The Coca-Cola Company’s (TCCC) Water Neutrality case study is an example of a case that highlights the importance of public involvement in decisions made by corporations in foreign countries. Failure to consider key stakeholders will definitely lead to a backlash from these stakeholders. The conflict inherent between TCCC and her stakeholders is centred upon public involvement. TCCC’s direct interests are rivalling those of some stakeholders. The two parties have a performance-expectation gap that was allowed to unfold rather than being addressed in the initial stages. A performance-expectation gap is a variance between what a firm desires to undertake or is in the process of undertaking and what stakeholders desire to see (Lawrence & Weber, 2014). The stakeholders’ expectations are antonymous to the company’s performance hence brewing a conflict.
The Water Neutrality case presents a scenario where TCCC’s performance did match with its stakeholders’ expectations. A vivid analysis of TCCC’s performance against its shareholders’ expectations will clearly portray this performance-expectation gap. The general public had two marquee expectations. The first was that TCCC would produce nonalcoholic beverages that were safe for human consumption instead of the contaminated products they were taking to the market. The second expectation was that TCCC would strive to limit its water demands to its allocable fair share of water resources and generously compensate for this water by undertaking in water conservation efforts. This compensation was critical since these same water sources were being relied upon by the local community. However, TCCC’s actions were in direct contravention of these expectations. To begin with, TCCC’s acted irresponsibly by producing nonalcoholic beverages that were contaminated with high amounts of pesticide residues. Secondly, TCCC failed to act in a way that observed the water alarm raised by world leaders in some parts of the globe that included India. The company used huge amounts of water for its manufacturing processes, cleaning equipment, and undertaking both employee and ingredients sanitation. This usage was both unwarranted and unsustainable. Thirdly, TCCC’s water operations led to the depletion of key water sources by diverting fresh water to its facilities.
The success of any given entity is highly pegged on its ability to sufficiently understand and hence operate within its environment. One effective tool for scanning an environment is the strategic radar screens model. This model provides a framework that is useful for analyzing and trend scanning a given environment (Albrecht, n.d.). The first step in applying this model is segmenting the larger business environment into eight segments. These smaller segments are easier to track and observe trends. These eight segments are: competitor, social, legal, technological, customer, political, geo-physical, and economic. The competitor segment covers the behaviors of other companies in direct competition for the customers. The social segment deals with issues such as culture, preferences, and beliefs that impact the consumer’s behavior. The legal sector deals with legal considerations that are applicable in a certain jurisdiction such as intellectual property laws and patents.
The technological environment deals with trends in the world of technology that have an impact on a company’s value creation process. The customer environment covers the psychographic and demographic truths about the consumers such as their behaviors, wants, and life situations. These includes elements such as their strengths and weaknesses. The political environment tackles government policies that impact the health of a company such as taxation policies, political stability, and legislations such as subsidies. The geo-physical environment covers the physical surroundings of the company. Lastly, the economic environment tackles the market dynamics that affect the operations of a company such as revenues, input costs, and access to capital.
The most outstanding segment in the TCCC Water Neutrality case is the geo-physical segment. Critical issues were raised by both stakeholders and world leaders regarding the usage of fresh water as a natural resource. Coca-Cola’s activities were responsible for the depletion and the contamination of final products. TCCC’s operations directly led to the depletion and contamination of water resources. This issue led to the nearby communities suffering from the lack of water. Coca-Cola’s actions also negatively impacted the legal, political, and customer segments. The company’s customers made their complaints regarding the nonalcoholic beverages being contaminated. The company also found itself in legal tussles with certain governments over its poor management of water resources. The government of India, for instance, went to the extreme of shutting down the company’s operations in the country.
TCCC’s response to the public’s concerns was both timely and appropriate. The response involved two approaches. The first approach was reaching out to key stakeholders like CARE and Nature Conservancy for advice and forming beneficial partnerships with them. The second approach was undertaking a global comprehensive study with the purpose being to assess its water management practices. The company even went to the extent of coming up with a water neutrality objective in 2007. This objective involved safely reimbursing to nature and communities an equal measure of water used in its nonalcoholic beverages by 2020 through recycling, replenishing, and reusing.
The company started making positive strides as early as 2011. It managed to reduce its water usage ration by 13% from its baseline levels. It also managed to successfully place 39% of its facilities under recycled water while replenishing 23% of utilized water in nonalcoholic beverages production back to the community. TCCC’s positive progress continued to 2014 when the company publicly announced that it had replenished 68% of the fresh water it had used in nonalcoholic beverages production. This success was attributed to partnerships TCCC had fostered with different governments geared towards enhancing sugarcane irrigation systems in Australia, restoring watersheds in Thailand, and building water treatment facilities in Columbia. Other actions that show TCCC’s appropriate response include a $2 million investment aimed at implementing water conservation solutions in Jordan. The company even went to the extreme of changing its sustainability goals by redoubling its efforts towards water efficiency in August 2012.
The media is full of tobacco related material such as adverts, blog posts, and article. However, most of the time tobacco is in the media it’s for the wrong reasons. The two issues at the helm of this negative media attention are secondary smoke health issues and the ban on smoking in public places. The two are interconnected since the ban on smoking in public places is as a result of the negative effects of secondary smoke. It is important to understand the health effects of secondary smoke so as to see the need for the ban on smoking in public places. According to research, tobacco smoking in public locations is the most critical cause of deaths from cancer and cardiovascular diseases.
The American Cancer Society identifies secondary smoke as being more hazardous because it contains two different types of smoke. The first type is side-stream smoke while the second type is mainstream smoke. The former is smoke produced by the lightened end of a cigarette. The latter is smoke exhaled by an individual who is an active smoker (“Health Risks of Secondhand Smoke,” 2020). As a result of the side-stream smoke, second hand smokers end up inhaling both toxic chemicals and nicotine in higher quantities than primary smokers. The biggest health risk to these smokers is cancer. Some studies have even linked second hand smoking to depression. Other health hazards include damage to heart and blood vessels thus increasing the likelihoods of stroke and heart attack.
The above health effects make the ban on smoking in public areas a vital safety mechanism. Smoking in public locations can be controlled using the following interventions: restrictions and bans, signs and posters, and the use of media to educate the public. A smoking ban can be enforced in public places such as public transport, passenger pick-up and drop-off points, work places and homes. The smoking ban in public places due to the harmful effects of secondary smoke involves many stakeholders. These include primary and secondary stakeholders. The primary stakeholders comprise of tobacco companies, customers, tobacco outlets, and advertising agencies. These parties are directly involved in one way or another in the tobacco supply chain. The secondary stakeholders include the general public, non-governmental organizations, the government, and anti-smoking activists. These parties are indirectly involved in the tobacco supply chain.
The roles of the primary stakeholders are as outlined below. The tobacco customers actively buy tobacco products and smoke them for stimulation or other reasons best known to them. The tobacco companies are involved in the direct production of cigarettes, cigars, and pipes. They control the manufacturing plants and supply the cigarettes in wholesale amounts to wholesalers and retailers. Advertising agents affect the sales made by tobacco companies. Tobacco outlets comprise of wholesalers and retailers that sell the products to the final users.
The secondary stakeholders also play specific roles in the tobacco industry. Non-governmental organizations such as the American Cancer Organization serve to sensitize the public on the adverse effects of tobacco smoking to the body and society as a whole. Anti-smoking activists such as the Americans for Nonsmokers Rights champion for the rights of passive smokers. Lastly, the general public is mostly the victim of second hand smoke. They are also the target for tobacco companies since they form a vital potential market. Their activities have an indirect effect on tobacco smoking. The general public can involve itself in demonstrations and petitions aimed at either crippling or enhancing the tobacco industry.
I have two stakeholder roles in relation to the tobacco industry and cigarette smoking in my society. The two stakeholder roles are both primary in nature. They are an advert agency employee and a customer. My position as a stakeholder in two different capacities influences my decisions differently regarding the public issue to ban smoking in public places. As a cigarette smoker I consume on average between two to four cigarettes a day. I purchase my cigarettes from a local retailer in my locality. Employment-wise, I am contracted to an advertisement agency that develops adverts for businesses and companies regardless of their industry. One of our largest perennial clients is a cigarette company.
As a customer, I support the decision to ban smoking in public places but moderately. Smoking in places such as kindergartens, health institutions, and gatherings for the whole family should be banned because of the potential health risks it poses to children. However, I am a bit biased to then ban of smoking at work and home setups. The reason being not all places of work have specified smoking zones. Homes also lack smoking zones as it is uneconomical for landlords to include extra rooms to accommodate smokers. Since smoking is a recognized right to citizens then limiting this right should be only implemented in the presence of a designated smoking zone. The absence of such zones makes it hard for smokers to observe the smoking ban.
Another source of bias is the fact that my income is solely generated from advertisement activities with tobacco companies forming part of our clientele portfolio. As such, the ban to smoking not only limits smoking but also passes a negative message about the dangers of smoking (Menzies, 2011). This message may end up converting some smokers to non-smokers hence adversely affecting audience. The less the amount of smokers then the less the amount of money tobacco companies will be willing to spend on advertisements. The result is a dip in earnings and a possible pay-cut or even lay-off. As such, the success of the tobacco adverts play a critical role in ensuring I remain employed. This fact influences me to sometimes oppose the ban of smoking in public places.
As a tobacco industry executive, I am a primary stakeholder to the tobacco public issue. As such, my actions have a direct impact on tobacco smoking and the public issue to ban smoking in public places. The tobacco industry is one of the most highly regulated industries by the Food and Drug Administration (Deyton, Sharfstein & Hamburg, 2010). The Family Smoking Prevention and Tobacco Control Act gave the FDA express control over tobacco products. As such, my company’s products are highly regulated in terms of the raw materials and processes involved in manufacturing. The final product is thus conducive for human consumption according to the prescribed standards of the FDA. Banning smoking in public places appears as a passing on blame from the FDA to my company and as such I do not support the move. The FDA is supposed to ensure that the end products are not only safe for the active smokers but also the passive smokers.
However, to effectively manage this public message, my company will have to comply with the laid down precautions and ban. I will ensure the information regarding the ban is well communicated to our final users to keep them from getting in trouble with the law. My company will thus include short messages of the ban on all our cigarette packets and include the message in our advertisement ventures. The company will also strictly adhere to legal requirements such as including all the ingredients of the cigarette on the packet.
The government is charged with the responsibility of upholding its people’s rights in accordance to the constitution of the land. The freedom of expression is well stipulated under the constitution. As such the government has not right to stop an individual from indulging in acts such as smoking unless it perceives that the substance being smoked is harmful. The government also has to strike a balance between when to respect people’s personal choices and when to forcefully go against such choices. The reason being the resultant loss is both to the individual and the government. The U.S government, for instance, is spending a lot of citizens’ taxes on self-inflicted acts such as drug addictions in numerous government-funded rehabilitation centres nationwide (Pagano, Tajima & Guydish, 2016).
The government has little authority in banning smoking completely since the side effects of tobacco are not as extreme as those of say cocaine. However, the government bears a responsibility to protect passive smokers from the actions of active smokers. The fact that passive smokers run a greater risk of developing chronic health effects makes this responsibility more critical. As such, banning smoking in public places is both beneficial to the public and the government itself. The move will help reduce health cases associated with tobacco and as such reduce government spending in health institutions. Moreover, the responsibility of the government to protect its citizens from harmful acts forces it to institute this ban. Only the intentional smokers should suffer the harmful effects of tobacco and not innocent passive smokers.
The media acts as a communication channel between the public and the tobacco companies. It plays a very pivotal role in either enforcing or opposing the ban against smoking in public places. The media, for instance, has falsely made people believe that smoking is a legal constitutional right when in real sense it is not. Government media sources play a critical role in enforcing the ban citing the health effects of secondary smoke as the biggest reason. The Centres for Disease Control and Prevention (CDC) was at the helm of the first federal-funded anti-smoking advert (Harris, 2012). The advert led to positive results with nearly 2 million smokers being inspired to quit smoking. The ad contained tips from former smokers on how to quit. The agency cites the effectiveness of their public anti-smoking education to the ad. Such ads have shown that the media can be an effective channel in effecting the smoking ban based on the adverse effects of second hand smoke.
The media, however, also suffers from an acute case of conflict of interest. As such, most media outlets would prefer to air pro-smoking ads because of the monetary infrastructure possessed by the tobacco companies. The fact that government agencies cannot match the hefty campaign budgets of tobacco companies make the media biased in addressing the issue. It is a common occurrence to see a single media agency airing both anti and pro-smoking campaigns. The goal for private media outlets remains to maximize their profits with little concern for the wellbeing of the public.
Deyton, L., Sharfstein, J., & Hamburg, M. (2010). Tobacco product regulation—a public health approach. New England Journal of Medicine, 362(19), 1753-1756.
Harris, G. (2012, March 15). U.S. Backs Antismoking Ad Campaign. Retrieved from https://www.nytimes.com/2012/03/15/health/policy/cdc-finances-nationwide-antismoking-ad-campaign-a-first.html
Health Risks of Secondhand Smoke. (2020). Retrieved 13 January 2020, from https://www.cancer.org/cancer/cancer-causes/tobacco-and-cancer/secondhand-smoke.html
Karl , A. (n.d.). The Strategic Radar Model. Retrieved from http://karlalbrecht.com/articles/pages/strategicradarmodel.htm
Lawrence, A. & Weber, J. (2014). Business and society: stakeholders, ethics, public policy (14th ed.). New York, NY: McGraw-Hill, Irwin.
Menzies, D. (2011). The case for a worldwide ban on smoking in public places. Current opinion in pulmonary medicine, 17(2), 116-122.
Pagano, A., Tajima, B., & Guydish, J. (2016). Barriers and facilitators to tobacco cessation in a nationwide sample of addiction treatment programs. Journal of substance abuse treatment, 67, 22-29.