Case Study 16: Coke and Pepsi
1. Identify the ongoing issues in this case with respect to issues management, crisis management, global business ethics, and stakeholder management. Rank order these in terms of their priorities for Coca-Cola and for PepsiCo.
Number 1 Priority: The major global business ethics I found in this case study was the whole issue with excessive water usage in their companies as well as the pollution of the water. The book explains that water is very sacred in India. Even though India has some of the worse/polluted water in the world, it still carries a very large significance to Indians. Just because they have poor sewage, pollution, and pesticide use, that doesn’t mean that we can just bring an American company into India and make their water worse. These companies should have done their research and found that water is extremely sacred to them and these problems never would have risen. That is why it is so important for businesses to have cultural knowledge about the countries they enter because something that is not important to us may be the most important thing to another country.
Number 2 Priority: Both Coca-Cola and PepsiCo dealt with this crisis very poorly this first time. Instead of taking action and accepting the fact that they were in the wrong, they choose to deny the allegations of CSE and IRC through the media. They should have explained to their customers the problem, why it happened, what they were going to do to fix it, and keep their customers informed of the progress. They did not do these steps but rather, they conducted their own tests within their companies and came to the conclusion that their drinks met demanding European standards. The two companies also tried to play the blame game and explain that other companies in India had high levels of pesticides as well. This is not the correct way to go about the crisis, Coca-Cola and PepsiCo. needed to take responsibility for their actions and explain to their customers that the issue was being taking care of instead of denying it and throwing other companies under the bus. In 2006, issues were still arising but this time the two companies responded much better to the allegations from CSE and IRC. Coca-Cola hired researchers to talk to customers to find out what exactly the allegations were. They created a TV commercial with a famous Indian celebrity where he told the people that the product was safe and that they could go to the company and see for themselves. Over 4,000 customers did just that and took a tour of the company. This proved that they have nothing to hide which was very persuasive. Pepsi’s response was similar to Coca-Cola in which they went straight to the media as well. Their commercials featured the PepsiCo. president walking through a laboratory. Pepsi also increased its efforts to cut down on their water usage.
Number 3 Priority: In terms of stakeholder management, the company was not really at the best interest of their customers. They clearly were putting pesticides in their soft drinks that were over the legal amount in India. When they were accused of this, the two companies denied it and ran their own tests within the company to “prove” that they were innocent. They should have allowed another subject to come in and test their products because obviously that’s a bias opinion. This also shows that at first they were not trying to do anything to improve their company. They just wanted to do what was best for them which was sell their product and make more money. They did not care about the pesticides or the sacred water they were overusing and polluting. If any business wants to be successful they need to put their customers first and their company second.
Number 4 Priority: The issue management that began to arise with Coca-Cola and Pepsi in 2003 is that it is extremely difficult to go into another country and sell a product. Every country and culture is different across the World and not all...
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