GSBS6484 | Social Responsibility | A Case Study of Coca Cola Company

Outline: Coca-Cola (Coke) is a major multi-national corporation that operates in the food industry. They have a major 'footprint' and their supply chains affect a great number of people, in a great many nations. The case material supplied gives some examples of a number of issues of possible concern with Coke's behaviour. (Make sure you also look on this paper's Moodlerooms site for additional material & videos, as well as source other material via Google to justify your writing.) In your essay: 

Task 1: Identify and critically evaluate the issues mentioned in provided case studies. This task should cover the following: 
(a) What are the impressions you derive about Coke (Coca-Cola Company) after reading the material written/published by Coke on their achievement of CSR obligations (from their corporate website)?
(b) What are the impressions you derive about Coke after reading third party articles written/published about Coke on their lack of CSR activities?

Task 2: Analyse the impressions derived from both sources in Task 1 and substantiate with factual information the behaviours and attitudes in respect of CSR that Coke appeared to have demonstrated from the inception in carrying out their business activities.

 

Task  3: Examine the types of ethical decisions made by Coke to achieve CSR obligations so as to comply with various external drivers/motivators.

Answer:

Introduction

The Coca-Cola Company is a global brand with its business tentacles reaching most corners of the habitable earth. The monstrosity of the company’s operation raises concern that to make a healthy profit, it has to be exploitative in some of its operations, and in fact, there have various complaints about its operations in some developing countries. However, according to the company’s Corporate Social Responsibility (CSR) Reports that it releases every year, it is as white as snow and makes the allegations look like witch-hunt sponsored by jealous competitors. Furthermore, the funds many CRS programs across the globe to the tune of billions of dollars, which on the face of it looks quite impressive. The amount of the money the company spends on CSR dwarfs some nations GDP. However, compared to the profits that Coca-Cola Company rakes in within a financial year, it can do more.

Task 1A

On visiting the Coca-Cola Company website, one is left with the distinct impression that this is a company that truly cares for the world. Its CSR-funded activities range from those supporting the people to earn a livelihood to those activities that enhance environmental sustainability. Most of the organisation’s activities are rooted in the developing countries where the people need all the support they can get. To their credit, the company has used the CSR activities to promote and positive brand image in the eye the eyes of the consumer (Pelberg, 2014).

Global Compact

Coca-Cola is one of the companies that have signed up and endeavour to support the UN Global Compact (The Coca-Cola Company, 2012). The UN Global Compact is a commitment that encourages businesses to ensure the realisation of human rights in their business operations. In the labour principles of the UN agreement, organisations commit to abolishing child labor and forced labour and eliminate any discrimination. Under the principles dealing with the environment, the companies under the UN Global Compact deal are expected ensure that sustainable operations which included using environmentally friendly technology and operations and funding environment conservation efforts. The final requirement in the agreement is that a business eliminates corruption from all its operations wherever it operates across the globe.

According to the company’s CSR reports, it adheres to the principles outlined in the UN Global Compact agreement. First, the company has spent over $850 million in its CSR activities. The CSR activities include providing clean drinking water to communities hard-hit by drought and also supports the education of the youth and women empowerment economic activities in countries across the globe (The Coca-Cola Company, 2018).

Community Support

Coke funds and participates in community activities in areas where it operates. In as much as these activities are primarily for public relations and advertisement, they do support the community. The company spends about 1% of its annual income in such community empowerment programs.   

Sustainability

Sustainability is a concept that deals with the idea that all of an organisation’s processes from extraction to the consumption of a product or service are serves the current generation and does not compromise the ability of the next generations to do the same. The Coca-Cola Company has made steps in the right direction on sustainability which includes the use of agricultural products as ingredients in their products and makes packaging materials from pulp fibre. The company partners with stakeholders such as farmers to produce environmentally healthy products for their operations and at the same time empowering them by paying premium prices for the products (The Coca-Cola Company, 2017).

Innovation

Coke endeavors to produce the best products at with the latest technology. Canada is one of the company’s renovation arenas and they have been experimenting with production of unique packaging such that no two coke bottles resemble each other. Also, the company, together with other partners such as HP is embarking on using the latest technology in digital printing (Whitehead, 2016). 

Remove Social Barrier

In its efforts to remove the social barriers between able bodied people and those living with disabilities, the company funded a Coke Studio event in Pakistan. The event was aimed at allowing people who could not hear experience music through other senses.  During the event, there was a specialized chair and that vibrated and LED lights in tune with the music allowing people with impaired hearing experience music (Staff, 2016).

Task 1B

Contrary to the rosy picture the Coca-Cola Company paints of their exemplary CSR policies and practice, information from third-party actors seems to suggest that it is all public relations. Research reports by recognised organisations indicate that the company breaks most of its stated policies and signed treaties and in fact engage in activities that destroy the environment and directly endanger human life.

Land Pollution

The Coca-Cola Company has been accused of spreading the waste sludge from its factories in Uttar Pradesh by passing it off as fertilisers to the neighbouring farmers. Chemical analysis of the sludge indicated high percentage contents of harmful chemicals such as Cadmium, Lead, and Chromium (Lype, 2003). The land pollution and poisoning of agricultural land with the same chemicals led to the closure of the company’s factory at Plachimada, Kerala (Srivastava, 2006).   

Crimes against Humanity

The Coca-Cola Company stands accused of abetting torture, murder and rape of Union Leaders and or members of their families. In Guatemala, for instance, the company was taken to court for being accomplices in the torture, rape, murder, and disappearance of either union members or their families. The crime the victims to attract the wrath of the company was to organise and call for improved working conditional and wages (Killer Coke, 2003). According to Organic Consumers (2010) Association, the company routinely commits crimes against the union’s members and their families taking advantage of a weak judicial system that allows turns a blind eye to the suffering of the people.   

Child Labour

In most sugarcane plantations, children as young as eight years work as labourers. These are the plantations that provide sugar for the Coca-Cola Company, which means that the company indirectly uses child labour in its productions (Human Rights Watch, 2004). In El Salvador, the children are labelled as helpers to avoid scrutiny from the authorities and humanitarian organisations. Furthermore, in these plantations, if the children get injured in the course of duty, they have to take care of their medical bills (Lobe, 2009).

Depleting Water Level

Coke is facing accusations in India that it is using too much underground water. Coke industries are water intensive, and the fact that there are over 50 plants in India means that it is consuming a lot of the underground water. The accusations that it is depleting the underground water resources may have some merit.

Court Cases

The company brags of its ethics in running its business operations, but from time to time it finds itself in court answering to various charges of misconduct. The most Recent was a case in which it the plaintiffs accused the company of misleading the consumers in its advertisements. Also, Scientists and health professionals have accused the company of funding some non-profit organisations that propagate ideas favourable to its products (Anahad, 2016).

Task 2

The Disconnect

In its website and other press releases, Coke comes out as one of the most ethical companies to ever conduct business on planet earth, but a closer look at its operations across the world seems a little different and leaves a lot to be desired. On the one hand, the company states that it does not condone some actions such as child labour yet it works with plantations that have a proven past of employing the same. Another instance of disconnect between policy and practice is its support for the apartheid regime in South Africa, yet it states that it does not support discrimination. These are just examples to indicate that the company talks more and does less.

Challenges of multinational organizations

Multinational organizations face the challenges of expansion. It is possible to maintain a tight leash on a small organization but as it expands and management becomes more decentralized, the top management no longer has the ability to control each and every aspect of the dispersed units. The managers on the ground take over the daily running of their departments and some are bound to make mistakes.  It is understandable that because of its global reach some of its local employees in those countries might conduct business operations in ways centrally to the norm in the company. However, the company owes the affected people a duty of care by at the very least investigating the allegations and stopping it. Also, it may like to consider compensating the people and the communities affected.

Misrepresentation of a product Kills

The sins of misrepresenting facts to hide some truth or telling outright lies to the consumers are not just immoral; it is harmful. The company exploits the weaknesses in its consumers such that they love the coke products so much that they are waiting for an excuse to consume the products. Some people are so addicted to the coke products that even when they have ailments like diabetes, they are willing to risk it all for a bottle of their favourite drink. When the company comes up with advertisements saying that it is sugar-free or calorie-free, the consumer with who has been diagnosing with diabetes will go right ahead and enjoy his coke in the process endangering his/her life. In fact, there is a case of a fan of the coke products who took too much of the same which ended her life (Seeker, 2013).

Task 3

The company has made strides in its ethics department to ensure that it can comply with the various external and internal motivators. In a company or an organization, integrity is paramount and any company which disregards this aspect of their organization suffer in the long run as customers no longer trust them.

Corporate Responsibility

The Coca-Cola Company takes its Corporate Social Responsibility seriously. To this end, the company established a Social Reputation Council comprising of managers drawn from various department of the company. The council is charged with the responsibility of conducting SWOT analysis in the company regarding CSR activities and recommending appropriate action to solve the problem (The Coca-Cola Company, 2016).

So far the Social Reputation council has been instrumental in enabling the company to increase its spending on CSR activities and projects from 1% of the annual income in 2014 to the current 1.3%. The money is spread across the globe, especially in the developing countries to support various programs such as health and sanitation, youth and women empowerment, and environmental conservation. Examples of the programs that the organisation supports include “Ripple of Happiness” and “The Price of water” in the Middle East and India Respectively (The Coca-Cola Company 2017).

Anti-Corruption

According to the information available on their website, the Coca-Cola Company endeavours to prevent incidences of corruption in all its operations in the world. To this end, the company has comprehensive anti-corruption police that binds all the employees to operate in a corruption-free manner without giving or receiving bribes or unwarranted favours that may compromise the integrity and reputation of the company. The organisation ensures that all its employees conduct their activities with integrity in all the countries that the coca cola operates in. The company employs the use of internal audit risk assessment reports to evaluate its risk of corruption and act accordingly to solve the issues (The Coca-Cola Company 2017). There are challenges in some countries, especially in the developing countries where the senior government officials demand kickbacks before they company can be allowed to enter the market. The management recognizes these challenges and tries to deal with them the best way they can without hurting Cokes opportunities of establishing the business.

Sustainability 

Sustainability is a concept that deals with the idea that all of an organization’s processes from extraction to the consumption of a product or service are serves the current generation and does not compromise the ability of the next generations to do the same. The Coca-Cola Company has made steps in the right direction on sustainability which includes the use of agricultural products as ingredients in their products and makes packaging materials from pulp fibre. The company partners with stakeholders such as farmers to produce environmentally healthy products such as sugar for their operations and at the same time empowering them by paying premium prices for the products (The Coca-Cola Company, 2017). The Coca-Cola Company strives for sustainability in its operations which include the use of agricultural products as ingredients in their products.

Bring happiness to Lives of People

Coke brands its products not as mere beverages to be consumed but as part of enjoying life. The company encourages its consumers to share pictures having fun with the coke products as the life of the party. The “spread happiness” message may look frivolous, but it resonates well with the consumers because life is tough and people need to be encouraged to enjoy life and get relief of the stress that build-up as we go through life.    The slogans work by encouraging people to trudge on and whenever they can spare the time they enjoy it to the fullest.   

Conclusion

Coke Company is one of the biggest beverage brands in the world with operations in almost all habitable corners of the earth. For a company its size and the CSR activities it carries out, it is plain that it is punching below its weight. Coke has a huge presence across the globe which makes management a challenge resulting in some of its managers in far-flung corners of the earth engaging in business practices that are contrary to conventions and even contrary to its policies. The company is, however, working hard to rectify its shortcomings.     

References

Anahad, O. (2016, October 10). Retrieved from Coke and Pepsi Give Millions to Public Health, Then Lobby against It: https://www.nytimes.com/2016/10/10/well/eat/coke-and-pepsi-give-millions-to-public-health-then-lobby-against-it.html

FSRN. (2016, March 11). Retrieved from Coca-Cola shuts three bottling plants in India amid severe water shortages: https://fsrn.org/2016/03/coca-cola-shuts-down-three-bottling-plants-in-india-amid-severe-water-shortages/

Human Rights Watch. (2004, June 9). Retrieved from El Salvador: Child labour on  sugar plantations: https://www.eldis.org/document/A20107

Killer Coke. (2003, August 26).Tell Coca-Cola to stop the violence: Retrieved from tell Coca-Cola to stop the violence: https://www.modamania.es/index2_IW_PC.php?formato=500aye6b1314&a=1533254756mb15654607258

Lobe, J. (2009). Organic Consumers. Retrieved from Coca-Cola exploiting child labour in Salvador rain Sugarcane Plantations: https://www.coca-colasrbija.rs/content/dam/journey/rs/sr/private/pdfs/Human-Rights-Report-2016-2017-TCCC.pdf

Lype, G. (2003, August 4). Redif India Abroad. Retrieved from Sludge at Coke factory is deadly: https://www.rediff.com/money/2003/aug/05spec2.htm

Organic Consumer Association. (2010, March 1). Retrieved from Coca-Cola hit with new charges: https://www.digitaljournal.com/business/business/op-ed-coca-cola-and-the-power-of-brand-association/article/392411

Perlberg, D. (2014, July 24). Digital Journal. Retrieved from Op-Ed. The power of Brand association:  https://www.digitaljournal.com/business/business/op-ed-coca-cola-and-the-power-of-brand-association/article/392411 

Seeker (2013, Dec 2). Retrieved from Woman drunk herself to death with Coca-Cola: https://www.seeker.com/woman-drank-herself-to-death-with-coca-cola-1767186346.html

Srivastava, A. (2006, March 14). India Resource Center. Retrieved from Coca-Cola poisoning water land and people:  https://www.indiaresource.org/campaigns/coke/2006/cokepoisoning.html

Staff, J. (2016, August 3). The Coca-Cola Company. Retrieved from See How Coke Studio is Bringing Music to the Deaf Fans in Pakistan: https://www.coca-cola.co.uk/stories/see-how-coke-studio-is-bringing-music-to-deaf-fans-in-pakistan

The Coca-Cola Company. (2012, January 1).  Retrieved from Our Stance on Child Labour: https://www.coca-colacompany.com/stories/our-stance-on-child-labor

The Coca-Cola Company. (2012, January 1). Retrieved from UN Global Compact:  https://www.unglobalcompact.org/

Whitehead, C. (2016, June 9). Retrieved from Diet Coke Celebrates What Makes Us All One of a Kind: https://www.coca-cola.ca/stories/diet-coke-celebrates-what-makes-us-all-one-of-a-kind