Coke and Pepsi Issues

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Case 23: Coke and Pepsi in India: Issues, Ethics, and Crisis Management

In APA style

Table of Contents

Chapter Page

1. Abstract3

2. Introduction4

3. Issue Management5

4. Crisis Management7

5. Global Business Ethics10

6. Stakeholder Management13

7. Corporate Social Responsibility14

1. Economic Responsibilities14

2. Legal Responsibilities15

3. Ethical Responsibilities16

4. Philanthropic Responsibilities18

8. Lessons from the Case20

9. Conclusion21


1. Abstract

The Coke and Pepsi are multinational companies. They have business in almost every country on the Earth. However, there are always problems occurred in business world as ‘business is risk’. Coke and Pepsi could not escape as well. They had faced an ethical crisis in India where it is concern about consumer’s health and the environment cleanliness. This paper will discuss about Coke and Pepsi issues with respect to issue management, crisis management, global business ethics and stakeholder management besides looking into their corporate social responsibilities and what lesson does this case portray to other multinational companies to be aware of.

2.0 Introduction

First of all, the issue started to take place when Coke and Pepsi’s products were tested containing a hazardously high level of pesticide residue by a public interest group called Center of Science and Environment (CSE). The director of CSE, Sunita Narain proclaimed that such residues are able to cause cancer and birth defects besides harming the human nervous and immune system if the products are being consume over a long period of time. Later, CSE claims that the pesticides levels in the products of Coke and Pepsi were much over the limit permitted by European Union standards.

Next, another public interest group called India Resource Center (IRC) accused that all soft drinks companies especially the Coca-Cola company’s operations are polluting the sacred water in India. IRC even accused these soft drinks companies of water exploitation and controlling of natural resources. IRC also indicted that Coca-Cola causes water shortages around its bottling plants besides a significant depletion of the water table. Moreover, IRC pointed that due to the pollution of groundwater and soil, it causes water to have strange tastes and smells. The IRC then pointed out that Coke was distributing their solid toxic waste to farmers as fertilizers. This eventually leads to the event of India’s Supreme Court ordered Coke and Pepsi to put warning labels on their products as the consumers has the right to know what contents of the product they are consuming. The issue above had worsen and become more complicated when the cultural sensitive issue is brought up. Water in India has a significant spiritual meaning and it is views as sacred to people in India. Polluting their water source is considered as not respecting their culture and this causes a serious slide in sales of both Coke and Pepsi for several years.

3. Issue Management
According to Business and Society (7th edition) written by Buchholtz and Carroll, the issues management process includes identifying the issues at hand, analyzing the issues, ranking or prioritizing the issue using the five filter criteria, formulating an issue response, implementing the issue response formulated, and evaluating and monitoring the results after the issue response is executed. To analyze an issue means “to carefully study, dissect, break down, group or engage in any specific process” (Buchholtz and Carroll, 2009). This is essential in helping a company to get a better understanding of the issue in order to rank the issues based on the five filter criteria. The five filter...
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