UNETHICAL PRACTICES BY

COCA COLA AND PEPSI

INTRODUCATION:

AUTHORIZATION:

This report is being submitted to DR. Muhammad Khalili, Professor of business

ethics, University of Wollongong in Dubai. The topic of the report is unethical issues

of coca cola in comparison with Pepsi.

Purpose of the Report:

In today’s competitive world, many organizations are practicing unethical practices to

increase their productivity and profit without caring for the consequences of their

actions.

In order to stay ahead of their competitors many organization overlook the moral and

ethical aspects of their actions and their main focus remains on increasing profit and

getting competitive advantage.

Furthermore, if when we consider our company coca cola, on the basis of its

involvement in unethical practices, coca cola has been involved in many unethical

practices like child labor and use of pesticides in their beverages over the years. This

report will evaluate the unethical practices by coca cola and will suggest coca cola to

improve their behavior as for as ethical practices are concern.

PREVIEW:

This report starts with the introduction of the chosen company (coca cola) and then it

goes to several unethical practices, the company is involved in. then the company is

compared with their arch rival and competitors Pepsi and then the report is

concluded with the conclusion and recommendations.

HISTORY OF COCA COLA:

Coca cola was established by john Pemberton. The story of coca cola is very

interesting. John Pemberton stimulated caramel colored liquid and took it to a

pharmacy and added carbonated water in it, and the sample was very appreciated

by the people who tasted it. After watching the response of the people the pharmacy

put the drink on sale for five cents. They named the drink as coca cola and they were

able to sell only 9 glasses of coca cola per day in early days of coca cola.(coca-

cola.com,2010)

In 1891 a businessmen Griggs Candler bought coca cola rights for just $2300.

Candler was the first president of coca cola. Candler was a very successful

businessman due to his innovation and marketing skills. He knew that there was a

very good scope for the beverage industry in United States. He started promoting

coca cola by giving away free samples and advertising it in many different ways. By

1895 Candler had built beverage plants in Chicago, Los Angeles and Dallas. By that

time soda drinks got huge reputation in United States. .(coca-cola.com,2010)

In 1899 Benjeman Thomas and Joseph whitehead bought rights from Candler to

Bottle and sell coca cola.

As the drink got reputation with the passage of time many new competitors came in

the market, basically copying the coca cola idea. Coca cola responded this thread by

introducing unique bottle shapes, just to differentiate their product from the

competitors. Coca cola then went international by introducing its product in Canada,

France, Cuba, and some other countries.(coca-cola.com,2010)

Robert Woodruff’s father bought Coca cola from Candler in 1919. Woodruff is

considered to be the main person behind the success of coca cola. He introduced

coca cola to the word by taking coca cola to the Amsterdam Olympics with the US

team. He introduced Six-pack and open top cooler, to make the drink available to the

customer in home or outside. This was a great innovation done by Woodruff. This

gave Coca cola a huge opening in the market and gave the company a huge

success. .(coca-cola.com,2010)

In 1941 when the United States entered into the World War, Woodruff introduced

announced that soldiers can buy coca cola for just 5 cents. Coca cola was quite liked

in those areas and when the war finished coca cola was already established in those

areas. Coca Cola then got global; they had their plants all around the world .(coca-

cola.com,2010)

After a success story of 70 years coca cola decided that it’s the time to diversify their

product and introduce something new. This led them to the introduction of Fanta

and Sprite.

In 1981 Robert Goizuta took over as the chairman of Coca cola. He made the Coca

cola as a public company known as Coca cola enterprises Inc.

In 1990s coca cola saw a vast growth in the beverage industry. This era is known as

the emerging advertisement competition. Man other companies were trying to take

competitive advantage over their competitors by applying new marketing strategies.

Coca cola was no different from others. They lined up with various players and

teams to promote their products. They associated with football world cup, Olympics

games, NBA, Rugby world cup and Nascar competitions. They started the famous

“Always coca cola “advertising promotion and the “coca cola polar bear” campaign.

Many new markets like Germany and India were found by coca cola. At the moment

Coca cola has more than 500 brands and is being love all around the world. They

have brands like Diet coke, thumps up, Minute maid, Sprite etc. they have many

flavors like lemon cola, green tea and orange cola etc..(coca-cola.com,2010)

Coca cola collected around 28 billion dollars in revenues and their profit was around

6 billion in 2007. They spent 2.2 billion dollars on advertisement in 2007. They spent

around 60 million dollars for recycling the plastic bottles in United States.

(corporation-free.org,2010)

UNETHICAL PRACTICES BY COCA COLA IN RELATION WITH ETHICAL

THEORIES:

Coca cola has been noticed to be involved in various unethical practices like:

1: Child labor

2: Water wastage

3: Unethical labor practices

4: Harmful ingredients

CHILD LABOR:

Sugar is the basic ingredient for making soft drinks. Coca cola is blamed of buying

sugar from sugar farms in Latin America who use child labors for producing sugar.

So indirectly coca cola is encouraging the child labor. They illegally hire the children

to manufacture the sugar. Children are mainly used for planting sugarcanes in very

miserable conditions in Latin America. And before cutting the sugarcane the leaves

are burnt which cause tremendous smoke, which affect the children health. (Human

Rights Watch, 2004).

If we apply this act using ethical theory this act is against act utilitarianism theory as

a large number of children get effected by by child labor and harms are more than

the benefits. So it can be proved that the act of buying sugar from Latin American

fields is unethical.

3.1.1 WATER WASTAGE:

Coca cola is one of the world’s largest beverage manufacturers. Besides their

success in United States they have always been involved in growing their business

around the world. For this they have entered in many global markets around the

world. India is one of those countries, where every multinational company sees a

huge prospect due to their population and growing economy. Coca cola entered in

India market in early 1990’s.

India is coca cola’s top international investor. Coca cola has invested around one

billion dollars in India in previous years.

Residents of Kerala (south India) have been facing a tremendous shortage of

drinking water since 1998. When the matter got the attention of higher authorities, an

investigation was conducted and it was found out that the reason behind the

shortage of water was coca cola plant in Kerala. Coca cola was accused of using

around one million liters of water daily to operate. Local people complained that

plant since the plant arrived there was a shortage of water and people stopped

working in farms due to shortage of water. But on the other hand coca cola explained

their case by saying that they didn’t cause shortage of water in the state, but the

shortage is due to shortage of rain. And to compensate the local people coca cola

started providing drinking water in those areas which were facing the shortage.

(Biz/Ed, 2010).

Coca cola has also been blamed for drawing clean drinking water from wells in

remote areas of Kerala. Local people suffered a lot from this as they were force to

bring drinking water from other areas.

The act of coca cola by drawing community water from the ground without the

permission of the local residents is unethical. If we see this from the prospect of act

Utilitarianism Theory, this behavior is clearly unethical. As more number of people is

suffering and only few people are getting benefits.

Unethical labor practices:

Coca cola is accused of being involved in awful labor practices in Colombia. They

are accused of being involved in violent activates against the labors. Coca cola took

the advantage of poverty in Colombia, as they knew that Colombia is a poor country

with most of its people living in miserable conditions without any means of income,

so they built their plant in Colombia for accessing cheap labor. ( killercoke.org,2004)

International labor rights and united steel workers filed a case against coca cola in a

court in Miami asking for 500 million dollars as compensation. They accused coca

cola for killing some major union leaders for their benefits. But this allegation could

not be proved in the court and the case was discharged. (Martinez, 2006).

This act of coca cola by being involved in horrible activates like killing and abusing

the employees is wrong as it clearly defy the theories of ethics.

Harmful ingredients:

Coca cola is a kind of brand, which always tries to focus on its quality and customer

care in their marketing crusades, but the reality is that coca cola has been accused

for using highly toxic and harmful chemicals in their beverages in recent years, with

caring about the health and safety of their potential customers.

Centre of science and environment believes that coca cola uses such kind of

ventilated water in their manufacturing process that contains very harmful pollutants

and chemicals that can be the main reasons for cancer and break down of the

immune system. Furthermore CSE reveals that coca cola products uses more

amount of chemicals then the suitable level, which are highly harmful and are

against the regulation of European Union.(Tejomoortula, 2006).

While on the other hand coca cola refused to accept any of the allegations and said

that they filter the water and they make sure that they use appropriate amount of

chemical in their beverages which is not harmful for human health and safety. And

coca cola announced that the lab test conducted by CSE is not dependable to

monitor the level of chemical in beverages.(Tejomoortula, 2006).

As competition is increasing day by day, everybody looks like that he is competing in

a race; they are ready to go to any extreme to win that race. They won’t care about

other people and the Ethical norms set by the society. Same is the case with Coca

Cola.

In order to increase their profit and productivity they tried to risk many human lives

by using such harmful chemical in their ingredients, which is wrong and unethical.

COCA COLA AND PEPSI:

Pepsi cola was established by CaledBradham in 1898 in North California. In 1902 he

properly announced his company known as Pepsi-cola Company. Then Pepsi

started to get attention of people of California and Bradham saw some prospect in

this business so he started Pepsi in bottles. And with the passage of time business

got bigger and bigger and they registered the patent for Pepsi-cola in 1903. In 1903

the company sold 7968 gallons of Pepsi. Pepsi is believed to be the first company in

the United States to use a motor vehicle instead of horse-drawn vehicle. And in 1907

Pepsi went international by introducing its drink in Mexico. And in 1909 Pepsi signed

racing driver Barney Oldfield as their brand ambassador and went into a marketing

race with other competitors like coca cola. And in 1932 Pepsi increased its

international market by introducing the drink in Argentina and then in Russia in 1938.

Pepsi is considered to be the first company to use a jingle for their advertisement in

1940. (sirpepsi.com, 2010)

At the moment Pepsi is one of the world’s largest soft drinks company which is all

over the world and has got a huge number of customers. They spent millions of

dollars on research and marketing their product. According to an estimate Pepsi

collected a revenue of 14.80 billion dollars by 2010, . And at the moment Pepsi have

brands like Pepsi max, Pepsi one, diet Pepsi, Pepsi cherry etc.

Now if we compare coca cola with Pepsi on the basis of ethical practices performed,

Pepsi is no different than coca cola. Pepsi also have been involved in many

unethical practices over the years. As mentioned above that coca cola uses 30

percent of harmful chemicals in their drinks and on the other hand Pepsi uses more

amount of harmful chemical in their drinks than Coca Cola. These chemical are very

harmful for human health and when it was proved in the lab, both Pepsi and coca

cola rejected the labs report telling them that those reports are unreliable.

As coca cola, Pepsi is also accused of affecting the local inhabitant and the local

population in India. Like coca cola Pepsi is also blamed for drawing and wasting

community water for their bottle plant in Kerala, severely affecting the local

population. (Narayanan, 2007)

as a result, it can be said that both Pepsi and coca cola have been involved in

unethical practices which is affecting the people.

Conclusion and recommendations:

Coca cola has been involved in many unethical activities like drawing the community

water, without the permission of local population, therefore causing many difficulties

for the local population.

Coca cola is also blamed for using child labor for their operation. They use the child

labor for getting sugar in very miserable conditions which is against the theories of

ethics. Coca cola also tries to benefit from the poverty of people and their employees

in Colombia work in very miserable condition and they are also accused of killing

some union leaders. This is against moral rights and is considered unethical.

Coca cola is also blamed or using unhygienic and harmful chemicals in their drinks

which is very harmful for the health of the people and is very unethical.

And if we compare Pepsi with coca cola, pepsi is also involved in unethical practices.

Pepsi has also been involved in many unethical practices like drawing the

community water without the permission and wasting it, causing sever difficulty for

local population. Pepsi is also accused of using harmful ingredients like chemicals in

their drinks, which is affecting the health of their customers.

We can recommend coca cola to consider their policies and practices and have

some mercy for the people they are affecting by their unethical practices. They

should not draw water illegally and above all they should not waste it , as it belongs

to the local population and is affecting their lives. Coca Cola should also make sure

that they don’t buy sugar from those farms which use child labor in their farms as

coca cola is indirectly promoting child labor which is unethical. They should also

consider their ingredients. They should not play with the lives and the health of their

customers by including harmful chemical. They should also consider their labor

policies in countries Colombia. They should not take advantage of their poverty and

they should give those labors their proper rights.