Racial Discrimination Issues In Coca-cola Company

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Coca-Cola is a well-known American company. It is one of the largest international beverage companies in the world. It manufactures nonalcoholic beverage, syrups and concentrates. Since its origination in late1800’s, it expanded rapidly and was evident that it was here to stay. The company is in over 200 countries. Over the years, they have also added the production of various types of carbonated drinks and water to their line of products. Coca-Cola has faced different legal dilemmas, which has impacted the company not only financially but also the trust of its consumers. The legal and ethical troubles affected their financial performance to where their stock trading in 2000 was the same price as it was ten years ago.

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Racial Discrimination

Just like all the multi-nationals, Coca-Cola has strict policies when it comes to dealing with racial discrimination issues in the organization. Racial discrimination occurs when an individual is treated differently on the basis of the race, skin color or national origin. While discrimination is the unjust and prejudicial treatment of individuals solely on the basis of a quality perceived as different. Actions or words prompted by someone’s race, national origin, color, marital status, sex or religion is discriminatory if they adversely affect a term or condition of the persons employment or living environment. They are also discriminatory, if they are used as the basis or factor in decisions affecting a person’s employment, education or living environment, or if they purposely interfere with an individual’s employment performance as a result of a hostile work environment. Employers are required by law to treat each employee fairly in the workplace. A positive workplace ethics is expected to be part of every establishment.

Ethical Theories relating to racial discrimination

Ethics is the study of proper business policies and practices regarding potential controvential issues and how companies integrate values such as honesty, trust, respect and justice. Although these values should be practiced in all companies, you still find organizations that do not abide by the rules. With the advent of administrative theories focused on people and human relations, from the mid-twentieth century, there were various studies that highlighted the compatibility between ethically correct and successful businesses.

Steps have been taken, pointing out the need for ethics in other to achieve professional excellence. Since then, ethical values and, specifically, respect for people especially in the work environment have been at the base of companies. More recently, new research has been presented that reinforces the idea that there is a high correlation between a very demanding ethical action and the high profits achieved by companies. Regardless of the nature of a business or commercial position, companies have an obligation to act in accordance with moral values and to have a clear ethical-business responsibility towards the society. The decisions of a company, ethical or not, have long-term implications. Acting without moral values can be highly profitable, but if society values an unethical niche due to its high profitability, the company will be in a precarious condition.

In contrast, when business activity, for example, is a constant concern for employees (human and intellectual capital, quality and organizational climate, fair remuneration, positive leadership, quality of life at work and outside of work, sense of family, adequate incentives, security) if they are treated respectfully, they will be motivated to put in their best effort to each task assigned to them. This state of mind is in itself an ethical question. In many companies, the relentless competition and lack of time for everything makes it easier for managers to make the mistake of considering their workers not as people but as resources.

According to some experts, employment is a scarce commodity and work is a natural necessity for the vast majority of people. But simultaneously, work is also one of the main sources of personal fulfillment. It gives dignity to man, gives him a sense of belonging, responsibility and being useful. To the extent that the labor reality is considered from the point of view of a dignifying need of the human being, work will be seen under a deep sense of solidarity. Ethics is not only a subject for specialists; it is a living part of the business reality and a necessity for all its employees. The universities train future entrepreneurs, therefore they play a very important role in reinforcing the thinking and ethical behavior of their students (Rossouw & Van Vuuren, 2017).

Throughout its history, Coca-Cola has demonstrated a strong market position in its field, it has taken actions that attract, retain its customers and are fully committed to sustaining this with future generations. Max Weber in The Protestant Ethic and the Spirit of Capitalism argued that the spirit of capitalism preceded its economic embodiment, because the Protestant ethic conformed that spirit that encouraged the body of capitalism, a body that seems to be immortal, because it has at least two reincarnations. Bearing in mind that ‘competitive’ means not that it acquires the ability to throw its competitors out of the market (something that many people dream of), but that it maintains its ‘viability’, its capacity to remain in the market, with a good value for money, conquering new customers.

According to the well-known trilogy of Castells, the goals for which informational capitalism emerged are somewhat discouraging for ethics, since it was born with the aim of deepening the logic of profit seeking, intensifying labor productivity and capital, globalize production and get state support to increase productivity and competitiveness. The list of problems would be widened with those of capital mobility, which seems to introduce a gap between the real economy and the speculative one, and with that painful marginalization of countries and workers that are no longer of interest or to be exploited (Neuliep, 2017).

Racial discrimination in Coca-Cola

Coca-Cola settled a racial discrimination case against multiple Black employees and former employees for over $156 million. They where accused of discriminating against them in pay, promotion and evaluations. Plaintiffs also claimed that the top management had known about the prejudice for years and have done nothing. Racial discrimination involves treating someone unfairly because he or she is of a certain race or has the personal characteristics associated with a race. While color discrimination involves treating someone unfavorably because of the color complexion of his or her skin. The lawsuit was filed on the basis that the Black employees where paid less than their White counterparts because of their race. Statistics was provided to show that the salaries of the Black employees where one third less than that of the white employees. Although Coca-Cola denied the allegations they agreed to make changes to their personal policies and procedures. The Black employees where treated unfairly by paying them less than their White counterparts and also promoting only s few of them to managerial positions compared to the number of Black employees in the company. Dealing with people from different cultures is a sensitive issue, and should be dealt with carefully and patiently. Failure to handle the situations in a timely manner and acknowledge the seriousness of situations harmed the company’s reputation. Every concern should be addressed properly, otherwise greater problems emerge at later times when nothing can be done.

Coca cola had weak leadership that was not strong enough to resolve ethical issues within the organizations. Ethical issues kept rising and many board members lost faith in the company. Some CEO’s of the company’s tenure was very short because they had to resign due to frustration over ethical issues (Ferrell, 2011). Coca-Cola should have taken swift steps to restore its reputation, by addressing the racial discrimination in the organization as soon as it was brought to management’s attention. By producing good quality products free from contamination and hiring a management team that will act swiftly to resolve issues that arise as well as follow rules and regulations of the company and country. These are important standards that the company must maintain.

Disparities in salaries of black employees

There are never-ending lawsuits on discrimination. Racial gaps still remain deep in the United States. Some social indicators converge with the passing of the years (such as life expectancy), but other differences become encyst or even increase (such as economic differences). Black employees still face discrimination in the United States in terms of salaries, privileges and other labor issues. Numerous amounts of demonstrations in the United States particularly after the deaths of Eric Garner and Michael Brown indicate that racial animosity, conscious or unconscious is still alive. This seems to translate into racial discrimination in labor market outcomes, such as wage discrimination. Restrictions in the labor market such as quotas, work permits, or restrictive hiring rules for national employment limit the ability of Black workers to move from prejudiced to unprejudiced enterprises. Equality, wisdom, and comfortable life are values that are present in every culture across the world. These are natural and inborn qualities in a person as equality, wisdom, and a comfortable life are universally applicable values. Equality has a vast meaning, implying the fact that all men and women are equal to each other without any discrimination. In the Coca-Cola case the plaintiffs also claimed the “glass ceiling” and “glass wall” policies kept the Black employees from rising to top positions. Only a few Blacks got to senior levels in the company compared to the number of Black employees in the company. Failure to handle the situations in a timely manner and acknowledge the seriousness of situations harmed the company’s reputation. Part of the claim was that Coca-Cola failed to prevent this discrimination or provide a remedy.

Coca-Cola had a credibility gap between the image that it cultivates with Blacks in the African American community on the outside than with the way they where treated on the inside as employees. In every work of life everyone should have equal rights without discrimination on the basis of race, religion, sex or national origin. For instance, women and men must be treated equally in every aspect of life. The right to live, pray, and speak should be extended to everyone equally. The will to live a comfortable life can motivate employees to stay away from negativity and focus on their work.

Coca-Cola has had other legal and ethical troubles, which has had a negative impact on the company such as in 1999 when thirty Belgian children became sick after consuming some of its products. Although the products where recalled right away the harm was already done. The cause was later discovered to be from poorly processed carbon dioxide. The sickness spread to other countries like France and Poland. Coca-Cola was blamed for slow response this hurt its reputation. They where also accused of unethically monopolizing the market. Coca-Cola also had ethical issues with Burger king over whistle blowing, where they had to pay $21 million to Burger king in settlement. This caused the company negative press, loss of stakeholder trust and negative publicity. The company was also been accused of sending extra concentrate to Japanese bottlers in an effort to increase earnings. Coca-Cola failed to make fortune list of top companies in America as a result of its legal ethics violations like for charges of racial discrimination, contractual disputes with distributors, long-term contracts and misrepresentation of market tests.

Valuable Changes Coca-Cola has made

Settlements may not resolve Coca-Cola’s ethical problems, they have made many changes over the years and improvements that have assisted the general public in alternating their perception of the company. They have gone as far as changing their mission statement and changing their website to rebrand themselves with a commitment to build sustainable communities, support active and healthy living, create safe and inclusive work environments for their employees and enhance economic development in the communities where they operate. Coca-Cola also made valuable changes such as making social responsibility a main focus for the company. An example is making local education and community improvement a top priority for its charity programs. They support a promise to better life for the people in their communities. In Singapore they started a program that promotes creativeness in children by enhancing their communicating skills and discover new insight into life in their various communities. Coca-Cola offers scholarships to over 200 high school students each year. Since its commencement in 1986, over 2000 scholarships have been awarded and over $22 million has been spent for education. Coca-Cola has also partnered with UNAIDS to set up plans and programs to fight the AIDS epidemic. These changes have further helped its reputation. Consumers of the products trust its loyalty, and it has proven that the company is truly here to stay. Although the company still struggles with ethical issues they have developed a clear vision and goal for the stakeholders, consumers and employees by making sure that the brand recognition is high and quality products are promoted. Branding is a set of activities designed to create a brand and position it in the minds of the consumers. 

16 August 2021

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