Control mechanisms are necessary in order for any business to run smoothly and ensure that things are going as planned. These controls help the business determine the activity and direction of its employees in a manner that helps the company meet its goals (Bateman & Snell, 2007). There are three basic types of controls: bureaucratic, market, and clan. Bureaucratic control basically consists of the formal rules and regulations that establish authority, set standards, and regulate behaviors (Bateman & Snell). Market control regulates activities by examining the competition, analyzing profit and loss, and utilizing economic information (Bateman & Snell). Clan control differs from the previous two controls in that there are no formal rules, regulations, or analysis. Clan control functions under the assumption of common goals, values, and trust among individuals and the organization (Bateman & Snell).
Like most businesses, the Coca-Cola Company has a system of control mechanisms in place to help guide the activities of its employees. One bureaucratic control mechanism that is utilized by Coca-Cola is an audit. Coca-Cola’s Audit Committee Charter is responsible for ensuring the integrity of financial statements, overseeing internal financial controls, and evaluating the company’s internal audit function (The Coca-Cola Company, 2008). Another bureaucratic control is the Code of Business Conduct, which guides the actions of the employees in a manner that is consistent with the company’s values. “The Code helps our people do the right thing and play by the rules wherever we operate around the world” (The Coca-Cola Company, 2008).
In addition to these bureaucratic controls, Coca-Cola also utilizes market and clan controls. One way the company uses market control is by breaking into smaller business units based on geography and product. For example, they have a North American business unit as well as a Bottling Investments business unit (The Coca-Cola Company, 2007). Each year, the economic information from each of these units can be analyzed to make decisions regarding future activities. Coca-Cola utilizes clan control by assuming that all employees share a passion for the organization and will use their creativity and innovation in a manner that helps the company achieve its goals. This is exemplified by their career slogan, “One Company. One Team. One Passion.” (The Coca-Cola Company, 2008).
Some controlling mechanisms work better than others, and the controlling functions at Coca-cola are no different. There are similarities and differences between each controlling mechanism associated with Coca-cola. An example is the aspect of ethical behavior shared with an audit and the Code of Business Conduct. Even though the two aspects are different, they still encompass a similar value, integrity. A person’s integrity could be questioned by both an audit or by being compared to the Code of Business Conduct. A huge contrasting view of the two is that a financial audit is a lot less personal than being evaluated to the Code of Business Conduct. Another likeness in the controlling function of Coca-Cola is the company’s division into multiple branches and the clan control aspect. These two are similar because each branch affects another group of people and clan control is an inherent entity in each branch. When a company branches out like Coca-Cola, they ultimately include new people and cultures in what they are trying to accomplish. A difference here is that even though both include people’s interests, the new people that are hired may not necessarily buy into what the company wants. This could lead to a high turnover margin when it comes to personnel, which disrupts continuity within the company. Although the company uses control mechanisms, they are not exactly alike but can work in conjunction with each other and make the company more successful.
Control mechanisms have...
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