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Ethics Report on Coca Cola’s operations in India

  • Intro to the controversy surrounding the operations of multinational corporations (MNCs) in developing countries.
  • Overview of the issues arising from Coca Cola’s operations in India
  • Intro to the report: what are you going to do in this report and how are you going to do it, eg review the case of Coca Cola in India from an ethical perspective using the semiotic square

How you name and structure the sections is up to you. At Level 5 you are expected to be able to organise your thoughts into a coherent, logically structured piece of text.

  • Discussion of issues of MNCs in developing countries: rationale, issues (eg power, ethical issues, legal issues, working conditions, CSR)
  • Coca Cola in India
  • Ethical principles: Deontology, Utilitarianism, Rawls
  • Externalities

Discussion of Coca Cola and application of Semiotic Sq: where is Coca Cola on the good/bad, legal/illegal continuum? Has its position changed?

Issues faced by the MNCs in developing countries

The MNCs face many issues whenever they expand internationally. These are businesses which have operations all over various nations and each of the nations has its specific rules and regulations, culture, ethical practices and social practices. There are over 40,000 MNCs that operate within the global market. In the developing nations there are various non stability issues that come up. These issues can be resolved only by dissolving the social and ethical concerns. This report provides with a discussion of different issues faced by the MNCs in developing nations, and for this the example of Coca-Cola has been considered.

In fact, a Multinational company (MNC) is a conglomerate business that operates with a control centre in the source of that nation, whereas having remaining facilities and resources that are set up in locality of other nations (Gertner and Rifkin, 2017). MNC that works in various nations endows with knowledge, expertise, marketing ability and financial resources for a further lucrative market in response (Lu et al., 2016). A lot of host nations have enforced rule which allows them a fraction of share in revenue, market and also employment which is caused by MNCs in that specific nation.

Coca-Cola has always been facing controversies in India. In February 2017, the Southern Indian retailers boycotted Coca-Cola in the state of Tamil Nadu and the businessmen within Kerala file a suit against Coca-Cola with the allegations that MNCs are causes of exploitation of scarce water resources in drought-impacted regions (The National, 2017).

In past also, this brand and very bad experience with in India as Coca-Cola had withdrawn from this nation in the year 1977  because of the new government insisting that this  firm would need to be partner with a regional business. This business did not make a comeback till the year 1993 however after the liberalisation it made a return when India started opening up the markets towards overseas investments (Abdulsomad, 2013). In the developing markets like India, Coca-Cola is making huge investments however it has to face many obstacles to capture the market. 

One of the examples of ethical issues faced at Coca-Cola had been at Kala Dera. Kala Dera is a very big village out of the city of Jaipur and people here indulge in agriculture to earn their living. At this place Coca-Cola initiated its bottling functions in the year 2000 and in just one year, the city noticed a great fall in the groundwater levels. This loss of groundwater was directly linked with lots of awnings for the farmers. The females had to go for extra work of 5 to 6 km for fetching water so that they could fulfil the basic everyday requirements of the family. Therefore women had got extra household burden and so the children had to leave from school to be helping hands of their mothers.  Since there was excessive extraction and pollution caused by this set up, the society asked for closing out of this bottling plant of Coca-Cola (Chaklader and Gautam, 2013). 

Ethical issues:

In the community of Kala Dera has got ample global support for closure of the bottling plants of Coca-Cola. This support has been majorly given by the universities and College students all over the world especially from UK, Canada and USA – Which are a few of the big markets for Coca-Cola.  Coca-Cola had started with its operations within India with the idea of "business continuity" however it ignored the effects on the society. 

Since there were four recommendations made by the assessments created for Coca-Cola bottling plant so the community was satisfied. It was also made clear that Coca-Cola would not be utilising the overexploited groundwater positions at that place. It was made clear that Coca-Cola had to store water the sources from the seasons which were not very much stressed and from the nearby water supplies which were also not much stressed. It would also need to relocate the working plan to any region which is having surplus water and this particular site at Kala Dera had to be shut down (Mubayi, 2012).  However, Coca-Cola did not behave ethically it for seven months for responding to these recommendations and it did not take ample actions for dealing with such issues (Mail Online, 2017).  It was unethical because knowing the reality is Coca-Cola Company decided to continue the bottling operations and added to the misery of thousands of individuals. 

Before locating the bottling plant to such location, Coca-Cola am should have carried out the assessment with respect to environmental effect. By this it would have looked into different situations and potential effects of the plant on the society.  Even in the letter written to Michigan University, it was shown that Coca-Cola is compliant with the regulations of Indian government and other regulatory agencies however the assessments showed that none of its six plants in India met those compliances (Preuss, 2015).  The corporate social responsibility of being a clean, green and socially responsible company has failed because the environmental effects of its operations are faced by India and its different locations. 

  • Solid waste and water problem:The societies and regions close to the bottling plant in India whined about the entry of mud as manure, leading to wellbeing and natural harm. The most imperative issue concerning these groups is the exhaustion of water levels caused by the Coca-Cola packaging operations which have definitely decreased accessibility of water for water irrigation roles (Isaacs, 2015).
  • Pesticides in soft drinks:One more problem relating to human wellbeing caused due to Coca-Cola is that their filtered water and soda pops contain pesticides which were examined by the well-known NGO, CSE.  
  • Double-item standards:Coca-Cola is blamed for having double models regarding their items and security measures concerning human wellbeing as for USA, Europe and India.
  • Community concerns:These accusations impacted Coca-Cola mostly with its sales and also led to the shutting down of one of their bottling plants inside Kerala, India. Moreover, Coca-Cola’s goods are disallowed in Kerala, India.

 Water stresses are caused due to different factors like double up meant of population, over usage of water for irrigating, however the over consumption acts of Coca-Cola in the areas which were already water stressed has been disastrous in order India (Tanne, 2013).  There have been discussions and conflicts that these bottling plants have to act as an illustration of the devastation that MNCs are causing to the developing economies.  The developing economies are facing challenges due to such issues in their day-to-day living and in their capacity to fulfil their basic needs. Even though  accessibility to water is the basic human right however it has been changed into a comedy which is utilised and exploited by such MNCs. Coca-Cola failed to give due consideration to the  impact of its acts on citizens in the water stressed regions. 

Communal issues:

With the semiotic consideration, the difference among goods and non-goods link features is important (Fischer, 2011). The non-goods linked features show that the brand has a high motivation level.  The brand doesn't inherit anything which decides the relation between two different sets of features. The business acts of Coca-Cola or unethical since they have restricted the liberty of the activity and there has been violation of the fundamental rights and duties as per deontology. The resultant incorrect and seek details given by further undesirable investments for the goods and services lead to a rise in the complete manufacturing cost of the community. As per consequentialism, this act of Coca-Cola qualifies to be unethical. Also as per the utilitarianism, the power of Coca-Cola is at is found out by looking at its impacts. It can be seen that the activity and behaviour of Coca-Cola brought sufferings, problems and pain to the maximum general community therefore this activity is termed to be unethical and wrong. 

It is believed by Carl Rawls that the society expects the firms to get engaged and social responsibilities in four key regions.  These regions are legal responsibility, charitable responsibility, economic responsibility and ethical responsibility. The society expects businesses such as Coca-Cola to get engaged in the economic and legal duties, which are the fundamental needs.  Once these two are satisfied, the society also demands that Coca-Cola has to get engaged in its official duties. This kind of demand is reasonable because the company is responsible for treating the stakeholders in God, appropriate, fair and justified way so that there is null or minimum damage to the stakeholders. Finally the society expects that the Coca-Cola will get engaged in charitable duties which are an add-on towards other duties. The companies have to be great for corporate citizens contributing towards the society, economy and towards the promotion of quality of living in developing countries (Comegys, 2010).

Coca-Cola Company, India considered its corporate obligation and seeing tremendous sales-declines. With a specific end goal to pick up trust among the regional groups close to the packaging plant, they made their business acts to be better and decreased the water utilization by 34%. Through the act of water collecting, Coca-Cola returned significant water to the aquifers. They have quit disseminating muck as Biosolids (fertilizers) to ranchers for farming use, and have brought activities with the Indian government to empower the improvement of extra strong waste transfer locales. The water utilized for making colas is treated with initiated carbon filtration and passed by a refinement procedure to guarantee that the water doesn’t have any pesticide deposits. As per the organization's brochure, they entirely pursue the item guidelines which are a similar everywhere throughout the globe (Neiman, 2012).

Ethical issues:

Anyways, the charges on Coca-Cola helped the business to demonstrate their corporate social duty and to keep up great item quality benchmarks. Due to Semiotic, Coca-cola has still not been able to recover because even if it has started using or preserving rain water, the farmers need it to be removed from the site. Also, any residual or any study would shoe pesticides in the bottle of Coca-Cola. So these signs are interpreting the unethical approaches used by Coca-Cola in India.

Source: (Revolvy, 2017)

In the developing countries, as the society grows and businesses expand in scale, people expect more and more companies to enter the market. As per Carl Rawls, Coca-Cola must fulfil its first three duties, which contain the people's notion of whether the businesses ethical or not (Cant, 2012). In case the company is unable to fulfil the fourth duty then also it won't be considered to be unethical. How these first three obligations are ever in case of Coca-Cola were also not met. Just as Rawls laid stress that these for duties are complimentary to one another and in case any one of them is missing then there is a big gap. 

Conclusion

The corporate activities and MNCs have huge impact on the daily lives of people. The typical idea in developing countries is that MNCs have to get engaged in different social responsibility is. Also the civic society of these developing nations has turned out to be more increasingly aware of ethics (Shenkar and Luo, 2014). Therefore it is important that social fairness is kept up so that overall social security can be achieved. The citizens of these developing nations are ready to use ethical standards for example they can boycott the businesses which are socially irresponsible. As in the case of Coca-Cola, people boycotted it's used you to the water issue, issue of pesticides and other issues for bringing social change. It is recommended for Coca-Cola to consider social welfare to be its own welfare so that society turns out to be a better place.

References

Abdulsomad, K. (2013). The transformation of multinational corporations (MNCs) from an innovation perspective: some notes on the theories of MNCs. AI & SOCIETY, 29(3), pp.415-426.

Cant, M. (2012). Small Business Attitudes Towards Ethical Issues: Survival Or Ethically Correct?. International Business & Economics Research Journal (IBER), 11(12), p.1347.

Chaklader, B. and Gautam, N. (2013). Efficient Water Management through Public-Private Partnership Model: An Experiment in CSR by Coca-Cola India. Vikalpa, 38(4), pp.97-104.

Comegys, C. (2010). The Impact Of Religiously Affiliated Universities And Courses In Ethics And Religious Studies On Students Attitude Toward Business Ethics. Contemporary Issues in Education Research (CIER), 3(6), p.35.

Fischer, R. (2011). Semiotics of International Law. Trade and Translation. Archiv des Völkerrechts, 49(3), pp.339-342.

Gertner, D. and Rifkin, L. (2017). Coca-Cola and the Fight against the Global Obesity Epidemic. Thunderbird International Business Review.

Isaacs, D. (2015). Ethical issues in publishing. Journal of Paediatrics and Child Health, 51(7), pp.655-656.

Lu, Y., Chen, T., Fuhrman, J. and Sun, F. (2016). COCACOLA: binning metagenomic contigs using sequence COmposition, read CoverAge, CO-alignment and paired-end read LinkAge. Bioinformatics, p.btw290.

Mail Online. (2017). Coca-Cola halts India plant over pollution issue. [online] Available at: https://www.dailymail.co.uk/wires/afp/article-3749165/Coca-Cola-halts-India-plant-pollution-issue.html [Accessed 12 Jul. 2017].

Mubayi, S. (2012). Alexandra Chreiteh, Always Coca-Cola [D??iman Coca-Cola]. Trans. Michelle Hartman. Northampton, MA: Interlink Books, 2012. Pp. 121. Journal of Arabic Literature, 43(2-3), pp.540-542.

Neiman, P. (2012). A Social Contract for International Business Ethics. Journal of Business Ethics, 114(1), pp.75-90.

Preuss, L. (2015). Corporate social responsibility and trade unions. Abingdon, Oxon: Routledge.

Revolvy, L. (2017). "Semiotic square" on Revolvy.com. [online] Revolvy.com. Available at: https://www.revolvy.com/main/index.php?s=Semiotic%20square [Accessed 12 Jul. 2017].

Shenkar, O. and Luo, Y. (2014). International business. New York: Wiley.

Tanne, J. (2013). Coca-Cola launches antiobesity advertisements. BMJ, 346(jan23 2), pp.f494-f494.

The National. (2017). Coca-Cola losing its fizz in India. [online] Available at: https://www.thenational.ae/business/coca-cola-losing-its-fizz-in-india-1.72443 [Accessed 12 Jul. 2017].

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