Corporate Governance and Social Responsibility in Coca-Cola - Case Study Example

Institution : xxxxxxxxxxx Title : Corporate Governance & Social Responsibility. Tutor : xxxxxxxxxxx Course : xxxxxxxxxxx @2010 Executive summary Corporate Governance and Social Responsibility is one of the organizational principles practiced by majority of the employees in their duties and responsibilities. Today, a large number of organizations are increasingly interested in Corporate Governance and Social Responsibility as a way of achieving good public relations through meeting societal needs. The study centres on Coca-Cola as an international company that is strategically meeting the public demands through careful practice of the Corporate Governance and Social Responsibility. A detailed discussion on the contributing factors for the increased interests in Corporate Governance and Social Responsibility with Coca cola as the main case of study is examined. The identified strategic issues in addressing the social responsibility by the company include the following; enhancement of diversity, employment support, respect for people, protection of the environment, community assistance, obesity address, provision of quality and safe products. The Coca-Cola supporting data on corporate social responsibility enhancement is also established with conclusion of the study with relevant recommendations. Introduction The corporate social duty is being embraced by the domestic as well international organizations. The entire organizations are found to be socially responsible for the interests and needs of the society. According to Asmus (2005), organizations demonstrate their responsibilities through adhering to their various corporate governances that guide them in all their duties which aim at improving the environment, employees, customers and shareholders. Several of the organizations volunteer to better the lives of people in the societies, their families, communities as well as their employees. This study centre on Coca Cola as one of the international organizations showing increasing interest in corporate social responsibility and corporate governance, indicating reasons as to why the company is interested in corporate social responsibility. Contributing factors for increasing interests incorporate social responsibility in Coca Cola Company Globalisation and increased competition Given the increased rate of globalisation as well as ever-increasing competition, it becomes unavoidable for companies to employ the well stated business practices that focus on the interests of the entire public. The Coca Cola India being the greatest beverage producer has engaged in several community-based corporate social responsibility initiatives. Such initiatives have increased due to the allegations and concerns like pesticide residues that may be found in their beverages. Similar concerns have also been considered in water resources conservation measures. The Coca Cola Company strives to avoid contaminating their soft drinks and water with the pesticide residue impurities. The company addresses this issue by engaging itself in the environmental-based social responsibilities such as the eko system execution that has been used to preserve water. With this case study of India, there is need for emphasis on the adoption of ethical values within the business processes of the multinationals established in India and in the entire world (Backgrounder, 2008). Business ethics Due to the increasing need for organizations to have good business ethics as a way of promoting care for people and the societies, corporate social responsibility and governance has taken lead in the enhancement of the ethics. Coca Cola Company values the concept of corporate social responsibility and governance in the achievement of its business ethics in meeting the public needs (Crane & Matten, 2007). The company indicates a considerable concern on the issues of business ethics. As a result of this corporate social responsibility and governance has taken lead in the promotion of the company’s business ethics. It has published its 2006 reports which indicate that the rate for water use has been declined compared to the previous years. The Coca Cola Company is greatly concerned with the issues of environmental management as it has shown its concern for waste water recycling and its proper treatment for the public. In times of economic crisis, the Coca Cola firms support people as well as communities on welfare development for socio-economic enhancement among the people. Responsible business form In the current ultra-competitive environment, several organizations endeavour to have a sustained long-term development through having unique competitive advantage. Coca Cola Company considers achieving its long-term success through having a business model that is responsible and with efficient corporate governance. As a result of this, the company has set up its quadrant framework for the establishment and communication of its core values to various publics such as; the workplaces, communities, and market environments. For the purpose of product diversification, Coca Cola is continuously exploring other beverage groups and maintaining their tradition of extending the present range of brands as well as products. Establishment of new Alliances As the Coca Cola Company embraces its corporate social responsibility and governance, it has managed to acquire its expansion in 200 and more countries in the whole world. Due to this vast and widespread of consumer base, the company maintains its public concern for the customers through the production and distribution of its products and support that meets the social needs of societies as well as its customers (Aruna 2008). Corporate citizenship Coca Cola Company discovered the significance for its feedback to the needs of the society which they serve. In order to implement this idea sustainably, the company is progressively practising corporate social responsibility and governance in responding to the frequent needs of the societies. The idea of CSR has given the company a foundation for meeting the society’s needs. The company has established educational programs in Malaysia, Philippine and China to improve the standards of living among the people (Zappala, 2003). Environmental scanning The entire business functions are controlled by wider environment, competitive environment and the immediate industries. The strategies and business functioning of Coca Cola Company are highly affected by the environmental factors. The strategic issues involved in addressing social responsibility in Coca Cola Company Coca Cola as an international Company, has embraced the strategy of mutual social responsibility through several interventions which have achieved productive and improved implications in various societies. Such factors range from social, legal, economic and to technological concerns as they are discussed below; Enhancement of diversity The Coca Cola Company has greatly ventured in the promotion of diversification which has identified it as one of the major international organizations that undertake care support for the people in need within the society. As a result of this intervention, the company was positioned 26th by the Fortune magazine. Coca Cola Company is considered to be one of the several companies that have greatly supported the policies of Michigan University on the idea of affirmative action. Employment support According to Crane & Matten, (2007), Coca Cola Company offers to about 58,000 people with employment in the bottling system within the African continent. The company has as well some other strategic plans of aiding with support programs that related to HIV/AIDS under its proposed budget that will cost approximately 50 millions. The money is allocated to the organizations that deal with people infected and areas affected with the pandemic within the African context. The Coca Cola Company responded to the need for revitalization of its functioning in India through the integration of its business and the environmental concerns considering the social needs within the country. With the company’s focus to the local community desires is a total indication of how an organized can easily achieve improved wealth creation and be involved in social responsibility. The ability to balance the current and the future developments with care for social equity to everybody is the key to successful sustainability (Burnett & Richard 2007). Maintaining their concern on the issues of business ethics as well as the corporate social responsibility, Coca Cola Company released their 2006 reports arguing that the ratio for water use had declined compared to past years. Therefore, the company has put more concern on issues for environmental management by advocating for waste water re-use. In time of economic crisis, the Coca Cola firms assist individuals and communities in the aspects of growth and society welfares as a way of winning future customers. The company is aiming at establishing the importance of societies and the stakeholders by use of new concepts (Backgrounder, 2008). Respect for people Crane & Matten (2007) note that the company’s top compensation is fairly competitive in comparison to its related companies. It also indicates the individual performance and its corporate performance. The vision of the Coca Cola Company aims at supporting as well as enhancing the long-term objectives of the company in sustainable growth and the entire shareowner earnings through performance. In those countries affected by violence in opposition to Union members it has discouraged few of the workers, however, approximately 31 percent of the company’s bottling partner affiliates belong to the union members. The self-governing Coca Cola bottling affiliate in Columbia practice collective bargaining conformities aiming at covering wages, the working conditions and entitlements. These independent partners of the Coca Cola are committed the welfares and health care of their respective associates with broad security agreements. Coca Cola Foundation is supporting the Colombia Education with 10 million dollars that has greatly improved the lives of families as well as 20,000 more children dislocated as a result of Columbia civil war (Aruna, 2008). Protection of the Environment The Coca Cola Company is changing their packages to be lighter, through the use of recycled content and enabling the recycling programs of the consumers. Through the company’s water brands and beverages, Coca Cola has dedicated its efforts to the utilization of the resources responsibly and conservation of the natural resources. With the reduced weight of packages, the company aims at enabling reducing the amount of fuel used on transportation and energy in Production. The Company has put in place recycling programmes in the whole world. It has also secured 80 million dollars for putting up the six plastic bottle recycling centres in the entire world such as; PET plant and the South Carolina (Hubert, 2005). Community Assistance To alleviate poverty, the Coca Cola Company strongly believes that it can successfully help Africa meet its needs, the ability to sustainably establish wealth with the application of unique supply model (Gill, 2007). This can also be efficiently obtained through the utilization of the company’s core strengths in programs that are supportive to the business needs and to local communities. Several programmes in the rest of the world are put in place to aid in wealth as well as job opportunities with pushcart projects inclusive in Sri Lanka and Cambodia. The HIV/AIDS control, sensitization and treatment are considered to be one of the major priorities for the company. In China, the Coca Cola Company participated in the control of HIV/AIDS widespread and it has joined the Chinese Foundation in the enhancement of STD as well as AIDS prevention awareness campaigns. It also established the AIDS orphanage support care projects in Yunnan China (Aruna, 2008). Provision of quality and safe products The Coca Cola Company produces and packages its beverage with no public health hazard. The beverage is free from the risks related to BPA. Although BPA is mostly utilized in can linings to avoid damages and to separate food as well as beverages from getting in contact with the cans used in beverage storage. The company does not make use of BPA in PET production; neither does it use the chemical in plastic water bottling (Asmus, 2005). Obesity address Obesity being one of the major public health issues, Coca Cola Company has had a vital task to play as a way of addressing obesity. Coca Cola being the biggest beverage company is striving to achieve leadership recognition and therefore, the company is collaborating with some other stakeholders to discuss and implement strategic solutions improve people’s lives and enable them to be active with health living standards (Crowther, 2007). The company in collaboration with some other stakeholders are very much committed to various programmes that combat obesity as stated below; i. Diversification of the goods together with package sizes ii. Promotion and provision of support opportunities that allow individuals to actively engage in healthy living via the establishment of nutritional education as well as physical activities programmes. iii. Liaising with the government heads, public health associations, NGOs to maintain the grounded discussions about obesity iv. Recognize rights of teachers, school officials and parents in choice making for the children v. Development of effective training tools as well as programs that call attention to the value of energy balance in achieving active and healthy living standards with the collaboration of main stakeholders The Coca-Cola supporting data on corporate social responsibility enhancement This report was undertaken in the year 2007. Bottling, transactions and distribution actions within the 28 countries that Coca-Cola Hellenic functions were taken into consideration. According to Benzaken (2009), this report lacked investments as well as partnerships in brewing welfare that took place in FYROM. Bulgaria represents around 1% from the turnover and less of 1% from the total volume. The report also lacks data on investments held in Greek Snacks. The Company Tsakiris are very insignificant based on the impact for the turnover and the volume (Benzaken, 2009). 2222222 2007 Targets22222222007rgets 2007 Progress 2008 and beyond 1 Consumer Health Reduce average calorie content by 3% Launch GDA nutritional labels Average calorie content down 4% GDA labels for main sparkling beverages rolled out in all EU countries Reduce average calorie content by 2% Complete labeling rollout 2 Water Stewardship Improve water efficiency by 2% Build 3 new wastewater treatment plants Extend Green Danube to ten countries Improved water efficiency by 1% 3 new wastewater treatment plants built Green Danube extended to ten countries; Living Volga and many other programmes launched Improve water efficiency by 4% 3 new wastewater treatment plants in 2008 100% treatment by 2009 Extend watershed protection programmes and strengthen those Relationships in existing partnerships. Launch of Business Friends of the Danube Fund. 3 Energy and Climate Reduce relative CO2 emissions by 3% Reduce CO2 emissions by 3% Improve energy efficiency by 2% Relative CO2 emissions reduced by 10% Plant energy efficiency improved by 9% Green IT initiative 20% more energy efficient cooler Introduced Reduce CO2 emissions by 3% Improve energy efficiency by 3% 15 CHP units by 2009 4 Packaging and Recycling – Continue light weighting Reduce plant waste ratio by 3% Increase plant recycling by 1% New PET-to-PET recycling plant in Austria Plant waste ratio reduced by 4% Plant recycling decreased by 2% Reduce plant waste ratio by 3% Improve plant recycling by 1% 5 Employee Development – Leadership Pipeline OHSAS certification in 15 more plants Launched Leadership Pipeline OHSAS certification in 12 plants New fleet safety programmes 66 certified trainers to deliver training for the Leadership Pipeline in countries Certification in 15 plants 6 Supplier Engagement – Launch supplier audits Continue to reduce environmental impacts Audited two sites; 5 in progress New cooler - 20% more efficient Green IT and fleet initiatives Expand audit programme Launch new energy saving device 7 Community Involvement Deepen programmes Joined LBG and applied model Major disaster relief in Greece Aim to increase volunteering levels Disaster relief plans for all countries (Burnett & Richard, 2005). Governance Coca Cola Company dynamically does management and measurement of sustainability. The council group of corporate social responsibility creates priorities as well as targets. The programmes that cover the local needs translate them. This council supports with updates to the committee of social responsibility (Gill, 2007). Recommendations Corporate social responsibility and governance should be the pillar for all the organizations. This is simply because with the enhancement of the social responsibility, organizations are able to identify the needs of the societies as well as the people and provide support to them to improve on their standards of living. In order for Coca Cola to sustainably achieve its business goals, the company is responsibly participating in various programmes that need public attention such as; health care provisions, community outreach, employment support, charitable donations and environmental management. The company is in a position to build strong customer relationships and manage it well through the implementation of corporate social responsibility and governance. Conclusion In the current ultra-competitive world, various organizations strive for a sustained long-term development through having unique competitive advantage. Coca Cola Company considers achieving its long-term success by having a business model that is responsible and with efficient corporate governance. Bibliography Crowther, D., 2007, Corporate Social Responsibility, Deep & Deep Publications Pvt. Ltd, New Jersey. Burnett, M., & Richard, W., 2005, Coca-Cola and water in India: episode 2, University of Hong Kong, Hong Kong. Hubert, S., 2006, Corporate Governance and Social Responsibility of Family Firms in Hong Kong: A Case Study of Hutchison Whampoa Limited (HWL). Aruna D., 2008, Corporate social responsibility in India: towards a sane society, Social Responsibility Journal, Vol. 4, 209 – 216. Backgrounder H. A., 2008, Maximizing the Impact of CSR in China, Retrieved July 4, 2010 from Gill S. L., 2007, Corporate Social Responsibility: Issues and Implementation in APO Member Countries, Asian Productivity Organization, Kuala Lumpur, Malaysia. Crane, A. & Matten, D., 2007, Business ethics. 2nd ed , Oxford University Press, India. Zappala, G., 2003, Corporate Citizenship and the Role of Government: the public Policy Case, Information analysis and advice for the parliament. Prentice Hall, New York. Benzaken, T., 2009, Public guiding principle and the sponsorship of Corporate Social accountability. School of International associations and Pacific Studies, University of California, California. Asmus, P., 2005, Protecting Brand Value: How (and why) the World’s Most Valuable Brand is Building a Corporate Citizenship Pyramid, Northern California Publishers, California. Read More