Corporate Governance and Social Responsibility at Coco Cola

Introduction

Corporate social responsibility has been embraced by both local and international organizations in this twenty first century. In this case, the organizations put in high regard the society’s interests. This is carried out through the organizations being responsible for the overall effects of their endeavors on environment, shareholders, employees and even customers. In this case organizations have the overall obligation to abide by legislation.

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They actually do more than what the statutory obligation demands. Most organizations just volunteer to improve the quality of life o the entire society, community, their families and the employees too. This paper focuses on Coca Cola as an international organization and why it shows interest in corporate social responsibility. This is in terms of economic, social, cultural, legal and technological factors.

Coca Cola

Coca Cola Company is a widely known organization that produces a non-alcoholic beverage. It is one of the largest marketer, distributor and manufacturer of this drink. This Company’s headquarters are based in United States. Its Coca Cola product was first invented in the year 1886 by Pemberton John Stith. Later on in the year 1889, Candle Asa bought the formula and it was incorporated in the Company in the year 1892. This Company currently has more than four hundred brands which are sold in its branches that are in more than two hundred countries. (Arnold, 2005)

Coca Cola Company has also taken part in corporate social responsibility. This has been done through very many ways. All these have had very enviable positive implications in the society. One of them is the promotion of diversity. Through this venture, this Company was regarded as one of those that care for the minorities in the society. Due to this aspect, the Company was ranked by Fortune magazine to be 26th. This Company is among the many that has been supporting Michigan University policies of affirmative action. (Bansal, 2000)

This Company also offers health benefits to its employees. It is known to give them orientation on sexual matters which is part and parcel of its employment policy. Coca Cola Company also plays a big role in helping in HIV/AIDS pandemic. This Company spent approximately $5 million every year since the year 2002 to help HIV/AIDS victims in Africa that are working in this Company. Initially it had also helped one thousand two hundred employees in Africa who were infected with the disease.

This Company employs approximately 58, 000 people in its Africa’s bottling system. This Company also has plans to support programs in line with HIV/AIDS. This is part of its budget propagated to cost $50 million. This cash is to be given to organizations dealing with this pandemic that are African based.

It is known for charitable donations during the Hurricane Katrina. In this case the evacuees were helped through the 30 million donations. Asia also benefited during tsunami where Coca Cola donated approximately $ 10 million for relief. Food, water and other supplies were also delivered by Coca Cola employees to the affected people. When there were terrorist attacks on Pentagon and World Trade Center, this Company gave $12 million to assist in efforts of relief in the area. The graph below shows Coca Cola Company’s CSR ventures in the education sector in Africa. The amount is in $million. The efforts made by this Company in education sector in Africa are worth credit.

Source: Arnold, D. (2005): Coca Cola Company; retrieved from; http://www.cocacola.com; accessed on 26-01-08

Research shows that very many international organizations are incorporating corporate social responsibility into their operations. International organizations are using development projects that are community based to reach out to the society. There are very many reasons as to why international organizations are engaging in corporate social responsibility. (Carroll, 2003)

Reasons for interest in CSR

There are various economic reasons as to why international organizations get involved in corporate social responsibility. Many international organizations engage in this activity because they want to expand their economic niche. Many organizations know that when they get involved in the society’s endeavors, it will gain favor among the people and therefore the community will embrace its services or products. This can be described as a calculated move.

Many international organizations aim at growing economically even as they incorporate corporate social responsibility. This venture gives the Company the acceptance in the foreign country because the locals see its importance to them and in the long run expand economically through its increased profits. It also helps them to create a right environment for expansion of their business. This in the long run has very positive effects on the organization’s interest rates.

There are also social factors that make international organizations to get involved in corporate social responsibility. When these Companies get involved in CSR, they seek to create good relations with people in the society. These relations are healthy for the organization because they help both the society and the Company initiating them. International companies aim at being friends with its employees and the community. Social factors include health consciousness of management in relation to the Company’s employees. (Carroll, 2003)

 International organizations clearly understand that their employees have to have good health for them to give their service and also this maximizes their potential. Career attitudes of the people determine whether an organization will have employees or not. Therefore this is one of the reasons why international Companies engage in CSR so that career attitudes align with the organization. Safety of international Companies is important and this is one of the factors that make international organizations to go beyond the borders to engage in CSR so that safety is enhanced in its business environment.

Culture among other factors also influences international organizations to venture into corporate social responsibility. Many international organizations carry out CSR because it is part of their organizational culture. In this case the organization has put in place a culture where they are concerned with its employees, the society, community and the environment at large. In this case these organizations’s culture stipulates that it puts part of its profits back to the community and the society at large. CSR is also carried out by international organizations because they intend to know more about the society’s culture. In order to get to understand these people’s culture, they seek to interact with them through educational programs and other CSR approaches. (Thilmany, 2007)

There are technological factors that are making international organizations get interested in corporate social responsibility. The reason as to why these organizations are interested in CSR is because they desire to improve the technological environment in the areas where they are operating. This is in line with diverse sectors like communication, transport among others. Many international organizations are involved in CSR through this sector because they are also affected in one way or the other by them.

 For instance when they help improve communication networks in their area then their businesses will thrive. For example improvement of technology in the society by improvement of road network, then a Company dealing with products will be in a position of transporting their goods fast. This is very beneficial to Companies dealing with perishable goods like flowers and other horticultural products. International organizations understand that when they help in developing technology in branch nations through CSR, then they will automatically improve business relations. (Jastram, 2007)

There are also legal factors that make international organizations to be interested in corporate social responsibility. There are some nations that require the international organizations to participate in corporate social responsibility. This is in terms of government policies. For instance an international Company based in United States that wishes to have branches in Asia may be required by the Asian government to get involved in CSR. This is normally carried out by the government in order to benefit the community and its nation. In this case, the nation that does not adhere to these rules may not be allowed to continue with its businesses. In order to continue with their businesses, the international organizations are forced to adhere to the laws of the land.

Political factors also influence international organizations to get involved in corporate social responsibility. There are environmental regulations that international organizations have to adhere to and this sometimes is part and parcel of them depending on the place. This is sometimes part of the trade restrictions imposed on international organizations.

The other reason as to why many international organizations are interested in corporate social responsibility is because of human nature. Human beings have the tendency to help others and the society even if they are strangers. These international organizations feel the need to help the society because of the nature of humans. It is very evident that after someone achieving what they want or rather what is enough for themselves, they tend to help the society. This is the same case with international bodies. Many of them after achieving their targets feel they also have to do something for the entire community and society at large because they feel the need to.

 Management teams in international organizations live with people in the society, interact until they become friends. This normally affects the management such that problems faced by the community become their problems too. They feel they are part and parcel of the people and therefore they naturally have the burden to help. Take for example people around an international organization suffer from a natural calamity like the case of Hurricane Katrina. Since this people are the organization’s customers, they just have to get involved to help them regain their normal lifestyle. (Visser, 2007)

The table below shows the amount spent (per annum) by international organizations in CSR projects. That is in helping HIV/AIDS patients and awareness, educating the poor and maintaining of the environment. This is for the year 2007.

Organization
Education
Environment
Health(HIV/AIDS)
Coca Cola
$ 5m
$3.1 m
$ 6m
British American Tobacco
$ 2.5 m
$ 3.5 m
$ 4.8 m
BP
$3.4 m
$ 2.6 m
$ 3m
Shell
$4.5 m
$ 1.3 m
$2m

Source; Visser, W. (2007): The A to Z of Corporate Social Responsibility. John Wiley & Sons Ltd; pp 56

Strategic issues

The strategic issues that are involved in addressing corporate social responsibility are quite diverse. They include issues of education of the community. In this case international organizations sponsor needy students’ education. Most of the needy students that are sponsored by international organizations are bright students. Issues of poverty are also quite essential in CSR matters. (Matten, 2003)

 Educational forums and projects are normally organized by international organization to train and educate people on poverty alleviation through entrepreneurship. Environmental factors are also taken with their deserved seriousness when international organizations plan for CSR. In most cases international organizations help in keeping the environment clean by employing cleaners to clean the town.

They are also concerned about beautification of environment and conservation practices like tree planting. They plant flower gardens that are well manicured in towns as efforts of beautifying the environment. Another strategic issue that is highly addressed by international organizations is health sector where they help build hospitals and also sponsor needy cases in terms of medical upkeep.

 (Wood, 1991)

International organizations have in the past become quite concerned about the HIV/AIDS pandemic. These organizations ensure that their employees are well educated concerning their HIV/AIDS status. For instance Coca Cola Company normally educates new recruits on sexual matters that affect their health. Those that are already infected with the disease are counseled to live a positive life. They are also supported financially so that they can get or access health facilities. This enables AIDS infected workers to access anti-retroviral which are very expensive with ease.

Conclusion

Corporate social responsibility is all about organizations being involved in society’s interests. International organizations are influenced by various factors to get involved in CSR. These factors are political, legal, economic, Social, technological and environmental based. Without getting involved in corporate responsibility, international organizations may never thrive in business in foreign nations. The rate of growth would be very slow. Strategic issues in corporate social responsibility endeavors by international organizations are quite diverse. They include education of employees, the health sector, technological sector and the environment. It is however very evident that involvement of international organizations in corporate social responsibility has brought plausible results in many nations.

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Corporate Governance and Social Responsibility at Coco Cola. (2016, Aug 17). Retrieved from https://graduateway.com/corporate-governance-and-social-responsibility-2/