BUSINESS ETHICS WITH

GOOD GOVERNANCE AND

SOCIAL RESPONSIBILITY
OFFICE MANAGEMENT TECHNOLOGY 2B

SUBMITTED BY:
FUENTES, ANA JAY AMOR
EREJER, DOMINADOR JR.
ENTINO, KARYLLE
MESIAS, RUVIE ANN
AMANDARON, MITCHE
Case Study Analysis Outline

I. Executive Summary
Coca-Cola is one of the most valuable brand names worldwide, they excelled
as a business over its long history. However, in recent decades the company has
had difficulty meeting its financial objectives and has been associated with a
number of ethical crises that cause them some investors losing faith in the
company.
Since 1990s Coca-Cola has been accused of an ethical behavior in a number of
areas, including:
 Contamination Scare
 Competitive Issues
 Allegations of Racial Discrimination
 Inflated Earnings Related to Channel Stuffing
 Trouble with Distributors
 International Problems Related to Unions
 Issues Regarding Water Usage, Pollution, and Supply Chain Oversight
 Coca-Cola’s Impact on Health

The company has dealt with a number of these issues, some via private
settlements and some via court battles, while others remain unresolved. The way
they handled different ethical situations has not always been lauded but they
generally responded by seeking to improve its detection and compliance system.

II. Findings
In 1996, Coca – Cola traded just below $50 a share and in 2013 ranged
between $58 and $69. The slow growth was attributed by various internal
problems associated with top management turnover and departure of key
investors, as well as external problems that have led to a loss of reputation.
The following incidents exemplify some of the key crises Coca-Cola has faced
in the last several years.

 Contamination Scare
- Where in some countries in Europe recalled/banned Coca-Cola
products when some children got ill after consuming coke
products.
 Competitive Issues
- The European Union, Italy, France are among the
countries/organization that tried to hinder Coca-Cola in expanding
their business in Europe.
 Allegations of Racial Discrimination
- Coca-Cola’s alleged racial discrimination to the African American
in their pay, promotion, and performance evaluation.
  Inflated Earnings Related to Channel Stuffing
- They were accused of sending extra to inflate their profit.
 Trouble with Distributors.
- In their attempt to stay away from the traditional direct-store
delivery, bottlers filed lawsuit both to Coke and Coca-Cola
enterprise to block them from delivering directly to Walmart’s
warehouse.
 International Problems Related to Unions.
- Coca-Cola allegedly threatened employees who joined unions.
 Issues Regarding Water Usage, Pollution, and Supply Chain Oversight.
- They were accused of contaminating the groundwater with waste
water.
 Coca-Cola’s Health Impact
- They’ve been battling consumer perceptions that its soft drinks
contribute to obesity.

III. Discussions
A company’s reputation will affect an organizations performance. Just like
Coca-Cola, they have faced a lot of problems that damaged their company’s
reputation both internally and externally. First is the contamination scare,
when some children got ill after consuming a Coca-Cola product. Second is
the competitive issue, it happened when they entered the European market.
Coca-Cola’s aggressive expansion in France highlighted their power which
made their competitors feel threatened of losing their market in Europe. Third
is the allegations of racial discrimination. This issue focuses on Coca-Cola’s
African American employees, and it was about them being at the bottom of the
pay scale, promotion and performance evaluation compared to the Caucasian
employees. Fourth is the inflated earnings related to channel stuffing. Most
companies dream to be the best, and Coca-Cola is no exemption. They sent
extra concentrate in exchange for extended credit just to have a big profit.
Fifth is trouble with distributors, this was caused by the delivery of Powerade
sports drinks directly to Walmart’s warehouses which caused a stir on its 54
U.S bottlers. Sixth is the international problems related to unions, this
accusations of Coca-Cola harassing and violating employees who joined
unions have surfaced in Columbia and Guatemala. Seventh is the issue
regarding water usage, pollution, and supply chain oversight, this was
encountered by Coca-Cola’s bottling plants in India. With accusations of both
groundwater depletion and contamination. Last is Coca-Cola’s impact on
health. There were claims from consumers that Coca-Cola contribute to
obesity and that a certain ingredient could contribute to cancer.

On the contamination scare, the best solution is the inner management should
be the first one to recall their products on the specific area where those kids
bought the item instead of the government and that they should have created
an investigation team to know and access what really caused the
contamination and that they should’ve released a statement to the public. In
 the competitive issue, they should’ve studied and understand the law and
regulations of European countries before they expand the business. Having
knowledge of a new environment will help them strategize their business
letter. Racial discrimination, one good solution is appointing or promoting an
employee that is African American because they will feel represented because
someone could voice out their opinion. Inflated earnings related to channel
stuffing, they should promote their products by advertisement in TV,
magazine, poster, and ads. Trouble with the distributor’s easiest solution is to
have a better and constant communication. Problems related to unions’
solution is that Coca-Cola management should meet with the union to form a
partnership with them, and to help the company understand it’s better. Water
pollution’s solution is to have the company create a bigger and better drainage
system for the wastewater. Health issues, since Coca-Cola can’t control how
much a person would consume, a constant reminder of the effects of too much
sugar intake would help.

IV. Conclusion
All those crises/lawsuits/complaints that Coca-Cola encountered, such as the
contamination scare, competitive issues, alleged racial discrimination, inflated
earnings related to channel stuffing, trouble with distributors, international
problems related to unions, issues regarding water usage, pollution, and supply
chain oversight, and Coca-Cola’s impact on health are hard fought battle.
Some of these they’ve won, some were lose, and others are still being faced in
the present time. But with the help of Neville Isdell and Muhtar Kent’s
leadership, the Coca-Cola Company have rebounded and has begun to take
strides toward improving its image.

V. Recommendations
We highly recommend a constant company meeting because nothing is more
efficient when it comes to solving a problem than a good communication.
Communicating all the necessary details to the people involve and the
management could help lessen the effects of a problem. If the contamination
scare, racial discrimination, trouble with the distributors and problems related
to unions and was communicated well, then these issues would’ve become a
minor issue, and that it wouldn’t have a big impact on the company sales and
reputation.

VI. Implementation
Have an employee who works in the production communicate to the CEO of
Coca-Cola on how they make its company product at least once, so that he
would understand better on how to lead the company and not just solely focus
on the paperwork’s. Also the CEO of Coca-Cola should have a regular
meeting with the different managers and employees in its organization, in
order for him to know all the necessary things that’s going on in every
department. And in that way he could hear the sentiments and concerns of the
employees and managers, they could find a solution. Since a good leader is a
good listener, a good leader should build better communication with its
employees.