Coca Cola - Business Ethics - Case Study Example

BUSINESS ETHICS Affiliation Coca cola business ethics QUESTION ONE The Burger King franchise back in 2002 got into a fight with Coca-Cola Company for attempting to sell them wrongfully on the then new frozen drink of coca cola. The Burger king management sought compensation amounting to sixty-five million dollars from Coca-Cola. After the frozen coke had been made a mandatory drink in all the Burger king restaurants in 1999, it was late discovered by an employee of Coca-Cola that there was rigging in the market testing for this drink. The employee who blew the whistle lost his job immediately along with other 1000 employees in the claim that the company was reorganizing. The manager in charge of the project, John Fisher was accused of paying somebody to buy the frozen drinks worth 10000 dollars to help in convincing the Burger king to become a pioneer in frozen Coke promotion that would take place nationally the following year (Lovell, 2012). From this case study, several stakeholders are involved in the malpractice. There is the Burger king franchise that was the organ to help in the testing as a business partner. From their point of view, they felt cheated and moved to court to seek compensation for the loss and expenses incurred. They also were angered that a partnering company used their reputed business name in a malpractice in business. The other stakeholder was the customer that was taking the frozen coke. The customer in this scenario was neither aware of the malpractice nor harmed by the malpractice. The customer however was betrayed by the fact that the biggest beverage company could afford to generate false results to promote a new brand. Though the research was not done to evaluate the drop in the customer loyalty of Coca-Cola then, this angered the customer and made the customer question the trust of other famous products of Coca-Cola (Laufer and Coombs, 2006). The other main stakeholder was Coca-Cola itself. Given the reputation of the company, it was hard for the company to explain the malpractice as well as the firing of employees who attempted to blow the whistle on the company. From the employees’ perspective, the question of ethics in this scenario is whether to quit or to blow the whistle. For the employee, Matthew Whitley, who blew the whistle the dilemma was in either choosing his job or his integrity. In the end when he chose his integrity, he and other employees lost their job. The management of the company had a decision to either preserve their name and fire the then manager, John Fisher or retain the manager and deny the claims of malpractice. In the end, the company owned up to the malpractice and fired the manager. The consequence was that the reputation and relationship of the company with the above stakeholders was ruined (Carroll and Buchholtz, 2014). QUESTION TWO Management in the twenty-first century is focusing more and more on the issue of ethics in business. Many business organizations have undertaken to train the managers in handling ethical issues that managers face daily. Some of the ethical dilemmas include: Employees’ behavior All businesses are irrespective of size and location deal with the ethical issue of regulating and controlling the behaviors of its employees. In the case above, it is an ethical dilemma when an employee unearths a plan by the manager to malpractice in order to obtain favorable results. The question is whether the manager still has a moral and ethical authority over the junior staffs who notice the managers’ unethical behavior (Ferrell et al., 2014). Employees working conditions The law requires that the working conditions of all employees be safe for the employee in the short and long term. The dilemma is however faced by the managers where the product being produced by the company includes certain risks that the employee is aware of and still chooses to work in the environment. In Coca-Cola company, for example, the temperatures in most rooms where cleaning of bottles and canning occurs are very high and dangerous. For the operation of the business to continue, the manager has to deploy employees in these regions (Rossouw and Van Vuuren, 2010). Supplier and partner relations Most businesses deal with other business entities that supply them with raw materials or the ones that receive the product for marketing. For the case of Coca-Cola, the partners and suppliers are numerous. In the above case study, Burger king was a partner in doing a market test for the frozen coke. The ethical dilemma in this manner of relationship is the issue of whether a company should continue to deal with another that has unethical practices. For Burger King, the choice was terminating the relationship with Coca-Cola at the expense of all the profit that could have accrued had the company hidden the unethical practice (Yoffie, 2002). Marketing behavior Marketing as a process involves informing the public of the products that the company offers and their value. Given that market has a great incentive of money attached to it; managers have a higher tendency to tolerate malpractice and even fraud. The strategies of marketing like advertisement and market testing require transparency in the process and the managers if ethical practices are to be achieved. In the case of Coca-Cola, the case study above reveals the practices that managers have undertaken to ensure that their brand is marketed and received compared to the competitors (Carroll and Buchholtz, 2014). QUESTION THREE Some of the positive outlooks of the company can be seen in the environmental preservation measures undertaken by the company. Among them is the collaboration with UNAIDS to help in funding HIV/AIDS prevention programs (Fan, 2005). The company has also set up scholarship funds for high school and college students in almost all countries where the company has branches donating a tune of over twenty million dollars in education (Lindgreen and Swaen, 2010). The company has even won awards in the global scene owing to these projects. Some of the recognitions include the most accountable company in 2007, the most socially responsible company in 2008, responsible CEO of the year in 2010 and 50 most admired companies in the same year (Lovell, 2012). Coca-Cola remains the leading beverage distributor of soft drinks in the world. The reputation of the company is, therefore, an asset that the business fights to protect. However, like the above case study, the company has had many incidences of malpractice. The range cover incidences of racial discrimination, manipulation of market tests, earning manipulations to disrupt arrangements by contractors and incidences of poisoning among others. All these unethical practices have continued to tarnish the name of the company. Many other ills of coca cola have become known in the course of time but the company has refused to deal with the root of the problem. They include addition of phosphoric acid in coca cola drinks that causes tooth decay. As a result two thirds of young people in the nation have tooth decay due to the. Addition of calcium lactate can reduce the erosion but the company has refused to do it. The location of coca cola Company in India’s most dry areas like the Kala Dera plant near Jaipur has caused serious water shortage. Though recommendations have been made to close the plant, it is still in operation.in the accusation of pollution in Varanasi state, the company reversed the case by cleaning its products before releasing them to the environment but did not remove or compensate for the damage already caused. The company equally has come under the lime light for increasing demand on its workers and refusing to pay them for overtime hours. It has been said that all the activities in the social responsibility circles that the company has undertaken have been to cover up the unethical practices of the company. Other than the case study referred above, other incidences of crisis include a case of carbon dioxide poisoning in Belgium in 1999, molds in the products distributed in France (Kapferer, 1989) that caused sickness in about one hundred people and racial discrimination of almost two thousand African Americans (Nemery et al., 2002). In all the above cases, the company handled the cases via court and ended up losing money through fines and compensation. In the case of Belgium poisoning, the brand suffered a huge setback when the country and the regions around recalled the product. All these occurrences have led to a loss in reputation of the company and its products or loss of money. The action plan of Coca cola has been to deal with the crisis only when it is noticed (Nemery et al., 1999). Though the company has also attempted to replace the top management as a means of cleaning up the system, failure to have positive results has proven that it is more than the management that need changing. The whole company CSR philosophy and its adoption mechanism ought to change. Corporate social responsibility refers to the self- regulating and built- in mechanisms of business to ensure compliance with the ethical requirements of the law. Though Coca-Cola has continued to release the annual detailed CSR report, the report fails to shoe evidence of it responsibility to the public. Corporate money that the company gives to Non-Governmental Organizations like American Academy of Pediatrics is not CSR if the company consistently advertises its chemical and sugar-laden product to children under twelve years. The practice has continued to expose many to childhood obesity and diabetes from the reality point of view while the out appearance of the company is painted with respect (Sievenpiper et al., 2012). In Mexico, for example, the company carries out its advertisement using children with Coca-Cola brand wearing like superheroes. This is among the highest-ranking countries in child obesity. In 2002, For example, the company was accused of tax evasion that amounted to 13.9 billion dollars from its offshore accounts. The organizational design and claims to be a CSR company cannot be achieved if the practice of the company is not synonymous with the claim of social responsibility. The millions of dollars that the company gives to NGOs around the world and all the philanthropic practices that the company is involved in fades in the light of all the unethical practices that the company propagates continuously (Ardichvili et al., 2009). CSR requires that organizations incorporate practices that promote sustainable action courses for managing their environment and their surroundings. This is achieved through a purposeful inclusion of CSR in the strategy and the mission of the organization. Even though Coca-Cola has had a history of attempting to be socially responsible, it is their response to the harm they cause that makes their strategy fail. Instead of adopting a system that only responds to crisis, the company should aim to establish a system that considers the social and public good of the products and the services of the company before they are produced and distributed to the public (Lindgreen and Swaen, 2010). QUESTION FOUR As a decision maker faced with the problems and ethical dilemmas that face Coca-Cola Company, my action courses will be different. It is clear that the decisions made in such events must take into account the interest of the business as well as the interest of the customers and the public. Since I have disagreed with the means of handling crisis and ethical dilemmas that occur in coca cola, my plans as a manager will be to focus on the root of the problem (Hartman, 1996). Coca cola as a company does not suffer from ignorance or lack of knowledge on the corporate responsibility that is required from the company. Rather the company suffers from an absence of systems that will facilitate the implementation of ethical principles and the monitoring of ethical and unethical practices of the company. If the system to facilitate this was available, the change of top management that has occurred over the years should have brought about the change that the public expects from the company (Dorfman et al., 2012). This point of view is based on the fact that systems are more self-sustaining than people are. Systems are influenced by cultures in the organization. Unfortunately, history has indicated that the culture in Coca-Cola is to cover up the unethical practice or bully its way around using the market share and popularity. However, changing a culture takes more than a manager making decision (Ford and Richardson, 1994).the company for example in its new culture should consider addition of calcium lactate to its soda to prevent tooth decay among other ingredients that it needs to change. It takes the company and its workers acknowledging the prevailing culture and expressing dislike for it and need to change the culture as well. The top management has the responsibility of setting an example in the creation of a new culture and monitoring policymaking and implementation to ensure the transition from an old unethical culture to a new ethical culture (Taylor, 2000). References Ardichvili, A., Mitchell, J.A., Jondle, D., 2009. Characteristics of ethical business cultures. J. Bus. Ethics 85, 445–451. Carroll, A., Buchholtz, A., 2014. Business and society: Ethics, sustainability, and stakeholder management. Cengage Learning. Dorfman, L., Cheyne, A., Friedman, L.C., Wadud, A., Gottlieb, M., 2012. Soda and tobacco industry corporate social responsibility campaigns: how do they compare? PLoS Med. 9, e1001241. Fan, Y., 2005. Ethical branding and corporate reputation. Corp. Commun. Int. J. 10, 341–350. Ferrell, O.C., Fraedrich, J., others, 2014. Business ethics: Ethical decision making & cases. Cengage Learning. Ford, R.C., Richardson, W.D., 1994. Ethical decision making: A review of the empirical literature. J. Bus. Ethics 13, 205–221. Hartman, E., 1996. Organizational ethics and the good life. Kapferer, J.N., 1989. A mass poisoning rumor in Europe. Public Opin. Q. 53, 467–481. Laufer, D., Coombs, W.T., 2006. How should a company respond to a product harm crisis? The role of corporate reputation and consumer-based cues. Bus. Horiz. 49, 379–385. Lindgreen, A., Swaen, V., 2010. Corporate social responsibility. Int. J. Manag. Rev. 12, 1–7. Lovell, M., 2012. BUS 680-01, Ethics: Business and Society, Spring 2012. Nemery, B., Fischler, B., Boogaerts, M., Lison, D., 1999. Dioxins, Coca-Cola, and mass sociogenic illness in Belgium. The Lancet 354, 77. Nemery, B., Fischler, B., Boogaerts, M., Lison, D., Willems, J., 2002. The coca-cola incident in Belgium, June 1999. Food Chem. Toxicol. 40, 1657–1667. Rossouw, D., Van Vuuren, L., 2010. Business ethics. Oxford University Press Southern Africa. Sievenpiper, J.L., De Souza, R.J., Mirrahimi, A., Matthew, E.Y., Carleton, A.J., Beyene, J., Chiavaroli, L., Di Buono, M., Jenkins, A.L., Leiter, L.A., others, 2012. Effect of Fructose on Body Weight in Controlled Feeding TrialsA Systematic Review and Meta-analysis. Ann. Intern. Med. 156, 291–304. Taylor, M., 2000. Cultural variance as a challenge to global public relations: A case study of the Coca-Cola scare in Europe. Public Relat. Rev. 26, 277–293. Yoffie, D.B., 2002. Cola wars continue: Coke and Pepsi in the twenty-first century. Harvard Business School Publishing Corporation.  Read More