mgmt 9

Bautista 2

Introduction

Corporate social responsibility, ethics, and sustainability are major areas that companies are being more conscious of. The whole idea behind corporate social responsibly is to leave society better off than it was before, not worse. There is not a single company that has done perfect in all of these areas, but it is important for companies to be aware of how their business decisions regarding CSR, ethics and sustainability affect society.

Chapter 9: Strategies for Competing in International Markets

L.O. 1: The costs of business ethics failures

There are three costs of business ethics failures: visible cost, internal admin costs, and intangible or less visible costs (271 Thompson). Coca Cola has been accused of several unethical decisions before and below are some examples and how they relate to ethical failures.

1. There was a “Coca-Cola lawsuit” article that describes a situation where Coke’s business practices were completely unethical. Back in 1999, Coca Cola was accused of racial bias and “discrimination in pay, promotions and performance evaluations” for its African American workers (Coca Cola Lawsuit). It was alleged that they were being payed much less than white employees for doing the same level or type of work. The annual difference was found the be an additional $26,000 (Winter). Coca Cola had settled to pay 192 million dollars to the current and former employees in this class action suit (Coca Cola Lawsuit). This relates to the learning objective as it was an internal administrative cost the company had to deal with. They had to pay the settlement because of the legal costs incurred and because of the judgment in favor of the workers because of their ethical failures (271 Thompson).

2. Another media article I found, “Indonesia: Report says Coca-Cola Amatil violates workers' right to organise; company did not respond,” covers an ethical issue that undermines employees that work for a Coke subsidiary, Coca Cola Amatil. They are accused of following the old union structures created by a former dictator which violate the bottling workers’ rights. Although it is a subsidiary, the blame falls on Coca Cola and damages their reputation. This is an example of the intangible and less visible costs to the company. I would say this example contributes to lower employee morale and higher degrees of employee cynicism and loss of reputation.

3. A third example of an ethical business failure I found from a New York Times article made by Coca Cola was back in 2003. Coca Cola had a deal in place where Burger King would supply their coke beverages in their chain restaurants. Coke wanted to promote a new product at Burger King so they wanted to do a market test to see if they should continue with a national marketing campaign. It turned out that coke had manipulated the marketing test by paying a man to spend $10,000 to buy the Burger King value meals that came with their coke slushy product. They were trying to make the product look more in-demand than it actually was. Coke eventually admitted to tampering with the market test. In this case, it caused their reputation to be slightly damaged with their other suppliers. This is considered as an “intangible or less visible cost” because of this unethical business decision.

I think these articles highlighted some of the ethical issues Coca Cola has faced and how it negatively impacted them. For those reasons I think these articles were relevant to the learning objectives and the overall integrative case study paper.

L.O. 2: The concepts of corporate social responsibility and environmental sustainability and how companies balance these duties with economic responsibilities to shareholders

Corporate social responsibility is “the idea that businesses should act in a way that enhances society and their stakeholders and be held accountable for ay of its actions that affect people, their communities, and their environment” (Lawrence 538). There are 5 components of a Corporate Social Responsibility strategy according to Thompson:

I. Actions to promote workforce diversity

II. Actions to enhance the well-being and make the company a great place to work

III. Actions to ensure the company operates honorably and ethically

IV. Actions to support philanthropy, participate in community service, and better the quality of life worldwide

V. Actions to protect and sustain the environment (Thompson 273)

1. Coca Cola has and continues to use the philanthropic component of the corporate social responsibility strategy. Coca Cola created their own foundation back in 1984 initially to locally “support learning inside and outside the classroom” (What is the Coca Cola Foundation?). Today the foundation continues its philanthropy goals with “enhancing communities, protecting the environment, and empowering women” and supporting other local programs globally (What is the Coca Cola Foundation?). Each year Coca Cola “giv[es] back 1% of its prior year’s operating income” through the foundation (The Coca-Cola Foundation’s Charitable Giving). In 2018, they reached the billion-dollar giving milestone since its foundation’s start. This a major part of Coca-Cola’s Corporate Social Responsibly Strategy.

2. Another example of how Coca Cola uses the concepts of CSR is by protecting and sustaining the environment. I would say it also falls under operating honorably as well because it affects the people and their neighboring communities. According to a case study from the textbook Business and Society, water neutrality was one the initiatives Coca Cola has started in 2007. Prior, the Coca Cola Company was under fire for negatively impacting communities in India from aquatic pollution, to toxic pesticide residues, and creating water shortages for irrigation and drinking (Lawrence 43). Because of this issue, Coca Cola went in to assess their operations of water management and acquired the help of wildlife and humanitarian organizations to find solutions. Over the years Coca Cola was able to improve their levels of water consumption and make their bottling plants more sustainable.

3. Another strategy Coca Cola takes part in is sustainability. An article posted on The Coca Cola Middle East website in late 2018 mentioned how the company made investments in recycling that will “speed the development and deployment of breakthrough enhanced recycling technologies that will convert recycled plastic into food-grade PET for use in the company’s beverage bottles” (Coca Cola New Investments). This is a big step on the company’s end to invest money in order to become more sustainable while protecting the environment. “Enhanced recycling allows recovery and reuse of PET plastic without material degradation” (Coca Cola New Investments). This helps save time, material waste, carbon emissions, and money which ultimately benefits the environment, people, and the company.

I felt these articles were very insightful to how the Coca Cola Company chooses to be socially responsible. Sustainability and protecting the environment is an important factor for the company as they need to think of ways to operate safely and prepare for the future. Their philanthropic goals are respectable, and those articles showcased their importance and relevance with this chapter.

Conclusion on Findings

In conclusion, Business ethics are important to a company’s reputation and can have negative or positive effects depending on the situation. Managers and leadership may make unethical moves which can lead to consequences that are visible or non-visible in the sense of the three costs of business ethics failures. Corporate social responsibility is a growing factor in the way a company chooses how to operate and what they value. The Coca Cola Company is an example of a firm that chooses to use the five components in their corporate social responsibility strategy. Philanthropy and sustainability are some of the important components they choose to use.

Works Cited

“Coca‑cola announces new investments in enhanced recycling as part of ‘world without waste’ vision.” Coca Cola Middle East. https://en.coca-colaarabia.com/sustainability/packaging-and-recycling/coca-cola-announces-new-investments-in-enhanced-recycling-as-part-of-world-without-waste-vision

“Coca-Cola lawsuit (re racial discrimination in USA).” 20 Mar. 2003. Business and Human Rights Resource Centre. https://www.business-humanrights.org/en/latest-news/coca-cola-lawsuit-re-racial-discrimination-in-usa/

Day, Sherri. Coke Makes Up with Burger King Over Rigged Test Of Frozen Drink. 2 Aug. 2003. The New York Times. https://www.nytimes.com/2003/08/02/business/coke-makes-up-with-burger-king-over-rigged-test-of-frozen-drink.html

“Indonesia: Coca-cola Amatil faces allegations of serious violations of workers' right to organise.” 25 Oct. 2017. Business and Human Rights Resource Centre. https://www.business-humanrights.org/en/latest-news/indonesia-coca-cola-amatil-faces-allegations-of-serious-violations-of-workers-right-to-organise/

Lawrence, A. T., & Weber, J. Business and Society: Stakeholders, Ethics, Public Policy. New York, NY: McGraw Hill, 2015 

“The Coca-Cola Foundation’s Charitable Giving.” 9 Feb. 2015. Clear Learn Grants. http://clearlearngrants.com/the-coca-cola-foundations-charitable-giving/

Thompson, Arthur. Crafting & Executing Strategy: The Quest for Competitive Advantage. McGraw-Hill, 2016.

“What is the Coca Cola Foundation?” The Coca Cola Company. https://www.coca-colacompany.com/faqs/what-is-the-coca-cola-foundation

Winter, Greg. “COCA-COLA SETTLES RACIAL BIAS CASE.” 17 Nov. 2000. The New York Times. https://www.nytimes.com/2000/11/17/business/coca-cola-settles-racial-bias-case.html