After the implementation of the change on small scale the results are checked
and analysed and it is determined whether it made a difference.
 Act : If the change was successful, it should be implemented all over the company and a
continuous assessment of the changes that are being implemented should be made.
These theories are very useful for both the organizations to effectively implement the
changes that are taking place in the internal and external environments of the company.
Following things can be done by firm to minimise the negative impact of change:
 Improvements can be done in the change introduced in enterprise.
 Proper planning should be carry out by firm to execute the changes as this support in get
positive result.
 Efforts should be firm to remove the factors that affect positive output.
TASK 2
P4 Various barriers for change and their influence on leadership decision making
Force field analysis – It is an essential tool for companies to find out the factors which
are against or in favour of change. These factors are analysed and changes are made accordingly
(Keppel, G. and et. al., 2012).This is a very useful technique in determining and measuring
driving factors or forces which are relevant for the firm and might help company in achieving
business aims in an efficient manner. The steps of this techniques are as follows ;
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Step 1: Proposal for change – It involves defining vision and mission processes of a company.
Based on this a effective change model is framed and implemented which would help the
company in achieving organizational objectives.
Step 2: Identification of forces of change – Under this Internal and external change drivers are
determined.
Internal change drivers
 Employees
 Technology Customers
External change Drivers
 Political environment
 Social environmental Technological Environmental
Step 3: Identification of forces against change– In this step factors which are against the change
are considered. These factors are both internal and external in nature. These factors influence the
workings of the company and its business operations these are discussed as follows:
 Consumers
 Legal Laws and regulations workers and their behaviours
Step 4 : Assign scores – It is about giving scores to forces which are strong and weak. Ratings
are allotted to forces according to their strengths.
Step 5: Analysis and application - Under this step the impact on change forces are analysed and
plans are being prepared. Company takes critical decision as to implement the change or not at
this stage.
Barriers of change and affect of decision making on leaders Minimum employee involvement: Without support of employees an enterprise can not
implement the change effectively and can not achieve its goals. Support of employees is
very necessary and lack of it is known as one of the biggest barrier in change
management (Salmela, Eriksson and Fagerström, 2012). Large number of individuals
does not accept or support change due to fear of new and many more. If management
does not involve the employees in change process then this also create obstacles in
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process of change management. To remove this, participation of staff members should be
encouraged in process of change. Lack of communication: Communication pay a big role at workplace especially at time
of change. For get maximum results, there must be proper communication among all
employees and management. To achieve this, it is very necessary that proper
communication channels should be use at workplace. Lack of communication create
delays in execution of business activities and ta the same time increase cost of change
management. All this hamper productivity and profits of organisation. So it is very
important that proper communication channels should be there at workplace as this
enhance the effectiveness of decision making process.
 Ineffective leadership: Leaders are the individuals that play a big role at time of change.
These are the one who encourage and motivate staff members to participate in change
and influence them to work well (Stanleigh, 2013). It is very necessary that effective
leadership style must be opt by leaders at time of change to manage employees and their
actions. Further, proper training must be offer to staff members so they can perform their
roles and duties in an effective manner. Training programmes enhance employee's
knowledge which motivate them to work well and at the same time enhance their
contribution in process of change management.
TASK 3
P5 Different approaches of leadership dealing with change
Pepsi and Coca-Cola both enterprises use an effective approach of leadership which
ensure completion of all business activities in time and at the same time contribute in success of
firm. Workers of firm play a big and effective role in whole process of change management so
their support is very necessary to get desired results. Leaders are the one which play a big role in
motivate the employees during change (Suchman, Sluyter and Williamson, 2011). He is the one
which combine all the efforts of staff members which help firm is achieve its set goals and
objectives in given time period. It is very important that effective leadership style should be opt
by leader to guide employees and motivate them to work well. All this ensure effective effective
execution of business operations. Following are the major leadership approaches which can be
used by Pepsi and Coca-Cola to deal with process of change management.
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 Autocratic leadership: This style of leadership is one in which leader is the one which
take all necessary decisions and input form group members in this is very little. Leaders
do bot involve employees in decision making process. Leader take decision in his own
manner without any kind of involvement of other. This type of leadership is important in
those situations when decisions need to be made quickly without take opinions of group
members. As leader do not involve employees in decision making process so this results
in lack of creative solutions of problems. Democratic leadership: This style of leadership is just opposite of autocratic leadership
style. Under this leaders encourage the involvement of employees in decision making
process. One of the main benefits of this style of leadership is that it enhance confidence
and morale of staff members and encourage them to perform well. Further, employees are
motivated to share ideas and opinions which decrease rate of employee turnover but at
the same time this is very time consuming.
 Transformational leadership: This is another style of leadership in which both leaders
and their follower raise each other to higher level of motivation and morality. In this,
various efforts are done by leaders to enhance the motivation lecher of employees which
increase productivity of employees and profits of company (Yoder-Wise, 2014). This
involve set the goals and objectives for enterprise in an adequate manner and after that
efforts are done to achieve those goals.
CONCLUSION
From the given information, it can be summarised that leaders play a big role in process
of change management. These are the one who motivate employees to work well. Effective
leadership style must be opt by leaders at time of change management. When an enterprise
implement or introduce any kind of change at workplace then number of issues arise. All those
issues must be identify by management and effort should be done by firm to remove the same.
With this, maximum results of change can be achieve by firm. Change affect the operations and
activities of a company in both positive and negative way. So efforts must be done by manager to
maximise the positive impact of changes and to minimise the negative impact.
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