Ethical issues that have faced Coca Cola Company
The Coca Cola Company has been faced with many challenges ethically which has jeopardized their state as the leading soft beverage manufacturer in the world. Some of the challenges include the contamination in the products which are produced by the company. This affected the integrity of the company products loosing trust to its consumers. Contamination cases have been evident in the beverages sold by Coke in some parts of the world. For instance, In Belgium, it was reported that Coca Cola products consumed by the children led to widespread illness. Thirty children who consumed these products become ill in 1999 putting the company image at peril. This was the most damaging of all the ethical issues that the Coca Cola Company has faced in its operations. The presence of contaminants in the products led to the questioning of the process and testing of the products which were used in the manufacture of the products. This led to the Belgian government recalling of all the products manufactured by coca cola in the country. This however, was followed by a domino effect where the Netherlands and Luxembourg officials also had to recall the Coca Cola products in their countries fearing the same consequences as those experienced in Belgium. The situation became worse when the French government reported multiple cases of illness that were related to the consumption of Coca Cola products. This consequently led to the banning of all the Coke products in France.
Another issue that has affected the company is the accusations of racial discrimination. In the course of its operations, the company has been accused of discriminating its employees on the basis of race and ethnicity. These racial profiling issues first emerged when a batch of employees of African American origin sued the company for discriminating against them in pay, performance evaluations and promotions. It was observed that the employees of African American descent were the ones ranked lowest on the pay scale as compared to employees of other races in similar job positions.
Coca Cola was also accused of channel stuffing, which led to inflated and fictional earnings. This can be termed as an insider trading, which also falls under fraud ethical issue. This mainly represents carrying out transactions without the authority of the required personnel’s. The company had been shipping excessive inventory to wholesalers and terming them as sales in their books. The accusations were reported in Japan in 2004 where the company reported inflated financial earnings. The allegations were found to be true by the Securities and Exchange Commission (SEC) despite the company clearing its name.
Coca Cola has also been facing problems with the international trade union due to the working conditions of the employees. The company abused the rights of the workers. The conditions under which the employees work was unfriendly while it has been reported that some workers died while on duty in some of the Coca Cola Plants such as Colombia. This led to the unions lobbying against the company activities in many areas around the world.
Another ethical set back that has affected the company is the conflict between the company and the distributors. For example, the company entered into an agreement with Wal-Mart in the distribution of its products beyond Texas. This was in contravention of the laid down procedures and led to the distributors filing suit challenging the contract entered into. This led to negative media coverage which affected the image and the long cultivated reputation of the company.
Conflict of interest among key officials in the company has been prone within the company. This is mainly in terms of work position and assignment of tenders. The issue has influenced the company performance thus posing a challenge on the profitability of the company.
Ethical issue which is most significant
Among the ethical issues discussed, the contamination case can be ranked as the most significant issue. This is based on the fact that the products that the company produces determine its life. The consumers influence the direction of the company profitability therefore a change of consumer demand influenced by contamination cases may lead to company solvency. Other ethical issues are also significant in influencing the company performance but a contamination issue is the worst scenario.
The Steps Coca Cola Company should have taken
In the situation of contamination of products, the company should have quickly responded to the crises and recall the products rather than wait for the intervention of the respective governments and also try to compensate the families of the affected children. This would have gone some way in salvaging the image, which was being soiled, and market retention. To prevent the ethical issue, the company should embrace strategies that are meant to ensure all products released to the market meet all the social standards as required by the regulatory authority. This will prevent integrity loss of the company products thus maintaining its market base.
Similarly, on the case of racial discrimination, the company should have should also have taken action on the management for failing to act on the issue which they had known of in their tenure. The company has to embrace remedial strategies that ensure payment should be based on work done and not race. This will ensure the productivity increases as workers will be motivated to work diligently.
In channel shuffling, a well established process of accounting any transactions of the company should have been established to ensure all processes within and outside the company meets the company accounting standards. This involves coordination with distributors to minimize the fraudulent transactions.
In international union problems, the company should have compensated the affected and those responsible be brought to justice. Favourable working conditions should be established in all working stations to ensure that the workers' welfare is up to the standards required. This will improve the profitability of the company and there will be strong cohesive power between the company and workers now and future.
The company has the responsibility to maintain the set contractual procedures and hence it was unethical for the company to override the distributors in the signing of the contract. The company should ensure that in future, it should uphold contractual rights which help to maintain its corporate image and relation with other organizations. Also, the company needs to establish measures that ensure that all parties within the organization respect the duties assigned to them. This is by establishing a code of conduct that ensures all the terms and conditions within the organization are followed. This is to prevent the conflict of interest among officials or workers in the organization.
Actions that the Coca Cola Company undertook to solve the ethical issues
Among many ethical issues mentioned, the organization restructures in terms of human resource management assisted in resolving the issues. For instance, the company had to settle the case of employee’s discrimination by paying huge sums of money as collateral damage. The company took the right action by implementing the diversity committee which was supposed to sort the discrimination issues.
References
Coca Cola. (2009). The Coca-Cola Company Struggles with Ethical Crises. 308-317.
FEMSA. (2012). BUSINESS CODE OF ETHICS. COCA COLA FEMSA , 1-30.
Ferrell. (2011). Ethical Issues and the Institutionalization of Business Ethics. 55-90.
Mahajan, A. (2009, August 18). Ethical issues concerning Coca-Cola in India. Retrieved July 31, 2013, from The Corporation: http://imaginecorporation.blogspot.com/2009/08/ethical-issues-concerning-coca-cola-in.html
Race, Difference, and Corporate Ethics at Coca-Cola, ISM (IBC1 Autumn 2012).
