Coke Combats Ethical Crises

Tracy Weispfenning

Coca-Cola Case Study #2

MGMT 310

Jason Cussler

February 14, 2014

Coke Combats Ethical Crises

Coke has faced many ethical dilemmas such as racial discrimination, creative earnings reports, environmental and health concerns and violation of contract agreement with distributors.  Their responses have varied from creating a diversity council, creating a no waste recycling program at all levels of the Coke operations, repositioning the Coke marketing campaign, to providing contract agreements that satisfy the antitrust laws.  In my opinion, Coke is on the right track but could do more in their response to these ethical challenges.

Coke has responded to these ethical issues in a number of ways.  In the racial discrimination claims Coke was slow to respond to the issue by not addressing the problems sooner.  When Coke did take action, the pledge to increase spending for more goods and service from minority vendors displayed Coke’s willingness to be a better global ambassador for diversity in the supply and delivery chain.  This however was just a band aid to close the wound that upper management within Coke had known about for years.  The more permanent solution came when Coke created a diversity council which provides fairness and inclusion practice throughout the company.

The claims that Coke sent out extra shipments to warehouses and retailers to improve the sales numbers and inflate the earnings reports where proven to be true by the Securities and Exchange Commission.  Coke did respond to the investor concerns over this by settling this with compensation to the common stock holders.  This action did improve Coke’s image to the consumer and stockholders, but there still needs to be more policies in place to ensure this situation does not occur again.

Coke violated antitrust laws with the distributors by sending product directly to a retailer’s warehouse.  These actions led to the development of guidelines that reviews the situation of delivery methods to meet the requests from the bottler, distributors, suppliers, and other partners.  From this situation, Coke’s reputation as a leader in the bottling industry led to a major decline in consumer relations, profit margins, and created a systemic risk scenario throughout Coke’s supply chain.  Coke has worked hard to have guidelines and policies in place to build relationships with the consumer and partners and prove that competitive prices and intimidating tactics are a thing of the past in this highly competitive and lucrative market.

Environmental and health concerns have plagued the bottling industry for years.  Coke is no different in this battle.  The concerns over water and pollution have led the company to create sustainable practices to benefit consumers and suppliers.  These efforts have influenced recycling programs, climate change concerns, and increased the efficiency and reduced emissions in day to day plant operations.  Coke’s response to health concerns has been to create awareness of making the consumer more informed on leading an active and healthy lifestyle and choosing whether or not to buy the product.  This course of action is leaving the decision up to the consumer and letting Coke off the hook for improving its formulas for its products.  Consumers need to push Coke into improving the formulas of its product line to increase awareness of harmful ingredients used in the making of the products.  It all comes down to the consumer dollars spent to make the necessary changes.