Coca-Cola has been the most significant beverage company on the planet. Until now, it's been offering about 400 beverage brands and functions more than one billion servings per day. Coca-Cola was rated as the No. 1 brand on the planet by Global Brand Scorecard of Interbrand, in 2003. Its brand value was projected at about 70. 45 billion dollars. (Interbrand, 2003)
Coca-Cola's occurrence in India had been cemented, from 1993. In 2003, Coca-Cola India even earned the Robert W. Woodruff Prize, based on the broad variables of quality, level, and success.
"In 2003, the Indian subsidiary of the Coca-Cola Company was awarded the Robert W. Woodruff Honor1 for spectacular business performance. "
However, on the 5th of August, 2003, there is a news release with a shocking subject: "Hard Truths about Soft Drink", from an activist group (a group of experts, environmentalist, journalistetc from India) - the Center for Research and Environment (CSE).
"the global players - two giant firms, who swear by the ideas of corporate and business responsibility and global criteria - have been caught in the function, taking good thing about the poor and nonsensical regulatory standards in India. "
(See the Appendix A) (Centre for Knowledge and Environment, 2003)
On the statement of the studies done by the Air pollution Monitoring Laboratory (PML) of this CSE, the Coca-Cola and PepsiCo's examples in India comprised DDT (dichlorodiphenyltrichloroethane), lindane, chlorpyrifos, and malathion - which are pesticide residues. All of those toxic chemicals within the examples exceeded the international limits for more than 30 times.
In response to that article, products of Coca-Cola and Pepsi were forbidden by the Indian Federal government. Moreover, the Coca-Cola Bottling Company and Coca-Cola Businesses stock on the New York Stock Exchange also dipped. It could be said that, the allegation from CSE had really challenged Coca-Cola India to keep its brand image in India and in the world.
Challenge for Coca-Cola India
Coca-Cola's situation in India, prior to the challenge
In India, Coca-Cola had been the leading soda brand before it got to leave in 1977, to avoid disclosing its formulation to the federal government and reducing its collateral stake - as required under the Foreign Exchange Regulation Work (FERA).
16 years later, in 1993, Coca-Cola delivered to India and began to cement its existence, again. Some popular local brand in India, such as Limca, Maaza, Thumbs Up, were purchased by Coca-Cola. It was to tap into the domestic marketplaces while taking benefit of the global styles in preferences.
In the first 21st century, in the global carbonated soft drink (CSD) market, the Indian beverage market was highly competitive, since it had large people, but low intake of soft drinks. The marketplace was controlled by Coca-Cola and Pepsi, as their consolidated market talk about was more than 95%.
Until 2003, Coca-Cola has spent more than one billion folks us dollars in India and became the top international buyer. In 2002, the volume progress of Coca-Cola India was almost 39 percent, so Coca-Cola India prepared to twin its capacity at an investment, in 2003.
In spite of this confidence, from the disclosure on August, 2003, there were many problems for Sanjiv Gupta - the leader and CEO of Coca-Cola India - to deal with.
The key problems for Gupta to focus on
Actually, Coca-Cola India would have foreseen that, this kind of problem may happen to be ready for it. It can even be said that, they could have avoided this turmoil. In Feb of the same calendar year, Coca-Cola was already attacked for a similar issue about water in bottles. The Kinley normal water brand was launched by Coca-Cola, in 2000. Unfortunately, on Feb 4th, 2003, there was also a written report from the CSE that was proven on studies done by the PML. The name of that survey was "Pure Water or Pure Peril?"
"Analysis of 17 packed normal water brands sold in the united states revealed evidence of pesticide residues including lindane, DDT, malathion, and chlorpyrifos. "
In this circumstance, the European specifications for maximum limits of pesticides in water were employed by the CSE. The concentration degrees of the Kinley normal water brand from Coca-Cola were greater than the provided restrictions for 15 times. At that time, the hype just passed away, because of Coca-Cola's silence. However, that cannot be called a powerful way to take care of those sorts of problem.
Actually, the nongovernmental organizations (NGOs) always have great credibility. Whenever a multinational corporation (MNC) is attacked by the NGOs, it is the MNC that will lose its trustworthiness automatically. Or, in other word, it is unfair for the MNC to compete with an NGO like CSE. Therefore, thinking about the right action in response to CSE allocation could be a short-term task for Gupta to accomplish.
However, those were simply a short-term work with Coca-Cola India. There were also some other problems in the long-term period for Gupta to deal with.
It is the actual fact that, most of the consumers from expanding countries, such as India, will often have a love-hate romance with MNCs. The explanation for that are some problems of the MNCs, which might make them to be blamed for not watching the same requirements in those growing countries like what they do in the industrialized countries.
For example, regarding Coca-Cola, by screening Coca-Cola's test of the merchandise bought from India, PML discovered that the total pesticides in those examples was higher than the Western european Economic Commission rate (ECC) limit for approximately 30 times. Nevertheless, from then on, the sample of Coca-Cola's products sold in the United States was been tested by PML. And, remarkably, the Coca-Cola's products sold in the United States didn't contain any pesticides. This is often a ugly truth about the inequality between Coca-Cola's procedures in producing countries and industrialized countries.
Furthermore, before the August 5 disclosure in 2003, Coca-Cola acquired always been regarded as a company with high communal responsibility. A company with high cultural responsibility should look after the communities that it manages in. Therefore, to be a socially liable company, Coca-Cola should abide by just similar specifications, internationally.
As mentioned previously, Coca-Cola didn't seem to truly have a history of interacting with turmoil effectively. However, in cases like this, their unwillingness to immediately package with those sorts of problems did not repeat.
In addition, as also mentioned previously, Coca-Cola's brand value was predicted at about 70. 45 billion dollars and it was rated as the most valuable brand on the planet. The brand value of any company is largely damaged by its image and products' performance. Therefore, Coca-Cola's solution to take care of the reputational risk and wthhold the brand's value should be carefully considered. Actually, this problem should be carefully centered on in both short-term and the long term.
All of these issues will be mentioned in more detail later, in a separate part.
Corporate cultural responsibility
"At Coca-Cola India we strive to refresh the entire world, inspire moments of optimism and delight, create value and change lives" (Coca-Cola India, 2010)
The efforts for good citizenship in the community have been made by Coca-Cola Company. By good throw away management and responding to water, environment change, it is wanting to improve both the environment and the grade of life locally. That can be seen obviously in the "Principles of Citizenship" from Coca-Cola Company.
(Start to see the Appendix B)
It can be seen that, the Coca-Cola Company is wanting their finest to keep carefully the positive brand image as a corporation having good corporate social responsibility (CSR). On the website, it is said that,
"We have been determined not and then make great drinks, but also to donate to communities around the world through our commitments to education, health, wellness, and diversity. " (The Coca-Cola Company, 2003)
For example, just in India, Coca-Cola is having positive contribution to the world, in education, environment, health or even occupation. (See Appendix C)
Actually, those fact is just talked about to be great data for my very own perspective. In my opinion, nowadays, the Coca-Cola Company's great CSR is to pay for their insufficient responsibility, before.
India was such a encouraging market for Coca-Cola to enter into, in 1993. Therefore, Coca-Cola made many blunders. For example, just in 2003, there have been the February problem with Kinley water in bottles, the July trouble of normal water scarcity and polluted normal water in Kerala, and the August problem with pesticides in this case. That was because of Coca-Cola India's hurry to overtake the first mover. So many similar problems just continued coming, so it can be said that, Coca-Cola India was absolutely not ready for those types of problem. This is why for their reimbursement to the city, in these days.
In my estimation, at that time, Coca-Cola India would have made some other choices to handle the situation, instead of fighting against the CSE - as what Coca-Cola India really does. Together with Pepsi, Coca-Cola attacked the reliability and the laboratory results of CSE. They tried out to supply the safety with their products with other testing at the impartial laboratories and displaying those data to the public.
Some ideas for Coca-Cola's communication and the pros and cons of each will be given and talked about in detailed. Those key problems mentioned previously might be solved insurance agencies these alternatives.
Firstly, the key constituents should be carefully considered. In cases like this, the key constituents could possibly be the public, the mass media, the suppliers or even the countrywide government and the CSE.
In my estimation, the tests conducted by an authorized could have been suggested by Coca-Cola to the CSE. It had been able to prevent the loss of consumers' trust by becoming a member of with the CSE to solve the problem. In fact, Coca-Cola shouldn't have shown a great deal offensiveness. It made the consumers feel that Coca-Cola didn't really take care about their health - the public's health. However, in this case, though it is the CSE's interest to safeguard the costumers, what if they refused to collaborate with Coca-Cola? Furthermore, if the result of that second test also establish that Coca-Cola's product included pesticide residue, everything might be worse. Additionally, if Coca-Cola agreed with CSE to truly have a second test, the consumers might perceive it as acknowledging that the CSE's record was right.
In addition, in my perspective, there might have been another method for Coca-Cola to deal with the problem. Maybe it's precisely what they performed with the situation of Kinley bottled water - just stored silent and the buzz would go away. Coca-Cola is such a robust brand so the majority of the Indian costumers would easily forget it. Actually, some Indian consumers moving into the rural area even didn't find out about that statement from CSE. Therefore, Coca-Cola may possibly also deny the say of CSE simply by disregarding it. However, there could be some disadvantages for this solution, too. Imagine if some journalists did not simply want to allow buzz disappear completely and made the media give notice to it? In fact, as mentioned above, those NGOs, like the CSE, might have small size, but great reliability. If there is an argument, it'll be the CSE, who the consumers will automatically have confidence in. Furthermore, the consumers in the us could probably feel that what those MNCs - like Coca-Cola - want is merely selling. Or, in other words, they might think that the MNCs consider about profits, nor think about consumers' health.
In finish, some keys for this problem, which have been clarified, should be pointed out.
It had been demonstrated that, having available communication with the main element constituents is quite important with a firm. Especially, when having the problems like Coca-Cola, the business needs to communicate with willingness to resolve the problem, or actually, a nature of partnership. Therefore, a company may organize with the CSE to solve the problem, favorably. There could be great reputational benefits from that determination to spouse. When the company can turn the problem into a confident, you will see the upside for reputational risk, on a corporate level.
Furthermore, it can be said that, the decision to be different as a corporation with corporate cultural responsibility is obviously a good idea.
"Corporate and business responsibility constitutes an organization's esteem for society's hobbies, demonstrated by firmly taking ownership of the consequences its activities have on key constituenciesin all elements of their procedures. " (Argenti, 2009)
Therefore, in my opinion, in these days, the Coca-Cola Company is to have such great CSR to compensate for their lack of responsibility, in the past. When the Coca-Cola Company can retain that positivity, it will be able to sustain that position - one of the leading companies in the global drink industry.
Word matter: 2, 161
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