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BUSM4687 Managing International Business Responsibly Findings

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  • Course Code: BUSM4687
  • University: Royal Melbourne Institute Of Technology
  • Country: Australia

Question:

Describe and explain the CSR work of the company you have chosen Use company websites and reports to describe and explain the main CSR work done by your chosen company. You might also find it helpful to explore any evidence you find about the company’s reason for doing CSR work, and the rationale given for the particular approach to CSR taken. For example, the company might tell you why it is addressing the issues that it covers.
 
 

Answer:

Introduction

Today Corporate Social Responsibility (CSR) has become a very popular topic in the global market. With the increase of demand for corporate citizenship and transparency, CSR has been majorly required to embrace ethical, economic, social, and also environmental considerations. Through the current globalization changes and approaches, companies are expected to not only be of commercial value but also good corporate citizens of the world. In other words, CSR main priorities are to make a close relationship with international community development and sustainability (Carroll, 2008). Often, most multinational companies such as coca cola face very significant pressure from most regions which mostly consist of unethical behavior from emerging markets. Most of concern is mainly directed to the improvement of standard quality and organization roles in how they to handle or react to some of the challenges or situations affecting the society.

Also, with the increase of globalization effect, public image and/or reputation is one greatest concerns in most multinational companies. The reputation of a company in one country is considered very important as it can cause a significant loss in other markets. Some of the main public concerns include social impacts and environmental issues which have continuously become sensitives topics in today’s business world (Flammer, 2013). In the event where companies have failed to fulfill the social and environmental responsibility, the public has been empowered with the ability to boycott products and goods of the respective companies. On the other hand, CSR is also considered as a voluntary initiative but with increasing demand in standards and competition, the approach of social-economic by multinational companies has proved to be one of the competitive advantages that every multination organization must attain in order to compete effectively (Hopkins, 2012).

 

Overview of Coca-Cola Company

Coca-cola company is regarded as one of the largest non-alcoholic beverage companies in the world having its operation in almost every country in the world. The net revenue of coca cola as per 2017 financial report was estimated to be approximately 35.41 billion dollars. Over the past decade, the company has reported an increase of its market share which has greatly contributed by the approach in diversifying its brand portfolio and focusing on making healthier beverages due to the growing concern of consumer health. The company is one of the few many that have been able to successfully implement CSR variables. Unlike most companies, coca cola company has been able to create a “code of ethical business conduct” which is able to align all shareholders interest and developments. With this, the company has also received a number of awards such as Golden Peacock Awards for environmental sustenance in India (Suliman, Al-Khatib, and Thomas, 2016).

Some of the main reasons the company has continued to embrace CSR includes the competitive labor markets, increasing interest of customers, growing investor pressure, relations with suppliers, corporate transparency demand, and the shrinking role of government. Some of the issues such as the relationship with suppliers and customer interests have been contributed by increasing the change in the supply chain and logistics where the standards of quality have also continued to increase with the emphasis on effective communication approaches between all the shareholders (Singh and Kaur, 2016). Also, like most of the multinational companies, coca cola has impacted the society both positively and negatively in its daily operational activities. Some of the main issues that the company has faced over the years is the issue of water problems in India. Despite the challenges, the company main approach is to creating a sustainable CSR with a policy of “impacting positively” to the entire world (Van der Heijden, Driessen, and Cramer, 2010).

 

Analysis of the CSR of Coca-Cola company

As stated earlier, Coca-Cola has managed to successfully implement and embrace CSR in most of its regional operations. The company engages itself in numerous activities which are all designed to offer sustainable and development approaches to the community members in situations which are offered by the respective governments. The Coca-Cola Foundation is one of the main approaches by the company which has significantly helped in the execution of some of the major projects that the company has accomplished (Thorne, Ferrell, and Ferrell, 2011). The Foundation is majorly focused on maintaining and developing a sustainable society with better living standards for humans. Some of the main features that are involved in the foundation projects majorly include difficult areas which are hard for the community to tackle or handle. Some of the major projects include ensuring health standards are observed, providing education support for needy community children, providing clean and enough water, and many others (Torres, Bijmolt, Tribó, and Verhoef, 2012).

Education support is one of the major aspects that the Coca-Cola Foundation has increasingly emphasized in offering sustainable developments in most of the communities. The education development has been widely achieved through great investments in all possible areas that would enhance students to perform better i.e. building educational infrastructures and granting scholarships (Singh and Kaur, 2016). Since 1986 after the establishment of the program, there have been over 6,000 scholars who have benefited from the Coca-Cola Foundation. The health of the community is another important feature the foundation has intensively invested in assuring healthier life in the community. The company has deployed education initiatives and research programs for major health issues such as hepatitis, cancer, tuberculosis, polio, and HIV/AIDS. The program is generally designed to greatly minimize and manage the epidemic challenges of the community. With enough funding, the company has reported its main focus will be to increase its initiative in African countries who have widely been affected by most of the diseases (Idemudia, 2011).

In the event of any calamity in any part of the world, the foundation has strategized means of offering relief aid to the victims. some of the basic commodities the company supplies include a vehicle for distribution of aid, bottled water, food, and other basic features. Example, during the Haiti earthquake, Coca-Cola contributed approximately over 2 million dollars to the Red Cross team. The response to the water issues is another significant part of the major projects the Coca-Cola has determined to provide and/or assist. In the approach to the company sustainability, its committed to ensuring environmental conservation i.e. climate, soil, and water which are very important elements for any living thing survival on earth. On the same note, the company has also developed a partnership with World Wildlife Fund in the commitment of protecting freshwater basins all around the globe (Flammer, 2013).

According to Shamir (2017), through the increase in emphasis on global business ethics, individual’s rights are very important and thus every organization should be able to undertake the required approaches for the protection and restoration of the environment. The Coca-Cola company has been widely perceived by various methods which have been designed for the improvement of its operational activities. Example, Coca-Cola company has intensely invested in the improvement of its manufacturing sites in China where a high level of standards is stressed upon through the improvement technology being used and the type of packing used (Werther Jr and Chandler, 2010). Although the green practices of the company may be observed as still profit-oriented change it still benefits the entire community at large. With the environmental challenges which affect major of its manufacturing destinations, i.e. India and China, Coca-Cola company has a very vital role to play as a multinational company in the improvement of environmental crises with a contribution of the fund, human capital, and technology (Lambooy, 2011).

With the current changes in the global market, labor exploitation has been one of the major issues that continue to be observed in most of the multinational companies. Example, unlike in America business where there is a very high guarantee of ensuring the dignity of the workers and in line promotion of human welfare, markets such as China and India continue to face labor exploitation and many unethical strategies that which companies utilize to maximize profits (Burchell, 2008). Through Coca-Cola emphasis on integrating management strategies in most of its manufacturing points, the company has successfully been able to combine both the corporate and regional cultures. The cross-cultural initiative has greatly improved the ethical standards and also its business practices. On the same note, Coca-Cola has increasingly continued to localize most of its operations thus, on the other hand, enhancing most of the community’s development by training the locals and encouraging innovation (Udayasankar, 2008). In terms of income generation, Coca-Cola has provided over 61,800 employment opportunities all around the making it one biggest “social enterprises” in the remedy of unemployment issue in communities.

 

Evaluation of the CSR of Coca-Cola company

According to the Coca-Cola CSR main objective in sustainability, this is mainly achieved through several ways which consist of employee development, consumer health, the involvement of suppliers, energy and climate, water stewardship, and packaging and recycling. In regards to the development of employees, the Coca-Cola company has continued to maintain on the important employees play in the success of the company (Kotler and Lee, 2008). The CSR of Coca-Cola is highly focused on special programs help in the development of employee abilities, skills, and most importantly the retention of talent. The Employee Engagement Survey of Coca-Cola review showed that the company had received 100% score with significant improvement on the Corporate Equality Index of the Human Rights Campaign and employee engagement. Through the current trends in the food and beverage industry, Consumer health is considered one of the main topics which continued to gain popularity and significant effect on most of the companies involved in the industry market (Brammer, Jackson, and Matten, 2012). With this, Coca-Cola emphasized increasing its products brand with healthier products that have reduced calories and are not fattening.

The value of any organization brand is considered significantly important in the evaluation of its performance. The value of a brand can be characterized by some of the approaches which include the level of company CSR and its relation to sustainability issues (Chen and Delmas, 2011). According to research on customer perception, more 80% of consumers have positive image of an organization if there some of the observable indicators showing efforts of the organization making the world a better place (Jay Polonsky, 2008). After the criticism of pollution on Coca-Cola, its reputation was significantly damaged which even made worse by the company refusing to accept the responsibility for its mistakes. Due to the public pressure, Coca-Cola was forced to change its means of operation. through this, the company was forced to initiate some projects which would enhance some issues such as underground pollution, water pollution, and irrational use of water. Over the years, the company has drastically improved its water usage by over 10% since 2008 where its current water ration use is 1.76 liters (Suliman, Al-Khatib, and Thomas, 2016).

Apart from all the major effort by the company to enhance its CSR, it cannot also be able to eliminate all the negative effect it impacts back to the society. It is described that most of the Coca-Cola products are not so healthy for consumers as they constitute a wide range of ingredients which can cause diseases such as heart diseases, diabetes, tooth decay, obesity, and many others (Karnani, 2014). Example, most of the company products contain phosphoric acid which causes weakening of bone due to leaching of calcium in the body. Due to this, the has reported cases in the increase of osteoporosis cases which have directly related to the consumption of coke products (Herrick, 2009). To react to this, the company has also developed healthier product brands such as the Coke Sugar-free which has been heavily accepted thus also increasing the annual revenue income.

Despite the company effort in the conservation of natural resources, Coca-Cola has faced a series of criticism especially the degradation of water sources in most of its manufacturing areas. In India, Coca-Cola was reported having pesticides which polluted waters sources and also claims that the company products have also been proven to have traces of pesticides (Karnani, 2014). This wide accusation led to a massive loss of profit by the company and significant tarnish of the company public image. Example, after the release of the report in 2003, the company experienced a turnover decrease of about 40% just in two weeks’ time which was later followed by poor customer relation in India and other parts of the world (Chatterji, Levine, and Toffel, 2009). Although the company at first refused to acknowledge the claims brought forward it afterward reacted by admitting to the public that the company had failed in meeting required operation standards and the plans taken to ensure sustainability of the water resources.

 

Recommendations

One of the main recommendation that Coca-Cola should widely focus its concentration on its shareholder engagement. Shareholder perspective view of CSR, the organization has a responsibility in offering full satisfaction and failure to this the shareholders have also the power which can affect the company performance. Since shareholders have various opinions in the company’s action, operations, and outcome, Coca-Cola should enhance its communication strategies where it will be able to easily identify problems and opinions on the improvement of services and products (Culnan, McHugh, and Zubillaga, 2010). Another improvement the company should be able to implement is the improvement of the working environment. On its emphasis to integrate its management structure, Coca-Cola should improve its remuneration thus to eliminate labor exploitation criticism which continues to affect many multinational companies all around the world. The aspect of the company CSR should be to promote world-class standards in corporate management by enhancing its human welfare movement and promotion of employee’s development (Idemudia, 2011).

Also, with continuous changing concerns of the consumer in the market today, Coca-Cola should also consider the application of cross-culture in respective market sectors. The main of the approach is to improve the company corporate environment disclosure which will, in turn, offer significant group membership with the company (Barnea and Rubin, 2010). With this, Coca-Cola will also be able to improve sustainability rating in all major aspects and in line also improve its status of legitimacy. Unlike most of the current methods in CSR which majorly comprise of reacting to social issues, Coca-Cola should implement pro-acting tactics which will be able to identify and curb challenges before they become major issues in the society.

Conclusion

In summary, the good relationship of an organization with shareholders can be described as “win-win” situation for all the parties involved. Thus, for any organization willing to embrace responsible corporate citizenship and also generating development in the stakeholders and the society there will be a more positive expectation in the company in the world market position (Cacioppe, Forster, and Fox, 2008). With this, Coca-Cola company has continued to increase its effort in improving its CSR wherein most of the markets such as Australia it has received a considerable acceptance as part of the society with a rating of about 60% in all aspects of CSR sustainability.

As compared to some of its competitors like Pepsi, Coca-Cola company has significantly improved in its CSR approaches which have led to the increase of the company income and improvement of its reactions to some of the challenges facing communities today. With the increase in demand in social responsibility, shareholder engagement is one of the critical elements every multinational organization must fully understand and utilize. This means the company will be able to fully understand customer wants and changes in different regions and how the issues can be well handled or solved (Carroll, 2008). Therefore, prior to the criticism the company has faced, it has greatly improved in its CSR which has been reflected in most of the company projects in improving living standards of the entire global society and participant shareholders.

 

References

Barnea, A. and Rubin, A., 2010. Corporate social responsibility as a conflict between shareholders. Journal of business ethics, 97(1), pp.71-86.

Brammer, S., Jackson, G. and Matten, D., 2012. Corporate social responsibility and institutional theory: New perspectives on private governance. Socio-economic review, 10(1), pp.3-28.

Burchell, J. ed., 2008. The corporate social responsibility reader. Routledge.

Cacioppe, R., Forster, N. and Fox, M., 2008. A survey of managers’ perceptions of corporate ethics and social responsibility and actions that may affect companies’ success. Journal of business ethics, 82(3), p.681.

Carroll, A.B., 2008. A history of corporate social responsibility: Concepts and practices. The Oxford handbook of corporate social responsibility, pp.19-46.

Chatterji, A.K., Levine, D.I. and Toffel, M.W., 2009. How well do social ratings actually measure corporate social responsibility?. Journal of Economics & Management Strategy, 18(1), pp.125-169.

Chen, C.M. and Delmas, M., 2011. Measuring corporate social performance: An efficiency perspective. Production and Operations Management, 20(6), pp.789-804.

Culnan, M.J., McHugh, P.J. and Zubillaga, J.I., 2010. How large US companies can use Twitter and other social media to gain business value. MIS Quarterly Executive, 9(4).

Flammer, C., 2013. Corporate social responsibility and shareholder reaction: The environmental awareness of investors. Academy of Management Journal, 56(3), pp.758-781.

Herrick, C., 2009. Shifting blame/selling health: corporate social responsibility in the age of obesity. Sociology of Health & Illness, 31(1), pp.51-65.

Hopkins, M., 2012. Corporate social responsibility and international development: Is business the solution?. Routledge.

Idemudia, U., 2011. Corporate social responsibility and developing countries: moving the critical CSR research agenda in Africa forward. Progress in Development Studies, 11(1), pp.1-18.

Jay Polonsky, M., 2008. An introduction to green marketing. Global Environment: Problems and Policies, 2(1).

Karnani, A., 2014. Corporate social responsibility does not avert the tragedy of the commons. Case study: Coca-Cola India. Economics, Management and Financial Markets, 9(3), p.11.

Kotler, P. and Lee, N., 2008. Corporate social responsibility: Doing the most good for your company and your cause. John Wiley & Sons.

Lambooy, T., 2011. Corporate social responsibility: sustainable water use. Journal of Cleaner Production, 19(8), pp.852-866.

Shamir, R., 2017. Between self-regulation and the Alien Tort Claims Act: On the contested concept of corporate social responsibility. In Crime and Regulation (pp. 155-183). Routledge.

Singh, B.J.R. and Kaur, M.P., 2016. Corporate social responsibility in India. International Journal of Higher Education Research & Development, 1(1).

Suliman, A.M., Al-Khatib, H.T. and Thomas, S.E., 2016. Corporate social responsibility. Corporate Social Performance: Reflecting on the Past and Investing in the Future, p.15.

Thorne, D.M., Ferrell, O.C. and Ferrell, L., 2011. Business and society: A strategic approach to social responsibility and ethics. South-Western Cengage Learning.

Torres, A., Bijmolt, T.H., Tribó, J.A. and Verhoef, P., 2012. Generating global brand equity through corporate social responsibility to key stakeholders. International Journal of Research in Marketing, 29(1), pp.13-24.

Udayasankar, K., 2008. Corporate social responsibility and firm size. Journal of business ethics, 83(2), pp.167-175.

Van der Heijden, A., Driessen, P.P. and Cramer, J.M., 2010. Making sense of Corporate Social Responsibility: Exploring organizational processes and strategies. Journal of cleaner production, 18(18), pp.1787-1796.

Werther Jr, W.B. and Chandler, D., 2010. Strategic corporate social responsibility: Stakeholders in a global environment. Sage.

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