Ethical and Moral Business Management: Coca Cola and Pepsi in India
Synopsis of the case
Coca Cola and Pepsi are companies that have greatly been established to cater for international markets in regards to the set standards. These companies have been managed in competitive environments hence leading to massive profitability. This has made these companies to grow in terms of providing job opportunities to the people in the regions. The introduction of these two companies into the global market has since been a mystery following rejections in the late 70’s. Coke entered the Indian market as a result of massive production standards put together by John Pemberton. However, introducing these companies was not a good idea for companies such as Limca and Citra, just to mention a few, which fled the market.
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Ethical Issues
The main problem encountered by Coca Cola and Pepsi was the claim that the soft drinks contained high levels of pesticides; this was investigated in the year 2003 (Carroll and Buchholtz 652). These components were claimed to have the ability to cause cancer to the consumers once consumed. Along with this effect, the residues of these pesticides were proven to cause deformations at birth and also interfere with the nervous system. There was also the issue of polluting water resources (Caroll 855). It was argued that Coca Cola’s practises were geared to exploiting and assaulting the consumers in India, especially Kerala and Mehdiganj. It was also observed that water around the Coca Cola plants had a disturbing taste as well as smell (Caroll 856). The company was prone to distribute “fertilizer” to farmers, which in turn polluted the soil. It was discovered that the “fertilizer” contained cadmium, which made the waste toxic (Bills para 6).
The India Resource Centre (IRC) continually criticized the Coca Cola Company of high pesticide levels. This body ensured that all the Coca Cola products were banned, especially in cafeterias (Carroll and Buchholtz 652). It was later agreed that Coca Cola and Pepsi introduce warning stickers on all their products. This led to a major decline of the companies’ sales. These are some of the ethical concerns that affected the smooth running of Coca Cola and Pepsi. The main aspect that led to the establishment of these companies was distinctive marketing strategies, which created a link of trust between communities and the companies. It has been observed that India lacks clean water as a result of poor sewage treatment as well as industrial pollution (Brady para 9).
Since Indians view water as “sacred”, the act of water pollution in strongly unacceptable as practised by these companies. The Coca Cola Company conducted research upon these
allegations and proved that all their products met the required standards (Caroll 856). One of the major concerns that caught the interest of the locals was the allegation made by Coca Cola that some of the products in the Indian supply chain contained significant amounts of pesticides. In moral perspective, this is unacceptable especially when companies justify their wrong-doing with bad deeds. This shows that the companies took this matter as a simple case. Nevertheless, Coca Cola decided to clear its image by hiring another firm instead of addressing the issue at hand. This was highly unethical, especially when it concerns the lives of people.
Violation of Agreements
One of the major violations made by the Coca Cola Company was the introduction of high levels of pesticide. In 2006, a new research done by the “Centre for Science and Environment” (CSE) proved that the amounts of pesticide content in the products were high than the requirements of the Indian government. This made states like Kerala to ban the products completely.
In resolving this crisis, Coke geared up its marketing campaign challenging the research done by the concerned bodies. Coke introduced stickers that argued that their products were safe for human consumption (Griffin and Moorhead 313). Researchers were hired in order to capture the response of the consumers and also establish the interests of the public (Caroll 857). Some of the well-known celebrities were among those who were used as tools of promoting the products.
For instance, Amir Khan assured people that the products provided by the Coca Cola Company were safe, and that people could prove this by trying the products. There was also the availability of his posters (drinking a Coke), which was the major attraction of the sales performance. Another important position that was taken by Coke was to change the 2003 management. In
2006, it was proven that the products provided by Coke and Pepsi contained few amounts of pesticide, and in some cases none at all.
Ethical Effectiveness
Pepsi as well had the same approach as that of Coke. Pepsi also ensured that water usage was cut down, especially in its plants. Pepsi also drew much attraction by appointing Indra Nooyi as the CEO (Caroll 858). She advocated that Pepsi had implemented special programs aimed at improving the quality of water as well as the environment. This made her receive praise, not forgetting the increase in sales.
Since these two companies use water as their main raw material for their products, these challenges have not been quite promising. These companies have gone through processes of renewing their priorities (Caroll 859). For example, Coke established over 65 water projects mainly to boost local economies. All this is viewed as efforts by Neville Isdell to restore Coke’s image. Isdell claimed that this crisis established the link between the company and the public, and that this was imperative in boosting their sales. It has also been noticed that Pepsi has a number of projects similar to those of Coke. Pepsi established a project aimed at trapping rain water in excavated ponds. The Pepsi Company is also praised at its efforts in sponsoring other water projects in the community (Griffin and Moorhead, p313).
Both the Coca Cola and Pepsi companies made allegations that all these accusations had no concrete evidence and that they were false. Their argument was based on the fact that they were observing international standards set by the United States Environmental Protection Agency (USEPA). They all believed that the main theme of these “false” allegations was to tarnish their earned reputation just as other companies do for their own benefit (Carol 859).
Despite all these challenges, the strategies applied by Coca Cola and Pepsi have attracted the Indian market, especially due to their unique brands. In respect to the challenges introduced by the extensive amounts of pesticides, it was also discovered that the products were a major concern of a number of miscarriages in women. This made these companies face major threats, especially in international markets. With major concern, these companies ensured that their reputation was restored (Caroll 859). This was mainly done through implementing the regulatory procedures. The major issue that concerned the public was the fact that these companies worked on building their reputation rather than that that of the public. It was argued that the Coke CEO never investigated the allegations, but rather he argued that all the products were safe for human consumption. Coca Cola proceeded to argue that all the water filters used in the plant were capable of removing contaminants to meet the health standards (Griffin and Moorhead 313).
Conclusion
It is clear that in any business practise, the well-being of the consumer is what matters the most. In the long run, Coke and Pepsi listened to all the claims and dealt with them accordingly.
It is always important to observe the regulations whether they are implemented or not. This is all in the efforts of safeguarding the interest of the consumers. Companies that ignore universal standards just because there are no people watching have no interest in the health of its target and lacks moral values. In order for these companies to excel, they must make sure that all the promises made are fully addressed. It would also be important for these companies to apologize to the public about the allegations of the high pesticide levels. It is also important that the companies follow all the information and make sure that it is based on facts that can be verified. The battle over water pollution is a clear indication of global drawback introduced by poor
management of companies. Consumers are now much concerned with the way companies conduct their businesses, and this can be clearly seen from the protests conducted.
Works Cited
Bills, W. Anthony Coca Cola in India. 2011. Web. 17 April 2012. http://cocacola.ezinemark.com/coca-cola-in-india-7d2e7eda6b37.html
Brady, Diane. "Pepsi: Repairing a poisoned reputation in India." Bloomberg Businessweek .2007, June 11. Web. 17 April 2012.
http://www.businessweek.com/magazine/content/07_24/b4038064.htm
Caroll, B. Archie. Coke and Pepsi in India: Issues, ethics, and crisis management. n.d. Case 23, pp. 855-860.
Carroll, B. Archie and Buchholtz K. Ann. Business and society: Ethics, sustainability, and stakeholder management. Canada: Cengage Learning, 2011. Web. 17 April 2012.
Griffin, W. Ricky and Moorhead Gregory. Organizational behaviour: Managing people and organizations. Canada: Cengage Learning, 2010. Print.