Traditional and Contemporary Issues and Challenges

14128 WordsJul 10, 201157 Pages
Traditional and Contemporary Issues and Challenges FIRST THINGS FIRST Coke Needs Shaking Up “We feel pretty good about the way the company is moving. We just have bumps in the road that are so doggone visible.” —JIMMY WILLIAMS, DIRECTOR, COCA-COLA chapter 2 At the peak of Coca-Cola’s dominance of the soft-drink industry, about 1996, the company seemed invincible. Coke’s then-CEO Roberto Goizueta and many industry observers dismissed PepsiCo as a loser in the cola wars. Goizueta convinced stockholders that cola purchases were steady through both strong and weak economic conditions, and that cola drinkers were willing to pay a premium price for the number one soft drink. Yet over the last ten years, Coca-Cola’s tale has been one…show more content…
There were two new low-calorie drinks, Diet Coke with Splenda and Coca-Cola Zero, yet there hasn’t been a truly innovative beverage developed since the launch of Diet Coke in 1982. Daft, along with Ivester, made a significant number of serious mistakes as CEO, including allowing a culture of racism to flourish, resulting in a $192 million settlement in 2000. Both CEOs replaced capable leaders with others who were less capable but perhaps more loyal to Daft and Ivester, which resulted in a loss of talent and experience at Coke. They both have been accused of ignoring the murders of union leaders at a Coke bottling plant in Colombia, South America, whom the union alleges may have been killed as a union-busting tactic with the implicit consent of Coke. Coke refused to compensate the workers’ families for the deaths, and now faces union conflicts, a boycott, and several lawsuits in U.S. courts. On the positive side, Coke’s financial performance is currently quite good. Earnings are sharply up in 2006, costs are lower, bottlers are stronger. “We feel pretty good about the way the company is moving,” says director Jimmy Williams. “We just have bumps in the road that are so doggone visible.” Yet investors have little confidence in the firm’s leadership and governance, as shown by the depressed stock price. So far, even with the 2004 selection of insider Neville Isdell as CEO, Coke has not recovered. In fact, Isdell promises more of the same, spending

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