Coca-cola stands as the global leader in the beverages industry operating large worldwide distribution systems. The company has cemented itself as the trendsetter in this industry given its ability to operate on a relatively large small-scale and enjoying economies of scale. As a global leader in the beverages industry, coca-cola prides itself in serving its products in billions every day across the world. Coca-cola has adopted marketing strategies that promote its products thus building solid customer relations. The beverage industry is considerably competitive and sees as if Coca-cola compete favourably with Pepsi even though Coca-cola gains a considerable edge because of its well known and admired brand.
Coca-cola has all along aimed at achieving ethical business success making the company very active in numerous aspects of business ethics ( Vaduva, Alistar, Thomas, Lupiţu & Neagoie, 2016) . The company has seen a range of steps being made to ensure ethical standards are met and maintained. However, Coca-cola does not pass as a completely clean company with no ethical issues despite the company’s global acceptance and reputation. The organization has been faced with numerous ethical issues.
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Ethical crisis details
One of the most notable challenges that the company has faced is racial discrimination allegations in the United States market ( Massotte, 2017) . One thousand and five hundred Coca-cola employees of African-American origin sued the beverages giant over discrimination. The company’s woes increased when more employees joined the suit having a detrimental effect on business. The employees complained that they were the least paid despite performing similar tasks that saw the African-American employees get approximately twenty-six thousand dollars less than their Caucasian counterparts per annum. The lawsuit made allegations that the company management was well in the know about the wage differences between employees of different races but took no step to make amends to the situation. Additionally, discriminations in performance evaluations, as well as promotions, were a major bone of contention during the lawsuit.
Effects on stakeholders
The ethical issue worked to affect numerous stakeholders with the African-American employees being the worst hit by the crisis since the discrimination was meted on them ( Massotte, 2017) . Working relationships with the then company management were strained on a relatively large scale with the company spending millions of dollars to continue with the suit as well as make compensations later. The public which forms Coca-Cola’s customer base was also affected by the ethical crisis given that the events happened at a time when there were heightened calls for the end of work discrimination especially based on skin colour. According to Vaduva (2016), numerous investors would as a result of the discrimination claims sell much of their shares in the company. The company management as the most affected stakeholder in the ethical crisis denied any claims of racially discriminating its employees, but it responded through developing a task force to look into the discrimination claims as well as revising the personnel policy of the company. Additionally, the company agreed to pay one hundred and ninety-two million dollars as compensation to the affected employees which stood out as the largest compensation in a racial discrimination case.
Ethical issues and the law
The issue of racial discrimination has been an ethical concern in the corporate world. According to ethical practices in the business world, all employees should be treated equally irrespective of their race, religion, sexuality or gender ( Massotte, 2017) . As such for a reputable company as Coca-Cola to propel racial discrimination towards its employees indicates grand ethics erosion within the company.
The legal suit that ensued from alleged racial discrimination with its employees brings a legal view to the ethical issues. First, it can be argued that the company acted within the law given that it paid compensation to the employees who had sued the company. In any case, the amount of compensation that the company paid has been the largest in a discrimination case. Additionally, the organization is showing determination to deal with instances of not acting ethically set up a panel to investigate into the matter as well as review Coca-Cola’s policy in efforts to ensure that instances of discrimination do not surface again. Moreover, Coca-Cola agreed to set up a parallel panel that was tasked with evaluating the company’s compliance with the settlement agreement for five years later citing the evaluation process as a success.
Influencing factors
Ethical issues at Coca-Cola have been influenced by various factors among them environmental issues within the beverages industry. Factors such as barriers to entry in the industry have largely played a part in ethical issues at Coca-Cola. Given the large capital outlay required to enter into the industry coupled with sophisticated machinery that has made Coca-Cola a large company which may not even feel the pinch of fines as well as compensatory expenses in case of breaching business ethics ( Bowie, 2017) .
Social factors that included the continued inability of the employees to get into workers unions also significantly resulted in the ethical issue experienced at Coca-Cola. Joining unions for workers helps employees voice their grievances and grants them a platform on which their bargaining power rises considerably. It can be concluded that the general society was also not aware of the laws protecting employees from being discriminated racially thus leaving a gap which unscrupulous businesses can utilize to treat some of its workers unfairly.
Racial discrimination laws include the Race Relations Act that made discriminating employees on a racial basis a crime and were less enforced ( Bowie, 2017) . Such laxity by the governments of the day to enforce laws on racial discrimination at the workplaces made it easier for Coca-Cola among other corporate entities to deny equal salaries and opportunities in promotion to certain races.
Coca-Cola’s case on racially discriminating employees did not receive much media coverage in comparison to other issues such as the falling ill of children in Belgium after consuming a Coca-Cola branded product. The Belgium incident saw the media largely criticizing Coca-Cola Company leading to considerable damage to the company’s reputation. The racial discrimination incident received less media attention in the United States.
Recommendation
The racial discrimination incident was poorly handled by the Coca-Cola Company. First, the response to the issue was rather slow leading to a legal proceeding against the organization. As a globally respected corporate organization, Coca-Cola ought to have acted swiftly to constitute an internal task force tasked with assessing the claims of racial discrimination. On the contrary, the organization waited until a case was lodged in the law courts despite employees claiming that the ethical breach had been ongoing for a long time. Moreover, an internal taskforce would have acted to prevent future instances of the ethical breach while identifying the risk factors that contributed to the breaches. By doing that the organization would have made a step towards recovering from the negative effects the breaches had on it ( Kennedy, 2017) . Therefore, it may be recommended that Coca-Cola builds a strong ethics department where aggrieved parties present their cases so that appropriate actions may be taken.
Business impact
A far-reaching impact of the ethical crisis at Coca-Cola was experienced within the beverages industry as well as the entire corporate world. Numerous companies initiated a review of business culture with the aim of promoting racial integration within the human resource ( Kennedy, 2017) . Plans were put in place to create and promote equal opportunities by fairly treating employees as well as developing inclusive policies.
Additionally, corporate entities have paid significant attention to ethical issues with quick attention being accorded any claims of ethical breaches. Considering Coca-Cola’s slow response to claims of ethical breaches and the ensuing challenges the company faces with stakeholders, major corporate organizations have set up ethics departments as well as hotlines through which reports on ethical breaches can be made. Moreover, employees have been given the liberty of joining workers unions to better air their views without fear of victimization.
References
Bowie, N. E. (2017). Business ethics: A Kantian perspective . New York (N.Y.: Cambridge university press.
Kennedy, M. (2017). Shareholders: Business success in the age of activism .
Massotte, P. (2017). Ethics in social networking and business: 2 .
Vaduva, S., Alistar, V. T., Thomas, A. R., Lupiţu, C. D., & Neagoie, D. S. (2016). Moral leadership in business: Towards a business culture of integrity .
