Both the companies are actually facing multidimensional problems in India for the last couple of years. The key issues can be summarized as:
- Management: While the companies were busy finding out the reason behind the allegations, they were supposed to keep the situation under control, by not unnecessarily igniting the passions.
- Crisis Management: Immediate challenge for the companies was to retain the customer base and market space for themselves, as it took many years for the company to come to this place.
- Global Business Ethics: The ethics required the company not to compromise on the health and safety standards of consumers in India and keep the standards as high as meant for a consumer in some developed part of the world.
- Stakeholder Management: Key stakeholders for the companies are the customers, the respective governments, the opinion builders, the equity holders, the media, NGOs, the strategic partners, the employees and of course the environment. Both the companies are supposed to keep these stakeholders in high esteem as far as devising policies for future are concerned.
But as far as handling this issue is concerned, the Crisis management will take the topmost priority, as this would be used to buy some time for a permanent solution. Taking a comprehensive look at the adherence to global business ethics is the second priority. Stakeholder management must be third priority to keep the faith of all stakeholders in the company. Overall management of the issue requires to take stock of entire situation and then come out with policies and principles which does not result in repeat of the situation.
Some of the latest initiatives undertaken by Coke under its Corporate Social Responsibility program are:
- Relief & Rehabilitation Measures In The Flood Affected Areas Of Bihar.
- Launch Of Water Conservation Project In South India.
- Coca-Cola India Supports Vocational Training.
- Coca-Cola Takes Lead In Clean Energy Industry Initiative.
Similarly some such initiatives from PepsiCo are:
- Showing its commitment to saving and recharging more water than it uses in its beverage plants.
- Agri-partnerships with farmers help more than 22,000 farmers across the country earn more.
- Converting ‘Waste to Wealth’, in an effort to make the cities cleaner.
- Distribution of products directly aimed at addressing the nutritional deficiencies.
- Launch of a pilot program which directly delivers against the United Nations’ Millennium Development Goal to eradicate extreme poverty and hunger by 2015.
From the case it appears that these companies are sincere towards their CSR in India, but it appears there’s something which is getting ignored somehow by both these companies. For example, the reports from CES and IRS cannot be termed a bundle of lies. There’s something which has been lapped by many countries as an opportunity to take on the MNC giants. The issue involving excessive use of water, thus resulting in water scarcity like situation appears to be direct fallout of lack of vision for such an eventuality. These Companies must have thought that in this land of rivers and floods, water might not be an issue, but perhaps it forgot to take into account the capacity of the land holding the water.
It appears Coke has become a larger and more frequent target than Pepsi over the years. The reasons could be:
- Coke is a much larger MNC. Sometimes, the bigger the size, more numbers of adversaries are there.
- Historically Coke has been at the receiving end of protests in the past as well, when during the late-1970s, Coca-Cola was made to leave India by the then government (Khanna, 2008).
- Sometimes the local brand ambassadors contribute to a great extent on how people react to the policies of the company.
- Indeed, Pepsi’s having an India born CEO did help the cause of Pepsi. Once people find that the company is run by an Indian, some of the protesting voices start taking sides.
MNCs in general and bigger MNCs in particular quite often happen to be the targets of special interest groups. One simple reason for this trend is that such special interest groups gain instant name and fame once they are able to find fault with MNCs. The simplest method to keep such situations at bay is to keep track of the needs of all the stakeholders and address the concerns of each stakeholder at the first available opportunity. In this case for example, CSE has been taking up the case against Coca-Cola since 2003, but Coke came out openly in defense of its policies only in 2006, when a new study started hitting the company.
After the crisis of 2003, both Coke and Pepsi tried to portray as if they have plenty of ammunition in their arsenal to counter the allegations. Instead of addressing the real issue of water allegation, both the companies launched brand building exercises. This might have proved irritating for some in India, particularly because water is considered as sacred by a large section of Indian society. Had the companies initiated the efforts towards installing water-recharge machines during those early years, this would have helped them in portraying as responsible, caring and as a company which respect the values of Indian ethos.
In order to move forward, the company will now have to take the Indian populace into confidence on two counts:
- With regard to the purity of their beverages,
- With regard to protecting the water interests of the people.
By taking the Indian populace in confidence that they are getting world class products, which are not at all different from the one’s being sold to customer in UK, USA etc.
This case clearly presents some important lessons for MNCs doing business in the global market place:
- There are no short-cuts to success.
- Local sentiments would have to be respected.
- Human values are sacrosanct and one should not try to temper with them.
- Special interest groups should not be taken lightly.
- Interests of all stakeholders must be managed properly.
- Controversies should not be unnecessarily allowed to drag-on for longer durations.
References
Coca-Cola (2008). Coca-Cola India: Little Drops of Joy. Web.
Khanna, Tarun (2008). Great Ideas, Great Minds—State Accountability. Web.
PepsiCo (2008). PepsiCo India: Performance with Purpose. Web.