Business Sustainability and Society: Coca-Cola Company - Case Study Example

Running Head: Business Sustainability & Society Business Sustainability & Society [Institute’s Business Sustainability & Society Introduction Since centuries, ethics has been a crucial and significant component of the human societies that contributed enormously in the creation of norms and values through religious influences, as well as through contribution of intellectuals and philosophers in the society. Unfortunately, nowadays, it is an observation that individuals, organizations, and even nations have commenced to overlook the phenomenon of ethics in their practices, specifically in the business sector that has become the major stakeholder confronting criticisms related to ethical practices. Critics (Crane, pp. 23-29, 2007) argue that business ethics has now become a component limited to theoretical policies and frameworks of business organizations, and such principles and ideologies although enable an organization to acquire income in a fair manner, however, it is now fading gradually from the business sectors. Brief analysis (Chadwick & Schroeder, pp. 11-18, 2002) has indicated that a set of ethical principles exist in almost every business organization globally; however, executives are not ensuring its implementation on ground reality level. For such reason, a number of researchers (Crane, pp. 43-48, 2007) are putting efforts to analyze different practices of business organizations in light of ethical theories and frameworks that has become a major concern of organizations around the globe. In specific, this paper is part of the similar series that will be endeavoring to analyze one of the leading companies in the business sector, Coca-Cola (2010) in terms of its business practices that has resulted in huge criticism globally, especially in India. In this regard, this paper will put efforts to evaluate company’s practices critically while identifying any existing ethical issues and analyzing them with three specific ethical theories, Utilitarianism, Ethical Relativism, and Kant Deontology. Lastly, the paper will attempt to offer some implications for the improvement of company’s image. Coca Cola Since its establishment in late 1880s, the Coca-Cola Company has traveled a long journey until now, as it now enjoys ownership of approximately 450 brands, as well as roughly 2,750 drinking products globally (Coca-Cola, 2010, specifically in more than two hundred countries that is a huge achievement for the company. Although public usually recognizes the company with its top brands of Coca-Cola, Sprite, and Fanta (Coca-Cola, 2010; however, the company is successfully running its businesses in different range of products from water to juices, and from coffee to energy beverages. The company controls its operations in different continents from the American continent in Atlanta, Georgia (Coca-Cola, 2010, and reports have indicated that it has roughly 0.1 million employees in different parts of the world that indicates the number of individuals, families, communities, and societies associated with the company (Coca-Cola, 2010. One of the significant characteristics of the Coca-Cola Company is its working on local scale in every region that points out the diversity of company’s policies; however, at the same time, such practice has resulted in huge criticisms from media, environmentalists, social organizations, etc. In addition, the company (Coca-Cola, 2010 seems a single organization; however, it has been operating under different channels localized under its headquarters in Georgia, USA. In specific, the company (Coca-Cola, 2010 is responsible for producing syrups for beverages and other products, while its bottling operations complete the product processes that subsequently take the company towards organizing its marketing initiatives that is another imperative operation of the Coca-Cola Company (2010). Experts (Coke Justice, 2010) have argued that although relationship with bottling partners has enabled the company to manage the different operations in an efficient manner; however, it has resulted in huge attempts on company’s reputation that has now become a major concern of company’s executives globally. In response, company’s officials (Coca-Cola, 2008) are now putting efforts to rescue image of its global brands. Moreover, analysis has shown that from a management perspective, the company does not have possession of the bottling partners; however, it has to confront criticism of even bottling partners due to its association with them. For instance, by the year 2007, the company did not own more than 75% of its bottling partners that manufactured beverages and other products to the customers and consumers globally (Coca-Cola, 2008). Scrutiny of the company’s reports has indicated that it has been very concerned about its ethical image in the world, and it has been endeavoring enormously to market its image as an ethical and sustainable company. Despite of such efforts, a huge number of individuals and organizations (Coke Justice, 2010) have been carrying out protests against the company that it is involved in unsustainable business practices, as well as unethical ones that are damaging a huge number of stakeholders associated with it. In this regard, in order to acquire a validated side of the case, this paper will now focus on some of such issues while evaluating them critically. Specifically, this paper has chosen the case study of Kala Dera Bottling Plant (Srivastava, 2007) of the Coca-Cola Company that began to confront the protests of villagers, and subsequently, media and social organizations in the year 2005. Critics (Srivastava, 2006) have argued that the company experienced similar protests in few other villages of India due to same factors; however, the company has continued to carry out its operations in the usual manner that shows its unethical behavior. It is observation (Srivastava, 2006) that the company has been choosing agricultural lands for its bottling plants due to fertility of land, in order to ensure continuity of water supply for its plants. The village of Kala Dera is an agricultural land as well that facilitates hundreds of families to earn their income through farming (Srivastava, 2007). Reports (Srivastava, 2006) indicated that after only a year of commencement of bottling operations in the village, the farmers noted a drastic reduction in levels of groundwater (Drew, pp. 37-41, 2008) that automatically meant decline in their income level due to lack of water. Besides decline in family income, this reduction in groundwater level created problems for women of the village that had to travel further five kilometers to acquire water for their necessary requirements on daily basis (Hoffman, 2006). This decline did not limit its effects here, but affected children of this village as well that unwillingly chose to sacrifice their education, in order to help their mothers at home in daily chores, as mothers had to travel more by foot that required hours of walking. The villagers and their supporters argued that the company was involved in over-extraction of the water that was declining the groundwater level (Hoffman, 2006), and at the same time, pollution from the bottling plant was another major factor that was worsening the environmental conditions in the region (Basu, 2006). In response, the company (Coca-Cola, 208) declined such practices and continued with their plant operations. However, the villagers were able to acquire support of international organizations, especially academic institutions that were using Coca Cola’s products. These institutions inclined the company to allow an assessment of its bottling plants in the villages of India under the observation of the Energy and Resource Institute (TERI) (Srivastava, 2006). In the year 2008, the TERI published the findings that were a shock for the international media and authorities that immediately demanded closure of the bottling plant (Srivastava, 2009). The report pointed out that water extractions of the Coca-Cola were causing rapid reduction in groundwater level, and thus, in order to continue, the company will have to identify alternative sources for its water supply. In the result of such findings, more than fifty academic institutions in the UK, USA, and Canada immediately terminated contracts with the Coca-Cola that was a major blow for the company (Srivastava, 2008). However, most of the critics (MarketLine, 2005) argue that this showed business profit and continuity as the foremost priority of Coca-Cola, rather than ethical or sustainable impact on the community or stakeholders associated with the company. Besides over-extraction and pollution, the report (Srivastava, 2009) pointed out the third issue that the company was not even following its own policies and procedures of the waste management that became a major risk factor of various diseases in hundreds of families residing near the bottling plant (Flex news, 2008). Lastly, in this case study (Srivastava, 2008) including different ethical and sustainable issues, the fourth issue occurred with response of the Coca Cola’s unethical response on the report, as the company continued with its operations, and especially over-extracting during the months of summer due to its huge demands that were the months of severe shortage of water in the village. From a non-professional perspective, the case seems clear and simple in which, the Coca-Cola Company (2010) has shown unethical behavior by carrying out unsustainable business operations and practices in the Kala Dera village of India. However, it is very imperative to evaluate the case from the point of view of an ethical auditor. For this purpose, the paper will now include few ethical theories that will allow analysis of the case study in a critical manner. Utilitarianism (Mill, pp. 20-43, 2001) is one of the prominent ethical theories of contemporary era that although traces back historically; however, ethical experts have continued to consider it until today. In order to evaluate the case from a Utilitarian’s perspective, it is essential to understand the basics of this ethical theory. In this regard, consequentialism (Mill, pp. 29-50, 2001) is the foremost and most important concept in the ethical theory of Utilitarianism that evaluates every situation based on its consequences. For instance, a bad action with good consequences will be an ethical action from a Utilitarian’s point of view (Mill, pp. 24-41, 2001). From this aspect, business practices of the Coca-Cola Company seems very unethical as it has been causing huge number of problems and issues for the community members of Kala Dera village of India. However, Utilitarianism limits its range by focusing on the majority of people that benefit or confront losses from the actions (Mill, pp. 37-48, 2001). From this specific standpoint, it becomes a complex task to evaluate the business practices ethically, as from the company’s profile, more stakeholders will be affecting by the closure of bottling plant, as compared with the victims of village that will be few thousand. This shows the ineffectiveness of the ethical theory of Utilitarianism (Wellman, pp. 63-74, 2002) that while focusing on majority, is indirectly considering the actions of continuing the bottling plant as an ethical decision, rather than an unethical one. Ethical Relativism (Kolb, pp. 47-56, 2007) is another significant ethical theory that has been contributing in the evaluation process of many case studies globally since decades. One of the major reasons of selecting this ethical theory is cultural diversity of the Coca-Cola Company that has now become a global citizen, and thus, this theory (Swift, pp. 46-78, 2006) will be efficient in evaluating the ethical and sustainable issues identified earlier in the paper. Ethical Relativism (Everson, pp. 33-41, 1998) suggests that it is very essential and important to consider the ethical principles of a particular region while evaluating actions or decisions of individuals, organizations, or communities from that region. It endorses that every society or community has its own ethical beliefs and moral values that distinguish it from other societies and communities (Everson, pp. 33-40, 1998). In this regard, it will be inappropriate to evaluate actions in an African region based on the principles of American region that has been a usual practice these days. In other words, ethical relativists refute the idea of a single and fixed ethical standard, as well as disprove the existence of universality in ethics (Johnson, pp. 57-59, 2008). From this argument, there is no doubt about two different ethical standards, one of the Coca-Cola Company and the other of villagers of Kala Dera, specifically, the Indian community. If viewed from these two lenses, actions and decisions of the Coca-Cola Company could be ethical, while unethical from Indian perspective. Interestingly, there has been a third player in this case study, international supporters from USA, UK, and Canada (MarketLine, 2005) that shared the ethical standards with the Coca-Cola Company, and subsequently, resulting in unethical status of the Coca-Cola. From this stance, the analysis indicates the notion of self-interest existing in the practices, actions, and decisions of the company that disregarded the adverse impact on the community. In order to evaluate the case study in a more detailed manner, Immanuel Kant (Rescher, pp. 20-30, 2000) is the best option to include in the analysis that has remained one of the most influential authorities since decades. Specifically, Kant’s theory of ethics (Rescher, pp. 22-34, 2000) is nothing but an opposing response to the theory of Utilitarianism, as Kant argued that consequences cannot be the appropriate tool of evaluating ethical status of an action, and thus, he proposed a categorical imperative (CI) ((Rescher, pp. 19-27, 2000) for this purpose. In particular, he regarded goodwill of an individual as the CI in his theory, Kant’s deontology. In Kant’s CI, goodwill must not be imaginary, as well as not conditional in any circumstance, and the best way to evaluate is to evaluate universality of the action (Rescher, pp. 42-45, 2000). This theory discouraged the notion of self-interest while promoting every individual to act as a means of charity. Analysis from the point of view of Kant’s deontology (Furrow, pp. 79-88, 2005) indicates that Coca-Cola has been very unethical in its actions. All the practices discussed earlier in the paper were universally inappropriate and adverse for farmers and their families, as well unsustainable for the whole environment that became the victim of Coca Cola’s bottling plant in Kala Dera, and several other villages in India. Conclusion In conclusion, it is an observation that only one ethical theory showed ethical status of Coca Cola’s business practices in India, whereas, the other two regarded them as unethical. Personally, the practices and actions of the company seemed unethical as it affected hundreds of families of the Indian village financially, socially, as well as psychologically. However, from Kant’s stance, the action of agreeing for a self-paid assessment (MarketLine, 2005) by the company seemed an ethical decision that would have been efficient in rescuing its damaged reputation in the international media. However, some reports (MarketLine, 2005) have shown that the agreement was the last resort to save its contracts with academic institutions in the UK, USA, and Canada worth millions of dollars that again creates a doubt due to the existence of the notion of self-interest of the company, as the issues became very riskier for its reputation globally. Besides this agreement, the Coca-Cola Company also announced introduction of its rain harvesting programs (Coca-Cola, 2008) in Indian villages, and indicated recharging of wells with the water that it used from the village sources that somehow creates a soft corner for the company, as it indicates an ethical goodwill of the Coca-Cola. Conclusively, the paper has discussed and analyzed some of the significant aspects of ethical and sustainable issues existing in the Coca-Cola Company for almost more than a decade. 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