The Ethical Issues Coca Cola Needs to Consider

Table of contents

Your manager has asked you to prepare briefing papers to explain the ethical issues the client organisation needs to consider in its operational activities (P1) Understanding Business Ethics| Understanding business ethics| Business Ethics plays an important role in business today and it can be defined as an examination of how people & institutions should behave in the world of commerce and it Ethics – is the study of the moral obligations and the difference between right and wrong.

Ethical values – the standards that are held and are set by a business or individuals that control their behavior. Business Ethics . Every activity and every profession requires that employees work with the responsibility and must respect not only general, but also the special requirements of professional morality. Since ancient times it comes to professional morality or professional ethics, emphasizing such things as professional conscience and responsibility, self-esteem and dignity.

Individuals and professionals within Coca-Cola must be ethical in the decisions they make this include: Respect other workers and managers, Using appropriate behavior Perform job competently

Act loyally

Act honestly Coca-Cola ethical activities Coca-cola always focuses on making a positive contribution to the community. Coca-cola support a lot of charities, aims to be the beverage industry leader in energy efficiency and climate protection. Also they keep trying to improve bottling plants to safely return to nature and communities an amount of water equivalent to what they use in their beverages and production.

Operational Activities

Operational activities are day-to-day actions taken by a firm to achieve its primary purpose to simplify that it is what a business actually does. Coca-cola makes soft drinks and beverage products, factories contain machinery and have people running them, it makes and receives deliveries, people travel to and from the factory. Operational management is very important and that includes controlling how a business works, so that it achieves the aims and objectives which is set by strategic management. Aims and objectives An aim is where the business wants to go in the future, its goals.

Objectives give the business a clearly defined target. Plans can then be made to achieve these targets. Without aims and objectives there is no meaning to business, it’s the aim and objectives that give meaning to subsequent activities of planning, directing, staffing, organising and controlling. Coca-cola’s aims and objectives are to: To refresh the world – in mind, body and spirit by providing the best product that they can to the public in order to create customer satisfaction and ensure that all employees are working to their highest standards.

Coca-Cola also wants to be the best beverage sales and customer service Company and make sure to never let their high standards of quality fail. To create a value and make a difference – everywhere they engage. To inspire moments of optimism – through their brands and actions Live Our Values Coca-Cola’s values serves as a compass for their actions and describe how they behave in the world. Values include: Leadership: The courage to shape a better future Collaboration: Leverage collective genius Integrity: Be real Accountability: If it is to be, it’s up to me Passion: Committed in heart and mind

Diversity: As inclusive as our brands Quality: What we do, we do well

Corporate Responsibility

Coca-Cola manages their corporate responsibility through the Public Policy and Corporate reputation council. Coca-cola also have to review Company policies and practices relating to significant public issues of concern to the shareholders. After researching Coca-cola’s Code of Conduct I found that Coca-cola said: Corporate responsibility is not just good for Coca-Cola, but for the whole world too.

Protecting resources, saving energy and encouraging recycling are serious challenges. If we all play our part in meeting them, everybody will benefit.

Corporate Governance

The Coca-Cola Company is committed to sound principles of corporate governance. The Board is elected by the shareowners to oversee their interest in the long-term health and the overall success of the business and its financial strength. The Board serves as the ultimate decision making body of the Company, except for those matters reserved to or shared with the shareowners.

The Board selects and oversees the members of senior management, who are charged by the Board with conducting the business of the Company. After researching Coca-cola’s Code of Conduct I found that the responsibility for administering the Code rests with the Ethics & Compliance Committee, with oversight by the Chief Financial Officer, General Counsel and Audit Committee of the Board of Directors. The Ethics & Compliance Committee is comprised of senior leaders representing corporate governance functions as well as operations.


Environment is very important as it’s the natural world either as a whole or in a particular geographical area. When it comes to Coca-Cola they keep trying to improve themselves and be environmentally friendly. Coca-Cola designed water programs to support healthy watersheds and sustainable programs to balance the water used throughout their production process. Also they use sustainable packaging, energy saving and climate protection. There are many bad stories how Coca-Cola had a bad impact on the environment. Negative stories – Environment

In 2004 Coca-Cola opened bottling operations in India – Kala Dera village and after factory was opened the community started to notice a rapid decline in groundwater levels and people was thirsting because of Coca-Cola. Coca-Cola has more than 50 bottling plants and six are reported that they are draining water too much, because each bottling plant extracts up to 1. 5m litres of water everyday from the ground and it takes about 9L of clean water to manufacture a 1L of Coke.


Sustainability can be defined as maintaining the world’s resources rather than depleting or destroying them.

This will ensure business can support human activity now and in the future. Coca-Cola is always trying to reduce and optimize the amount of materials and energy used for their packaging, also 85% of their products is delivered in recyclable bottles and cans. Coca-Cola are also trying to reduce their impact and minimize their use of water and their goal is to improve their water efficiency by 20% by 2012. So all in all Coca-Cola is keep trying to stay sustainable as possible, although they have bad stories about depleting water in India. In 2000 Coca-Cola opened a new plant at Plachimada in India and it produced 1. m litres of coke everyday which is almost 11m litres of clean water from the ground everyday. Human rights are the rights and freedoms to which all humans are entitled. Coca-Cola is constantly improving their human rights by respecting their employees and customers and protecting workplace rights. Coca-Cola had a lot of bad stories about human rights. To date, there have been a total of 179 major human rights violations of Coca- Cola’s workers, including 9 murders. In 2001 Coca-Colas bottling companies had been linked to many controversies.

These included the murder of eight union leaders. Violence, abductions and torturing of the union members were common practice in Colombia. In Code of Conduct Coca-Cola have said “We are continually advancing our understanding of human rights by engaging with experts in the field and with our peer companies. In 2007, The Coca-Cola Company joined the Business Leaders Initiative on Human Rights (BLIHR), a network of 11 multinational companies focused on identifying practical ways of applying human rights principles within the business context. ”

Corruption is to be guilty of dishonest practices and impairment of integrity. Corrupt means getting something by unfair means. It’s a major concern for every business and Coca-Cola do have a policy on corruption, although they were involved in corruption in past such as they “underhand dealing” and getting contracts not ethically and fairly.

Anti-Corruption Partnership

As a signatory to the United Nations Global Compact, Coca-Cola are actively engaged with other companies and nongovernmental organizations in the fight against corruption.

In December 2007, Coca-Cola became a signatory to the World Economic Forum Partnering Against Corruption Initiative (PACI), making The Coca-Cola Company the first food and beverage company to join approximately 140 other multinational companies in the private sector fight against corruption.

Trading fairly – is market-based approach to empowering fair trade where: * Business is carried on in an open manner * Consumers can feel secure that the goods and services that they paying for are going to be of satisfactory quality * Competition is open and fair 005 Pepsi Co had filed a case in the US accusing Coca-Cola of monopolizing the market of fountain dispensed soft drinks in the US. 2005 Coca-Cola agreed to end all its deals with shops and bars in Europe to stock only Coca-Cola. 2005 Coca-Cola were accused of poor trade practices in Mexico, because Mexicans were buying “Big Cola” rather then products from “Coca-Cola” because it was cheaper therefore Coca-Cola changed pricing strategies in Mexico and therefore started threatening the small business owners to stop selling “Big Cola”.

Coca-Cola had few bad stories for not trading fairly in past these includes not letting shops to sell other soft drinks.

Legal and Regulatory Compliance

Legal Compliance is more important than regulatory compliance. The most important statutory areas are; * Freedom of Information Acts (2000 and 2002) * Data Protection (1998) * Health and Safety * Employment Law * Human Rights (2000) * Animal Welfare Acts And Regulation * Contractual Relationships * Environmental Information regulations 009 Lawsuit was filed in regards to company flavours, of Vitamin Water. Claims say that there is 33 grams of sugar in each bottle of Coca-Cola that is more harmful than the vitamins and other additives. 2008 Coca-Cola were accused in Philippines for an unfair competition case because investigation raided three of cokes warehouses for illegally possessing imported bottles. 2008 Coca-Cola had to pay $137. 5 million to settle a shareholder lawsuit as they were channel stuffing or artificial inflation. Coca-Cola was charged in a U. S.

District Court for the Northern District of Georgia, with “forcing some bottlers to purchase hundreds of millions of dollars of unnecessary beverage concentrate to make its sales seem higher. ” Regulatory compliance is almost as important as legislative compliance. This is an important element in both good management and institutional efficiency. Elements include:

  •  Funding
  •  Teaching Quality Assessment
  •  Research Quality
  •  Financial Audit
  •  Risk Management
  •  Disaster Planning and Business Recovery

Coca-cola Negative Stories

Working Conditions

Working conditions can be defined as the conditions in which staff works this can include stress and noise levels, degree of safety or danger or physical environment. Coca-cola has strict working conditions to ensure that their staff is always safe. Working conditions are really important and it includes health and safety standards. Coca-cola has bad stories for its working conditions. To investigate Coca-cola’s working conditions few undercover students’ was sent to Coca-cola’s factory for temporary job during summer.

One of the student’s was beaten by staff members at the agency and student said that he was beaten by staffers at the agency after he demanded pay for his work at Coca-Cola. Coca-cola had even more bad stories relating to summer jobs these can be found in link bellow: http://www. chinadaily. com. cn/china/2009-08/20/content_8591019. htm

Business Practices

Business practices are a method, procedure, process, or rule employed or followed by a company in the pursuit of its objectives. Coca-cola has a lot of business practices and some of them was not been followed in the past.

In 2003 Indian NGO, Centre for Science and Environment has announced that they found cancer causing chemicals in Coca-Cola. 2007 Coca Cola’s products that were produced and distributed in the Indian market contained pesticides such as DDT, lindane, malathion and chlorpyrifos which all contribute to cancer and a weakened immune system of the human body. Individual Ethical responsibilities Every single worker in Coca-cola’s company must act in accordance with the law it does not matter is it staff member or is it manager all individuals should follow their own ethical principals at all time and be ethical.

Conclusion Therefore to conclude this report on ethical business culture and trade practices of Coca Cola, some basic elements that can be adopted by Coca Cola are like Develop worldwide code of ethics, by these we mean that the statement given by the company’s business culture is not true and the company should come up with a proper solution to this problems and should not tolerate any human rights infractions in any of its plants, or by any of its subsidiaries.

Consider ethical issues in strategic development, while making the strategic the company should consider ethical issue and develop its strategy according to it. Develop periodical “ethical impact statements”, when they are promoting any of its product they should make an ethical statement with it as it will help them to improve the company’s image in the minds of consumer. Recommendations

Coca-Cola Company must ensure that they keep their company always ethical and don’t have any bad stories. Although they are doing good job and not getting and bad stories about them lately, but still they should try to make their company even more ethical for people to think that it is a good company that has a good corporate image.


  1. Coca-cola bad stories – http://en. wikipedia. org/wiki/Criticism_of_Coca-Cola
  2. http://www. ibe. org. uk/index. asp? upid=71&msid=12
  3. http://www. thecocacolacompany. com/ourcompany/mission_vision_values. html
  4. http://www. thecoca-colacompany. com/ourcompany/pdf/COBC_English. pdf
  5. http://en. wikipedia. org/wiki/Fair_trade
  6. http://www. lilesparker. com/areas-of-practice/regulatory-compliance

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