Coke: Ethical Issues

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Coke: Ethical Issues

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Case Code:

BECG014

Case Length:

Period:

Pub Date:

2002

Teaching Note:

YES

Price (Rs):

Organization:

The Coca-Cola Company

Industry:

Food & Beverage

Country:

Themes:

Accountability

Abstract

The case discusses the crisis faced by Coke in Europe when people fell ill after consuming its products. The case also brings out the ethical dimensions involved in Coke’s exclusive school contracts, which was done to promote soft drink sales among school children. The case is designed to help students critically analyse the ethical issues involved during Coke’s European crisis and the exclusive school contracts controversy in the US. Students must appreciate the role of sound ethics in doing business.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

Unethical Practices by companies.

Dr. John Pemberton, an Atlanta-based pharmacist, developed the original formula of Coke in 1886. It was based on a combination of oils, extracts from coca leaves (cola nut) and various other additives. The ingredients were refined to create a refreshing carbonated soda.

The exclusive school contracts allowed Coke exclusive rights to sell its products - soda, juices, and bottled water - in all the public schools of a district. Under the plan, the schools got $350,000 as an "up front"money and a percentage which ranged from 50 percent to 65 percent of total sales...

While Coke faced a lot of criticism from health experts and public agencies for targeting school children during 1998-1999, the company received a major setback during the European crisis in which school children were the major victims. After the crisis, Coke investigated the problem by testing the suspect batches for chemicals. The company claimed that the tests showed nothing toxic in the beverages. However, to explain the whole crisis, Philippe Lenfant, general manager of Coke Belgium, said that there had been separate errors at two plants...

Exhibit I: Seven Categories of Schoolhouse Commercialism Exhibit II: Health Impact of Soft Drinks Exhibit III: Rising Consumption of Soft Drinks

Keywords

Coca-Cola, District schools controversy, Exclusive school contracts, Public relations problem, Unethical business practices, Harmful effects of soft drinks, Belgium controversy

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