: “The Coca-Coca Company Struggles with Ethical Crises”
HRM 522-Ethics and Advocacy for HR Professionals
Abstract
Since the late nineteenth century Coca-Cola has been a successful company. Coco-Cola went to war with its competitor PepsiCo throughout the 1990s as Coca-Cola expanded its market overseas. Its overseas sales increased to the point where over 85 percent of its sales came from outside of the United States (Ferrell, Fraedrich and Ferrell, 2011). As a consequence, the Coca-Cola brand and trademark is the most recognized in the world and worth an estimated $25 billion. Yet, by 2000 Coca-Cola failed to make Fortune’s list of most admired American companies because in part of its serious ethics violations like charges of racial
…show more content…
Apparently, it seems that the company is working fine, but it has run into numerous difficulties and, in short, has had ethical issues one after another, even with international recognition. The company’s problem began at the executive level where many areas of the organization lacked quality leadership that was lacking a series of ethical crises. Coca-Cola had a weak leadership and was not strong enough to resolve the ethical issues. Due to the weaknesses within the organization, ethical issues kept arising. Many board members lost faith in the company. Employees resigned from the company after it failed to conquer its challenges. According to Ferrell (2011), when Doug Ivester became CEO of the company, he was groomed for the position by a former CEO, and his tenure did not last long in the company. Ivester was faced with many challenges and issues and unfortunately he was not equipped to handle the competition from others in the industry. There have been several CEO’s whose tenure did not last long and have also decided to resign from the organization after years of frustration over these ethical issues. Coca-Cola however, had shown that they could not handle disputes or incidents whenever they occurred, there were slow responses, and failure to acknowledge the severity of situations that harmed the company’s reputation and management’s unprofessionalism. The company
The stakeholder theory made popular by Ed Freeman (1984) does seem to represent a major advance over the classical view (Freeman, 1984). It might seem inappropriate to refer to the stakeholder position as neoclassical. Bowie (1991: 56-66) has defined stakeholders as a group whose existence was necessary for the survival of the firm--stockholders, employees, customers, suppliers, the local community, and managers themselves.
A strong believer in his reconceptualized Stakeholder Theory of the Modern Corporation, R. Edward Freeman believes the key to success in business is
Coca-Cola is one of the world’s biggest and most well-known beverage brands. During its heydays when the company was led by CEO Goizueta, Coca-Cola’s stock was on a steady rise. As late as the 1990s, Coca-Cola Co. was one of the most respected companies in America, a master of brand-building and management in the dawning global era (Carvens & Piercy, 2009). Over the last couple of years, however, Coca-Cola’s stocks have been falling and profits have been decreasing from quarter to quarter.
“Citizen Coke: The Making of Coca-Cola Capitalism” by Bartow J. Elmore tells a story of how Coca- Cola have changed its industry as well as the globe by utilizing natural resources. To start on his journey about Coca-Cola, Elmore questions the success of the company behind selling Coke, a low-priced mixture of “sugar, water, and caffeine, packed in glass, plastic, or aluminum” (Elmore 8). Elmore discovers that even though advertising plays an essential key in selling products, Coca-Cola is mostly profitable from outsourcing the supply (Elmore 9). Besides explaining his research on the Coca-Cola capitalism, Elmore also emphasizes on the ecological evidences that support it, which make this book an environmental history of Coca-Cola capitalism (Elmore 14).
Today, the Coca-Cola Company is the biggest soft drink corporation on the planet. It accounts for about 44 percent of soft drink sales market in the United States and the company spends on average $3 billion on advertising annually (Smith). Coca-Cola is one of the most iconic brands of century promoting itself as the drink of freedom, choice, and US patriotism. However, behind this carefully crafted image exists a selfish dollar hungry and greedy company. Greed can be defined as the excessive or rapacious desire, of possessions, power, especially for wealth. Coca-Cola Company is exploiting less developed countries of resources, spoiling the environment, as well as bring about an assortment of heath issue
Today Coca-Cola is viewed as one of the most successful corporations all around the world. Melinda French Gates Co-Chair of “The Bill and Melinda Gates Foundation” sates “Non-profit should learn from mega corporations like Coca-Cola, whose global network of marketers and distributors ensure that every remote village wants and
After reading the lawsuit case article and further research, I come to the conclusion that Coca-Cola has improved tremendously and they continue to put diversity on the top of the list – diversity is one of the company's core value. Shortly after the lawsuit case the company was more involved in the community and they showed the efforts they were making to to build a relationship with minority groups, especially in Atlanta, where the company donated money to churches and schools attended by some of the people who were involved in the lawsuit case (Winter, 2000). The 2011-2012 Coca-Cola sustainability report shows how involved the company is in the community, the groups and programs they support, and how much they donate. Coca-Cola's 2011 charitable contributions total $124 million dollars; contributions were distributed between education, health and wellness, community initiatives, environmental programs, healthy living, disaster reliefs, and other kind contributions (The Coca-Cola Company, 2012).
Coca-Cola has a trademark value of $25 billion with the ability to make strategic decisions to satisfy and retain consumers (Ferrell, Fraedrich, & Ferrell, 2013). However, Coca-Cola has struggled to maintain a strong ethically sound integrity. Not only has the beverage giant struggled with ethical issues in the U.S., but has also had difficulty maintaining a positive reputation abroad as well.
The company known as Coca-Cola today was started in September of 1919, but the first Coke brand was served as early as 1886. Since that time it has grown to be one of the most globally recognized brand names with a stock value of $167 billion. Coke’s plan has always been developed with the future in mind. Right away the company realized that it was more profitable to manufacture the concentrate used to make carbonated drinks than to bottle it. From that point on they saw the entire world, not simply the originating country, as their desired market. It seems only practical that the company should pursue this agenda until conquered then focus the effort on expanding into different product lines. This logical
The values of Coca-Cola include the set mission, which consist of creativity, inspiration, act with urgency, consumer satisfaction, the brand to promote happiness, and the ability to refresh the world that will make a difference. Meanwhile, the Coca-Cola organization’s values drive the company to remain competitive and take a leadership position that properly meets the needs of the consumer in the marketplace. Nonetheless, the organization understands the importance to be a vital community citizen and remain responsible for its actions.
The Coca Cola Company is very cautious and responsive to change; they act with urgency and have the courage to discourse when needed to work more efficiently. Coke’s focus is to administer its system assets to build values and rewards for the people who take risks by finding better ways to solve problems. Coca Cola Company feels they are accountable for their actions and inactions and hence answerable to the people. They learn from their outcomes and understand what works or what doesn’t for them.
The stakeholder theory stants that large companies have a higher impact in the society, it sets that they are more than just shareholders, they should discharge their accountability not only for their stakeholders but as well as to several sectors of the society. In addition, it is a combination of agency theory and stakeholder theory law and codes of governance developed by governments all have an effect on the combined code and reports of corporate governance.
Coca-cola boasts of being the world’s largest beverage company serving approximately one billion customers daily. The most dominant products distributed by Coca-cola are Coke, Fanta, Sprite and Diet Coke. This strategy is aimed at ensuring that every customer gets satisfied whenever they use a Coca-cola brand. Coca-cola has large distributions across the globe making it the largest distributor in the world. The late Roberto Goizueta termed Coca-cola to be an American company with large international business and a sizeable American business (Ferrell, 2008). This has helped a lot with brand selling as it is the most recognized brand in the whole world. “Coca-Cola has the most valuable brand name in the world and, as one of the most visible companies worldwide, has a tremendous opportunity to excel in all dimensions of business performance” (Ferrell, Fraedrich, & Ferrell, 2008). Coca-cola, however, has not been smoothly running over the decades in operation. It has on numerous occasions been criticized for overlooking some ethical standards that it should have rather upheld. This essay aims at looking into some of the issues facing Coca-cola, the most significant of them, how they were resolved and how Coca-cola should have solved them.
“A Coke is a Coke, and no amount of money can get you a better Coke than the one the bum on the corner is drinking. All the Cokes are the same, and all the Cokes are good. Liz Taylor knows it, the President knows it, the bum knows it, and you know it."(Andy Warhol, 1975) Regardless of its corporate reputation, the organizational performance and its social responsibility of Coca-Cola makes it loved around the world. Ever since its creation in 1886 Coca-Cola has been a household brand known globally for generations of families. I have to mention, of all the cases researched this is my least favorite not only because of my childhood love for the product because the ethical issues in one way or another always manage to resolve themselves not before further tainting the reputation Coke worked so hard to obtain. Most times, whether an organization is innocent of an unethical act, it becomes secondary to the suspicion of the original act. Almost as if the court of public opinion has the power to ruin the reputation of an organization based on an unfounded accusation. In spite of my loyalty after having ready the case, I do believe Coca-Cola to be flawed. The contamination scare in Belgium is a great example of a public relations nightmare. The slightest hint of impurity should have pushed Coca Cola into crisis management mode but they were slow to react, citing it a minor issue (Ferrell, Fraedrich, & Ferrell, (2011). It was not until local officials
Coca-Cola is a big recognized brand that produces many products than just soda drinks. With all the money and brand recognition the company possesses, there are possibilities for the company to past the scandals and keep up in the business market, like we have discovered the company has invested money to cover illicit activities. However, it is very important for the company to act ethically and respond to the scandals that the company has been accused. If Coca-Cola responds morally correct, it will shows the customers that the company cares about social responsibility, but if the company does not act fast and ethically, it exists the possibilities that the company’s sales keep declining.