Running Head: Risk assessment for coca cola

Title: Risk assessment for coca cola

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Risk assessment for coca cola

Introduction

Running organizations that aspire to succeed in the future is not an easy task. It is

therefore important to take risks to ensure they are able to achieve their goals and objectives. In

most cases, however, when organizations are not facing hard times, they tend to be reluctant and

forget about the future risks that they might face. They, therefore, forget to plan for the future

risks, where they are caught unawares. It is therefore advisable for management to be conscious

of the issues that are unpredictable to happen in future that may affect the business negatively.

Then they take such things into consideration, they are able to counter problems and also plan for

a successful future (Heinken, 2015).

It is important for organizations to carry risk assessment, where in this case it requires

organizations to identify potential risks that may happen, identifying the areas that are likely to

be affected, evaluate the risks and decide on the measures to be taken to mitigate the problems.

Then the findings of the mitigations procedures are recorded and implemented. The last

procedure is to assess and update the risk mitigation and assessment procedures (Lam, 2014).

In this case, the study will involve preparing a risk assessment report of the Coca-Cola

Company. Coca-Cola is a multinational beverage company, where it has extended its services to

almost every country in the world. Even though the company has succeeded in penetrating the

market and become a global leader, it has experienced challenges and risks that are sometimes

inevitable, while other risks are necessary to enhance its growth (ries.com, 2013). Whichever the

case, risks puts a lot of pressure on organizations. For instance, if the risks are the risks affects

the business in a positive way, the organization will have more pressures in ensuring the risks are

maintained to levels that help the business achieve its purpose. On the other hand, risks affect the
Risk assessment for coca cola

business in a negative way, the organization will have pressures in ensuring the risks are

minimized to levels that are manageable to an extent that the negatives are minimized.

The risk exposure calculator

The risk assessment procedure to be used in this company is analyzed using a tool called

the risk exposure calculator. The calculator shows various pressure points that an organization

may be in regarding the risks it is facing. Different risks affect different departments in the

external setting of an organization. In this way, an organization is able to identify various

breakdowns that may pose threats to the organization. The calculator is calibrated with scores

based on the pressures of the organization that include various threats. These pressures include

growth, culture and information management. For each pressure, there are three threats that the

firm may be experiencing (danuzice.com, 2013).

Pressure points due to growth

Pressures due to the growth mostly affect organizations that are growing and expanding

at faster rates. Coca-cola is one of the fastest growing companies in the world experiences

growth pressures. First pressure on growth includes the performance. Being a highly competitive

company in the beverage industry, the company receives a lot of pressures from the management

and customers as well (Lyon, Lumpkin & Dess, 2000). In this case, there is a risk that if the

company does not perform better, it may lead to failure and also lose its competitive market.

However, from the scale of risk exposure calculator, this type of risk for the coca cola company

can be rated as a caution zone. This is due to the pressure the firm gets from other competitive

firms that are coming up in the industry (Anderson, 2017). The other growth pressure is the rate

of expansion. Coca-Cola is multinational company and it is always aspiring to expand even more
Risk assessment for coca cola

in the areas that it offering its services and also to new areas. The company wants to remain in

the leaderboard as one of the most expanding companies. Thus, whenever another company is

expanding at a higher rate, it feels challenged and hence it feels the heat of wanting to grow even

more. Thus basing this issue on the risk exposure values, the risk pressure can be classified in the

caution zone, on a scale of between 21 and 34. At this point, the company has taken important

moves to ensure the risks associated with the competitions are minimized as much as possible

(Hwang, 1994). The last pressure point due to growth for the coca cola company is the

inexperience of key employees. When the employees are inexperienced, the company can have a

bad reputation and hence lead to huge losses. In this case, the company experiences very little

pressure on the inexperience of the key employees, and hence the risks associated with this type

of pressures are minimal (Leroi et al, 2005). The company is led by highly qualified individuals

who handle key operations and hence it is not likely to have pressures on the underperformance

due to the inexperience of key performers.

Pressures due to cultures

One of the factors that define cultures in the organization is the entrepreneurial skill that

plays a significant role in enhancing the operations of a business through creativity and

innovation. Coca-Cola, through its diverse workforce, encourages entrepreneurial skills by

investing in various projects that can expose it to high risks. The company believes in creating

new insights and gambling in taking risky deals that it may not be sure whether the customers

might like them or not. For instance, the company produces other products and services that are

not the main line of products. In this case, the innovator of the product may not be sure whether

the product will be acceptable to the customers but they just take up the risk of introducing the

product to the new customers. In scaling this risk on the risk exposure calculator, it can be
Risk assessment for coca cola

regarded to be in the caution zone. The company benefits from the strong brand name and hence

ensure it takes risks that may be projected to bring benefits in the future but not guaranteed

(Martin, 2013).

The other risk on the pressure due to cultures is the executive resistance to bad news. The

top-level managers at the Coca-cola Company are aware of the challenges on the reputation that

the company faces. In this case, the management sometimes fails to communicate the problems

that the organization is facing the resistance on the issue of competition. Coca-cola has created

the impression to the customers that it is the best and has the largest market share in the world.

Therefore when news arises on major competition from other main competitors such as Pepsi

that they are taking up a significant market share, or having controversial mixes on their

ingredients, the managers may decide to keep the information for themselves (Oppermann &

Chon, 1997). This is a significant issue that brig a lot of pressures to the company. However, this

issue can be classified to fall into the caution zone in the risk exposure calculator. In this case,

the external forces might not be as significant as the company does not have many competitors

and also it has a strong brand name. Thus, the top level executive might only hide the sensitive

information that may adversely affect the organization when disclosed to the customers or the

employees.

The other is factor putting pressure as a result of cultures is the level of internal

communication. This is one of the important risks that may benefit the organization when taken

appropriately. The managers always want to create a competitive spirit between employees in

different departments and locations (uniquedevelopment.com, 2016). This is meant to bring out

the best from them and hence increase theory motivation. This is not a serious risk to companies

like Coca-Cola. For instance, it has a reward program for the best performing employees which
Risk assessment for coca cola

is spread across the regions that the company operate from. Pressure emanating from this type of

cultural practice in the organization does not pose a significant risk to the organization and hence

this can be classified to be in the safety zone from the risk calculation calculator.

Pressures due to information management

The flow of information in every organization is very important as it ensures the

management practices put into place are able to control risks that may arise and cause operations

to go wrong. Information flow should be directed on the right channels especially on the way the

customers are served, communicating important changes to the employees. However, in most

cases, people may not fully understand the complexity brought about by these transactions. In the

case of coca cola, the flow of information is greatly affected as it is a multinational organization.

Due to the decentralization of the leadership command in the organization, it becomes hard to

relay important information on time to all the operation points throughout the world. There is

also the pressure of ensuring that the complexity if spreading the information is minimized as

this reduces the cases of confusion altogether (Pettigrew, 2014). The organization serves markets

with diverse cultures and therefore there may be differences in the way information is spread. In

this case, it is important to ensure it goes beyond the language barriers, and ensure the

information that was intended to reach to the customers or the employees in the different regions

is the same as when it was released from the source. Coca-cola is decentralization in terms of

how the information flows from one management level to another and also various regions of

operations (ries.com, 2013). Through the adoption of technology in delivering and processing

information, Coca-Cola faces minimal risks in form of transaction complexity and velocity and

hence this can fall in the safety zone. This is because the pressures on are minimal due to the use
Risk assessment for coca cola

of modern methods of managing and controlling the flow of information have been enhanced by

the use of technology.

The other risk factor due to the information management at Coca-cola is the gaps in

diagnostic performance. Diagnostic performance gap involves the approach through which an

organization develops an enabling environment that helps in producing strong team and leaders

who ensure the performance of the organization is improves significantly. Coca-cola, being one

of the most successful companies in the world, has to ensure it produces nothing less than the

best. Since the company is delocalized in different regions of the world, it has to ensure it has the

best teams from different countries who ensure the high standards of operations are maintained

(Yücenur & Demirel, 2012). With this the company has pressures of ensuring that there is an

accelerated business environment, have a strong and engaging team that have a clear market

driven purposes, ensure collaboration across boundaries and also involve science-driven

approach in building a strong organization that is flexible to the changing demands in the

dynamic business world (danuzice.com, 2013). The risks taken to ensure this for the coca cola

company can be classified to be in the danger one. This is because the issues discussed here

cover a wide range of critical operations that may impact the operations of the organization

negatively if they are not carried in the right way.

The degree of decentralized decision making also has a great impact on the pressures that

the organization puts in the information management. Coca-cola experiences a highly

decentralized management whereby every region in which it operates has its own way of

management (ries.com, 2013). Although the management structures may be similar, there is a

significant difference in the way the actual management out on the ground. Decentralized

decision making is one of the global strategies that the organization has taken, whereby there are
Risk assessment for coca cola

different corporate segments that ensure the division of work is carried out in an effective and

successful manner. This move also encourages the local management in the individual countries

where the company operates where they feel that they have input in the general management of

the global organization. When they feel in the larger output of the organization, there is a high

probability of ensuring success in the future (Ahituv, Igbaria & Sella, 1998). However, the

pressure may be in maintaining similar leadership practices and reputation the organization has

across the world. In considering the risk exposure calculator, the risks on the pressures on

decentralized decision making in the company can be categorized in the caution zone, whereby

there it must ensure it balances on all the factors that ensure it scores high in the provision of the

important services to across the world.

Risk assessment for coca cola

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