HR Restructuring ofCoca-Cola & Dabur

Aditya Kohli B03

Parth Khurana B15

Vigneshwar B29

Shusank Parihar B39

Ajinkya Thorat B51

Mitali Barot B63

2

WHY WAS IT NEEDED?

CAUSE

• 4 CEOs replaced within 7 years.

• Huge losses and heavy employee attrition

• Negative mass media information

IMPACT

• Arch rivals: Pepsi making

•  Write off assets worth $ 405 million

• Corruption and Rule Violation

3

THE COCA-COLA WAY- HR RESTRUCTURING

• Merging of four bottling operations in 1999

• Two new companies -Coca Cola India and Coca Cola Beverages

• Plant Incharge became Profit Centre Head

• Regions increased from 3 to 6

• People driven company

• VRS system

• Talent development

• Salary restructuring and Cutting Expenses

4

ISSUES DURING RESTRUCTURING

• Reports received for wrongdoings in North India operations

• Large number of employee resigning due to regionalization including Senior managers

• Violation in discounting terms and the credit policy

• Unexplained cancellations and re-appointments of dealerships

• The manager who quit or were sacked claimed the company to be farcical and the company was already planning to get rid of them

5

MAJOR CHANGES AFTER RESTRUCTURING

• Talent development

• Inculcate feeling of belongingness in employee

• Setting up hierarchy in a proper manner

• Standardized the discounting limits and best practices

• Launched a major IT initiative

 STRENGTHS

The strength of Brand Position as the largest beverage company Incomparable promotions Sponsors of main events Wide distribution globally Improved packing and new products Customers loving coco cola(Brand loyalty) Large involvement in CSR activities

 WEAKNESSES 

Diminishing performance in markets Health issues regarding carbonation Some promotions presenting negative image Less diversification-Only in FMCG 

 OPPORTUNITIES

Drinking water issues- high demand for bottled water

Rise of beverage as style quotient Ability to promote anything along with. Potential expansion to many third-tier

countries Mergers and acquisitions

 THREATS

Strong competition ( from Pepsi) People becoming more health conscious Different countries having different

regulations Demand and trends changing frequently Inflation, economic slowdown and instability

S W O T

INTRODUCTION TO THE PROBLEM

• Family oriented work culture

• Higher net working capital

• Low return on Net worth

• Low operating profit margins.

RESTRUCTURING PLAN

Burman’s tacking back seat and appointing a CEO to run Dabur

To concentrate on few businesses

To improve the supply chain and procurement process

To reorganize the appraisal and compensation systems

SOLUTIONS

Outside professionals were appointed

Annual Sales conferences and cash incentives to Junior level sales officers

Performance Appraisals and compensation planning was based on KPAs

BUSINESS UNIT HEADS• Health Care• Personal Care• Ayurvedic Specialities• Ayurvedic Veterinary• Pharmaceuticals• Oncology• Foods

FUNCTION HEADS• Operations• Supply Chain• Purchase• IT• HR• Packaging Development• R & D• Quality Assurance• Finance & Accounts• Corporate Communications

AFTER RESTRUCTURING

CEO

Management Committee

Board of Directors

AFTER EFFECTS

• Overall ‘feel good’ sentiment

• Increased Employee efficiency and morale

• Increased sales from Rs. 9.14bn in 1998-99 to Rs. 10.37bn in 1999-00

• Increased profits by 53%

 STRENGTHS

Strong brand Performance Appraisals and

compensation planning was based on KPAs(Key Performance Areas)

Cash incentives to Junior level sales officers

Improved morale of employees

 WEAKNESSES

Price to Earnings(P/E) Ratio was less prior to restructuring

Low return on Net worth Inefficient organization

 OPPORTUNITIES

More competitive environment can be created

Expansion (merger and acquisition)

 THREATS

Increasing competition Increasing bargaining power

S W O T

THANK YOU!