Environmental and Social Performance of Coca-Cola Company - Case Study Example

Environmental and social performance of Coca-Cola Company Contents Contents Environmental and social issue 2 Stakeholder engagement 3 Extent and type of entrepreneurship or leadership attempted 4 Innovations or strategies undertaken 5 Organizational change and sustainability 6 Performance of other companies 8 References 9 Environmental and social issue Coca-Cola Company over the years has been well known as an American multinational beverage manufacturer, marketer and retailer of non-alcoholic beverages. The company has adopted best practices in order to sustain their business operations across the globe and stay competitive. There has been criticism about the firm from various groups like NGOs, consultancies, etc., highlighting different issues like health effects, business practices and environmental issues. The company as well as its subsidiaries since 2000 has been subjected to criticism both by watchdogs and consumer groups (Hays, 2004). Immense water usage is the major environmental problem which is witnessed by the organization. This company is highly responsible for causing environmental degradation in terms of local ground water table depletion. There is a serious threat posed to many communities due to natural water resource utilization. It was observed that in Kerala, India, local officials had shut down bottling plant of Coke worth $16 million due to decline in water quality and quantity to villagers and local farmers. The firm has even created problems in Plachimada in context of water shortages, destroying firms, and polluting soil or groundwater. Many protests by local communities and NGOs were observed in North Eastern part of India because of polluting surrounding land through release of wastewater (Spiller, 2008). On the other hand, societal impact caused by its business operations is producing high fructose corn syrup. This content was greatly introduced in soda drinks and processed foods across United States. High fructose corn syrup is introduced by the firm in all its products instead of sucrose so as to reduce overall costs. Some nutritionists have commented that consumption of this element eventually leads to diabetes and obesity. Though the company has incorporated best possible ingredients in its product line but still sustainability is not achieved efficiently due to environmental and societal challenges. Stakeholder engagement Stakeholders are those individuals who have their direct or indirect stake in a company. Coca Cola Company has been able to perform their wide set of operations due to constant support or motivation from stakeholders. These stakeholders basically involve customers, employees, suppliers, distributors, wholesalers, retailers, shareholders, etc. Strategic decisions of the company are taken collaboratively with stakeholders. The major aim of the firm behind this approach is to determine creative ideas. Environmental and societal challenge surrounding the company is directly associated with their manufacturing process. The sustainability report of the firm which is prepared every year clearly states that stakeholder engagement has enabled the management to understand environmental or societal issue and address them appropriately. Firstly customers and retailer involvement has revealed the fact that there is high fructose content in all Coca-Cola products (Stafford, 2012). This in turn is causing drastic impact on health as it leads to obesity and diabetes. The firm could not have realized the harmful impact caused by their product line if retailers, wholesalers or customers did not come forward with their complaints. Their engagement not only helped the company to understand this social issue but even provided a platform to develop better substitutes. The company currently has lowered down fructose content and utilizes substitutes such as corn syrup, etc. In present scenario the major area of concern for Coca-Cola Company is to safeguard health of individuals. On the other hand, environmental issue identified by the company was due to support of stakeholders. Employees, suppliers and customers played a vital role in highlighting mentioned environmental issue. Shortage of natural resource was continuously reported by local people and employees (Kahn, 2006). The management is trying to adopt suitable practice that can prevent degradation of water supply. Extent and type of entrepreneurship or leadership attempted Entrepreneurial skills are the pillars for achieving success and growth. Every organization that is operating in highly competing business environment needs to possess such skills. Coca-Cola Company has been operating as a multinational corporation from past many years. The company was founded in 1886 by some pharmacist such as John Pemberton and Asa Griggs Candler. Later pharmacist was the main founder of the company and John Pemberton developed the idea of flagship product known as Coca Cola. These two key personnel had a common goal which was to be an industry leader in beverage industry (Louis and Harvey, 2008). Concentrated syrup was produced by the company and then distributed across the globe to various bottlers. The leaders of the firm were focused towards controlling their operational costs and covering more geographical area. They were aggressive in context of strategy planning and marketing products. Franchised distribution system was the core of business strategies formulated by the entrepreneurs (Blanding, 2010). Leadership styles are usually different for every organization since it depends on the nature of business. In some business form democratic style of leadership is most appropriate whereas for some other firms autocratic style is best suited. Coca-Cola Company is one of the strongest players in beverage industry. The leaders of this firm believe in following a democratic approach and consider their employees to be most important resource. Such collaborative work style has been witnessed in identifying external environmental issues and then developing strategies to address these issues. Many bottling plants of the company had been ceased in past years but management together with wide scale of suppliers implemented initiatives to revive their market position (Isdell, 2011). Product and market diversification are certain examples of entrepreneurial skills within the company. The extent of entrepreneurship in this company is even observed in terms of identifying market opportunities and gaining high revenue margins. Innovations or strategies undertaken Innovation is at the core of business strategies. Coca-Cola Company on basis of innovative strategies has introduced diverse products to meet hidden customer demand. The company manufactures more than 40 brands in total. Efficiency and excellence are their main focus and they believe in delivering value to customers. The firm has already invested $65 million in business process and in wide scale improvements or equipment innovation. Since 2007 innovative strategies undertaken by the company has reduced water usage ratio by 18% and energy usage ratio has also reduced by 15%. A great deal of investment, resources and time are devoted to bring down energy and water usage (Oliver, 2006). In order to address environmental concern to a certain extent the firm has investment lump sum amount in water saving and energy technologies. The firm has even invested in targeting and monitoring systems across the globe. On basis of this approach live data can be efficiently obtained so as to benchmark water and energy usage. Coca-Cola Company has incorporated strategies to conserve natural resource and achieve high sustainability standards. Water efficient bottler was an innovative strategy adopted by the firm so as to reduce water usage in production process. Source Water Protection Plans or SWPPs and Source Vulnerability Assessments or SVAs has been incorporated in all plants of the firm in order to extract water in a sustainable way (Foster, 2008). The firm has even undertaken an innovative strategy in context of renewable energy and low carbon with the support of solar photovoltaic panels. This was done to evaluate whether heat loss can be effectively captured during any form of glass production. Quantity of waste is being reduced by the firm through waste recycling at manufacturing plants. By the end of 2016 the firm has set target of zero waste to landfill. Organizational change and sustainability The use of communications, targets and metrics supports building change within an organization. Our business has social and environmental impacts across product life cycle from usage and sourcing of raw materials to manufacturing of desirable product range. The goals which are incorporated within sustainability plan are focused on waste reduction at every possible stage. They even aim at creating positive difference within communities in which they operate (Pendergrast, 2005). The metrics involved in business operations of the company are outlined in figure 1. Figure 1: Manufacturing and Distribution process (Source: Coca-Cola Enterprises, 2013) Water and energy is utilized by the firm in order to manufacture required products but their major aim is to reduce possible wastage. In present scenario the firm is collaboratively working with total of 140 suppliers so as to reduce overall carbon emissions. This clearly indicates that there is a standard set for every stage of value chain. Coca Cola Company has adopted a target in the form of an innovative carbon reduction program known as carbon challenge. This three stage program is based on prioritizing efforts and motivating suppliers to succeed in carbon management journey. Carbon footprint is managed and measured by the company to share carbon information and improvement plans. The suppliers need to score appropriately within supplier relationship management (Elmore, 2013). Communication also plays a significant role in context of transmitting set target to team members. Verbal or written communication is generally adopted by the firm to implement organizational change. The strategies that had been adopted by Coca-Cola Company were focused towards reducing carbon footprint and this was communicated through conducting a meeting. Organizational change is an essential component so as to remain competitive in modern business world. Performance of other companies The sustainability goals of PepsiCo are to some extent similar with aims of Coca Cola Company. In beverage industry PepsiCo is regarded as the strongest rival of Coca Cola Company. Social and environmental issues are witnessed by PepsiCo and proper strategies are adopted so as to reduce such issues. Their major human sustainability goals are reducing saturated fats in food brands against a set baseline, reducing added sugar content by 2020 in all beverage products, decreasing average amount of sodium content from the products. In context of human sustainability the company has been able to set high performance standards. UK, US, Turkey and China has been able to reduce saturated fat in PepsiCo’s products by 15%. The year 2013 brought forth serious changes within key operations of the company. All the team members were aligned towards the common goal and reduced added sugar content in Mirinda by 25% (PepsiCo, 2013). Since 2006, the firm’s has highlighted its capabilities through reducing overall sodium content in Cheetos by 34%. PepsiCo not only takes into consideration social or environmental issues but undertakes effective measures so as to serve local communities. They donate lump sum amount, fruits or vegetables to those who belong to socially backward communities. In overall context it can be stated that performance of PepsiCo is similar to that of Coca Cola Company. Nestle on the other hand is another competitor of Coca Cola Company in relation to confectionary product line. This company lays more emphasis on health and safety of employees and customers. Proper strategies are adopted in order to deliver best products to target audience (Allen, 2004). Major focus of the company is to incorporate nutrition within all products. Health standards are maintained by the firm so as to meet set business standards or goals. References Allen, F., 2004. Secret formula: how brilliant marketing and relentless salesmanship made coca-cola the best-known product in the world. New York: Harper Business. Blanding, M., 2010. The coke machine: the dirty truth behind the world’s favourite soft drink. New York: Avery, 2010. Coca-Cola Enterprises., 2013. Innovating for sustainable future. [Online]. Available at: http://www.cokecce.com/system/file_resources/125/Corporate_Responsibility_Report_2013_2014.pdf [Accessed on 22nd December 2014]. Elmore, B. J., 2013. Citizen Coke: an environmental and political history of the coca-cola company. Enterprise & Society, 2013, 14(4), pp 717–731. Foster, R., 2008. Coca-Globalization: following soft drinks from New York to New Guinea. New York: Palgrave Macmillan. Hays, C. L., 2004. The real thing: truth and power at the coca-cola company. New York: Random House. Isdell, N., 2011. Inside coca-cola: a ceo’s life story of building the world’s most popular brand. New York: St. Martin’s Press. Kahn, E., 2006. The big drink: the story of coca-cola. New York: Random House. Louis, J. C., and Harvey, Z. Y., 2008. The cola wars. New York: Everest House Publishers. Oliver, T., 2006. The real coke, the real story. New York: Random House. Pendergrast, M., 2005. For god, country, and coca-cola: the unauthorized history of the great american soft drink and the company that makes it. New York: Basic Books. PepsiCo., 2013. Sustainability report 2013. [Online]. Available at: http://www.pepsico.com/Assets/Download/PEP_2013_Sustainability_Report.pdf [Accessed on 22nd December 2014]. Spiller, G. A., 2008. Caffeine content of some cola beverages. USA: CRC. Stafford, L., 2012. Coca-Cola to spend $30 billion to grow globally. The Atlanta Journal-Constitution, 35(2), pp. 135-267. Read More