Today, water is a critical natural resource that challenges us at local, national and global level. We are facing water shortage and drought to floods and declining of water quality. More than 1 billion people worldwide lack access to safe drinking water (Lawrence & Weber, 2011, p. 43). Especially in the developing countries, with poor water management it contributes to increasing malnutrition and disease, a losing of biodiversity and agricultural production, rising food prices, reducing economic growth and social stability, that leading to conflicts over water resources.
The major source for of the Coca-Cola Company’s (TCCC) products is water. Even the company’s CEO admits “that unless the communities where the company operated had access to water, they haven’t got a business” (Lawrence & Weber, 2011, p. 43). Coca-Cola and its bottlers using 80 billion gallons of water every year worldwide; in which two fifths goes into finished beverages and the rest use in the manufacturing process. TCCC partners with 300 bottlers and franchised with independent companies around the world.
Its’ revenue, more than 70 percent came from outside of United States. Due to the company operating in developing countries and accessing to the water resources, Coca-Cola is facing an emerging issue of water quality, availability and access around the world (p. 43). How can Coca-Cola resolves the issue and what other alternative solutions for the company? Public Issues In the case of Coca-Cola’s Water Neutrality Initiative, Coca-Cola is facing the public issue of using too much water that depriving local villagers’ supply of water for drinking and irrigation.
In addition, India charges the company for its products containing dangerous unacceptable pesticide residues level. The primary stakeholders in this issue are Coca-Cola, local villagers, India’s government and the NGO. Coca-Cola is a famous soft drink company worldwide; the stakeholders have high expectation for the company’s social performance over the year. The stakeholders expect when TCCC operates in their village, they would have a better living, however; CoCa-Cola have taken all their water supplies and depletes groundwater that have negative impact on their living.
Moreover, the company has done nothing until local officials from Kerala, India shuts down a bottling plant and in the United States, schools and colleges boycott Coca-Cola’s products (Lawrence & Weber, 2011, p. 43). Strategic Radar Screens If the strategic radar screens model apply in this case, there are three out of eight environments would be most significant. The most important is the geophysical environment because it relates to the organization’s dependence and impact on natural resources such as minerals, water, land or air. In this case water is the natural resource in concern.
Water consumption was doubling every 20 years and by 2025 one third of the world’s population is expected to face water scarcity (Lawrence & Weber, 2011, p. 44). However, TCCC is using too much water in the company’s production causing more water scarcity in the area. The second important is social environment that has a close tie to the geophysical environment. The Social environment includes the culture patterns; in Kerala, India, most citizens are villagers and their source of income is coming from agriculture that depends on water resource.
Once Coca-Cola’s plant operates, it depletes the groundwater for irrigation. And lastly is the political environment because it includes the structure, processes, and actions of all levels of government-local, state, national and international. The local government of Kerala has to shut down Coca-Cola’s bottling plant because it affecting the living of the villagers. Issue Management Proactive companies do not wait for something to happen, they actively manage issues as they arise and the process is issue management (Lawrence & Weber, 2011, p. 31).
In Coca-Cola case there are 3 stages of process identify. The stage of generate option in the issue management process is identified when the company took on a comprehensive study, surveying its global operations to assess its water management practices and impacts, as well as reaches out to stakeholders like World Wildlife Fund, the Nature Conservancy…and numerous academic experts to seek their advice (Lawrence & Weber, 2011, p. 31). In the take action stage, TCCC builds a set of Web-based tools that allow its bottlers to benchmark and learn the best practices from their peers.
Furthermore, in the evaluate results stage, Coca-Cola announces a goal of water neutrality, which will accomplish in reduce, recycle and replenish (Lawrence & Weber, 2011, p. 44). The company would operate more efficiently to reduce its own use of water. It also only discharge clean water that can support aquatic life and in the area where local authorities unable to handle the wastewater, Coca-Cola would handle the wastewater. For replenish the balance of water TCCC used, the company funds $20 million to the environmental group to support river conservation, rainwater collection and efficient irrigation (p. 44). Stakeholder Engagement
Internally, Coca-Cola have sat down with its top bottlers, operating groups goes through all the aspects and understood where the water coming from. Externally, Coca-Cola takes the initiate to reach out to World Wildlife Fund, UNESCO, CARE and other top NGO’s leaders for their advices and partnerships on the water issues. Coca-Cola’s benefits from this engagement are: the company learns about society’s expectation, get the outside expertise, have creative solutions, have stakeholder support for implement the solutions and improve company’s reputation in the eyes of public. SWOT with Reactive, Proactive and Interactive
I think Coca-Cola did not respond appropriately to this issue because in the beginning, Coca-Cola was a little reactive to the issue, and acts only when forced to do so. That is when its’ plant shuts down, the company starts to shift to proactive approach, try to understand the stakeholders concerns and uses the environmental scanning practices to identify emerging public issues. The company’s lateness in response to the issue was its’ weakness. If TCCC have acted proactively and interactively on the issue rather than reactively, it may avoid the threat of company’s plant shut down and the boycott of its products in schools and colleges.
However, in the end Coca-Cola finally reaches the interactive stance of working closely with stakeholders that the stakeholder organizations brought many distinct strength and opportunity for the company. The company have the opportunity to learn and aware of the shifts in popular sentiment and able to alert on emerging issues. Also, interacting with the stakeholders gives the company access to information in the stakeholders’ networks, which is the strength for TCCC’s competitive advantages. Recommendation Although, I am satisfy with Coca-Cola’s case outcome, in the end TCCC have done the right thing.
There are other alternatives that Coca-Cola can consider. I recommend TCCC using independent laboratories to prove that their products are safe. In addition, the company can work with the central government in India as its ally. Coca-Cola should communicate better with internal and external stakeholders. Also need to consider the ethical implications of selling their products in a developing country. Justification If The Coca-Cola Company uses independent laboratories to prove that their products are safe, the company has to incur the expense cost but the benefit, it may find where the residues come from.
Lobbying with the central government in India as the company’s ally can help TCCC pressures the local government to bypass the issue. However, the cost is money and money, also Coca-Cola may have to face more public critics and rage from stakeholders. Communicating better with internal and external stakeholders can help the company to understand the stakeholder’s concerns so the company can act more proactively and interactively on the matters. Summary Conclusion Coca-Cola, one of the world’s valuable brands alleges to the public issues of creating water scarcity and produces products with dangerous level of pesticide residues in India.
Due to the poor issue management of the company in the early stage of the issue; the company encounter its bottling plant shuts down in India and the boycott of Coca-Cola’s products in USA’s schools and colleges. Guarding one of the world’s most valuable brands, environmental mistakes can cost millions or billions of dollars. This is a lesson for Coca-Cola to learn and it is a costly one! ?
REFERENCES Lawrence, A. T. , & Weber, J. (2011). Business and Society: Stakeholders, Ethics, Public Policy (13th ed. ). New York: McGraw-Hill/Irwin.