Tesla-Organizational Change Project - (Management)

Running head: RED BULL ORGANIZATIONAL CHANGE 1

Red Bull Organizational Change

Team member 1, Team member 2, Team member 3, Team member 4

California State University, Northridge

Management 450

13599

Dr. Drew Foley

December 5, 2016

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Red Bull Organizational Change

Introduction

Briefly establish the purpose of the report here.

Organizational Analysis Report Summary

After carefully reviewing the Organizational Analysis report for the company Red Bull,

we found that Red Bull has a special type of culture. Red Bull’s culture emphasizes the product.

Just like the drink, Red Bull’s culture emphasizes energy and adventure. This is why the

company focuses on hiring and recruiting individuals whose physical and personal attributes

match what the drink is about. Also, the company’s values include honesty and courage, while

also emphasizing ethical character from top executives to employees. From the report, we found

that this is different than Red Bull’s competitor Rockstar Energy Drink, who places more

emphasis on profit-maximization rather than the development of culture.

In developing the company culture, Red Bull has begun to transition from the product to

a type of lifestyle. Not only do they sell their drinks, but have also started to host several sporting

events, sponsor athletes, created a clubbing scene, and have even made their way toward music,

see Exhibit 1. Red Bull has come up with its own music label and has created a Red Bull Music

Academy. The company has gone about investing into other areas. but has not lost focus in

promoting their unique lifestyle that is sport, adrenaline and adventure.

Throughout the years, changes within Red Bull have been relatively minor, but consistent

with the company culture. They have opted to new marketing techniques, such as social media,

to promote their events to key generations. Also, they have an academy that empowers

individuals with innovative ideas to take action and gives them the resources to take their ideas

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further ahead. Some of the restraining forces mentioned are the success of the energy drink, the

company culture, and the size of the corporation. The driving forces mentioned are the health

risks, environmental factors, and millennial preferences.

Specific Change While Red Bull remains successful in the energy drink business, we believe that there is

one specific change that could benefit the company. Red Bull must transform sectors of the

business that do not encompass the overall theme of Red Bull. They should reorganize the brand

similar to Google’s organization restructure to Alphabet; in which Alphabet became the parent

company of Google (Alphabet website, n.d.), see Exhibit 2. We believe that the media outlets

that Red Bull is attempting to gain footing in, should be rebranded and reorganized into the “RB

Media” spin-off company and operate under a new CEO that will be qualified to take the needs

of the business sector into the right direction. We understand that one of the most important

aspects of business is to be diverse in many ways, however we think that investments in the

media industry will ultimately distract consumers of Red Bull’s drinks. Festival-like activities,

such as the Red Bull hotel, and nightlife scenes sponsored and operated by Red Bull, should be

rebranded and reorganized, and the overall theme of these events should be separate from Red

Bull drinks and be separated off into a “RB Entertainment” spin-off company. This spin-off

company will operate under a CEO that will understand the needs and requirements of the

entertainment industry. While we understand the direction Red Bull is attempting to go with their

brand image, we believe that these types of investments will cloud the image Red Bull is trying

to send to its consumers. With these new divisions, we believe that the overall direction of these

business sectors will be able to operate more efficiently and effectively.

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Extreme sports, sponsorships, and sales are excellent avenues of approach to embolden

Red Bull’s image, as they have had large success in the past in these sectors. Red Bull should

also launch stronger ad campaigns to target larger pools of consumers such as Millennials, and

diversify their athlete sponsorships to include a wider variety of sports such as American

football, baseball, and basketball. With these two approaches, Red Bull could strengthen their

branding image, gain a higher market share in the energy drink business, and be able to

effectively compete with Rockstar Energy Drink and Monster Energy Drink for higher drink

sales.

Implementation

Red Bull is a privately-held global organization that currently has offices in 71

countries. They divide the countries into five regions: Europe, Latin America, Middle East &

Africa, Asia Pacific, and North America (Red Bull Jobs website, n.d.), see Exhibit 3. To

implement the organizational restructuring of Red Bull into three spin-off companies that report

to the parent organization, the process may take three to five years to fully implement across all

countries. The change should start with Red Bull’s primary headquarters in Austria. If the

change started at one of their regional headquarters, it may be construed as if the company is

testing it out to see the results and not as if they are fully committed to making the change. By

implementing the change at their primary headquarters, it shows the entire organization that Red

Bull is dedicated to making the necessary changes to focus on the separate divisions of energy

(drinks, sports, etc.), entertainment (music, nightlife, etc.) and media (television, magazine,

etc.).

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To ensure that the entire organization is aware of the Red Bull’s plan to restructure and

rebrand the organization into specialized spin-off companies, they will be using four step change

process with “Sharing the Vision” framework (Brown, 2011, p. 405). First by “sharing the

vision,” Red Bull will hold a conference with all upper management, leaders in the financial,

legal, and marketing divisions for all 71 countries at Red Bull’s primary headquarters in Austria.

Second, during the conference they will “empower the individual” by giving all members across

the organization an opportunity to provide feedback on the changes and be part of planning

phases before it is implemented in their country. Third, Red Bull will “develop trust” by

explaining that the restructuring does not mean a change in the current culture, it is an

opportunity to provide a dedicated personnel to each unique industry. With the restructuring,

there will be a new CEO for each spin-off organization that is an industry expert, and that can

help improve, expand, and grow Red Bull’s image, standing, and impact in each respective

industry. Each spin-off company will have set goals to meet to evaluate their performance and

reward accordingly. Fourth, they will “reward performance”; Red Bull will reward to its top

performers by providing free V.I.P. admission and travel expenses to various Red Bull’s events.

The driving forces putting “pressure on the organization to change” (Brown, 2011, p.

129) include strong competition in the respective industries. Red Bull Records and Red Bull TV

are not as well-known as many other organizations in their respective industries. Many

consumers associate Red Bull with the energy drink and sporting events, not with music

entertainment or the various media outlets that Red Bull is currently in. By having a dedicated

spin-off company that is solely dedicated to a specified industry, it provides opportunity for

growth and recognition within that industry.

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One of the restraining forces for Red Bull is that it is a privately-held global organization

and has 85 registered organizations throughout 71 countries, see Exhibit 4. This would make the

restructuring of Red Bull into three child companies complicated as each country has different

laws and processes for organizational restructuring. This can be managed by beginning the

organization’s restructuring process at the main headquarters in Austria, then move to North

America, and then each year expand into another region.

There will be some resistance to change as restructuring the organization is a major

change, but there is a low impact to the Red Bull’s current company culture (Brown, 2011, p.

148-149), see Exhibit 5. The parent company will still be managed by Dietrich Mateschitz, the

CEOs for each spin-off company will report to him and Dietrich will work with them to ensure

that the culture and foundation of Red Bull’s motto of “giving you wings” does not

change. Since Red Bull will just be restructuring their organization and have dedicated

management focusing on their respective industries and the growth of the company, the

resistance to change can be managed. Management will have to keep an open dialogue with all

employees to inform them that the restructuring will not mean downsizing, but instead will mean

growth within each new company.

Desired Outcome

With these new changes being implemented we want Red Bull to be the number one

energy drink people purchase. By separating different sectors of the company, Red Bull will be

able to focus its energy on promoting the drink without having to worry about the other aspects

of the company. Once the company is focusing on its drink by associating it with various types

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of sports and not just on extreme sports, Red Bull will attract new types of people and increase

its customer base.

To keep track of the success of the change, we suggest giving each spinoff company three

goals they will need to accomplish. Each spinoff company will have a short, medium, and long

term goal. For instance, when it comes to the energy drink sector of the company, the short term

goal will be to begin working together with other companies around the world focusing on the

sale of the drink. By the end of 2017, all companies focused on the drink will be connected and

collaborating on its sales. The median goal would be to have a wider variety of sports involved

as well as various famous athletes promoting the drink, and the long term goal will be to increase

sales and customer involvement and satisfaction. This goal should be accomplished five years

after the initial change was made. This will also be tracked for each section under the three

sectors. Based on these results, it will be decided whether to keep the sections such as the Red

Bulletin or Red Bull TV.

Call to Action

Red Bull has emphasized that their culture is more than the drink or business profit. Red

Bull has hired and recruited individuals that attribute their personality with the drink. Also, Red

Bull has sponsored individuals who are willing to break world records, or have broken world

records like the world record jump by Felix Baumgartner on October 14, 2002 who jumped

128,100 feet from a helium-filled balloon ("Freefall," 2012). Red Bull has adopted new areas of

opportunity like the media and entertainment industries because they want to excel at everything

and not just breaking world records or sponsoring athletes. Red Bull has moved into different

lifestyles that include the Red Bull Academy, nightclubs, radio, and much more. However, to be

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the best in the media and entertainment industries, Red Bull will need to adapt to each of spinoff

companies by re-organizing. Adapting to the spinoff companies will not only recruit the

appropriate CEO for every segment, but they will ensure that the Red Bull culture will continue.

By separating different sectors of the company Red Bull will also be able to focus in promoting

the energy drink without concern about the other aspects of the company. Red Bull spinoff

companies will have three goals that they will need to accomplish. Additionally, Red Bull will

continue to focus on their culture in a more effective and organized way, consequently Red Bull

will accomplish to be number one at everything and not just a drink. With this call to action we

believe that this will take Red Bull into the right direction, leading the company to a prosperous

and profitable future.

Exhibit 1: Current Red Bull Organization Chart

http://energydrink-us.redbull.com/en/red-bull-history

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Exhibit 2: Red Bull Organization Restructure

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Exhibit 3: Red Bull’s Organization Office Locations and Regions

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Exhibit 4: Red Bull’s Current Globally Registered Organizations

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Exhibit 5: Change Model for Red Bull

(Brown, 2011, p. 148-149)

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References

Alphabet website. (n.d.). https://abc.xyz/

Brown, D. R. (2011). An Experiential Approach to Organization Development (8th ed.). Saddle

River, NJ: Pearson.

Felix Baumgartner Breaks the Speed of Sound in Freefall. (2012). Retrieved from

http://www.redbullstratos.com/the-mission/world-record-jump/

Red Bull History website. (n.d.). http://energydrink-us.redbull.com/en/red-bull-history

Red Bull Jobs website. (n.d.). https://jobs.redbull.com/us/en-

US/results?utf8=%E2%9C%93&term=&all_regions=true&function=&job_type=&organi

sation=&region=&country=&state=&city=

Segal, D. (2012, March 18). Chaleo Yoovidhya, Who Created Red Bull Beverage, Is Dead. The

New York Times. Retrieved from http://www.nytimes.com/2012/03/19/business/chaleo-

yoovidhya-dies-created-red-bull-energy-drink.html