Coca Cola Water Neutrality Initiative
What was the issue facing The Coca Cola Company in this case? What stakeholders were concerned and how did their expectations differ from the company’s performance? The major issue facing The Coca Cola Company is the availability of water. Because all aspects of the production are dependent on this resource, from the company’s perspective water is the key component of profitability. Other stakeholders, such as residents of the surrounding area and organizations such as the World Wildlife Foundation and other environmental groups had a different point of view; profitability was not a concern.
These stakeholders were concerned with long term effects of demand on the water supply and contamination of water runoff. 2. If you applied the strategic radar screens model for this case, which of the eight environments would be most significant and why? The Coca Cola Company (TCCC) seemed to that it did not do deep environmental analysis before they operated in the state of Kerla. If we applied the strategic radar screens model for this case, we believe that the Geophysical and Social environments would be most significant.
The plant was surrounded with villagers that would need the water to live, and the mass production capacity for the soft drinks deprived the local villagers of supplies for drinking and irrigation. However, TCCC was not concerned with the physical surroundings of the company’s plant and the effects it would have on the village. In addition to the lack of geophysical analysis, TCCC forgot to study the social environment. The India Resource Center seemed to have an influence on the people in India and a non-profit organization with one full-time employee was able to impact the sales of the company and shut down its plant.
We believe that a company must scan and analyze the environment surrounding its operations for potential threats. 3. Apply the issue management life cycle process model to this case. Which stages of the process can you identify in this case? The Coca-Cola Corporation utilized four out of the five processes within the management life cycle model. The first step in the life cycle is to identify issues. Coca-Cola completed this step and identified that they were in fact using up too much water and at a faster rate than it could be replenished.
The company came to the conclusion that if they did not have access to a ready supply of water, than they couldn’t operate. The next step was to analyze the issue. Coca-Cola completed a “comprehensive study” of its national and global operations with regards to its water management and practices as well as its impact. The corporation continued within the life cycle and generated some options for its company to undertake. Coca-Cola reached out to many different stakeholders, including government agencies, and conversation groups.
Ultimately Coca-Cola took action by engaging the government agencies, conservation groups, and stakeholders to determine solutions that were agreeable to all. They also developed web-based tools for their suppliers and bottlers to benchmark and share best practices. Ultimately, they decided on a “water neutrality” program that would allow TCCC to return the water consumed to the communities and the environment. 4. How did TCCC use stakeholder engagement and dialogue to improve its response to this issue and what were the benefits of engagement to the company?
The company reached out to stakeholders and various academic experts to seek advice to best resolve the water issue. Extensive studies were performed through surveys of its global operations to assess the current water management practices. In order to better understand the impact of water on production, TCCC engaged its top bottlers and all operating groups in one on one session to thoroughly access process. By reducing, recycling and replenishing, the company set a goal of returning to nature and communities an amount of water equal to what was used in the beverages and their production.
It partnered with World Wildlife Fund, an environmental group, to support projects such as river conservation, rainwater collection and efficient irrigation. The dialog with stakeholders was successful on many levels; many new initiatives were started, including the web-based tools to for benchmarking and best practices of peers. The partnership formed with World Wildlife Fund to address stakeholder concerns about its impact on water quality and access, gave credibility to this new process.
By engaging the various stakeholders, TCCC was able to understand society’s expectations, capitalize on outside expertise, generate creative solutions and ultimately neutralize critics and improve the company’s reputation by implementing the water neutrality initiative. 5. In your opinion, did TCCC respond appropriately to this issue? Why or why not? The Coca-Cola Company responded appropriately once they believed a serious issue was brought to their attention. However, hey waited until they were forced to react to address an already known problem. They knew their water consumption was depleting availability and contaminating reserves yet, did nothing. It wasn’t until The Center for Science and the Environment, the India Resource Center and other activists aired TCCC’s faults, that action was taken. Now that TCCC has experienced such repercussions for faulty business procedures, it seems they will not react so slowly in the future.
With their new “water neutrality” stance they have addressed the issue and are going beyond what is needed of them to “reduce, recycle and replenish” water. Not only have they improved on their water usage but have established projects to improve water conservation outside of their environment. By continually maintaining an interactive stance with its stakeholders, TCCC will hopefully avoid future issues. As an added step, they should create an internal issue management department to proactively address future issues.