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Coca cola ethical dilemma

Coca cola ethical dilemma
Ethical dilemma is a common trait found in the business organization and this has the clear linkage with
moral dilemmas. The perfect world of business includes the right thing, but the ethical dilemmas have
become much prominent in this complex world of business. According to Van Auken (2016), the ethical
dilemmas lead the human being to undertake the wrong decisions due to the difficulties. More specifically,
the ethical dilemma arises when a person has to differentiate between the moral and the immoral act. The
personal temptation is one of the significant ways to improve such ethical dilemmas (Shapiro & Stefkovich,
2016). It is necessary to find the conscience while undertaking any important decision based on some of
the crucial aspects in business. Many of the organizations face diversified forms of ethical dilemmas, which
create the significant impact on organizational reputation as well as the business practices.
Purpose Of The Study
The purpose of the study is to focus on the ethical dilemmas faced by Coca Cola in this current market.
The news of ethical corruptions against the business practices of Coca Cola has created the buzz both in
social life and in the business market. The study will be focusing on such ethical dilemma found in the
external and the internal organizational scenario of Coca Cola. The study will also be associated with the
theoretical concept based on the ethical dilemma that has been influencing the managerial practices in
Coca Cola. The assimilation of these segments would be concluding the study at the end.
Background Of The Organization
Coca Cola has been capturing the largest position in the beverage market with the largest distribution
system all over the world. This position is allowing the company to serve almost one billion products to the
customers worldwide and introducing new flavors as well as promoting other brands. In keeping
concentration on the marketing strategy undertaken by Coca Cola, it is seen that the company has been
promoting the world famous brands like Fanta, Coke, Diet Coke, and Sprite (Icmrindia.org. 2016). Such of
these marketing strategies have been influencing the strengthened customer relationship aspects, which
are the keys to get the business opportunities for the company. The establishment of such effective
customer relationship is therefore serving as the major driving force for acquiring the customer base. The
recognizable competition between Pepsi and Coca Cola has been holding the dominant share of the soft
drink market worldwide (Standard.co.uk, 2013). In order to expand the business, the company has been
focusing on growing the share market across the United States. In fact, the internationalization strategy is
also much commendable for the future growth. The major goal of the company is to increase the market
share in the international market. However, it is to be stated that due to the direct competition with Pepsi,
Coca Cola has been concentrating on the innovative organizational practices to ensure the sustainability in
this market. Therefore, it is seen that the company is getting involved with several unethical business
practices that are harmful for the business. Generating more benefits within a short span of time is forcing
the managers take several ethical discrepancies that have been broadcasted to the news channels. The
study will be specifying some of these ethical dilemmas featured in the managerial practices and
accordingly some of the theoretical perspectives will be analyzed.
Ethical Dilemma
Coca Cola is considered as the most valuable beverage brand in the international market. More specifically,
the company has captured the significant position among the companies, which are always visible in the
news. The company even got the effective opportunity to present their skilful performance in the business
market. However, besides achieving such significant position in the business market, Coca Cola has been
even facing some of the ethical issues in the recent times (Icmrindia.org. 2016). It has been seen that the
leadership changes in last few years is inviting the ethical challenges in a very prominent manner. It is to
be seen, the managerial practices involved with the ethical issues like misinterpretation, disrupting long
term contract-based agreements, and racial discrimination. It is to be noted that Coca Cola has been in
news for quite a long time due to their ethical business practices. Due to such ethical and legal issues the
stock price of the company remains the same what it used to be few years back.
One of the most critical ethical issues was found when many of the people fell ill after drinking Coke and
other soft drinks of Coca Cola. The incident caused the huge loss of the company reputation and people
lost the respect for the company. Many of the investors started selling their stocks in Coca Cola. The issue
became hazardous when the managers remained unresponsive towards the questions of the media
(Icmrindia.org. 2016). However, when they completed the entire research and found the root cause of such
problem, they decided to announce it publically. However, the time was too late to be broadcasted, as
media found it too slow to make any story about Coca Cola. Even though the company is much focused on
maintaining the corporate social responsibilities as well as the ethical concerns, the incidents created the
negative impact on the organizational reputation (DiStaso & Bortree, 2014). Unresponsiveness is one of
the major mistakes that the managers would commit to maintain their reputation. It may create the reverse
effects in the situational crisis. However, after such situation, the managerial practices of Coca Cola got
involved with another unethical concern (Standard.co.uk, 2013). The agreement signed with the European
countries was actually based on the anti-trust laws, which affected the management in a very significant
manner. The overaggressive attitude towards dealing with the French company was the major issue for the
company (Strandvik et al. 2013). Moreover, the foreign countries did not appreciate their strong-arm tactics,
which crossed the limits of discrepancies for achieving the competitive advantage. The legal case against
Coca Cola was presented to the court and the company even proved to be the looser in this case. Apart
from these unethical issues, some of the allegations regarding the racial discrimination, falsified market
tests, inflated earnings, and distributors were put against Coca Cola.
Theoretical Perspective Of Managerial Ethics
According to Hair Jr et al. (2015), the ethical concern is an area that helps the business companies to grow
and is considered as the science of human concerns. The managers of the company have to maintain the
responsibility to educate the employees these business ethics that is necessary for the business
sustainability. On the other hand, Cavusgil et al. (2014) argued that some of the managerial practices may
create the hazardous scenario for the company, which affect the sustainability management. However, in
considering the theoretical perspectives, the managerial ethics are divided into different classifications.
Some of these categories are Utilitarian theory, Principle of Rights, ethics of care, and Aristotle’s Virtue
Ethics. In this section of the study, the description of these theories would be analyzed.
Utilitarian Theory: According to Black (2015), the utilitarian theory is based on several principles. It is to be
noted that the utilitarian theory has been specifying the ethical actions that prove less harm for the individual
by considering the good outcomes. The judgments related to this ethical concern, as mentioned in this
theory, is always depending on the analysis of the cost benefits. In such cases, the focuses are needed to
be on the actions to get the best outcome instead of focusing on the ways of achieving the results. Similarly,
the managers of Coca Cola need to concentrate on the organizational activities and the ethical practices
by providing the effective products to the customers that are less harmful for their lives.
The utilitarian includes the good or the bad consequences while making any organizational decision. The
actions depend either on the after performance or during the performance time (Alon et al. 2013). It is to be
indicated that the Utilitarian does not deal with the moral issues. The actions performed during such phase
are being judged whether it is right or wrong. Hence, the focus on the dependable consequences is
essential during the application of the utilitarian theory. This normative ethics theory is generally maximizing
the utility, which is a form of making the individual happy or unhappy (Sheng, 2012). In case of Coca Cola
business ethics, it has been seen that the managerial practices are involved with racial discrimination. The
internal employees have been facing such scenario, which is affecting their performance attributes.
Moreover, the unethical behavior related to their business dealings and the falsified market tests are also
going against the utilitarian theory.
Principle of Rights: The Principle of Justice is also termed as Categorical Imperative. In specifying such
theory, it can be stated that the ethical actions of the managers are needed to be based on the moral rights
that influence the organizational practices. In this area, the right has got the entitlement that intends to
protect the interests perceived by others. The managers need to be more conscious about their action
before taking it. If the actions are justified and appreciated by the others, it would turn out to be beneficial
for the company itself. The aggressive behavior of the managers to achieve the competitive advantage can
sometimes is too risky, which may affect the organizational reputation in case of failure.
Ethics of Care: As opined by Stathopoulou & Balabanis (2014), the principles of ethics of care usually deal
with the morally correct actions, which serve care and concerns to the other individuals. The moral
obligations of a person are usually focusing on the care they have been receiving from any particular source
rather than following the impartial principles. The application of such theory is quite effective for the
managers within an organization, as it helps in building the transparent relationships with their stakeholders.
In case of Coca Cola, the managers need to be much attentive towards the cares provided to their
stakeholders. Especially, in time of the situational crises, the managers are needed to be responsive to
manage the reputation of the company (Jones & Felps, 2013). More specifically, both the internal and
external stakeholders thus get the assurance from the managers, which make them feel secure to deal with
this company in future.
Virtue Ethics: The specification of virtue ethics is including different approaches, which have been making
the theory much confusing to understand. The very first approach to ethics is considering the theoretical
orientation, which is pointing out the dispositional characteristics or attributes (Van Hooft, 2014). These
traits are praiseworthy in general and perform the particular role. Furthermore, the formulation of virtue
ethics is stated as “a systematic formulation of the traits of character that make human behavior
praiseworthy or blameworthy” (Winter, 2013). It generally means, if any character trait can be beneficial for
an individual, it will be appreciated and similarly, if it is harmful for others, it will be blamed. However, the
second approach to virtue ethics is highlighting the virtuous significance as well as the “practical wisdom”.
According to Donnelly (2013), ‘practical wisdom’ generally refers to describe one’s capability of selecting
the patterns of desirable actions. The patterns usually have been concentrating on the engaged habits of
emotional experiences or virtues. However, such of these patterns of actions are also analyzing the indepth experiences in the social life. Hence, it is important for the business companies to keep the
concentration on the moral values in order to maintain the corporate social responsibilities.
Theory of Moral Behavior: In discussing the theoretical perspectives based on the business ethics, the
development theory of moral behavior is also very much significant. The famous psychologist Lawrence
Kohlberg developed the Jean Piaget’s theory of moral reasoning. As per this theory specification, it is to be
indicated that the morality starts from the childhood times and this can be affected by diversified reasons.
Barnes et al. (2015) suggested that morality can be developed in both positive and negative ways. Mostly
it depends on the individual who can use several ways to accomplish the goals during the moral
development of his life (Opp, 2013). However, while elaborating the theory of moral development, it can be
stated that the theory suggests of diversified levels or stages. The first level is dealing with the preconventional morality, which have been focusing on different stages. The second level is dealing with
conventional morality, which includes two different stages, such as interpersonal relationship phases and
law and order orientation phases. The third level is dealing with the post-conventional morality, which
includes the social contract orientation and universal ethical principle orientation. These stages are
explained further:
Stage 1: Punishment- Obedience Orientation: This particular stage is concerned with the punishments
provided to people after refraining from their performance (Jayawickreme et al. 2014). People in this stage
start obeying the rules since they know if the rules are not being followed, they can be penalized.
Stage 2: Instrumental Relativist Orientation: In this particular stage, the judge of morality is based on the
actions, which have been satisfying the needs of the people. The theory of Kohlberg is considering such
actions engaged with the moral rights due to the serious needs of the order.
Stage 3: Interpersonal Relationship Phases: In this particular stage, the action is judged in keeping focus
on the societal roles (Grappi et al. 2013). The interpersonal relationship has been highlighted in this
particular stage, which has the significant impact on people from the very childhood.
Stage 4: Law and Order Orientation: This particular stage is conveying respect to the authority by following
rules, norms, and responsibilities. In this particular stage, the major concern is society. The focus on the
responsibilities towards the society is the most required criteria in such aspect.
Stage 5: Social Contract Orientation: The stage has been dealing with the particular focus on the values
and opinions received from diversified people (Hoffman et al. 2014). It is to be noted that this particular
decision has to be depended on the morality of actions.
Stage 6: Universal Ethical Principle Orientation: The last and final stage of this particular stage is depended
on the universally accepted ethical principles. In some of the cases, the judgment may cause the violations
or breaching of laws since the person is much focused on the self-principles of justice.
Stakeholder Theory: The business ethics and the organizational management have been addressing
another fruitful theory, which is termed as “stakeholder’s theory”. This particular theory is mainly promoting
the moral values, which are essential for managing the organizational practices. As per this theory
specification, it has been implied that the organization needs to provide the stakeholders as much value as
possible in order to achieve the sustainable business position (Shaw, 2016). The executives have to be
much concentrated on the key stakeholders both internal and external. The framework of the stakeholders’
management is provided further:
Figure 1: Business Stakeholders
It is to be indicated that the stakeholders are the major assets for a company. The influence of the
stakeholders ensures the sustainability of the company. The group of stakeholders is divided into two
different classifications, such as internal stakeholders and the external stakeholders. The internal
stakeholders are the people who are associated with the internal business practices. These internal
stakeholders are the investors, employees, and the business partners. The company has to be much
concerned about the internal business practices. The help of the internal stakeholders, the business
practices will be skilful to provide the recognizable benefits to the external stakeholders (Harrison & Wicks,
2013). The external stakeholders, such as customers, suppliers, media, and government are needed to be
satisfied with the skilful business approaches. More specifically, the business ethics should be based on
the fulfillment of customers’ requirements. In case of Coca Cola, the allegations are much focused on the
unethical business practices that are harmful for both the internal and the external stakeholders (Verbeke
& Tung, 2013). Hence, the management of the stakeholders’ approaches is essentially needed for the
future existence of the company.
Role Of Leadership In Ethical Decision Making
It is to be noted that the role of the leadership attributes on the ethical decision making process is much
significant. The different typologies of the leadership attributes have been concerning the different types of
the decision-making process. For example, the authoritarian leaders assume that their decisions and the
way of working are the best practices for facilitating progress in the organizational context. On the other
hand, the democratic leaders usually gather the responses form the other associates to make any ethical
decisions. In case of the autocratic leaders, it has been seen that the decisions are based on the one
consequence, which may even harm the other sectors of the business. Similarly, the suggestions derived
from the other associates are based on the different segments of the business practices. Hence, usually it
has been seen that the autocratic decisions are mostly involved with diversified ethical dilemmas whereas
there is the complete chance of the democratic decision to be fair and fruitful. However, as suggested by
(), the major focus should be fixed on the code of conduct in undertaking any relevant decision regarding
the business practices. The fixation of the aim at the code of conduct can make any of the decisions fruitful
by eliminating the unethical business practices.
The study has been featuring the different allegations against the Coca Cola regarding their unethical
behavior in last few years. The issues specifications have been concerning the different moral values that
are essential for the business sustainability. The theoretical perspectives have been analyzing the
stakeholders’ approaches, utilitarianism, justice forms, and character virtues that have been associated
with the business practices. It is to be noted that the maintenance of the ethical concerns while dealing with
the internal and stakeholders is the major driving force for the long term sustainability of the company. The
effects of the managerial leadership attributes are also focusing on the code of conduct, which is necessary
for the business companies. The managers of Coca Cola thus need to be focus on such essentials to make
the future progress.