Coca-Cola’s Case Study in India
Introduction
The case study is based on Coca-Cola’s initiatives regarding the company’s corporate social responsibility (CSR) in India. This is the strategies that the corporation adopted in its management as well as by staffs in offering its contributions to the Indian communities where its operations are based (Coca-Cola, 2016 1). Corporations are required to be socially responsible by placing the wellness of the community before its own and helping the communities where it operates to develop.
In India Coca-Cola can be described to the among the leading and largest beverage corporations. The corporation made the realization that its CSR should be integrated with the general objectives of the corporation for more benefits (Coca-Cola, 2016 1). The community necessitates the compensation from corporations as the offer a market and a favorable environment for the corporation to work. Based on a report by the corporation it was fully are of the social, economic, political as well as the environment effect caused by its business operations and with this it recognized and accepted the need of implementing more initiatives. This decision was developed as a strategy of improving the consumer’s life quality , the employees as well as the general society. The approach was a positive one that resulted into being highly responsible to the community and in turn created more sales and widened the company’s market (Coca-Cola, 2016 1).
However, the corporation fell into a drastic criticism from the country’s activists as well as environmental specialists charging it with the exhaustion of underground water sources located in the area where the firms involved in bottling where situated (Coca-Cola, 2016 1). The charges were that the exhaustion of the water sources by the company’s operations was negatively impacting the lives of all the poor farmers since the firms where dumping toxic wastes as well as hazardous material wastes near the facilities. The wastes that the company was discharges was alleged to have been directed to the agricultural farms thus affecting productivity. The environmental pollution by the facilities would not have been considered as social responsibility since it was a form of destruction. Moreover, this act was alleged to be under unethical business conducts which resulted into a boycott of its products worldwide and particularly because it was charged with the conduct in several developing states (Coca-Cola, 2016 1).
in spite of the rising criticisms against the corporation, it continued in championing different responsible initiatives like the restoration of groundwater sources, rainwater harvesting, the adaptation of recycling and packaging as well as offering different community services in all its locations. Coca-Cola made the decision of becoming neutral in the context of water in its Indian location by the year 2009 as a section of its international approach of obtaining water objectivity (Coca-Cola, 2016 1). However, despite its resistance criticisms against the corporation failed to leave. Those criticizing it held the belief that the corporation of utilizing so much money in terms of million dollars in sustaining the green project as well as creating an environmental friendly reputation for its own benefits. It was alleged while this was happening the corporation failed in making any changes to all its operations that were ruining the wellness of the community. This attempt was developed in order to wash the company’s business conducts in the country thus tarnishing its brands reputation both in India and globally (Coca-Cola, 2016 1).
Company Overview
Coca-Cola Corporation began its establishment in the year 1886 in Atlanta Georgia (Coca-Cola, 2016 1). The company is accounted to be leading globally in the delivery of non alcoholic drinks , first positing in manufacturing, distribution , better relations and marketing of all its products which are both syrups and concentrated beverages (Coca-Cola, 2016 1). The products are normally distributed to the bottling corporations for packaging, and the last and standard dilutions to customers. The company generates an increased range of distinct beverage products which ranges from five hundred distinct products globally. The company’s globalization initiative was implemented in 1920’s and toady the company operates in an exceed of 200 nations which follows a simplified international approach (Coca-Cola, 2016 1). This approach states that the company is objected at offering a refreshment moment for less cost for a million times each day.
The company along with the firms that are involved in bottling the beverages creates the best distribution and manufacturing systems globally. The systems are created in a way that motivates the employees and ensures that they are fully dedicated thus placing the aims of the company as their priorities (Coca-Cola, 2016 1). This strategy values culture with helps in connectedness and teaming up as employees and consumers are highly involved in the operations of the company. The company’s products have been established to be the most effective soft drinks in quenching the customer’s thirst with the utilization of non alcoholic products globally for more than the 115 years that the company has been operating (Coca-Cola, 2016 1). One of the prime aim of the corporation is to ensure that its general market share as well as value increases annually. This aim is mainly accomplished via the utilization of associates who offer increased satisfaction to consumers by valuing the general needs of the customers while still protecting the assets of the firm and minimization of business threats.
In 2004, the company’s revenue totaled to 22 billion dollars from the global market which has been growing since then. In India Coca-Cola has continued to be a leading seller of soft drinks despite the rising criticisms against it (Coca-Cola, 2016 1). It is estimated that the corporation’s investment in India is approximately 1 billion dollars (Gulati & Ahmed, 2012 1). This therefore makes the corporation to be one of the highest investors globally in India. This demonstrates its commitment and ability to grow in the Indian market with the adaptation of effective corporate strategy. The marketing, sales, manufacturing and distribution of goods in the country is not of much concern as company to its corporate responsibility.
the corporation is involved in the beverage production with about 7000 staffs at its 27 distinct an fully owned bottling activities which are supplemented by bottling operations which are franchisee owned (Muhtar, 2015 1). Additional to the employees who are situated in the firms , the company states that it develops jobs indirectly for more than 125,000 persons through is supply, distribution as well as supply networks (Muhtar, 2015 1). The CSRs initiatives for the corporation in the Indian society are mainly focused on communities as well as the environment. The corporation has been involved in setting up projects for primary education which primarily offer benefits to children from slums as well as remote places. In addition the company recently established engaged in a major responsibility in setting up national projects for water sustainability. This projects mainly incorporates offering the local communities with education regarding the conservation of water. The company has additionally partnered with different NGOs in the country as well as local agencies in the provision of healthcare for the poor (Muhtar, 2015 1). Additional initiatives that the company is involved in includes the cleaning of cremation locations as a form of community services and also giving working opportunities at its firm that is involved in bottling to deaf students in nearby schools.
Industrial Overview
Soft drinks can be describes as distinct popular beverages that are primarily comprised of sugar, flavor and carbonated water. These drinks do not consist of any form of alcohol are usually sold in terms of cans or even bottles. The beverage companies for the non alcoholic products are mainly, Pepsi, Schweppes as well as others (Ziobro, 2011 1). The soft drinks industry is a mature market that involved established and globally situated corporations. The sector is characterized by reduced growth chances as compared to the general market and thus most of the firms involved in the sector and focuses of on products diversification as well as differentiation to increase their competing abilities as well as gaining a reasonable share in the market. Most of the firms are involved in productive distributions as well as acquisitions strategies that are aimed at growing the general operations, products images and ease the venture into distinct locations (Ziobro, 2011 1).
Energy drinks are being embraced highly in developing states which is a form of threat to the general competition in the market. Pepsi and Coca-Cola are characterized with the dominance of the beverage market based on their abilities and global positioning (Ziobro, 2011 1). The general demand for carbonated drinks is fueled by customers demographics as well as taste. The general profitability that is obtained by the involved corporations is normally determined by the marketing effectiveness. The dominating companies such as Coca-Cola uses scale economies both in its distribution as well as manufacturing (Muhtar, 2015 1). For the smaller companies they normally offer competition through prices reduction, serving local preferences and bringing distinct and fresh products in the market.
In reference to the carbonated drinks they account to a 65percent revenue in the particular industry while the non carbonated drinks accounts to 35 percent (Muhtar, 2015 1). This therefore shows that the carbonated drinks are characterized with high sales. Generally Coca-Cola holds a market share of 42 percent globally while Pepsi holds 32 percent; Schweppes 15 percent and 11 percent is held by others (Muhtar, 2015 1). In order to understand the industry a PESTLE analysis will be utilized in assessing the external surrounding which involves political, environmental, economic, legal, and social as well as the technological environment. Despite the fact that Coca-Cola company is still the leading one in the manufacturing as well the distribution of soft beverages globally a Pestle analysis would be essential in understanding its external concerns (Muhtar, 2015 1). This is in particular the existing treats as well as opportunities to adopt competitive strategies for a better positioning. Coca-Cola Company is a global empire in the servicing of soft beverages that are characterized by affordability and high quality. In the distribution of the products to the consumers the company follows strict laws as well as high adherence to the demands of consumers with the utilization of the best technology that is available.
Political Environment
Since the company is a non-alcoholic drinks manufacturer Coca-Cola’s products are normally evaluated by the FDA which works in ensuring that the products meets the necessarily regulations that are offered by the governing bodies for the wellness of the customers. FDA is from the American origin which is well known in the global food industry as it is involved in the evaluation and verification of the ingredients that are being utilized in the manufacturing of goods mainly for direct consumption (MAY, CHENEY& ROPER, 2007 253). The changes that may occur in the stated laws may result in the prevention of the corporate from delivering its yields. These may include changes in internal marketing, accounting, taxes as well as the changes in the labor policies which may affect production and sales. The company examines its yields carefully prior to presenting them to the agency for more verification (IDOWU, 2009 202).
Beside from the agencies requirements from the company several other primary political forces that are designed and implemented in reference to the country domain that includes regulations, political crisis and income taxes affects the operation of the company. If the regulation for export or rather imports are high this implies that the company’s ability to sell is low which is similar to the high income taxes which affects demands (IDOWU, 2009 202). Political crisis in any state can occur in the nature of protests that can mainly impact products demand. In addition political violence creates a surrounding that is challenging for products to penetrate different zones due to the lack of stability (IDOWU, 2009 202).
Economic Environment
These are the economic factors which are utilized by the corporation in future’s forecasting on investment decisions. Coca-Cola yields are mainly distributes to its more than two hundred nations. This implies that the countries are characterized by diversity since they posses different languages, tastes, preferences, customs, desires as well as cultures (MAY, CHENEY& ROPER, 2007 259). The company deals with the diversified consumers in distinct ways in ensuring that their needs are met without fail. The company has in the recent transformed and innovated its strategies in handling products through creating distinct flavors that best accommodate all its consumers. The economic factors that affects the company includes , inflation, interests rates, living standards, rate of exchange, high unemployment level, wages and the general growth of a state economically. The economic forces are normally different based on a state.
The company ensures that the economic analysis of a new country is analyzed before a venture. If the market is characterized by high power of purchasing this implies that the country is well situated for maximum gains. Coca-Cola corporation utilizes the strategy in products marketing and it has about 63 distinct currencies from the different nations (MAY, CHENEY& ROPER, 2007 258). Based on the continuous fluctuations of the foreign currencies in exchanges the weaknesses or the strength of the currency stands to be the primary determinant of profit. The maximization of profit is affected by currency fluctuations and therefore an evaluation is required in weighing the strength of a currency before a venture (IDOWU, 2009 203).
Additionally the company utilizes an analysis of borrowed money interest rate which may affect its general operations. The changes in the rate of interests impacts the profit status of any corporation as well as additional investments because the operational cost is increased. The company manages to handle the interest levels fluctuations through the implementation of imitative tools (MAY, CHENEY& ROPER, 2007 254). If inflation occurs the company offers their staffs higher salaries in the affected nations which stabilizes their ability to handle the situation. This additionally benefits the company since the rise in salaries results in an increase in the costs of products. This is however, not designated on the goods prices because the market is characterized by high competition as well as high risks. This threat is mainly faced by most corporations from their external environment due to the failure to manage it (MAY, CHENEY& ROPER, 2007 254).
The corporation is characterized by more than 80 billion dollars equity value in its global locations. Most of the value is normally derived from the beverage market as it holds the highest demand and value. The corporations income is acquired from all its global locations and about 70 percent of this revenue is generated outside the American market (MAY, CHENEY& ROPER, 2007 253). However the corporation is faced with a threat since modernization has its unique needs which are not being incorporated by the company. For instance consumers are highly demanding for healthy or drinks with no preservatives as the alternative drinks to a healthy living (IDOWU, 2009 204). However, the corporation has implemented very minimal efforts in regard to addressing the need.
Social Environment
Social forces are mainly the things including traditions, cultures, health perceptions, fresh trends, safety as well as the growth of demand. The company does not therefore, have the capability of transforming its social forces but mostly it is required to make an adoption and suit to the needs of the society. This aspect is very crucial for Coca-Cola which is directly allied to consumers. The element of cultural diversity is analyzed prior to the introduction of goods and marketing to the specific market. Since the company has more than 3300 differentiated products market analysis begins with the introduction of less products based on social preferences (MAY, CHENEY& ROPER, 2007 253).
Coca-Cola’s products distribution mainly occurs in states that are characterized by active cultures. However , the effectiveness of the corporation is determined by its general ability to meet the necessities and demands of the consumers without fail. For instance in countries such as India and Japan high products differentiation are a necessity to satisfaction of consumers. The company developed 30 distinct flavors in Japan in the quest of alluring to its consumers (Muhtar, 2015 1). Similarly, the corporation is attempting to develop such diversification in china as the market is characterized by distinct needs and a unique cultural preference and taste.
However, in countries such as America individuals are mainly focused on healthiness and some just preferences. The country’s preferences are rapidly switching as most of them are switching from sugary drinks to the consumption of water as well as tea. This is mainly because the drinks are much better in regard to benefiting them health wise. Coca-Cola is therefore required to make a quick response to these needs through the creation of healthy drinks so that the consumers can respond (Ziobro, 2011 1). The government as well as the modern customers holds great concerns in regard to products safety and healthiness. Most individuals are concerned about being obese in regard to the beverage products particularly by young individuals. Nutritional content is very crucial in the mind of consumers today. Coca-Cola was recently able to utilize the opportunity by introducing dietary products that includes, Light Coke, Coca-cola zero and diet coke (Ziobro, 2011 1). The highest market share is derived from young adults and children and they hold the highest population growth thus the need to address their needs is a necessity.
Technology Environment
The beverage industry benefits highly through technological advances in offering services such as branding, packaging, marketing, research as well as the distribution of goods. The packaging for the products are dependent on its bottling partners but the corporation does not hold full control of its operations (Ziobro, 2011 1). The availability of the distinct branding and packaging is influenced mainly by technological advances as well as sales which is fueled by the availability of increased vending machines. Technology has also assisted the company in designing stylish cans which are highly desired based on their attractiveness particularly to young people (Ziobro, 2011 1). This acts as a form of a marketing tool which is useful in creating awareness.
Technological development has been a major help for manufacturing corporations and particularly Coca-Cola thus resulting into the rise of high quality, quantity and speed in production. The company has factories that are situated in Britain and works to ensure that quality as well as the production speed is enhanced (Ziobro, 2011 1). In addition, the company utilizes the technology in making direct and simplified connections with the consumers.
Legal Environment
Legal laws that governs corporations globally are employment law, consumer law, health, antitrust law, discrimination as well as safety law. In the united states alone corporations are managed by distinct regulatory acts such as safety, health, FDA and drugs (IDOWU, 2009 209). Beside from these policies which are also applied in the global regions environmental regulations are part of the legal forces which may include advertising regulations, production , as well as sales (Peck, 2015 1). The slight changes that may either be applied to the regulations or policies may result into a desirable or a non desirable effect on the corporation. In addition, the violation of any of the mentioned laws, regulations or even policies may result in the rise of serious punishment which will bring obvious effects on the company’s capabilities and may also ruin the well established reputation. The company reserves all the associated rights towards the business which includes ownership of its yields and it is fully responsible of its practices globally.
Environmental
Coca-Cola is normally affected by criticism against its waste disposals as well as the consumption of water. The company is mainly impacted by water accessibility since it requires more water in its manufacturing. Water is a core necessity for the development of soft drinks which implies that even climatic changes holds effects on the firm. The company mainly acquires its water from the underground sources which is alleged to be an exhaustion of the sources (Peck, 2015 1).
Coca-Cola is expected to respect all the environmental regulations in all its stations. However, it has been blamed for being environmentally irresponsible based on its excessive water requirement as well as wastes disposal which is related to high pollution (Muhtar, 2015 1). This issues are highly relevant and needs to be addressed as the reputation of the company’s brand may be affected. In addition most of the consumers may switch their soft drinks demands to the existing substitutes with better reputation in regard to environmental conservation. However, in the recent the company has continuously engaged in the green project through changing its branding and packaging to suit a conservative surrounding. The company is additionally offering education to communities in regard to how water can be conserved (Muhtar, 2015 1).
It is widely known that a brand that yields high value is very important for any corporation in operating in the market that is characterized by high competition. Developing brands with high value should also incorporate high performance for the corporation in order to eliminate the issues that may hinder its sustainability issues (Peck, 2015 1). This reflects the level in which a company is responsible socially since poor performance ruins reputation and sustainability. Based on the operations of the modern businesses most of the consumers who account to approximately 85 percent are highly impressed by brands if it the corporation has a good reputation (Peck, 2015 1). In addition the reputation should have been generated from the company’s ability in engaging in things that are aimed at improving the society.
When the issues of pollution and water exhaustion began to prevail in the public domain, the company was affected economically as well as a loss of its good reputation. However, the company ignored the occurrence and instead of addressing the public it began to implement the green project. This was criticized too based on the objective that the corporation was only doing it for its individual benefits and to build back its reputation without caring on how it impacts the society undesirably (Peck, 2015 1). This resulted into the rose of a negative reputation towards the corporation by the society in the global market and particularly in the developing countries. The company’s products had been boycotted for a while with consumers switching to the existing substitutes. Under the scenario, it is clear that the corporation is needed to recognize and adopt sustainable initiatives which will resolve all the issues that involves social responsibility. In short, Coca-Cola should be driven by the needs of the consumers in order to adopt changes to benefit it in gaining a higher share as well as creating a better reputation in India (Peck, 2015 1). The sustainable projects should be grounded mainly on the areas of the environment which includes underground conservation, extensive water use and pollution from wastes.
Coca-Cola recognized the necessity of incorporating social responsibility as part of its corporate objectives to increase its stability in the India market. This was an effective strategy since social responsibility helps in attaining a positive image, increasing demand and market share (Peck, 2015 1). However, the company did not adhere to its responsibility fully as it only focused on the sectors that would benefit it more. Corporate responsibility requires the company to place the society’s needs first before its individual interests. This was however, contrarily to what the company did. It is good to note that the provision of education chances to the poor children in the Indian community as a part of social responsibility is a good thing. In addition the fact that its branding, manufacturing and packaging is based on the green project is an additional positive thing. However, disposing toxic and hazardous wastes in the open thus leading them to the poor farmers farms is something that cannot be accepted (Peck, 2015 1).
Making the decision of conserving the environment totally means committing to the responsibility. The corporation was additional accused of water exhaustion despite its initiative which educates the communities about water conservation. It is true that the production of softy drinks is one that necessitates much water but the company should be utilizing the water minimally to ensure that pollution does not occur as that may affect farming which is depended by many (Rana, 2016 1). After the corporation suffered to a crisis of its image both in America and in India, most of its economic and social forces that leads to its stability were altered which affected most of its operations. The company from the particular situation recognized that it was very important to build a better reputation by improved handling of environmental and social forces. Success cannot be attained through prioritizing the needs of the company and ignoring the necessity for the society to value the company. In order for success to be achieved the corporation needs to work on its brands reputation which is crucial in fueling sales (Rana, 2016 1). Corporate responsibility needs to be planned as a primary section of developmental approaches for the future growth.
The modernized society is characterized by high needs based on the high living cost in accessing services such as health or even education. The company has made a crucial step in assisting children from unstable backgrounds to accessing education. In addition it should implement initiatives to help individuals in accessing health services as a strategy of sustaining wellness for its consumers (Rana, 2016 1). This will create a much desirable image but changing how the community perceives the company and its operations. This implies that the company does not need to change much but it is highly necessitated to commit to the necessities of the society without fail. Moreover, the corporation should work more on protecting its image which seems to be affected by environmental issues. It should collaborate with NGOs and the government in making moves that will serve the community better (MAY, CHENEY& ROPER, 2007 256). But this must begin by developing better strategies in releasing its wastes as well as utilization of water in minimal nature. These strategies if adopted by the corporation will benefit it in the long-term. If it is made to be part of its objectives this implies that it will be hard for the corporation to lose all that it has built in years.
An effective corporate responsibility works best with the incorporation of compliance, minimization of harm as well as creator creation of value. The first step that the corporation should take should involve the adaptation of the legal policies and industrial standards which may include environmental regulations, consumer rights as well as employment laws (Rana, 2016 1). This will help to ensure that the company operates based on the provided standards without fail to eliminate all the chances for advanced criticism. The second part involved elimination or the reduction of the unenthusiastic effects that are subjected to the community by the company’s practices. This means that the corporation should operate effectively by avoiding negative impacts such as toxic and dangerous wastes disposal, underground pollution and water wastages. The community depends on the water for faming and thus it should be utilized minimally without affected its sources. In addition wastes disposal exposes the community to disease which may acquired through consuming foods or water that is infected by bacteria’s (Rana, 2016 1). The company should therefore, establish strategies to avoid the high pollution as a way of reducing harm. This strategy will be effecting in increasing a desirable brand image.
Moreover, it should focusing on increasing desirable impacts that best creates value for the communities and the corporation in India. This may be achieved through focusing of high investments, collaborations and investment into the existing social needs (Wharton, 2010 1). For instance the company should made partnership with parties that holds the objective similar to its own on water usage as well as conservation. This will help in covering its past’s activities that were alleged to be destroying water sources. The corporation is highly engaged in social activities which is a beneficial thing for the growth of its abilities globally. It should therefore in this case utilize its establishment and great potential in relating well with its consumers to regain its image (Wharton, 2010 1).
Protecting the society does not only mean that the corporation has to help them in acquiring serves rather it should also be involved in conserving its surrounding. Coca-Cola is more focused on building a better image without observing the impact that is caused by its activities on the environment (Wharton, 2010 1). The corporation holds a higher engagement in social developments but all of its efforts and investments are being outweighed by the undesirable impacts that are caused on the environment. It is a high time that the corporation incorporates environmental measures as part of its objective in India.
Conclusion
It is clear that social responsibility programs are crucial in creating and enhancing the global reputation for a company. Company are therefore necessitated to work more on the generation of better relation with the society through environmental conservation. After Coca-Cola got the negative experience that was based on its negative practices that were harming the society it recognized the need of integrating social responsibility in its corporate objective to appeal to its market. Despite the fact that the crisis affected productivity, revenue generation and the image of the company a basis for corporate responsibility in India has been affirmed via the introduction of various CSR schemes. In addition the devotion of the corporation to the global environment is a reflection of the need in sustaining the positive attitude held by the corporation.
The implementation of the differentiated initiatives by the corporation adds value to the society thus enhancing its reputation. If the company is effective in the application of its corporate responsibility globally, it is more likely to attract an increased number of consumers and high brand acceptance. Thus, after obtaining the conflict’s experience the sales and the value of the company’s product have risen in the nation. However, despite the fact that CSR is a beneficial thing for the company in India it should not work on the implementing too many initiatives. This may result in the loss of focus for the corporation since they will necessitate attention. In addition this will additionally require the general allocation of more costs towards the project which may reduce the general value that the company generates from operations. As much as there is a necessity to build a good reputation the company needs to keep expenses lower for profit maximization.
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