Fall

08

Global [GLOBAL BUSINESS STRATEGY] 1

G

Table of Contents
ABSTRACT........................................................................1
Introduction and Coca-Cola Companys overview.................2
PESTEL ANALYSIS..............................................................3
SWOT ANALYSIS................................................................8
The impact of international business environment on CocaCola Company:................................................................15
Globalization:..................................................................16
Brief history of Globalization............................................16
Benefits of Globalization..................................................16
Factors affecting Globalization.........................................17
Extent of Globalization on Coca-Cola Company..................18

Global Business
Strategy

Challenges faced by Coca-Cola Company on Globalization..19

Structures of organisation operating on international scale

...................................................................................... 20
Moral and ethical issues faced by organisations operating

Fahad Umar
ABSTRACT
This paper focuses on global business strategy of Coca-Cola Company. The
first part of the paper concentrate on the internal and external analysis of
the company in the international business environment as well as the
extent of globalisation on the company with a detailed report on different
organisational structure being implemented on an international scale. The
second part of the paper explicitly congregate issues on Corporate Social
Responsibility on organisations operating internationally with regards to
moral and ethical issues, conflicts between social responsibilities and
ethical issues and regulations/guidance as regards to social responsibilities
with emphasis on Coca-Cola company.
internationally................................................................21
Stratford Collage of Business and Management UK

Conflicts between corporate strategy and ethical and social

responsibility..................................................................24
The legislation, regulation and guidance as to corporate
social responsibility.........................................................25

Code of ethics in regards to guidance on corporate social

responsibility..................................................................26
Conclusion and recommendations....................................27
Reference.......................................................................27

Introduction and Coca-Cola Companys overview

According to a report by United State Securities and Exchange
Commission (2006) the Coca-Cola Company was established in
Atlanta, Georgia, in the year 1886. The company is considered to be
the world number one non-alcoholic beverages company, leading in
manufacturing,

marketing

and

distribution

of

its

product

(concentrate and syrups). Concentrates and syrups are being sold

out to bottling companies for final dilutions and packaging to
consumers, Coca-Cola Company produces a wide range of about
500 different beverage brands across the world. In the late 1920s
the company begins its journey for globalisation and presently
operating in more than 200 countries following a simple global

formula Provide a moment of refreshment for a small amount of

money a million times a day.
The Coca-Cola Company together with the bottling companies forms
the best production and distribution system in the world, the system
is designed in such a way that employees dedicated and put the
companys objectives as their number one priority. Products of this
company have proven to be the number one soft drink in quenching
consumers thirst of non-alcoholic soft drinks from Moscow to
Montreal and from Beijing to Boston all over the world for more than
115 years of its existence. One of the key objective of the company
is to increase its market share-value, which was achieved by
operating with associates with the aim of satisfying customers and
valuing customers interest as well as protecting companys assets
and minimizing business ricks.

PESTEL ANALYSIS
A recent analysis polled online (http://anasurname.hubpage.com)
written by Annasurmane on PESTL analysis. PESTL analysis is an
mnemonic meaning Political, Economical, Social, Technological and
Legal often use is a tool by companies to analyze the whole
EXTERNAL environment from every angle the company is operating
under. Although Coca-Cola Company is the world leading nonalcoholic beverages company in the world, its still needs to

undertake PESTL analysis

environment,

precisely

to know

the

more about its

opportunities

out

external

there

and

it

competitors so as to maintain its customers loyalty and position.

The Political factors establish the extent as to which the serving
political policies and rules influence the economy or rather the
business organisation. This policies and rules include, how much tax
is impose, trade tariffs and fiscal policies to mention few.
The

economic

factors

are

the

determinants

of

economic

performance that impact the company in one way or the other,

factors such as interest rate, inflation rate, foreign exchange rate
and economic growth. These factors will affect the companys sales,
product price and purchasing power of potentials customers.
The social factors comprises of environmental trends, which
includes cultural trends, population analytics, demographics trends,
seasonal trends to mention few. For example, in the western
countries there is high demand of things during holiday seasons.
Technological

factors

includes

innovations

and

technological

development the affect the organisational performance in either in

positive or negative way. This can be in form of automation of some
organisational.
Legal factors involves both internal and external segment of the
organisation, internal in the sense that the organisation develop
some inside laws and regulations to maintain its operations and

dealings while external in the case where certain law, policies and
regulations are imposed to the company by legislation, government
or regulatory agency.
PESTL ANALYSIS FOR THE COCA-COLA COMPANY
POLITICAL:
Political changes in accordance with the ruling government, changes
that has to do with government regulations, majors and policies as
to how a companies should operate and as to how the products
should also be. By setting up those rules and regulations the
government intervene with the companys decisions because the
board have to make sure in every decision that is being made those
roles and regulations must in no circumstance be violated, some of
which includes monitory policy, trade restriction, recruiting policy,
environmental policy.
The Coca-Cola Company being a non-alcoholic beverages company
falls in the category of what is known as the Food and Drug
Administration (FDA), FDA is a globally recognized agency originated
from the United State of America to monitor and verify ingredients
that are being used in manufacturing non-alcoholic products. The
coca-cola company cautiously examine their ingredients to meet up
requirements of the FDA before presenting it for approval.
However, aside from the FDAs requirements other political majors
that are being set in accordance with the jurisdictions of countries

includes income tax, import and export regulations and the

uncertainty of political crisis. Political crisis can be in form of protest,
which might affect the demand of products, as well as political
violence that makes it hard for the products to penetrating in
political crisis zones.
ECONOMIC:
These are economical factors, which companies uses in forecasting
future decisions on investment. These includes interest rate,
inflation, standard of living, wages, exchange rate, unemployment
rate and the overall economic growth of the country. These
economical factors differs in each of the operating countries, which
is

why

before

company

venture

any

country

it

has

to

comprehensively analysed the economy of the country considering

the upper mentioned factors.
Economic growth of a country gives a company a glimpse of high
purchasing-power, this is what most marketers use in penetrating
the market. Coca-Cola Company uses this tool to market their
product across the world, which brought about the 63 different types
of currency being used by the company. However, due to constant
fluctuation on exchange rate strong or weak currency are some of
the determinants of exporting product world wide which is very
important as the company generate 72% of its operating profit
outside the United State.

Furthermore, another major economical tool is the interest rate

imposed on borrowed money. Changes in interest rate affect the
financial status of a company and further investments as it increase
total cost, the Coca-Cola company manage to cope with interest
rate fluctuation by implementing a derivative instrument. In the
case of inflation, the Coca-Cola Company sort their employees with
higher wages and salaries in countries with high inflation rate so as
to enable them cope with the situation. This increase in wages
increase product cost and couldnt be reflected on the product price
due to the competitive and risk of the market, a threat being faced
by external environment in most companies.
SOCIAL:
The social factors have to do with peoples cultures, traditions,
health perception, safety majors, population growth and new trends
among the population. A company is not expected to change the
social factors but rather, to adapt and adjust to suit these social
factors.
This is a very important section as regards to a company like CocaCola that has a direct link to the customers, companies of this
nature are considered to be B2C. Countries are diversify in terms of
culture and tradition, this element have to be absolutely analyse
before introducing marketing and introducing products. Coca-Cola
Company has about 3300+ different products, in penetrating new
market after intensive market analysis the Company start by

introducing few of their products based on the social factors of the

general population subsequently increasing products based on
social factors.
Consumers and government are very cautious on the issue of health
and safety, in beverages industries obesity is the most common
concern of the general public. This concern is mostly raised by
younger generations so as to maintain good physique. According to
a study consumers of Coca-Cola are very concern with nutritional
content nowadays. This is one threat that the management was able
to turn into opportunity by introducing dietary products such as
Coca-Cola Zero, Light Coke and Diet Coke.
In a non-alcoholic beverages company, most of the market share
comes from youth and children, which is why population growth is
being given high emphasis in market analysis and being one of the
major factor of social analysis.
TECHNOLOGY:
Technology plays several functions in beverages industry as with the
manufacturing new products, packaging product and distribution of
products.
Coca-Coca Company rely on its bottling partner for packaging, 83%
of case volume produce across the world is being manufactured by
bottling partners which the company dont have total control power
over. This is why its essential for the company to keep a healthy

relationship not just with its bottling company but within and outside
the entire departments companies involve.
The availability of different Coca-Cola packaging has everything to
do with the advance in technology, various vending machines are
available all over the world. This let to the production of some
stylish non-refillable bottles and cans, which are trending among
youth and attractive to children which also serves as a marketing
tool for promoting products.
LEGAL:
Legal laws includes, employment law, antitrust law, customer law,
health and safety law and discrimination law to mention few.
Various acts and regulations exist in the United State of America
some of which includes Federal Food Act, Federal Trade Commission
Act, Drug and Cosmetic Act, health and safely Act apart from the
upper mentioned Acts several environmental regulations are being
implemented within the State some of which include, regulations on
advertising, sales and production. Slight alteration in either of the
laws, regulations or act could yield to positive or negative impact on
the company. Furthermore, violation of any of the upper mentioned
laws, acts, or regulations will escalate serious penalty which will
definitely affect the company.

SWOT ANALYSIS
According

to

Berry

(2014)

SWOT

is

mnemonic

representing

Strengths, Weaknesses, Opportunities and Threats which are

considers to be internal and external factors some of which the
company has control over and some of which it has no control over.
This analysis is been used as a tool of auditing of generally strategic
position of an organization.
The factors can be overviewed as follows
Strengths: These are qualities of an organization that facilitate that
support the organization to achieve its mission. These qualities
could be what the organization is versed on or expertise on, these
includes individual and team quality of employee, the diverse
qualities that distinguished the organization from its competitors.
Strengths of an organization can be on its brand, financial resource,
human competency, products/services to mention few.
Weaknesses can be regards to the attributes the prevent an
organization from achieving its mission or operating effectively,
these

weaknesses

organization.

hinder

Weaknesses

the

growth

include

poor

and

success

machinery,

of

the

ineffective

decision-making, deficient research and development capability etc.

Opportunities are usually presented by the external environment
within which the organization operates to take advantage of, when
opportunities arise its expected for an organization to strategized on

10

how to take advantage of it be its in profitability, brand, customer

loyalty, product/service recognition, penetrating new market etc.
Threats are also attributes presented by external environment,
attributes that have the tendency of jeopardizing the organization.
This are sometimes being mistaken for weakness, but threats are
external while weakness are internal within the organization
example of which includes technological changes, increase in
competition to mention few.

SWOT ANALYSIS FOR COCA-COLA COMPANY

Jurevicius (2013) in a site conducted a detailed SWOT analysis of the
Coca-Cola Company using so many factual statistics and evidences
in validating the analysis. As mentioned earlier SWOT analysis
comprises of Strengths, weakness, opportunity and threats, where
the strengths and weakness are considered to be internal factors
while the opportunities and threats are the external factors
influencing the company. This will be discussed in details below.
STRENGTHS:
1. Worlds foremost brand: Coca-Cola as a brand is consider to
be the global leading brand, in the year 2006 an international

11

branding consulting firm ranked Coca-Cola number one brand

on the hierarch of top 100 global brand in the same year
week-inter-brand valued the brand at $67,000,000. The brand
is racked far above it competitors in the beverages industry,
the brand following it in the beverages industry is Pepsi which
was ranked number 22 with brand value of $12,690,000.
Moreover, aside from being the number one brand, it owns the
top four beverages brand in the world that include Fanta,
Sprite, Coca-Cola, and Diet Coke. This is why the Coca-cola
brand posses the largest portfolio of product brand in the
beverages industry. This advantage is what the company look
at in introducing new brand example of which are Vanilla
Coke, Cherry Coke, and Limon Coke. Coca-Cola Company
heavily invest in promoting the brand over the years, this is
one major advantage the Company uses in penetrating new
market meanwhile strengthening existing markets.
2. Large scale of operations: In the whole world Coca-Cola
Company is the largest beverages company operating with
more than $24 000,000,000 (twenty four billion USD), it
manufacture, market and distributes its product in more than
200 countries with approximately 52,000,000,000 (fifty two
billon) consumed everyday. The company account for more
than 1.4 billion USD in beverages bearing trademarks. These
operations are being supported by strong infrastructures with
32 high standard manufacturing plants distributed across the

12

world along with 95 bottling and canning plants outside the

United State. In addition the company also produce bottle
water and concentrates juice. This advantage enable the
company to be able to meet up to its high demands of
products as well as increase the companys revenue.
3. Vigorous revenue growth: Coca-Cola Companys revenues
double it growth in Latin America, Pacific Rim and East, South
Asia. In the year 2006 its recorded revenue grew by 20.4% in
Latin America, and grew by 10.6% in East/South Asia and
Pacific Rim. Furthermore, the bottling company accounted for
34.8% of revenue generated during the fiscal year 2006. This
vigorous raise in revenue in those segments contributed
effectively in the overall growth of the Company during the
year.
WEAKNESS:
1. Negative Publicity: The Company has been allege to various
unethical related issues which prompt lawsuits against the
Company on issues of human right violations, there have been
rapid allegations raised concerning the Middle East and U.S
foreign policy over the years. In the year 2006, the company
received negative publicity concerning ingredients used for
producing its products by CSE (centre for Science and
Environment).

The

products

where

asserted

to

contain

pesticide residue.

13

The President/CEO of Coca-Cola Company Mr. Muhtar Kent

received a note on the 10th of December 2008 from FDA
warning him about some of its product that are violating the
Act.

Products

include

Diet

Coke,

Plus,

20FL

and

OZ.

Furthermore, Coca-Cola Company has been suit by United

State Consumer Group I early January 2009 against the
companys flavours for Vitamins Water.
2. Slow performance in some regions: In North America CocaCola Company generate about 30% of it total revenue during
the fiscal year 2006, this significantly shows how important
this region is to total revenue growth of the Company. Prior to
this study estimate a weak market performance in this region
due to weak trends of sparkling beverages in the region,
where the company recorded a decrease supply in companys
warehouse. Slow performance in this region will defiantly
impact the company negatively in terms of revenue growth
and hinder the company in entering the top growth list of
companies.
3. Decline liquidity from operating activities: As recorded in the
companys annual report, there is a clear declination in cash
flow from operating activities in the year 2006. Comparing it
to the preceding year in 2006 the operating activities cashflow decrease by 7%. Total cash flow generated in the year
2005 is recorded to be $6,423,000 which decrease to
$5,957,000 in the year 2006. The decrease of $216,000,000 is
as a result of tax-qualified trust, which is set up to promote

14

and fund retiree medical sector. However, the decrease is also

as a result of positive marketing strategy in the year 2005,
which was lacked in 2006. Decline liquidity reduced the
financial investment rate that will positively impact on the
total companys growth.
OPPORTUNITIES:
1. Acquisitions: in the year 2006 Coca-Cola Company acquired
Kerry Beverages (KBL) this made it possible for the company
to take control over manufacturing and distributing its product
across Chinese provinces operating in form of join ventures.
Likewise in Germany Apollinaris was acquired, a company that
is engage in sparkling and mineral water. More also the
company owns 100% interest in South African company
named TJC Holdings, more acquisitions where made in
Australia and New Zealand in the year 2006. This acquisition
did not only expand the companys revenue but rather
strengthened the companys international operation, which is
an added advantage. Furthermore, as we mentioned earlier
robust international operations increase the companys overall
growth and make it much more easier for the company to
penetrate into a new and existing markets.

Coca-Cola

Enterprises is one of the biggest bottling company in North

America was also acquired by Coca-Cola Company on 25 th of
February 2010.

15

2. Emergence of Bottle Water: In beverage market today bottle

water is the fastest growing commodity study has showed that
in the year 2006 bottle water generated revenue of $15.6
billion. This is due to increase in health concerns, in the years
2006 consumption of bottle water was estimated around 30
billion volume of litres and statistics expect it to increase in
2010 by 38.6 billion unit.
The value of bottle water is estimated to reach $19.3 billion in
2010 while the revenue generated by the flavour (slightly
sweetened refreshing flavour) is annually increasing by $10
billion. In the United State Coca-Cola bottle water Dasani
brand is rated to be the third best selling water.
3. Rapid population growth: Rapid increase

in

Hispanic

population across the United State is an added prospect for

the company to snatch so as to generate higher revenue on
products consumption. In the year 2006 its confirmed that
11.6 million households in United State are Hispanic, where at
the same year census estimated that Hispanic population will
increase to more than 60 million by 2020 (18% of United State
Population). Translating this to buying power, the Nielsen
media proclaimed Hispanic buying power will increase to $1
trillion by the year 2003.
THREATS:
High Competition: Coca-Cola Company being among the nonalcoholic beverages find its self in highly competitive position in

16

various market within the United State and outside. PepsiCo is

the major competing company to Coca-Cola Company; other
companies include Danone, Krafft Foods, Cadbury Schweppes,
and Nestle to mention few. The presence of these competitors
elevated the factors which include issues of pricing, innovations,
brand, advertising, sales and protection. High competition rate
could impact the companys general performance.
Dependence on bottling companies: The Company generate lion
share of it revenue through sales of concentrates and syrups to
many bottling companies of which the Coca-Cola Company have
no total control of. It was approximated in 2006 that 83% of the
total volume unit is been produce and distributed by various
bottling companied across the world.
Health cautious is now becoming major concern among people.
In the United State of America people are searching for different
variety of non-alcoholic beverages and at the same time highly
cautious with carbonated and sweetened drinks are are align to
prompt a decline rate in consumption of those carbonated drinks.
The general revenue generated in 2005 by carbonated drinks
decrease by about $63.9 billion USD. Beverages Company faces
criticism for promoting obesity and poor diet to their consumers.

17

The impact of international business environment on CocaCola Company:

As studied in 2007 (ElAmin) Coca-Cola Company being on a
multinational manufacturing business environment with high
valuable brand, high market development and vast scope for
product development on an international level the company own
its

national

and

international

operations

in

an

extensive

economic segment. This makes the level of companys turnover

as well as the profitability margins proportionate to the
companys expansion and development in the outskirts market.
Wide brand expansion is one of the companys main objectives
which is maintain through producing over 260 million bottles of
different sizes. Aside from the upper mentioned Coca-Cola
product, the company owns Schweppes in the Great Britain name
and produces it in different flavors so also other products, which
include Capri Sun, Friutiser, monster Appletiser and some
sparkling fruit juices.
The strategic management policy of the Coca-Cola Company
focused toward imprisoning the national and international market
for the purpose of quality improvement, developing strength in
the international market at the same time holding accountability
of environmental strategy on the ground of business operations,
performance

management

and

developing

environmental

standard in an international scale. There is a rapid change in the

economic environmental structure over the years; in the year
18

2005

there

was

high

marketing

strategy

that

was

why

distribution of products was being done through advertising

campaign. This got success and yield to 35% increase in
international sales force in the year 2006 while in the preceding
year sale strategy was included through promotion techniques in
the international market which also yield to an increase in sales
with 39.5% more than the previous year.

Globalization:
As defined by McGrew (2014) in the general scale globalization is
a way of eliminating the difference between different countries,
continent and economy so as to make it easier to trade and
conduct transactions within and between every nations there by
putting the whole world under the same umbrella called
GLOBALIZATION. This process has been going on over a century
particularly in the 1945, but the process has been moving on a
slow rate until in the last 20 year when it became much more
faster due to development and order forces which will be
discuses letter on.

Brief history of Globalization

According to James and Peck (1998) Globalization started in the
17th century with the inventions of new ships which gave
Europeans avenue to trade with other centuries on a large scale,

19

comparing to agriculture trade was still a tiny part of the

economy

as

of

then.

With

the

recent

development

and

innovations in transport sector such as rails, steam ships and

Airplanes. These developments contributed hugely in the sense it
shrinks the world and make it more convenient and faster for
people to travel across the world and carry out trade, with the
presence of the Internet it makes it even much more easier to
communicate internationally. Decline in barriers to trade between
different countries increase international trade that makes the
worlds GDP increasing in a steady rate.

Benefits of Globalization
Increase in economic integration can be seen to be on of the
major benefit gain from the umbrella term Globalization as
asserted by Jeffrey (2003). Economy used to be self-contained in
the sense that import and export are mostly independent but
rather now with integration between countries economies are
closely dependent in the sense that importing raw materials for a
production. This is why recession in an economy of ones country
affect the others. However, consumer markets are considered to
be more important in the economy, as there is convergence
globally in customer tastes and purchasing habit. Hence,
businesses operate and productions are mostly on global
preference example is Coca-Cola. Companys operating in that
scale are known as multinational companies, these companies

20

have been existing in small number until recently with the

advance in technology and they have brought a great positive
change to world GDP as mentioned earlier.

Factors affecting Globalization

A later study (Jeffrey, 2003) shows that fluctuations of monetary
capital exchange between countries: This has to do with the
policies and regulation concerning transfer of funds between
different countries, with this barriers in some countries it makes
transactions unattractive in the region but with free movement of
funds like in the 90s huge amount of funds enter United
Kingdom form the United State of America.
This is what is known as deregulation, which is also a factor that
affects globalization. Its started in the UK in the 80s when many
policies and rules regarding foreign business ownership where
removed and privatization took place, this prompt foreign
investors to carry out their businesses across the world. A clear
example is the one that took place in the UK, many of their
utilities which used to be own by the government are now owned
by local and foreign investors.
Rapid development in technological and communication sector is
another major driving force of globalization, this development
made

information

open

and

accessible

to

everyone

and

anywhere. This gives investors all over the world a chance to

21

search and take chance of new business opportunities. This is

visible due to the presence of faster and cheaper transportation
medium.
Transportation medium is now much faster and cheaper, aside
from airplanes, containerisation that was developed in the 50s
was a major drive in transporting heavy and huge goods.
However, there was a continuous enhancement to shipping
technology ever since.

Extent of Globalization on Coca-Cola Company

According to Coca-Cola Companys report (2006) The name CocaCola is one of the must popular brands in the world and the
company is ranked the largest company in beverages industry
today. This is so because the Coca-Cola Company continuer to
gain growth due to the prompt expanding across the world, the
Company operate presently in more than 200 countries with
84,000 suppliers this makes 70% of the companys turn over to
be from other foreign country.
This is possible due to globalization; John Pemberton founds the
company in the 1880s in United State of America with a good
reputation of consistency and high quality, in the early stage
storekeepers requested for an attractive package with brand
recognition. The Coca-Cola Company focus and meets those
requests with a brand name Coca-Cola and a red and white

22

attractive package with a uniform taste of product across the

country, this became some of the foundation strategy of the
company.
Globalization in Coca-Cola Company started in the 1900s when
bottling plants where built in Panama and Cuba as military
spread through those regions, this spread prompt the rise in
demand of the product. These plants reduced the shipping cost
of the product in these regions, the success of these plants swift
the Company to build many more across which includes Hawaii,
Puerto Rico and Philippines. By the year 1926 the Company
established a strong foreign relationship with other countries
around the world this gave the company a chance to continue on
its quest of rapid expansion and mass production of its product
across the world by the use of local branches and local
partnerships. This expansion continue to take place for several
centuries until the end of World war II and Cold war that is when
the company was marked as a accurate global corporation.

Challenges faced by Coca-Cola Company on Globalization.

The road to success has never been smooth and easy. For CocaCola

Company the

phrase seems

perfectly

matched,

the

Company faced a lot of challenges in some countries as it was

trying to globalize. Some countries prohibited the used of CocaCola products with the assertion that the products are health
threatening and cheering obesity, which are two major concern
23

for people nowadays. Aside from these assertions so many suits

had been filed against the Coca-Cola Company with the
allegation of child labour sweatshops other countries suits the
Company for being selective in providing healthcare to their
workers. Another major challenged faced by the Company was
the infiltration of the beverages market by other strong
Companies such as Pepsi and co as analysed by the companys
sustainability

report

(http://www.coca-

colacompany.com/sustainability/global-challenges.html).
However, upon the above mentioned challenges, the Coca-Cola
Company remain strong and overcome the obstacles by focusing
on its mission to provide good quality, satisfying and refreshing
products to their customers. The Coca-Cola Company uses a
strategy of uniform tastes, which is been achieved by ensuring
strict control of recipes and facilities. This strategy really helps
the Company in overcoming some of the challenges and the
Companys number one goal to be the number one beverages
company in the world.

Structures of organisation operating on international scale

Organisational structure
According to an article written by Nordmann (2004) The term
organisational structure is primarily used in defining how
organisations structure their operational tasks. Six key elements

24

are expected for an organisation to consider in structuring

organisational tasks, this includes work specialization, span of
control, decentralization, centralization, departmentalization and
chain of command.
The Simple Structure
The Simple organisational structure is mostly been use in a small
businesses where the owner is likely to be the manager of the
business,

this

structure

is

characterized

with

low

degree

subdivision of tacks. This made it easy for the authority to be

sided or centralized to a single manager who is assumed to be
the owner of the business. From the name simple structure, its
consider to be simple with little formalization, this makes it
flexible, easy to control, more accountability, fast to coordinate
and more economical to operate. However, as organisation is
growing bigger this structure is prompt to so many challenges
due to low level of formalization and high level of decision
centralization this will eventually instigate information overload
which drive ineffective decision making by slowing it down.
The Bureaucracy Structure
Bureaucracy business structure is a pyramidal structure that is
often use by government agencies and public administrations
which involved a lot of paper work with the intent of achieving
predefined complex goal efficiently and at low cost. The structure

25

is characterized with extremely organized structure with high

level of formality and the structure has a strict orderly, highly
efficient and fair line of command at all times with centralized
authority as well. This structure has many layers of line
management,

flowing

from

executives

to

senior

regional

managers on to departmental managers flowing all the way down

to supervision officers.
The Coca-Cola company has a similar organisational structure
with a distinct international division which is in the head office
commanding the five continental divisions around the world, this
includes Eurasia and Africa Group, Pacific Group, Europe Group,
North America Group and South America Group. Each of those
continental groups has a vice president that assumes the control
of each sub-division. The companys structure is uniformly
irrespective of region or country of operations with rigid
command of operations control from the head office.

Moral and ethical issues faced by organisations operating

internationally
According

to

Donaldson

on

recent

(https://www.karlknapp.com/resource/ethics)

polled

site

Generally,

organisation operates in either production of goods or services by

utilizing limited resources to meets customers needs and wants.

26

The organisational activities is expected to be carry out in such

an efficient way to maximize profitability so as to get back to the
society in a positive way, by so doing the organisation is fulfilling
its social responsibility. In light of globalization, there has been an
increase number of ethical and moral issues facing international
organisations, issues of cross-cultural situations where many
international

organisations

are

being

accused

of

ethical

misconduct in carrying out some of there functions. Most if not all

organisation operating internationally in a cross-cultural setting
are being exposed to divers ethical norm and values which have
to be taking care of for the organisation to succeed. Addressing
such ethical issues has never been easy but it could be influence
using

some

ethical

approaches,

some

of

which

include

descriptive-prescriptive and normative approach.

Descriptive approach laid more emphasis on taking a deep
understanding of moral reasoning and value of groups and
individuals when making decision on ethical matters, in this
approach ethical decision making process is being influence by
different individual, contextual and situational context such as
cultural environment, organisational environment, opportunities
and personal experience.
Ethical standards are often not clear or not defined explicitly in
many countries, which is why moral question of what is right or
wrong is still a dilemma in both local and international market

27

place. This problem is more complicated in the international scale

due to diverse cultural groups, that is accepted in one country
might be rejected in another country. This gave raise to the issue
of universal ethical norms that had been based upon some basic
moral principles that could be used to appraise international
organisational ethics, where violation of such basic moral values
could be regarded as a bridge. Most of this basic morals values
are cultivated using a scenarios in various organisational subdisciplines

which

management,

includes

purchasing

retail

management,

management,

human

advertising
resource

management and so on.

General

ethical

and

moral

issues

faced

by

organisations

operating internationally include the following:

Bribery: This could be categorised in either traditional small scale
or large scale, which involves the payment of relatively small of
large amount of money to any official to overlook of violate some
of his/her duties/responsibilities or rather to facilitate policies in
favour of the giver.
Pricing: The issue as regards to pricing involve differential pricing
and incontrovertible invoice. These include a scenario where
buyer will request for a different price written on the invoice
other than the actual transactional price and secondly for the
prices to be unjustly different form the host country.

28

Illegal/immoral activities: Some organisational practices can be

seen as illegal in the hosting country due to the negative effect it
has

on

the

country,

workers

or

customers

of

the

products/services. This includes polluting environment with

organisational by-products or operating in an unsafe environment
that prompt the workers at ricks.
Cultural differences: Their exist a high tendency of cultural
misunderstanding in transactional and exchange processes due
to cultural diversification, a clear business transactional practice
could be considered a bribery by other culture example include
political contribution, gift, favours, monetary payment and so on.

Conflicts between corporate strategy and ethical and social

responsibility
As asserted by European competitiveness report (2008) A
corporation being having a predefine decision making ability on
rules and policies is the key element that makes it mandatory to
abide by societys ethical and social responsibility. Some
corporation policies and rules can contradict society ethical and
social principles, which will defiantly bring conflict between the
society and the corporation. A most common conflict that usually
arises between corporations and society is the issues of
advertisement.

29

Advertising is way of broadcasting message through the media

with the intension of reaching out to customers or potential
customers in order to promote certain goods or services. This
process is conducted with the aim of achieving three consecutive
goals, which include convincing potential customers over certain
product of services, communicating information to the general
public and constructing some certain values to the society.
This process can bring conflict between the society and the
corporation if either the message is unwholesome to the
audience or if the advert is conveying negative value to the
audience. Furthermore, if the message is unwholesome it can
mislead the audience. A clear example is the advert slogan that
uses to exist many year ago Do whatever you want this slogan
is believed to have violate sensibility of the audience which was
argued on and letter modify to Do what you should. The second
phase is the conveying values, which can either be positive or
negative. A common positive advert slogan is You only live
once this is inspiring and it teaches the audience the value of
life, on the contrary some does convey negative values.
Examples of such are the hedonism as well as the patriarchy; the
hedonism adverts always encourage the value of material wealth
to be the greatest good such adverts distort the moral and
ethical value of human and encourage trend of audience chasing
after brands and materials while some advertisements contains
some violent sexual implication which are some of the reasons
30

why many countries regulate the type of advert to shown due to

these negative influence on audience.

Examples includes,

Sweden and Norway prohibit advert of any kind to children under

12, Greece prohibits adverts on war games, Germany and Finland
prohibits advert of products that children can access and buy
directly,

England

prohibits

adverts

starring

in

children

programmes to mention few.

Hence, its expected for the corporations advert to stay within
the societys social norms and encourage significant social values
to its audience.

The legislation, regulation and guidance as to corporate

social responsibility
Feris

(1997)

These

are

parameters

most

managers

and

government agencies used to ensure and promote ethical

conduct of an organisation, which can be shaped within the
organisation by the managers and outside the organisation the
organisation by government and regulatory agencies.
Legal responsibility in this phase has to do with the rules and
regulation

enforce

by

state

legislators,

federal

regulatory

agencies and local town councils on corporations operations,

those embrace what the regulating bodies as mentioned earlier
31

deems as significant in respect to proper corporate behaviour. Its

expected for every organisation to operate within the legal
framework

set

by

those

regulatory

bodies

wherever

the

organisations is located or positioned.

Any organisation that is found to compromise any of those rules
and regulations is likely to be suit by any of these regulatory
bodies. Example is Tenet healthcare; this health organisation had
a federal lawsuit on one of its hospitals for performing excessive
cardiac procedure to some client that has to be settled with
$54,000,000 USD. There are several numerous cases of such
federal lawsuit against organisation across the world this is
making managers to be more cautious in abiding by each one of
their legal responsibilities. Some of this laws and regulations
include,

tariffs,

child

labour

law,

import/export

quotas,

discrimination law, site regulations, and administrative policies,

International financial reporting standard, OECO, ISGN, ISAR to
mention few.

Code of ethics in regards to guidance on corporate social

responsibility
Porter (2006) Code of ethics is a formal statement developed by
the organisation revelling the companys stands of social and
ethical issues, this statement is formed primarily to communicate

32

directly to the employees on certain level of social, moral

behaviours and values that are being expected from them at the
same time those that wont be tolerated. This statement often
comes in two categories, the policy based statement and the
principal based statement.
The principal base statement is popularly known as corporate
credos which is developed to address corporate culture, the
statement define the fundamental ethical and social values on
companys products quality, employee welfare and companys
responsibilities. The policy-based statement is designed to
address situational techniques to be used in address specific
ethical and social circumstances, which include conflict of
interest,

proprietary

information,

equal

opportunities

and

marketing practice.

Conclusion and recommendations

The report commenced with a brief introduction of Coca-Cola
Company with a detailed analysis of the international market of its
products. PESTL and SWOT analysis was being conducted to identify
potential segments the management needs to focus on in order to
achieve its objectives so also the trends and factors affecting the
company on an international scale. The report also examines the
global position and structure of the company. Although there were
some limitations and challenges being faced by the company, it still

33

maintained its position due to its Brand, Taste< Availability and

Innovativeness.
It is clear that customers are being regards as the number one
factors to be considers in operating under international or local
level, unlike before nowadays customers have different varieties of
choices between products. Therefore, if a company can not satisfy
his/her desired product they will eventually switch to the other
sources. Hence, for any company or organization to endure its
market competition they need to put in their best in given
customers what the desired because customers are no longer loyal.

Reference
Ahmad ElAmin (2007). Coca-Cola reports progress in red
environmental impact William Reed Business Media.
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Anthony McGrew. Researching Globalization Retrieved June 19,
2014 http://www.polity.co.uk/global/research.asp
Brian Nordmann (2004) Organizational Structure
http://www.studymode.com/essay

34

Coca-Cola Company Sustainability report Retrieved May 28, 2014

http://www.coca-colacompany.com/sustainability/globalchallenges.html
G.A Cole (2006). personnel management theory and practices
Hemisphere D.P publication Ltd.
G Jeffrey (2003) Winners and losers over two centuries of
globalization Retrieve May 29, 2014
http://www.nber.org/papers/w9161
M. Porter (2006). Strategy and society: the link between
competitive advantage and corporate social
responsibiliyu. Harvard Business Review
Thomas Donaldson (2014). Ethical Issues in Business. Retrieved June
15, 2014 from https://www.karlknapp.com/resources/ethics

35