Sample Case Study on Coca-Cola’s Current Ethical Issues

Introduction

Coca-Cola Company is one of the largest establishments in the world that manufactures soft drinks. The company has established many branches all over the world with the coca cola brand being known worldwide due to the excellent distribution network. The company statistics estimate that over one billion of the company products are consumed daily around the globe, which has enabled the company to excel in all market dimensions. Coca-ColaCompany has demonstrated strong product orientation in the market by engaging in tactical decisionmaking and considering good practices that are aimed at attracting, meeting consumer demands and retaining the customers.

The company strategic plans have offered it an advantage over other competing firms in the market by having the larger market share (Fernando, A. 2010, 94). The advantage over other companies has since given the company much confidence in the market hence, the firm has engaged in various questionable behavior and gross misconduct over the past few years. The realized challenges are based on the ethical lines that have imposed considerable impact on the company economic performance, stakeholders trust and slowing down the companyproduct sales.

The coca cola company has been alleged of engaging in behaviors that are unethical activities that are not corresponding to the social standards. In the city of Varanasi, East India, the Coca-Cola bottling plant has been accused of damaging the groundwater resources in the area (Li&Bernoff.2011, 117). The company has donemuch water extraction in the wells and at the same time, contributing to water pollution in the region. In New York, the company plant bottle packaging, according to the consumer protection officials argue that the enterpriseexaggerates the goods environmental benefits that are lacking evidence. Apart from environmental, ethical aspects, the company also suffers from social responsibilities that arerelated to labor laws working conditions.

Honesty and trust for the coca cola company has always been good as one of the major ethical issues that measure the corporation of an existing industry. The ethical issues, which are affecting Coca-Cola Company arise because of leadership or governance failure in implementing the expected social responsibilities (Rnando, A. 2009, 28). The management decisions to operate using their company rules without considering the social and environmental effects put the company at risk in conducting operations and maintaining consumer’s trust. The company has engaged in the Environmental violation that was realized in the year 2003 and 2004.The coca cola products packaged in India were found to be containing pesticidesafter being processed using contaminated the ground water.

The discussions in thepaper will look into three current ethical issues that affect the coca cola company operations in Mehdiganj plant closure, Plant bottlegreenwashing, and Chinas working conditions. The increasing moral obligation for Coca-Cola Company has affected the performance of the firm and the general environmental sustainability of the entire industry across the globe (Bolman& Deal. 2013, 162). The discussions are based on the ethical theories that will are applied in the evaluation of the coca cola company strategies and position in the market. The three approaches that are considered include meta-ethics, normative ethics, and applied ethics.

Mata-ethics

Meta-ethics is business ethics that will try to examine the kind ofethical prosperity and moral statements, including attitude, declarations, and judgments that are applicable to the coca cola company. The businessprinciplesaddress the correct actions to be taken by the business dealings and those actions that are wrong and may affect the company or the consumer using the company products. The coca cola company has been known to be engaging in business dealings that take good care of the environment, considering the packaging materials that they use. The research in the market reveal that the packaging resources that are being used by the company are not meeting the environmental standards and the company is exaggerating the environmental benefits of the materials without giving proofs. The bottle that is used to package the drinksis said to be partly made from plant-basedmaterials whichdo not meet the impression of the product.

According to Henrik saugmandsgaard, the Danish consumer, the company is only using the writings as a marketing tool but not for the benefit of conserving the environment. The bottling plants use symbols and claims that are not documented as environmentally friendly. The coca cola company has been greenwashing the public by providing false information while making gains out of the activity. More evidence revealed that the company has been paying little attention to protecting and conserving the environment by using materials that are not friendly to the environment (Rnando, A. 2009, 184). Despite the company having recyclable logo  and statements that depict that the packaging materials are environmentally friendly, the bottling plant has no proofs that the commodity have no undesirable impact on the environment.

Kristian Jorgensen, forest of the world spoke person argue that the coca cola company has gone against the set guidelines for fair and perfect marketing strategies that are relating to the environmental conservation and protection. The argument that is brought forth in defense for the allegation is that the plastic bottle that is being used for packaging is made of plant-based materials as compared to the old plastic bottles that isproduced from petroleum and other fossil fuels.

The plant bottle basic state the variance that exist between the percentage of the plant –based material that has utilized in the manufacturing of the plastic bottles that exist in other markets. According to the plantbottle, the plastic bottle consists of 30% plant-based material and also state that the bottle is 100% recyclable. The percentage stated in the bottle composition cannot be justified and is unclear to the consumer.

In response to the greenwashing allegations, the coca cola company came in the defense of the plant Bottle packaging (Li&Bernoff. 2011, 127). The general manager of the plant Bottle packaging program said that the detractors are taking advantage of the report to pull down the effort by the company to complying with the environmental standards. Concerning the governance statement, Coca-Cola Company is striving to produce products that are environmentally friendly and engage in dealings that reduce carbon footprints.

The coca cola bottling plant was established after a proper research has  been conducted that considered environmental aspects. The plant bottle has the benefits of reducing the carbon footprints that have animpact of the global climate change. The plant bottle ensures transparency in all its dealings and the coca cola veterans are working handy to ensure assurance and viability of the jobs being undertaken  (Wahlen, Jones&Pagach, 2013, 321). The company is keen in maintaining its image to the public hence would not engage in deceptive information that would damage the public relations. The company involves third parties such as Imperial Collage of London to carry out research and development for the plant Bottle Company. The company commitment to taking part in the environmental conservation is displayed in the bottle as recycle logo and the excess green effects.

 

 

Normative ethics

Normative ethics in the business operations take into account the actions that Coca-Cola Company should engage in by adopting some ethical evaluations while rejecting others that are not in accordance with thebusinessprocesses. Coca-Cola Company should adopt the utilitarianism as a branch of normative ethics while engaging in its daily operations. Through the adoption of the utilitarianism, the company will be in a better position to get the community support hence creating good ties with the locals. The company has gone against some of the established principles hence losing community support. Through the adoption of utilitarianism, Coca-Cola Company will be seen as considering the local demands and expectations.

According to the code of business ethics and Kantian ethics, Coca-Cola Company is expected to engage in good actions and those that are in line with the cultural values. Being a multinational company, the company is expected to take lead action in ensuring environmental sustainability. The act of establishing Coca-Cola companies had good intention of job creation, promoting economy and other benefits that result from the company existence. The company,therefore has the responsibility of maintaining and achieving the good intentions.

Coca-Cola companies are operating under virtue ethics that define the righteousness of the company to the people. In this case, Coca-Cola Company has taken the responsibility of compensating the employees working in hardship areas such as China. Social responsibility is mandatory for industries, as defined in the Deontological ethics. The Coca-Cola industry is expected to provide a good working environment for the employees. Paying workers to go work in the polluted environment is not an appropriate action that the company should engage (Li&Bernoff, 2011, 231). Providing environmental hardship allowance to coca cola employees in China may be good examples of consequentialism Ethics. The Company only considers its operation, making profits or value of their products.  Looking at the long-term effect of working in the polluted environment, the employees will definitely spend the allowances in treating the chronic related illnesses. The Coca – Cola company focus is only on maintaining and keeping the company operational.

The Coca-cola companies being well known I beverage, the company is expected to apply intuitionism. The company should also engage in cleaner production, which is aimed at managing and controlling all the sources of polluting and sustainable development in all part of the continent. The company brand is known all over the globe hence the company should use its products to drive environmental change along ethical lines. The company should engage in restoring the depletedenvironmentthan sending people to go work in the polluted environment (Fernando, A. 2010, 271). It is imperative for the business to consider the employeesworking conditions. Providing huge allowances and better medical insurances may not be adequate than restoring the depleted environment.

The employees will also not be in a good condition to deliver for the company if they are sick with respiratory infections. Industrialization is the contributor to global climate change by releasing greenhouse gasses to the atmosphere. The existing industries, such as the Coca-cola companies and other companies should stick to the truths a well as being in the forefront to managing the environmental impacts caused by people. Through the application of Intuitionism ethics, the coca cola company is expected to apply the principle while making honest decisions so as to overcome the accusations plotted against the company.  .

Applied ethics

Applied ethics examines the correct actions that are morally right to the company and the society in anattempt to overcome the alleged challenges. Environmental factors are the majorconcern in the applied ethics when carrying out daily operations at the existing coca cola companies (Bolman& Deal. 2013, 49). The coca cola bottling plant located in Mehdiganj in India has faced many challenges relating to environmental aspects in the society. The bottling plant that is located in the remote and agrarian area, close to the city of Varanasi, East India has been faced with underground water pollution.

The coca cola bottling company has been blamed for extracting underground water and at the same time, polluting water and soil in the region. Water is important resources that need to be conserved because the local people residing in the area depend on the water for domestic purpose. The coca cola bottling plant has been targeted since 2003 for mismanagement of the water resource that the local also depend on for irrigation as the significant economic activity for the people in the area (Rnando, A. 2009, 163). The locals have proposed for the plantshutdown since it does not meet the required environmental sustainability needs.

According to the report, the Coca-Cola bottling plant has failed to meet the company code of business conduct by failing to meet the social demands on environmental protection. In the company code of business conduct, the company is mandated to embrace the principle of honesty and integrity in performing the daily operations. The coca cola ethic and compliance program stipulate the procedure and responsibilities that the company management team are expected to follow and carry out assessment and evaluations. Corporate responsibility in conserving the environment is a crucial factor for any company that is sharing a natural resource by indigenous people (Ferrell, Fraedrich& Ferrell. 2010, 304).

The coca cola bottling company in Mehdiganj has been accused by the local residents, who have tabled evidence to prove a fact that the establishment and operation of the industry has resulted in the depletion of the underground water in the area. The residents claim that the functioning of the plant has ledin wells and ponds running dry since the company is the only existing large-scale consumer of underground water in the region.  The case made for Coca-Cola Company by pollution regulatory agency that wad demanding for the shutdown of the coca cola bottling company provide some of the evident supporting their grievances (Fernando, A, 2010, 281). According to the pollution regulatory agency, the bottling company has futile to conformwith the terms stated in the license.

Agricultural water vs. Bottled water is evidence being brought for in the case targeting the coca cola bottling company. According to the argument, water that is being utilized in the agricultural field for irrigation is being restored back to the water aquifers hence will not affect the water quantity (Wahlen, Jones&Pagach, 2013, 48). On the other hand, water, that is being extracted by the company for bottling purpose, does not get back to the ground because it is transported to other areas and sold for profit.  The local community if Mehdiganj protest project the problem  being transferred to the future generation that will see them ran out of water as an essential resource. The rising matter in the case is that the Coca-cola bottling company has neglected the responsibility of carrying out sustainable development in the region. The company has concentrated in making profit and continuing with its operations without considering the effect that the company has on the local community.

According to the code of business principle and code of ethics, the company is expected to be transparent in is operations by publishing the water consumption and how the wastes generated by the companyis handled(Bolman& Deal, 2013, 274). According to the reports, the ration of water being extracted to the quantity being used in packaging reveal that more water is being lost in the form of wastewater. In the year 2004, the bottling company extracted twenty million liters of water but only used five million liters for packaging. The fifteen million liters was unaccounted for hence discarded as wastewater. The data in this case has portrayed the bottling company as being wasteful for not maximizing the use of the extracted ground water. The water being disposed of, as wastewater is also not fit for local consumption since chemicals from the plant already contaminate it.

The coca cola bottling company further pollutes the environment by channeling the contaminated water into river Ganges as some of the effluents leach into the aquifers thus polluting the ground water. Sample collected by Central Pollution Control Board of India in 2003 revealed that all the nine coca cola companies in the country are non-compliantwiththe hazardous waste rules and regulations in the country.The company has since been found guilty of affecting the public health by releasing toxic substances in the environment (Fernando, A. 2010. 203). Some of the toxic components realized in the waste include heavy metals such as lead, chromium, and cadmium, which pose ahigh threat to human, and animals in the region.

In response to the allegations, the coca cola company engagesin public relationsto win back the public trust and enable the operation of the company in the region. The company has organized corporate responsibility campaigns to convince the public that they are taking responsibility in conserving the underground water resources. The company has engaged in rainwater harvesting that is being used to recharge the ground water. The effort to winning back the public trust has however been faced by opposition. The public claim that the rainwater-harvesting program is not in full operation and the harvesting facilities are not maintained to the expected standards. The harvesting facilities are not adequate to meet the social demands of the people in the region and to meet the production demands of the company.

In general, the entire Mehdiganj communities are irritated by the performance of the coca-cola bottling plant hence demanding for its shutdown. Shutting down the plant may not be a solution to the society because there are some of the community members that are employed to work in the plant  (Wahlen, Jones&Pagach, 2013, 127). The solution for maintaining the company existence and smooth operation is for the governance team to take charge of complying with the set standards. The plant has to ensure cleaner production and ensure sustainable use of the water resource. The water that is being extracted by the company should be used efficiently, and proper record be maintained for monitoring purposes.

The coca cola bottling plant can establish a water treatment plant so that all the wastewater is being treated before being discharged to the environment. The plant can also reclaim some of the treated water and reuse it for cooling and cleaning purposes in the factory. Since the community has lost trust in the company, the “polluter pay” principle should be applied to the bottling company.

Conclusion

Ethics in business is aglobal issue of concern in the current economic world. Coca-Cola being one of the largest and well-known companies in the world has to deal with different kinds of ethical issues such as conflicts, rights and responsibilities. Coca-ColaCompany has to deal with the social responsibilities that ensure total respect to the employees’ rights and complying to the national policies of human rights. The existence of Coca-Cola Company depends on the governance commitment to comply with the company product allocation in different parts of the world. The company should develop training programs for the labor force so that they fully understand the company code of business principles (Bolman& Deal, 2013, 127). The company has a big market share in supplying beverages;hence, the company interacts with people of different ethnical backgrounds. The company has different departments that handle different responsibilities. It is the accountability of the authority team to ensure that all the departments are complying to the company and national rules and regulations.

Some of the major departments that are closely monitored are the sales, production, and branding. The departments are in close connection with the consumers and the local communities (Ferrell, Fraedrich& Ferrell. 2010, 206). Sales department must ensure that the consumers are not exploited in terms of price setting. Production department must ensure that the company attains cleaner production and that the company is not violating the ethical, and environmental issues established. Branding department must ensure the information in the packaging bottles is reliable for public understanding.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

Bolman, L. G., & Deal, T. E., 2013.Reframing OrganizationsArtistry, choice, and leadership.San Francisco, Calif, Jossey-Bass.

Fernando, A. C., 2010. Business ethics and corporate governance. Delhi, Dorling Kindersley (India), licensees of Pearson Education in South Asia.

Ferrell, O. C., Fraedrich, J., & Ferrell, L., 2010. Business ethics: ethical decision-making and cases: 2009 update. Mason, OH, South-Western Cengage Learning.

Li, C., &Bernoff, J., 2011. Groundswell: Winning in the world transformed by social technologies. Boston, Mass, Harvard Business Review Press.

Rnando, A. C., 2009. Business ethics an Indian perspective. Chennai, Pearson Education.

Wahlen, J. M., Jones, J. P., &Pagach D. P., 2013.Intermediate accounting: reporting and analysis. Mason, OH, South-Western Cengage Learning.