Coca-Cola India is a pure commitment to the Indian economy. The company has been gaining a healthy growth in the economy of India creating an enormous job opportunity. Although it is one of the prominent brand of the sector, the company had to face numerous obstacles in the past. India, being one of the most influenced country by political ideation, the party in the government demanded for the secret formula of the brand. As a result, the company had to quit from the country. Some environmental group also accused the brand of mixing the pesticides in their drink which later turned out to be false after much of allegation and defence. The brand was also claimed to have engaged in unethical production practices in India such as causing sever water shortages, locating water extracting plants in "drought prone" areas, further limiting water access by contaminating the surrounding land and groundwater, and irresponsibly disposing of toxic waste. After defending itself from massive accusation, the company employed The Energy and Resource Institute (TERI) to assess its operations in India to safeguard the brand.
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Keeping in mind the concept of Corporate Social Responsibility, Coca-Cola took various initiatives to improve the drinking water conditions for those around the world. It formally pledged support for the United Nations Global Compact and co-founded the Global Water Challenge and catered services to countries in critical need for water access and sanitation. To conserve water and fresh water resources, it declined the use of water level on a per-plant and system wide basis. They also established Ethics Line for disclosing confidential information to third party. Company invested more than US$ 1billion in India, making it one of India's top international investors.
It is not possible to carry out business in the same way in every global location. Procedures and strategies that work well at home may not be adopted overseas without modifications because different cultures exist in the world. An understanding of the impact of culture on behaviour is critical to the international management.1. If international manager do not know something about the cultures of the countries they deal with, the result can be quite disastrous.2 Basic cultural differences can create some misunderstanding but can easily be adjusted to when the difference is recognised.
1. Peaple, 2002, p.1
2. Hodgetts, Luthans,& Doh, 2006, p.94
Kerala is run by a communist government where as the U.S. have capitalism thoughts. The clash of capitalism and communism bought some cultural differences for Coke in India. Because of several political and bureaucratic divisions, the company had problems implementing policies and reform. Stemming from India's colonial legacy, Indians are highly suspicious of foreign investors. Business activity in India is undervalued and leisure is typically given more value than work whereas US culture focuses individual initiative and personal achievement. In context of US society, one's position is determined by one's achievement as opposed to status or age. American people have low context cultural values3. Generally, they tend to deal conflict4 directly and openly, for which they never hesitate to say 'no' or criticise others in public. This direct style of speech is considered as rude and hostile sometimes. India is a complex country. Entry into Indian culture to do a business is quite difficult. Hostile and aggressiveness is considered as a sign of disrespect in Indian culture. When Coke was accused of using water that contained pesticides in its bottling plants and banned the product, they fought back against the accusation.
As we know, prevention is better than cure. Taking into consideration the fact, Coca-Cola might have opened its own laboratory before facing the accusation, instead of employing The Energy and resources Institute (TERI) to access its operation in India. Negligence of the burning issue in such a delicate environment led the company to more risky situation. They had to leave the country once. They should have emphasized more in the issue rather than creating a thought of leaving a country.
Understanding of the cultural concepts is important for any organization when doing business in any part of the globe. Coping with the political situation is a matter of utmost care. When the political parties form government, companies have to abide by the financial, export and import policies prepared by them. Consideration of Corporate Social Responsibility is important (CSR). CSR will have a chain effect. When people feel that the company is taking care of them and their society, they will buy the product and company will have profit. Consumer health is a great concern and they should be taken great care.
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Countries differ significantly in terms of their national cultures. Flourishing businesses need to consider the cultural diversity and adapt to the differences effectively.
3. Hodgetts, Luthans, Doh, 2006, p.94
4. Stone, 2011
Such adaptation requires an understanding of cultural diversity, perception, stereotypes, and values.5. Companies should have a feeling of trust, commitment, success, working together, with societies, attitudes to time, and favourable decision making considering societies. Business ethics should be the core practice of companies like Coke and Pepsi i.e. always doing the right thing. Dealing fairly and reasonably with local population's safety & health and committing itself to environmental protection is vital for the company.6
In a nutshell, Coca-Cola being a renowned brand should protect the environment. There are quality standards developed by the government. Coca-Cola should adhere to those quality standards which cover both source water and finished products. Company should focus in the production of the beverages which consistently meet the international standards for safety and quality. Focusing more in the Corporate Social Responsibility (CSR) (will foster the company growth. As a known fact, they have a problem with water pesticides and groundwater system in India. Frequent checking and renewal of the operation and publishing the result will give them more consumer belief.
Respecting people and supporting communities is important as well. Creation of job and wealth in the nation can be a great help. They can go for the programs such as sustainable lending program (Frederick & Kuratko, 2010), micro enterprise development (Frederick & Kuratko, 2010. The outcome of the program will be profit for the company and creation of job for the communities.
Offering safe and quality products which are free from health risk to the consumers can be considered as important for companies. Coca-Cola should maintain the safety and quality of the product and address consumer preferences and needs which will always help company to grow further.
5. Hodgetts, Luthans, & Doh, 2006
6. Retrieved from http://www.coca-colaindia.com