Case Analysis of Coca Cola Company In India
Causes of Coke’s difficulties in India
When reviewing the case on Coca Cola (“Coke”) in India, there could be several reasons why Coke’s attempt to expand its market in the country caused many complications. First reason is lack of research and understanding of how the Indian culture is portrayed. Coke is a traditional American company and trying to enforce their views on how their company should be seen and using the same systematic approach in operations to gain market share in India was a failed attempt. One strong aspect that was lacking is the use of communication. The company should have done more research by conducting surveys to get feedback from whom they are targeting and see what Indian people value. As seen from the case, Coke neglected to do this and assumed that being a U. S company its culture would be a success anywhere.
What they failed to recognize is India is a country whose people are becoming increasingly concerned on the health effects of products from foreign corporations. As discussed by Mr. Chandramouli, a brand expert and Chief Executive of Trust Research Advisory says “Indians are becoming increasingly health-conscious and explains that Coca-Cola has yet to adapt and it would need to develop a strategy for the long term. the case. ” (Bundhun, 2017). More recently India’s Center for Science and Environment (CSE), found 57 bottles of Coke’s brand to have contained unsafe levels of pesticides by their standards. (Doh & Luthans, 2018, p. 248). Coke has continued to struggle with India’s stronger rules and restrictions of what can pass as healthy to consume and how the company operates.
The company was accused of overuse of the country’s water supply and furthermore contaminating the country’s ground water supply during production. India is a strong supporter on the safety of the country’s environment and its people, but not in favour of having big multinational corporations trying to take advantage of them and their resources. Indians are highly suspicious of multinational companies because they believe large corporations are just in it for the profits and therefore disregard any well being for its potential consumers who come from such poverty-stricken countries. As mentioned by Uhel Seth, a leading public relations expert in India and an adviser to Coca-Cola India. “Fringe politicians will continue to be publicly hostile to big Western companies, regardless of how eager they are for their investment,” Mr. Seth said. “Large multinational corporations are still seen by pockets of consumers and opinion makers as marauders and not as contributors. ” (Gentleman, 2006). India’s society might feel that because of this, large foreign companies are making more profits by cheap labour costs to produce their product and see them as bullies due to their large buying power.
How might Coca-Cola have responded
When looking at Coca Cola’s first response to the negative perceptions surrounding its product in India, they should have taken a better approach by acting on the problems first hand. If the company would have reacted immediately to these allegations of contaminated soft drinks, the news surrounding their product would not cause such an uproar. Coke’s first reaction was to focus to revive their self image by workarounds. They blamed how other companies should have been tested too, which was basically an attempt to blame India’s own ground water supply.
Taking this approach would have caused bigger issues for Coke as they were trying to criticize a country they are trying to capitalize on. If Coca Cola would have addressed the allegations at first rather then wait for their own lab results, they could have reduced such negative back lash from Indian government officials and its consumers. It is understandable that Coca Cola, being such a large company, would want to conduct their own testing, however it can be seen from Indian officials as disobedient. Furthermore, Coke’s silence around the issue, could be seen as dishonest towards potential investors and consumers which could ruin any chance of the company’s future plans of expansion into India.
Changes Coca-Cola needs to make
Since the negative perceptions that were brought upon Coca Cola, the company has made many adjustments in enhancing their reputation in India. Coca cola has taken initiative to improve the drinking water conditions that once derailed the success of their company expansion.
As discussed in the case, Coca Cola now seeks “support from the United Nations Global Compact and co-founded the Global Water Challenge which improves water access and sanitation in countries that are in critical need. ” (Doh & Luthans, 2018, p. 250). The company has also improved energy efficiencies in 98% of new refrigerator sales by using hydrofluorocarbon-free insulation and marketing equipment. Other initiatives include expanding its rainwater harvesting projects by partnering with Central Ground Water Authority, State Ground Water Boards, schools, colleges and local communities to fight against water shortage. In doing this Coca Cola has managed to achieve a target of being a “net zero” user of ground water by engaging in 400 rainwater projects.
The chair and CEO of the Coca Cola has stated, “our goal is to replace every drop of water we use in our beverages and their production. For us that 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”. (Doh & Luthans, 2018, p. 251).
As of 2014 the amount of water used to produce a liter of Coke has reduced from 2. 70 liters to 2. 03. Coca Cola has also introduced EthicsLine, a service toll free line that allows anyone to report confidential information 24 hours a day.
Working with different countries
As mentioned earlier large multi-national enterprises like Coca cola and PepsiCo need to demonstrate commitment in working with different countries and respecting cultural barriers by means of communication. These large corporations need to gather more research on the countries they are trying to expand their business operations in. By conducting surveys, Coca cola and PepsiCo will be able to receive important feedback from who they are targeting and in return get a better understanding of what these societies value the most. Coca cola has made improvements in their communications by allowing anyone to connect directly through their EthicsLine. Now the company is able to answer any questions or concerns from the public, which will build more honest relationships.
As seen from the case, Coca Cola was frowned upon by India’s government and society because of how silent they were towards the allegations brought upon them. Other characteristics that these companies can continue to focus on is respecting the rules and restrictions and the natural environments of these countries. As mentioned, India has high values on the health and safety of foreign products and its country’s natural resources. The accusations surrounding Coca cola had a huge impact on the company that discouraged a lot of people from buying their product. If theses large multi-national companies want to continue doing business and become successful, they need to fall within the limits of what is considered safe and healthy when conducting their operations.