The Coca-Cola Company Struggles with Ethical Crises - Essay Example

? The Coca-Cola Company Struggles with Ethical Crises al affiliation Introduction Coca-Cola has been one of the most revered companies globally that has curved a niche for itself in the business world as the leading beverage company. Despite this, the company has faced a lot of ethical challenges that have threatened to slander the company’s name. Delineate the ethical issues and dilemmas (as found in Chapter 3) the company faced. In 1999, the Coca-Cola Company was faced with allegations that its products were contaminated after approximately thirty children from Belgium fell ill, following the consumption of Coke products. The Belgian government ordered Coca-Cola to recall all its products, a move that was also witnessed in the Netherlands and Luxembourg. Coca-Cola at first underestimated the gravity of the matter, and took several days before correcting the situation or even going to the press about the issue. As a result of this delay, other people continued to suffer from the contaminated products, which had been determined to be the result of a consignment of carbon dioxide that had been improperly processed. France also reported about a hundred people had become ill after consuming coke, which led to all Coca-Cola products being banned from the country (Ferrell, Ferrell & Fraedrich ,2011) . The situation escalated and culminated in December the same year, when Belgium ordered Coca-Cola to halt a campaign it had launched to re-introduce its products in the country. Coca-Cola market eminence in Europe reduced significantly after this scandal, due to the incapability of the corporation to handle the cases professionally and with the seriousness they deserved. Coca-Cola was also accused of unfair competition in the international arena especially in European countries. In 1999, Coca-Cola sought to expand its market in France by trying to purchase a beverage company. The government intervened and stopped Coca-Cola from acquiring the company, under the antitrust laws of the European Union. Other countries such as Italy also accused Coca-Cola of anticompetitive prices and won a case against the company on the same. Other companies such as Pepsi also accused Coca-Cola of using discounts and refunds to get more consumers, something that was against European laws. Allegations of racial discrimination also plagued the Coca-Cola Company in 1999, after about 1500 employees of African-American descent sued the company on grounds of racial discrimination. The employees complained that favoritism was evident, in terms of payment, performance analysis and promotion. These allegations caused a lot of unrest in the company, and Coca-Cola had to pay 193 million dollars to settle the case (Griffin & Moorhead, 2011). Another case was in store for Coca-Cola, when it was accused of shipping more inventories to its supplies before a quarter was over, against business law. Afterwards, the company would count the shipments as sales, despite such goods remaining in the warehouses or being returned. These sales were then counted as revenue, thus creating the impression of a strong company, therefore, fooling investors who believed the inflated profits. Distributors of Coca-Cola products in the U.S sued the company in early 2006, after the company started using delivery agents to supply its products to warehouses. This move according to the distributors was against antitrust laws, and Coca-Cola had to find a way to settle this dispute. In Colombia, accusations surfaced between 2001 and 2004 that Coca-Cola had been intimidating its employees since 1989. Statistics showed that eight workers had died, 48 forced into hiding, and 65 issued with death threats in the Colombian bottling plant. The workers union sought compensation for the affected families, although Coca-Cola maintains that these allegations were unfounded. In India, the Coca-Cola subsidiary was accused of using contaminated ground water to make soft drinks, resulting in excess levels of pesticides in these drinks. In addition to this, Coca-Cola was also accused of contaminating ground water with waste water from its processing plant. According to Fernando (2010), this toxic water was believed to lead to water depletion in areas where it was released, leading to drought, thus affecting the lives of Indians, especially farmers. Lastly, Coca-Cola was taken to court by the Australian commission for competition and consumption. This was after the company had conducted a campaign urging parents to give their children diet coke, as it was good for one’s health. Both dentists and obesity experts had filed complaints against this campaign, arguing that the company had not indicated the correct amounts of caffeine in the product. Coca-Cola has also been sued for the contents of its mineral water, which was marketed as healthy, although it contained high sugar levels. Determine which of the issues/dilemmas you identified was the most significant. Explain your reasoning. Among all those issues that the company had to contend with, the most significant in my opinion is the issue of contaminated products being sold to consumers, yet the company was doing virtually nothing to correct the situation. This is because these contaminated products were endangering the lives of consumers. The company would have faced a huge dilemma had there been confirmed deaths from the consumption of the company’s products. This would have amounted to a violation of human rights, where no one has the mandate to inflict bodily harm to another person or take away the life of someone else. Although no deaths were reported, the Coca-Cola Company name was tainted, and its sales took a tumble, especially in the European market. Although the company has faced other health-related issues, none has been as significant as that of contaminated products. Determine what steps Coca-Cola should have taken to prevent the issues you identified from arising in the first place. In as far as the health scare is concerned; Coca-Cola should have been more watchful of their production plants to ensure their products were non-toxic. Consequently, Coca-Cola would have saved face and minimized loses attributed to bad products. The racial discrimination cases would never have been filed, if Coca-Cola had a competent human resource office to deal with issues affecting employees. On issues regarding unfair competition and distributor wrangles, the company should have familiarized itself with antitrust laws in both the E.U and the U.S In India; the company should have looked for alternative methods of disposing off their sludge or by treating and recycling their waste water. Finally, coca-cola should have been more transparent and indicated the contents of their products, such that consumers knew the exact health implications of the products they used. Analyze how Coca-Cola responded to the crisis and determine if this was the best possible response or not. On the health scare issue, according to Ferrell, Ferrell & Fraedrich (2011), Coca-Cola was acquitted by the Belgian government of any wrong doing, and was very cooperative all through the investigation. Regarding the racial discrimination case, Coca-Cola agreed to donate 50 million dollars to a foundation that supported minority programs, in addition to hiring a person, to investigate discrimination matters and report such to the company’s Chief Executive Officer. On the issue of channel stuffing, the company came up with an office to oversee ethics and compliance, and to ensure that quarterly reports were not altered. In the Colombian case, Coca-Cola continues to maintain its innocence and has been acquitted of all charges. In India, Coca-Cola has partnered with the local community to come up with facilities for harvesting water, ensuring sustainable water resources. Last but not least, Coca-Cola tackled its health-related issue by encouraging consumers to embrace healthy lifestyles by exercising and being aware of nutritional effects of foods. In most cases, Coca-Cola has done a commendable job in addressing the challenges it has faced. However, regarding the contaminated products, Coca-Cola should have immediately conducted a public awareness campaign before withdrawing the contaminated products from the market. This would have prevented more people form falling ill, and as a result, law suits against the company would have been minimized. On the killing and intimidation issue, Coca-Cola should have compensated the aggrieved families, then investigated and fired the orchestrators of such actions. Conclusion Although Coca-Cola has gone through all the foresaid challenges, it continues to be a market leader in global beverage production and distribution. If the company can institute better ethics and rules of conduct, and incorporate comprehensive corporate governance, better days are in store for this admired company. References Fernando A.C. (2010). Business Ethics And Corporate Governance. New Delhi: Pearson Education India. Ferrell, O., Ferrell, L., & Fraedrich, J. (2011). Business Ethics: Ethical Decision Making & Cases. 8th Edition. Mason: Cengage Learning.  Griffin, R., Moorhead, G. (2011). Organizational Behavior: Managing People and Organizations.10 Edition. Mason: Cengage Learning. Read More