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The Coca Cola Company, the world’s largest multinational beverage manufacturer and corporation, operates bottling plants and sells its products in more than 200 countries across the globe (The Coca Cola Company, 2014). Coca Cola’s massive global presence requires the organization to understand the different cultures of its many host countries; the laws within each country; and the business norms, styles, as well as practices of each country it conducts business operations in. The company has developed and implemented numerous policies, regulations, and guidelines for its suppliers, operation management, and employees in its various host countries. But, all of this detailed undertaking to address transparencies in the corporation’s supply chains throughout the world did not stop its El Salvadoran bottling and manufacturing plant’s management from purchasing refined sugar from a mill which used child labor.
According to Human Rights Watch (HRW), up to one third of the workers on El Salvador’s sugarcane plantations are under the age of 18, with many starting to work in the fields between the ages of eight and eleven (HRW, 2004). Even though, the national and international child labor authorities prohibit minors under the age of 18 from performing hazardous or harmful work, plantation owners define these young children and teenagers who work with their parents as “helpers” instead of the workers they actually are (Veracity, 2006). The above paragraph represents one of the many cross-cultural issues facing Coca Cola and the myriad of other multinational organizations interactions outside the United States.
In these various host countries having your children working beside you is considered common cultural practices; it provides additional income for the family’s survival because the poor state of many of their country’s economy (such as El Salvador) allows these injustices to continue. Regardless, of why these children are working in the sugarcane fields, and the fact that Coca Cola does not actually purchase its refined sugar directly from the plantations, the company is in direct violation of its own “Guiding Principles for Suppliers to Coca Cola Company” policy.
The policy states that, “Suppliers will not use child labor as defined by local law,” but Coca Cola fails to extend this policy one step further in the supply chain to include the supplier’s supplier of raw material (Veracity, 2006). So, in the long-term means that the organization is just as socially and ethically responsible for the use of child labor as well as the harm working in the field create as the suppliers and the plantation owners. The Coca Cola formula was invented in 1886 by pharmacist John Stith Pemberton in Columbus, Georgia; and the formula as well as the brand was purchased in 1889 by Asa Griggs Chandler who incorporated The Coca Cola Company in 1892 (The Coca Cola Company, 2014). Throughout its many years of operations the business always demonstrated strong market orientation; exhibited strategic decision making processes; and took actions to attract, satisfy, and retain customers. All of these positive actions have just added to company’s advantage and profitability over competitors in the beverage industry, which is why they are number one in the world.
Nevertheless, as the organization began to expand its operations into more and more host countries around the globe it has been involve with quite a number of misconduct and questionable unethical behavior. As a result, these legal and ethical problems have had an impact on the corporation’s financial performances, investor trust, and reduced its sales levels. Today’s Coca Cola Company is now engaging in an operation to rebuild its brand image and credibility, improve its sells, and reinforce its reputation by developing and implementing stronger company ethical and social responsibility throughout its entire global marketplace (The Coca Cola Company, 2014). There have been a number of events other than child labor in El Salvador where Coca Cola has been involved and held accountable in unethical behavior. In Colombia, Turkey, and Guatemala bottling plants the company has been accused of hiring paramilitary mercenaries to assassinate, torture, and coerce workers, their family members, and union leaders as they attempted to unionize to protect workers from unfair treatment and abuse by the host countries’ employers.
These incidents sparked an campaign entitled, “Stop Killer Coke”, and a 2009 PBS documentary filmed by German Gutierezz and Carmen Garcia entitled, “The Coca-Cola Case” to reveal the company’s practices to consumers around the world (Huff, E. A., 2010). Of course, Coca Cola denied the allegations against the company and its bottling partners, where cleared of any wrong doing in the foreign courts. When the case was brought to the United States, Coca Cola fought and succeeded in having its name removed from the lawsuit (Huff, E. A., 2010). Another ethical and social responsibility issue the company encountered, actually there are two environmental issues concerning the depletion of groundwater and polluting of water in India. Coca Cola operates 52 water intensive bottling plants in India using 3.8 liters of freshwater to generate a liter of carbonated drink. While in the Southern Indian village of Plachimada in Kerala state groundwater along with local wells dried up forcing residents to rely on water supplies trucked in daily by the government due to persistent droughts, and the company’s bottling plants.
In the rural Indian state of Uttar Pradesh where farming is the primary industry the residents have been experiencing similar conditions, only the government is not supplying enough water for the crops. As a result of the groundwater depletion situations the business is not only responsible for the loss of livelihood and hunger for the many citizens across India, but the creation of thirst. In 2003, the other issues of polluted water were discovered near the Kerala and Uttar Pradesh bottling plants. Sludge containing high levels of cadmium, lead, and chromium was given to farmers as free fertilizer to tribal farmers who lived near the plants, but the need for fresh water was overlooked by Coca Cola. As a side note, an Indian nonprofit group tested 57 carbonated beverages made by both Coca Cola and Pepsi at 25 bottling plants were found to be contaminated with between three and five different pesticides (The Corporation, 2009).
Although, the organization denied creating the problems, the Indian government ordered Coca Cola to shut down one of its $25 million plants. The organization then thought long and hard about its corporate social responsibility (and lost revenue); and decided to improve their business practices in the local communities, reduced the water usage by 34%, started rainwater harvesting, and returned substantial amounts of water to depleted aquifers. They also stopped distributing sludge, joined with the Indian government to develop additional solid waste disposal sites, and began treating the water used to make soft drinks with activated carbon filtration (The Corporation, 2009).
Coca Cola conducted all of these improvements to regain the trust of the local communities and the Indian government. But, my question would be, why not practice these ethical and corporate responsibility policies from the beginning? As more and more organizations are utilizing the opportunity of transitioning into multinational operations, they will have to research how business is conducted, the local laws, as well as the government policies and operation methods of every host country they wish to operate in. Then they will have to incorporate and implement all of their ethical and corporate social responsibility they employ in their home country universally throughout the entire business operation. Creating a unified culture that will adhere to a high level of business behavior in all global operations, respecting all of the local workforces’ cultures and traditions, and eliminating the use of any unethical values or behaviors from home and abroad.
Huff, E. A. (2010, May, 22). Coca Cola’s Murderous Record of Anti-Union Activity Exposed Retrieved from http://www.naturalnews.com/028844_coca-cola_html. The Coca Cola Company (2014). Retrieved from
The Corporation (2009). Ethical Issues Concerning Coca-Cola in India. Retrieved from http://imaginecorporation.blogspot.com/ethical-issues-concerning-cocacola-in.html Veracity, D. (2006). Coca-Cola, Human Rights and Child Labor Retrieved from http://www.naturalmatters.net/article.asp?article=1301&cat=219