Coca-Cola Company Business Ethics Challenges

Coca-Cola is a beverage making company with a global presence. It began in 1919 after taking over operations from a Georgia company with a similar name. The company runs a network of company owned or controlled bottling and distribution centers around the world. At the same time, it has a number of independent bottling, distributors, and wholesalers who make up its distribution system, which is number one in the world. The company headquarters is in Atlanta, Georgia. The company has divisions in more than 200 countries and regional headquarters in all the major continental markets in the world. Coca-Cola owns or licenses its products. Currently, it markets more than 500 non-alcoholic beverage brands. It main products are Coca-Cola, Diet Coke, Sprite, and Fanta. The entire range of non-alcoholic beverage brands includes waters, enhanced waters, juices and juice drinks, ready to drink teas, and coffees, as well as energy and sports drinks (Coca-Cola, 2013).

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Three key issues related to Coca-Cola’s code of ethical conduct, rationale for response

The first main issue in the code of ethical conduct for Coca-Cola is integrity of actions around the globe. Integrity helps to demonstrate the values of the company and sustain its positive reputation. Under the integrity around the globe issue, the company aims to comply with all laws and with its own code of conduct. The issue covers management, local ethics officers, the ethics and compliance office in the company, and legal counsel or senior finance personnel. Every employee has to promote a culture of ethics and compliance to ensure that the company meets its intentions of ethical behavior. It also aims to subject employees to the various laws of business operations in various countries.

The second issue in the code of ethical conduct for Coca-Cola is handling of company records, assets, and information. The Coca-Cola Company strives to register accurate financial statements. It also aims at keeping quality reports and other documents related to claims. Accurate record keeping is important for the company’s reputation. Falsification of documents and distortion of the true nature of transactions, as well as collusion to subvert local currency laws or evade taxes are just some of the violations that employees should not make. The second issue in the code of ethical conduct only concerns internal dealings of the company and ensures that the company provides an equal working environment and fair practice for its employees and shareowners at all times. The codes help to safeguard trade secrets and other company asset to sustain competitiveness (Kent, 2014).

The last issue of concern in the code of ethical conduct is the way the company deals with others, who include governments, customers, suppliers and consumers, and competitors. Government transactions have rules that the company must not violate, such as anti-bribery, improper hiring of government officials, and improper payment of third parties. The code of ethics specifies that the company does not reimburse its employers for their personal political activity. Its contributions to political activities must comply with local and international laws. Whenever there are trade restrictions, the company has to comply with them based on its codes, which match the U.S. anti-boycott laws. As for dealing with customers, suppliers and consumers, no employee of Coca-Cola should engage in any activity that inappropriately gives the company advantages. Such activities and behavior would include deceptive and misleading practices (Coca-Cola, 2013).

Use three key issues to compare and contrast with two similar companies in the same industry

PepsiCo commands a global presence just like Coca-Cola, thus it is one of Coca-Cola’s main rivals. Its internal code of ethics is similar to Coca-Cola’s as it compels employees to seek guidance, follow the code always, and not retaliate in any circumstance. However, on the other two key issues of dealing with company property, including records and on dealing with government and other stakeholders, the code of ethical conduct for PepsiCo goes into detail, unlike the Coca-Cola one, which is general. PepsiCo lists various issues relating to government and supplier conduct such as bribery, corruption, money laundering, political activities, and business gifts. It then explicitly states the terms of engagement to avoid gaining unfair advantage for the company or violating business ethics (PepsiCo, 2013).

The Royal Crown Cola is the other competitor company for Coca-Cola used in this paper’s review. The company has two major issues on ethical behavior. Its environmental and societal concerns make up the main area of focus for its code of conduct. The company does not categorize its key issues, but identifies them with equal weight. It does not state specifics of how employees should deal with company property, which is its main difference with Coca-Coca’s code of ethical conduct. However, the company matches all the concerns on ethics put up by its competitors, such as conflict of interest, record keeping, insider trading, fair competition, international business engagement, waivers, and fair disclosure regulation (Fowden, 2013).

Extent to which similar companies have addressed the issues

From the above comparison, it is clear that both PepsiCo and Royal Crown Cola are embracing the same issues that Coca-Cola embraces in its code of ethical conduct. However, the orientation of the issues and their importance to the companies differ slightly. Coca-Cola seems to be focusing on the existence of a standard of internal practice for guiding its global operations, under which the code is only part of it. On the other hand, the competitors are having codes that are independent, thus their link to the main company values is not as apparent as it is in the Coca-Cola sense.

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Hypothesis of two positive outcomes for the other companies if each addressed the key issues

When PepsiCo and Royal Crown Cola address the issue of handling company records, assets and information, they will be able to remove any chance for blame on violation of competitive ethics. Therefore, they will not face threats of cancellation of its license or fines related to disclosure or integrity acknowledgement. Compliance ensures that a company is able to compete appropriately as an equal player to its rivals. Handling of the second issue, which deals with government engagement, will ensure that the companies are in good terms in their foreign operations. It would provide the companies with unrestricted access to markets that can help them grow their business. It would also allow both PepsiCo and Royal Crown Cola to position their ethical interventions in accordance with the laws, which would facilitate their long-term stay in the countries of operation. Compliance would also let the companies avoid public shaming, which would have detrimental effects to their reputation.

Hypothesis of two adverse outcomes for the other companies if each failed to address the key issues

Ignoring key issues would give employees a leeway to misuse company assets. This would essentially make them competitors when they engage in business activities with personal gains. On disclosures and corrupt practices, employees could expose the companies to lawsuits by their competitors or regulatory authorities for failing to follow fair competitive laws. Each country has local accounting practice rules, thus failing to enforce the issues in the codes of ethical conduct would let employees violate other laws for personal gains, such as accomplishing job assignment targets.

Proposal of two techniques that original company could use to ensure code of conduct is relevant amid changes

Coca-Cola has to have a compliance team that not only oversees the implementation of the codes, but also actively scans the global environment for avenues to modify internal company practices to match emerging challenges and opportunities. The compliance team would have various ways of letting any of the company’s stakeholders to raise issues relating to ethical practice, with provisions for anonymous reporting. A second technique that Coca-Cola can use is to separate auditing practices from consultancy. Here, it would be putting up a buffer system that allows early spotting of any wrongdoing before it grows into becoming part of the company culture, which would be difficult to address when any change in political, social, cultural, or technological forces on business and society arise.

Evaluation of effectiveness of two current methods used by original company to manage environmental issues

Currently, Coca-Cola relies on its code of ethical conduct to govern its sourcing of materials from suppliers, which ensures that the company complies with all necessary business environmental issues. However, the code does not extend to ecology and the company here relies only on country law provisions on raw material extraction and processing. Coca-Cola does not have an internal obligation to embrace greener technologies. The lack of obligation handicaps the company’s response to emerging global environmental issues. A second method that Coca-Cola is using to attend to the environmental issue is voluntary action and policies by regional leadership teams to respond to country specific concerns, such as environmental pollution. These are mainly voluntary displays of corporate social responsibilities and they may or may not last in the long-term. The company can easily discard the ethical practice when it faces financial difficulties, which is the main weakness of the second method.

Anticipation of three technological advancements that the company could face

Advances in commercial plant-plastic technology would allow Coca-Cola to make recyclable plastic bottles and cut its environmental impact. The technology would lead to low costs of bottling as recycled plant-plastic is cheaper to source and process. However, commercial production of plant-plastics could present conflicts on land use. Advances in internet technology, especially social networking, would provide the company with richer avenues for engaging its consumers in both its marketing initiatives and ethical awareness initiatives. Appropriate use of social networking and consumer information collection could come with its own challenges of customer information management. Improper handling of information and engagement of customers using internet technologies could violate business ethics laws. Dispenser technology is a third technology improvement that would allow the company to increase its products remarkably by allowing customers to choose combinations of its main beverages that they like. It would let the company respond to customer needs better. Rival companies can accuse Coca-Cola of infringing on their flavors with the customer choices.

Recommendation order to eliminate or minimize each of the anticipated challenges

Coca-Cola can work with existing commercial producers of plant-plastic that already comply with various laws and policies on commercial use of land for cash crops. On the second concern, Coca-Cola should update its codes of ethical conduct to ensure employees properly manage consumer information. On the third issue, the company can rely on patents to cushion it against lawsuits from its rivals.

A lobbying strategy that the Coca-Cola Company used in effort to influence national or local government decisions in its favor

The Coca-Cola Company was quick to apply for approval of its candy and soda as part of the list foods that are in the category of food stamps. Here, the company was using the general category of its main products, which is beverage, to try to add soda as part of the approved items for buying with food stamps. When approved, that would allow consumers who cannot afford soda to buy using food stamps, which would work in favor of Coca-Cola by improving its sales in the United States (Rosiak, 2013).

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Summary and conclusion on the issue

Coca-Cola had a business reason to engage in lobbying to have soda included in the list of items approved for purchase by food stamps. However, soda is not a healthy choice for consumers when taken in excess and food stamps are publicly funded. The company was not acting ethically when it asked taxpayers to sponsor the consumption of soda, which would include a number of products made and marketed by Coca-Cola. The company ought to own up to the fact that excessive sugar consumption is detrimental to health. Consequently, Coca-Cola it should aim to provide a neutral environment for consumers to make decisions, rather than influence their choices by improving their odds of choosing it products.

References

Coca-Cola. (2013). 2013 annual report on form 10k. Washington, DC: United States Securities Exchange Commission.

Fowden, J. (2013). Code of business conduct and ethics. Mississauga, ON: Cott Corporation.

Kent, M. (2014). Code of business ethics. Web. 

PepsiCo. (2013). PepsiCo global code of conduct. Web.

Rosiak, L. (2013, April 24). Coca-Cola’s food-stamp lobbying effort falls flat, conservative group says. The Washington Times. Web. 

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