Coca-Cola and CEO Douglas Ivester
BP and CEO Tony Hayward
If Douglas Ivester was so successful, for years, on the executive staff, why did he fail when he was given the CEO/president position? Give an overall impression, broad stroke explanation of why he failed. Ivester was a hardworking, diligent CEO, but he lost sight of the people side of Coca-Cola. In any business people are a very important aspect that needs to be nurtured because without them the business is nothing but a name. Ivester’s predecessor, Robert Goizueta, had a “management mantra -- this is a people-relations business” (Knoop, 11). Ivester seemed to forget that mantra and took over the company selfishly.
List the key situational challenges and opportunities facing Ivester when he was appointed CEO after the death of Roberto Goizueta? •
Acquisition of Orangina
Purchase agreement for Cadbury Schweppes
Contamination in Belgium
What were the primary missteps Douglas Ivester made during his tenure as CEO of Coke and identify why these worked against him? The first misstep made by Ivester was the severed ties between the French and Coca-Cola. Ivester pushed to acquire Orangina which “the deal was expected to boost Coke’s market share from 49% to 58% in France” (Knoop, 14). The French denied the acquisition because it “wouldn’t make enough of a contribution to economic progress to compensate for the risks of distortion of competition in the carbonated, non-cola, on premise soft drinks market” (Knoop, 14). The second misstep was the contamination scare in Belgium. Thirty-Three school children became ill after drinking Coke. Ivester’s response to the incident was late and unsympathetic. Coca-Cola was poor in communication on the problem. The third misstep was in regards to the retaliation on Coca-Cola’s competitors, Pepsi and Schweppes. In a company memo that was sent out, Ivester wanted a “commercial plan to attack Pepsi and Schweppes” (Knoop, 19). This led to Europe’s Competition Commission to take over Coca-Cola’s offices, documents, and computer files to prove Coca-Cola was trying to drive the competitors out of Europe. A fourth misstep was the way Ivester handled management reorganization. He didn’t assign a president, which he was in need of, and he negatively affected ten executives because he “scaled his direct reports down to six” (Knoop, 19). Ivester’s final misstep was how he raised concentrate prices on the independent bottlers. The raised prices were hurting the bottlers and with the company’s mandated mergers many bottlers were left in debt.
How did Ivester approach his transition? What suggestions would you have had for him for a better transition? Ivester approached his transition from being on the executive staff to CEO with a running start and needed to slowly merge into the position. Ivester commented about not wanting to walk in his predecessors shoes and he wasn’t going to spend much time thinking about how his predecessor ran the company. This is where Ivester fell short. He needed to look how Goizueta treated the company and look at the mistakes that were made and learn from them.
What responsibility did his board of directors have in his failing? What should they have done to enable his success? The board of directors of a company has the responsibility to keep a watchful eye on the CEO. They are there to assist and offer assistance whenever necessary to achieve the board’s goals. I believe that Coca-Cola’s board of directors failed Ivester by not being assertive in their actions. Ivester was obsessed with controlling everything and this made him unwilling to take advice. The board should have been more involved in assisting Ivester from the start. If they were more assertive in their assistance I strongly believe he would have taken their advice and maybe...
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