SID No: 0925660/01

Decision Making and Problem Solving (BB415013S)

Word Count: 3914

11

COCA-COLAs Strategies in INDIA

SID No: 0925660/01 Decision Making and Problem Solving (BB415013S)

SID No: 0925660/01

Decision Making and Problem Solving (BB415013S)

1. INTRODUCTION The Coco Cola Company is a beverage retailer which was incorporated in 1892 by Asa Candler. The flagship product of this company is Coco Cola which was invented by a pharmacist named John Stith Pemberton in 1886. Besides Coco Cola it offers more than 500 brands in over 200 territories and has 1.6 billion servings each day. The company maintains a franchised distribution system from 1889 where it produces only syrups and the bottling is done throughout the world as a exclusive territory. The anchor bottler is in North America. The Headquarters of Coco Cola Company resides at Atlanta, Georgia and the current chairman of this company is Muhtar Kent. Also according to the 2007 Annual Report, Coca-Cola had gallon sales distributed as follows: 43% in the United States 37% in Mexico, India, Brazil, Japan and the People's Republic of China 20% spread throughout the rest of the world In 2010, it was announced that Coca-Cola had become the first brand to top 1 billion in annual UK grocery sales.

1. COCO COLA HISTORY IN INDIA Coco Cola had sales in India from 1958-1977 till the wake of Foreign Exchange Regulation Act of 1973 stating to indianize foreign products and dilute share holdings to 40%. It discontinued its operations in India then and reentered in 1993 by taking over one of Indias top soft drink company Parle which had popular brands like Thums Up, Limca, Maaza, Citra and Gold Spot which had a 60% market share. Ever since, Coca-Cola India has made significant investments to build and continually consolidate its business in the country, including new production facilities, waste water treatment plants, distribution systems, and marketing channels.

SID No: 0925660/01

Decision Making and Problem Solving (BB415013S)

CHALLENGES FACED BY COCO COLA IN INDIA: Coco Cola has been continuously facing criticism due to the environmental issues caused by its plants in India.
2.

Certain communities across India living around Coca-Cola's bottling plants experienced severe water shortages, directly as a result of Coca-Cola's massive extraction of water from the common groundwater resources. The groundwater wells have run dry and the municipality hand water pumps do not work anymore. Studies, including the one by Central Ground Water Board in India, have confirmed the significant depletion of the water table. It was observed that when the water is extracted from the common groundwater resource by digging deeper, the water smells and tastes strange. Coca-Cola has been indiscriminately discharging its waste water into the fields around its plant and sometimes into nearby rivers, including the Gangas, in the area. The result has been that the groundwater has been polluted with the soil. Public health authorities have posted signs around wells and hand pumps advising the community people that the water provided is unfit for human consumption. In two communities, Plachimada (Kerala) and Mehdiganj (Uttarpradesh), Coca-Cola was distributing its solid waste to farmers in the area as "fertilizer". Then tests conducted by the BBC found cadmium and lead in the waste, effectively making the waste toxic waste. Coca-Cola stopped the practice of distributing its toxic waste only when legal orders were levied by the state government.

SID No: 0925660/01

Decision Making and Problem Solving (BB415013S)

Tests conducted by a variety of investigating agencies, including ones from the government of India, confirmed that Coca-Cola products contained high levels of pesticides, and as a result, the Parliament of India has banned the sale of Coca-Cola. What so ever Coca-Cola not only continues to sell drinks laced with poisons in India (that could never be sold in the US and EU), it is also introducing new products in the Indian market. And as if selling drinks with DDT and other pesticides to Indians was not enough, one of Coca-Cola's latest bottling facilities to open in India, in Ballia, is situated in an area with a severe contamination of arsenic in its groundwater.

1.

STRUGGLES FACED

BY

COCA-COLA

IN VARIOUS REGIONS OF

INDIA:

Kala Dera, Rajasthan The bottling plant in this area was accused of indiscriminate mining of water due to which over 50 villages are experiencing water shortages and "struggle committees" have been formed in at least 32 villages to confront Coca-Cola's abuses. The Central Ground Water Board, a government agency, not only confirmed the declining water table but also faulted Coca-Cola for creating "ecological imbalances" in the area.

Plachimada, Kerala The sole largest Coca-Cola bottling plant in India, in Plachimada, Kerala, remains shut down since March 2004. The village council has maintained that the plant needs to shut down because it has destroyed the water system in the area as well as polluted the area. The struggle in Plachimada is the initial struggle against Coca-Cola in India. From 2002 onwards there has been an opposition by communities in this area against the bottling plant and many authorities and studies have confirmed the issue. In December 2003, the High court stated that it could extract only

SID No: 0925660/01

Decision Making and Problem Solving (BB415013S)

as much water from the common groundwater resource as a farmer owning 34 acres of land could. Also in August, 2004, the Kerala State Pollution Control Board (PCB), directed the Coca-Cola company to ensure that water supply through pipeline is delivered to the houses of all the affected communities in the vicinity.

Mehdiganj, Uttar Pradesh Similar water issues were the cause in this area too. The water table has been has declined between 25-40 feet in the last four years, and CocaCola has been discharging its waste water into the surrounding fields, and now into a canal that feeds into the river Gangas, a holy river for millions of Indian. Several anti- coke strikes and agitations have been conducted in this area from 2003-09 but the authorities have been ignoring any such criticism against Coco Cola moreover have also filed cases against key leaders of such struggles.

1. APPROACHES ADOPTED BY CCI: India has over 17 per cent of the worlds population, but less than 4 per cent of the worlds freshwater resources. Consequently, water availability will continue to be a serious issue in many parts of India. The steps taken by Coco cola to solve acquisitions faced by them can be summed up to the following: Continue to sell bottled water Prevent water stewardship Supporting Communities Offering safe and quality products

SID No: 0925660/01

Decision Making and Problem Solving (BB415013S)

5.1 CONTINUE TO SELL BOTTLED WATER: Bottled water is a convenient, safe and refreshing beverage, and its portability makes it a popular choice. With the number of water brands and beverages, resources have to be used with great commitment and responsibility, reducing environmental footprint and protecting natural resources. Packages are made lighter, using more recycled content and supporting comprehensive consumer recycling programs. Lighter packages require less fuel to transport and save energy during production. Increasing the use of recycled content in water packaging reduces the need to generate new materials from non-recycled content. All of waters are packaged in either PET or refillable glass bottles and materials that are 100 percent recyclable. Bottles are made clear, green and light blue because these colors have the highest recycling value. Even the caps and labels are designed to be recycled along with the bottle and are compatible with local recycling systems. To further reduce waste, recycling initiatives are launched throughout the world by Coco Cola and with third-party partners. The company has invested more than $80 million to build six plastic bottle-to-bottle recycling plants throughout the world, including the world's largest PET recycling plant in Spartanburg, South Carolina. Its operations and distribution are local, which means that for most of our water brands the water is collected, bottled and transported locally, proving its freshness with minimal transportation to consumer outlets. 5.2 PREVENT WATER STEWARDSHIP: Coca-Cola has decided to find a solution to its Indian water issues and make water stewardship the primary focus of its sustainability efforts throughout the country. Its efforts start inside the plants where focus is on

SID No: 0925660/01

Decision Making and Problem Solving (BB415013S)

improving water use efficiency and treating the wastewater from its manufacturing processes before it is discharged from their bottling plants. Throughout all operations, Coco Cola India has adhered to rigorous quality standards that cover both source water and finished products. The manufacturing process will ensure to produce beverages that consistently meet international standards for safety and quality. Prevent water stewardship in all communities where business is done as it makes no sense to then drain the community of water, the most important resource we need to produce company products and ensure not to run business that way in any country, including India. Established Partnerships with local governments, NGOs, schools and communities for creating local rainwater harvesting facilities. Installed 320 rainwater harvesting structures across 17 states in India over the last two years. A substantial amount of the groundwater that used in various operations are renewed and returned to groundwater systems, and the company is working to return all of the groundwater used in the near future. The University of Michigan recommended, and CCI agreed, to an independent assessment of water management practices in India by The Energy Resources Institute (TERI), a New Delhi-based international research organization. The company's participation in the TERI assessment was an important, additional step in ensuring that its water management practices are consistently improving and are among the best in the world. The TERI report confirms that CCI are in overall compliance with Indian regulations and, with a few minor exceptions, consistently meet company's own standards (which are often more stringent). It also confirms that the company is on the right track with many of the improvements made over the last few years.

The TERI report also identified some areas of improvement. In response, CCI are strengthening the plant siting requirements, its monitoring

SID No: 0925660/01

Decision Making and Problem Solving (BB415013S)

capabilities for both rainwater harvesting and effluent treatment, and guidelines for source protection and operating in areas of water scarcity. The company also is expanding its efforts to work with local communities to ensure sustainability of the local water resource and recently launched The Coca-Cola India Foundation for Sustainable Development and Inclusive Growth. The experience in India has made the company to engage more proactively and regularly with local communities -- to listen, to learn, and to partner in finding effective solutions to water management and other issues of local interest. The company continues to work closely with local stakeholders to support community initiatives in India. In 2008, Coca-Cola India received the prestigious Golden Peacock Global Award for Corporate Social Responsibility for water conservation, management and community development Initiatives. 5.3 SUPPORTING COMMUNITIES: One of the major global problems is poverty and unemployment. By setting up local bottling plants the company ensures jobs to many local people. The Coca-Cola system will invest in scaling up our network of Manual Distribution Centers leading to increase in new revenue for local economy. Also conduct programs to support wealth and job creation, by helping small retailers establish their businesses. Also fight against a severe disease called AIDS. HIV/AIDS prevention, education and treatment continue to be a top priority for the Coco Cola Company. They partnered in Prevention of STD and AIDS in awareness and prevention programs, and initiated an AIDS orphan care program. 5.4 OFFERING SAFE AND QUALITY PRODUCTS: Many have misconceptions about certain ingredients in the products manufactured by CCI. One of them is that High fructose corn syrup (HFCS) available in beverages is a reason for obesity. Coco Cola spreads

SID No: 0925660/01

Decision Making and Problem Solving (BB415013S)

awareness that this is not true. A study conducted by the American Medical Association concluded that HFCS is just like any other sweetener. HFCS is used as a sweetener in foods and beverages because it tastes like sucrose, is easy to use in the food manufacturing process, and has historically cost substantially less than cane or beet sugar. It provides numerous consumer benefits, such as sweetness, shelf stability and pourability. All products and ingredients by CCI are safe for human consumption and comply with the regulatory requirements of the country in which a product is sold. The United States Food and Drug Administration (FDA) have approved HFCS as a safe ingredient for use in food and beverages. Also together with other stakeholders, CCI have taken a number of initiatives that can help combat obesity, by providing variety in both products and package sizes. Also by promoting, providing and supporting opportunities for people to engage in active, healthy living, with a focus on young people through development of nutrition education and physical activity programs. CCI also engage in developing effective educational tools and programs that emphasize the importance of energy balance in attaining active, healthy lifestyles in collaboration with key stakeholders. CCI respects the rights of parents, teachers and school officials to make choices for children and works with representatives of government, NGOs and the public health community to ensure that the discussion about obesity remains grounded in fact and scientific evidence. Other sweeteners used in CCI products are also a concern by CCI clearly states that these are low-calorie sweeteners such as aspartame; saccharin and sucralose provide sweetness with almost no calories, which makes them a useful tool for weight management. More than 200 scientific studies confirm the safety of aspartame as a sweetener. In addition to U.S. FDA approval, regulatory agencies in more than 100 countries approve aspartame's safety. In an extensive 2006 review of its safety by the European Food Safety Authority, aspartame was again demonstrated and reaffirmed to be safe. Similarly saccharin and sucralose area also proved

SID No: 0925660/01

Decision Making and Problem Solving (BB415013S)

to be safe non-nutritive sweetener by U.S. FDA and other government agencies. Another misconception was whether Bisphenol A in Coco Cola packages has health risks. Coco Cola clearly states that currently, the only commercially viable lining systems for the mass production of aluminum beverage cans contain BPA. This is the industry standard, and reliable scientific evidence indicates that the levels of BPA associated with can linings are safe. Bisphenol A (BPA) is a chemical used worldwide in making the packages of thousands of products, including the coating inside virtually all metal food and beverage cans. This coating guards against contamination and extends the shelf life of foods and beverages. It also is used to manufacture shatter-resistant bottles, medical devices, sports safety equipment and compact disc covers. It has been used for more than 50 years. The beverage packaging for Coca-Cola products does not pose a public health risk including any alleged risks associated with BPA in can linings. Despite the highly publicized concerns and viewpoints that have been expressed about BPA, CCI point of view is that the scientific consensus on this issue is most accurately reflected in the opinions expressed by those regulatory agencies whose missions and responsibilities are to protect the public's health. The consensus repeatedly stated that current levels of exposure to BPA through beverage packaging do not pose a health risk to the general population, including children.

CCI are also searching for alternatives to improve our packaging, while maintaining its safety and quality, to address consumers' preferences and needs or to enhance the performance of the packaging. They are working with third-parties that produce can liners to explore possibilities that include alternatives to liners with BPA. Currently, the only commercially

10

SID No: 0925660/01

Decision Making and Problem Solving (BB415013S)

viable lining systems for the mass production of aluminum beverage cans contain BPA. CCI ensures the safety of all of our beverages' packaging. 1. CCI
AN OVERVIEW ON ITS

FUTURE GOALS:

At The Coca-Cola Company, they monitor new scientific studies and consider the entire body of evidence regarding the safety of our packaging. They look to regulators for their guidance, and follow local regulations wherever they operate.

Water Stewardship

2009 Goal Publish corporate water footprint Reduce water use by 3% 100% of wastewater treated by 2010 Expand water risk assessments

Energy

Watershed protection programmes in all countries Expand ISO 14001 certifications Reduce Reduced energy use Expand

Progress in 2009 Future Goals 1st corporate water Reduce footprint published corporate water footprint by 40% by end 2010 vs. 2003 Reduced water ratio No increase in by 3.4% (now 25% absolute water below 2002) use Built 2 more Build final 4 wastewater wastewater treatment plants treatment units, meeting target of Risk assessments 100% of repeated across our wastewater business treated by end 2010 Tisza transboundary Source water programme vulnerability initiated assessments and protection plans in 2 more plants all plants by certified ISO 14001 2012

11

SID No: 0925660/01

Decision Making and Problem Solving (BB415013S)

&Climate Change

energy use by by 4.2% (now -31% watershed 3% vs 2002) protection programmes Build CHP 3 CHP units All plants units to cut completed certified ISO manufacturin 14001 g emissions by 20% Develop cold Purchased more Reduce CO2 drink than 10,000 coolers emissions from equipment with energy manufacturing (CDE) with management device by 20% by 2020 carbon footprint on average 50% smaller Improve fleet Safe &Eco-Driving Build 15 CHP performance cut fleet emissions units by end by 6,600 tonnes 2011 Publish Worked with Carbon All new CDE will product Neutral to precisely be HFC-free by carbon understand our 2012 footprint product carbon footprints Participated in Carbon footprint Copenhagen climate of CDE fleet to be conference 50% lower than in 2004 Continue light Packaging efficiency weighting improved 9% vs. 2008 Use almost Avoided more than 7,000 tons of 4,500 tons of rPET (recycled packaging through PET) in our light weighting bottles by 2020

Packaging &Recycling

Install photovoltaic panels on roofs of bottling plants

12

SID No: 0925660/01

Decision Making and Problem Solving (BB415013S)

Increase recycling in plants and in marketplace

Consumer Health

Continue expand beverage range Reduce average calorie content Extend GDA labels to all products in the EU Expand ISO 9001 and 22000 certifications

Used almost 6.3 tons of rPET less than target but more than 2008 Recycled equivalent of 66% of bottles and cans (exceeding 2015 goal to recycle 50%) to 100 new juices, flavours, package sizes Average calorie content increased 1%, yet 18% below 2001 GDA labels on all products in the EU, where practical 5 more plants certified ISO 9001 (Quality)

Improve packaging efficiency by 25% by 2012 Recycle 50% of beverage packaging by 2015 Recycle 90% or more plant waste by 2015 Continuously adapt to consumer preferences Continue efforts to reduce average calorie content Extend GDA labels on all products in nonEU countries All plants certified ISO 9001 All plants certified ISO 22000

Employee Development

22 more plants certified ISO 22000 (Food Safety) Improve 3-year safety plan safety underway, 26% performance fewer serious Expand accidents than PY, 5 OHSAS 18001 more plants certifications certified OHSAS 18001 Roll out Leadership Pipeline All Leadership expanded to 50% of certified

plants OHSAS

13

SID No: 0925660/01

Decision Making and Problem Solving (BB415013S)

Pipeline Model

Continue to enhance and standardise training across the Group

Supplier Engagement

Joint European auditing with The Coca-Cola Company

Community Involvement

Certify all employees in new anticorruption training Develop Co-developed 14 Expand joint climateHFC-free, energy- audit programme friendly saving coolers, the to more suppliers refrigeration largest range on the market Conduct Truck trial Continue hybrid truck conducted in Austria exploring and CNG additional (compressed climate-friendly natural gas) trials Address global Worked with sugar refrigeration footprint with refineries to options suppliers understand water footprint Maintain Increased to 1.9% Further explore community pretax profit green transport investment at technologies 1.5% pretax

front-line managers and individual contributors New centre of excellence, new leadership and functional skills programmes, new coaching programme. Average employee training rose to 20 hours/year 35 additional suppliers jointly audited

18001

Extend Leadership Pipeline to managers

all

14

SID No: 0925660/01

Decision Making and Problem Solving (BB415013S)

profit Assess impact Launched first Explore positive of impact assessments screening programmes integration of environmental criteria Greater Exploring Red Cross Maintain 1.5% alignment partnership pretax profit with relief agencies Supporting the Actively Continued support Roll out impact UN Global support to Caring for assessments to Compact leadership Climate, CEO Water country platforms and Mandate and 13 operations 13 local local networks networks Published 1st COP- Group wide Red Water for CEO Cross partnership Water Mandate Adopted UNGC anti- Continue support corruption reporting to UN Global guidance Compact New anti-corruption training programme

2009 UNIT CASE VOLUME UNIT CASE VOLUME BY GEOGRAPHY A. South Africa B. East & Central Africa C. India D. Turkey E. Russia F. Middle East G. Southern Eurasia H. Nigeria 14% 12% 12% 12% 9% 7% 7% 5%

15

SID No: 0925660/01

Decision Making and Problem Solving (BB415013S)

I. Other

22%

2.

ORGANISATIONAL

DRAWBACKS FOR

CCI

WHICH THEY COULD HAVE OVERCOME:

There is no such ready remedy for the causal effects that CCI has been pursuing through. When it comes to decision making and problem solving techniques the most dominant and reliable one which I would suggest is the Root Cause Analysis. RCA is a popular and often-used technique that helps researchers answer the question of why the problem occurred in the first place. Root Cause Analysis seeks to identify the origin of the problem and it uses specific set of steps for determining what actually happened, why it happened and figures out how it could be reduced that it would never happen again. We have enough information on what were the causes for this negative impact on CCI sales which they are still held responsible. Root Cause Analysis looks at all three types of causes which are investigating the patterns of negative effects, finding hidden flaws in the system, and discovering specific actions that contributed to the problem. CCI had to follow the listed STEPS and should have found a solution: Define the Problem: Toxic wastage and polluted drinking ground water Collection of the Data and the impact: Environment Challenges CASE: Kala Dera, Rajasthan Plachimada, Kerala and Mehdiganj, Uttarpradesh Identify possible Causal Factors: Media exploitation, possible market research failure, fraud acceptance with areas of operation and legal liabilities.

16

SID No: 0925660/01

Decision Making and Problem Solving (BB415013S)

Identifying the Root Cause: Priority kept more for profit motive and No control for environmental measures Recommending and Implementing Solutions: They must compensate the affected members of the community. They must recharge the water for the depleted groundwater. Responsibility should be taken to clean up the contaminated water and soil. They must ensure that workers laid off as a result of Coca-Cola's negligence are retrained and relocated within a more sustainable industry. They must admit liability for the long term consequences of and fight all legal allegations for exposure to toxic waste and pesticide laden drinks in India.

1. INFLUENCE OF DECISION MAKING AND PROBLEM SOLVING IN A FUTURE PERSPECTIVE: Suggestions and decisions taken earlier with the approaches that could have been used we will notice that it was only a basic research done earlier looking to the problems directly from within. A broad based research was not conducted; hence the desired ultimate result was not achieved as targeted. Decision making and problem solving techniques helps managers regardless of the nature of the problems find a way to arrive at an effective solution. Being a manager one should have all the leadership qualities and confidence. Much of that confidence comes from having a good process to use when approaching a problem with which you can solve problems quickly and effectively. A logical and systematic decision-making process helps you address the critical elements that result in a good decision. These are steps that hint for arriving at an effective decision: Creating a constructive environment, generating good alternatives, exploring these alternatives, choosing the best one and cross checking your decision and then taking action.

17

SID No: 0925660/01

Decision Making and Problem Solving (BB415013S)

Use of certain strategic decision making tools would help a manager to get a wider picture of what is happening with the organisation. Some of the commonly used decision making tools are SWOT analysis, PESTEL analysis of the external environment and the Porters Five Forces Model. Throughout this assignment, evaluation of CCI is carried out by focusing on external environment and tried to provide a broader approach of explaining PESTEL analysis. Strategic Prioritisation was one of the most important topic discussed in this module. It explained how Porters Value Chain which helps an individual comprehend how value is created within an organisation. Flexible Thinking approach and mind game activities such as self perception of team behaviour bring in experience on how one should fit in to an organisation.
2.

REFERENCES:

Internet Sources: http://drvinods.tech.officelive.com/Documents/Decision%20Making.pdf [Accessed on Nov 14th] http://www.guardian.co.uk/environment/2003/jul/25/water.india-[Accessed on Nov 20th] http://www.indiaresource.org/campaigns/coke/[Accessed on Nov 21th] http://www.corpwatch.org/article.php?id=7508[Accessed on Nov 29th] http://www.thecocacolacompany.com/citizenship/pdf/india_env_rpt.pdf[Accessed on Dec 1st] http://www.ethicalshopping.com/food/beverages-liquor/coca-cola-refusesclose-indian-plant-despite-local-water-shortage.html[Accessed on Dec 7th] http://www.thecocacolacompany.com/citizenship/challenges_opportunities. html[Accessed on Dec 8th] http://www.coca-cola.co.uk/faq/community/responsible-coca-cola-wateruse-in-operations-in-india.html[Accessed on Dec 18th] http://www.cocacolaindia.com/media/media_news_releases_detail.aspx? id=416-[Accessed on Dec 22th]

18