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Memo Coca Cola India

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Facts Relevant to the Ethical Issue

Tests carried out by Pollution Monitoring Laboratory (PML) of the Centre for Science and Environment (CSE), indicated that Coca Cola’s products and those of a rival – Pepsi – contain amounts of toxic chemicals that far exceed the recommended standards. If the allegations are true, the toxic chemicals in question – lindane, DDT, chlopyrifos and malathion – pose health hazards to users of the products. However, what is evident is the fact that these allegations have significantly tarnished the image of the company. This is despite the fact that Coca-Cola has taken many years to build the image of the company. Evidence of tarnishing of the image of the company is the drop in the sale of products. As the operations manager, you should take measures to ensure that the perception of consumers and its products does not continue to deteriorate. Otherwise, the company will incur enormous financial losses due to the allegations. In addition, the company has a tendency of laying low until the initial buzz on various allegations subsides. This was the strategy that managers of the company took regarding the allegations that Kinley Bottle water contained toxic chemicals. In addition, managers in other countries have also used the same strategy to alleviate some crises. The company should use the opportunity to show it is committed to high standards of social responsibility and differentiate itself from its main competitors.

Ethical Issue

The allegations of poor quality of Coca-Cola India have shown that the company has poor corporate relations. The allegations are serious and may have massive financial impacts on the global activities of Coca-Cola. It is a fact that no one would like to be associated with a company that does not care about the quality of its products. People who use the Coca-Cola’s soft drinks consume them for their own refreshment. The consumers may purchase various substitutes instead of buying the soft drinks. Quality is one of the main reasons that make consumers opt to buy Coca-Cola’s products. In essence, the quality of Coca-Cola’s products is the primary factor for continued profitability of the company. Therefore, as the operations manager of Coca-Cola India you should take radical measures for the ultimate good of the company. If the management of Coca-Cola India does not handle the allegations in time, the allegations would lead to enormous financial losses and reduce the investor confidence in the company. The company should act fast and not start passing blame to other parties. It was wrong for the company to claim simply that the analysis of PML was wrong since Coco-Cola regularly checks the quality of its products using external laboratories. The allegations had already done considerable damage to the company. The management should have used tangible evidence to show the company’s products are of high quality.

Alternative Resolutions of the Ethical Issue

The allegations fueled pessimism of the quality of the company companies by consumers. To help restore confidence in the quality of the companies the company may follow three different strategies. The company may also decide to include the levels of the toxic chemicals in the “ingredients” section of the bottle of the drink. The company should compare the levels of these toxic chemicals with the recommended standards. The company may decide to publish regularly the levels of various toxic chemicals in its drink. It may do this in the daily newspapers or magazines or its website. The company should compare it with the accepted standards to show people that the levels of various toxic chemicals are way below the recommended standards.

 These methods would help to show consumers that the company’s products have extremely low levels of toxic chemicals and are safe for human consumption. However, the distinct disadvantage of these strategies is that they will always remind people of the allegations of PML on the quality of the company’s products. Therefore, consumers would always ensure that they look at the levels of the toxic products. The other limitation of these strategies is that should any testing results of the toxic chemicals by PML differ with those on the bottle labels, there would be much damage on the credibility of the company.

Corporate Social Responsibility (CSR) would be the most appropriate strategy to help improve the image of Coca-Cola India. CSR is far much better than advertising in improving the image of the company. This is because CSR get more media attention and the company interacts directly with its customers (Gottschalk, 2011). Coca-Cola India should engage in CSR activities that ensure that people have access to clean water. Access to clean water is one of the problems that the Indian population faces. Approximately 21% of all communicable diseases in India are waterborne. In addition, pollution affects an estimated 90% of water sources in the country (Bansil, 2004). Lack of clean water affects people in both urban and rural areas. Therefore, availability of clean water is one of the main problems that the country faces. Therefore, the company would significantly help the population of the country. Vigorous advertising campaigns should accompany the company’s CSR activities that ensure that Indians have access to clean water.

Long-term commitment of the company to this CSR activity would help improve the company's image. This would help in cushioning the company from any malicious allegations by PML. It would seem outrageous, even laughable, should PML come up with these allegations in future. In addition, company may engage in CSR activities that improve the sanitation of Indians. Coca-Cola strives to penetrate the rural market. CSR activities that help improve the sanitation of Indians would immensely help Coca-Cola India penetrate the rural market. Involvement in CSR activities that improve sanitation of people in rural areas has tremendously benefited other companies, such as BPCL (Krishnamacharyulu & Ramakrishnan, 2011). Therefore, the allegations would help the company venture into the rural market. The company has strived to venture into the rural market for long.

Conclusions and Recommendations

The allegations that coca cola products contain levels of toxic chemicals that exceed the allowable levels have led to the tarnishing of the image of the company. The allegations have shown that the company has poor corporate relations. Instead of countering the allegations with mere words and putting the blame on the analysis methods of PML, Coca-Cola should use the allegations to show its commitment to high standards of corporate social responsibility. This would enable the company differentiate its products from those of its main competitors and enable it increase its market share. Thus, the company should turn the allegations for the ultimate benefit of the company.

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