Code of Business Ethical Conduct
Ethical business practices are known to provide companies a significant competitive advantage over their worthy competitors. To establish and sustain an ethical business culture, companies have always developed a code of ethical conduct that guide their business operations, employee relations, and even their interaction with clients, other companies, and the society at large.
Coca-Cola’s Code of Business Conduct
Coca-Cola is a United State-based beverage manufacturing industry. The company was founded in 1982, and has developed over the years to become a multi-national company, with business operations is almost every country across the world. The leading Coca-Cola brands include Coca-Cola, Fanta, Sprite, Minute Maid, among others. Coca-Cola’s success in selling its products around the world is largely attributed to its franchising strategy. Through this strategy, the company has been able to domestically manufacture all its important concentrates in the United States (U.S.), but has franchised the bottling business to independent firms across the world (Gong, 2013, p. 47). Coca-Cola is among the world’s most valuable brands.
Coca-Cola attributes its global success largely on its rich culture of integrity and ethical conduct. The company interprets integrity as the ability of its employees and the company to act honestly and treat one another, its customers, partners, suppliers and consumers fairly, and with much deserved dignity. Furthermore, Coca-Cola acknowledges that the code of business conduct has been instrumental in helping it establish and sustain ethical conduct. Coca-Cola’s code of business conduct identifies three issues that are critical to its success, namely, acting with integrity around the globe, integrity in the company, and in dealing with others.
In the “acting with integrity around the globe” issue, Coca-Cola clearly explains what is expected of every employee of the company. For instance, this section requires everyone to comply with the company’s code of conduct and law, regardless of the location. It requires all employees to make informed judgments, and even avoid exhibiting any improper behavior. It insists that its employees should consider their actions and ask for guidance when in doubt. Coca-Cola managers are expected to encourage a culture of ethics and compliance, and also respond to questions and concerns raised. Those raising concerns are assured of anonymity, confidentiality, and appropriate protection against retaliation.
The issue of integrity in the Coca-Cola Company has also been identified as critical to its success. This is particularly true as Coca-Cola’s employees cannot be expected to act with integrity across the globe without beginning ethical conduct within the Coca-Cola Company. This issue highlights how the company’s employees and management teams are expected to deal with the company’s records, assets, and information. For instance, they are required to ensure the accuracy of all the company’s business and financial records. This is particularly important because ensuring accurate recordkeeping and reporting would be a reflection of the company’s reputation and credibility. Furthermore, it would ensure Coca-Cola complies with its legal and regulatory obligations. Secondly, Coca-Cola requires its employees to protect the company’s assets, and ensure that such assets are in the intended manner. It prohibits individuals from using the company’s materials and equipments for personal benefits. This rule is important to the company’s overall success as it is meant to ensure that all Coca-Cola’s assets are entirely used to benefit the company. Finally, employees are required to safeguard the Coca-Cola’s nonpublic information. The rule covers a wide range of aspects, such as contracts and pricing information, marketing plans, staff information, and even the technical specifications of its products. This rule is critical to Coca-Cola’s success as its ability to dominate the market is largely attributed to the highly secretive formula that has been used to manufacture its leading brands for years, for example, the Coca-Cola soft drink.
Finally, the issue of integrity in dealing with others is important because the company’s success is largely dependent on its external relationships. It is for this reason that the company requires its employees and businesses to deal fairly and lawfully with all entities it encounters, for instance, governments, customers, suppliers and consumers, and even competitors. The company prohibits any forms of bribery when dealing with the government, and prohibits its employees and business units from participating in political activities while representing the company. This rule has helped the company maintain political neutrality and work favorably with governments across the world, thereby contributing to its years of business success.
PepsiCo Code of Business Conduct
PepsiCo also operates in beverage and food industry as Coca-Cola. The company acknowledges that its code is critical to its success as it helps the company do business in the right way. Similar to Coca-Cola, PepsiCo also requires all its employees to embrace the company’s code of conduct principles. Three important elements in PepsiCo’s code include its requirement that all its employees show respect in the workplace, act with integrity in the marketplace, and perform work responsibility to its shareholders (Belew et al., 2009, p. 58-59). The showing respect in the workplace rule shows that PepsiCo believes that ethical conduct begins with employees within the company. It requires employees to respect diversity and human rights in the workplace to enable employees establish teamwork to accomplish the company’s goals. PepsiCo’s code principle requiring its employees to act with integrity in the marketplace is similar to Coca-Cola’s issue of integrity in dealing with others. This is because it requires PepsiCo’s employees to treat everyone they contact in the marketplace (for instance, consumers, customers, communities, competitors, and suppliers) with fairness and integrity. Its commitment to integrity is founded on its obligation to observe all applicable laws in every location it operates. Finally, the principle requiring employees to perform work responsibility to shareholders matches Coca-Cola’s issue calling for integrity within Coca-Cola Company. This is because the principle requires all PepsiCo employees to create value for the company’s shareholders. They achieve this through putting PepsiCo’s interests first, ensuring accuracy of its business records, and protecting and using the company’s resources, information, and property properly.
Kraft’s Code of Business Conduct
Kraft’s code of business conduct principles is also similar to that of Coca-Cola and PepsiCo. Firstly, Kraft requires its employees to make food that is safe to eat and also treat people fairly. This rule ensures integrity and respect for diversity. Making safe food would increase customer and consumer confidence in its products, which can result in increased sales and success. Secondly, Kraft requires its employees to keep honest books and records in order to add value to the investors, the company, and the employees themselves. This rule is critical to the company’s success because giving false information can make the company be prosecuted, managers jailed, and scare away investors, all of which contribute to its success. Thirdly, Kraft requires its employees not to trade the company’s inside information. For this reason its nonpublic information, such as the formula of its products provides it some competitive advantage in the industry.
Coca-Cola, PepsiCo, and Kraft
Coca-Cola requires its employees to keep the technical details of its product a secret, for example, the Coke drink formula. Some consumers have suspicious of the drink’s content, some claiming that it contains cocaine (Smith, 2013, 429-430). Disclosing significant information on how safe its beverages are would potentially improve sales among worried consumers because of transparency. Failure to address the issue would result in more controversy about the drink’s content, which would not be good for business. Integrity in dealing with others, such as suppliers and governments, would enable Coca-Cola to maintain its position as the world’s largest beverage company amid stiff completion. Failure to exercise integrity in dealing with governments may adversely affect its overseas operations as it can be denied permission to operate in some countries.
PepsiCo’s requirement that all employees show respect in the workplace is essential in building an organizational culture in which diversity is valued. This would create a very good working environment, which would eventually translate to higher productivity and profitability. The company risks losing its high performing employees if it fails to create an organizational culture in which diversity is valued and respected. Secondly, performing work responsibilities to shareholders would motivate them to invest more in the business to expand their global reach. Failure to meet shareholders’ expectation would result to scaling down of activities, resulting in unemployment as shareholders would channel their investments elsewhere where they get value for their money.
Kraft’s ability to make safe foods and beverages would increase consumers’ and customer’s confidence in its products. This would increase its customer base, and subsequently higher profits. The company can be rocked with the damaging food safety scandals if it fails to make safe food and beverage products, thereby reducing its market penetration and profitability. Keeping honest books and records would increase Kraft’s transparency. This would make the company attract new investors to boost its market competitiveness. Lack of transparency would discourage shareholders and potential investors, which would adversely affect its operations and expansion aspirations.
Coca-Cola can ensure its code of conduct remain relevant through reviewing/evaluating and amending them periodically, for instance, yearly, to ensure they commensurate with the changing economic, political, social, cultural, and technological forces on business and society. Secondly, apart from evaluating existing code, the company can also add on new rules that address new challenges that cannot be solved using existing code.
Coca-Cola is managing environmental issues through designing resource efficient packaging, and using recycled and/or renewable materials. Resource-efficient packaging has been highly effective in reducing the amount of energy and raw materials used in manufacturing its packaging materials (Ashby, 2013, p. 84). Using less energy reduces carbon dioxide emissions from combustion of fossil fuels. Minimum packaging materials often reduce the exploitation of raw materials from the environment, and use of less fuel in transportation as materials are lighter. Using recycled and/or renewable material has also reduced the demand and subsequent exploitation of resources for manufacturing packaging materials.
Coca-Cola is embracing technological advancements for innovation through allocating enormous resources to its technology research and development program. It has a technology hub that is constantly developing and testing new technological innovations. Furthermore, Coca-Cola is building and supporting technology startups, most of which have been integrated into the company. All these approaches have worked to improve Coca-Cola’s business offerings.
Coca-Cola would experience more problems benefiting from business intelligence using information systems because its franchising units across the world are quite independent. It can minimize this challenge through establishing an information system that integrates all its national and regional business units. Coca-Cola is not well prepared to benefit from the recently developed 3D technology. The company can minimize the challenge through exploring areas in which 3D can be useful in its business operations. Finally, marketing strategies are increasingly going online, especially in social networks. To minimize the challenge, Coca-Cola should intensify marketing via social networks as it is currently relying heavily on traditional media.
The U.S. federal government had singled out soft drinks, such those by Coca-Cola as uniquely contributing to the obesity problems in the U.S. The attempts to exclude soda from states’ food stamp program made Coca-Cola lobby the federal government against the move as it could adversely affect its business. The company was lobbying policy making institutions such as Congress and U.S. Department of Agriculture. Coca-Cola succeeded opposing a bill in Florida that could have prevented the supply of its products containing soda in the state’s food stamp program. The lobbying effort was appropriate because there is no convincing evidence that soda causes obesity. If there is, the problem should be addressed at the manufacturing level, not at the market level.
Coca-Cola’s global citizenship efforts have largely been evident in the sports and music industries that have global audiences. For example, Coca-Cola remained for years the main sponsor of World Cup football competition that has a global audience. This competition has brought teams and fans from different countries together, in which most travel across countries and continents. The company’s support for the competition has not only enhanced intercultural awareness, but has also helped market the company’s products to the global audience. These could possible boosts its sales and increase its customers’ brand loyalty. Secondly, the company is actively involved in environmental projects across the world, in an attempt to address the climate change problem. This has helped it emerge as an environmentally friendly company, thereby improving its acceptance across various regions of the world. It also ensures the company operates in a safe and sustainable environment that supports its operations.
Ashby, M. F. (2013). Materials and the environment: Eco-informed material choice. Amsterdam: Elsevier/Butterworth-Heinemann
Belew, S., Elad, J., Holden, G., & Rich, J. R. (2009). E-business. Hoboken, NJ: John Wiley.
Gong, Y. (2013). Global operations strategy: Fundamentals and practice. Berlin: Springer.
Smith, A. F. (2013). The Oxford encyclopedia of food and drink in America. New York, NY: Oxford University Press.