Coca Cola And The Privatization Of Water Business Essay

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Water has become a highly precious resource. There are some places where a barrel of water cost more than a barrel of oil. ( Lloyd Axworthy, foreign Minister of Canada (1999- News conference). This quote shows the importance of water for human being. Water is consider to a basic human, need and so access to clean water is typically considered to be a fundamental human right. Even when both poles of earth is filled with ice and despite of so many oceans only 1% of global water resources can be used by humans for drinking. Apart from this fact 18% people mainly from underdeveloped or developing countries have no access to basic safe drinking water and 40% have no access to basic sanitation. The aim of this essay is to discuss the abuse of water in the era of globalization by MNC's like coca cola and the reaction of stakeholders.

Evidences shows the sharp rise in the privatization of water utilities over last few decades. Privatization of water has become a heated as well as political issue specially in developing countries where western MNC's are competing with indigenous population for the use of often scare water resources. Coca Cola bottling plant in Kerala in southern India. As per estimate coca cola has invested $ 1 bn in India between 1993 and 2004, which was roughly a fifth of the entire foreign direct investment to the country. It was a surprise for the company when in 2004 High court of southern provinces of kerala the closure of a coca- cola bottling plant in the village of Palchimada. The ruling followed three year of campaning by local villager, national NGOs, and research institutes. The centre issue of the compagin, at least initially, was the fact that since the kerla plant opened in 2000, groundwater level had fallen by 25-40 feet, resulting in severe water shortages for rural neighbours of the plant. Harvest allegedly fell by 80-99% and the remaining water become undrinkable in a region where most of the people are extremely poor and dependent on small-scale local agriculture.

Still though the company set up a tanker service providing people around the plant with daily supply of water. The court, however ruled that the groundwater is public a public good and Coca Cola, in the aftermath of ruling, had to reorganise its water supply from other parts of india into the plant. As of 2006, coca cola has reduced its water use by 24% and installed rainwater harvesting system in 26 of their plants. Ultimately Coca Cola became something of a leader in water management practices, including the introduction of far-reaching global water stewardship initiative. In india this entailed, amongst other things, a commitment to replace all groundwater used in its beverages and their production by 2009. Globally, the firm struck a water convention partnership with the world wide fund for nature(WWF), which in 2007 led to the firm's CEO announcing an ambitious goal to return to communities and to nature an amount of water equivalent to what they used in all of their production. As the firm says, 'this means reducing the amount of water used to produce our beverages, recycling water used for manufacturing processes so it can be returned safely to the environment, and replenishing water in communities and nature through locally relevant projects'. The latter included a $30m 'Replenish Africa initiatives' that aims at providing drinking water to the towns and villages where the company has botteling plants. Usually Coca Cola works in these projects in partnership with local and international NGOs, community groups, and international aid agencies. Since 1997, the company has successfully engaged in a number of projects in country such as Angola, Ethiopia, Mozambique, Nigeria, and Rwanda and effectively brought water supply to many places where government had failed to deliver.

Business ethics is the study of business situation, activities, and decision where issue of right and wrong are addressed. The word business does not mean only commercial business, but also government organisations, pressure groups, non-profit organisation, charities and other organisation. One natural question comes into mind having defined business ethics in term of right or wrong is it different from law? Law is defined as minimum acceptable standards of behaviour. However, many morally stable issues, whether in the business or elsewhere, are not explicitly covered by law. Business ethics can be said to began where the law ends which means it is concerned with those issue not covered by law or where there is no definite consensus on whether something is right or wrong. Ethics represent an attempt to systemize and rationalize morality, typically into generalized normative rules that supposedly offer a solution to situation of moral uncertainty. It is about some form of rationalization of morality. Ethical judgement are subjective, complex, and deals with cultural, legal and accountability issue. Ethics in advertising is all about marketers acting in the right way. Ethical marketing helps to maintain trust, without which marketing function cannot succeed among the brand owner and other stakeholders, mainly the consumer. Ethical marketers should ideally embrace principle such as honesty and fairness, taking responsibility for their product, transparency as well as respect for the costumer rights. Adopting ethical code of conducts companies helps themselves in building reputation as well as in maintaining their market share. Unfortunately most of the companies come in news for their unethical behaviour.

Globalisation- Globalisation as defined in terms of the deterritorialization of economic activities is particularly relevant to business ethics, and this is evident in three main areas- culture, law and accountability.

Cultural issue-As business less fixed territorially, so corporations increasingly engage in overseas market, suddenly finding themselves confronted with new and diverse, sometimes even contradictory ethical demands. Moral value that were taken for granted in the home market may get questioned as soon as corporations enter foreign markets. (Donaldson 1996). Globalization results in the dererritorialization of some process and activities, in many cases there is still a close connection between the local culture, including moral values, and a certain geographical region. Globalization reveals economic political, and cultural differences and confronts people with them. This dialectical effect has been growing subject for research over the past decade ( Boli and Lechner 2000)

Legal issues-The more economic transactions lose their connection to a certain regional territory, the more they escape the control of the respective national governments. Business ethics begain where the law ends, then deterritorailization increases the demand for business ethics because deterritorialized economic activities are beyond the control of national government.

Accountability issue- , MNCs own the mass media that influences much of the information and entertainment we are exposed to, they supply global products, they pay much of the taxes that keeps our governments running. Furthermore one could argue that MNCs are economically as powerful as many governments. For example coca cola investment was .......................................................................................

However Indian government has to be responsible or accountable to the Indian people and must face election on regular basis, the manager of caca cola are formally accountable only to relatively small group of people who owns share in the company. Even communities in the india depends directly on coca cola investment decisions, however have next to no influence on the company and unlikely a regional or national government, coca cola is, at least not legally accountable to these constituencies. This menas the more economic activities get deterritorialized the less governments can control them, and the less they are open to democratic control by the affected people. Concequently the call for direct accountability of MNCs has become louder in recents years, evidenced, for example, by anti-globlization protest. Globalization leads to growing demand of corporate responsibility. Business ethics is increanisly in demand since it offers the potential for corporation to examine and respond to the claim made on them by various stakeholder.

Who are the key actor in business ethics?

non governmental organisation (NGOs), is often a key player within the arena of business ethics. One of the reason lies in the fact that governments in these countries often are underfunded or even corrupt, and therefore provided limited guidance or legel frameworks for ethical decision-making. NGOs also partner with business in public ( and governments) in public-private partnerships to address urgent ethical issue, such as poverty, disease, or lack of education.

Dominant stakeholders management approach- different character of corporation in the world. Asian companies also feature a great deal of structural integration,but the interests of employees and other stakeholders are often promoted through cultural norms of trust and implicit duties, rather than formal governance mechanism (Johnson and Scholes 2002:99). An approach that has a long standing tradition in countries such as india, where companies like tata have attempted to honour ethical obligation to multiply stakeholder for decades (Elankumaran et al. 2005).

New challenges of globalization have emerged, considerable interest has also been directed toward the development of new ways of addressing the diverse impact of business in society. Many of these impacts are far reaching and profound. Such as-

The environment pollution, in particular the effects on climate change, caused by the production, transportation, and use of product such as....

The ever increasing problem of waste disposal and management as a result of ef excessive product packaging and the dominance of throwaway culture.

The erosion of local culture and environment due to influx of mass tourism in place as diverse as thai fishing village.

Sustainability refers to the long term maintenance of systems according to environmental, economic and social considerations. TSB represent the idea that the business does not have just single goal- namely adding economic value-but that it has an extended goal set which necessitates adding environmental and social value too ( Elkington 1998). Sustainability is generally regarded as having emerged from the environmental perspective, most notably in forestry management and then later in other area of recourse management (Hediger 1999). The basic principles of sustainability in the environmental perspective concern the effective management of physical resources so that they are conserved for the future. All biosystem are regarded as having finite resources and finite capacity and hence sustainable human activity must operate at a level that does threaten the health of those systems.even at the most basic level, these concern these concern suggest a need to address a number of critical business problems, such as impact of industrialization on biodiversity, the continued use of non renewal resources as well as the production of damaging environmental pollutants like greenhouse gases and CFCs from industrial plant and consumer products.

Economic perspectives- the economic perspective on sustainability initially emerged from economic growth models that assessed the limits imposed by the carrying capacity of the earth. The recognition that continued growth in population, industrial activity, resource use, and pollution could mean that standards of living would eventually decline led to the emergence of sustainability as a way of thinking about ensuring ensuring that fyture generation would not be adversely disadvantaged by the activities and choices of the present generation.

A narrow concept of economic sustainability focuses on the economic performance of the corporation itself: the responsibility of management to develop, produce and market those products that secure the long term economic performance of the corporation. This includes a focus on those strategic which, for example, lead to a long-term economic performance of the corporation. This includes a focus on those strategic which, for ex lead to long term rise in share prices, revenue, and market share rather than short term explosion of profits at the expense of long term viability of success. A broader concept of sustainability would include the company's attitude toward and impact upon the economic framework in which it is embedded.

Socia; prespective- the development of the social prespective on sustainability has tented to trial behind that of environmental and economic perspectives (Scott, Park and Cocklin 2000) and remains a relatively new development. The explicit interation of social concerns into the business disclouser around sustanibility can be seen to have emerged during the 1990s, primarly it would seem in response to concern regarding the impact of business activities on indigenious communities in less developed countries and regions. The key issue in the social prespective on sustainability is that of social justice.

Implication- we should look at businee ethics, be they plant closures, product accessibility issue or industrial pollution, demand that we consider a diverse and complex range of consideration of concerns. However to achieve genuine sustainability in any of three area,let alone in all of them. Page 37.

Corporate social responsibility- corporation perceived as being socially responsible might be rewarded with extra and more satisfied customers while irresponsibility may result in buycotts or there undesirable consumer actions. The economist ( 2008a: 13) found that for more than 50% of global business leaders the prime reason to engage in csr is having a better reputation for companies with a strong global brand consumer pressure can be the key driver towards more responsible practices. (Zedek 2004)

Voluntarily commitment to social actions and programmes may forestall legislation and ensure greater corporate independence from government (Moon and Vogal 2008).

Making a positive contribution to society might be regarded as a long term investment in a safer better educated and more equitable community, which subsequently benifits the corporation by creating an improved and stable competitive contex in which to do business (porter and Kramer 2006)

But when they are carried out by our own reasons of of self intrest they are not csr at all but merely profit maximization under the clock of social responsibility. ( bowie 1991) corporation causes social problem and hence have a responsibility to solve those they have caused and to prevent further social problem arising. As powerful social actors with recourse to substantial resources, corporation should use their power and resources responsibly in society.