1.0 INTRODUCTIon

Coca-cola often called or referred as a Coke is a carbonated soft drink most popular and largest-

selling soft drink in worldwide and history, as well as the best known brand in the world. Coca-

cola often sold in restaurants, stores, vending machines throughout the world. The history of

Coca-cola begun in the year 1886, invented by a pharmacist named Dr.John Pemberton or known

as a “Doc”.He started his invention of Coca-cola has begun when he fought in the Civil War, and

at the end of war he decided to invent something that would bring him commercial success.

Dr.John Pemberton previously had invented drugs, but unfortunately it’s have gave him failure.

As a result Dr.John Pemberton decided to try his hand in the beverage market which is different

from his previous invention.

During his time, soda fountain was rising popularity as a social gathering spot. As a

result, Dr.John Pemberton created a distinctive soft drink that could be sold at soda fountains.

Thus, he created a flavored syrup took to neighborhood pharmacy and deemed to be an excellent

carbonated drinks. However, Dr John Pemberton invented Coca-cola, he had no idea how to

advertised it. Frank Robinson who is the partner and bookkeeper registered Coca-cola’s formula

with patent office, designed the logo, and slogan “The Pause That Refreshes”. At first, Coke did

not much get to known and do well in first year. Unfortunately, during the time Dr.John

Pemberton died. After his death, a man named Asa Griggs Candler took over the business and

became the sole owner. He had made Coca-cola to get to know by applying marketing strategies

such as pass out coupons for free coke to make everyone to get taste of it, plastering Coco-cola

logos in calendars, poster, and as a patent medicine.

In 1928,Robert Woodruff, led to expansion of Coke by introduced the Coca-cola to the Olympic

game for the first time. In the 1960s Coca-cola has came out with various flavor Fanta, Sprite

and Fresca. Moreover, the introduction of Diet Coke has attracted the market. As a present,

Coca-cola was growing rapidly and year after year and became famous carbonated drinks in the

world with 1.4 billion beverage servings sold each day.

2.0 KEY ISSUES AND PROBLEMS

Leading global brands such as Nestle, Mars and Coca-Cola are failing to ensure the well-being of

the workers who produce their products. The Coca-Cola Company continues to confront with

issues with regards to unethical conducts as it enters into the 21st century era, whereby Coca-Cola

was accused of engaging in unethical conducts in its business operations in several countries.

Coca-Cola was embroiled in ethical issues such as racial discrimination, manipulating earnings,

and contamination of beverages, depletion and pollution of groundwater, exploitation of child

laborers and abuse of human rights.

In the spring of 1999, initially fifteen hundred African American employees sued Coca-

cola for racial discrimination but eventually grew up to include two thousand current and former

employees. Coca-cola was accused of discriminating against them in pay, promotions, and

performance evaluations. Plaintiffs charged that the company grouped African American

workers at the bottom of the pay scale, where they typically earned $26,000 a year less than

Caucasian employees in comparable jobs. The suit also alleged that top management had known

of the discrimination since 1995 but had done nothing. Although in 1992 Coca-Cola had

pledged to spend $1 billion on goods and services from minority vendors, it did not seem to

apply to their worker. Although Coca-cola strongly denied the allegations, the lawsuit evoked

strong reactions. To reduce collateral damage, coca-cola created a diversity council and paid

$193 million to settle the racial discrimination lawsuit.

Another ethical issue that Coca-cola faced during this period was accusations of channel

stuffing. Channel stuffing is the practice of shipping extra inventory to wholesalers and retailers

at an excessive rate, typically before the end of a quarter. Essentially, a company counts the

shipments as sales although the products often remain in warehouses or are later returned to the

manufacturer. Channel stuffing tend to create the appearance of strong demand for a product,

which may result in inflated financial statement earnings thus misleading investors. Coke was

accused of sending extra concrete to Japanese bottlers from 1997 through 1999 in an effort to

inflate profits. In 2004, Coca-cola reported finding statements of inflated earnings due to the

company's shipping extra concentrate to Japan. Although the company settled the allegations, the

Securities and Exchange Commission (SEC) did find that channel stuffing had occurred. Coca-

cola had pressured bottlers into buying additional concentrate in exchange for extended credit,

which is technically considered legitimate.

Among these cases, the most prominent was the contamination of Coca-Cola beverages

that were internationally sold. The situation that every company dreads began in 1999, when

about thirty Belgian children became ill after consuming Coca cola products. Although the

company recalled the product, the problem soon escalated. The company eventually determined

that the illness were the results of a poorly processed batch of carbon dioxide. Coca-cola initially

judged the situation to be minor and not a health hazard, but by that time a public relations

nightmare had begun. France soon reported more than hundred people sick and banned all coca-

cola products until the problem was resolved. The contamination crisis was exacerbated in

December 1999 when Belgium ordered coca-cola to halt its " Restore" marketing campaign in

order to regain consumer trust and sales in Belgium. Under Belgium's strict antitrust laws, the

claim was upheld, and Coca-cola abandoned the campaign. This decision, along with the others,

reduced Coca-Cola's market standing in Europe.

One of the severe issues that have caused a commotion from the community took place in

several villages in India, where Coca-Cola was alleged for the depletion and pollution of

groundwater. The issue in Plachidama, a village located in the southern state of Kerala, India,

begin with the establishment of a bottling plant in 1999. The operations commence in 2000, with

the extraction of approximately 510,000 liters of water each day from boreholes and open wells

which in turn produce one liter of product and substantial amounts of effluents. Within months

of kick off of operation, complaints from the villagers with regards to non-consumable water and

abnormal rapid depletion of waters started to surface. In 2002, the local residents started a

protest against the plant, demanding for immediate cessation of the plant’s operation that has

brought about scarcity and polluted water which threatened their daily life. Women from the

Vijayanagaram Colony in the village of Plachimada have to travel about five kilometers twice a

day to fetch water with their well being dried up due to exploitation of groundwater by the plant.

The issues lasted for few years with several large protests going on and legal procedures brought

against the company until the closure of the plant in 2004.

Another major issue that Coca-Cola faced is issued on the exploitation of child laborers

in El Salvador Sugar Cane Fields. Similar to the case of Nike in Pakistan, where Nike is accused

that their production line employed more than 200 children aged as young as 4 and 5 years old,

Coca-Cola and some other large companies were accused of indirectly obtain the benefit from

the employment of child labor in a sugar cane plantation in El Salvador. According to the report,

‘Turning a Blind Eye: Hazardous Labor in El Salvador’s Sugarcane Cultivation’, from 5,000 to

30,000 Salvadoran children with the age as young as eight years old for some of them, are

employed as labor in El Salvador’s sugar cane plantations, where the children were exposed to

the high probability of injuries, specifically acute cut and these children are not entitled certain

protections that are entitled to the employee under Salvadoran law as the children were hired as

helpers not as employees. Although Coca-Cola does not own nor does it purchase directly sugar

cane from El Salvador, its action of purchasing sugar milled from the cane from El Salvador’s

largest mill, Central Izalco implies that Coca-Cola might be supporting the use of child labor. It

is stated under Coca-Cola’s own guiding principles that its direct suppliers “will not use child

labor as defined by local law”.

Besides all the issues mentioned above, Coca-Cola also faces issues with regards to the

abuse of human rights. Coca-Cola was being sued for ‘Campaign of Violence’ in Guatemala by

the Guatemalan in 2010. According to the Guatemalan workers, the people who are working on

behalf of bottling and processing plants owned by Coked, initiates a “campaign of violence”

against them after they participated in union activities. On Feb 25, a legal procedure was filed

by  José Armando Palacios and José Alberto Vicente Chávez, along with their families, in New

York State Supreme Court in Manhattan, accusing negligence, deceptive practices and other

claims against Coca-Cola Company. Both  José Armando Palacios and José Alberto Vicente

Chávez were employed by a company that owns and operates an instant coffee and Coca-Cola

processing plant in Guatemala City and bottling plant in Retalhuleu, Industria de Café S.A.

(INCASA)- previously owned by Coca-Cola. It is mentioned by the plaintiffs that Coke knew or

considerably certain that it and its bottler were operating business in an environment where their

unionized workers were exposed to great risk of being totured and/ or murdered by the party

responsible for violence against trade unionists in Guatemala, at the time when the alleged event.

3.0 REASONING AND ANALYSIS

By looking at all the ethical issues faced by Coca-cola, we can analyze that most of the unethical

activities took place in the late 90’s when it was already a well established company which

supposed to have better standards, rules and practices regarding ethical behavior. This might

indicate that Coca-cola is too focused in growing its company and profitability that it has

neglected its duty to its stakeholders and did not comply with its corporate social responsibilities.

One of the reasons could be that, during those days ethics code of conducts or corporate social

responsibility in company is not given much importance as compared to today. Nowadays the

stakeholders such as consumers, employees, shareholders, finance provider, and suppliers are too

aware of the requirements by regulatory bodies regarding ethical conducts, disclosures, and

financial material misstatements. However, looking at Coca-Cola Company, although it has

faced so many issues throughout its existence and developments, we can note that it is still able

to continue its operation without any major downfalls. This could be because it is a well

established company which has a very good market positioning and loyal customers. Having

saying that, still there are many other stakeholders or external parties that might be affected by

the company’s unethical conducts.

Although Coca-cola was sued by discriminated Africans on 1999, it seems that the

company was having discrimination issues in the early 80’s where it was alleged to have

supported apartheid system where there was racial segregation in South Africa. It was said that

the company in South Africa operated its workplace, wages and housing on apartheid system

basis. Hence, its lawsuit of racial discrimination in 2000 is not such a surprise. This unethical act

could have lead to downfall of their products in African country, but according to the company

such loss would not have affected them as it is only small portion of their total profit. Looking at

this situation in stakeholder’s perspective, people like the employees or suppliers or the human

rights group or more importantly the investors, will not be satisfied with such unethical issue.

This will lead in Coca-cola to lose its images among stakeholders and in the end to lose

customer’s trust in products and investors confidence in company on a long term basis. Other

than that, there are also high cost and expenses incurred by company to settle the lawsuits.

Thus to prevent this to happen again, Coca-cola has taken measures such as hiring third party to

monitor the operations and treatment of its employees, revise the company’s personnel policies

and having a watchdog panel to access the employees records of salaries and promotion are

improved.

Other than that, the company’s activity of channel stuffing and not disclosing the

important information tend to be misleading for the investors as mentioned above. These not

only shows its desperation to show high profits but also this issue might have caused creation of

bad image among investors and most importantly the customers. As this can be said to be a fraud

committed by Coca-cola to mislead investors and the public in regards of its inventories and

earnings, thus once it gain bad image as fraud committed company, then it could have been very

hard for it to recreate a new image without affecting its profitability and goodwill earned

throughout its operation. However, as we can see the company has been able to get pass the

accusation and continues to grow internationally. To solve the issue, Coca-cola has stated that it

has adopted proper disclosure standards to prevent any material concealment from its reports and

financial statements. Other than that, as additional measures, the company could also be

monitored by external regulatory bodies such as the Security Commission or the government.

The company’s issues of contamination of drinks show that their internal health and

safety control system is very poor. As a high profit earning company established over 100 years,

it is very inappropriate for it to make such mistakes in its manufacturing department. This

contamination scare has actually really affected Coca-Cola’s reputation among consumers in

Europe and led to profits to be affected. Coca-Cola’s fast response in this issue can be

appreciated where it has withdrawn its products from affected regions and came up with the fault

confession rather than refusing to accept the blame. To prevent such incidents to happen again,

Coca-Cola should take extensive health measures and have defect detection activities as its

negligence could cause lives of many consumers. In addition to this, in regards to health issues,

Coca-cola should consider revising its ingredients to minimize the high intake of sugar level as

its products are mostly consumed by teenagers and children.

Among the 200 countries where Coca-Cola is sold, India reportedly has the fastest-

growing market, but the adverse environmental impacts of its operations there have subjected the

parent company and its local bottlers to a firestorm of criticism and protest.

There has been a growing outcry against Coca-Cola's production practices in India, which are

draining out vast amounts of public groundwater and turning farming communities into virtual

deserts. Suicide rates among Indian farmers whose livelihoods are being destroyed are growing

at an alarming rate. Every day for years there has been some form of protest, from large

demonstrations to small vigils, against Coca-Cola's abuses in India. On Jan. 18, 2004, more than

500 protesters, including about 150 residents who live near Coke's bottling facilities in India,

marched and rallied to condemn the company. Coke's indiscriminate dumping of waste water

into the ground has polluted the scarce water that remains. "Some samples tested showed the

presence of these toxins to be more than 30 times the standard allowed by the European Union.

Tests of samples taken from the U.S. of the same drinks were found to be safe," he said."It is

only a matter of time before the Coca-Cola company will be held financially and criminally

liable for their operations in water-stressed areas in India," Coca-Cola shareholders were told at

the April 2010 shareholders meeting in Duluth, Georgia. "The company management is being

seriously derelict in its duties by not acknowledging the real extent of the liabilities Coca-Cola

has incurred and continues to incur in India,' said Amit Srivastava.

In 2005, over half of the rural population in El Salvador was living on less than U.S. $2

dollars per day. The harsh reality of economic subsistence obligates children in El Salvador to

contribute to their family’s survival. Employers providing this frail economic lifeline inevitably

acquire control over the children. This economic control is a prominent aspect of contemporary

slavery and is manifested through violence or exploitation. The enslavement of children in El

Salvador not only steals their youth and opportunity to receive an education, but it also places

innocent beings into a dangerous work force. This addresses the problem of forced child laborers

in El Salvador, along with the government’s failed enforcement of legislation, and binding

international laws. Solutions to the complex problem of contemporary economic enslavement in

El Salvador call for a broad-based collaborative effort linking legal structures to educational

advancement.

Besides that, in El Salvador, children’s forced agricultural work is commonly

unacknowledged due to its interconnectedness with culture, tradition, and overall way of life.

Many of the children who work alongside their family members are not paid; rather, they are

seen as “helpers.

Within the rural population, females, impoverished children, and young adults have the highest

risk by participating in this hazardous agricultural practice. Failure to understand risks,

immaturity, and a lack of experience are common causes of emotional, mental, and physical

harm among child laborers. Aggravated health issues in sugarcane production involve skin

exposure to irritants headaches, respiratory problems, physical overextension, and lacerations

with sharp tools.

On February 25, 2010, another human rights abuse lawsuit against Coca-Cola was filed

in the Supreme Court of the State of New York and later moved to federal district court. "This

case involves a campaign of violence - including rape, murder, and attempted murder - against

trade unionists and their families at the behest of the management of Coca-Cola bottling and

processing plants in Guatemala." "For nine years the 450 workers at the Coca-Cola bottling plant

in Guatemala City fought a battle for their jobs, their trade union and their lives. Three times

they occupied the plant — on the last occasion for 13 months. Three General Secretaries of their

union were murdered and five other workers killed. Four more were kidnapped and have

disappeared. Against all the odds they survived." Besides that, In Turkey, in 2005, 105 workers

at a Coca-Cola bottling plant in Istanbul joined a union and were terminated. They organized a

lengthy sit-down strike in front of the main offices of Coca-Cola in Turkey. After several weeks

of protesting, Coca-Cola workers entered the building to demand their reinstatement. While

leaders of the workers were meeting with senior management for the company, the company

ordered Turkish riot police to attack the workers who were by all accounts peacefully assembled,

many with their spouses and children. Nearly two hundred of them were beaten badly and many

required hospitalization.

4.0 CONCLUSION

The Coca-Cola Company is the biggest and recognized soft beverage brand in the world. It is

understand to be today’s business world technology to run such as big company Coca-Cola.

Therefore Coca-Cola Company uses different types of technology to run their company such as

creating database and data warehouse about supplier and customer and doing business through

internet. Coca-Cola has spent over to promote their product by advertising, search engines and

having own shopping website for promote their product. Besides that Coca-Cola has established

its products through advertising its products in social networking sites such as Facebook and

Twitter which makes Coca-Cola to be well known food beverages all over the world.

Apart from that, Coca-Cola knows techniques that no business can run with proper plan,

due to it has high barrier in beverage industries which makes other new companies afraid to

compete with Coca-Cola. Moreover, Coca-Cola Company has good agreements with supplier

especially bottling company so that can provide services to Coca-Cola. It can be said that Coca-

Cola have greater impact on its customer by remaining as a favorite and well known beverage

drinks through worldwide. Coco-cola managed to overcome their competitors due to of its

formula of success. Coca-cola Company is using an effective ways to hold number one soft

drinks by practicing various marketing strategies. The strategies that been implementing by

Coca-cola are Coca-cola had approaches customer in the way of healthier product. This is by,

producing Coke Zero and Coca-cola Diet. They had promoted healthy living style in the way of

advertising by using the Coke Zero and Diet. Moreover, Coca-cola concern about obesity which

has attracted many people to be their loyal customer by holding strong market share. Besides

that, Coca-cola mainly focus on advertising and strategies. This is by coming up by doing

advertising according to situation and had attracted many Americans. Moreover, brand

recognition is factor of success of Coca-cola. Coca-cola brand name had been identified ninety

percent through worldwide The slogan and logo of Coca-cola had attracted many customers.

Furthermore, Coca-cola has come up with various flavor of Coca-cola flavor such as Coca-cola

Vanilla, Coca-cola Cherry and so on which varies according to customer preferences. Thus, it

can be known that Coca-cola is world largest and famous carbonated soft drink which has

established until today and made strong position in beverage market by attracting a lot of

customer and loyal customer.

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