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  • Subject area(s): Marketing
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  • Published on: 14th September 2019
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The Coca-Cola Company is one of the most recognizable brands in the world. The drink, which was originally intended to treat various diseases, was soon changed to focus on the mass consumer. Sweet taste, attractive color, and strong marketing allowed Coca-Cola to become one of the richest modern companies. The recognizable logo consisting of white letters on a red background is part of a strong multi-billion dollar brand. Coca-Cola has thousands of employees around the entire world in different regions, and corporate social responsibility is one of the main functions of its activities. Recently, the company has been paying more and more attention to the issue of CSR since its representatives are confident that this directly affects the organization's reputation in the eyes of consumers. It is advisable to consider the advantages and disadvantages of CSR in the context of the Coca-Cola Company, as well as to analyze the company's CSR.

One of the most important benefits of CSR is to increase the competitiveness of the company. In the face of increasing competition, the stability of the company is increasingly associated with its intangible assets. The environmental and social performance of a company can have a very big impact on its reputation, brand promotion, risk reduction, improvement of relations with stakeholders, etc. Corporate social responsibility initiatives contribute to attracting additional investments since any portfolio investor or investment fund, making a serious decision to buy stakes in a company, assesses the whole range of risks, combining economic, environmental and social indicators in its stock analysis (Baric, 135). In the case of Coca-Cola, CSR is an important competitive advantage at least because there are no serious competitors that are involved in CSR on such a scale (Torres, 53). Pepsi, Sprite, and other competitors do not use CSR as a competitive advantage, while Coca-Cola relies on it.

As a result, after an increase in competitiveness, the next benefit is an increase in the investment attractiveness of the organization. It is important to emphasize that in the context of globalization, the fact of a socially responsible business is an important factor in the investment attractiveness of the company. Despite the fact that the introduction of the principles of CSR objectively causes significant expenses of the company, in the long-term period they are compensated by the growth of revenues from improving the image and business reputation of the company (Makoni, 13). This ultimately contributes to its competitiveness. In accordance with the results of a large-scale study conducted by researchers at the Harvard Business School, firms implementing CSR programs have an advantage in all significant indicators over companies that do not have such programs. For example, in the case of Coca-Cola Company, one of the elements of its CSR strategy is investing in farming in India for growing coffee. In 2017, the company invested $ 1.7 billion in agribusiness development in India and sustainable sources for growing coffee, thereby employing more than 200,000 farmers across the country (The Coca Cola Company, 15). On the one hand, this is an element of CSR; on the other hand, it is an increase in the investment attractiveness of a company.

The third benefit of CSR is increased productivity. A company may gain significant competitive advantages because of an active corporate social responsibility policy. At the same time, the development of human capital, which is the sum of the knowledge and skills of the company's employees, which ensures its competitiveness, is of particular importance. Increasing the potential of human capital fits into the framework of personnel development strategy in order to attract and retain the most capable and talented employees, which becomes a sustainable competitive advantage of the company (Caroll, 88). The experience of leading companies shows that initiatives in the field of corporate responsibility increase labor productivity, and reduce staff turnover, increase motivation and loyalty of personnel, which, ultimately, provides the firm with competitive advantages. According to international research, the company can save from 3.5 thousand to 50 thousand dollars due to an increase in employee loyalty (Torres, 52). In the case of Coca-Cola, its internal corporate social responsibility led to an increase in employee productivity by 4% (The Coca Cola Company, 19). In addition, according to company representatives, the implementation of internal CSR programs makes it possible to attract the best specialists in the labor market.

At the same time, the introduction and application of CSR strategies may have certain limitations for the company. For example, one of the most significant limitations of CSR is the additional costs that a company must bear in order to implement a strategy. Corporate social responsibility is often a costly element even for large corporations. At the same time, corporations spend millions of dollars in order to increase their reputation, but this money is not returned in the direct context (Makoni, 18). In other words, corporations do not have the ability to measure the return on investment, if we consider the funds for CSR as investments. Coca-Cola Company invests millions of dollars, and every year the volume of investments in CSR increases (The Coca Cola Company, 1). However, the company still cannot measure the return on investment. It is possible to determine the indirect relationship between investing in CSR and sales, but there is no direct relationship between the two indicators.

The second limitation of CSR for corporations is the ambiguous perception of investment in CSR by consumers. Researchers note that often companies focus on corporate social responsibility not for the sake of good intentions, but for the sake of enhancing the company's reputation and, as a result, increasing profits (Caroll, 89). Consumers find such companies hypocritical and insincere, generally believing that compulsory state and international regulation is better than voluntary measures to ensure the socially responsible behavior of companies. In the case of the Coca-Cola Company, one of the elements of its CSR strategy was negatively perceived by society in 2016 (Torres, 69). Green Bank of Coca-Cola Life, which allegedly has fewer calories, and is more suitable for reuse and processing, was not so. Critics claim that Coca-Cola Life had the same number of calories as regular Coca-Cola, while the chemical composition of the jar did not differ from the traditional one.

The third limitation of CSR for companies is the possible increase in pressure on the company's activities from public organizations and the media. On the one hand, this is an increase in the company's reputation. On the other hand, excessive media attention can reduce this reputation (Makoni, 11). Companies engaged in CSR as a marketing tool may receive increased attention from public organizations. Any kind of violation of working conditions, even insignificant ones, and unfair competition or preconditions for it can be used by the media to distribute negative content. Modern media are very biased and ready to criticize the activities of any company, and Coca-Cola is no exception. The company and its CSR strategy several times became a victim of gossip and rumors in the media, which were aimed at undermining its reputation (Torres, 55).

The Coca-Cola Company is investing heavily in the development of corporate social responsibility. One of the most significant areas of corporate responsibility of the company is educating and empowering workers. As already noted, over the past few years, the company has invested in the development of the labor market in India, providing thousands of jobs. As a result, thousands of low-income Indian families are given the opportunity of employment and access to social benefits. In addition, the company is engaged in the education of its employees. According to the report, it provides not only jobs but also all the opportunities for staff development, career growth and the exchange of international experience (The Coca Cola Company, 13). All this together increases the investment attractiveness of India in the eyes of other companies and improves the economic situation of the population and the country as a whole.

The second direction of Coca Cola's CSR is labor and human rights. The company has developed a separate tool called the Ethics Line, which provides stakeholders with the opportunity to report alleged violations of the code of business conduct (Baric, 139). In addition, the Ethics Line includes the possibility of securing rights at the workplace or any other violation of the rights of workers in an anonymous manner (Torres, 58). This approach allows company employees to be confident in respecting their rights, thus they become more loyal to companies. In addition, according to a CSR report, as of 2017, 48% of the company's labor force in the United States was multicultural (The Coca Cola Company, 10). The company is trying to break the cultural, social and racial barrier between members of different races, providing access to employment for employees regardless of their origin. Finally, the company is engaged in the employment of military veterans who have problems finding work after the war. In 2017, the company employed 1057 military veterans.

The third most important area of ​​a company's CSR is Health and safety. Since the company produces drinks that contain a large number of calories, it aims to reduce the harm to its drinks. For example, in 2013, 100 of the 400 new drinks companies were either without sugar or with a low amount of sugar (Torres, 53). The company also cares about the health of its employees. The company created the Coca-Cola Workplace Rights Policy, setting requirements for the right conditions of the workplace. As of 2017, 96% of all the company's facilities complied with this policy (The Coca Cola Company, 7).

It is possible to support the first two activities of the company. Everyone has the right to a good quality of life, and the company respects and promotes this right by providing access to promising jobs. In addition, every employee has the right to proper working conditions, decent pay, and an objective attitude on the part of management. However, the third direction regarding consumer health may be controversial in some cases. Since Coca-Cola was originally conceived as a sweet drink with a high content of sugar, the company's attempts to reduce calories are illogical. In addition, as already mentioned, the company has been criticized by society for its high-calorie content in those drinks that were developed as low-calorie. Therefore, this direction of CSR is controversial.

Summing up, the company's CSR has both advantages and limitations. One of the most significant benefits is increasing the company's competitiveness in the market. Thanks to CSR, the company has every chance of increasing reputation and loyalty on the part of consumers, and as a result, growth in demand for products. The second advantage is an increase in investment attractiveness. By investing in CSR, the company encourages investors and stakeholders in the prospects and further development of the company. The third advantage is increased productivity. CSR increases employee motivation and loyalty to the employer. Among the main restrictions, it is possible to emphasize increased attention from the media, an ambiguous reaction to CSR directions from society, a decrease in company profits. Coca-Cola company is involved in CSR, namely in the provision of jobs in developing countries, consumer health, and workplace ethics. Caring for the health of consumers, as the direction of CSR, is controversial because the company produces high-calorie drinks, and its attempts to reduce calories have been negatively perceived by society.

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