Managerial Economics and Strategic Analysis (Research Paper Sample)

Managerial Economics and Strategic Analysis Student’s Name Institutional Affiliation Managerial Economics and Strategic Analysis Introduction Today the world has become a global village, and as organizations strive to increase their market share in the global market, it has become necessary that they align their operation so as to cater for the welfare of all the stakeholders ((The CocaCola Company, 2007)). Strategic analysis has become an important feature of modern day corporation as it determines the way in which they carry out their operations. Coca Cola is a multinational company engaged in the production of soft drinks. It is renowned brands in the global market. The company headquarters are based in United States of America, but it has regional subsidiaries all over the world. By the year 2013 the demand for Coca Cola brand had increased in more than 200 countries across the world (McGuigan, et al, 2011). There are important elements that shape the structure, design and culture of a company. This paper will exemplify the strategies within managerial economics and how they influence decision making process in a Coca Cola Company. Organization’s Structure and Strategy Formulation Coca cola Company has six strategic business units and has a divisional structure that is combined with localization and centralization (Coca-cola Company, 2014). The company has a head office that is headed by an executive president. He is responsible for making a decision on the company's progress and generally offering support to the regional branches. Coca cola success is pegged on the capability to bond with local customers, and as such company has a divisional structure. As aforementioned, there are six regions, or strategic business units which employ localization and centralization. The six strategic business units are further subdivided into smaller divisions. For instance, the United Kingdom falls under the brackets of Southwest Europe division. These divisions are established based on the geographical location of the market. The various functions within a given region continually exchange information on best practices so as to maintain the efficiency in operations (Coca-cola Company, 2014). The company is able to provide managers with operational control through separating division into specific geographical location to address different lifestyles and tastes of consumers. This is crucial for the regional managers to focus their attention to the specific market they control and consequently improving operations. Additionally, this separation and divisions make it easier for regional and local managers to responds swiftly to changes in the market they cover than when they would report to the head office for direction. Autonomy accorded to the regional managers by the company enables the company to perform research and development within a given area and react accordingly depending on the prevailing environment in the market (McGuigan et al, 2011). Figure 1: The Coca Cola Company Structure
(McGuigan et al, 2011). Coca Cola operations in international markets are very similar to its domestic operations. In any part of the world Coca Cola brand is the same. Since it began operations the firm has been restructured to adapt to the changing size and scope of operation. The firms’ key strategy is to globalize its brands and at the same time building a strong local structure in countries where it has operations (Coca-cola Company, 2014). The local companies play a significant part in developing the brand. They connect consumers of Coca Cola soft drink in a given region through calculated evaluation of consumer trends, taste and preferences. These local companies enable the firm to react to changes in consumer tastes and lifestyles very fast and, as a result maintain its market share amid the competitive soft drink industry (McGuigan et al, 2011).. The matrix structure that integrates both the divisional and functional structure has played a huge role in maintain the company’s dominance in the soft drink industry. Additionally, division of power among the workforce in the matrix structure increases flexibility which is paramount in global business (McGuigan et al, 2011). While the top executive makes a major decision relating to the operations of the company, regional and local managers have the power to make modification on the brand they are selling. Matrix structure also facilitates the exchange of information and experience since different individuals in executive body come from different parts of the world. Relevance of Ethical Programs and Culture in Corporate Management Coca Cola Company has developed a code of conduct to serve as a guide to its employees all over the world. The code describes how Coca cola employee should conduct themselves being the company’s agents in over 200 countries where the Coca cola sells its brands (Fernando, 2010).. The code defines the duty of every employee to the firm, to colleagues working in the company and suppliers, authorities and consumers. Every person is supossed to obey the law and act with integrity. Leadership that wishes to create an ethical environment need to ensure that workers under their supervision fully understands their deities and responsibilities. Creating a code of conduct goes a long way in guiding employees on the position of the top executive and the preferred culture of the firm. Employees conduct will be evaluated based on the established code of conduct. Managers who want to maintain high ethical standards should never support employees who pursue company goals if their conduct is not synonymous the established code of conduct. Similarly, the code of conduct and policies defining the responsibilities of every employee are the most important milestones in creating an ethical atmosphere at workplace (Fernando, 2010). Conspicuously the character and conduct of leaders has a major effect on the performance of a company. Just like the way Nancy Snyder was a capable of creating a culture of innovation at Whirlpool Corporation, leaders should embrace the responsibility of developing a standard ethical conduct in their organizations. Coca cola has achieved immense rewards from creating well structured code of conduct and firm policies that are geared towards maintaining the highest level of integrity to their clients. Starting from the company's president, to the directors and managers in respective subsidiaries all over the globe, Coca cola has made ethical code a part and parcel of its mission and vision. The reward system has significant influence on employees’ ethical standards. Unfair reward system may invariably lead to unethical behavior in the workplace. Employees might contend that unfair remuneration and evaluation system is the strongest manifestation of unethical conduct (McGuigan et al, 2011). Therefore, if the top executives do not serve as role models then it would be difficult to develop effective code of conduct. Decision relating to employee salaries is made at the regional level but it is communicated to the head office of Coca Cola Company. The company has come up with a number of policies to guarantee fairness, justice and appropriateness in the reward system for a number of years (Coca-cola Company, 2014), Why Effective Leadership is Core to the Success of Business Entity Effective leadership is another strategic management that needs to be embraced by corporate bodies to ensure organizational success. Effective leadership entails the transformation of organization from the current status quo, and assisting in achievement of organizational goals as envisioned by the leader, through strict follow-up of organizational goals. This involves effective direction of workers towards desired goals, through proper understanding of salient environmental trends, events as well as visions of the organization (Shavinina, 2005). This involves the ability to solve the increasing corporate problems, proper designation of organizational roles and hierarchy, through proper understanding and accountability, adequate budgeting and control systems as well as proper rewards systems that motivate workers to work towards goal achievement. Effective leaders should nurture ethical organizational cultures, incorporate integrative thinking and overcome all barriers to change, thereby embracing innovation, which is a requisite for organizational success (Shavinina, 2005). Since the establishment and the invention of the first drink in 1886 by the Coca-Cola Company had controlled the largest market, owing to its effective leadership. Today, the company prides production of more than five hundred beverages, all of which can be traced to effective leadership by CEO of the firm. The effectiveness and efficiency of the leader has enabled the company to meet its goals of being the leading world producer and supplier of soft drinks, making the company highly effective and productive (Coca-cola company, 2014). How to promote effective Learning in Organizations In order to prevail in the competitive business world, corporate management must establish and maintain a learning organization within its premises. The learning organization, aims at accumulating, sharing and integrating internal as well as external knowledge and information among all corporate stakeholders. The learning organization should ensure employee motivation, and confront the status quo within the corporate to promote innovation, which is imperative in attaining corporate success (Fernando, 2010). The learning organization within the firm should ensure involvement of employees at all employment levels, encouraging them incorporate individual intelligence to achieve corporate success. Further, the corporate learning organization should accumulate and share vital organizational knowledge and information, which is imperative in the promotion of effective o...