unit 12.3 coca cola
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:
- Czech Republic
- 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.
This is a preview of the whole essay
As in World War 2 coca cola gained a negative reputation helping to set up Coca-Cola plants in occupied territories using kidnapped labour.
The disadvantages which exist for the EU members are:
- Member states have to consult other countries or take permission before acting on certain situations as they can’t act alone in situations which are considered as big/ important.
- It costs money to keep the EU going which coca cola has to contribute through its taxes to keep it running. But by there being no EU costs coca cola would have had a larger profit margin which would enable the company to use the money for other purposes.
- National governments don’t have the final say on some issues affecting their citizens so this causes a loss of sovereignty.
- Member countries will have wage competition. In various countries coca cola employees receive different amount of wages depending on the country and there role of the job. Coca cola employees will be paid more in the UK than china whilst holding the same job positions, as UK is a developed country whereas china is an undeveloped country where cheaper labour can be found for coca cola to reduce its overall production costs. Coca cola operating in the Eu will be expected to pay higher wages than coca cola operating in foreign 3rd world countries as the Eu member states have a better standard of living.
- The costs of labour market disruption which will result in higher unemployment.
Unemployment above the average rate in the EU.
Overall there are more benefits than drawbacks for coca cola by being part of the European Union. Coca cola operates in all the 27 member states of the Eu, and will gain the Eu benefits listed above. The European union will enable all the coca cola plants operating in the Eu member states becoming more successful and gaining a better reputation than the coca cola plants that operate in non- Eu countries, as they will have better living standards, reducing costs, benefit from single currency, greater opportunities for coca cola employees within the Eu countries, gaining productivity efficiency, coca cola employees protected by citizen of human rights whilst travelling in other Eu countries and finally less chance of war between member states.
European laws are known as directives. The EU has certain directives which will affect Coca cola these are
National minimum wage 1999
National minimum wage 1999 law was set to provide a legal right which covers the entire EU. It was set to prevent very low pay also this will be fair towards all employees by making each employee getting paid appropriately for how much hours they work. This affects coca cola as the number of hours for which Coca cola employees work, coca cola has to pay there workers at least the minimum wage which is calculated, according to the types of work the Coca cola employees do. Coca cola will base the wages on 4 things which are:
- Salaried hours
- Unmeasured work.
There is no evidence that coca cola has broken this law within the Eu but it has broken the law in Chile outside the EU ‘In Chile, Coca-Cola workers have been striking because the company is forcing them to work 16 hours a day for less than minimum wage.’ This will give coca cola a very bad corporate image as it shows it coca cola does not treat there staff in the right manner by forcing them to work 16 hours a day, this shows coca cola are overworking there staff and do not care about them also by paying minimum wage this shows that coca cola do not value there staff. Also by coca cola making there staff work excessively may affect there work which may lead to poor quality coca cola beverages being produced.
Equal pay act 1970
This act was set to provide both genders being treated equally by woman/man receiving the same pay as a man/ women would in similar employment. So coca cola will have to pay both genders equally and provide them with the same working conditions when in similar employment or if coca cola does not abide to it then the employee can take the case of discrimination to industrial tribunals however if needed it can go on to the highest court of law which is the European court.
Coca cola has broken the law of equal pay act outside the Eu as there is no evidence that it has broken its laws in the Eu but evidence can be found outside the Eu that coca cola has paid its employees below the minimum wage ‘Coca-Cola underpaid more than 2,000 female in recent years and will give them $8.1 million to make amends.’ This will have a bad impact on coca cola and show that it is not a very good company to work for as it does not treat female workers fairly as it paid them less than men for doing the same, it will create a negative corporate image for coca cola as it shows it does see each gender as equal and is unfair to the female gender. This may lead to coca cola losing female customers as they may not want to support a company who is who is not fair to both genders. By coca cola paying $8.1 million dollars to compensate for what they have done wrong and trying to amend their broken image which they would have created by breaking this law.
The Sex Discrimination act 1975
Sex discrimination act applies to both men and women, to protect them from being unlawfully discriminated by the employer discriminating an employee due to his or her gender. This act makes sex discrimination unlawful in employment, vocational training, education and other areas where the act has been applied. The coca cola company will have to ensure both genders are treated equally and will not be able to favour a certain gender over another or the employee can take coca cola to court for sex discrimination, but currently no evidence can be found that coca cola has not broken this law.
Working time act 1998
‘Working time directive act was applied in 1998 to help protect workers from working too many hours’ as to many hours could result in health or physical problems, this act is set in the in the best interest of the worker. Most workers should not have to work more than an average of 48 hours a week, according to the Working Time Regulations. The Regulations also give you rights to paid holiday, rest breaks and limits on night work. ‘Coca-Cola workers have been striking because the company is forcing them to work 16 hours a day’
Manufacturing employees in Colombia work long hours for little pay
Health and safety at work act
An Act to make further provision for securing the health, safety and welfare of persons at work, for protecting others against risks to health or safety in connection with the activities of persons at work, for controlling the keeping and use and preventing the unlawful acquisition, possession and use of dangerous substances, and for controlling certain emissions into the atmosphere; to make further provision with respect to the employment medical advisory service; to amend the law relating to building regulations by ensuring the workplace is a safe environment to work in.
The Race Relations Act 1976 The race relation act 1976 is to prevent discrimination on the grounds of race, colour, nationality, ethnic and national origin in the areas of employment. This act makes it unlawful for coca cola to treat a person/employee less favourably than others on the basis of race, colour, nationality, and national or ethnic origin in the area of employment.
The Disability Discrimination Act 1995
The Disability Discrimination Act 1995 was put in place to protect people with disabilities from being discriminated in connection with employment and other stuff. This applies to coca cola as it has more than 15 employees which is the requirement to be able to follow the law. Coca cola will have to full this law by not discriminating people against disabilities whilst employing but coca cola can still have reasonable medical criteria for certain work of employment for employing people also it is acceptable for coca cola to expect equal performance from all employees once the affordable changes have been made for employees with disabilities working for coca cola. It has been unlawful for service providers to treat disabled people less favourably for a reason related to their disability.
CE Mark (mark is placed on product when it meets the standard of EU directives)
Trade descriptions law
Specific Acts which affect coca cola
ACT -‘Council Directive of 10 September 1984 on the approximation of the laws, regulations and administrative provisions of the Member States concerning misleading advertising’ this law will affect coca cola as coca cola is know to do a lot of advertising to create awareness of there beverages, so they are not able to mislead consumers about there beverages. ‘1928 - Coca-Cola pure drink of natural flavors.’ This slogan which was used to advertise coca cola in 1928 is very misleading as it is trying to make coca cola seem like a healthy beverage but whereas coca cola beverages are filled with sugar and contains ‘’ which is not a natural ingredient, this shows coca cola may try and mislead consumers to generate more sales. coca cola sometimes misleads consumers by using TV adverts where they over exaggerate the coca cola beverages by using the slogan. ‘1956 - Coca-Cola ... makes good things taste better.’ They are over exaggerating the beverages to encourage the consumers to purchase the beverage and then hope they like it and then repurchase the beverage, also by it having caffeine in it hoping people get hooked on the coca cola drinks as caffeine is know to be an addictive ingredient.
ACT-Directive of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Directives , 97/7/EC, 98/27/EC and 2002/65/EC and Regulation (EC) No (Unfair Commercial Practices Directive).
ACT -Decision No of the European Parliament and of the Council of 18 December 2006 establishing a (2007-2013).
ACT- Communication of 13 March 2007 from the Commission to the Council, the European Parliament and the European Economic and Social Committee, "EU Consumer Policy Strategy 2007-2013"
ACT-Directive of the European Parliament and of the Council of 16 February 1998 on consumer protection in the indication of the prices of products offered to consumers
ACT-Directive of the European Parliament and of the Council of 20 March 2000 on the approximation of the laws of the Member States relating to the labelling, presentation and advertising of foodstuffs
ACT-Council Regulation (EC) No of 20 March 2006 on agricultural products and foodstuffs as traditional specialities guaranteed. Commission Directive of 18 July 2002 on the labelling of foodstuffs containing quinine, and of foodstuffs containing caffeine [Official Journal L 191 of 19.07.2002].
ACT-Council Directive of 20 September 2001 relating to fruit juices and certain similar products intended for human consumption
ACT-Council Directive of 15 July 1980 on the approximation of the laws of the Member States relating to the exploitation and marketing of natural mineral waters [ ].
ACT-Commission Directive of 6 August 2002 relating to plastic materials and articles intended to come into contact with foodstuffs
ACT-Council Directive of 23 July 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States Council Regulation (EEC) No of 26 March 1992 on access to the market in the carriage of goods by road within the Community to or from the territory of a Member State or passing across the territory of one or more Member States
ACT-Communication from the Commission to the European Parliament and Council of 21 June 2000 - Towards a safer and more competitive high-quality road transport system in the Community [ final
ACT-Council Regulation (EC) No of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty Commission notice on the definition of relevant market for the purposes of Community competition law [ ].
EU Trade Policies
EU Common Agricultural Policy (CAP)
Rules and regulations
Subsidies for farmers
Waste product from a Coca-Cola plant in India which the company provides as fertiliser for local farmers contains toxic chemicals, a BBC study has found.
Coca cola have caused problems for the agricultural policy ‘Coca Cola factories have also even been selling their toxic waste to local farmers labelled as "fertilizer", poisoning food supplies and causing long-term contamination of farm land.’
There are many factors of the Eu taxation regulation that can affect coca cola which are discussed below.
Taxes are also known as tariffs.