For this unit 12.3 I will explore the dynamics of the international organisations on Coca cola.
12.3 The European Union and the impact it has on Coca cola
The European Union (EU) is when the countries governments work together to agree on certain rules and regulations to gain a lot of benefits from each other as the EU countries will all have similar aims and objectives. The Eu was set up by the treaty of Rome in 1957 when it included just 6 countries. In 2006 the number of member countries had risen to 25 countries, by 2007/8 2 more countries joined to become a member of the EU. There are currently 27 countries who are members of the Eu with just under 500 million citizens but further countries are predicted to join to increase the number of members even more. The current EU member countries are:
- Austria
- Belgium
- Bulgaria
- Cyprus
- Czech Republic
- Denmark
- Estonia
- Finland
- France
- Germany
- Greece
- Hungary
- Ireland
- Italy
- Latvia
- Lithuania
- Luxembourg
- Malta
- Netherlands
- Poland
- Portugal
- Romania
- Slovakia
- Slovenia
- Spain
- Sweden
- United Kingdom.
Coca cola currently operates in all the Eu countries. ‘Coca-Cola, which operates in all EU countries’ so coca cola gains many benefits by operating in the Eu countries as it has plants set up in each Eu country. Poland is one of the many plants coca cola has set up in the Eu ‘The Coca-Cola Co. has unveiled a $30 million bottling plant here to provide Coke products along the northern coast of Poland.’ By coca cola operating in all Eu countries this will create more awareness of the coca cola company and the beverages also by setting up the plants in the Eu countries will enable easy access for people in the Eu.
By coca cola operating in the Eu, the company will save transport costs from the US there home country to the countries in the EU as that is where the coca cola company is originated from. ‘Coca-Cola is sold in over 200 countries world wide; it originated in the USA in 1886.’
There are a lot of advantages and disadvantages to being a member of the EU which I have highlighted below.
The advantages which exist for the EU members and the coca coal company are:
- By increasing the living standards the export for consumer goods industries will become huge. The total West European Soft Drinks & Juices Market was worth Euros 69.6 billion in 2005 and the Top-10 West European companies supplied 48.0% of this market. This total market is forecast to grow at an average annual real 2.16% during the 2005 - 2010 period.
- Saving money as no restrictions will be imposed within the EU countries as they can trade freely with each other with no restriction on the products which is known as a single European market. ‘by removing the barriers to free movement of capital, labour, goods and services’ this will give coca cola a competitive edge in the carbonated soft drink companies that
- Most EU countries use a single currency which is the euro which are members of the euro zone this saves changing money from other countries. Coca cola is affected by this due to the entire euro zone members being the countries where coca cola has set up its plants. By having a single currency in some of the Eu countries will benefit coca cola by it only using one currency which is easier to compare prices in different Eu countries so will be less hassle for coca cola if they wish to change prices in the 12 euro zone member countries.
- ‘Opportunities are increased for EU people to travel, live and find more jobs’ so this enable people to move from different Eu countries and find another job easily. This will benefit coca cola by people being able to easily come from a Eu country to another and will be easier to get a job at the coca cola company than a person who used to live outside the EU.
- Gaining productive efficiency or increasing returns to scale is a great benefit to coca cola as it will enable them to save a large amount of money so they will be able to gain a higher profit as the production cost will be cheaper so there will be a place for higher profit margin or increase in sales if they decide to put there prices down as the production cost will go cheaper.
- In areas where there are severe labour shortages by importing lower cost skilled labour it will save coca cola money as the labour will be cheaper so will result in coca cola saving money but the employer of coca cola receiving less money then coca cola would pay a person from the area where there are labour shortages. This may affect coca cola by it employing less experienced workers who don’t have many skills.
- When Eu citizens are travelling outside the EU they can get help from the embassy of any other member state. If coca cola workers from the Eu travel to any other Eu country are protected as they will be able to get help from the embassy if they come in contact with some sort of trouble as the embassy will help look after them and ensure they are being treated fairly.
- By working together, EU member states have more power in global politics and trade. The Coca cola plants operating in the Eu will be surrounded by countries with a lot of political power, which will affect coca cola hugely as they will have a say in the government policy and influence laws that regulate or tax coca cola. But this could also be a drawback as many governments in developed countries have strong views on healthy eating and are trying to make changes to get people, especially kids to eat healthier. ‘The school is taking part in the government's healthy schools programme’ this shows the government are very keen to get kids to healthier, whereas coca cola is a carbonated beverage which is seen as unhealthy and has negative impacts on your health. So the power in global politics could also have a negative effect on coca cola as governments may feel that coca cola is an unhealthy drink as it contains ‘unhealthy levels of pesticides and other harmful chemicals’ which is not a healthy beverage.
- The EU insists that all member states respect the human rights of their citizens. This will enable coca cola workers to have there citizens of human rights protected whilst travelling to any other Eu country or if they wish to work as a coca cola employee in a different Eu country and still be treated the same as the coca cola employees.
- By being a citizen of the EU you can move around more easily in the EU member countries for both work and pleasure. Coca cola workers will find it easy to move to a different coca cola plant within the Eu and work over there
- Member states are less likely to go to war with one another as they are like one big country.
