CSR & BE-SESSION 9

Coke & Pepsi in India

Swechha Dhakal-112755, Shashank Pradhan-113312, Jush Shrestha-112817,

Nitesh Jung Joshi- 112736, Sneha Basnet-112884

Q1) Identify the issues that are going on in this case with respect to issues management, crisis management, global business ethics, and stakeholder management. Rank these in terms of their order of priorities for Coca-Cola and PepsiCo.

Ans: There are several issues in this case:

Issues Management:

- High levels of pesticide residue in the soft drinks

- Over consumption of water which caused severe water shortages in the communities

- Water pollution and soil pollution.

Crisis Management:

- Coke and Pepsi used media as their main strategy for tackling for such problems by claiming that their products were safe.

- Coke used Bollywood star Amir Khan by claiming that the product was safe

- Pepsi tried to cut down water usage and they also used kaizen.

Global business ethics: Companies have to be not only legally but also ethically responsible during manufacturing of product.

Stakeholder’s Management: The main problem was the companies did not connect with the communities in the way they needed to.

Q 2) Evaluate the corporate social responsibility (CSR) of Coke and Pepsi in India.

Ans: After the pesticide controversy and many other allegations against these soft drink companies, they are taking forward the CSR projects to the national footprint. Both companies were pursuing CSR initiatives in India, many of them related to improving water resources for communities, at the same time as the conflict was holding stage. After Nooyi became the CEO of Pepsi, she planned to improve water and the environment and she spoke broadly about it. These two companies have together invested $2 billion in India over the years and have generated

12500 jobs and support, more than 200000 indirectly through their purchase of Indian made products, including sugar, packing materials, and shipping services.

Q 3) Are these companies ignoring their responsibilities in India? Or is something else at work?

Ans: These companies are not ignoring CSR in India. As we have discussed earlier, they have participated in many social activities. However, a form of backlash against huge MNCs that come into countries and consume their natural resources seems to be at work. It could be the environmental interest groups using every opportunity to bash large corporations on issues sensitive to the people, or CSE and IRC strategically making an example of these two huge companies and trying to put them in place.

Q 4) why does it seem that Coke has become a larger and more frequent target than Pepsi in India? Did having and Indian born CEO help Pepsi’s case?

Ans: Coke has become a larger and more frequent target than Pepsi in India because of their international exposure and strong economic portfolio. Coke has the total beverage package and is able to present all of its energy towards its economic portfolio. Pepsi also makes snacks, yet has a weaker portfolio and has less international exposure. The brand ambassador of Coke is Amir Khan, one of the super stars of Bollywood, as most of his movies are selective and big hit, due to which, the general public on India perceives that he has chosen to be the brand ambassador of Coke as it must be a good product. Therefore, the coke in India has become a larger and more frequent target than Pepsi.

The Indian born CEO, Indira Nooyi has become a great help to Pepsi, as Pepsi was able to rebuild its relationships in India. Before she became CEO, she had number of successes in Pepsi and became the company’s chief strategist. After she became the CEO, the sales of Pepsi started rising upward.

Q5. How do companies protect themselves against non-stop allegations from special interest groups that have made them a target?

Ans: The companies are protecting themselves against non-stop allegations from special interest groups that have made them a target in various ways. Like the company has 70 clean water projects in 40 countries aimed at boosting local economies. It also has been putting efforts to their broader strategy on the part of CEO Neville Isdell to build Coke’s image as a local benefactor and a global diplomat. The company also has made water stewardship which is a strategic priority. The company unveiled its 5-pillar growth strategy to strengthen its bond. So its new strategy focuses on the pillars of People, Planet, Portfolio, Partners and Performance. It also announced another proposal which tries to reinforce the company’s connection with stakeholders in India. The Pepsi Company also has developed new initiatives that gather rainwater in

evacuated lakes and ponds and on the rooftops of its bottling plants in India. So this is hoe companies protect themselves.

Q 6) What should the companies have done differently in 2003 to address the water allegations? What should the company now do as it moves forward?

Ans: Coke and Pepsi in 2003 should have connected to the communities in the way they needed to in order to address the water allegations in a better way. Further, since water is the key natural resource and that it goes into its products, Coke and Pepsi should have taken the step of performing various social responsible acts like clean water projects that they have been doing now in several countries to build their image as a local benefactor and a global diplomat along with the economic boost the that particular region long ago.

As the company now moves forward, they should continue to get close and connect with their customers and communities closely. They should move ahead with their philanthropic activates contributing to the community more. Like Coke and Pepsi can confront the issue of water use in the manufacturing of their products by the use of canal irrigation and rain water harvesting. Then they can also put water recycling plant to treat the discharged water from their factories and then they can provide that water to farmers for their agricultural use. This way the ground water problem can also be solved and managed.

Coke and Pepsi can further defuse boycotts or demonstrations against their products in California by following the strategy used in India of doing Ad-campaigns in which the experts from the ministry for health can convey the message to the public that their products are safe and healthy. They can hire celebrities to do the ads for their products because the public follows them.

Q 7) what lessons does this case present for MNC’s doing business in the global marketplace?

The following lessons can be learned from this case for MNC’s doing business in the global marketplace:

- For MNC’s doing business abroad should keep in mind the policies, rules and regulations for consumer’s safety and health related issues.

- Food and Beverage products are very sensitive products as it will have a direct effect on the consumer’s health, therefore, it is essential to maintain consistent quality and taste all over the world for the same product.

- The head office should do a regular inspection on the factory site so that they are maintaining quality and not compromising on quality and taste of the product.

- If we are launching any product in other countries, then, it would be advantageous, if we can make a popular celebrity of that country as a brand ambassador, so that the consumer will feel comfortable and excited to buy that product.