MKT 410/412 Global Marketing Ethics And Culture

Abstract Coca-cola is the World's largest beverage producer and it sells products worldwide. Currently, Coca-cola has operates its business in many countries such as China, India, Malaysia and so on. Coca-cola has been criticized to have a lot of issues regarding of its global marketing. Many of the people complaint about the health effects, cocacola's aggressive marketing to children, exploitation of foreign labor, high level of pesticides contained in its beverages, building plants in Nazi Germany which employ slave labor, hiring paramilitary to murder trade union leader, environmental destruction, and more. All these unethical practices done by The Coca-cola Company will be discussed in detail in this report.

MKT 410/412 Global Marketing Ethics And Culture

1.0 Introduction 1.1 Company background The coca-cola company is the largest beverage company, manufacturer, distributor, and marketer of non-alcoholic beverage concentrates and syrups around the world. (Alvi, 2009) It was the global player and most of its profit is come from outside the United State of America. (Saran, 2009) The coca-cola company was invented by pharmacist John Stith Pemberton in 1886 in Columbus, Georgia. The headquarter of the company was located in Atlanta, Gerogia. (Ford, 2007) the company best know product was the Coca-cola beverage. Coca-cola has currently offers more than 500 brands of beverages in over 200 countries with servers over 1.7billion beverages sold per day. Coca-cola was a carbonated soft drink which was sold in most of the stores, restaurants and vending machines around the world. In the 1889, The Coca-Cola Company introduced franchised distribution system where the company only produces syrup concentrate which is then sold in various bottlers and tins throughout the world. (Love D.,2011) The current objective of the company is to use their formidable assets such as brands, financial strength, unrivaled distribution systems, global reach and a strong commitment by their management and associates worldwide in order to achieve long-term sustainable growth. The beverages is simply known as the Coke or in European and American countries as Cola or Pop.

MKT 410/412 Global Marketing Ethics And Culture

MKT 410/412 Global Marketing Ethics And Culture

1.2 Visions and Missions (The Coca-cola Company, 2013)

VISION

MISSION

Our vision serves as the framework Our roadmap starts with our mission for our Roadmap and guides every aspect of our business by describing what we need to accomplish in order to continue achieving sustainable and quality growth. PEOPLE: Be a great place to work where people are inspired to be the best they can be. PORTFOLIO: Bring the world a portfolio of quality beverage brands that anticipate and satisfy peoples desires and needs. PLANET: Be a responsible which is enduring. It declares our purpose as a company and serves as the standard against which we weight our actions and decisions. To refresh the world. To inspire moment of optimism and happiness To create value and make a difference.

citizen that makes a difference by helping build and support

sustainable communities. PROFIT: Maximize long-term return to shareowners while

being mindful of our overall responsibilities. PRODUCTIVITY: Be a highly effective, lean and fast-moving organization.

MKT 410/412 Global Marketing Ethics And Culture

1.3 Products of the Company

In the 21st century, the coca-cola company had more than 500 brands in over 200 countries besides its namesake Coca-cola beverage. The above diagram shows the different type of brands that is under The Coca-cola Company. Tab was the Coca-cola first product that uses saccharin as a sugar substitute to develop diet soft drink. (The Coca-Cola Company, 2013) The company also introduced a number of soft drinks such as Fanta and Sprite. In the 1990s, due to the increased in consumers concern in healthy beverages, the company has produced some new non-carbonated beverage brands such as Minute Maid Juices, Powerade sports drink, Dasani water and so on. In 2004, in respond to increase the bargaining popularity of low-carbohydrate diets such as diet coke and Atkins coke, Coca-cola announced to develop a lowcarbohydrate alternative to coke classic, dubbed C2 cola. (Love D., 2011)

MKT 410/412 Global Marketing Ethics And Culture

2.0 Marketing Analysis Macro-environment Analysis 1. Political Analysis: According to Witcher and Chau(2010), these refer to the degree of intervention of government in the economy. Coca-cola which categorized as nonalcoholic beverages is within the food category, under the FDA (Food and Drug Administration). Like most of the companies, Coca-cola is monitoring the rules and regulations set by the Government. There are no political issues in this instances. 2. Economical Analysis: As depicted by Witch and Chau (2010), economic factors concern the costrelated matters for the organizations such as interest rates, taxation changes and exchange rates. There is a low growth of soft drinks market especially in Coca-colas main market, North America. According to Abdullah F. (2009), the market growth in North America was recorded at 1% only in year 2004. 3. Social Analysis These factors cover the cultural changed within the environment and are often referred to as socio-cultural which includes demographics, education, culture and so on. (Henry,2008) There are changes in consumers' lifestyles. Consumers are more health conscious. Demand for carbonated drinks decrease due to consumers prefer non-carbonated drinks such as tea and juices.

4. Technological Analysis: According to William and Green (2007), technological factors include changes in technology and advances in the process or production. As the technology advances, new products are introduced to the market. The advanced technology has led to the introduction of Cherry Coke in 1985 but consumers still prefers the traditional coke.

MKT 410/412 Global Marketing Ethics And Culture

Micro-environmental Analysis

S.W.O.T analysis is widely used by the managers to create a quick overview of a company's strategic situation. (yousigma, n.d.) Strengths (Favorable) World's leading brands Large scale of operations Strong revenue growth result of low profile and nonexistent advertising Opportunities(Favorable) bottle water consumption Threats (Unfavorable) many successful brands to pursue buy out competition More brand recognition High cost commodities such as sugar and metals used in cans production Pepsi more diversified offering drinks and foods products Weaknesses (Unfavorable) Lack of popularity of Coca-colas other brands. Health issues

increased by 11% Energy drink sales are expected to increase in the following years. Less developed countries are in desperate need to boost the community water supplies

MKT 410/412 Global Marketing Ethics And Culture

3.0 Elements I have identified 15 issues which associated with the Coca-cola Company as shown in the diagram below but in this report, it will only shows three priority issues which are the (1) Cultural issues, (2) Global macro-environment issues and (3) Corporate social responsibility.

MKT 410/412 Global Marketing Ethics And Culture

3.1 Cultural issues Coca-cola, the world's largest selling soft drinks company is the first international soft drink brand enter to the Indian market in the early 1970's. (Admin, 2012) Till 1977, Coca-cola was the leading brand in India, but due to Foreign Exchange Regualtion Act (FERA), they left India and did not returned back till 1993. Coca-cola had face many cultural barriers in India such as its quality, resource exploitation and price-quality trade-offs. However, the main failure is due to the improper knowledge

MKT 410/412 Global Marketing Ethics And Culture

about the country and the national culture. It is important to know about the people lifestyle and their consuming behavior in a country as culture plays a vital role in buying behavior. India is a country where people are sensitive towards culture. Considering Geert Hofsted's cultural dimensions, India has uncertainty avoidance as low as 50 and people are not flexible to adopt sudden changes. This shows that people are sensitive and emotional towards the exploitation from other people. (Riedel S., n.d.) Besides that, another cultural issues faced by the Coca-cola Company is the health conscious in China. China people are practicing tea culture and almost all of the Chinese drink tea everyday. Coke has been losing market share in beverages market to the China companies like Wang Lao Ji, the well-known herbal tea producer. This is because Chinese consumers prefer teas and juices instead of Cola. (Rein, 2009) In fact, Chinese consumers would buy Sprite than Coke itself because they think of Sprite as a healthier drinks than Cola due to its lemony taste and clear color drinks. Moreover, when coca-cola first entered into the China market in1982, it had no official Mandarin name. The word coca-cola was pronounced approximate the sounds ko-ka-ko-la . While the company searching for a satisfactory Mandarin name, one of the Chinese shopkeeper created the signs that combined the coca-cola pronunciations as ko-ka-ko-la without concerns of the meaning of the written phrase. The word wax which pronounced as la was used in many of these signs so that it can be sounded like ko-ka-ko-la but when that's actually has a nonsensical meanings such as female horse fastened with wax, wax-flattened mare, or bite the wax tadpole when read. (Allman,2011) This has bring a lot of arguments and dis-satisfaction among the consumers. However, the transliteration of the name coca-cola is finally settled with suitable words a shown below with pronunciation of ke-kou-ke-le

MKT 410/412 Global Marketing Ethics And Culture

3.2 Global Macro-environment issues In 2003, the people who stayed near the Coca-cola bottling plant in Kerala, India complained about the water scarcity and polluted water that resulted from the bottling operations. The irresponsible practice caused the closure of the bottling plant. As a

MKT 410/412 Global Marketing Ethics And Culture

results of the Coca-Cola's operations, pollution of water and soil, water shortages, exposure to toxic waste and pesticides are having a big side effects and even destroying lives, livelihood and communities. Many of the people were affected by Coca-Cola's irresponsible ethics and the issues are considered serious which it may cause long-term problems. The coca-cola has destroyed the earth natural resources land and water; consequently it is fair to say that Coca-cola is also reducing the quality of life for the future generations. Unfortunately, the Indian citizens are left out of the so called economic and social development process and they are paying high price for that. According to the book, When the River Runs Dry by Fred Pearce, he mentioned that the average a western people to get through a day will takes about hundred times of their own weight in water. (That's every day, not every year) Coca-cola has 1.5 billion beverages selling each day in over 200 countries and and uses about 2.5 litres of water to produce one litre of its products. In the year 2002, the residents of Plachimada, a village in India's southern state of Kerala accused the company's bottling plant of polluting the ground water, the company received its water wake up call. However, the problems did not solved after two years and they local government forced them to shut down the plant. In 2006, the situation getting worse when a New Delhi research group found out the high level of pesticides containing in Coca-cola beverage and resulting in several Indian states banning their products. (Visser, 2012)

3.3 Corporate Social Responsibilities (CSR) issues Corporate social responsibilities refers to a company's sense of responsibilities towards the community and environment (both ecological and social) in which it operates. Companies express this citizenship (1) through their waste and pollution

MKT 410/412 Global Marketing Ethics And Culture

reduction processes, (2) by contributing educational and social programs and (3) by earning adequate returns on the employed resources. (Business Dictionary, 2013) In 2004, when the organization sought a new Chief Executive Officer (CEO), their top choices make them down because the prospects felt that the board has too much power. (Valluri, Nahata, Jangalwa & Sethi, 2010) The main reasons lie in the leadership problems. One of the example is when the Coca-cola Company was seeking to buy Quaker Oats, the deal were almost finalized but then it was stopped because the board felt that it was too pricey. When the decisions were decided by the board, it means they lack of confidence in the upperlevel management of the company to make important decisions. This has become problematic for the company because members of board do not or have not worked for the company, so they have less knowledge with all the pertinent information required to make complex decisions. Besides that , in January 2006, the University of Michigan suspended the purchase of Coca-cola products on its campus, according to Hoffman (2006). The reason of this was not due to any problems with products or pricing but it is because of the concerns over environmental issues in India and labor issues in Colombia. The labor issues are not only happened in Colombia but also in China, Turkey,Mexico and so on. In Colombia, several of the Coca-cola workers were falsely imprisoned and the survivors of Isido Gil and Adolfo de Jesus Munera, two of its murderer. The lawsuit charged Coca-cola bottlers contracted with or otherwise directed paramilitary security forces that utilized extreme violence and murdered, tortured, unlawfully detained. However, in China, Chinese press reported on

December 2008 that Coke employees are involved in the most dangerous, intense and tiresome labor, work the longest hour but receive the lowest wages and face arrears and even cutbacks in their pay. (Draper, 2004) Last but not least, on August 5, 2003, Coca-cola in India was attacked by The Center for Science and Environment (SCE), an activist group of scientists, journalists, engineers and environmentalists, said the products contained pesticide residues which

MKT 410/412 Global Marketing Ethics And Culture

is not achieved the global standards. Tests are done on three samples of 12 Coca-Cola brands were said to contain 30-36 times the global standards of pesticide residue. (Papyriyana, 2010) The pesticides were known to cause diseases such as birth defects, cancers and severe disruption of the immune system.

4.0 Recommendations and Conclusion As a recommendation, I suggest that Coca-Cola need to focus in wider aspects so that they can expand their market share and earn respect from the community members. The company's brand name and reputation is actually not enough for them

MKT 410/412 Global Marketing Ethics And Culture

to grow in the foreign countries. For an example, in India, the people take business so seriously and their approach is entirely different when it comes to buying pattern and habits. Therefore, Coca-cola has to create alternate branding and marketing strategies to attract more customers loyalty in India. Besides that, Coca-cola should also communicate openly with the key constituents, including the public, employees, media, state and national government and suppliers. They should do an honest communication to resolve the issues so that problems can be identified and solved effectively. An honest and open approach is always appreciated by the Indian societies. The reason to choose communication is because it has a proper and clear picture about the company and its products. Communication has its roots in a person's behavioral aspects and behavior is directly linked with culture (Smith, 2002). Therefore, it is important to communicate in accordance with their cultural status and values. Apart from that, it is widely known that the government system and procedure is lack transparency in its operations. Therefore, it is vital to have a close relationship with the government. This can be done by joining the government activities such as charity operations and government initiated infrastructure development. The citizens of China always appreciate any true effort towards the development of their country. This will also create brand awareness and brand reputation. In a conclusion, after doing a detailed study on the Coca-cola global marketing issues, the most noticeable is the company do not follow and consider the social and cultural trends and factors. The main problem that Coca-cola is facing is it is going to against the environment or exploiting environment. These problems will affect the life of people staying nearby to the manufacturing plants as well as the future generations. From the above given recommendation, suggestions and analysis, Cocacola can make a brilliant come back to the market in the future.

MKT 410/412 Global Marketing Ethics And Culture

References Andrew, H. (2013) Coca-cola learns a tough lessons about corporate sustainability. [online] [Accessed: 3 Feb 2013]. Available at: http://grist.org/article/hoffman1/

MKT 410/412 Global Marketing Ethics And Culture

Businessinsider.com (2013) Coca Cola - Blackboard. [online] Available at: http://www.businessinsider.com/blackboard/coca-cola [Accessed: 1 Feb 2013].

Coca-Cola Journey (2013) The Mission, Vision and Value. [online] Available at: http://www.coca-colacompany.com/our-company/mission-vision-values [Accessed: 2 Feb 2013].

csri_admin (2002) Coca Cola | CSR International. [online] Available at: http://www.csrinternational.org/tag/coca-cola/ [Accessed: 5 Feb 2013].

Harini, V. et al. (2010) Organizational Structure of the Coca-cola Company . [online] Available at: http://www.scribd.com/doc/37483762/OrganizationalStructure-of-The-Coca-Cola-Company [Accessed: 3 Feb 2013].

Heritage.coca-cola.com

(n.d.)

Untitled.

[online]

Available

at:

http://heritage.coca-cola.com/timeline.swf [Accessed: 2 Feb 2013]. HubPages (2013) PEST Analysis for Coca-Cola. [online] Available at: http://annasurname.hubpages.com/hub/PEST-Analysis-Coca-Cola [Accessed: 2 Feb 2013]. Killercoke.org (2004) Campaign to Stop Killer Coke | About . [online] Available at: http://killercoke.org/about.php [Accessed: 3 Feb 2013]. Manish, S. (2007) Coca-cola globalisation strategies . [online] Available at: http://www.scribd.com/doc/15264295/10/COCA-COLA-GLOBALIZATIONSTRATEGIES [Accessed: 6 Feb 2013]. Rein, S. (n.d.) What Coca-Cola Did Wrong, And Right, In China Forbes.com. [online] Available at: http://www.forbes.com/2009/03/24/cocacola-china-leadership-citizenship-huiyuan.html [Accessed: 4 Feb 2013]. Sharon, R. (n.p.) Communication. [online] Available at:

http://ftp.rta.nato.int/public//PubFullText/RTO/TR/RTO-TR-HFM-120///TRHFM-120-06.pdf [Accessed: 4 Feb 2013].

MKT 410/412 Global Marketing Ethics And Culture

Unknown.

(2013)

Untitled.

[online]

Available

at:

http://www.scribd.com/doc/17134627/Coca-Cola [Accessed: 1 Feb 2013].

Veronica, P. (2010) Coca-cola India Case Study. [online] Available at: http://www.scribd.com/doc/59965415/Coca-Cola-India-Case-Study [Accessed: 5 Feb 2013].

Wilhelmina, F. et al. (2013) Coca-cola case study. [online] Available at: http://www.marketingpower.com/Community/ARC/gated/Documents/Teachin g/AME/AME_Teaching_Materials_2007_08_Ford_Stephens_Cooper.pdf [Accessed: 1 Feb 2013].