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Padmashree Dr. D.Y. Patil University

Department of Business Management.

PROJECT TITLE :

UNETHICAL PRACTICES BY COCA COLA AND PEPSI

SUBMITED TO MR VISHAL SIR

SUBMITTED BY GROUP MEMBERS

NAME ROLL NO

KHAMLESH PANDEY 011161

ROHAN NAIK 011179

AJAY NANDKUMAR 011158

ROHAN YADAV 011172

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Coca-cola

The world is changing all around us. To continue to thrive as a business over the next ten years and beyond, we must look ahead, understand the trends and forces that will shape our business in the future and move swiftly to prepare for what's to come. We must get ready for tomorrow today. That's what our 2020 Vision is all about. It creates a long-term destination for our business and provides us with a "Roadmap" for winning together with our bottling partners.

Our Mission

Our Roadmap starts with our mission, which is enduring. It declares our purpose as a company and serves as the standard against which we weigh our actions and decisions.

To refresh the world... To inspire moments of optimism and happiness... To create value and make a difference.

Our Vision

Our vision serves as the framework for our Roadmap and guides every aspect of our business by describing what we need to accomplish in order to continue achieving sustainable, qualitygrowth.

People: Be a great place to work where people are inspired to be the best they can be.

Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and satisfy people's desires and needs.

Partners: Nurture a winning network of customers and suppliers, together we create mutual, enduring value.

Planet: Be a responsible citizen that makes a difference by helping build and support sustainable communities.

Profit: Maximize long-term return to shareowners while being mindful of our overall responsibilities.

Productivity: Be a highly effective, lean and fast-moving organization.

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Our Winning Culture

Our Winning Culture defines the attitudes and behaviors that will be required of us to make our 2020 Vision a reality.

Live Our Values

Our values serve as a compass for our actions and describe how we behave in the world.

Leadership: The courage to shape a better future Collaboration : Leverage collective genius Integrity: Be real Accountability: If it is to be, it's up to me Passion: Committed in heart and mind Diversity : As inclusive as our brands Quality : What we do, we do well

Focus on the Market

Focus on needs of our consumers, customers and franchise partners Get out into the market and listen, observe and learn Possess a world view Focus on execution in the marketplace every day Be insatiably curious

Work Smart

Act with urgency Remain responsive to change Have the courage to change course when needed Remain constructively discontent Work efficiently

Act like Owners

Be accountable for our actions and inactions Steward system assets and focus on building value Reward our people for taking risks and finding better ways to solve

problems Learn from our outcomes -- what worked and what didn’t

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Be the Brand

Inspire creativity, passion, optimism and fun

PEPSI

Our Mission and Vision

At PepsiCo, we believe being a responsible corporate citizen is not only the right thing to do, but the right thing to do for our business.

Our MissionOur mission is to be the world's premier consumer products company focused on convenient foods and beverages. We seek to produce financial rewards to investors even as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity.

Our VisionPepsiCo's responsibility is to continually improve all aspects of the world in which we operate – environmental, social, economic – creating a better tomorrow than today.

Our vision is put into action through programmers and a focus on environmental stewardship, activities to benefit society and a commitment to build shareholder value by making PepsiCo a truly sustainable company.

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Coca-Cola Continues Unethical and Dishonest Practices in India

• The Indian government forced Coca-Cola out of the country in 1977.

• The company returned in 1993

• Each bottling plants extracts up to 1.5m litres of water everyday from the ground.

• It takes nine liters of clean water to manufacture a litre of Coke.

• In 2000 Coca-Cola opened a plant at Plachimada, a village in Kerala to produce 1.2m litres of coke every day.

• The conditional licence granted by the local panchayat authorised the use of motorised pumps

• But the company drilled more than six wells & illegally installed high-powered electric pumps to extract millions of litres of pure water.

• The level of the water table fell from 45 to 150 metres below the surface.

• The conditional licence granted by the local panchayat authorised the use

of motorised pumps.

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Kala Dera - Thirsting from Coca-Cola

• Kala Dera is a large village outside the city of Jaipur.

• Agriculture is the primary source of livelihood.

• Coca-Cola started its bottling operations in Kala Dera in 2004, and within a year, the community started to notice a rapid decline in groundwater levels

• Kala Dera is a large village outside the city of Jaipur.

• Agriculture is the primary source of livelihood.

• Coca-Cola started its bottling operations in Kala Dera in 2004, and within a year, the community started to notice a rapid decline in groundwater levels.

• Kala Dera lies in an overexploited groundwater area and access to water has been difficult.

• Summers are particularly intense in the area, when water shortages are most acute.

• Moreover summer months are also when Coca-Cola reaches its peak production.

• Coca-Cola bottling plant in Kala Dera continues extracts the most water, making already existing water shortages even worse.

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• For farmers, loss of groundwater translated directly into loss of income.

• For many children it meant leaving schools to provide a much needed helping hand in household since the women had additional burdens

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Community response

The community in Kala Dera organized itself to challenge the Coca-Cola company for the worsening water conditions - through extraction and pollution - and demanded the closure of the Coca-Cola bottling plant.

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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.

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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

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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

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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

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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).

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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

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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

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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)

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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.

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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.