Coca-Cola's Business Practices: Facing the Heat in a Few Countries

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Case Details:

Case Code : BECG061
Case Length : 20 Pages
Period : 1989-2006
Pub. Date : 2006
Teaching Note : Available
Organization : The Coca-Cola company
Industry : Beverage (Softdrink)
Countries : USA, Columbia, India, Mexico

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"The University of Michigan has said it is committed to working only with companies that have ethical and responsible practices, yet the Coca-Cola Company is in obvious violation of these standards. Coca-Cola needs to be accountable for their actions, and until they are, we demand that they are taken off our campus. We refuse to support businesses that are unable to promote basic human rights amongst their employees and the public."¹

- Kristin Purdy, The Coke Coalition, University of Michigan, in 2005.

"Coca-Cola is a frequent violator of union rights and that's why several universities in the United States have decided to protest their conduct."²

- Fabio Arias, Vice President, CUT Trade Union Confederation, Colombia, in 2006.

"It is a very unfortunate. The actual volume in terms of sales is small but it is the larger issue of our reputation. These allegations are false but we do share the concerns with issues."³

- Kari Bjorhus, Spokeswoman for the Coca-Cola Company, in 2006.

Introduction

From January 1, 2006, the University of Michigan in the US put on hold the sale of the products of The Coca-Cola Company (Coca-Cola) in all its campuses, thus becoming the tenth US University to do so. The ban was the outcome of a relentless campaign by student activists and trade union groups, who accused Coca-Cola of violent labor practices in Colombia and of creating environmental problems in India.

The University of Michigan issued the orders for the ban based on the recommendation of its University Dispute Board. This was following the inability of Coca-Cola to meet the deadline of December 31, 2005 that required agreeing on a protocol on the findings of the commission formed by a set of universities in the US.

The commission had offered to investigate the company's labor practices and that of its bottlers in Colombia.

Coca-Cola did not want the findings of the commission to have any legal consequences but the attorneys in an earlier lawsuit against Coca-Cola and its bottlers in Colombia insisted that the findings should be legally admissible in court of law in the US.

Other prominent US universities that had banned Coca-Cola on similar grounds were the New York University, the largest private university in the US, Rutgers University in New Jersey, and the Santa Clara University in California. The University of Michigan and The New York University were Coca-Cola's largest campus markets in the US.

Coca-Cola's annual contracts with the University of Michigan, which had over 50,000 students, were worth around US$ 1.4 million in sales in 2005. The campaign by student activists and trade union groups to ban Coca-Cola had been going on for several years in different countries. Coca-Cola was accused, along with its bottling partners, of hiring paramilitary death squads in Colombia to kidnap, intimidate, or kill its union leaders and other workers at its bottling plants. Since 1989, around eight union leaders of Coca-Cola's plants in Colombia had been murdered and many others abducted and tortured. In India, Coca-Cola had to face opposition from the local people around its factory in Plachimada, Kerala,⁴ who charged that the company was responsible for the draining of the underground water table.

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1] "Students Campaign to ban Coca-Cola products on Campuses," www.indiaresource.org, April 19, 2005.

2] "Colombian workers support U.S. Universities' ban on Coca-Cola," www.timesleader.com, January 02, 2006.

3] "Univ in US to toss Coca-Cola," www.financialexpress.com, January 02, 2006.

4] Kerala is a state in the southern part of India.