Challenges in the Global Business Environment
The Coca-Cola Company is an American food company, the largest supplier and manufacturer of syrups, concentrates, and soft drinks in the world. Its activities are based on a few very simple ideas, including the following. The company guarantees a pleasant taste, high quality products and the first class service. Devotion to these principles allowed the company to become a leader in the soft drinks production. Consumers of the company’s products live in more than 107 countries all over the world.
The Coca-Cola Company is faithful to the principles of civil liability to society. Directly or indirectly, it is connected with the destiny of billions of people all over the world, including employees, suppliers and customers. A sense of responsibility to them requires it to conduct business at a very high level. Despite the fact that the Coca-Cola Company has branches in many countries over the world, it has always carried out its activities and operations conducted as a single company in accordance with the moral, ethical and legal standards of each country. To consolidate this policy in the long term, the Board of Directors has adopted and developed a special document on the rules of conduct and principles of their work. This code of ethics has “the force of law” and is applied to the activities of the company’s offices around the world and the performance of all its employees. The most critical issues of the mentioned code include:
1. Decent behavior in any situation; all of the company’s employees are obliged to obey the law, act honestly and decently in any situation and be responsible for their actions. A dignified behavior reinforces the image and reputation of the company and its brands in more than a hundred countries, in which it operates.
2. Honesty and integrity in dealing with others; decent behavior begins with the Coca-Cola Company and includes how its employees handle financial reporting, the company’s property and confidential information. In other words, this issue is centered on maintaining the company’s position on the market and protecting its core competences (drink recipes, material reward of employees, etc).
3. A conflict of interests; while performing their duties, the employees must always act in accordance with the interests of the Coca-Cola Company. A conflict of interests occurs when the employee’s personal activities and relationships interfere with his/her ability to act according to the company’s interests. Addressing this problem allows reducing risks of the activity of the company to be interrupted because of internal turmoil.
The Coca-Cola Company has many competitors among the producers of soft drinks throughout the world, with the largest of them being PepsiCo, Inc. and Dr. Pepper Snapple Group, Inc. Considering that both companies specialize in the same production and target the same consumer groups, their ethic codes are mostly similar to those of the Coca-Cola Company. However, the code of PepsiCo, Inc. pays more attention to the inner environment of the organization, including such issues as the struggle against the use of alcohol and drugs during work time, fraud, corruption, bribery and money laundering, making it possible to assume that PepsiCo, Inc. has already seen the negative effects of the stated malfeasance. As for Dr. Pepper Snapple Group, Inc., it should be noted that this company’s code of conduct specifically highlights the problem of equality of all employees and inadmissibility of discrimination on the grounds of race or gender, which also leads to a conclusion that the company has to deal with the corresponding problems.
All of the mentioned key issues enlisted in the ethic code of the Coca-Cola Company are addressed to full extent in PepsiCo, Inc. In this case, the company can expect such positive results as strengthening the positive image of the firm as a reliable and socially responsible organization both for consumers and business partners, and the establishment of a friendly atmosphere within it. On the contrary, negative outcomes for PepsiCo, Inc. may include termination or omission of profitable contracts and bargains, as well as the loss of its current position on the global market of soft drinks and beverages.
Considering the similarities in its code of conduct with those of other organizations working in the soft drinks industry, Dr. Pepper Snapple Group, Inc. will receive the same positive results as PepsiCo, Inc., in case the company addresses all of the mentioned ethical issues. However, it seems that Dr. Pepper Snapple Group, Inc. is unable to regulate the inherent conflict of interests. For example, in 2010, more than three hundred workers of highly profitable Mott’s plant in Williamson, NY were protesting against the sharp reduction in their wages and benefits and the employer’s refusal to negotiate over a collective bargaining agreement on fair terms. Moreover, the company was also unable to explain the apparent conflict of interests and breach of ethics in relation to the presence of Ann Szhostak, who is a member of the Board of Directors of SFN Group, a subsidiary company that delivers agency workers (potential scabs) to the factory in Williamson, in the Board of Directors of the company. It should be noted that the ethic code of Dr. Pepper Snapple Group, Inc. contains unambiguous prohibition precluding such a relationship. Consequently, it is possible to highlight the two following negative outcomes for the company. These are strikes and abuse of the company’s assets for personal purposes. Both of them hamper the production process, thus reducing profits of the company, and negatively influence the image of the enterprise.
So, it is possible to say that answering to the key issues of the ethic code is critical for any enterprise. However, in the years of changing political, economic, cultural, social, and technological forces on society and business, it may become irrelevant and fail to comply with its main functions. In order to avoid this problem, the Coca-Cola Company must utilize the following techniques:
1. Code of conduct review. This is a comprehensive analysis of the company’s ethic code, taking into account the factors from both external and internal environment of the organization (political situation, state of the economy, moral values of people, etc.).
2. Revision of the code using the results of the analysis and its implementation.
The Coca-Cola Company does business in more than 200 countries around the world, and all environmental issues are an integral part of corporate policy. Therefore, the company seeks to protect natural resources of the planet and actively implements the following methods:
- Energy and climate. The climate change could have a direct impact on the company’s business. Therefore, it strives to use the best available technology to improve energy efficiency in the production and delivery of products in the system. Recently, the company has launched a special refrigerating equipment using carbon dioxide, which helps to reduce greenhouse gas emissions and electricity costs.
- Recycling. A significant attention is also paid to the problem of reducing the weight of packaging. Since 1995, the weight of glass containers has decreased more than twice, and that of plastic reduced by more than 10%. Virtually the entire package can be recycled 100%. Moreover, packaging consists of valuable secondary raw materials, which can be used to make many useful products, from T-shirts and shoe insoles to garment brushes. Moreover, the company is also the world leader in the use of the “bottle into the bottle” technology, by which previously old PET bottles are used in the manufacture of new packaging for beverages.
The Coca-Cola Company pays great attention to its innovation policy. Currently, the company has taken the following approaches to embrace technological advancements for innovation and thus improve its business offerings:
- A wide use of digital and mobile technologies. In 2013, The Coca-Cola Company began testing vending machines, which can be used for buying drinks without money, using the app for smartphones. This application can be connected with the user’s plastic card, coupon or ticket, with which one can pay for the drink in vending machines.
- Environmental protection. The company has developed a PlantBottle, which is the most innovative solution in the field of “environmentally friendly” packaging that includes 30% of plant components. Introduced in December 2009 in Denmark, it is now used in the U.S., Canada, Japan, Mexico, Brazil and Norway. Moreover, the company is preparing the next generation of PlantBottle, which will consist completely of recovering materials.
However, while implementing these and other innovations, the company may face the whole set of technological challenges. First of all, many of the countries the company operates in do not own digital technologies at a level that is sufficient for the implementation of innovations. Second, the non-waste production is still an expensive process that leads to excessive costs of production. Third, the transition to digital settlement system increases the risk of fraud. Thus, in order to eliminate or at least reduce the negative effects of the mentioned challenges, the company must develop a strategy of diversification, i.e. promote its production and implement innovations considering the features of each country it operates in (level of technological development, incomes of people, environmental policy of the government, etc.).
Lobbying is an industry involved in the intersection of expertise activities, advertising and public relations. A typical example of it is a real coalition of citizens and businesses, standing for or against any initiative of the government. In the US, the Coca-Cola Company was affected by the governmental decision about one of the ingredients of its soft drink (a sugar substitute), and had to replace it, thus changing the formula of its famous beverage. In order to avoid losses, the company has founded a coalition with the Association of Diabetics (who cannot consume natural sugar without having a negative impact on their health) and reversed the decision made, putting to the fore not its own interests, but those of its major customers. It is possible to say that the mentioned lobbying strategy was appropriate, as the government must consider the interests of all the layers of the community and particular social groups when making decisions that influence the lives of citizens.
The Coca-Cola Company is also involved in several global corporate citizenship projects that include:
- “Smile of a Child”; a charity project to assist children living with mothers in crisis centers for women that are victims of domestic violence. The aim of the project is to restore a sense of joy to the children experiencing one of the hardest periods in their lives. The process of adaptation in the crisis center is a difficult one, and the company informally participates in it, presenting a personalized gift to each child and inviting kids to various festive and recreational events.
- Participation in the Peace Day event. Each year, the Coca-Cola Company releases a series of “charitable” 330 ml Coca-Cola cans, proceeds from the sale of which are used to fund the organization of the Peace Day, which is celebrated by the decision of the UN since 2001.
Both of the mentioned projects are rather effective as they allow the company to maintain the image of a socially responsible organization and moreover, broaden the range of consumers by obtaining support from particular social groups (single mothers in the first case, and pacifists in the second).
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