1. Abstract
The Coke and Pepsi are multinational companies. They have business in almost every country on the Earth. However, there are always problems occurred in business world as ‘business is risk’. Coke and Pepsi could not escape as well. They had faced an ethical crisis in India where it is concern about consumer’s health and the environment cleanliness. This paper will discuss about Coke and Pepsi issues with respect to issue management, crisis management, global business ethics and stakeholder management besides looking into their corporate social responsibilities and what lesson does this case portray to other multinational companies to be aware of.
2.0 Introduction
First of all, the issue started to take place when Coke and Pepsi’s products were tested containing a hazardously high level of pesticide residue by a public interest group called Center of Science and Environment (CSE). The director of CSE, Sunita Narain proclaimed that such residues are able to cause cancer and birth defects besides harming the human nervous and immune system if the products are being consume over a long period of time.
Later, CSE claims that the pesticides levels in the products of Coke and Pepsi were much over the limit permitted by European Union standards.
Next, another public interest group called India Resource Center (IRC) accused that all soft drinks companies especially the Coca-Cola company’s operations are polluting the sacred water in India. IRC even accused these soft drinks companies of water exploitation and controlling of natural resources. IRC also indicted that Coca-Cola causes water shortages around its bottling plants besides a significant depletion of the water table.
Moreover, IRC pointed that due to the pollution of groundwater and soil, it causes water to have strange tastes and smells. The IRC then pointed out that Coke was distributing their solid toxic waste to farmers as fertilizers.
This eventually leads to the event of India’s Supreme Court ordered Coke and Pepsi to put warning labels on their products as the consumers has the right to know what contents of the product they are consuming. The issue above had worsen and become more complicated when the cultural sensitive issue is brought up. Water in India has a significant spiritual meaning and it is views as sacred to people in India. Polluting their water source is considered as not respecting their culture and this causes a serious slide in sales of both Coke and Pepsi for several years.
3. Issue Management According to Business and Society (7th edition) written by Buchholtz and Carroll, the issues management process includes identifying the issues at hand, analyzing the issues, ranking or prioritizing the issue using the five filter criteria, formulating an issue response, implementing the issue response formulated, and evaluating and monitoring the results after the issue response is executed. To analyze an issue means “to carefully study, dissect, break down, group or engage in any specific process” (Buchholtz and Carroll, 2009).
This is essential in helping a company to get a better understanding of the issue in order to rank the issues based on the five filter criteria. The five filter criteria mentioned above included strategy, relevance, action ability, criticality and urgency of the issues. However, Coke shown a bad issue management because in response to the crisis, Coke first chose to conduct its own test of their products which shows that the drinks are safe to be consumed.
Then, the company conducted various studies that indicated all Indian food supply has a certain levels of pesticide in it. Obviously their main aim right now is to distract the public’s attention by spinning the arrow back to India’s side. In this manner, Coke is clearly abusing their customer’s rights of safety and rights of health as Coke conduct its own test on its own products. Certainly, the results can be really questionable. In the issue management process, after analyzing the issue, a company would formulate a series of strategies to solve the issues.
Then, the company would implement the formulated response and start to monitor the results. If the issues are solved, then the company will evaluate the response in order to get prepared for similar issues that might arise again in the future. However, if the issues are still affecting the company, they will formulate another response to solve the issues effectively. In this case, Coke issue certainly had not ended. This is because the company did pollute the environment. However, they choose to not apologize. Instead, Coke hired a new public relations firm to build a new image in order to boost up their sales in the country. This act shows that Coke not only prioritize their profits but also trying to hide their wrongdoings of polluting the environment.
Moreover, from the results of the studies Coke self conducted which contradict with CSE and IRC results, obviously they show a manner of trying to fool the consumers. This is very unethical in business and they should be sued. This is because consumers have their rights to be informed of both benefits and dangers of a product in order to make their choice whether or not to purchase a product. In conclusion, Coke did not handle the issue with CSE and IRC well from the beginning. When the issue had worsened into a crisis, Coke and Pepsi only started taking serious and proper actions. This matter will be discussed under crisis management (pg. 7).
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