Legal and Political Issues of Coca Cola - Research Paper Example

 Researching in Business Management: Issues for Multi-national Organizations Table of Contents Introduction 3 Analysis and Discussion 3 Management Issues 4 Legal and Political Issues 5 Environmental Issues 6 Economic Issues 6 Social Issues 7 Business Environmental Challenges 7 Conclusion 8 References 9 Introduction Multinational organizations are the organizations that operate their business practices in more than one country. Generally the multinational organizations have several dimensions. This type of organizations can be viewed from several perspectives. A national organization that has expanded its business practices in several outside countries in order to achieve several advantages. Significant global expansion helps an organization to maximize its business profit. In addition to this organizations can attain growth in market share and can develop potential global customer base through global expansion strategy. Multinational organizations implement several different strategies in different operating countries to meet the market demand of that country. However, these multinational organizations face critical issues associated with business operation in different countries due to different cultural background, economic environment and political aspects. The Coca Cola Company has been selected for the research purpose. Following discussion will help to determine the issues that are faced by Coca Cola Company in different countries. Analysis and Discussion Global business environment is highly competitive as several leading organizations are operating within a similar industry. These organizations not only focus on primary market bases, but also used to target rest of the world. It is true that an organization can achieve significant competitive advantages through effective global expansion strategies. High profitability and high business revenue motivate several leading organizations to expand their business practices in global market place. These multinational organizations not only have to sell products and services in international countries, but also have to take care of workplace environment, business environment, market demand and several business policies in international countries. Therefore, it is not easy for a multinational organization to handle all these things quite comfortably. They have to develop effective business strategy in order to get success in global market place. The multinational organizations generally face following issues in their business operation in different countries. Management Issues Culture of an individual generally varies from a country to another. A multinational organization has to develop different corporate and organizational policies in different countries in order to maintain effective business performance. Culture is typically a complex aspect that includes beliefs, art, knowledge, laws, attitude, behaviour, customs and other habits or capabilities acquired by an individual as a member of a particular community or a society. Therefore, it can be stated that work culture cannot be similar in each and every place around the globe. It differs from a person to another due to several cultural differences. Coca Cola is one of the leading multinational soft-drink manufacturing and distributing organization. The organization has significant business operation presences in various global market places. The organization is one of the leading organizations within the industry. Coca Cola faced several issues during globalization and its global expansions. The organization was facing difficulty to develop business and corporate culture in different country due to different cultural background of employees and customers. In addition to this, there were several local organizations in these countries that already had significant brand recognition and market share growth rate. After several difficulties the management of the organization de3cides to market their product in different countries based on the demand and cultural aspect of the customers. Different slogans in different language in different countries helped Coca Cola to achieve huge brand recognition and significant customer loyalty (Lussies, 2008, p.113). It is important for the organization to focus on change in market demand in respective countries. In addition to this, Coca cola should implement workplace diversity program in its workforce to reduce possibilities of workplace conflicts. The organization has to ensure that the manager of each and every department in different countries should be regional individuals. It will help the organization to take care of needs and satisfaction level of the employees. Moreover, the language barrier, cultural barrier and inter-organization communication conflict can be reduced through this strategy. In terms of marketing and supply chain management, Coca Cola has to review its all strategies periodically. Legal and Political Issues Coca Cola faced serious legal issues and challenges in different countries due to inadequate quality of products. The soft drinks of Coca Cola were enriched with high pesticide. As a result frequent consumption of these soft drinks was resulting bad health as consumption of soft carbonated drinks can increase the obesity and fat in human body. Looking into these negative consequences, governments of several countries restricted the promotional, marketing and selling activities of the products. However, the organization sorted out the problem quite expertly. The organization introduced zero calories soft drinks items for health conscious customers. In addition to this, effective product differentiation strategy helped the organization to regain its brand value in global market places (Fernando, 2010, p.23). The organization always follows labour policies, business ethics and corporate culture in different countries. It helps them to minimize the risk of legal issues. Environmental Issues Rapid and frequent use of natural resources forced governments of several countries to develop environmental policies for the business organization. High consumption of fossil fuel as energy resource in business operations can increase the carbon emission level. High carbon footprint affected the brand image of Coca Cola Company in global market place. External Stakeholders started to minimize their interest in this organization. Looking into these challenges, the organization implemented several strategies to recycle water and maintain zero solid waste (Gleick, 2010, p.191). In addition to this, the organization uses fuel efficient long headed trucks in logistics and supply chain network to reduce the emission level of carbon. Moreover, the organization is using substitute energy sources in manufacturing and processing to reduce overall consumption level of fossil fuel. This strategy helped them to reduce operational cost in several countries. In addition to this, these green strategies motivate the stakeholders to take interest in Coca Cola Company. Economic Issues Recent financial crisis and economic recession affected the global economic environment. The organization faced difficulty in several countries due to different accounting standards. In addition to this, volatile currency change affected the business transaction process of Coca Cola (Williams, 2010, p.300). However, limited disposable income and low purchasing power of people are considered as the major consequences of this economic slowdown. This economic downturn is stopping the people to consume this type of product as soft drinks are considered as refreshment products not the necessary food product. It is important for the organization to reduce its business operation cost in different countries to implement economic pricing. It will help the organization to maintain its strong global customer base. Social Issues The demand for a product of people around the globe depends upon the social background of people. It can be harmful if an organization implements similar strategy in all the global market places. For example, Coca Cola has its business presence in India. India is an emerging economy. Recently it has been identified from several survey reports that people are trying to consume healthy fruit juices and energy drinks rather than soft carbonated drink. Therefore, change in market demand among people within the society affected the sales volume of Coca Cola (Ferrell and Hartline, 2008, p.59). However, the organization tries to acquire several popular local brands that used to provide health drinks. In addition to this, they implemented brand extension strategy in different countries to introduce healthy soft drinks. This specific strategy helped the organization to meet the social demand of several countries around the globe. Business Environmental Challenges It is discussed that global business environment has become saturated and highly competitive due to presence of different leading organizations within a similar industry. PepsiCo is the only leading and potential competitor of Coca Cola Company (Hamilton and Webster, 2012, p.72). In addition to this, several energy drink and fruit juice manufacturing and distributing organizations are growing at a significant growth rate due to change in market demand and customer’s need. However, Coca Cola implemented several unique strategies to maintain their leading position in global market place. Effective product differentiation and brand extension strategy helped the organization to maintain its large customer base (Adekola and Sergi, 2012, p.17). In addition to this, significant corporate social responsibility activities and charity programs increased the customer loyalty of this brand. It is important for an organization like Coca Cola to review and redefine its business operation strategies in different countries due to volatile external environmental factors. Conclusion It is clear from above discussion that being one of the leading organizations, the Coca Cola Company faced several problems in global market places. Different cultural background of employees made it difficult for the management of the organization to develop corporate strategy according to the cultural background of employees. In addition to this, the organization faced critical challenges regarding product quality in different global markets. High pesticides and calories in soft drinks forced the global customers to switch over healthy fruit juices and energy drinks. However, the organization expertly implemented product differentiation and brand extension strategy in order to meet the current market demand. It is important for the organization to follow each and every developed policy by the government in business operation to minimize the chances of external environmental threats. References Adekola, A., and Sergi, B., 2012. Global Business Management: A Cross Cultural Perspective. New York: Ashgate Publishing. Fernando, A., 2010. Business Ethics and Corporate Governance. New Jersey: Pearson. Ferrell, O., and Hartline, M., 2008. Marketing Strategy. Stamford: Cengage Learning. Gleick, P., 2010. Bottled and Sold. New York: Island Press. Hamilton, L., and Webster, P., 2012. The International Business Environment. New York: Oxford University Press. Lussier, R., 2013. Management Fundamentals. Stamford: Cengage Learning. Williams, C., 2010. Management. Stamford: Cengage Learning. Read More