The Coca-Cola Company Struggles With Ethical Crisis

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Delineate the Ethical Issues and Dilemmas the Company Faced

Each company is required to adhere to some laid down ethics when engaging in business. Without ethical regulations, business would be carried out in very unclear circumstances. Companies that have the ability would aim at maximization of their profits without taking into consideration effects of their activities on other stakeholders.

On the same note, environmental protection and affairs of the common person will be given minimal priority if any. The laid down ethical standards are therefore designed to ensure that issues of other stakeholders are protected. Coca-Cola’s activities have been found to violate the ethical requirements in various instances.

To begin with, Coca-Cola has been associated with the production of contaminated products in various countries. The first case was reported in1999 in Belgium where the product caused illness in several children. Cases of contaminated products were also reported in France and Poland. These cases were occurring when Coca-Cola was insisting that its production system was perfect and every product was of high quality.

On the same note, Coca-Cola was reported to have anti-competitive prices in some European countries. It is important to note that Europe has very tough antitrust laws which Coca-Cola was breaching. In Italy, Coca-Cola was accused by PepsiCo and Virgin Cola for using rebate and discounts in the strategies to increase its sales. On the other hand, its planned acquisition of Cadbury Schweppes had to be stopped because it was against the antitrust laws of France.

Additionally, Coca-Cola has been blamed of having discriminatory practices against minority employees. Minority groups complained that promotions, payment and performance evaluation was tailored against them. Management had knowledge of these practices since 1995 but had chosen to remain quiet while the vice continued.

In Columbia, it has been said that Coca-Cola mistreats its employees especially those that belong to labor unions. The death of some employees and death threats to others, which has made them go into hiding, has been cited to support these claims.

It is ethically required that any business organization should give its true and fair financial position to the public. However, Coca-Cola compelled bottlers to buy more stock than they required thus inflating their sales and reporting higher profits than the company actually made.

This misrepresentation can misguide investors to invest in the company on the hopes that the company is stable in the long run. Though respect of contracts with various stakeholders is vital, Coca-Cola has never completely upheld this. The Company has been taken to court for breaching its contracts with its distributors.

Additionally, Coca-Cola does not reveal all the information concerning the health effects of its products. It has been noted that though Coca-Cola sales its products as being healthy, they have some health side effects that are critical. Moreover, Coca-Cola Company accepted having a problem with its waste water in India where it was releasing contaminated water. On the same note, the company was also accused of using contaminated water in its plants.

Determine which of the issues was the most significant and explain the reasons

Arguably, the worst ethical scenario that Coca-Cola was involved in is that of selling contaminated products. The contaminated products caused illness to children in Belgium. On the same note, France also reported cases of people who became sick after consuming contaminated coke.

Contaminated products can lead to loss of lives or other severe health conditions and the legal repercussions in such instances are quite serious. It should be noted that this could lead to permanent closure of the company. Similarly, contaminated products raise questions about the production process of a firm. Furthermore, if contaminated products get out of a firm it means that quality control measures of the firm are questionable (Shaw, 2010).

Similarly, presence of contaminated coke products in the market could be interpreted to mean that health standards are not given priority in the company. This can adversely affect demand of the company’s commodities thus reducing its sales. The recalling of the products is also costly as the company has to incur all the expenses related to the activity.

Discriminatory activities are also very serious to be practiced by any company. In many nations, discrimination of any form has been prohibited by law and there are penalties if the same is breached. Additionally, discrimination practices depict a company as being unwilling to uphold the principle of equality. As a result, potential employees will be unwilling to apply for job opportunities in the firm.

This means that the firm will miss very many good talents that would be helpful in the future of the company. Similarly, there is a high tendency that current employees will leave the firm and move to firms where they will be treated fairly. Increased employee exit from a firm is costly because the firm will have to continuously train new people. Morale of employees is also affected by discriminatory practices and this reduces output of the company (O. Ferrell, Fraedrich & L. Ferrell, 2012).

Determine the Steps that Should have been Taken to Prevent the Issues Identified

For the case of contaminated products, Coca-Cola should have put in place quality control measures to ensure that all the products leaving its plants meet the required quality standards. It should be made part of the organization policies that always all products should be tasted to ensure that they are of high quality before releasing them to the market.

Each production step should be carried out carefully while maintaining the highest level of hygiene. On the same note, Coca-Cola should have ensured that all laws and regulations of any country in which it has activities, are followed to the latter to avoid being sued. This will minimize cases of the company going against laws when marketing or advertising its products (O. Ferrell, Fraedrich & L. Ferrell, 2012). It would be prudent to have local legal advisors who will ensure that everything is according to the law.

The company should have ensured that equality is upheld always. Payment should be based on the academic qualification of employees and their experience. Moreover, promotions should be given on merit.

Using a panel that is composed of people from different backgrounds would have been essential in ensuring that the color of a person would not be used to discriminate against him or her (Mackavey, 2006). On the same note, there should be laid down rules that should be followed when carrying out a performance evaluation and the same criteria should be applied across the board.

Holding discussions with various stakeholders is very essential in avoiding conflicts before implementing any policy. Consequently, Coca-Cola should have ensured that consultations were always carried out and this would have eliminated the problem they had with the distributors concerning delivery of Powerade to Wal-Mart.

Furthermore, there was no need in the first place of giving false financial information to the public knowing that eventually the truth will be known. Coca-Cola should have therefore adhered to the international financial reporting standards (Shaw, 2010). This would have eliminated the problem of misrepresentation which is against Securities and Exchange Commission requirements.

Environmental sustainability should be among the priorities of any firm. Policies should be instituted to ensure that environmental pollution is eliminated. In this regard, Coca-Cola should have ensured that waste water treatment channel was complete before opening any plant for activities.

Moreover, it would have been vital to recycle water in areas where there is scarcity of water. Furthermore, engaging the local communities in issues that affect them will go a long way in ensuring that conflicts with the local people is avoided. Over and above, business code of ethics should be the guide of Coca-Cola in any business activity that they carry out (O. Ferrell, Fraedrich & L. Ferrell, 2012).

Analyze how Coca-Cola responded to the crisis and Determine it was the Best way or not

Of course Coca-Cola did not just keep cool when the ethical dilemmas were unfolding; it took steps though some were not equal to the problem. In the case where Coca-Cola was accused to breach its contract with the bottlers, it settled the matter by reaching an agreement where guidelines were issued on where delivery to Wal-Mart could take place.

Nonetheless, the action came rather too late when reputational damage had taken place. Coca-Cola should not have left the matter to go this far. Management should have held talks with the involved bottlers to settle the matter. The delay in taking necessary actions ended up exposing Coca-Cola as a bad company (Shaw, 2010). Ensuring that the relationship with all stakeholders is good all the time should be a priority of an interlinked company like Coca-Cola.

Coca-Cola thought the issue of contaminated products in Belgium was minor and did not act immediately. This was a very wrong move. Human live is human live whether it is one person involved or the whole community. It makes no difference whether it is children involved or adults.

Immediately the first case was reported, Coca-Cola should have moved into action to investigate the problem. This could have sent a signal to the public that the company is very concerned with the welfare of its customers thus ensuring that the customers remain loyal to the company. Management should have addressed the media as quick as possible to avoid spread of negative information during this period (Mackavey, 2006).

It was not sufficient that Coca-Cola waited until its employees moved to court in order to address the discriminatory claims. This showed how unwilling the firm was to address the issue. Policies to counter discrimination should have been instituted from the very moment it was realized that discriminatory activities took place.

Moreover, action should have been taken to the managers under whose watch discrimination had thrived. It does not help setting up a committee that will take forever before giving any feedback. Situations like this require rapid and immediate actions (O. Ferrell, Fraedrich & L. Ferrell, 2012).

In India where the problem of water has been the issue between Coca-Cola and the local community, the company should have found ways of negotiating with the locals. The firm just assured people that it had an alternative pipeline and made no efforts to ensure that the toxins are contained. Instead of contemplating to recycle water used in the plant, the option of relocating could also have been explored. The company should have ensured that contaminated water does not leave its plant under any circumstances.

References

Ferrell, O. C., Fraedrich, J. & Ferrell, L. (2012). Business Ethics: Ethical Decision Making and Cases. Mason: Cengage Learning.

Mackavey, M. G. (2006). Practicing Ethics in HR: Where’s the Action? Journal of American Academy of Business, 9(2), 244-249.

Shaw, W. H. (2010). Business Ethics. Stanford: Cengage Learning.

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