Writing Assignment -Final

February 4, 2018

Coca Cola Company Economic Analysis

Regulatory Considerations Affecting the Company

Coca Cola Company operates in a global environment where it is affected by a wide range of environmental regulations. The global environmental conditions have been changing, which requires the organization to make effective decisions that will guarantee sustainability of their business. The policies and programs developed within the company seek to ensure that Coca Cola Company continues with its operations across the world in a manner that upholds social responsibility, enhances productivity, and profitability of the organization (McConnell, Brue, Flynn, 2014). Thus, the company has to observe some environmental and accounting regulations while making some of its key decisions, which in turn go a long way towards affecting its performance on a global platform.

Environmental Regulations

There are various environmental regulations that affect the economic decisions made within Coca Cola Company such as the Clean Air Act, Clean Water Act, and the Resource Conservation and Recovery Act. The company has always strived to make its economic decisions in a way that enhances accountability for environmental performance. This has helped minimize the negative impacts that may be associated with their operations on both the local and global environment. As the company continues to achieve greater growth globally, it has always sought to maintain compliance with the applicable environmental laws and regulations in all their manufacturing and distribution activities of their products. In addition, the company has been a major stakeholders in the policy formulation discussions, which impact their environmental conservation strategies (Rubin, Moriarty, & Mehlsak, n.d). This has ensured that the company supports all the public policies relating to water quality, agriculture, ingredients, packaging, among other environmental policies and actions that could affect the company’s global operations.

Water conservation, use of clean energy, and addressing climate change are some of the policy issues that have affected the firm’s operations. The adoption of ISO 14001, which is an international environmental management system, in most of the company’s plants served as a key milestone towards compliance with environmental regulations. Packaging and recycling, through the 3Rs principle of Reduce, Recover, and Recycle, has enabled the company to minimize environmental impacts brought by packaging activities (Hitt, Ireland, & Hoskisson, 2012). On the other hand, the company seeks to promote sustainable agriculture in the face of population growth, rising food insecurity, and climate changes, by supporting various programs that aim at enhancing agricultural productivity.

Accounting Regulations

As a publicly traded company, Coca Cola Company is required to abide with the accounting regulations set by the SEC. Appropriate financial reporting standards should be followed to ensure that the stakeholders and general public can obtain accurate financial reports to be used in making their investment decisions. Some of the accounting regulations that affect Coca Cola Company include Dodd-Frank Act or the Sarbanes-Oxley Act, which aim at enhancing the financial accounting practices of most organizations (Posner, 2014).

Sarbanes-Oxley Act was introduced in 2002 as a way of trying to counter corporate fraud that was taking place in most publicly traded organizations. Coca Cola Company has put in place effective strategies to enhance compliance with the accounting procedures and regulations established by this Act. The company CEO is held personally responsible for any accounting audit errors which may indicate any organizational accounting malpractices (McConnell, Brue, Flynn, 2014). In addition, Coca Cola Company stands to be audited by the Public Company Oversight Board, which was created by the SOX to establish the required standards of audit reports. By following these standards, the company has been able to eliminate the occurrence of accounting malpractices, which has in turn enhanced investor confidence in their financial statements.

Another accounting regulation that has affected Coca Cola Company is the Dodd-Frank Act of 2010. This act was a federal law that seeks to regulate the financial accounting industry through various government agencies. The company abides with the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which has been essential in promoting accountability and transparency across all the levels of the organization (Posner, 2014). The presence of these regulations has impacted the accounting practices used by the company not only in the United States but also across the world.

Ethical Considerations and Economic Decisions at Coca Cola Company

As a global company, Coca Cola Company has to deal with many ethical issues in their operations. It is also one of the most valuable brand names across the world. However, Coca Cola has had to deal with many ethical issues in the industry such as racial discrimination claims, financial reporting malpractices, disruption of contractual agreements, and misrepresentation of market tests for some of their products (Rubin, Moriarty, & Mehlsak, n.d). Coca Cola faces stiff competition from other key companies such as PepsiCo, which is also a market leader in the beverage industry. The fact that the company operates in such a competitive and dynamic global environment makes it possible to engage in various ethical malpractices, which may raise concerns among the consumers, stakeholders, and respective agencies.

Corporate social responsibility has been at the center of Coca Cola’s mission to maintain its positive reputation among the key stakeholders and consumers. The company has always been committed towards ensuring that their products and activities are manufactured with the interests of their consumers guiding their decisions. This has enabled the company to provide healthy products and contribute towards programs that promote environmental protection across the world. Social responsibility has been a key ethical issue that has helped guide the economic decisions made by the organization in all their operations (Hitt, Ireland, & Hoskisson, 2012). Diversity in the workplace is also a major concern for the organization given its diverse workforce from across the world. There have been various incidents where the company had been accused of racial discrimination in the workplace. Additionally, the company has been involved in various queries over inflated earnings in their financial reports, which amounts to misinformation to their stakeholders and potential investors. The presence of various legal provisions on accounting practices has ensured that the company complies with financial reporting standards for the publicly traded organizations.

Role of Government Fiscal/Monetary Polices

Fiscal and monetary policies developed by the governments in various global locations where the company operates have had a significant effect on the economic decisions made by Coca Cola Company. The fiscal policies affect the growth, employment, inflation, and business cycles. Thus, fiscal policies can be used to target a particular sector of the economy or organization through tools such as taxation or providing incentives. On the other hand, monetary policies affects all the sectors of the economy through the use of various tools such as discount rates, open market operations, and reserve ration requirements (Hitt, Ireland, & Hoskisson, 2012). Coca Cola Company has had to make changes to its key decisions regarding employment and expansion into new locations based on the policies in place. Coca-Cola enjoys being able to acquire talents from all over the world through its highly effective human resource management platforms. The monetary and fiscal policies have led to various changes in the strategies applied by the company.

Monetary policy expansion within an economy has led the company to increase their expenditure and investment, which has helped the company boost its revenue from various locations. Expansion on the fiscal policies implies that the government is willing to spend more in supporting the operations of the organization (McConnell, Brue, Flynn, 2014). Coca Cola Company has worked closely with governments in the formulation of policies to ensure that they can achieve higher levels of performance and increase their investment in production activities. Higher taxes discourage investment, and as such Coca Cola may opt to reduce investing in economies where taxation is high while low taxes encourage the company to increase its investment within an economy.

References

Hitt, M., Ireland, R. D. & Hoskisson, R. (2012). Strategic management cases: competitiveness and globalization. New York: Cengage Learning.

Rubin, J., Moriarty, B., & Mehlsak, A. (n.d). Sustainability at the Coca-Cola Company in a New Era of Brand Building,

Posner, R. A. (2014). Economic analysis of law. Wolters Kluwer Law & Business.