Business Ethics - Coca Cola

1. Executive Summary
This report deals with the concept of business ethics and the code of conduct
of an organization as well as the employee of that organization. Coca Cola
Company has been taken as an example to clarify these concepts further and
to describe how an organization can be caught up in an ethical dilemma and
what all can be its repercussions if proper steps are not taken beforehand.
This report also gives an idea of the steps that could be taken by an
organization in case it is caught in the storm of ethical dilemma to ensure its
survival, the infamous incident of the detection of high pesticide levels in the
flag product of Coca Cola Company has been stated in order to describe them
more comprehensively.

2. Business Ethics:
Business ethics is also referred to as corporate ethics. It can be defined as using philosophical
methods to attain a direction which is morally correct. These directions are used in business
environment to ascertain the right course of action of the employee as well as the business
organization as a whole. It is an amalgamation of profit oriented mindset and non-monetary
concerns. (Singer,1986) The concept of Business Ethics came to limelight with the advent of
“Social Responsibility Movement” in 1960 when masses became interested in the mutual effects
between Consumerism and Natural Ecosystem. Business ethics basically refers to the non
supervised code of functioning of the corporation concerned but with the identification of some
ethically deviant cases and the emergence of profit (solely) oriented companies, government
formally imposed some moral obligations which has shown tremendous growth in considerate
behavior of the organizations.
(Chadwick,1997)
Organization: Coca Cola Company
Coca Cola Company is an American beverage manufacturing corporation taking care of the
manufacturing, marketing and retailing of their non alcoholic beverage and syrup products
throughout the world. Started by a pharmacist named John Stith Pemberton in 1889 in
Columbus, Georgia it is now a multi-billion corporation operating in nearly 200 countries with
its main headquarters in Atlanta, Georgia. Although the company is best known for its star
product “Coca Cola”, an aerated non-alcoholic cold beverage, but it offers around 500 brands all
over the globe.
(Pendergrast, 2000)
Code of Conduct:
Code of Conduct in an organization is a list of formally binding norms within the organization. It
is a kind of policy statement or legistation within the company working on its employees as an
ethical protocol with penalties associated with violations of any of the norms, severest penalty
being the termination of employee‟s stay in the company, except in cases of criminal activities.
With the rise of “Social Responsibily Movement” in 1960, the concept of “Code of Conduct”
began to gain momentum and now its existence is quite substantial in all organizations
throughout the planet. Code of Conduct is not just a “set of unwritten rules” or “unmonitored but
expected moral behavior and responsibility”, it is actually a carefully written document which an
employee has to sign, signifying that the employee concerned has read and understood all the
norms under it and will abide by them, prior to joining the organization.
Code of Conduct basically contains four parts:

3. Preamble
Objective and values
Precise rules with bifurcations
Implementation including the permissions, penalties and monitoring
(Inc.,2013)
Code of Conduct-Coca Cola Company
In the multibillion brand of Coca Cola Company, the code of conduct is summarized in five
small lines:
Act with integrity.
Be honest.
Follow the law.
Comply with the Code.
Be accountable.
Elaboration is as followsDiscrimination and harassment
1. Discrimination on the basis of caste, colour, religion, race or creed is a punishable
offence and the culprit will be dealt with strictly.
2. Sexual harassment in any form is strictly prohibited. The person responsible for such
actions will be held accountable for same.
Finance record keeping
1. All the revenue calculations should be done in the predetermined time and limit, no one is
allowed to modify the period of accounting of revenue in order to meet their optimal
budgetary goals.
2. All the data in the financial report should be backed up by required legitimate documents.
3. No transactions should be twisted and modified in order to display a different set of
scenario altogether.
4. No person or entity should be allowed to defy the laws in order to evade from paying
taxes and duties. Everyone should abide by the monetary, judicial and government norms
of the country where the business is carried out unless and until the entity involved in the
transaction has sold its rights to another party.
5. Personnel concerned should be accurate in laying out the company‟s pecuniary details,
however, honest mistakes or misprints could happen and will not be concerned as a noncompliance or violation of code.
Company‟s property

4. 1. Company has the full right of penalizing the employees who will intentionally damage
company assets and properties.
2. No company asset can be used for a different purpose other than what it is meant for. No
personal benefits can be extracted by the employees from company‟s assets.
3. Theft or intentional replacement of company assets may result in termination or filing of
lawsuit against the personnel involved.
4. No one is allowed to get involved in personal activities during the hours meant for
utilization towards company‟s objectives.
5. No one is allowed to use company‟s assets like computers and other electronic devices
for carrying out illegal business or getting involved in unethical actions like gambling or
pornography.
Company information
1. Non public company information shouldn‟t, in any case, be disclosed to a third party.
2. Sensitive information provided to the employee concerned by the company is meant to
be kept undisclosed by the same unless there is a corporate reason to share it with
another employee.
3. Company employees are prohibited from disclosing any sensitive company data or
information even after their working hours, leaving the organization or retirement.
4. No company‟s undisclosed information can be used for trading in stocks and markets.
Gifts and favours
1. No employee is allowed to receive any personal favors or gifts from a third party in
exchange of doing any particular favor to it.
2. No employee is allowed to ask for gifts from a third party dealing with the company.
3. Gifts as a gesture of respect like trophies or t-shirts and of modest value can be accepted
by the company employee from a third party.
Government dealings
1. Gifts of a particular value can be provided to government officials only after the
approval of counsel of legal affairs.
2. Hiring of any retired or off duty government official to further company‟s goals can
only be done after the prior written approval of the counsel of legal affairs.
3. No official is allowed to take improper payment or commodity in the form of bribe from
any third party or government official or entity in any case.
Possible violations
Although very ingeniously prepared and written, yet some of the norms of this code of
conduct are vulnerable to manipulation and there is a presence of certain loopholes in them.

5. No employee can be monitored 24/7, hence the major loophole, although it is there in
almost every code of conduct, is that a person violating the code of conduct can continue
to do so unless and until he is caught which in case of employees with higher designation
is highly unlikely.
The biggest victim of unethical violation in business is the accounts department in which
the goodwill figure is padded in the balance spreadsheet and/or the expenses could be
shifted to a wrong time or usage and in some cases this malpractice is practically
undetectable.
The beginning of twenty first century witnessed many malpractices of the employees in
which the employees extracted huge monetary lumps from company and utilized it for
personal benefits before getting caught, likewise Coca Cola company can also face such
„financial extraction‟, majorly because this is possible at any level of employment and
Coca Cola company basically deals with huge networks of clients and employees, so the
larger the network the more the possibility of undetectable monetary misuse.
Discrimination pertaining to race, caste, colour, creed or sex is quite ubiquitous in many
organizations around the globe and it will be impractical to say that Coca Cola Company
is an exception, it happens at various levels, ranging from the time of recruitment to the
time of retirement and in most cases the complains of the victims go unheard because
mostly the personnel discriminating is present at a superior level and has the ability to lay
his hands on various resources in order to prove himself innocent.
Like the case of discrimination, the cases of sexual harassment are also very difficult to
penetrate the level after which it comes into limelight because most of the time the person
harassed is at a lower designation than the one harassing and is also too ashamed to
accept the harassment in publicly.
(Coca Cola Company-Code of Conduct,2009)
Ethical Dilemma
Ethical dilemma is a problematic situation or group of situations in which the corporation or the
person concerned needs to make a choice within several options available, none of which solves
the situation ethically.
(YourDictionary,2013)
The ethical dilemma of Coca Cola Company
The population near the Coca Cola plant in Kerala complained regarding the scarcity and
pollution of water by the plant involved in the bottling of their product in 2003.This complain
gained momentum and resulted in the closing of the bottling facility concerned followed by the
banning of the brand in Kerala. The Company hadn‟t even recovered from this setback when an
environmental NGO by the name of Centre for Science and Environment (CSE) published a report
showing high levels of pesticides by the European standards in the flag product of the Coca Cola
Company i.e. the aerated non alcoholic beverage of the same name. As expected there were worldwide
protests against the company. As a result the company was placed under a probation period in 2006. The

6. samples were tested then by an independent lab named TERI (The Energy and Resources Institute) whose
report declared the product as safe. Nevertheless CSE claimed that the report published by TERI wasn‟t
comprehensive and that the lab did test only the solvent portion of the product, neglecting the rest of the
ingredients.
(www.imaginecorporation.blogspot.in)
Steps taken by the Company
These situations caused declination in the sale of Coca Cola by an astronomical value and further the
company started losing its trustworthiness .Hence, solid steps were taken by Coca Cola Company to
ensure its comeback in the market
It reduced its consumption of water by more than a quarter by utilizing techniques
like rain water harvesting.
It stopped distributing the waste products produced during the manufacturing of
its beverage to farmers as fertilizers.
Activated Carbon Filtration technique came into use by the company in order to
rid the solvent as well as the ingredients of the beverage off any pesticide.
The company, to gain people‟s trust back, carried out various medical camps in
association with government and several NGOs for providing medical assistance
to poor people.
The manufacturing of their product is closely monitored in order to rule out any
possibility of adulteration.
(www.urbantimes.co)
Conclusion
To be really effective the code of conduct shall be prepared and laid down in
the most comprehensive way possible. It shouldn‟t leave out even a single entity within the
organization or without, irrespective of the power or authority of that entity.
The code of conduct and business ethics in an organization are guidelines to
work in the interest of their own while also caring the integrity and welfare of others the
employee or the company might effect. Situations arise when it gets really hard to take any
particular decision and/or to work against a malpractice omnipresent within the business
environment concerned, but what should be kept in mind is the long lasting effect of the actions
and the repercussions that might follow because these guidelines are not only made in the
interest of the company or society but all and sundry.

7. Referencing:
1. Singer, P. (1986) Applied Ethics, Oxford, Oxford University Press.
2. Chadwick, R.F. (1997) Encyclopedia of Applied Ethics, London, Academic Press.
3.Stanford Encyclopedia of Philosophy (2008)‟Business Ethics‟(online)(cited 16 April 2008).
Available from <URL:http://plato.stanford.edu/entries/ethics-business/>
4. Pendergrast,M. (2000) For God, Country and Coca-Cola (2nd edn),New York, Basic Books.
5.Inc.‟Code of Ethics‟ (online).Available from<URL:http://www.inc.com/encyclopedia/code-ofethics.html>
5.Coca Cola Company(2009) Code of Business Conduct, Atlanta, Coca Cola Company.
6.Chron (2013). „Examples of Ethics Violations in Business‟
(online).Available from<URL:http://smallbusiness.chron.com/examples-ethics-violationsbusiness-25673.html>
7.YourDictionary(2013). „Ethical Dilemma Examples‟(online).Available
from<http://examples.yourdictionary.com/ethical-dilemma-examples.html>
8.The Corporation (2009) „Ethical issues concerning Coca-Cola in India‟ (online) (cited 18
August 2009).Available from<URL:http://imaginecorporation.blogspot.in/2009/08/ethicalissues-concerning-coca-cola-in.html>
9. Urbantimes (2013) „How Coca Cola and Dean Kamen are Working To Solve the Water
Crises‟(online).Available from<URL:http://urbantimes.co/magazine/2012/11/how-coca-colaand-dean-kamen-are-working-to-solve-the-water-crises/>