Organizational Theory and its Perspectives

Dscuss how and why they provide us with alternative ways of understanding and analysing Coca-Cola and its relationship with its organisational environment?

Before getting into the detailed analysis of Coca-Cola and its relationship with organizational environment, we will first get the idea of organizational theory.

Orgnisational theory or OT is the amalgamation of many theories and approaches to an organizational study. It cannot be explained in an organized progression of ideas and notions or a combined amount of knowledge in which each development is extended and carefully build on it. It is the study of the organizational structures and designs and the association of the organization with the external world. It implies the ways by which an organization can deal with rapid change. Organizational theory can be classified into the following:

• Classical Organizational Theory
• Bureaucratic Organizational Theory
• Functional specification Organizational Theory
• Human Relations Organizational Theory
• Systems Theory

The following diagram shows the four major perspective of organizations framework:

In this case study we will be using two perspective i.e., modernist and post modernist. We will now throw some light on the ontology and epistemology.

The term “post modern” and “modern” has become a common prevalence in the organizational theory. Postmodern is interpreted as perspective or a model of thought. Postmodern perspective differs very much from the modernist perspective in the process of thinking which shuns the words like individual, organizations, culture, etc (Bruns, 2001). The mentioned terms relate to the attributes of modern perspective and this is because the modernist style of thinking depends on the strong ontology of existence which has the advantage of thinking in way of distinct phenomenon (Hindrichs, 2011). Post modern perspective is a weak ontology of befitting which highlights on the developing and transient reality (Posner, 2011). Here the meanings are not fixed but fluctuating. According to the modernist the culture in corporate can influence the individuals performance in the organization (Alexander, 2004). It forms a ethos where the individual shares similar goal (McBride, 2010). They squabble that the external factors can help an help the organization towards performance improvable or can lessen the efficiency if the organization cannot draw level with change whereas post- modernism emphasize on the fact that organizational culture is not actual (McBride, 2010). They have a different philosophy towards the culture and believe it to be illusion. They encourage power and sustain it to make them feel privileged among the others in the organization. Modernism stresses on efficiency and effectiveness and help individuals to understand the organizational culture on the contrary post-modernism struggles to achieve power over each other. Two dissimilar but free style of thinking are distinct in the current conjecture in human science.

Coca-Cola deals with beverages by manufacturing and then sells and promotes such beverages around the globe (Coca-Cola Co (THE), 2005). Apart from the drink the company offers other products also. Currently the company has more than 400 brands across 195 countries around the globe. Organizational efficiency portrays how well an organization is functioning. Performance is used in indication to which a degree to which a company is moving towards realizing its goals. In modernism theory attributes like labor commoditization, adaptation to technology is taken into account whereas satisfaction of employees and its benefits are looked into in the perspective of post modernism (Green and Crowther, 2004). Coca-Cola’s capability to adopt and seeking for new markets made them achieve a globally accepted brand name. They focused strongly on marketing and growth. In addition to advertisements and promotions, they also distributed thousands of free coupons of glasses of coca cola so that everyone could taste.

Modernism vs Postmodernism

When coca cola started its business in India it concentrated on objectives and external reality. They followed the modernism perspective of the organizational theory. As time passed by like many other organizations Coca Cola also changed its perspective now (Gopinath and Prasad, 2012). Coca-Cola has begun its operation in the Indian markets in the year 1956, after the parliament passed the Foreign Exchange Regulation Act (FERA). This act is required to control dealings and payments in foreign exchange of the country and appropriate utilization of the resources for economic development. Under FERA four level of foreign equity contribution were permitted. After facing conditions of FERA, 64 countries in India did not want to reduce their equity and wanted to wind-up their operations. Free from the reduction of equity, Coca Cola needed to acquire each section of license for importing the concentrate that is needed to manufacture the soft drinks. When a new official in GOI took charge to approve the import license, Coca cola was asked to report the particular ingredients used for the product and have its safety test in the food laboratories under the government to get the license. Coca cola after refusing to do so withdrew its business from India.

Economic liberalization means a country “opening up” to the world with respect to trade, taxations and other matters that affect business with the objective of making the country more market-oriented and increasing the role of foreign investment (Ciafone, 2012).  Coca Cola’s unexpected reentry in the Indian market during the economic liberalization made ambitious global-citizenship for the upper middle class of India and business attachment for the ones who expelled the product and the resources to stimulate the consumption. Coca Cola now followed post modernism theory where they apply their own concepts and assumptions. Coca cola was like omnipresent. Many villages surrounded the company’s manufacturing plants; they stood against the operation of the company and accused them of polluting and exploiting the groundwater which was also used commonly for the production of the bottled drinks. Due to this the vast area of the country fell into water scarcity crisis. Poor people have protected the environment in their areas and also in the cities. Their apprehension is their livelihood. Thus due to this “environmentalism of the poor” has expressed criticism to the corporate privatization and globalization revealing the exploitation of resources of the rural people so that the other side of the economic divide can consume.

Pepsi and coke have started their business in many countries for the last 100 years. They always had high stakes. They started a joint venture in South Africa; it was with good intention but was a misguided venture in the modern business scenario (Moses and Vest, 2010). There were enough problems in SA when Nelson Mandela was just released from jail; he told that Coca cola was doing its business through apartheid that is segregating the workers on the grounds of racial discrimination. He then went to US and told that these people (authorities of Coca cola) are not the right people to do business with because they are using apartheid as a tool to do its business. And thereby Coca cola was attacked by its stakeholders and other social people who questioned them, on the grounds of corporate social responsibility, social activities. Post modernism theory was being used here as they believed in power and did not follow conceptualized regulations (Moses and Vest, 2010).

Coca-Cola and Organizational Efficiency

Coca cola following a post modernism theory has configured the labor relations and has created new forms of politics (Gill, 2007). They followed the neo liberalism of restructuring. With the focus on the struggles that the workers took in South Africa, the company has created inequalities between them and the workers, thereby ruining the social relationships. It has also been seen by the trade union people how the work has degraded and there was violation of human rights. There were many problems and tensions that emerged due to the internationalizing of Coca Cola in Columbia (Gill, 2007). They used power over anything else. The company believed that the world is placed in discourse.

Coca cola’s involvement program occupied the centre-stage in the range of many corporations because they believed in sticking to the objective and external reality. They applied modernism theory here. They focused mostly on charity and employee related issues. There is always a vague attitude when it comes to involvement in community. Coca cola’s international branding strategy and involvement with community has gained applause. In this scenario they did not follow post modernism theory and did not stress on discourse. They did not believe in public speaking about their product but focused on how to attract people with their product and channelize them towards the company to maximize profits (Barkay, 2011). If we see now we will find that these involvement in community programs helps in the entrepreneurial ideology.

It was seen previously that Coca cola was criticized on the aspect of corporate social responsibility. They believed in communication and practice than but it hides the inventions and motives. It is seen that the social responsibility of the corporate is sometimes problematic and also a lawfully discursive area that serves the migration process of the corporate. There were many concerns due to the company. The rural communities faced many ill-effects due to Coca cola while its operation in India.  The company believed in power over each other forgetting the problems of the people (Raman, 2007).

Here the finance part is in concern. Various models and theories were used top form the basis of the financial data, performance of the stock price of Coca cola. Short-term operating ratio analysis was done to find out the inventory turnover, payables turnover, average inventory processing period, etc.
Long-term investment analysis was done to find out the equity turnover, net fixed asset turnover, total asset turnover, etc
Liquidity analysis measured Coca cola’s adequacy to meet the near cash obligations through current ratio, cash ratio and quick ratio
Long-term debt analysis examined Coca cola’s structure of capital and if the company had the ability to fulfill the long-term debt.
Profitability analysis measured Coca cola’s income in relation to its revenue and capital invested by operating margin of profit, net profit margin, return on equity, return on assets
It also measured the economic value by comparing the net operating profit after taxes to the total cost of capital. This portrayed the management performance of Coca cola.
Coca cola has also done the relative valuation to determine its value by comparing similar industries on the basis of many ratios that compared the stock prices to the appropriate variables that affected the value of stock (MOODIE, 2006).

Conclusion

Thus we can conclude that Coca cola has used the combination of both the perspective of modernism and post modernism in the organizational theory model. It has faced man y challenges starting from getting a license in India and then re-entering India to corporate social responsibility. Coca cola’s stock prices are still in a position when they can increase their worth. Be it modernism or post modernism, Coca cola just need to find out the right theory during their operation in particular countries.

References

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