Introduction
The Coca-Cola Company is involved in manufacturing, marketing and distribution of non-alcoholic beverage syrups and concentrates. Coca-Cola Company is widely known for its product Coca-Cola which was created by John Pemberton in 1886.
The company has more than 400 widely recognized brands of beverage which serves approximately 1.6 billion people a day worldwide. India is one of the countries which sells Coca-Cola beverage. Coca-Cola has been a leading soft drink brand in India until the year 1977 when there was a reduction on the company’s equity stake which governed the company’s operation.
The Coca-Cola Company in India had to learn its lessons in a hard way after the collapse occurred. After having been absent in the Indian market for 16 years, the company revived back its operation of selling the soft drink brands in the year 1993.
The following is a statement of an ethical issue that the Coca-Cola Company in India has to deal with in order to maintain its sells in India. It also covers some of the resolutions to the ethical issue that affect the company in India.
Statement of Ethical Issue
The greatest challenge Coca-Cola India is facing is the way to introduce majority of the people to start using parked beverages in a ready-to-drink form which is against the ethics of so many consumers making distribution of products hard and challenging throughout India.
Analysis of the issue
This issue shows that the company has to transport the beverage to various parts of India in fizzy bottles at the right price and also at the right time. However, the greatest challenge is how to reach the places and yet the future of the drink is majorly determined on the countryside where most consumers are in.
This is because India is a vast hinterland and therefore it is hard to reach most of the rural areas. Coca-Cola India uses a marketing strategy of “Think Local, act local” which has grounded the company’s marketing communication and brand positioning in the insights of consumers.
The company believes that those people who stay in the rural areas will one day become residents of the city and thus still promote their product in the city. Indian market is one market that has not made it easy for inventory management and distribution of goods. This is due to a wide diversity of buying and tastes power from the consumers. Having the whole rural area for marketing of the Coca-Cola product can either be of benefit to the company or a loss to it.
First alternative resolution
Coca-Cola India has introduced new distribution methods. The company moved from making centralized distribution to a “hub and spoke” model of distribution. This means that the company no longer carry out direct transport of beverages from bottlers to retailers instead the beverages are first sent to the “hub” after which they are parceled to a nearby “spoke” centres when there is an order to refill.
This approach has helped the company to reduce costs due to the use of uneconomical vehicles to cover the long distance. The number of trips made are also few and there is an increase in efficiency as time goes by.
However, the larger sections that the company has to cover in the rural areas in India are much disproportioned thus increase logistics costs. This is because the India’s rural population is normally three times larger as compared to the urban areas.
Second alternative resolution
Coca-Cola India has also adopted a strategy of lowering the price for its products. This is because a report shown that most people in India love cheap products. This is meant to make the people of the rural area to use the products and to like them thus promote sells.
The company had set a price of Rs 5 for the 200 milliliter coke product. However this was later changed in 2009 after a price war erupted in the PepsiCo which is a rival product (Westcott 49).
Third alternative resolution
Improving in the promotion practices which will make the ready-to-drink brand popular in India. The company plans to neglect “Thums up” has not been successful. It is still the leading product in market as most people appeal for it. However the company is still striving to make Coke the leading product in India.
Best resolution of the 3 alternative solutions
Of all the resolutions that Coca-Cola India is trying to make on ethical issues, I believe that “hub and spoke” model is still the best way to promote its product. This is because it helps in the reduction costs. (Rose 25)
Conclusion
It is worth noting that Coca-Cola India has faced many ethical challenges in its process to expand its operations. The Indian branch has specifically faced challenges in terms of distribution of the beverages in a ready-to-drink form which is against the ethics of so many consumers making sales of products challenging throughout India.
However, the Company has resolved this issue through the introduction of “hub and spoke” model of distribution, a strategy of lowering the price for its products, and improving in the promotion practices which will make the ready-to-drink brand popular in India.
Works Cited
Freeman, David W. “‘This American Life’ Reveals Coca-Cola’s Secret Recipe (Full Ingredient List).” CBS News Healthwatch blogs, 2011. Print.
Rose, Kenneth H.. Project Quality Management: Why, What and How. Fort Lauderdale, Florida: J. Ross Publishing, 2005. Print.
Westcott, Russell T. Stepping Up To ISO 9004: 2000 : A Practical Guide For Creating A World-class Organization. New York: Paton Press, 2003. Print.