Apply Henri Fayol’s Five Rules of Management to the Coca-Cola Sample

Table of Content

According to Fayol’s five rules, the first rule is about foresight; the second rule is about organization; the third rule is about command; the fourth rule is about coordination, and the fifth rule is about control (cited in Chris, 2005).

Regarding the first rule, it refers to either a thought or a plan for future development in a company. In the case of Coca-Cola, they showed a clear and proper way for their foresight. Consider the following example: Coca-Cola decided to build a new bottling plant in Malaysia on March 16, and the plant is expected to open before the end of 2011. “With the new plant, one of the most modern of its kind in this part of the world, we will be able to support our core brands of Coca-Cola and Sprite in the coming years,” said Glenn Jordan, Coca-Cola’s president of the Pacific Group (IndustryWeek, 2010). Furthermore, Coca-Cola announced that its profit increased by 55% in the fourth quarter due to a significant increase in developing countries such as India and China (IndustryWeek, 2010). The Coca-Cola Company can make a plan to build a new plant to fulfill their further increase in the sales of drinks, which need more bottles for their drinks. Also, their sales figures proved that their plan of building a new plant is a proper and right way to deal with their production demand.

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The second rule is organization, which means that the company can be flexible in using its resources. The company did an excellent job in this issue. For example, the company set up a unique Coca-Cola System, which provides better cooperation with its suppliers like bottling partners (Coca-Cola, 2011). Through the system, the Coca-Cola Company can collect and consolidate different types of data like economic and social data in addition to the environmental data collected by themselves already. So, the company combined all these data to provide a certain degree of flexibility in their business, such as changing production and marketing strategies.

The third regulation is “bid,” which means setting up and selecting suitable staff to achieve sustainable and optimal work within a company. According to the case study, Douglas Daft, the CEO of Coca-Cola Company, established a 10-person executive management team composed of various titles responsible for specific jobs. “Twenty-four division and operations presidents report to the head operating officers” (Para 7 & 8, p. W-117). The management inside Coca-Cola can be strengthened, especially since Coca-Cola is a global enterprise. It is crucial to have a clear division of work to facilitate task-oriented management inside the company. Additionally, the resources in each section can be efficiently used. For example, five executive vice presidents of the Coca-Cola Company are responsible for different business parts worldwide, such as Europe, Eurasia, and others. Members of staff in each section can focus and be responsible for their work tasks with their office or executive presidents to achieve better performance in the company’s business.

The fourth regulation is coordination, which refers to organizing and communicating between staff and sections to facilitate their daily work. Referring to the example given in the third regulation, the 24 division and operating officers can keep track of the process of their work. Since sections are separated by specific tasks, staff can easily share their data and information within the section. Most importantly, Coca-Cola Company has business worldwide. Thus sharing information, such as business figures and marketing research, is a crucial element in the company. Additionally, information can be fully utilized within sections to drive profitable growth, which is one of their six strategic priorities in the Annual Report (Para 8, p. W-117).

The fifth regulation is control, which refers to the company’s need to monitor its operations and make changes if necessary. Referring to the example given in the third regulation, the 24 division and operations can entirely monitor their work, which can meet the company’s aims and goals. Additionally, the example of creating a new soft drink flavor in Coca-Cola Company demonstrates that they make changes if necessary. In recent years, people have become more aware of healthy diets, particularly that traditional Coke contains a higher proportion of sugar, which cannot meet the general market demands. Thus, Coca-Cola Company decided to introduce “Coca-Cola Zero” in 2004, which contains zero sugar and zero calories (Coca-Cola, 2011). By introducing “Coca-Cola Zero,” the company demonstrated that it recognized the market demand and made a new flavor to meet the change in their customers’ preferences.

How does Coca-Cola score on the eight properties of public presentation excellence?

The Coca-Cola Company can be scored eight out of 10 on the eight properties of public presentation excellence found by Tom Peters and Robert H. Waterman in 1982. The first property is “A prejudice for action, active determination making” (cited in Wikipedia, 2011). According to the information given in the case study, Coca-Cola Company established six strategic priorities, and all individuals, employees, and partners worldwide should follow these priorities. Employees understand their goals, so proper and active decisions can be made. The second property is “Close to the customer” (cited in Wikipedia, 2011). The Coca-Cola Company is always customer-oriented and willing to find out what their customers need. For example, “Coca-Cola Zero” has its own Facebook and Twitter websites for customers to receive the latest product information, and customers can provide feedback about the brand (Coca-Cola, 2010). The third property is “Autonomy and entrepreneurship” (cited in Wikipedia, 2011).

This company always has innovation in their products, such as introducing new Coke flavors like cherry, lemon, and orange. In addition to variation in their traditional carbonated drinks (Coke), the company also produces fruit juices, tea, and coffee, with a product list of over 3300 drinks (Coca-Cola, 2011). The fourth property is “Productivity through people” (cited in Wikipedia, 2011). According to the case, the new management structure introduced by Douglas Daft can enhance the working efficiency in the company. Every department is responsible for its own tasks and follows the six priorities; issues can be easily handled, and no matter senior or junior employees can work in the right direction, which can further push up productivity and turnover. The fifth property is “Hands-on, value-driven” (cited in Wikipedia, 2011). Although management was divided into 10 teams, they still shared the six strategic priorities, such as broadening drink brands, serving customers with creativity, etc. (Para 8, p. W-117). We can clearly see that each priority had an apparent and clear idea to follow, which can help the company increase their profit and sales.

The sixth property is “Stick to the knitting” (cited in Wikipedia, 2011). Referring to the example given in the third property, the company focuses on either carbonated or non-carbonated drinks, as these items are the core part of the business. Also, focusing on their core business can strengthen their market leadership in the world because they have already experienced doing drinks business for over 100 years. The seventh property is “Simple form, thin staff” (cited in Wikipedia, 2011). The most obvious issue is that CEO Douglas Daft axed 6000 employees and rearranged the management into 10 individual executive management teams (Para 7, p. W-117). By doing so, it is much easier to manage and control the company because the complexity of management is minimized, so departments can work efficiently, and officers can easily follow managerial tasks.

The 8th property is “Simultaneous loose-tight properties” (cited in Wikipedia, 2011) which refers to flexibility inside the company. The Coca-Cola Company shows a higher degree of flexibility in its marketing strategies. The company knows that people in different countries have different perspectives and preferences about Coke. For example, Coke with lime was introduced in the United Kingdom and North America, while Coca-Cola Cherry was not introduced in the UK but in America and Canada. These variations provide flexibility in their business and strengthen their reputation around the world. Do you think Douglas Daft will be successful in recovering the growth and value experienced under Roberto Goizueta?

Personally speaking, I do not believe that Douglas Daft will be successful in recovering the growth and value experienced under Roberto Goizueta. When Roberto was the CEO from 1980 to 1997, the Coca-Cola Company may have had better marketing research, strategies, and advertising than other rivals. These elements allowed the company to stand in an advantageous position. It was not surprising that the market value was seemingly increased about 38 times from 1980 to 1997, as mentioned in the case study. However, once a company becomes successful, other rivals may copy its business model, operating strategies, and even modify them to become more comprehensive and better strategies and then compete directly with Coca-Cola Company.

Currently, there are many competitors around the world that pose a threat to the profits of Coca-Cola Company, such as Pepsi worldwide, New Cola in Mexico, Robinsons in the UK, Qibla Cola in the Middle East, and Future Cola in China (Wikipedia, 2011). Obviously, Coca-Cola Company is facing vigorous competition with its rivals. Without a doubt, Douglas Daft made changes in management and six strategic priorities that are controllable within the company. However, customers have more choices than before, which means that customer preferences are uncontrollable, especially as people become more aware of their health, so they may tend to drink less Coke in the future. Furthermore, fluctuations in the prices of raw materials such as oil prices and aluminum prices cause barriers in recovering profits. These elements are essential for manufacturing plastic bottles and aluminum cans, so the company will be highly influenced by price fluctuations.

What are Coca-Cola’s underlying beliefs? What insights does it provide?

The underlying beliefs of the Coca-Cola Company include “to refresh the world,” “to inspire moments of optimism and happiness,” and “to create value and make a difference” (Coca-Cola, 2010). In general, the company aims to become a well-known and reputable brand worldwide. For example, the company widens its product line of drinks and makes innovative changes in different places to create impressive memories for customers through advertisements and promotions. These issues allow the company to align with their three main beliefs and maintain sustainable development in the future.

The insights that the company provides are the 6 “P”s, including profit, people, portfolio, partners, planet, and productivity (Coca-Cola, 2010).

Regarding profit, the company earns money every year, which can satisfy its stockholders and stakeholders; however, the company does not neglect the importance of corporate social responsibility. For example, the company ensures that it does not engage in child labor in its operations and its supply chain (Coca-Cola, 2011).

Regarding people, the company tends to provide a better working environment for its employees. “We value the relationship we have with our employees. The success of our business depends on every employee in our global enterprise” (Coca-Cola, 2011). The company recognizes that employees are the most important resources in a company, so it focuses on them, such as providing a fair and better workplace for them. For example, “The Coca-Cola Safety Management System” (TCCSMS) was introduced to provide a safe and ideal workplace for its employees (Coca-Cola, 2011).

See portfolio. The company maintains its investments in the business, such as producing new drinks and improving its production facilities. By introducing new flavors of Coke, it can generally meet customers’ needs and enhance its reputation. For example, currently, the company has more than 3,300 drinks in its portfolio (Coca-Cola, 2011).

Regarding partners, the company knows the importance of maintaining good relationships with its partners, especially its suppliers, to smooth the operation of the business. For example, “Our Supplier Guiding Principles (SGPs) communicate our values and expectations for our bottling partners and business partners” (Coca-Cola, 2011). This ensures that the company does not have conflicts with its suppliers, as both Coca-Cola Company and suppliers have similar principles and ideas, so they can be satisfied with each other.

Regarding the planet, they aim to become “responsible global citizens” (Coca-Cola, 2011). The company makes changes in the configuration of fountains, coolers, and vending machines, which aim to reduce pollution to the planet. For example, coolers usually contain a chemical called “chlorofluorocarbons” (CFCs), which causes the greenhouse effect on the planet. The company realized the issue and decided to stop using coolers with CFCs, which had already reduced 52.5 million metric tons of CFCs to the planet (Coca-Cola, 2011).

Regarding productivity, the company stated “Be a highly effective, lean, and fast-moving organization” (Coca-Cola, 2011). For example, there are only seven operating groups leading in the company, and each group focuses on specific tasks that can fully utilize their own resources in each department. The division of operating groups shows simplicity in management that can ease dealing with operating issues such as planning, organizing, and coordinating within the company.


  1. Agence France-Presse (2010) ‘Coca-Cola to Construct Malaysian Bottling Plant’, Industry Week, [accessed 27 February 2011].
  2. Chris Jarvis (2005) ‘Fayol (1841-1925) Functions and Principles of Management’, [accessed 27 February 2011].
  3. Coca-Cola (2010) ‘Coca-Cola Zero’, [accessed 26 February 2011].
  4. Coca-Cola Company (2011) ‘The Coca-Cola System’, [accessed 28 February 2011].
  5. Coca-Cola (2011) ‘Product List’, [accessed 28 February 2011].
  6. Coca-Cola (2011) ‘Mission, Vision & Values’, [accessed 28 February 2011].
  7. Coca-Cola (2011) ‘Sustainability’, [accessed 28 February 2011].
  8. R. Schermerhorn John (2005) Management: With Workbook: Personal Management, USA: John Wiley & Sons.
  9. Wikipedia (2011) ‘In Search of Excellence’, [accessed 27 February 2011].
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