Challenges in the Global Business Environment: The Coca-Cola Company's Case - Assignment Example

Challenges in the Global Business The Coca-Cola Company is a global leading producer of non-alcoholic beverages. It specializes in the production of popular soft drink brands such as Coke, Sprite, Fanta, Minute Maid, Dasani, and Del Valle. The Sprite brand is a lemon-lime flavored soft drink. The Fanta brand is widely available in orange flavor. The Coke brand, also known as Coca Cola, is the company’s oldest brand. Minute Maid consists of a variety of carbonated drinks obtained from fruit juices. Dasani brand is noncarbonated purified bottled water. Del Ville brand consists of natural fruit juices or extracts that are similar to Minute Maid. The brand is popular in Latin America (Cocacola.com). In its code of ethical conduct, the Coca-Cola Company emphasizes three important issues in the production and distribution of its products. They are customer focus, free flow of information, and confidentiality. In its customer focus, the company emphasizes the production of high quality brands that meet the demands of consumers. The company’s branding approaches concentrate on changing market trends and consumer sophistication. In order to achieve consumer sophistication, the company redesigns its brands with time. In redesigning the brands, Coca-Cola emphasizes honest treatment of its customers by selling its products at prices that are fair to both customer and the company. The company carries out frequent advertisement campaigns of its products efficiently. The move gives customers value for their money, differentiates the company’s brands, and helps in market penetration. It also secures customer loyalty to the company’s brands (Cocacolafemsa.com 2012). The second issue that Coca-Cola emphasizes in its code of ethical conduct is free flow of information. Coca-Cola requires its managers to create environments where all employees can freely report anything or volunteer any information. Such an environment encourages innovation. The company emphasizes innovation as a way of sustaining growth in its business. Innovation gives Coca-Cola Company an added advantage over its main rivals in the soft-drinks market. The company is consistently rebranding its products in innovative ways. Rebranding makes its products unique, thus, getting a short-term monopoly over rival brands. The monopoly also makes customers buy the company’s products irrespective of the prices because there are no substitutes (Cocacolafemsa.com 2012). The third issue that stands out in Coca-Cola’s code of ethical conduct is confidentiality. The company requires all its employees to keep the company secrets. Coca-Cola does not disclose information such as technical or market data, strategies, projects, plans, methods, or even manufacturing processes. It also requires its employees who can access such information to ensure that it does not leak. Coca-Cola has indeed succeeded in keeping its secrets safe from competitors or the general public. Confidentiality has helped the company in ensuring that its products are unique in the market. Uniqueness of products secures customer loyalty. The customers will find out that there are no other companies producing exactly the same brand like Coca-Cola. Although there will be similar brands, such brands will not resemble the Coca-Cola brands. The company will, therefore, secure a large market share (Cocacolafemsa.com). PepsiCo is Coca-Cola’s main rival in the soft drink industry. It produces non-alcoholic beverages similar to those of Coca-Cola. In its code of ethical conduct, PepsiCo emphasizes customer focus like its rival Coca-Cola. PepsiCo stresses the need for the production of high quality brands that meet the demands of consumers. Like its rival Coca-Cola, PepsiCo emphasizes a fair treatment of its customers by setting fair prices for its products. The main difference between PepsiCo’s and Coca-Cola’s strategy is the emphasis placed on substitute products. PepsiCo’s strategy is to produce brands that customers can use as substitutes at a reduced price. Coca-Cola, on the other hand, tries to produce unique products (PepsiCo 2008). Nestle is another competitor of Coca-Cola in the soft drinks industry. It produces non-alcoholic beverages together with other varieties of products. In its code of conduct, the company stresses fair customer treatment as its rivals in the industry. Nestle and PepsiCo both stress the production of quality products that meet the needs of their customers. The two companies emphasize production of brands that do not have related health risks such as obesity. The approach used by Nestle slightly differs from that of PepsiCo. Nestle extends safety concerns to its employees. The company commits itself to providing safe working environment to its staff (Nestle 2007). Both Nestle and PepsiCo emphasize confidentiality of company information. The two companies require all their employees to keep secrets. They do not disclose information such as business strategies, market data, projects, production plans, methods, or even manufacturing processes. They also require their employees who have access to such information to ensure that it is kept secret. PepsiCo’s strategy of keeping secrets, however, differs slightly from that of Nestle. In keeping secrets, PepsiCo allows some of its employees to share secret information with other parties provided the party signs confidentiality agreement. Nestle; on the other hand, restricts the sharing of information with third parties by its employees. The company can only authorize the sharing of information when the law requires it to do so. The company’s executive can also authorize the sharing of confidential information with third parties for business purposes alone. In addition, Nestle requires its employees to avoid situations that may lead them to disclosing company secrets unknowingly. It is, therefore, clear that PepsiCo’s code of ethical conduct has some loopholes that can allow the leakage of company secrets. Nestle and PepsiCo’s codes of conduct enhance the free flow of information from junior employees to the executive. The free flow of information gives employees opportunities to forward their views on how the companies can enhance service delivery. In doing so, the employees can come up with very innovative ways that the companies can use to improve competitiveness in the market. In addressing the three key issues, both Nestle and PepsiCo have tried to limit the leakage of their confidential information. The two companies have imposed restrictions on their employees on the disclosure of information to third parties. The companies have also enhanced the free flow of information in their organizational structure by widening their communication channels. They provide their workers with a variety of channels to volunteer information. In the case of reporting misconduct within the organizations, the companies protect the identities of the volunteers. The move helps in curbing retaliation among employees (Nestle 2007; PepsiCo 2008). Hypothesis If Nestle restricts the access of confidential information to the executive alone, the company will benefit by reducing the leakage of confidential information to its rivals. If Nestle improves further on its focus of customer service, it will raise its market share and profits. If PepsiCo seals the loopholes in its information secrecy, the company can get an added advantage over its rivals. It can then introduce new products to the market without the preparedness of its rivals. If PepsiCo enhances its information flow by rewarding volunteers, it can develop the best marketing strategies such as frequent rebranding. Potential adverse effects If PepsiCo fails to seal the loopholes in its information secrecy, the company will lose a large share of its customer base. Its rivals will learn about its strategies and come up with measures to counteract potential competition that may arise. If PepsiCo fails to streamline its focus on customer products, the company will lose a significant market share to its rivals. If Nestle fails to focus further on creating unique products that meet consumer needs, the company will lose in the competition for customers and market share. If Nestle fails to keep its secrets safe by restricting to executives alone, the company’s rivals will learn about its strategies in advance. The company will, therefore, fail to compete favorably in the market. How Coca-Cola can make its code of conduct relevant Coca-Cola Company can make its code of conduct relevant in two ways. First, it can do so by writing it in simple language. A code of conduct written in simple language is easy for workers to understand and interpret. There will be no room for misinterpretation. Second, the company can write what is expected of each employee at different levels of the company. How Coca-Cola manages environmental issues Coca-Cola manages environmental issues using a variety of strategies. First, the company does not involve itself in politics. It also discourages its employees from engaging in politics. If any employee wishes to engage in politics in any way, the company allows only if the employee does it on an individual basis. Second, the company follows the laws of the country in which it is operating. It also requires its employees to act with integrity and stick to the laws at all times (Cocacola.com). How Coca-Cola has embraced technological innovation Coca-Cola has embraced technological innovations for business advancement by partnering with institutions such as the University of Exeter. By partnering, they studied the consumer recycling behavior. In doing so, the company has learned how consumer behavior varies. The company has also used PlantBottle technology to create packages of its products. The PlantBottle technology uses plant products as some of the ingredients of making packaging bottles. The Company estimates PlantBottle as 30 % plant and 70 % petroleum products. The innovation has enabled Coca-Cola to reduce its dependency on fossil fuel products (Cocacola.com). There are three potential technological changes that Coca-Cola could face in the future. First, the company’s rivals can come up with unique beverages that consumers find more appealing than Coca-Cola’s brands. Second, the company’s rivals could invent cheap methods of production that can make their brands cheaper in the market. Third, the rivals can also create new products that can shift consumer preferences away from soft drinks to other products. In order to overcome such technological risks, Coca-Cola should diversify its products. It should start producing new products other than relying on soft drinks alone. Coca-Cola has once lobbied the US government into allowing the company to grow coca in the US in 1960s. The company used to add cocaine in its coke formula before it eventually abandoned due to health risks. The lobbying efforts were not ethically appropriate because Coca-Cola was the only company allowed to grow coca in the US (Elmore 2014). In its corporate citizenship, Coca-Cola has sponsored Special Olympics UK. The organization helps individuals with learning difficulties in alternative areas such as sport. Coca-Cola has also sponsored Juvenile Diabetes Foundation. The two projects help in improving the company’s acceptability in the region. References Elmore, B. (2014, March 21). What coke’s cocaine problem can tell us about Coca-Cola capitalism. Oxford University Press. Retrieved May 28, 2014 from http://blog.oup.com/2014/03/coke-cocaine-coca-cola-capitalism-business-strategy/ Nestle. (2007, November 15). Code of business conduct. Nestle company. Retrieved May 28, 2014 from http://www.nestle.com/asset-library/Documents/Library/Documents/Corporate_Governance/Code_of_Business_Conduct_EN.pdf PepsiCo. (2008 November). Worldwide code of conduct. PepsiCo company. Retrieved May 28, 2014 from http://www.pepsico.com/Download/CodeOfConduct/English_09.pdf The Coca-Cola Company. (2012 January 2). Business code of ethics. Coca-cola-femsa. Retrieved May 28, 2014 from http://www.coca-colafemsa.com /femsa/web/arquivos/KOF%20Business%20Code%20of%20Ethics%202012.pdf Read More