All organizations must uphold high ethical standards and adhere to legal requirements. But still, several organizations, especially manufacturing firms, confront particular difficulties since there is a risk of endangering staff and customers. It is always possible for workers on a production line to get hurt, and there is also the chance that the finished goods might be dangerous for customers (Le et al., 2017). Therefore this essay utilizes Coca-Cola as an illustration to highlight the significance of organizational ethics and legal concerns.
Organization example
The Coca-Cola Company is the most extensive beverage manufacturer in the world and was founded in 1886 (Coca-cola, n.d.). It also offers other lucrative brands, including Powerade, Minute Maid, and Dasani water, in addition to Coca-Cola and Diet Coke (Gersen & Hemphill, 2022). The corporation boasts the most significant distribution network in the world, which covers consumers and companies in almost every nation to meet worldwide demand (Le et al., 2017). Today, Coca-Cola products can be found practically anywhere in the world, demonstrating the effectiveness of the Company’s global marketing strategy.
Coca-Cola has recently struggled to reach its financial goals and has been linked to several ethical and legal issues. It has recently had substantial challenges with ethical and legal stand and company reputation, which have led to some investors losing trust in the firm (Le et al., 2017). For instance, Coca-Cola investor and board member Warren Buffet withdrew from the organization in 2006 after becoming increasingly frustrated with the Company’s inability to solve its problems (Le et al., 2017).
Unfavorable treatment of some employees has been a significant problem affecting the Company’s reputation and productivity. For instance, the Killer Coke campaign launched on April 13, 2003, called out Coca-Cola for its role in the killings of union leaders in Colombia. The incident disclosed more than simply killings; the union was also threatened, and workers’ pay was reduced (Coca-cola, n.d.). Owing to the Killer Coke website, which aims to put pressure on Coca-Cola by raising customer knowledge, the Company’s unethical business methods have led to recurring public relations issues (Le et al., 2017). This implies that if Coca-Cola chooses not to address the problems associated with workers’ harassment and intimidation, like in Colombia, the campaigns against the Company, like the one carried out by the Killer Coke campaign, will continue to have a detrimental impact on its operations.
Unethical conduct towards union members has also emerged as a problem affecting the Company’s performance. For instance, the Company had faced significant accusations in Colombia and Guatemala. In Colombia, eight employees perished in a bottling facility. Approximately 50 employees fled the workplace, and another 65 received violent threats (Coca-cola, n.d.). There was proof that union members were being intimidated, but unfortunately, Coca refuted all accusations (Coca-cola, n.d.). As a result, the Company faces the challenge of mistrust among its shareholders for not providing correct information or responding to accusations appropriately.
The significant challenge that Coca-Cola faces is that since the 1990s, it has been criticized for allegedly acting unethically and sometimes unlawfully in various situations. These areas include unsafe operation, anti-competitiveness, racial prejudice, channel stuffing, distributor disputes, harassment of union workers, pollution, and health issues (Le et al., 2017)). The corporation has addressed some of these problems through private agreements and legal disputes, while others are still open-ended. Coca-Cola has typically responded by enhancing its detection and compliance procedures, even though handling various ethical problems has only sometimes been praised.
A corporation risks having its entire business ethics criticized by the public when concentrating on its commercial goals and bottom line. Despite having a solid marketing strategy because its brand is well-known worldwide, Coca-Cola began to draw more attention. Critiques surfaced, including worries about the product’s impact on health and the Coca-Cola Company’s business methods (Le et al., 2017). Additionally, several Coca-Cola products are said to offer significant health risks. For instance, because there is high sugar content in the beverages, the Company has been accused of contributing to the rising obesity crisis (Wang et al., 2018).
Challenges and Recommended Solutions
Coca-Cola sales have somewhat decreased due to claims and consumer doubt about the risks of carbonated sweetened soft drinks. According to Hellmich (2013), sales of carbonated beverages fell by 3.4%, with diet soft drinks falling much more precipitously than all other soft drinks combined. But the Company reported an increase in fourth-quarter total sales and net revenue a month after the “Coming Together” campaign was introduced. However, the Company disclosed a reduction in first-quarter sales as soon as the critiques and litigation launched by the Center for Science in the Public Interest (CSPI) started to surface. Coca-Cola once more recorded an annual revenue decline of 3 percent. In other words, the rising fear or lack of trust in Coca-Cola products has hampered the Company’s success in terms of sales and the regular legal difficulties it faces. Coca-Cola must find the right balance between promoting health awareness programs and selling goods that some say contribute to the exact problem they are working to eradicate. Given the connection that numerous pro-health organizations and the media have drawn between Coca-Cola products and obesity and other health-related issues, the public has started to view the Company’s anti-obesity campaigns as a dishonest attempt at damage control with the hope of preserving the brand.
The appropriate solution to this challenge should be acting so that the customers have faith in the beverage products. Coca-Cola must find the right balance between promoting health awareness programs and selling goods that some say contribute to the exact problem they are working to eradicate by participating in talks focused on scientific research on product nutrition to preserve its special management status in the soft drink sector (Cascio & Aguinis, 2019).
Reduction in employees’ morale is another challenge that affects the Company’s productivity. Workers mistreatment or harassment of union workers has been reported harassment of union workers, which is a big challenge to the Company’s growth if the situation remains (Le et al., 2017). The rights of employees who work for Coca-Cola and their bottling partners must be protected. Without this, the Company will continue facing several lawsuits and lose faith in its customers (Le et al., 2017). When Coca-Cola, along with several of its bottling partners, joined the United Nations Global Compact in 2006, it took on responsibility for upholding its tenets, including labor and human rights. But it has been accused on several accounts that it does not follow such responsibility but is somewhat interested in making a profit, which again has spoiled the reputation of the Company and affected its marketing.
Therefore to solve the challenge such as employee resistance to organizational change that arises when employees feel they are not recognized or mistreated, Coca-Cola should strengthen its management to enforce the code of business conduct and code of ethics, which applies to all workers in its local and international subsidiaries and activities, to support this long-term policy (Cascio & Aguinis, 2019). By doing this, employees will feel appreciated and dedicate their energies to achieving the organization’s goals. Again, Coca-Cola’s reputation may be rebuilt if the employees start positively commenting on the Company. Aside from providing a safe working environment, Coca-Cola must foster a fair and ethical connection with employees. This will boost worker happiness and the business image and emphasize workers’ problems. This is especially relevant when working in countries with disparate labor regulations. Coca-Cola should collaborate to safeguard workers’ rights, including negotiating power. The union should also be treated decently, and no violence should be condoned.
Rationale
For Coca-Cola Company to remain one of the most popular brands in the world, it needs to facilitate desired changes that would solve the ethical and legal issues raised. Also, the Coca-Cola Company aspires to increased product growth, sustainable production practices, and improved brand recognition, which is affected by the ethical and lawsuits that the Company faces (Le et al., 2017). So it would be appropriate if the Company solved the situation, gained the clients’ trust, and acted with the law to achieve these goals. Desired changes like providing a safe work environment for its workers would ensure that employees are motivated and work passionately to achieve the company goals.
Coca-Cola operations must abide by the specific laws and regulations of each nation where they conduct business. Legislation about worker and human rights, as well as human rights, would be necessary for Coca-Cola to adhere to since these areas have major challenges. Additionally, to avoid legal problems in the future, acting ethically can also be advantageous for the Company (Le et al., 2017). Customers respond negatively to organizations that behave unethically; in particular, unethical behavior can have a negative impact on consumer demand for a company’s good or service. Finally, being a huge public corporation, it is crucial to please shareholders by keeping the business in good standing. However, this should not come at the expense of its employees because they are the Company’s main drivers.
Conclusion
Coca-cola product sales and company income have steadily decreased due to legal disputes, ongoing criticism from advocacy organizations, and distrust from a culture that is changing to a more health-conscious attitude in what they eat. The lawsuits have yet to help, however, since the firm’s reputation isn’t aided by the negative media depiction of the Company as being oblivious to public health. It will be interesting to watch if Coca-Cola can overcome its ethical issues in the long run, learn from its errors, make the required corrections, prevent similar problems, and continue to be a leader in the beverage industry.
References
Cascio, W. F., & Aguinis, H. (2019). Applied psychology in talent management. SAGE Publications.
Coca-cola (no date) The Coca-Cola Company struggles with ethical crises. Available at: https://harbert.auburn.edu/binaries/documents/center-for-ethical-organizational-cultures/cases/coca-cola.pdf
Gersen, J. E., & Hemphill, C. S. (2022). The Coca-Cola Bottle: A Fragile Vessel for Building a Brand. Forthcoming, Legal Applications of Marketing Theory (Jacob Gersen & Joel Steckel, eds.). https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4232437
Hellmich, N. A. (2013). Critics attack coke’s anti-obesity ad. USA Today. http://www.usatoday.com/story/money/business/2013/01/14/coca-cola-obesity/1832555/
Le, A., Jiang, J., Sandor, M., Stack, M., & Zhang, L. (2017). Business Ethics: The Coca-Cola Company. Jove’s Bodega, 1(1), 35-45. https://www.scribd.com/document/485807597/119-Article-Text-242-1-10-2017090
Wang, R., Liaukonyte, J., & Kaiser, H. M. (2018). Does advertising content matter? Impacts of healthy eating and anti-obesity advertising on willingness to pay by consumer body mass index. Agricultural and Resource Economics Review, 47(1), 1-31. https://doi.org/10.1017/age.2018.1
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