BUSINESS ETHICS: A CASE STUDY ON VIOLATION OF BUSINESS ETHICS BY COCA COLA COMPANY IN PLACHIMADA

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This is a case study on the violation of ethics by the Coca Cola company in the Plachimada village of Kerala and how the villagers were affected.
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   BUSINESS ETHICS: A CASE STUDY ON VIOLATION OF BUSINESS ETHICS BY COCA COLA COMPANY IN PLACHIMADA SWATHI P.AJITH Reg No- 1839311 MSc. Development Studies Christ University, Bangalore  VIOLATION OF BUSINESS ETHICS: COCA COLA COMPANY IN PLACHIMADA Business ethics is a form of appropriate business policies and practices regarding potentially controversial subjects including corporate governance, insider trading, bribery, discrimination, fraud etc. Business ethics has become very important in corporate firms  because of its growing need and importance. Ethics means the set of rules and regulations that the organization must follow. While in business ethics refers to a code of conduct that the corporates are expected to follow while doing business . ABOUT COCA COLA COMPANY : The Coca Cola Company is an American Multinational Company manufacturing non-alcoholic beverages. This company is most famous for its flagship product, ‘coca   cola’. The company is head quartered at Atlanta, Georgia and has its branches spread out throughout the world. Since the 2000’s the company has been in the headlines for its health related issues, animal testing, employee issues and various other cases as well but remains to be one of the  biggest multinational companies in the world. The Coca Cola Company started its functioning in India in the year 1950. But due to certain issues with the government and multinational companies, the operations of the company started on full swing from October 1993. ETHICAL POLICY OF THE COMPANY The company is committed to build an ethical business culture. To ensure that the company is following its ethics, it prescribes to the anti corruption laws in every country in which it operates. The company’s business conduct serves as the foundation to its ethics and compliance. All the members and associates of the company are required to know the  business conduct of the company. One of the most important characteristics of the company ’s  business ethics is anti-corruption. The company’s anti -corruption program ensures that the  business throughout the entire system of coco cola is done in a fair ethical and fair manner. The company restrains from corruption of any form including bribery. The Company’s  Code of Business Conduct serves as the base of its approach to ethics and compliance. It clearly states that the company ’s  expectations of accountability with regard to ethical conduct in all areas of its business. All of the Company and majority-owned subsidiary associates are required to read, understand and obey to the Code’s precept s. According to its ethical policies, the company is committed to build an ethical business culture across all its worldwide operations and its broader system, particularly focusing on the business that it conducts in countries where there may be a higher risk of unethical  behaviours.  The Company appoints an employee in each operation to serve as Local Ethics Officer (LEO). This role is a critical part of bringing together its ethics and compliance program to life around the globe, ensuring global consistency and local relevance. LEOs serve as a resource for workers to ask questions and share their concerns and are also the keeper of their Code on a local level. It has established many communication and management routines to keep this important network of compliance resources current on the latest trends, tools and elements of the programs and to enable the sharing of best practices globally. Ethical Conduct Administration The Code of Business Conduct is administered by the company ’s  Ethics & Compliance Committee. This cross-functional senior management team overlooks all the ethics and compliance programs and decides on the Code violations and discipline. The company’s  Ethics & Compliance Office has operational responsibility for education, consultation, monitoring and assessment related to the Code of Business Conduct and compliance issues. Associates across the globe receive a variety of ethics and compliance training courses monitored by the Ethics & Compliance Office. REVIEW OF LITERATURE: There have been many cases of violation of business ethics by companies and many reports have been filed on such companies. One of the prominent cases of corporate ethics violation is the Kingfisher airlines scams. The Serious Fraud Investigation Office found out that there were serious compromise of business ethics between the kingfisher airlines and Deccan aviation limited. T he SFIO has said that “documents were backdated and fabricated to show that there existed three business divisions/ segments.” Such cases of violation is very common on the marketing world these days. The study focuses on finding out where the coco cola company went short on following their business ethics and how the livelihood of a whole village was compromised. Companies, especially food companies must make sure that the end product is safe for the consumers to use and no poisoning or side effects will be caused to them afterwards. After  Nestlé’s  Maggi came under scrutiny of the Union Consumer Affairs Ministry for high lead and Monosodium Glutamate (MSG) content, questions on food safety have been raised from various parts of the Nation. But the marketers of the company comes up with huge marketing strategies to boost the sales of their products. In the case of Maggi, it was found that lead was present in the noodles, the sales of the company went down drastically, and people were also affected with food poisoning. This shows the severe carelessness and their incapability in following their business ethics. When we take the example of coco cola itself, researchers have proved that some of the items used are not fit for consumption. Fall in ethics and thus causing harm to the consumers is a major drawback of any corporate. Another case of such business ethics violation is of one of world  ’s best  sportswear brand, Nike used to produce their goods offshore to save money. It was a human rights violation done by the company. METHODOLOGY Theoretical framework: The theory that this study uses utilitarian theory. This theory comes under the family of consequentialist ethical theories. It puts forward actions that promote overall happiness or  pleasures and rejects actions that cause unhappiness or harm. This theory supports the study as it talks about the wellbeing and interests of the people. This theory was proposed by Jeremy Bentham and John Stuart Mill. They argued that every positive action tends to create something good and will create happiness and a wrong will tend to create unhappiness. This theory is in opposition to egoism where a person should pursue his own self-interest even at the expense of others. Where a company ’s ethical standards are compromised, it creates a great loss for the company as well as the customers. The coca cola company is bound to follow this theory as per its business ethics, because the company according to the ethics that it has stated has a responsibility towards the people. Research design The design used for this study will be the exploratory research design. Exploratory research is a research done for a problem that has not been studied deeply, it is meant to establish  priorities, develop operational definitions and improve the final research design. Exploratory research helps determine the best research design, data-collection method and selection of subjects. This case study is on finding out where the coca cola company fell short while following its ethical principles in the village of plachimada in Palakkad district. Research Tool Case study method is used in this study where a detailed sketch of the incident is taken into account. Sources of data . Secondary data sources are available for this study. Data has been collected from various newspaper articles and write ups .     CASE STUDY : Coca Cola Company is a leading soft-drink brand based in the United States. The coca cola  plant came to Plachimada, Palakkad in 1999. Palakkad district was known as the rice bowl of Kerala. Plachimada was a small village with good water facilities and the main source off income of the place as agriculture. The company came into Plachimada offering the residents  job opportunities and life long job security. The company promised that they will bring development in the village and increased the expectations of the residents. Believing what the company had offered the residents allowed the company to clear almost 35 acres of land and set up the plant there. There were almost 800 factory workers in the plant but only a mere number of 20 workers were from the area. The rest pf the worker were from the workers that the company had employed were from different places and those people were the permanent workers there and not the resident workers, which was exactly opposite to what they had  promised to the residents before. The first signs of contamination began when the people started to identify that the drinking water was getting polluted. People who were staying near the plant have reported that the water that they used to get from the wells and bore-wells were becoming polluted. The water was not fit for drinking or bathing. Diseases also started to spread out. When the people started showing mild signs of protest about the water impurity, to compensate them, the company started giving them fertilizers for their crops, soon to find out that the fertilizers that they have provided are not fit for crops and have poisonous content inside them. The residents started to understand the danger that the company was bringing to their land within the first 6 months of its operations there. In the year 2000, they went on a strike against the company. It was a legal battle between the residents of Plachimada and the coco cola company. According to news reports, the residents says that the company threatened them to stop the strike and even offered them to pay money. They say that the company thought that the people from such a small village did not stand a chance against the big corporate. Even the trade unions and local political parties were in favour of the coco cola company saying that the people should stop their strike as the company is the source of livelihood to many workers and so its operations cannot be stopped. The strike and the legal  battle went for years between the general public and the big corporate chain. The Company has set up its branches in almost all parts of the world. But over the course of time, the company has landed in lots off acquisitions pertaining to the quality of the drink. The leading soft drink giant has set up one of its plants in Plachimada, Palakkad district. It has been reported that over 5000 tonnes of sludge has been found in the drink. Officials has reported it to be to that of fertilisers that is used for plants. There also has been an ongoing dispute between the tribal people residing in Plachimada.
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