MT1005A: INTERNAIONAL MANAGEMENT: SKILLS AND

CHALLENGES

Unit 2

Name: Catalin G. Vasiliu

Lecturer: Charlie Malone

Submission Date: 10/03/2016

 Companies engage in CSR in order to offset corporate social
irresponsibility (CSI). While the link to financial performance is implicit,
.. analysis seeks to evaluate a different causal mechanism underlying
CSR: that CSI is a liability and companies do good in order to offset
bad, perhaps with the intent of avoiding financial loss.
Matthew Kotchen , The B.E. Journal of Economic Analysis & Policy, Volume
12, Issue 1 2012 Article 55
Introduction

The Coca-Cola Company, also known as Coke, is a beverage retailer, manufacturer

and marketer of non-alcoholic beverage concentrates and syrups based in Atlanta.
The company operates on a franchised distribution system dating from eighteen
eighty nine where Coca Cola only produces syrup concentrate and sells to different
bottlers around the world who hold exclusive territory. The firm is best known for its
flagship product, Coca-Cola. Coke is in the top five worlds most valuable brands list
of 2016 with brand value of $56 billion after tech giants such as Apple, Microsoft and
Google (Forbes 2016). Coca Cola and its catalogue of over four hundred brands was
founded by pharmacist and Civil War veteran, John Pemberton of Atlanta and
patented by Frank Robinson in eighteen eighty six. After the demise of Pemberton,
Asa Grigs Candler, a businessman from Atlanta, secured rights for the company and
became the first president to bring real vision to the brand by implementing new
marketing techniques, such as the hiring of travelling agents distributing coupons for
free drinks and plastering logos in calendars, in an attempt to nationalise the brand.
By early nineteen hundreds, close to one thousand bottling plants were available
across America and bottled coke was packaged and sold in groceries and saloons,
making it the ideal drink for citizens on work breaks or on-the-go (Pendergrast 2013).
With this newfound success, the first ever slogan, The Pause That Refreshes, was
implemented as part of Cokes marketing campaign, making the pause
synonymous with Coca Cola. In the following PR campaigns in the coming years,
Coke portrayed itself as an icon of Americanism as it spread its cult image in over
two hundred countries all over the world. Coca Cola paints itself as a responsible
and supportive global citizen manufacturing products that are considered to be
healthy, while at the same time refreshing the mind, body and spirit of its consumers
(Coca Cola 2016b). In reality, however, the corporation is concerned with profit
making schemes and misinformation of the masses by funding bogus organisations,
such as the Global Energy Balance Network and will stop at nothing to achieve this
goal. In the continuous push for global domination in the soft drink industry, Coca
Cola has resorted to a number of aggressive tactics to sell its products on the
market. In each instance denying responsibility or involvement for the activities and
accusations that have been raised against the company by various boycotting
actions on health and environmentally ethical issues. In Indias water supply and
pollution, for example and illegal murders in Colombia of its employees by getting
involved with political activists, as well as selling bottled water deemed as cancer
inducing in the United Kingdom.

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Leadership

Coca Colas code of conduct is aimed at acting in the best interest of the firm while
performing job in the company. Managers are expected to promote a culture of
ethics and compliance by being a role model to employees and exhibiting
appropriate behaviour at all times that is to be followed as standard practice.
Employees are also encouraged to voice concerns to managers by speaking up
whenever misconduct is being observed and the need to ask questions arises about
various activities on the factory floor. Managers are advised to provide answers to
questions to the best of their abilities and if unsure how to respond, ask further
questions themselves higher up the hierarchy of management. This is similar to a
paternalistic approach in which the managers are concerned for the wellbeing of the
firm and implementing a rather autocratic decision making style. It is very common in
companies where there is a hierarchical flow in management such as Coca Cola and
less creativity is expected from the job itself.

Corporate Social Responsibility

Corporate Social Responsibility is the continuing commitment by business to

behave ethically and contribute to economic development while improving the quality
of life of the workforce and their families as well as of the local community and the
society at large. (Baker, 2015)

CSR Crimes

India

With over twenty company owned bottling plants and another equally numbered
franchisee bottlers (Economictimes.indiatimes 2016) since the firms re-entry in
1999, India has become one of the largest growing market and most important
producer and seller of Coke products in the world. Coca Cola has been heavily
boycotted by the local and international communities due to its huge amount of water
depletion with over five thousand litres being harvested each day from boreholes and
open wells leaving farmers out of work and without a source of fresh water. For every
3.5 litres of water used by the plant, it produced one litre of product and large
amount of the sludge which was being fed back into the river Ganges and the land
thereby poisoning the land and making it barren, to which the company claimed was
regular fertilizer. Regulations in India on environmental laws are as strict as the ones
in United States or Europe so it is not the lack of insufficient resources or political
will. Since nineteen eighty five, the government has spent about fourteen billion
rupees ($300 million) on a clean-up plan which includes sewage treatment and
chromium recovery (Blanding 2010). It is not a lack of environmental laws that make

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those actions possible but a mix of power failures, local indifference, lack of
enforcement and outright corruption. The company has faced crisis due to
mismanagement of water resources, such as the forced closure of bottling plant by
government in Kerala in 2005 and also the closure of fifteen year old plant in
Varanasi in 2014.

To offset the water loss, Coca Cola has implemented a 2020 goal of safely
replenishing the amount of water used by finished beverages and their production to
communities and the environment thereby becoming water neutral (Coca Cola (c)
2016). However, suggesting Coca Cola can become water neutral is almost
impossible and deceptive claim for two main reasons. Firstly, the impact of water
depletion is local, unlike climate change and when Coke extract water from aquifer
but replenishing lost water far from the point of extraction has no relevance to health
of local water supplies, on which local communities depend. Secondly the amount of
water footprint used by Coca Cola to produce its products is far more than water
used in bottling plants (Global Research 2015).

United Kingdom

Coca Cola first sold bottled water in the United Kingdom in March 2004 under the
brand of Dasani being launched with heavy advertising of over seven million pounds
and the slogan, The more you live, the more you need Dasani. The way the water
was procured by using a mix of minerals shipped to bottlers placed in the purified
water tap. Shortly after, it was publicized in the newspaper that the source of the
bottled water was from southeast London suburb of Sidcup, which procured its water
from the River Thames. Later on, Coke was accused by the Food Standards Agency
(FSA), for the improper use of the word pure. The process of obtaining Dasani
water went through various stages of purification. Firstly, there was the ultrafiltration
where particles were removed, followed by the removal of odours using carbon filters
and ultraviolet rays to kill all bacteria present. Even after the reassurance, Coke
recalled half a million bottles of Dasani from the market due to it being contaminated
with carcinogen bromate (formed by oxidation of calcium chloride) which at twenty
two parts per billion, is twice the amount approved by the FSA. Ten years after the
retrieval of Dasani from the U.K. market, Coca Cola launched a new product,
Glaceau Smart Water which is fortified with electrolytes to mimic sports drinks for
athletes (Blanding 2010).

Colombia

To keep costs as low as possible by saving on pay and benefits, only a fraction of the
workers in Colombian bottling plants are employed on full time basis and the rest are
part time (Blanding 2010). Trade unions in various places of the world have accused
Coca Cola of hiring illegal paramilitary right wing militia of the United Self Defences
of Colombia (AUC) to intimidate and threaten to kill its workers. The firm was sued

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by Sinaltrainal in an attempt to mitigate the pain and suffering" over the deaths of its
members to which Coca Cola was removed from the trial but process against
bottlers continued on. The main targets were union members and leaders that were
boycotting the company in Colombia in an attempt to stop the consumption of Coca
Colas products by campaigning locally. According to International Confederation of
Free Trade Unions, Colombia is one of the worlds most dangerous country to be a
union member with 184 out of worlds 213 confirmed killings in 2003 (The Guardian
2003).

Conclusion

Coca Cola portrays itself as a very ethical company on the surface by claiming to
behave in ethical ways to offset damages done by the production and bottling plants
in various countries. However due to tactics implemented to deceive the underlying
reality of the companys actions and the lack of control from governments of less
economically developed countries, Coca Cola will continue its activities of over
depletion of water in India, and anti-union stance of murder of union members in the
Mexico. It is more difficult to carry out activities that harm first world countries such
as the U.K. due to tight legislation rules and strict controls.

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References:

Alternet. 2005. The 14 worst corporate evil doers. [online]. Available from:
http://www.alternet.org/story/29337/the_14_worst_corporate_evild
oers. [Accessed 16 February 2016]

Baker, M. (2016). Definitions of corporate social responsibility - What is

CSR?. [online] Mallenbaker.net. Available at:
http://www.mallenbaker.net/csr/definition.php [Accessed 9 March 2016].

Blanding, M. 2010. Coke Machine The dirty truth behind the worlds
most favorite soft drink. New York: Penguin Group.

Coca Cola (a). 2016. Our story 1886-1892: the beginning. [online].
Available from: http://www.coca-cola.co.uk/stories/history/heritage/our-
story-1886-1892--the-beginning/. [Accessed 16 February 2016]

Coca Cola (b). 2016. Mission, Vision and Values. [online]. Available from:
http://www.coca-cola.co.uk/about-us/mission-vision-and-values/ .
[Accessed 16 February 2016]

Coca Cola (c). 2016. Collaborating to Replenish the Water We Use.

Available from: http://www.coca-colacompany.com/collaborating-to-
replenish-the-water-we-use/ . [Accessed 9 March 2016]

Economictimes.indiatimes. 2016. Coca-Cola mulls sale of India bottling

units valued at $1 billion. [online]. Available from:
http://economictimes.indiatimes.com/industry/cons-products/food/coca-
cola-mulls-sale-of-india-bottling-units-valued-at-1-
billion/articleshow/51182842.cms . [Accessed 8 March 2016]

Forbes.2015. The World's Most Valuable Brands. [online]. Available from:

http://www.forbes.com/powerful-brands/list/ [Accessed 16 February 2016]

Global Research. 2015. The Privatization of Water in India: How Coca-Cola

Destroys the Aquifer. Available from: http://www.globalresearch.ca/the-
privatization-of-water-in-india-how-cocacola-destroys-the-
aquifer/5472625 .[ Accessed 25 February 2016]

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Pendergrast, M. 2013. For God, Country and Coca-Cola. 3rd ed. New York:
Basic Books

Polaris Institute.2005. Coca-Cola Company: Inside the real thing. [online].

Availabe from:
https://d3n8a8pro7vhmx.cloudfront.net/polarisinstitute/pages/29/
attachments/original/1410802045/Coke_profile_August_18.pdf?
1410802045. [Accessed 16 February 2016]

Saint Joseph University. [no date]. Evidence of the Coca Cola Companys
human rights abuses and environmental violations. [online]. Available
from:
http://org.ntnu.no/attac/dokumentene/cocacola/cokeinfopacket.pd
f . [Accessed 16 February 2016]

The Guardian. 2003. Coca-Cola boycott launched after killings at

Colombian plants. [online]. Available from:
http://www.theguardian.com/media/2003/jul/24/marketingandpr.c
olombia. [Accessed 16 February 2016]