Coca-Cola Ethical Issues

Running head: The Coca-Cola Company 1

The Coca-Cola Company Struggles with Ethical Issues

HRM 522

“The Coca-Cola Company Struggles with Ethical Crises”

1. Delineate the ethical issues and dilemmas (as found in Chapter 3) the company faced.

Honesty refers to the truthfulness and trustworthiness that a corporation has. Honesty is also identified as one of the ethical issues that corporations are measured on when doing business. Many times issues related to honesty arise because business is sometimes viewed as a game governed by its own rules rather than by those of society. Therefore, the scope is placed closely on businesses with the expectation that they will conduct business in an honest manner.

Coca-Cola skimmed around this honesty during the early 2000s when it was accused of channel stuffing. Channel Stuffing is the practice of shipping extra, non-requested inventory to wholesalers and retailers before the end of the quarter. This is done to create the appearance of strong demand for a product and results in inflated statement earnings and subsequently misleads the investors. This behavior has also been used with large corporations such as Enron with tricking accounting. A company is guilty of cooking the books when it knowingly includes incorrect information on its financial statements -- manipulating expenses and earnings to improve their earnings per share of stock (Obringer, 2005).

Environmental violations also plagued Coca-Cola during 2003-2004, when the Centre for Science and Environment tested soft drinks produced in India by the company and the found extreme levels of pesticides from using contaminated groundwater. Coca-Cola denied the allegations citing that they used purified water and tests their products prior to shipping; however this still hurt sales in India. To make matters more complicated for Coca-cola in India, they were later blamed for depleting the ground water as it had a few plants in drought-plagued areas around India. They later closed them (Ferrell, 2012).

2. Determine which of the issues/dilemmas you identified was the most significant. Explain your reasoning.

While Coca-Cola faced a plethora of ethical violations and dilemmas, one of the most

significant issue in my opinion was the contamination scare. In 1999, after drinking Coke products, nearly 30 children became ill. I view this to be the most significant because it does physical harm