The Coca-Cola Company Struggles with Ethical Crises

Confucius once said, “If your conduct is determined solely by considerations of profit you will arouse great resentment.”

In these times of high competitiveness due to globalization in business, is very important for all organizations having a good reputation, and provide the most benefit to the largest group of stakeholders.  Undoubtedly, prestige is the most important for any business, especially TNCs businesses. A large corporation such as Coca Cola has earned a presence and market share in many countries worldwide since many years ago.

            It is unarguably that the presence of Coca-Cola products is in almost every corner of the globe today, showing how successful the company’s international marketing strategy has been (Ferrel, 456). Moreover, it is a long process gets a good reputation and credibility from all stakeholders. Even though,   Coca-Cola strives to convey a message that the organization comply and exceed with the use and implementation of ethical practices of quality. However, it is possible that the reputation and the prestige gained for so long can be dramatically affected by a few errors in ethical judgment. Therefore, it is crucial for the image and transparency of the activities of the company that the responsibility of leaders is aligned with a socially responsible firm’s values, to keep a sound reputation free of ethical misconduct related to the organization.

Coca-Cola strives to be a socially responsible organization. After many troubles worldwide the company has made a conscious effort and sustains their commitment to adopting policies for preservation of the environment, concern about consumer’s health issues such contamination or tainted products (Ferrel 456). Also, demonstrate honesty, responsible financial behavior and avoid sexual and racial discrimination problems.  Many plaintiffs have been awarded with financial compensation in most cases, and also Coca Cola has adopted a compromise of amendment with minorities affected.  In case of violations of ethical values ​​standardized for the vast majority of countries where the company operates, any small misconduct or mistake will trigger a negative impact and adverse effects on stakeholders of the company. Capital investors are more likely to invest in a company with a solid reputation and with a socially responsible commitment.  A special topic that generates discomfort and arouses suspicions is the use of strategies linked to practices of monopoly that affect a free participation of market on equal terms; Europe applies vigorously antitrust laws to businesses running this type of behavior (Ferrel 457).

 

Factors that stakeholders can use to assess corporate reputation are:

 Appropriate employee retention programs, if there is much turnover, the company may be projecting an unstable or inefficient image of human resources management.

The quality of the product or service that a company is reliable and shows comparative advantage, in this case the company is working efficiently in the manufacture of state-of-art products or services. All business strives to convey a corporate image of strength and leadership.

 High ratings of customer satisfaction, a satisfied customer will be a life customer, plus mouth-to-mouth promotion has a multiplier effect.

 Consistent ethical leadership; when a leader or leaders within the organization demonstrate high ethical standards, the rest of the workforce will follow the example.

 Environmentally responsible - the company should be concerned about the future of the planet and how it will impact business activities running today.

CFOs and CEOs must show transparency and accuracy in the financial and accounting statements of the company at the end of year. Misconduct or unethical behavior should be left aside. Any attempt of manipulation or adulteration of the accounting information of the company might lead in catastrophic consequences. The lack of ethics in not only financial information is a serious offence according to Sarbanes-Oxley Act of 2002, but also sets prison to the direct responsible of disseminating erroneous or false information to financial institutions and other stakeholders.

Obviously, there are other factors that may be important for all stakeholders. However, when a company or organization suffers from ethical dilemmas or ethical lapses, the impact and release may be spread through the media, turning in viral in seconds worldwide. Lack of ethical values ​​in business are the current issues of which are spoken in the news and on the internet and lead in the demise of companies affected by internal or external ethical conflicts. When addressing problems faced by Coca-Cola, the media exert a great pressure over company’s reputation instead of its relations with all stakeholders (Ferrel 458). Coca-Cola crises affect directly to its business’ partners, stakeholders and its bottom lines.

The extent of the negative impact on the reputation of Coca-Cola is also linked to problems related to health issues and their possible effects on those who consume soft drinks produced by the company. Complaints of all kinds have been attributed to soft drink sodas, for example that contain ingredients that cause cancer or other diseases (Fulda University of Applied Sciences).  In America, some States like California for example, soda bottlers are required to include accurate information on labels if soda drinks contains caramel coloring. If other States follow this legal measure, it foresees a decline in sales nationwide (Ferrel 460).

It remains a serious problem in India, where the company has not gone well rid of claims attributed to environmental damage in the locations where the firm had its production plants. Law courts favor those who prove to have been victims of the excessive use of groundwater in these communities. For Coca-Cola, this dramatically affects their image and reputation; with the subsequent decline in its sales (Ferrel 461).

Updates:

In recent years, The Coca Cola Company has more clearly defined what they stand for with respect to human and workplace rights. They have also begun the complex work of ensuring that our entire business system and supply chain align with their policies. (Coca Cola, Human Work Place 2013.Web).