In recent years, The Coca-Cola Company (KO) is facing decreased global demand for its soft drinks due to customer health concerns about the sugary drinks. It has responded to decreased demand with a variety of ways, including cost cutting measures. In October 2014, Coke announced a $3 billion cost-cutting effort that would impact the entire global organization. (Trivia: Coke sells Coca-Cola in every country in the world except for Cuba and North Korea.) In January 2015, Mike Esterl of the Wall Street Journal reported that Coke is using zero-based budgeting throughout its organization (Wall Street Journal, Coca-Cola to cut 1,600 1,800 jobs globally, January 8, 2015). In addition, Coke is standardizing operations across its business units. It expects to complete the cost-cutting by 2019.

Questions

1.Why might Coca-Cola want to use zero-based budgeting?

2.Do you expect that managers at Coca-Cola would embrace zero-based budgeting? Why or why not?

3.Why would standardizing operations across business units help with cost-cutting?