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Submitted By: (2012248) IMT Nagpur

Introduction According to Andrew Crane & Dirk Matten Business ethics is the study of business situations, activities and decisions where issues of right and wrong are addressed. Ethics is something which we all talk about and when it comes to business houses we all try to behave or bring ethics in every damn move of the corporations. I am not saying that there should not be any ethics followed by the big companies or MNC. Of course they should follow all legal and regulatory norms of the government. I guess that if they follow all of them we can tag these companies as ethical because we feel that government make rules for the good of society. But why is that we expect that entire social responsibility lies with these business firms and its the responsibility of a company to fight with all social problems just because they make huge money. Now lets talk about a company which was introduced in 1886 more than 100 years ago. But it got registered trademark in 1944. Today this company is the most valuable brand of the world according to one of the survey done by Interbrand in 2011. This is the company which always talks about sharing happiness from its entire communication medium. Dashing red color in its logo attract almost everyone in the world and that is how it became the most valuable brand. Yes I am talking about the beverage company Coca Cola. Coca-Cola is a carbonated soft drink sold in stores, restaurants, and vending machines throughout the world. The company is located in Atlanta, Georgia, and is often referred to simply as Coke. Originally this product was invented as a patent medicine in the late 19th century by John Pemberton, but later Coca-Cola was bought out by businessman Asa Griggs Candler, whose marketing tactics led Coke to its dominance of the world soft-drink market throughout the 20th century. Coca cola produces the concentrate and hand it over to its bottling company around the world. These bottling companies, who are subcontracted by the Coca Cola, finally produce the end product by mixing the concentrate with filtered waters and sweetener and pack this into cans and bottles. Coca Cola presence is there in almost all parts of the world. They have become the thirst quencher and a substitute of water because of there soft drink products of different variety. These beverages are liked by all age groups from children to adults to elder ones. There main competitor is Pepsi. Together they capture almost 95% of market share in India. In world also these two players have captured the major market share in soft drinks segment. Ethical issues with theory According to sciencedaily a study indicates that in an average American diet, soda and sweetened drinks are the main source of calories which means that excessive consumption of Coca-cola or any other carbonated drinks will be harmful. Another research done by Centre of Science in 2010 suggests that the regular consumption of soft drinks will reduce important elements like calcium, magnesium, Vitamin A, riboflavin etc in a human body. Also the use of caffeine in its concentration can cause addiction which leads to unhealthy population. Researches found that one of the ingredients in Coke is High-fructose corn syrup which causes obesity and type-2 diabetes. Last but not the least in India a controversy aroused that there are pesticides and

other harmful chemicals present in Coca Cola. The Centre of Science and Environment said that the soft drink produced in India contains toxins like DDT, malathion, lindane and chlorpyrifos. That means is the consumption of theses soft drinks can cause cancer and breakdown of immune system to human beings. CSE found that the Indian-produced Pepsi's soft drink products had 36 times the level of pesticide residues permitted under European Union regulations; Coca-Cola's soft drink was found to have 30 times the permitted amount. In fact CSE also found that there is inconsistency in the quality of Coca Cola products sold in the U.S. and in India. The CSE did not found the traces of harmful residue in a bottle of Coke in U.S. Lets discuss the issue one by one. When research showed that it is harmful then why companies did not stop the production of the drinks. Is it ethical from company point of view to offer harmful or unhealthy drinks to the consumer? If government know that the product offered by these companies are harmful for the entire population did government took any action? If people are aware of the facts that the carbonated drinks are harmful did they stopped consuming it? Who is to be blamed? Is it company or government or is it Consumers? Many say that may be initially soft drink companies were not aware of the shortcomings and hence they increased there business but when they got the result of research then they should have stopped the production of such kind of drinks. Company says that they sell the product under all the norms of government and they sell it openly under license by government. So they are operating ethically by following the government rules. In other case if it is government who is to be blamed after knowing all the facts then government do put checks and balances. Her also they did it now since research say that excessive consumption is bad so government also says that excess of anything is bad even the sugar consumption can cause diabetes or edible oil consumption cause obesity. So its up to the consumer who can control this. If people are aware of the facts that these drinks consumption will hurt them in future then why they are not stopping so they say that in ad on TV it shows refreshing, sharing happiness etc so they put it back on company that the wrong communication leads them to take this decision of consuming. Also they blame government that on coke bottle it should be mentioned how much calorie per bottle delivers. So if I am a company person I will keep on selling these drinks by following all the norms of government without bothering whether it is going to affect anybodies health or not. If I belong to government then I will make sure that all the norms are at place. Even the companys communication is to be monitored by government to see if they are misleading. And as a consumer I will keep control on my consumption. To prove it that the company is following the norms made by government lets see the Indian case where CSE found the harmful pesticide in the drinks. So the company is sued and been penalized. After that the company has done its research and came up with new product within regulations. The only thing which looks unethical to me here is the double standards followed by company in US and India. If they are a brand then the quality of product in US or India or MEA should be consistent but they can say that if the Indian government is not worried to check the ingredients why should they? Also when Indian government asked us to follow European Regulation they did it. In this situation the only thing I would have made sure that as a company person the quality of product should be consistent all around the world.

It is something like a Bungee Jumping business. Those who try it they are aware of the danger but still they try it. In case if somebody dies in Bungee jumping will it be fare to call the Bungee jumping business unethical. I dont think so. Its people choice. It is something like an airplane crashed in bad weather then who is to be blamed is it pilot because he is unable to control properly. Is it bad weather to be blamed? Is it flight manufacturer to be blamed because they should have put some safety indicators? Or is it passengers who knows that flying is dangerous but still they chose to fly for there convenience and if something bad happens they blame to flight operator? Or is it the flight operator company who should have cancelled the flight due to weather? Can we blame one or everyone is to blamed equally for this unethical choice. The floor is open to debate what is ethical or unethical move and it varies from situation to situation. Another incident of Coca Cola in India is its bottling plant in Kala Dera. Coca Cola started its bottling plant in Kala Dera in 2000 and within a year the villagers started observing that there is a decline in the groundwater level. For a village like Kala Dera the main livelihood is farming and for farmers loss of groundwater is a matter of concern. Also in a village like Kala Dera the loss of groundwater also translates that the women have to walk additional 5 to 6 kilometers to get the water. So the entire community came together and demanded for the close of bottling plant in the village. Kala dera gets the international support also. One of them is from University of Michigan. The university mandated that Coca-Cola agree to an independent assessment of its operations in India if it ever wanted to do business with the university. The assessment conducted by TERI and result is released in 2008 which validates that Coca-Cola approached its operations in India from a "business continuity" perspective and ignored the impacts on the community. The assessment clearly shows that Coca Cola could no longer use the groundwater of Kala Dera also few recommendations was made with regard to the Coca-Cola bottling plant in Kala Dera, which is as following: 1. 2. 3. 4. Get the water from aquifer that is not stressed. In low-stress season the water should be stored. Relocate the plant in a new area where water is in abundance. Shut down this facility

At the very least, Coca-Cola could have stopped extraction of water after knowing the results of the assessment. But the company has chosen to continue its operations and contributed in the misery of thousands of people of the village of Kala Dera. Central Ground Water Board had declared the Kala Dera area as Overexploited in 1998. But still CocaCola decided to locate its bottling plant in Kala dera ignoring all the facts. The question arises that why the Coca-Cola did started its operations knowing very well that water problems already existed in Kala Dera?

Before locating the plant in Kala Dera the company is supposed to conduct the Environment Impact Assessment but Coca Cola has refused to share the result of this impact assessment stating that there are legal and strategic confidentiality reasons. The company states that there voluntary participation in the TERI assessment reflects how committed they are to transparency and continuous improvement. Now If Coca-Cola was really committed to transparency why did they refused to share the Environment Impact Assessment report. And regarding commitment to continuous improvement Coca-Cola should start with implementing one of the four recommendations made by the assessment in regards to the Coca-Cola bottling plant at Kala Dera. In its letter to University of Michigan after assessment, the company states that their plants on an overall basis are meeting stringent internal standards. But on the contrary one of the shocking findings of the assessment was that of the six plants of India surveyed, in not one did the plant meet the CocaCola company standards for waste management, known as the TCCC standards. What is the point of having Coca-Cola company standards if not a single plant meets them? In the same letter, the company states that "Coca-Cola bottlers are complying with all the standards of India government and regulatory agencies." Once again, Coca-Cola lied because the assessment found that none of the Indian government and regulatory agencies standard is met in any of the six plant in India. The assessment states that the treated effluent discharge at the plants "mostly met the effluent discharge requirements". The TERI team also found that the rainwater harvesting system of Coca Cola is not in good conditions. In Rajasthan many people and community use the rainwater harvesting from long ago. But Coca Cola started it after the campaign against the company started growing. In fact Coca Cola also claimed that they do five times more rainwater harvesting where they dont have any measuring system installed to measure the amount of rainwater harvesting. In the Kala Dera case if I have to take any decision then knowing the fact that Kala Dera was declared overexploited by Central Ground Water Board I would have selected some other location for the operation and tried to compliant with all the standards which is good for company as well as society. Also in this case company individually could not be blamed government is also equally responsible. When Coca Cola was starting its operation in Kala Dera why government did not stopped them or took stringent action against them. In both incidents fiduciary principle is applicable where it is the duty of company to think and work for the benefit of both the party i.e. society and company. Also the company did not follow the transparency, fairness, citizenship principle. There are two types of thinking process i.e. teleo and deonto. Teleo thinkers focuses on consequences. It is a result driven approach where the decision makers think of only the benefit of certain decision. Now this teleological thinking is further divided into two parts. The egoist teleological approach and the utilitarian teleological approach.. In egoist approach the thinker will only focus on the benefit of their decision to themselves only and not on others whereas the utilitarian approach will focus on the benefit of others.

The deonto means duty they focus on the process rather than consequences. Deonto is divided into two parts. The first type believe that it is his right to do certain thing or take certain decision whereas the second type believes about the justice. The later one always do what is right without thinking about the benefit or loss. So in Coca-Cola case the company behavior is teleological and to be more specific egoist teleological. I am taking this stand because company after knowing all the facts at some places ignored their duty and at some places only thought about the profitability and balance sheet of company. In case of Kala Dera they thought that Kala Dera would be cost effective for their business and hence they continued its operation. In case of offering unhealthy drinks they did not spent much on R&D and tried to make that beverage healthy instead of they just continued to offer the unhealthy stuff. In case of pesticide issue they had a double standard stand and thats why there was the inconsistency in quality of the beverage offered in US and India. In all case Coca Cola thought just as a businessman who did not followed the business ethics. In either of the incident the three tests should be done to find whether it was ethical from company side of whatever happened: I. Visibility test: Would company be comfortable if these actions were described on the front page of newspaper. I think the answer will be no company will think that such thing publishes on a respected newspaper because it will tarnish the image of company and the brand. Generality test: Will company be comfortable if everyone in a similar situation did this or for that matter if the businessmen own family member will be have to go through all this. I dont think any company or person will be comfortable with that. Legacy test: Will company be responsive to legitimate claims of others?



If any of the above three test brings you in an uncomfortable state then that is considered to be unethical. So Coca-Cola is behaving unethically.