Business Ethics and Corporate Social Responsibility - Assignment Example

Business Ethics and Corporate Social Responsibility Coca-Cola India Coca Cola India is definitely obligated morally to take additional steps in promoting their quality standards through conducting more testing. Even assuming that the company does not have legal obligation to do so and that this will require additional costs, the company faces a great reputational risk, whereas the scandal is based on fact or myth. In addition to the fact that Coca-Cola India is imposed to the risk of losing its market share, the company has a moral obligation and responsibility which it has taken when formally announced its mission statement, core values and principles. The company should not recall its products and should stay present on the market, however it should prove its ethical position to its stakeholders to keep its business in India and thus to achieve self-interest satisfaction. Below is provided more detailed analysis of Coca Cola’s business activity in India with the application of 7 major moral standards. Universal Ethical Values First of all, this approach is based on the universal ethical values which have in its core the value of trustworthiness. Based on the trustworthiness as one of the core values of the universal ethical values, Coca Cola’s behavior should based on honesty, promise-keeping, loyalty, and transparency. If the company is honest towards its stakeholders, including the Indian consumers it should honestly declare about its business and true quality of its products. While the company declares that its products are of high quality and safe for consumption, it also lacks the integrity based on the case studies of controversies in Belgium, Antwerp and employment of African-Americans. By allowing discrimination based on the race, Coca Cola failed to demonstrate its integrity and to act consistently according to its stated principles and values. If the lab results are true, Coca-Cola has failed in another one universal ethical value – promise keeping. If the company has not mentioned in its campaign that the drink is absolutely safe, its initial responsibility as a business should be ensuring safety and quality of the products. If to view promise-keeping value as a guarantee of safety and high quality, the company’s activity in India can be labeled as “ethical”. But in case if some of the stakeholders (employees, management) have not disclosed information about the quality of the products and its harmful impact on Coca Cola India consumers, the activity will be viewed as unethical. In case the lab results are true and the products really contain pesticide residues and other harmful elements, Coca Cola India’s behavior towards the Indian consumers was not ethical as the company was not transparent; it failed to provide sufficient relevant information on a timely basis for interested stakeholders (employees, consumers, suppliers, distributors, etc.). Coca Cola India failed to integrate caring as one more ethical value as it also failed to indicate “unnecessary” harm to the consumers; the company did not disclose the potential risks and harm to health caused by Coca Cola consumption. However, despite the potential problems with the above listed ethical core values, Coca Cola India is perceived to be a responsible company, whereas its management is ready to admit its faults and take steps to correct the mistake (example of Belgium case). Also, Coca Cola India is following the core ethical value of citizenship – initiatives focused on environment protection, compliance with the environmental legislation, and assisting/supporting communities. Relativism While evaluating the Coca Cola India case under a moral theory of ethical relativism, it activity can be viewed as ethical. Based on this principle, the company operating in India can act as the majority of other companies do on the local market (allowing greater % of pesticide residues than it is allowed according to the European norm for maximum possible limits). If the majority of competitors act in the same way, the action should be considered as morally acceptable. Therefore, the principle “When in Rome, do as the Romans do” can be interpreted in Coca Cola India case as “When in India, do as the Indians do”. Moreover, legislation of India does not set clearly defined standards for pesticide residues, and therefore implies that this act is morally acceptable. However, if the majority of customers in India believe that the amount of residue pesticides is not acceptable for them, then the Coca Cola’s activity should be viewed as unethical. Ethical Egoism When following the ethical egoism standard, Coca Cola’s activity in India can be definitely viewed as the ethical one. Taking into consideration that the best interest of the firm is to boost its sales and to maximize profits and/or share value, the extent of the “guilt” is highly correlated with the long-term self-interest. However, when applying the Coca Cola India case to the conditional egoism standard the company’s ethical position is weakening, as self-interest doesn’t lead to the betterment of society as people are imposed to health-related risks as a result of drinking Coca Cola beverages. However, the company’s unethical position in relation to society’s contribution can be viewed as challenging here if take into account the Coca Cola’s efforts aimed at improvement of the quality of life in the communities in which it operates and the environment. Utilitarianism When applying the utilitarianism as a moral standard to the Coca Cola India case there can be two different views in relation to the company’s business: unethical and ethical. Relying on the approach that the greatest good for the greatest number of people it is possible to say that the company’s products impose health threat problems (including cancer risk) to a huge population. The consequence of an action (Coca Cola consumption) here is the harm to health of consumers. Therefore, the Coca Cola’s business is unethical in relation to the utilitarianism principle. However, if the company’s products satisfy the needs of the Indian population and brings taste satisfaction to them then, from this perspective, utilitarian moral standard is applicable and the company’s business in India should be considered as the ethical one. The consequence of an action (Coca Cola consumption) is satisfaction and pleasure gained after drinking the beverage. Moreover, the extent of happiness is increased among those people who are not actually consuming the Coca Cola products as they benefit from the corporate social responsibility efforts undertaken by the company and huge share of population is employed in result of the Coca Cola’s business activity. Moreover, comparing to the other carbonated drinks Coca Cola has the lowest concentration levels comparing to competitors (Biserli and Aquaplus). Based on the utilitarianism approach, it is better to drink Coca Cola beverages than the beverages of the other two brands. Assuming here that the net benefits are greater than all other possible alternatives, Coca Cola India’s activity is moral. Kantianism Based on the Kant’s universability approach, Coca Cola India activity is not ethical in case the company failed to support its standards universally. If the company has produced beverages of lower quality (higher concentration of pesticides) in India comparing to those produced in the United States or in Europe, it failed to apply universal law and therefore its activity is immoral. If all companies would neglect by the quality of the products and allow high concentration of the pesticides it would become self-defeating. In relation to reversibility, Coca Cola India activity also might be considered as immoral in case the company has neglected the quality factor in the manufacturing of its products. If the company has intentionally misinformed its customers about the Coca Cola beverages in order to boost its sales and capture the Indian market share, this behaviour is viewed as unethical as the company’s employees, top management, or shareholders would not want to be in the “shoes” of the consumers. In relation to respect as a Kant’s moral standard, the Coca Cola India treated people as a “means” to an end, as it is obvious that the company’s initial goal of entering the Indian market was to capture the market share and increase its profits. The company has adjusted its bottle sizes of Coke to make it more affordable to the Indian population; it has launched a huge marketing campaign and undertaken some other efforts to boost its sales. Moral Rights. Coca Cola India is viewed as non ethical business if its products neglect the quality and health safety issue based on the moral right approach (negative right). On the one hand, the company imposes health risks on the consumers of its products by failing to disclose fully to consumers the dangers imposed. On the other hand, if the company is operating in India and is ensuring safe working environment to its employees then Coca Cola’s moral right is fulfilled. Here moral behaviour of the company is dependent on the rights of various stakeholders and the way and extent to which Coca Cola is performing its duties. Justice By applying justice as a moral standard to the Coca Cola India business activity it might be challenging to give a clear answer as it is difficult to define the criterion. Based on the information provided in the case study and the Appendix it is possible to conclude that it is business activity is fair in relation to the employees, customers, suppliers, community and other shareholders if the company is truly committed to its rules, core values and principles’ fulfillment. Milton Friedman would more probably disagree with my position on the ethical behavior of Coca Cola, based on the major criteria of the corporate social responsibility. Milton would argue that Coca Cola’s social responsibility initiatives undertaken by the company are the initiatives undertaken in the interest of the company rather than for a general social interest. The money spent on the social responsibility projects are the money spent by the customers, paid through the every bottle of Coca Cola. The only purpose of the company’s focus on social responsibility is it goal to achieve profit targets and boost its sales and share value. Nowadays, the increasing number of people becomes more aware about sustainability and environmental concerns and therefore, they make their choice based on the company’s commitment to these two aspects. I would definitely agree with Milton that corporate executive is only a person that is authorized to manipulate with the consumer’s money or employee’s wages declaring its social efforts. This is true that individuals are and should be responsible for their actions rather than the legal entity. In my opinion, the whole issue of the sustainability is confusing to some extent, as one the one hand business strive to maximize their profits through increased sales and therefore increased production and consumption. On the other hand, excessive consumption is contradicting with sustainability as a concept, as consumed products (packaging) is massively polluting the environment. Especially it relates to plastic bottles, such as bottles of Coca Cola. Read More