Case Stdy ON

The cola Conundrum

Course Title – Business Ethics

Submitted TO
Ms. Adiba Nazia
Assistant Professor
Department of Marketing
Premier University, Chittagong

Submitted BY
Mostafizur Rahman Khan
ID : 190302080-3651
Section-B
Semister :1st
Program : MBA
Batch : 30th
Premier University, Chittagong

Submisson Date : 01-10-2020

Question 1:
Explain in your own words, the cola controversy in India. Do you think MNCs
like Coca-Cola and PepsiCo seem to adopt different standards when it comes
to the use of materials in their soft drinks- a high standard of inputs for
developing countries?

I don’t think MNCs like Coca-Cola and PepsiCo seem to adopt different standards when it comes
to the use of materials in their soft drinks. They should not use a high standard of inputs for
developed countries like Europe, America and poor quality materials for developing countries
like India, Columbia. This discriminatory approach is quite unethical. Standards are supposed to
be universal regardless of whether or not the developing countries enforce these standards or not.
This should be done so as to safeguard the health of the consumers. At the end of the day it is the
consumer's wellbeing that has to matter and not the profit margins. Any company that ignores
standards simply because the government is not watching thereby threatening the lives of the
consumers lacks ethics.

Ethical theories in relation to business do not support the discriminatory approaches in which
Coca-Cola and PepsiCo do not adhere to the same standards in developing countries as those in
the industrialized countries.

According to Utilitarian theory, MNCs like Coca-Cola and PepsiCo should not use poor quality
materials for developing countries for their high profits. For one or two company’s profit, it is
unethical to sacrifice a large number of people’s health of developing countries with poor quality
materials. Large amount of pain for the small amount of pleasure is not justifiable. In addition,
the companies were established under the Foreign Regulatory Act (FERA) which means their
operation must be in accordance with the international set standards of quality products. So
according to Rawls’s Theory of Justice, Coca-Cola and PepsiCo should follow their duty which
is same standards for all countries.

Kantian theory does not support the act of using different input materials for different countries
as well. It says people should follow their duty properly. Coca-cola and PepsiCo’s duty is to treat
people equally all over the world. So, for the benefit of general people they should follow same
standard for developing countries as they follow for developed countries.
Question 2:

Having gone through the Cola case study, would you advocate that the
government of India bans these soft drinks forever?

I don't think it's fair to ban Coca-Cola and PepsiCo forever in India just because the sanitation
level is low. They should work on this problem, not try to accept it along. The real problem is not
with Coke or Pepsi. There should be control on the usage of pesticides as well. The general level
of sanitation is also poor in India.

The main problem is that Coca-Cola and PepsiCo draw too much underground water at its
bottling plants, thereby depleting the water resources of the local people. However I don’t think
this is the real issue, because if it were so then the solution would be fairly simple: work out an
arrangement whereby Coca-Cola and PepsiCo compensate the community for the water that it
utilizes, and does it in a sustainable manner, for example by requiring Coke to recharge a
minimum amount of groundwater through rainwater harvesting. So the concern should be how to
build a better bottling plant that utilizes water in a sustainable manner, not ban those soft drinks
companies.

Having gone through the Cola case study, here are some reasons why Coca-Cola and PepsiCo
should not be banned in India:

 Coca-Cola and PepsiCo have maintained in India that their products are safe. They have
got a ‘clean chit’ from The Energy and Resources Institute (TERI) in an audit that did not
find pesticides in the water used for making soft drinks.
 US government has warned India not to ban Coke and Pepsi as it may create a negative
impact on FDI in India.
 Coca-Cola and PepsiCo are depleting water resources. Surely the solution of this is to use
better technology and better water management principles in order to better utilize
available resources in a sustainable manner. This should include more efficient usage of
 water, better recycling, better irrigation techniques, etc. The solution cannot be to
abandon modern industries and move towards a pre-modern economy.
 Coca-Cola and PepsiCo have started rain water harvesting projects in 26 of their plants.
This has reduced water use by 25 percent and the water saved has been made available to
water-starved villages nearby.
 Coca-Cola and PepsiCo are harmful as it contains pesticides. This may be true, but this is
simply because the water that Coca-Cola and PepsiCo use in India contains pesticides.
Clearly they do not buy pesticides from pesticide manufacturers and pour them into
bottles. Targeting Coca-Cola and PepsiCo for the presence of pesticides in the water
supply seems unreasonable.
 India is taking the benefit from the technology, the management and logistics expertise,
as well as the new energy and ideas that Coke, Pepsi, etc. bring into the country.

Banning according to me will not solve the problem. Even cigarettes and other alcoholic drinks
are bad for health but they are not banned. People should know what is good and what is bad for
their health and take decisions accordingly. I am not claiming that Coca Cola or Pepsi is an
angel. However banning is not justified decision for them. So proper regulations are necessary to
solve the dilemma.

Question 3:

Put yourself in the position of the CEO of a Cola company and present your
viewpoint as to why your organization attracts so much of adverse publicity in
the Indian media and with the general public.

Coca-Cola and PepsiCo have often been the focus of public protests and adverse publicity in the
Indian media -- accused of exhausting groundwater resources, contaminating groundwater,
contributing to climate change and having high levels of pesticides in its drinks, among other
issues. As one of the world's most valuable brands, Coca-Cola does attract attention from all
quarters. I think Indian media and research institutes using Cola Company’s brand name to draw
attention with adverse publicity. Cola Company is a huge brand name and putting other name
beside it, is a prestigious issue. So this is one of the reasons behind adverse publicity.

These adverse publicities in the Indian media and with the general public are a reminder of
India’s sometimes acrimonious relationship with huge multinational companies. Previously they
did not want or like to foreign investment in India. They thought foreign companies might take
their country’s valuable wealth. Anti-Americanism may be the reason of adverse publicity of
Indian media and general public. They don’t want to make huge business in their country by any
American company.

The Center for Science and Environment (CSE), an NGO in New Delhi, claimed that Cola
company’s products contains high level of pesticides and they use poor quality input materials.
The claim against Cola Company is not true. Actually they are providing same test all around the
world by using same machinery. So, it is not possible to mix any other elements in Indian cola. It
is some extent true that the water the cola company using to produce soft drinks is not toxin free.
It is the problem of water of India not the problem of Cola Company. I think the Center for
Science and Environment (CSE) using Coke’s brand name to draw attention to their campaign
against pesticides.

Common beverage such as milk, tea, coffee and other locally produced soft drinks contain a great
deal of impermissible residues of pesticides and nobody raises any voice against them, why the
Pepsi and coke companies are often targeted and haunted. The fear seems to be based on the kind
of backlash Indian exporters are likely to face in the united states, because of the action against
their companies in India.

There are also a lot of Indians, including some notable leftist, who feel that we are not on firmer
grounds. Their muted response to the high pitch of criticism raised against the cola companies in
many quarters is ample evidence to the lack of sympathy for the cause of anti-cola agitations.