Coke: Ethical Issues


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Case Details:

Case Code : BECG014
Case Length : 12 Pages
Period : 1999 - 2001
Pub. Date : 2002
Teaching Note : Available
Organization : Coke, Belgian Health Ministry
Industry : Food and Beverage
Countries : Belgium

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Please note:

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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Excerpts

Background Note

Dr. John Pemberton, an Atlanta-based pharmacist, developed the original formula of Coke in 1886. It was based on a combination of oils, extracts from coca leaves (cola nut) and various other additives. The ingredients were refined to create a refreshing carbonated soda.

Pemberton's bookkeeper, Frank Robinson, suggested that the product be named 'Coca-Cola'. He even developed a way of lettering Coca-Cola in a distinctively flowing script. On May 8, 1886, Coke went on sale for the first time in the Joe Jacobs Drug Store...

Exclusive School Contracts

The exclusive school contracts allowed Coke exclusive rights to sell its products - soda, juices, and bottled water - in all the public schools of a district. Under the plan, the schools got $350,000 as an "up front"money and a percentage which ranged from 50 percent to 65 percent of total sales...

The Explanation

While Coke faced a lot of criticism from health experts and public agencies for targeting school children during 1998-1999, the company received a major setback during the European crisis in which school children were the major victims. After the crisis, Coke investigated the problem by testing the suspect batches for chemicals. The company claimed that the tests showed nothing toxic in the beverages. However, to explain the whole crisis, Philippe Lenfant, general manager of Coke Belgium, said that there had been separate errors at two plants...

Exhibits

Exhibit I: Seven Categories of Schoolhouse Commercialism
Exhibit II: Health Impact of Soft Drinks
Exhibit III: Rising Consumption of Soft Drinks


 

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