Pepsi Vs Coca Cola

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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.

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 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 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 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).

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 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 Caled Bradham 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 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)

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. 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.

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