Defining Corporate Social Responsibility: A Systems Approach For Socially Responsible Capitalism

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Critically discuss Coca Cola’s use of water for its business in India from the perspective of stakeholder theory. (20) Most businesses have to consider the impact of their activities on stakeholders. Coca-Cola is no exception but their operations in the southern Indian state of Kerala have caused widespread concern and a string of claims and counter-claims by residents of the local community and the company. Coca Cola is the world’s leading soft drinks company. Coca cola invested over $1bn between 1993 and 2004 on their bottling in Kerala. It has contributed in around a fifth of the entire foreign direct investment to the country. However the company faced severe criticism from activists and environmental experts who charged it with depleting groundwater resources in the areas in which its bottling plants were located, there by affecting the livelihood of poor farmers, dumping toxic and hazardous waste materials near its bottling facilities, and discharging waste water into the agricultural lands of farmers. Despite all the criticism, the company continued its operations and decided to implement a wide range of initiative such as rainwater harvesting, restoring groundwater resources, sustainable packaging and recycling, and serving the communities where it operated. The business in India is profitable to the company. The investment has enabled Coca Cola to make a higher return. Coca Cola reported a modest growth in the profit margin from their conducts in India. The Indian government highly encourages the company to undertake its business operations in its country. As a result, Coca cola received £1.5m subsidy and help with its legal issues by the local government in India as an encouragement of their investment in India. It’s difficult to create a direct link of the overexploitation of ground water by Coca cola. It is very complex to determine the fairness of this decision. This depends on who you are. The issue is that Coca cola makes money as an ambition. It does so within the local law, and provides to the local community, hence is tacitly supported by the local community at large. If we take the local people prospective who will be working in the company, the bottling plant in their village have provided them with job. However, their conducts have drastically reduced availability of water for irrigation purposes. The question that spontaneously arises is “is it right?” The decision maker has to make an ethical assessment of the rights of the poor community, the issues concerning human health and environment caused by Coca cola bottling operations against the economic benefits of the investment. Other information that can be helpful in making a judgement would include Coca Cola’s range of initiatives to improve the quality of life of its customers, the workforce, and society at large. The sustainability of this venture has to be considered. Rather ambiguous, it means using less water to create coke or shipping it in which has adverse affects on national water levels as well as fuel transportation affects on environment. It is important to analyse the issue from different perspectives. Corporate Social Responsibility provides different point of view on this topic. There are two schools of thought on this issue:

In the Free market view, the job of business is to create wealth with the interests of the shareholders as the guiding principle. The companies see profit as their main objective. The corporate social responsibility view is that business organisation should contribute to the economic, environmental and social sustainability of communities through the ongoing engagement of stakeholders, the active participation of communities impacted by company activities and the public reporting of company’s policies and performance in economic, environmental and social arenas. If we take the free market view “the social responsibility of business- to use its resources and engage in activities designed to increase its profit so...
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