See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/361490869

Corporate Social Responsibility act as a tool during Ethical Crisis: Case study
on Coca-Cola

Chapter · June 2022

CITATIONS READS

0 3,218

3 authors:

A. Menaga Vasantha Shanmugam

Vels University Vels University
18 PUBLICATIONS 27 CITATIONS 218 PUBLICATIONS 895 CITATIONS

SEE PROFILE SEE PROFILE

Lokesh Selvakumar
VISTAS
7 PUBLICATIONS 7 CITATIONS

SEE PROFILE

All content following this page was uploaded by A. Menaga on 23 June 2022.

The user has requested enhancement of the downloaded file.

 CDC-GM-234

Corporate Social Responsibility act as a tool during Ethical Crisis: Case study nn
Coca-Cola
Menaga Aa , S Lokesha , S Vasanthaa*
School of Management Studies, Vels Institute of Science & Technology
& Advanced Studies (VISTAS)

ABSTRACT
Coca-Cola has steadily executed well during its lengthy business period also it has gained
valued brand names on the planet. From 1999 to 2013 Coca cola has faced various ethical
issues to achieve its economic goals, with reflected in decreases in the sales revenue, also
most of the shareholder have lost the confident in the organization example Warren Buffet
have come out from the Board of director post he is a gain investor for coke ,following this
coca cola has faced several such ethical issues ,such as product safety, anti-dumping,
pollution ground water depletion ,these problems where solved privately and some of the
problems is solved through courts but during the course of these issues it lost its faith among
stakeholders in order to address this coca cola has adopted various method 1)
implementation of compliances system 2) company has vigorously involved themselves in
social responsibility works the sole purpose is to learn from the mistake and to resolve it
also to avoid future problems . The research will explore the strategy firm has dealt with to
overcome it ethical issues it had during the crisis, also the research will explore the firm’s
usage of Corporate social responsibility communication as a strategy to connect the
stakeholders

KEYWORDS: Corporate social responsibility (CSR), Coca Cola, FMCG sector (Fast
moving consumer goods), Ethical Crisis, Strategic Decision

ABBREVATION: CSR-corporate social responsibility, FMCG-fast moving consumer

goods

INTRODUCTION

Coca Cola With a market worth of $173 billion one of the most well-known brand names
in the ecosphere. The organization is always knee in three things to entice, satisfy, and hold
customers, Coca-Cola products are now available in almost every country on the earth,
reflecting the success of the company's global marketing strategy. Coca-Cola has long had
sophisticated marketing and a reputation for excellence, which has aided in the worldwide
adoption of the beverage.

135
 CDC-GM-234

However, organization is endlessly facing server crisis in different countries, in 2000 and
2001 company failed to get listed in top 100 fortune companies, 2016 Coca-Cola caused
severe sugar scarcity in Venezuela a global business located in the United States, because
the coca cola is manufactured ninety percentage with sugar there is lot of micro issues
always wrapped around the coca cola but still there stronger Corporate social responsibility
strategy always confronted the coca cola to bounce back ,recently coca cola ranked 93 in
Fortune 500 and topic but compared to other country coca cola CSR is performing below
average in India

BACKGROUND

Figure-1 Evolution of Corporate social responsibility in India

Source-Minister of Corporate affair official website

The brand Coca-Cola is introduced in the market during 1886, it is largest Beverage
Company around the globe, and this brand major selling is Coca-Cola and diet coke along
with this various acquisition is made by the organization such as, PowerAde, Minute Maid,
and Dasani water. The main aim of the company is to capture the world demand for the
product, it has world’s biggest distribution chain and infrastructure and entered every
corner in the planet

The organization has faced various challenges from executive level to CEO level within
the organization, during 1997 Doug Ivester was chosen as CEO, but he could not manage
a business well during that time Pepsi co where heavy competitor because of poor

136
 CDC-GM-234

management decision it reflected heavily in business, so the business's previous chairperson

Doug Daft, converted to CEO in 2000, after daft replacement there is a huge improvement
in the business later in 2008 Mr Kent became organization CEO and he took major decision
like women posting for 23% of Coca-senior Cola's management roles; that figure has since
risen to nearly 30%. Currently Mike Suco is going to became Companies CEO

Figure -2 Coca cola India CSR spending during the FYI 2020-2021

Source –CSR Official portal

THEORTICAL BACKGROUND

CSR should act as a prevention more than cure, doing corporate social responsibility is one
side but making the customer awarness is another side for success of the business, therefore
study adopted a Morsing and Schultz (2006) established a framework of CSR
communication strategies based on stakeholder theory (Freeman, 1984), with the goal of
including stakeholders as aspects of corporate strategy formulation, which might provide
organizations with competitive advantages. The stakeholder information strategy (a one-
way strategy in which the organisation communicates with its stakeholders only in one

137
 CDC-GM-234

direction), the stakeholder response strategy (Asymmetric two-way communication

model. The company sends out communication to its stakeholders, who in turn send
communication back to the company), and the stakeholder involvement strategy
(Companies engage in interaction with stakeholders, attempting to influence but also being
impacted by them) are the three strategies.

PROBLEM

In 1996, companies stock equity price under $50 a share. In 2022, the price ranged from
$60 to $69.00.

This sluggish progress can be linked to both internal and external factors, such as top
management changes and significant investor departures. Table 1-Situations of Coca-
Cola’s reputation crisis

SNO CRICIS EXPLAINATION

Coca cola has confronted difficulties at its bottle
manufacturing and ground water reduction. The
environment council body (CSE) the council body after
testing it revealed that it is not conductive to consume
because it has a level of pesticides because of using
unfiltered groundwater ,but Coca cola denied that it uses
proper filter for its product and it undergoes proper
ENVIRONMENTAL
1 research team for quality check before reaching to
ISSUES
consumers hand ,but this issue took a toll on sales percent
about fifteen percentage .secondly again in india Varanasi
coca cola has issue in poisoning the groundwater by
releasing the unwanted chemicals later this issue was solve
by installing new pipeline underwater, then in Kerala also
coca had an issue in water depletion but this is solved by
involvement court

138
 CDC-GM-234

Coca cola faced problem in various issues like

environmental issue, legal issue, stakeholder issue, under
that one such issue is distributor issue in 2006, 44 coke
manufacturer who is named as coca cola enterprises is
DISTRIBUTORS
2 sued for selling PowerAde beverage variant directly to
PROBLEM
store rather than going through Walmart warehouse who
has a contract of two years, this was a main issue because
this is a tradition followed for manufacturer by more than
a century

Coca cola was accused with racial discrimination between

blacks and white in giving compensation and promotion,

DISCRIMINATION blacks was getting lesser compensation and pay of rupees

3
BASED ON RACE 26000 dollar per year than whites so two thousand
employees together jointly signed the case file and sued
for discrimination

Another serious issued faced by coca cola is Guatemala

and US issue,eight employees in Manufacturing unit is
killed during the year 1989 few other employees have also
got life threads at US Manufacturing sector ,this issue

4 UNION PROBLEMS where taken lightly by the organization later employees in

Guatemala sued the organization .which caused a major
brand reputation , claiming that they and their families had
been exposed to violence as a result of their decision to
join unions.

In 1999 Coca cola launched there branch in French since

the time of launce it had done a massive extension beyond
the needs of the customer so French government has
COMPETITIVE
5 banned the purchase of Orangina brand by coca cola in
PROBLEM
order to eliminate the Monopolism also French
government ordered Coke to withdraw the acquisition of
Cadbury Schweppes and Dr Pepper

139
 CDC-GM-234

In 1999, approximately thirty Belgian youngsters were

unwell as a result of ingesting Coca-Cola products. Coke
6 IMPURITY
took a long time to respond to the matter, which generated
a public relations disaster.
Coca cola is claimed for Anti-dumping of products, the
organization rigorously extended its wing with one goal in
mind ,which is to create a demand for their products and
7 ANTI DUMPING
reach every corner in the planet so the organization has
sent un ordered items to wholesalers ,later this issue is
taken to court and coca cola got sued for anti-dumping

PROPOSED SOLUTION

Coca cola faced an issue for seeing a racial discrimination among employees, employees
together filed a case and campaigned to boycott the product later to resolve the issue it
consoled the employees by increasing the salaries and given good compensation among
employees .Coke decided to contribute $50 million to charity that cares minority-serving
programs as portion of the racial discrimination claim settlement. Recovery from moral
turbulence

Coca-Cola established an ethical and compliance division in reaction to SEC's conclusions

about Anti-dumping, and the business is obligatory to authenticate quarterly that it has not
changed payment conditions or provided special credit. In addition, the corporation pledged
to collaborate with overseas bottlers to limit the amount of concentrate they hold.

Regardless of the fact that Cola's in India caused in a little drop in sale and ongoing protests,
the organization claims to have taken steps to confirm security and quality. Coca-Cola has
established rainwater-collection facilities around India in collaboration with local
governments, NGOs, schools, and communities. The Major goal is to revitalise and return
all groundwater. Besides, the company is narrowing up its Industrial unit necessities and
collaborating with local communities to protect the long-term capability of water resources.
As a result, Coca-Cola has been recognised for its corporate social responsibility efforts in
areas including water protection, management, and community development.

140
 CDC-GM-234

The state of Kerala has established legislation allowing individuals to sue the firm for
damages. Coca-Cola "over-extracted" groundwater and improperly disposed of mud,
conferring by the authorities which causing harm to the atmosphere and local people. Coca-
Cola has denied the judgement, claiming that studies have failed to demonstrate a link
between the company's bottling processes and environmental damage.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES BY COCA COLA

To improve its business, the corporation has launched a number of social responsibility
projects. The enterprise's core convictions in the market, workplace, community, and
atmosphere guide these endeavours. As mentioned in the organization's Mission and Vision
& Values statements, Coca-Cola intends to "Stimulate Moments of Optimism" through its
products and deeds, according to statements.in addition to adding value and making a
positive influence in the countries where it operates business. Coca-Cola, for example, has
teamed up with Madeleine Albright, the former US Secretary of State. And Walter
Isaacson, President and CEO of the Aspen Institute, on a project to help entrepreneurs in
Muslim-majority countries.

Coca-Cola also provides funds to a variety of colleges and universities around the country
and around the world. Coca-Cola also offers Sponsorship to many universities, which
includes 30 tribal colleges that are members of the American Indian College Fund. Such
activities serve to improve the Coca-Cola brand, which benefits shareholders in the long
run. Every year, the Coca-Cola Research Foundation brings 250 new Coca-Cola
researchers and brings them to Atlanta for interviews.

Coca-Cola has also taken initiatives to help women entrepreneurs in its supply chain
become more empowered. The company's 5by20 initiative, which includes vocational
training, funding, interacting, and other supports, reached approximately 300,000 women
by 2012. In South Africa, for example, the company organised a women's entrepreneurship
training and worked with Techno Serve to give farmers with pest and infection control
proficiency. By 2020, the enterprise wants to reach 6 million female entrepreneurs and
operate in 100 countries.

Coca-Cola have took steps to strengthen local societies on a national and international level.
For example, Coca-Sprite Cola's brand collaborated on the Sprite Spark Parks Project with
Miami Heat star LeBron James. Sprite has pledged $2 million to the construction or
renovation of approximately one fifty basketball courts, athletic arenas, community areas,

141
 CDC-GM-234

and playgrounds in at least fourth locations. In terms of its worldwide duties, the
corporation continues to take a proactive approach to challenges such as Africa's
HIV/AIDS prevalent. Coca-Cola has teamed up with UNAIDS and other non-
governmental organisations to launch major initiatives and projects to tackle the HIV/AIDS
epidemic.

CONCLUSION

Coca-Cola has been fighting allegations of product health and safety, illegal competitive
practises, racial discrimination and employee intimidation, channel stuffing, unfair
distributor treatment, pollution, and natural resource pillaging for more than a decade, but
under the leadership of Neville Isdell and Muhtar Kent, the company appears to be on the
mend. Appears to have recovered and is making progress in improving its image. The
business For example, is putting a greater emphasis on environmental responsibility.

Critics, on the other hand, argue that Coca-Cola isn't doing enough, and that its efforts are
only window dressing to conceal its wrongdoing. For example, while the corporation
claims to have resolved all of its concerns in India and is working to help the country's
people, both the government and the people of Kerala believe that the company has
depleted the area's groundwater. Over the course of the firm's history, shareholder attitudes
have changed numerous times, yet the corporation has maintained a significant loyal
following. Coca-Cola is hoping that its present leadership can steer the corporation past
this ethical focus and towards a lucrative start to the twenty-first century.

REFERENCES

AAFP, “Coca-Cola Grant Launches AAFP Consumer Alliance Program,” October 6, 2009,
http://www.aafp.org/online/en/home/publications/news/news-now/inside-
aafp/20091006cons-alli-coke.html (accessed February 25, 2011)

Chris Moran, “Consumers Group Asks FTC to Stop Misleading Vitamin Water
Marketing,” Consumerist, February 2, 2011, http://consumerist.com/2011/02/consumers-
group-asks-ftc-to-stop-misleading-vitaminwater-marketing.html (accessed December 18,
2013)

Craig Simons, “Report Examines Coke Water Use in India,” Cox News Service, January
15, 2008,

142
 CDC-GM-234

http://www.statesman.com/business/content/shared/money/stories/2008/01/COKE_INDI
A15_1STLD_COX_ F4362_1.html (accessed September 4, 2009)

Melinda Peer, “In Downturn, Pepsi May Beat Coke,” Forbes, February 19, 2009,
http://www.forbes.com/2009/02/19/cocacola-pepsico-markets-
equity_dividend_outlook_49.html (accessed September 4, 2009).

“Who’s Funding Prop 37, Labelling for Genetically Modified Foods?” KCET, 2012,
http://www.kcet.org/news/ballotbrief/elections2012/propositions/prop-37-funding-
genetically-engineered-food.html (accessed December 18, 2013)

CSR official portal -https://www.csr.gov.in/search_page.php?query=coca+cola

CSR Coca cola engagement https://www.csr.gov.in/companyprofile.php?year=FY+2015-

16&CIN=U15549PN1992FTC065522#

143

View publication stats