Being global brings a business strategic benefits as well as challenges. The ongoing challenges in the global business environment for most companies are commonly attributed to unethical business practices, failure to embrace technological advances, and stiff competition among the businesses. Most companies find it challenging to be locally flexible and adapt to the new global environment. For the Coca Cola Company, established standards of ethics and corporate governance guide the beverage production in the company. In the global beverage production industry, a code of ethics dictates the acceptable and unacceptable activities and behaviors in the global business environment. This essay discusses the code of ethical conduct of Coca Cola Company in comparison with the code of ethical conduct of Pepsi and Nestle in the global beverage industry.
The Coca Cola Company is a beverage company that manufactures and retails beverages that are non-alcoholic. It is the world’s largest beverage company with numerous brands including soft drinks brands like Coca-Cola, Fanta, Sprite, Coca-Cola Zero, Minute Maid, vitaminwater, Simply, Dasani water, Powerade, Del Valle and Georgia. It manufactures and sells juice, juice drinks, sparkling beverages and ready to drink coffee. Globally, more than 200 countries consume the company’s products amounting to 1.8 billion of drink serving each day. According to Coca Cola Company’s ethics, there is a code of business conduct that requires honesty and integrity while doing business. By upholding integrity, the company does what is right in their business activities hence positively reflecting on the values and perceptions of the coca cola company. The code of business conduct dictates how the Coca Cola employees should conduct themselves while doing business transaction on behalf of the company. The key issues that arise in the code of business conduct of the coca cola company that emerge as critical to the company’s success include compliance with local and international law and regulations, dealing with customers, dealing with local government, and raising concerns regarding ethical issues. In order to ensure success in a global business environment, a company should show compliance with integrity and honesty while dealing with local and international laws, customers as well as the local government. While carrying out business operations, compliance with local and international laws will ensure success of a business venture. Compliance with governments should strictly follow legal rules and should not allow room for corruption or political affiliations. Customer satisfaction is key to the success of any business, and time and resources used to understand a customer’s perspective is a wise investment (Kent, 2012).
In compliance with the local and international laws, the Coca Cola Company ensures that the company operations and employees are subject to the code of business conduct, laws of the countries they operate in as well as jurisdictions across the world. In an instance whereby the code of business conduct conflicts with the applicable law of the host country, the law is followed. In PepsiCo, compliance with local laws is a priority for the company. They recognize that failure to comply with the local law in favor of effective internal control or to provide accurate financial statements can hurt the company’s reputation. Nestle also complies with all relevant laws and regulations relevant to their business activities. However, for Nestle, they oppose any unjustified bans or discriminatory measures by local laws. The code of business conduct in dealing with customers requires Coca Cola Company to offer the company’s products in an honest manner and not engage in any unfair or deceptive practices. Both Nestle and PepsiCo deal with customers in a similar manner and PepsiCo acknowledges the fact that damage to the company’s reputation can lead to loss of confidence by customers in their products. While dealing with the host government, the Coca Cola Company and its employees do not offer anything to government or government officials in exchange for a favor. Most global businesses including Nestle and PepsiCo prohibit bribery and use of company assets in political activity with the host government. If an employee plans to seek public office, these three beverage companies require the said employee to seek approval from the company’s legal counsel (Joo, 2005).
The conduct of PepsiCo business operations including production, distribution, advertising, sales and use of its many products are subject to various laws and regulations including those from the mother country US, as well as other foreign laws and regulations in which the company operates. The company acknowledges the fact that these laws and regulation change depending on the political, social and economic environment. compliance with these laws and regulations have enabled PepsiCo to avoid legal problems or even sanctions in countries they operate in. being a consumer products company, PepsiCo relies on continued consumer demand for their products. In dealing with customers, the company sells products that appeal to the consumers and respond to consumer trends and concerns regarding product safety. This has made PepsiCo achieve continued consumer demand. PepsiCo has tried to stay away from political affiliations and bribery of host government officials in exchange of favors and this earned them a good reputation in the global business environment.
In Nestle, there is full compliance with all the local laws and regulations. The company also participates in in food regulations between international organizations, government officials and consumer associations. Nestlé’s policy to give the correct and coherent information regarding its products to its consumers has created customer loyalty and sustained product demand. Staying away from corruption and any forms of bribery has enabled Nestle to run smooth operations in host countries. Failure by either PepsiCo or Nestle to comply with the rules of dealing with the government and consumers can damage the company’s reputation attracting loss of consumer confidence and trade restrictions by host governments (Joo, 2005).
A code of conduct plays a key role in achieving the best business practice against others in the same industry. By properly detailing the expected standards of behavior, the Coca Cola Company together with its employees can appropriately respond to ethical challenges, political and corruption risks posed by years of changing economic, political, social, cultural, and technological forces on business and society. One technique to keep the code of business conduct of the coca cola company relevant through the years is to provide a set of guidelines and values that will determine the right course of action in an ethical environment rather than just providing a set of rules that stipulate how employees should act in a possible circumstance (Kent, 2012).
Another technique that the Coca Cola Company could use to keep its code of business conduct relevant is regularly reviewing the codes of conduct. This would enable a reasonable response to the changing circumstances and would ensure that the code of conduct does not become outdated. In order to manage environment issues, the Coca Cola Company is promoting the use of recycled or renewable materials in their manufacturing and retail activities. The company is also redesigning consumer-tailored and resource-efficient packaging to balance the environmental concerns with the need to produce quality products. These two approaches are based on the special packaging needs for different locations and the impact of the packages to the environment. The two methods have been effective in addressing environment concerns particularly pollution by packaging materials (Morrison, 2011).
For a global business like Coca Cola, staying relevant in a dynamic market place requires creativity, innovation and embracing technological advancements for innovation hence improve business offerings. The coca cola company has taken various approaches to embrace technological advancements in packaging, consumer provocations, product and equipment, as well as cultural leadership. In one approach, the coca cola company is moving from “promoting” happiness to “provoking” happiness among its consumers. Embracing technology has enabled the company to innovate in participatory story telling among the consumers. For instance, in India and Pakistan, the company is encouraging the market to connect via the Coca-Cola vending machines that the company introduced. The coca cola company has also used technology to introduce new products and equipment to the markets. For instance, in the equipment front, the coca cola company is reinventing the fountain experience on the Coca-Cola freestyle dispenser with an accompanying mobile application. This has boosted consumer co-creation and customization enabling easier access to more than 100 sparkling beverages.
Even though technological advances have largely contributed to the coca cola company’s ability to succeed in the global market, the company faces three potential technological challenges. One, the automated and computerized dispensers can be quite costly particularly in the less developed countries that the company operates. Increased sales can cover these costs in the end. Technological advancement could mean more environment concerns but compliance with environmental laws can ensure better environment conservation. Another potential technological challenge is dependency of the company on computers and new technology. By ensuring that there is a backup strategy in case of machine breaks or system crashes, the company can minimize dependency on technology (Morrison, 2011).
A significant part of the coca cola company is to manufacture and sell beverages in aluminium cans. Even though the company uses the highest standards regarding products safety and quality, they always receive media, government and local government attention regarding the safety of its products, tax and environmental compliance. One lobbying strategy that the coca cola company uses to influence national or local government decisions in its favor is direct lobbying with the authorities before decisions regarding beverage production are made. In 2010, the company used more than $ 4.89 million in lobbying and public relations. Most of the lobbying strategies by the company address issues like climate change, trade and food and beverage industry issues (Grynbaum, 2012).
Another lobbying strategy that the company has used is grassroots lobbying whereby its canvassers were stopping people in the streets of New York in 2010 to gather signatures for petition. This was in bid to campaign against a new york city proposed restriction regarding large servings of sugary drinks. In a coalition with other beverage producers in New York City, the company managed to resist sales regulations in the city. With its lobbying groups including those it has hired, Coca Cola has successfully resisted bills and even overturned laws regarding imposing of taxes on soft drinks in new york, Florida and Washington states (Grynbaum, 2012).
Since the coca cola company went global, it has used its resources generously to benefit the global community. The company believes that giving back to the community that hosts the business operations is important. The philosophy is grounded on the company’s corporate culture system and values. The company has managed to show commitment to the wider global community through every aspect of life including sponsoring sporting activities, minimum usage of scarce resources and remaining committed to recycling. The company has also set up a foundation, the Coca-Cola Foundation, that supports education and development activities in communities in which the company operates. These efforts in global corporate citizenship are in line with the company’s corporate culture of public good will. The company’s sustainable development goals include developing a global partnership for development, eradicating poverty and hunger, achieving universal primary education, among others. Sponsoring development activities, education, sports and ensuring minimum usage of scarce resources would significantly contribute to the company’s sustainable development goals of eradicating poverty, promoting education and develop a global partnership for development with other partners (Grynbaum, 2012).
In conclusion, the coca cola company is one of the well-known brands in the world while operating in more than 200 countries. The global market has provide various opportunities as well as challenges in adapting to the global environment and remaining ethical. To address these challenges, the company has a code of business conduct that other companies in the same industry use to guide the actions of employees as representatives of the company. With the constantly changing economic, political, social, cultural, and technological forces on business and society, the company has managed to stay relevant. This business essay discusses the ongoing challenges in the global business environment and how the Coca Cola Company uses the code of ethical conduct to address the issues.