Business Ethics and Moral Behaviour
In this assignment I am going to explain and analyze the ethical issues the businesses have to overcome. How ethical issues affect business success and local community. I am going to outline the key issues surrounding Coca-cola’s presence in India and demonstrate how this causes an ethical dilemma. At the second part of my assignment I am going to identify who the ‘primary stakeholders’ in Coca-Cola case study are and describe how they have been affected by Coca-cola’s behaviour. Definition: Ethics is a study of moral. Discussion of what is right and wrong. Ethical rules depend on personal believes, religion and background.
It is based on people behaviour and activity. Ethics decide rules and regulations on people behaviour. Ethical rules and regulations are different in different countries. What people think is the right things to do in one country may not think that it is the right thing to do in another country. People judgments on others behaviours are called ethical rules and regulations. People use those rules for different situation, for example, to solve environmental issues. Different countries make their own ethical rules and regulation, because people have different beliefs in different countries.
Companies also make their own rules, but when companies decide to expand their business into another country, they have to consider what ethical beliefs are in that country, so the company follows ethical rules of that country. Pressure groups, such as environmental unions make companies to follow ethical rules and regulations. Businesses have to consider the impact of their activities on stakeholders. Some companies do not consider the impact of their activities on stakeholders and this cause ethical issue, if the impact of the activity on stakeholders is negative.
Coca cola caused widespread concern and a string of claim and counter claim by residents of the local community and the company after their operations in the southern Indian state of Kerala. Ethical Issues of Coca Cola In 1998 Coca Cola expanded to India in the southern state if Kerala. Local community started to complain about the amount of water available to them and have blamed the fall in supplies on Coca Cola who, they claim, use up to a million litres per day at the plant. In order to make a good profit Coca Cola did not care about local community and used a lot of water for their own company’s benefit.
This is an ethical issue. In order to be a successful and respectful company, the organisation has to consider other facts than making good profits. Water is crucial for people in order to survive, especially in tropical weather countries such as India. There is often a shortage of water in hot weather countries like India, therefore local community have to make sure they save water. Coca Cola did not consider local community needs and used too much water. It is an ethical issue because it is not the right thing to do.
Water shortage makes people life much more difficult and causes many problems, such as illnesses. Companies should not make people’s lives more difficult, their aim should is to provide services or goods that make people’s lives more enjoyable and easier without making damage to local community or environment. However Coca Cola needs water in order to produce drinks and make profit. The organisation should not operate in the country where there is a water shortage issue already even though it saves them money to operate in country such as India.
After local community complained about water shortage Coca Cola stated that the shortage of water is due to the lack of rains in the region. Coca Cola did not want to accept that it is an ethical issue and that it is their fault that local community is in a shortage of water. It is important that companies stay in a good relationship with local community. Avoiding the truth about ethical issues that company had to face and lying to local community will not keep the company and the local community in good relationship.
In order for business to work successfully the business needs to have good relationship with local community, because local community are customers and employees too. Many issues may occur after the company has lied to the local community. In this case Coca Cola may loose good reputations and this is always bad this for the business organisations. Even when the company has made an ethical issue, like using too much water, they still can get their reputation back if they admit it in time and try to fit the problem in time and the effect made because of the ethical issue.
Coca Cola did not admit the ethical issue, and they kept on lying to local community. To save their reputation and keep the business running they decided to confuse local community and make them believe that Coca Cola is a very good company and they want to help local community to survive in this water shortage period. In order to make local community believe that the shortage of water is because of the lack of rain, Coca Cola sent round tankers of water to the region to help the local community.
They believed that by providing little help to local community they will avoid pressure groups activities to close down the business, as the local community will stop complaining to Coca Cola about water shortage and will blame bad weather conditions. However, Coca Cola was making a very bad effect on local community and there was a big ethical issue as many people died because of the water shortage. Local farmers claimed that their livelihood has been destroyed since the building of the plant and that the number of people working on the land has dropped considerably because they cannot survive.
It is a huge ethical issue and it affected many people’s lives. Ethics is about what it right and wrong to do based on people behaviour and activity. If the company made peoples lives much more difficult, people cannot survive it is obviously an ethical issue. Coca Cola has become one of the most popular drinks in India. People like the taste of the drink, but many people do not know what is happening in Perumatti in the southern state of Kerala. People in India do not know that people in Perumatti cannot survive because of the water shortage and they keep on buying Coca Cola drinks.
Because the drink is so popular in India the company is not going to close the business down. Coca Cola is making good profit in India and they do not consider the bad effect they have made to local community. They want to make profit and it doesn’t matter for them if it is going to take some people’s lives. People cannot stop the company’s activity unless the pressure groups help local community to fight against Coca Cola. Following the cleaning of bottles, a waste sludge is produced that Coca Cola have been disposing of on the land of local farmers claiming it was a useful fertilizer.
BBC radio 4 programme states that the samples of the sludge were analysed by scientists at Exeter University in the South West of England and found to contain toxic chemical that can be harmful to humans. The report also states that there was a little or no benefit of the sludge as a fertiliser. This is another ethical issue Coca Cola have made. They made local community believe that the waste Coca Cola is producing is a useful fertiliser. In order to save some money Coca Cola disposed their waste on the land of local farmers.
By doing bad things to local community Coca Cola tried to make local community believe that the company is actually helping local community. It is an ethical and environmental issue. The waste should not be disposed on the land, it should be disposed in the way it would be environmentally friendly, like recycling. It also made bad affects on farmers’ lands. The disposal was not useful fertiliser and the farmers were confused and provided with the wrong information. Coca Cola wanted to cut their costs down; therefore they did not take an interest of how to get rid of the waste. They used local farmers land to get rid of their own waste.
In this way Coca Cola reduce their costs, because they do not have to buy special machinery to destroy their waste. By cutting their costs down, Coca Cola makes damage to local farmers land and this becomes an ethical and environmental issue. The waste should be destroyed by using special machinery, and it should not be disposed of the land. It also affects local farmers, because it is their land and in this land they make money for living. Coca Cola wanted to make profit and they did not care about local community and environment. Coca Cola states that they care about environment.
In their adverts they influence people to recycle cans to make environment safe. By doing this they get better reputation from customers, as customers believe that Coca Cola is environmentally friendly company, but customers do not know what happens behind all this. They do not know that Coca Cola dispose their waste on local farmers’ lands and therefore make life much more difficult for farmers and environment becomes more polluted. In a separate development, sales of Coca Cola have been hit by suggestions that its drinks produced in India contained higher levels of pesticide residues than was healthy.
Because the drink was so popular in India, people like the taste of it, Coca Cola did not put an extra care in producing the drink. They did not make enough investigations about the ingredients the drink contains. It takes time and money to do health and safety checks. Because Coca Cola wanted to save some time and money they put their customers’ heath beside their aim to make profit. It should not happen in any type of the company. It is an ethical issue that affects people health. Peoples’ health is more important than company’s aim to make profit.
Coca Cola should care about their customers’ health if they want to satisfy customers. Because Coca Cola did not care about their customers’ health, a large number of bodies have joined in the campaign for the local community demanding the plant be closed down and that tests be carried out on Coca Cola to assess its safety. Even though Coca Cola tried to confuse local community and make them believe that Coca Cola is helping them to solve water shortage problem and that the waste that has been disposed of on the land of local farmers is a useful fertiliser, people realised that Coca Cola is making a bad effect on their lives.