Topic: The Coca-Cola Company Struggles with Ethical Crises Date: Ethical issues and dilemmas Coca-Cola faced In Belgium, a contamination scare came up when thirty children became ill after consuming Coca-Cola products. Recalling the Coca-Cola products in the market was the wise move to reduce escalation of the problem…
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All these contamination issues were further aggravated by the slow response from the beverage manufacturer and failure to recognize the severity of the situation. In Belgium, the country’s strict antitrust laws upheld a halt on market strategy seen as illegal strategy to strengthen Coca-Cola’s market share. The reputation of the company was thus deteriorating at an increasing rate. While considering mergers and acquisition, the company’s marketing tactics came under scrutiny due to the strict antitrust laws in the European countries. The French government refused to approve the company’s bid to acquire Origina and Schweppes, other French beverage companies. But still, the company dominates foreign markets throughout the world. Further, claims of racial discrimination came up in the spring of 1999. It is claimed that the top management had knowledge of this since 1995 and had done nothing to neutralize this situation. Discrimination was alleged to take place among former and current black employees. Over two thousands of them are said to have been discriminated in terms of promotions, pay and performance evaluations. A mid-level executive accused the Coca-Cola Company of doctoring a study it had done on behalf of Burger King in 2002. The fast food outlet had to take the research on its own to establish the reality of the claims. Coca-Cola was found guilty and had to compensate Burger Kings, the whistle-blower as well as pay millions in pre-tax write offs. It further lost public image among its customers, stakeholders as criminal investigations were instituted. Channel stuffing – shipping additional stock at above board rates to retailers and wholesalers are allegations came up. This was aimed at manipulating the numbers just before the end of a quarter to create a strong demand picture. This makes the financial statement earning impressive to the investors. From 1997 through 1999, the company was accused of this in the Japanese market. Coca-Cola is facing a shareholder suit regarding this kind of actions also in the Europe, North America and South Africa markets. Other supplies of the company such as PowerAde – a sports drink- came under scrutiny. Its delivery to Wal-Mart beyond Texas test area was looked into as bottlers alleged the contracts engaged in did not permit such. Initially the company was using direct store delivery, bottlers dropped off products to all stores, stock shelves and building merchandising displays. Bottlers did claim diminishing of their businesses due to this new change of delivery tactic and also a violation of antitrust laws. The media reported this wrangle negatively hence costing the company its reputation as well as the reputation of firms within its supply chain. The integrity the company had across its shareholders and partners was eroded. Internal wars with unions were up around the same time in Colombia. The death of eight Coca-Cola workers, hiding of further forty eight and sixty five receiving death threats was attributed to Coca-Cola and its local bottler by the union though it was a coincidence. The union sought reparations to families of slain workers as well as the displaced. The companies denied all these claims and attribute them to the Colombia’s four decade long civil war. There was an arrest of an administrative secretary and two accomplices in 2006. Fraud charges were brought against them as well as stealing and trading
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