Coca Cola Risk Analysis Essay Example
Coca Cola Risk Analysis Essay Example

Coca Cola Risk Analysis Essay Example

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  • Pages: 9 (2403 words)
  • Published: July 19, 2017
  • Type: Article
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Throughout history, many companies have been recognized for their growth and success. However, controversies have led consumers to question the ethics and operations of various corporations. One such company is Coca-Cola, also known as Coke. Founded in Atlanta, Georgia in 1892, it has expanded globally by producing concentrate sold to licensed bottlers worldwide and eventually retail stores and vending machines. Along with regular Coke, the company produces other Cola-branded beverages like water, energy drinks, and coffee variants including Diet Coke, Caffeine-Free Cola, Diet Coke Caffeine-Free, Coke Cherry, Coke Zero and Coke Vanilla. As of 2013 these beverages were available in over 200 countries with at least 1.8 million servings consumed daily according to Elmore's "Citizen Coke: An Environmental and Political History of the Coke Company" (p.717). Despite its global popularity and high demand worldwide though,the C


oca-Cola Company has faced numerous controversies in India since production began there in 1999.Coca-Cola allocated $2 billion towards its bottling arm management in India from inception until present day with plans to add an additional $5 billion.The company seeks to double its revenue from India reaching up to $200 billion by 2020 putting it among the top seven markets for coke around the world(KillerCoke).Coca-Cola aims to boost its resources and collaborate with Coke India in order to reach its targets. The company foresees that emerging markets, including India and China, could deliver approximately 60% of additional sales volume growth. However, the establishment of several bottling plants close to villages dependent on their water source has caused controversy. In Plachimada, Kerala and Wada in Maharashtra as well as Mehdiganj in Uttar Pradesh, Coca-Cola's overuse of common groundwater resources around its facilitie

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- known as KillerCoke - has resulted in severe water shortages for these communities. Despite announcing a $25 million investment plan to expand production operations at the Mehdiganj facility back in 2003, Coca-Cola abandoned these plans in August 2012 due to delays obtaining a no-objection certification and growing concerns from locals about the plant's environmental impact. Organizations such as the India Resource Center have helped raise awareness about these issues and advocated for private regulation alternatives to government-led solutions. Without an effective non-market strategy established for international operations, Coca-Cola risks facing similar problems that could lead to missed opportunities.Having strong non-market strategies is crucial for companies to avoid government regulations and withstand private political pressures, such as protests (Baron, p.31). These pressures can negatively affect a company's success, with moral concerns being another factor that can impact their chances of survival. For example, Coca-Cola is currently facing issues with water usage in India and needs to develop policies that address the concerns of various private interest groups like anti-Coke NGOs, conservationists, politicians, farmers, and villagers. The Uttar Pradesh Pollution Control Board leads these efforts by enforcing environmental laws and regulations in the state of Uttar Pradesh. They found that Coke violated its license by using groundwater without clearance from the Central Ground Water Authority (CGWA), which regulates water usage in water-stressed areas. Despite Coke disputing these accusations and citing a 2012 CGWA report exonerating them of causing decreased groundwater levels in the area (The Economic Times), reports indicate that the UP pollution board has shut down Coke's Varanasi unit. This decision was based on CGWA findings that groundwater levels had gone from "safe" in 1999

to "critical" in 2009 around Coke's Mehdiganj plant - despite claims by the company that they complied with all Indian laws and regulations applicable to their operations there.The Authority shut down the plant of Coke because they had increased production capacity without permission, similar to a previous incident in 2004 in Kerala. The company may have to pay $47 million in damages due to regulations and protests over low water levels despite initial benefits for the local economy. Though expansion plans in Varanasi are on hold, Coke is seeking permission from the Uttar Pradesh Pollution Control Board to expand into Mehdiganj. Protests inspired by the recent closure have already occurred and many Indian villages accuse large companies like Coca-Cola of depleting their drinking water even when levels are critically low for basic consumption. A bottler of the company has caused further decrease in water supply levels for villages, including Mehdiganj where a farmer observed an 18-meter decline within three years below his water table.According to "Coca-Cola's Crimes in India," the Coca-Cola company is draining groundwater from farms and causing environmental damage, resulting in a decrease in water supply for about 10,000 people living in the village. The reduction of water has caused concern among villagers such as Shakuntala Devi who believes that it would be impossible to live there if Coca-Cola doesn't close its plant. The destruction of livelihoods has led to destitution and an increase in suicides. Protests have been held against Coke with varying degrees of participation. A violent protest occurred on November 24, 2004, outside of the Mehdiganj factory where around 2,000 individuals participated according to organizers – mainly women and youth.

However, Coke claimed that the number was significantly less than reported by organizers. Reports suggest that during this particular protest, approximately 200 villagers were arrested (Sydney Morning Herald P.13).In June 2007, an article titled "Indian villagers want Coke works shut amid water fears" reported that four hundred people, from twenty different villages, marched to the Varanasi territory magistrate's office. They demanded the immediate shutdown of Coca-Cola's bottling plant in Mehdiganj due to concerns over water shortage and groundwater and land pollution caused by Coke's operations. All participants submitted letters to the territory magistrate with Vina Kumari Meena drawing attention to these issues. The demand was made in view of Monitoring South Asia's poor state of affairs. According to the DRDA manager, India has been declared a "dark zoned" area where groundwater resources are overexploited and over 85% of total recharge of land water resources has been extracted resulting in new underground installations approved by the government. Accusations against unethical environmental practices can lead NGOs to mobilize people for causes such as environmental protection, health and safety protection for consumers, civil and human rights which have played a significant role in advancing these causes (Baron p.75).Nandlal Master, who leads the Lok Semiti (People's Committee) - a non-governmental organisation that opposes Coke - has questioned why the company should be permitted to draw hundreds of thousands of litres of water every day when people don't have enough water for their basic needs. However, there are additional issues with Coke beyond its use and reduction of water availability in most villages. Farmers receive waste products from Coke's operations as fertilisers for crops. Toxic chemicals have been found in

these fertilisers according to a BBC survey; sludge produced by the company in Kerala, Southern Province contained carcinogen Cd at dangerous levels. In an investigation by Face the Facts on BBC news media, presenter John Waite collected a sludge sample for testing at the University of Exeter. The results were alarming; it contained useless fertiliser with toxic metals Cd and lead. Senior scientist David Santillo confirmed contamination not only occurred through crops but also affected entire water supplies, which exceeded World Health Organization-approved levels. Professor John Henry, Britain's leading toxicant expert expressed grave concerns about those living near dumping sites and those relying on harvested crops.The consumption of Cd can lead to kidney failure, while even low levels of lead can cause mental retardation and blood deficiency in children. Pregnant women residing in small towns in India who consume goods from farms with high chemical water levels are susceptible to negative outcomes such as premature births, spontaneous abortions, and other related complications according to a professor. In 2003, the Centre of Science and Environment (CSE) conducted further tests on soft drinks including Pepsi, Mountain Dew, Diet Pepsi, Mirinda Orange, Mirinda Lemon, Blue Pepsi, 7-Up, Fanta, Limca Sprite Thumbs Up and Coke. The article titled "Pepsi,Coke contain pesticides:CSE" stated that both brands failed health standards due to positive pesticide results. Three samples from each brand were tested for residues by the Pollution Monitoring Laboratory (PML) of CSE which showed traces of four toxic insecticides and pesticides; Lindane DDT Malathion and Chlorpyrifos known for causing cancer damaging reproductive nervous systems and harming immunity.The testing was carried out between April-August 2003 using samples collected from various locations in

the city wherein Coke samples showed pesticide presence exceeding planetary standards by thirty times the limit of 0.0150mg/l whereas the total pesticide limit set by the European Economic Community is at 0.0005 mg/l.Coca-Cola has faced criticism and lost investor confidence in India despite claiming to use a multiple barrier system to eliminate contaminants such as iron, heavy metals, and pesticides. The Centre of Science and Environment has been an outspoken critic of Coca-Cola's practices in India, with groups forming to protest the company's operations. Legislation is already underway to ban Coca-Cola drinks from cafeterias in India due to concerns over high levels of pesticides and insect powders found during investigations by Indian authorities and private research labs. Amit Srivastaba of the Indian Resource Center is actively involved in addressing these issues. To avoid unethical practices leading to laws beyond their control, Coca-Cola must take appropriate actions similar to those needed for Enron's ethical downfall. Enron was discovered engaging in fraudulent activities including misleading financial reports, fabricating an energy crisis, and embezzling funds from investors that led the company into bankruptcy.Despite being a well-known global brand, Coca-Cola's reputation could be improved by addressing unethical issues within the communities it operates while maintaining consistent quality worldwide. However, Coke's actions in India have been questionable as they prioritize globalization without considering ethical and environmental costs. The company has faced opposition from dissenting groups due to their excessive development behavior and water pollution in areas with dangerously low water resources. Instead of directly addressing these concerns, Coke has used public relations tactics and presented deceptive information, including highlighting their corporate social responsibility awards. For example, the article "Coke's offenses

in India" reveals that Coke claimed recognition for environmental practices through consecutive Golden Peacock Environment Management Awards from the Institute of Directors. Similarly, in 2005 they boasted about being a "Water Efficient Unit" recognized by the Confederation of Indian Industry (CII).In 2007, Coca-Cola was accused of providing misleading information about their water resource management practices in India through the Energy and Resource Institute (TERI), a reputable non-profit research organization based in Delhi. Despite this, Coca-Cola has made societal responsibility a top priority by implementing new innovations and procedures to improve their operations. They aim to refill more than 100% of the water they use through various initiatives such as rainwater harvesting, pool reconstruction, and interventions to improve water efficiency. In India, they exceeded this goal and replenished 110% of the water they used by 2012. However, the company has faced criticism in India for allegedly consuming the water supply due to a deficit of monsoons impacting agriculture. Nevertheless, some areas near Coke's plants look flourishing with crops such as mustard, potatoes, pepper, wheat, and rice. Despite this success story of Coca-Cola's environmental efforts in India; critics remain focused on the negative impacts of their operations on surrounding communities. While prioritizing profitability is important for Coca-Cola; it should also consider its environmental impact when looking towards future goals rather than addressing non-market initiatives that would prevent community groups from questioning its ethics which may increase profits instead. As a leading drink company globally with significant resources at hand; it should do its bit towards responsible corporate citizenship beyond just profit-making measures alone.Protests have erupted in Kala Dera over Coke's lack of corporate social responsibility and the

damage caused to nearby communities due to their usage of water. During a 2010 Stockholders meeting in Duluth, Georgia, Amit Srivastaba from the India Resource Centre warned that Coke would eventually face financial and legal repercussions for their operations in water-stressed areas in India. He also criticized the company for not acknowledging the extent of their liabilities in India. With profits amounting to billions since its establishment, allocating a few million dollars annually towards compensating farmers who suffered losses when Coke initially began operating could be easily done. Furthermore, they are developing new inventions to address the long-term water issue for farmers and could establish new schools and invest in communities surrounding their bottling plants while increasing disease awareness through non-governmental programs. Publicizing these efforts should encourage the company to avoid unsustainable practices in developing countries while improving its image by stepping up community service contributions such as cleaning up streets and supporting non-governmental organizations. Consistent action is crucial to demonstrate commitment toward stopping water deficit and pollution problems.To promote water resource sustainability, one strategy is to continue efforts to stop the water deficit and plant trees for environmental enhancement. Trees are especially effective in reducing air pollution from mills by absorbing gaseous pollutants through their leaves. Working with organizations like TERI can also aid Coca-Cola in achieving this goal. Ultimately, actions speak louder than words. In various news articles such as "Coke rejigs bottling arm direction" (The Times of India), "UP pollution board shuts down Coke’s Varanasi unit" (The Economic Times) and "Indian villagers want Coke works shut amid H2O frights" (BBC Monitoring South Asia - Political Supplied by BBC Worldwide Monitoring), concerns have

been raised about Coca-Cola's impact on groundwater levels and consumption of water supply in India. The India Resource Center has reported that groundwater levels continue to decrease around a Coca-Cola plant ("Groundwater Levels Continue Downward Spiral Around Coke Plant").The Campaign to Stop Killer Coke's website and the Centre for Science and Environment report that both Pepsi and Coca-Cola products in India contain pesticides. Despite concerns about their use of water in their operations in India, Coke India's own website claims it is done responsibly and provides information on Mehdiganj Fact where Ray Rogers highlights alleged crimes committed by Coke in India. A Department of Natural Resources report discusses how trees can reduce air pollution. Criticism has also been directed at Coca-Cola for its water use in India, leading to the company abandoning expansion plans due to related issues. For further information, J Bartow Elmore's "Citizen Coke: An Environmental and Political History of the Coke Company" is recommended, while David P.Baron's "Business and Its Environment" offers additional insights. Both books are available in print format with Baron's book spanning 784 pages published by Pearson Education with a reference to page 717.

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