Coca Cola Beverages Pakistan limited – Management Study
The focus of this report is basically to analyze the different management functions at Coca cola beverages Pakistan limited Karachi. These functions include planning, organizing, leading and controlling.
Coca-Cola laid the foundation of the beverage industry when it was formed in May 1886 in Atlanta. However it was not until 1895 that the idea of selling coke in bottles was introduced. With the passage of time Coca-Cola gained popularity and its product began to get recognized internationally. Thus from its mere beginning in 1886 Coca-Cola has now been transformed into a strong multinational with its product being currently recognized all over the world. Coca-Cola, in fact, has now become one of the most famous and widely consumed brands in the world. It has not only established its footings in the beverage industry but is currently heading the list of the most financially sound companies in the world.
Although Coca-Cola is not a new name for the local market, Coca-Cola Beverages Pakistan Limited (CCBPL) began its operations on 26 May 1996 in Pakistan. Coca-Cola Beverages Private LTD (CCBPL) is a joint venture between Coca-Cola International, Fraser and Neeves Singapore and Package Ltd. Initially it acquired National Beverages LTD Karachi and later acquired International Beverages LTD Hyderabad .In May 1996 Fraser and Neeves, a Singapore based bottler of Coke, bought off the local bottlers in Karachi. Not long after it went on to acquire the bottling plants in Hyderabad as well. Since then coke has made an impressive impact on the local market by increasing it’s availability as well as its volume share. CCBPL has decided to expand its operations in Pakistan by buying other bottlers all over Pakistan. Implementing their plans of acquisitions of other plants they have recently acquired all the plants in Pakistan as they are inclined to give more attention to increase the market share in Pakistani market.
Coca cola Beverages Pakistan has a very narrow product range. It has the following brands in Pakistan.
- Coca Cola
These products are sold in the market in different sizes of bottles. These sizes are available for all its products.
- 250 ml (Non Returnable)
- 1 liter
- 5 liter pet
Without a strategy the organization is like a ship without a rudder, going around in circles. It’s like a tramp that has no place to go to.
– Joel Ross and Michael Kami
Strategic planning, formulation and implementation are core management functions. Although strategic management has been in existence for only a few years its implications have been firmly and strongly rooted in organizations that want to stand in good stead. Among all the varied things that managers have to deal with and act upon, few affect an organization’s performance more lastingly than do the task of charting an organization’s future course, figuring out the what strategic moves and approaches to undertake, and then orchestrating execution of the chosen strategy as close to perfection as is managerially possible. One of the biggest factors in determining whether the organization performs up to its potential or not is the extent to which the management team performs the strategic making and strategic implementing functions. Indeed
Good strategy and good implementation are the most trustworthy proof of good management
A strategic plan, then, is the bridge to the future, which an organization uses to lead from what it is to what it envisions it can become.
The environmental factors affecting Coca Cola can be divided into:
THE GENERAL ENVIRONMENT:
The Coca Cola Beverages Pakistan limited has a very strong potential in the future as Pakistani population is increasing and there is a shift in the consumer perception of its conservatism and the stigma, which was attached to it as an American product, is losing its effect. Increase in the level of inflation is a major concern for the company as the purchasing power of the people is eroding day by day. As there is an increase in the dual career families and women has started working in the offices with a great enthusiasm so it can be a capitalizing point for the company. The legal/political environment does have much effect on this company. As there has been a continuous change in the governments and the policies related to the duties and taxation so it is relatively less immune to changes in this sectors of the environment.
THE TASK ENVIRONMENT:
As Coca Cola has acquired 6 more plants in the country from their franchisees so it will increase their share as they are having more professional people in their management. The consumers of CCBPL are people from all the cultures and all the level of incomes. It is a company who is distributing its products to the masses. Apart from this they have some exclusive customers who are categorized as industrial customers these are: KFC, PIA, Pearl Continental, Sheraton, etc. With the acquisition of the new plants they have hired MBAs just to increase the level of professionalism. Their major competitors are Pepsi, RC cola, and some local products, which are manufactured in the cottages. Apart from these they consider all the thirst quenching products as their indirect competitors like Nestle, Haleeb, Milo etc. As for as suppliers are concerned they import their raw materials from the parent company.
THE CORPORATE OBJECTIVES
Coca-Cola vision statement:
“We will become the best and the biggest anchor bottler in the world”
CCBPL has a very flat hierarchy, consisting of just three layers. Thus, the top management handles most of the goals setting and planning activities.
The objectives of this company can be classified as:
The strategic goals are considered when company is thinking of the long-term objectives but at coca cola strategic objectives and goals are set up for three years. These strategic goals are decide by the top management with consultation by the parent company head quartered at Singapore. However, they are reviewed every year in the annual meeting to make sure that they are in line with the changing environment. They are:
- To continue to be an organization providing the quality products to the valuable customers.
- To select and retain the professional people for the organization.
- To project an outstanding corporate image.
- To satisfy the customer through extra ordinary service and an excellent service along with the complete tactical and operational support.
The top management of the company on an annual basis devises these goals together with the consultation of the lower level employees. Then each departmental director is given these annual tasks that then subdivide it on the quarterly or monthly basis to have a proper check to ensure that these objectives are achieved, mainly through marketing, is the job of the director of each division. For this year, these goals are:
- To increase the revenues by 20% as compared to last year.
- To increase the total retail customers by around 10%.
- To increase the market share by 5%.
- To reactivate the discontinued customers by 30%.
Operational goals are decided by the top management in consultation with the lower level employees. They are following the concept of management by objectives (MBO). Each employee is assigned its goals and is told what is expected of him and then he is evaluated on the basis of certain rules and regulations followed evenly by the company.
For example: a sales man is given following tasks, duties and certain targets: Each salesman has to oversee around 100-125 outlets. The frequency of visits to each outlet depends upon the sales of that particular outlet. Normally, a salesman has to visit a single outlet thrice a week i.e. every alternate day. This means that a salesman visits at least 20-30 outlets per day.
The salesman has three basic functions to perform.
- To find new customers,
- To retain existing ones,
- To bring back the discontinued accounts.
Each salesman has to bring in at least three new accounts every month. These may either be new customers or the reactivation of the discontinued accounts.
Sales manager is made responsible for the performance and achievement of operational goals and is assigned to set certain milestones for the salesman so as to give him proper feedback, which definitely helps the salesman achievement of the above-mentioned goals.
Competing in the market place is like a war. You have injuries and casualties, and the best strategy wins
– John Collins
The decision-making process in CCBPL is centralized. The model used is classical, whereby the top management takes their time while making decisions and explore and evaluate all the possible alternatives before choosing the rationally economic and feasible solution.
Programmed decisions are made only by the top management with no consultation what so ever with the line managers while the daily and routine decisions are made by the line managers at the middle level with the prior permission or approval from the general manager.
Decisions, which are normally taken at the top management, are related to
- The package positioning
- Trade discounts
- Price reductions
While recruiting new employees, the top management approves the vacancies and asks the Human Capital Department to conduct the written test and this test normally is conducted for the employees at the lower level. Then prospective applicants are short listed through the interview process. Then the Business and operations manager or general manager personally interviews the employees and then makes the final decision about the selection himself.
Hence, the style of decision-making followed by the CCBPL model, is AII. That is, the decisions are made on the basis of the inputs provided by the lower level employees and the managers at the middle management level. Top management asks for the suggestions and ideas of his subordinates and then takes the final decision himself.
However, the remaining decisions, which are mainly related to the daily operations, are made by the respective managers who are eventually made responsible for the results.
The management is very much cooperative and encourage its employees to come up with new ideas related to their duties and the work they do so as to increase the overall efficiency of the organization and eventually increasing the profits.
ANALYSIS OF THE ORGANISATION STRUCTURE
CCBPL is divided into different departments on the basis of functional approach. People are grouped together on the basis of common skills and work activities. This approach helps company in achieving the economies of scale through high quality of problem solving and lesser needs of the training of the employees.
CCBPL is headed by the General Manager. There are five departments at CCBPL namely, Production, Industrial Relations, Sales and Marketing, Human Capital, and Finance and Accounting.
Production Department is responsible for the overall production of the CCBPL. There are 8 plants of CCBPL operating throughout the country. Different areas are distributed the products on the basis of nearness so as to reduce the transportation cost.
Industrial Relations Department is responsible for dealing with the problems related to the working environment of the employees and the issues related to the labor unions.
Sales and Marketing Department is responsible for the making the product available in the market and to deal with the issues related to the advertisements of the products.
Human Capital Department is responsible for looking for the efficient pool of workers, selecting the professionals and makes them happy so that they should stick to the company. The Human Capital department deals with management level employees’ grievances.
Finance Department deals with the overall costing and pricing of the products. This also handles the import related issues of the company. Accounting department assists the sales department in making invoices and payroll entries.
The work specialization is high, as each Manager is made responsible for only a particular function, which is his expertise. There is no boredom or monotony as each salesman is meeting the different sort of person and the work is challenging and promotions are based on performance there is no monotony and boredom.
AUTHORITY AND RESPONSIBILITY:
The salesman has to report to the sales manager. These sales managers are responsible for the performance of the sales man and they are required to provide them timely feedback. They are also required to provide the guidance at any time and related to the issues related to the performance of the employees. These salesmen are monitored on an on-going basis by their manager, which serves as an effective control mechanism.
The employees have a lot of authority, responsibility and information relative to the work that they are doing. However, all the information and authority relative to the work is provided by their respective managers.
The procedure is same in the other departments as well.
DELEGATION AND ACCOUNTABILITY
There is a high degree of delegation and delegation is done with proper authority and responsibility. Each manager is also made accountable for the actions of his subordinates. Proper instructions and guidance is given at time to time to achieve the objectives by the respective managers.
Apart from the delegating every manager is responsible for motivating his juniors so as to increase the effectiveness and efficiency of the employees. Human Capital department also helps employees realize their potential and motivate them through different methods. They make sure that they give the best in return to their managers. This increases their performance, the quality of their work, and customer satisfaction.
SPAN OF CONTROL:
The span of control is low as there are 3-5 employees reporting to their managers. This low structure is due to the fact that organization is a vertical and different people have different works to do so. It is also difficult to control more than five people and still manage the resources and people in an effective manner.
As far as resource allocation is concerned, the managers of each department have the authority to utilize the organizational resources whenever needed for the functions of his department. They have to get the approval from the other managers if these assets belong to other managers. These resources may be capital, human or any other available.
ORGANISING THE HUMAN RESOURCES
Recruitment is normally done on the required positions and not on the standby basis. Recruitment starts whenever a supervisor or sales manager needs a salesperson and it is first approved by the general manager before sending it to the human resources department.
All the vacancies are first internally advertised so that all the employees who fulfill the requirements can avail this opportunity. If there aren’t any suitable persons for a particular job then human resource department search its data bank and if there is no suitable person then at last it is advertised in the newspaper but it is rarely the case at coca Cola for the sales man.
Selection is based on different criterion for different positions. Education requirements are the first and the most important and are the first part of the screening of the personnel.
After the screening stage, applicant is called for the aptitude test. For a salesman job simple arithmetic and general knowledge is tested. Know how of English is also necessary in some cases.
After passing the aptitude test applicant is asked to appear for an interview. This interview is normally carried out by the sales and human resource department. Purpose of this interview is to confirm the data and claims, which the applicant has produced and made.
If the applicant is selected, he is asked for four sureties or any other references, which he can make and sometimes, human resource department also like to confirm from their Ex-Employers about the conduct and the reason for leaving of the applicant.
At Coca cola on the job training is given the utmost importance. At first a sales man is given information about the product, sales environment and company policies and procedures. Ethical behavior is emphasized most so as not to create any sort of bad habits which can cause great problems for the company. Normally a new sales man is supposed to work under another salesman to learn the basics of selling techniques and the overall environment in which he will be working.
A salesman is then allowed to work under the salesman but he is asked to perform all the operations by his own. These include filling out the route card, dealing with the customers, communicating with to loader, cash management, setting the visi cooler and the next days order to be loaded. After doing all this if has any problems in learning then he is guided by salesman, market developer, and sales manager if required.
Apart from this on the job training, the company also has some in-house training facilities. The company has a sales hall in which all the sales personnel are given some tips regarding the changes in the selling environment and how to improve efficiency and efficacy. These tips are normally given by the general manager.
Coca Cola also arranges some type of seminars, work shops and modules related to the sales management, Forecasting of the daily sales, merchandising, selling skills, supervisory techniques and other areas related to the sales.
Coca Cola does not have any library and special trainers but they do have the separate space for the training and they also use some sort of videos to elaborate and show the examples of effective selling skills and techniques.
To maintain the professional employees company has a policy of promotion from within. Promotions are based on the performance, which is measured very objectively. Apart from this the company pays its employees more than the industry wages. Not only the wages and salary but different other benefits are also given to employees to motivate and retain them in the organization. The company also has an effective incentive plan.
The general manager of the company is at the topmost position in the organizational hierarchy, Even though he is not directly involved in its operations he is responsible for taking major administrative decisions regarding the company policy and Operations. Departmental managers are responsible for leading and directing their subordinates. These leaders focus on these areas:
- Increasing business with a coordinated approach by helping each other in its operations.
- Encouraging the employees to give new ideas so as to increase the customer satisfaction.
As there is a very high degree of delegation and participation so they believe that the leadership style used in all the departments of CCBPL is democratic. The concept of team management is only practiced in the sales and marketing department as they have to work in dependence of one another. Subordinates are given a fair treatment and are dealt in a very good manner so as to give them a feeling that you are not only an employee but also a member of the family.
The managers at CCBPL are very supportive as they use teams and treat subordinates as equals, and have a highly open communication system. They are participative since they encourage the involvement of the employees in decision-making and make use of group discussions. However, some monetary and non-monetary rewards are used to create a high involvement from the employees especially at the lower level.
Employee motivation is given a very high consideration at CCBPL. At CCBPL they have the policy of promotion from within policy. Promotions are bestowed on the performance basis. This performance base motivates employees to work hard and achieve the goals, which are very objective and are perceived achievable by most of the employees.
Apart from this compensation plan is also a motivating factor as CCBPL is paying more than the industry averages. Not only this different campaigns and competitions between the employees itself are also used to motivate the employees.
Managers play a vital role in motivating employees as they give them the timely feedback about their activities. They also help them solve different problems, which can be job related or personal problems. Working environment and a challenging milestone are a major factor in employee motivation at CCBPL.
There is open environment in CCBPL, which discourages barriers among the members sharing information. The top management consults lower ranks before deciding on the policy matters and then these things are communicated downwards. Every employee is allowed to see the general manager at any time if he has any problem. Inter departmental communication is done through formal and informal manners. Grapevine is also used to get the feedback about the employees’ views about the management.
The Top management at coca cola also try to emphasise to follow the prescribed culture of the organization. CCBPL has formal and documented values that are communicated to all the employees. To ensure proper application of the rules and behaviour of the values, the top management act as role models, and closely administer and review their employee’s behaviour.
“ALWAYS COCA COLA”
Control is done through the evaluation, which is based on the very objective basis. Certain criteria are fixed in advance and if these criteria are not met then the employees are asked and evaluated for the reasons and corrective actions are taken by the respective managers. Different departments have different criteria and different reporting and controlling systems. The reporting, evaluation and control system of sales departments is follows:
Sales Person’s Reporting system:
Every sales person directly reports to market developer of his area. A sales person is supposed to give him a daily report of his activities and he is free to ask for any kind of assistance from the market developer.
Every salesperson is given an attendance punch card, which records his arrival and departure time. He is also given a route call card, which he is supposed to fill out. This card includes all the details about the visits of the outlets, time spent on these outlets, sales made on these outlets, time spent on these outlets, sales made on these outlets, time during travelling, names of the loaders and salesperson’s time in and time out of the vehicle.
Apart from this a sales person is also given a form to fill up for the next days order to be loaded in the truck. This basically tells about the total sales of the salesman according to the brand and the size of the product. This basically is used by the human resources department to evaluate the performance and calculating the total salary of the salesman.
Sales Person’s Evaluation System:
Every salesperson’s evaluation is done on quarterly basis. Evaluation helps the company to promote the people to the higher levels of the organization. This evaluation also motivates salespeople to work hard and get the promotion or at least the monetary rewards, which are given not only to the best salesman but the best market developer and the best sales manager of the year.
Performance is evaluated on the basis of performance development plan. Performance is measured on the basis of achievement of the targets, which are set and communicated at the very beginning of the year to each sales manager, each quarter to every market developer and every month to each salesperson. This performance development plan evaluates the sales people on the basis of call slips, Route call, Call completion, Effective and productive call, attendance, growth in sales, market development and the punctuality of the salesman.
Coca-Cola has a brand name that holds its own prestige in the world market. The multinational entity of the Coca-Cola Pakistan gives it an edge upon other competitors. The management of this beverage company comprises of one of the most professional people and the strong financial firmness guarantees it a solid backing to sell its products.
EMINENT BRAND NAME
It is rated as the world’s number one cold drink and is famed for its internationally well-known brand name “Coca-Cola”.
QUALITY OF PRODUCTS
The product quality has improved due to upgraded quality of packaging and the ameliorated liquid in comparison to its competitors. My personal experience is that the product quality and taste is far better than any product of it’s kind and also the improvement in packaging and the commencement of plastic shells has received a favorable response from the dealers and the loaders.
The regular supply of the products is another strength of the company. The products are regularly supplied to the dealers through proficient means of delivering and distribution has given Coca-Cola Pakistan an added advantage. Coke trucks supply the products regularly and always have the desired products for the dealers.
AVAILABILITY OF PRODUCTS
In the past Coca-Cola was not available in abundance but now stiff measures has been taken to increase its availability. The increase in the procurement of Coca-Cola has done through new supply and distribution measures and advertising campaigns
AGGRESSIVENESS IN THE MARKET
Its marketing strategy is very aggressive which aids it in further and incessant production and distribution of its products. It gives trade offers to its dealers for storing more and more coke products and the signage strategies and agglomeration of all the marketing strategies proves that it has a very aggressive marketing strategy. This will help Coca-Cola Pakistan in strengthening its integrity in the market.
DISSATISFACTION AMONG STAFF
One of the major weaknesses as in majority of companies is the lack of co-ordination between the management and the worker. In short there is a weak point in their Human Resource management. Workers feel that they are being exploited and are not given the remuneration that they deserve. The management fault is that they think that the worker is indefatigable and can work tirelessly. The tough schedule results into limited rest for them and there are no holidays.
The employees lack motivation simply because of the huge communication gap between them and the management. Thus grievances reign high for they feel that their problems and recommendations are not being aired the top management. The workers expect to be adequately satisfied in terms of their salary and compensations
CENTRALIZED DECISION MAKING
The decision making process in the company is highly centralized and the workers feel that there exists no proper authority existing in the firm. The salesmen feel dissatisfied for they are totally powerless to make any decisions themselves. In dealing with their buyers they have not the slightest authority to allow them any credit or discount.
The product is not available to the extent that it should be. If Coca-Cola wants to make an impact in the market they will have to do more than they are doing at the present moment.
LACK OF PROMOTION
Promotional activities have been greatly neglected in many areas. In an interview with the route officer and a few salesmen it was clear that for areas such as Nazimabad and Liaquatabad no heed has been paid both to the singe and promotional activities. This indeed results in a high degree of difficulty for coke in penetrating the market.
MANUAL PAPER WORK
The huge amount paper work takes a lot of time, which could be effectively channeled to other important activities. The salesmen have to do a lot of clerical work i.e. he has to fill a lot of forms (call slips, route riding forms, cash memos, clearing bills etc.) at the shops and also after arriving back at the factory. At the same time the management also complains that the paper work leads to a lot of pilferage by the employees. All such activities cause an overall great reduction in productivity.
LACK OF COORDINATION
In the factory there is a co-ordination lag between the activities of the marketing, sales and repairing departments. The sales department complains that the marketing department does not pay any heed to their problems. The sales department also complains that the repair of the visicoolers is always delayed. Until or unless Coca-Cola restructures its co-coordinating activities the availability of its product would be always delayed.
We know that Coke came to Pakistan in 1996 and since it is working hard to develop its market. We think that Coca-Cola can secure new dealers and buyers of its product as still large part of the country is still devoid of its products. It can promote its products in the younger generation by targeting the new outlets being opened due to improved law & order situation and a growing population.
In areas such as Liaqatabad, New Karachi, Glimmeretc. Fake beverages by the name of coke are being supplied by unknown people. Such activities really hamper the company’s name and its brand originality. Above all the fake beverages supplied are almost similar to the taste of the original Coke brand and not everyone can decipher the difference between the original and the fake product. This is in fact a great threat to Coca-Cola for unworthy people is taking advantage of its brand name and spoiling its good name in the market.
For the purpose of promoting its product, Coca-Cola’s competitors have been doing much more than Coke itself is doing. For example Pepsi’s signage operations have been very successful. In addition to this Pepsi is also giving very liberal credit policies to its dealers, which gives the dealers a greater incentive to buy Pepsi rather than Coke.
THE MANGO SEASON
The mango season is a great threat to Coca-Cola’s operations and also its sales. According to statistics during the mango season Coca-Cola’s sales are reduced by about 25-30%. This is indeed a huge blow to Coca-Cola especially since it is a fairly new company in the market. The greatest affect is on the revenue from the rural areas where mango drinks take over. However this is one factor that Coke cannot do anything about for it is not in their hands. If the mango season is to come then it will and nothing can be done about it.