Business Ethics case study

Ethical issues at Coca cola

Product safety
Problem/issue: In November 10, 2021 Coca-Cola voluntarily recalled minute maid products
that were suspected of metal contamination. The recall lasted until March 3, 2022.
According to the FDA recalls involve products that cause temporary or medically reversible
adverse to health consequences.
Resolution applied: Coca-Cola’s spokesperson Ann L. Moore explained in an interview with
Health magazine that they voluntarily recalled the affected products because nothing is
more important to them than providing safe, high-quality products to their consumers.
Customers who had already bought the affected products were advised to throw it away.
Ethics Conclusion in relation to the issue mentioned:

Anti-competitiveness
Issue: Eu Commission launched a probe into Coca-Cola’s potential violations of competition
rules. The investigation was launched after a complaint from retailers who losing their
negotiating power against large branded suppliers. The inquiry was aimed at uncovering
Coca-Cola’s unfair trade practices it was imposing on retailers to impair competition in the
non-alcoholic drinks market. Some of the commissions findings were granting of discounts
for exclusivity and the provision of fixed shelf or refrigerator space for Coca—Cola brands. In
2005 Coca-Cola was also found guilty of exploiting its market position to stifle competition
through sales agreements.
Resolution: In 2005 they avoided a fine for similar offence by coming to an agreement with
the commission on changing its business model in the EU. Coca-Cola agreed to co-operate
with the commission. The matter is still on-going. If Coca-Cola is found guilty they will pay a
fine to deter them from such practices. Coca-Cola denies any wrongdoing but agrees to
abide by the commission’s rules.
Ethics Conclusion in relation to the issue mentioned:

Racism
Issue: In April 1999, a class action lawsuit was filed against Coca-Cola by four current and
former African-American employees for racial discrimination under US Civil Rights Act. They
complaint was that they received lower pay, less promotions and poor performance
evaluations due to the company’s racist policies. They provided stats showing African
American employees were paid a third lower than their white counterparts for the same
positions in particular departments within the company. Few African-Americans had
advanced to senior levels in the company. The employees were suing the company on their
behalf and 2200 African-American colleagues with similar grievances. Coca-Cola failed to
prevent and remedy this discrimination.
Resolution: In 2000, Coca-Cola agreed to pay a settlement. They denied the allegations but
agreed to make changes to its personnel policies and procedures. A watchdog was assigned
jointly by Coca-Cola and the plaintiffs’ lawyers and approved by court to revise the
company’s personnel policy over a period of 5 years and evaluating Coca-Cola’s compliance
with the terms of the settlement agreement. The Task Force issued a final report in
December 2006, its mission has been a success and that the Coca-Cola has made significant
progress.
Ethics Conclusion in relation to the issue mentioned:

Channel stuffing
Issue: Institutional investors led by Carpenters Health & Welfare Fund filed a lawsuit against
Coca-Cola for “channel stuffing,” which a practice where Coca-Cola artificially inflated their
results and gave investors a false picture of the company’s health. The US SEC said, “Coca-
Cola misled investors by failing to disclose end-of-period practices that impacted the
company’s likely future operating results.”
Resolution: Coca-Cola agreed to settle the case to avoid litigation but denied any
wrongdoing. The settlement applies to anyone that acquired common stock from October
21, 1999, to March 6, 2000.
Conclusion:

Distributor conflicts
Issue: Coca-Cola offers discounts below his competitors to retailers for them to pocket. This
causes consumers to ignore other brands in favor of Coca-Cola products.
Resolution: They have been sued for anti-trust several cases and settled out of court with
cautionary warnings.
Ethics Conclusion in relation to the issue mentioned:

Intimidation of labour union workers

Issue: Coca-Cola has been doing everything to intimidate union workers and denying them
their rights in its plants around the world.
Resolution: On some lawsuits it has offered a cash settlement out of court and some it has
denied allegations.
Ethics Conclusion in relation to the issue mentioned:

Depletion of natural resources

Issue: In Kerala, India Coca-Cola have been blamed for causing water shortages, which has
resulted in locals and farmers being unable to access groundwater to irrigate their lands and
sustain their crops, causing families to lose their livelihoods.
Resolution: In March 2004 the village council refused to renew Coca-Cola’s license and
forced them to close their plant.
Ethics Conclusion in relation to the issue mentioned:

Health concerns
Issue: According to WHO and CDC findings Coca-Cola soft drinks have high sugar content
causing heart disease, obesity and type 2 diabetes and tooth decay. They also found that its
cola has high caffeine content that causes blood pressure to increase.

Contamination scare in Belgium and France

(CNNfn) - France lifted its ban Thursday on the sale of Coca-Cola products after the
country's food-safety watchdog concluded the company's soft drinks are safe for
consumption. The action signaled a tentative end to the worst health scare in Coke's 113-
year history.
On Wednesday, Belgium allowed Coca-Cola (KO) to resume production of its signature
soft drink and other products at two Belgian bottling plants.
But Belgian health authorities said they would continue to bar sales of products from a
Coke plant in Dunkirk, France, pending a green light from French health officials.
The Belgian announcement came nine days after the country slapped a blanket ban on
sales of Coke products -- including Coke, Fanta and Sprite - after more than 100 people fell ill
with nausea, vomiting and dizziness after consuming Coke products.
The withdrawal prompted similar moves by France, Luxembourg and the Netherlands,
which pulled all or some Coke products from their shelves amid mounting questions about
the cause of the illnesses.
The episode dealt a public relations blow to Coke, which was criticized for its slow initial
response to the scare. The company released findings from a Dutch toxicologist Monday
asserting that the contamination wasn't present in sufficient quantities to pose any health
risk.
Atlanta-based Coke said the outside of cans from the Dunkirk, France plant revealed
tainting from a fungicide applied to wooden pallets used to ship the soft drinks. The
company attributed the problems at its Belgian factories to the inadvertent use of sub-
standard carbon dioxide in Coke bottles. Carbon dioxide creates the fizz in Coke soft drinks.
In a belated attempt at damage control, Coke chairman Doug Ivester personally
apologized to Belgium consumers in advertisements placed in Belgian newspapers. He told
reporters he planned to buy every Belgian consumer a can of Coke to make amends and
restore customer loyalty.
The Belgian health minister, Luc Van den Bossche, said he allowed Coke to resume
production at its Ghent and Antwerp plants after concluding that the contamination was
probably the result of an accident. He added that some of the scare may have been due to
public over-reaction.
But the same time, he decided to keep Coke products originating in the Dunkirk plant off
Belgian shelves pending clearance from French health officials. The French removal of the
ban Thursday presumably means those exports will now be allowed to resume.

Resolution: Coca-Cola issued a report that it has reduced its sugar content on all its soft
drinks.
Ethics Conclusion in relation to the issue mentioned:

Coca cola is an example of an immoral organization that puts profits above everything and
everyone else and will exploit everyone in getting it.