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Wednesday 16 November 2016

AIMA Assignments: contact us for answers at assignmentssolution@gmail.com

MM04

International Marketing

(For CNM Cases)

Assignment – II

Assignment Code: 2016MM04A2                                                                Last Date of Submission: 30th April 2016
                                                                                                                                  Maximum Marks: 100

Attempt all the questions.  All the questions are compulsory and carry equal marks.

Section-A       
1.         Explain the global segmentation and positioning strategies of firms like Coke and Mc-Donalds in             emerging economies like India? Do both MNCs offer customized and adapted products in India for achieving business success? Give examples to support your answer

2.         Discuss in details the contribution of E-commerce and e-business in promoting global trade        volumes? Give examples of sectors which have benefitted immensely with the rapid            advancement of IT?

3.         What are the external factors influencing international prices of imported products?                                     Give two examples of Firms adopting Market Skimming and Penetrative Pricing                           Strategies?

4.         Describe the characteristics, capital involvement and ownership status of the following modes   of entry into global markets:-

            a)   Franchisee Operations
            b)   Joint Ventures and alliances
            c)    Wholly Owned Subsidiary
            d)    Licensing
           
Section-B
Case Study

Coca-Cola's Business Practices: Facing the Heat in a Few Countries


Introduction
From January 1, 2006, the University of Michigan in the US put on hold the sale of the products of The Coca-Cola Company (Coca-Cola) in all its campuses, thus becoming the tenth US University to do so. The ban was the outcome of a relentless campaign by student activists and trade union groups, who accused Coca-Cola of violent labor practices in Colombia and creating environmental problems in India.
The University of Michigan issued the orders for the ban based on the recommendation of its     University Dispute Board. This was following the inability of Coca-Cola to meet the deadline of December 31, 2005 that required agreeing on a protocol on the findings of the commission formed by a set of universities in the US. The commission had offered to investigate the company's labor practices and that of its bottlers in Colombia. Coca-Cola did not want the findings of the commission to have any legal consequences but the attorneys in an earlier lawsuit against Coca-Cola and its bottlers in Colombia insisted that the findings should be legally admissible in court of law in the US.
Coca-Cola's annual contracts with the University of Michigan, which had over 50,000 students, were worth around US$ 1.4 million in sales in 2005. The campaign by student activists and trade union groups to ban Coca-Cola had been going on for several years in different countries. Coca-Cola was accused, along with its bottling partners, of hiring paramilitary death squads in Colombia to kidnap, intimidate, or kill its union leaders and other workers at its bottling plants. Since 1989, around eight union leaders of Coca-Cola's plants in Colombia had been murdered and many others abducted and tortured. In India, Coca-Cola had to face opposition from the local people around its factory in Plachimada, Kerala, who charged that the company was responsible for the draining of the underground water table.

Coca-Cola's Business Practices
Coca-Cola had always believed that it conducted its business with responsibility and ethics. The company's business practices were aimed at creating value at the marketplace, providing excellent working conditions, protecting the environment, and strengthening the communities in the places of operation. Commitment to quality and a code of business conduct were evolved to ensure good business practices. According to Coca-Cola, its commitment to quality was reflected in every facet of its business. These included commitment to product quality, quality in business processes, and in its relationships with suppliers and retailers. The quality system was reviewed constantly so that the performance bar for these standards was always kept high. The quality guidelines were communicated to all business units and their implementation reviewed. The company introduced the Coca-Cola Quality System (TCCQS) to achieve these quality objectives of delivering the highest quality standards in respect of efficient business processes, product quality, and relationships with suppliers and buyers. i.e. offering TOTAL QUALITY MANAGEMENT across all business dimensions.

Labor Practices in Colombia
Colombia is widely considered as one of the most dangerous countries in the world for trade union activists and union leaders. The country was in the midst of a four-decade-old civil war involving leftist guerrillas, right-wing paramilitary groups, and government forces.
            The civil war claimed approximately three thousand lives a year including those of many trade union leaders and workers. It was reported that in 2000, three out of every five trade unionists killed in the world were from Colombia. In 2001, SINALTRAINAL, a Colombian labor union, charged that Coca-Cola and its bottlers Panamerican Beverages (Panamaco), Bebidas y Alimentos De Uraba, and Coca-Cola Femsa, were linked to the violence against its union members in Colombia. Around eight union leaders of Coca-Cola's plants in Colombia had been murdered since 1989, and many others had been abducted and tortured. Coca-Cola was accused of hiring paramilitary death squads to kidnap, torture, or kill union leaders and intimidate worker union activists at its bottling plants...

Trade Practices in Mexico
Mexico was a very important market for Coca-Cola as the country was second, after the US, in terms of per capita consumption of soft drinks in the world. The Mexican market for soft drinks was estimated at US$ 6.6 billion for the year 2004. Over the years, some of the highest profit margins for Coca-Cola in its overseas operations came from Mexico. Coca-Cola was the number one seller of soft drinks in Mexico with a 70% market share. Coca-Cola's largest bottler in Mexico was Coca-Cola Femsa (CCF) in which Coca-Cola had a 40% stake...

Environment & Product Issues in India
In India, Coca-Cola was accused of draining the underground water table, of releasing improperly treated industrial effluents, and of selling products containing pesticide residues above standard limits. The focal point of the environmental accusations in India was the Coca-Cola plant located in Kerala. Coca-Cola, through its subsidiary in India, The Hindustan Coca-Cola Beverages Pvt. Ltd., had established a bottling plant at Plachimada locality in Palakkad district in Kerala. 

            The unit was established in 1998-99 in a 40-acre plot that had previously been used for irrigation of paddy and other food crops. The factory site was located in the proximity of a main irrigation canal that drew water from a nearby barrage and reservoir...

Boycott of Coca-Cola Products
In July 2001, SINALTRAINAL, with the help of United Steelworkers of America (USWA) and the International Labor Rights Fund (ILRF), filed a lawsuit against Coca-Cola and its Colombian bottlers at a court in Miami, Florida, under the Alien Tort Claims Act (ATCA) of the American Judicial System. It accused them of being responsible for a campaign of murder and intimidation against its unionized workers and charged that it was using right wing paramilitary groups for the purpose. The US judge dismissed these charges against Coca-Cola in Colombia but approved the charges against the local bottlers in Colombia...

Coca-Cola's Response
Coca-Cola opened an exclusive website, www.cokefacts.org, to address these allegations, especially those related to Colombia and India. In an official statement featured on the website, Coca-Cola claimed that the allegations against the business practices in Colombia were false.
            Two different judicial enquiries in Colombia, one by a Colombian court and the other by the Colombia Attorney General, had found no evidence against Coca-Cola or its bottlers linking them to the murders of the union members. Coca-Cola also quoted a judgment in the lawsuit at Miami, Florida, wherein the judge had dismissed the charges against Coca-Cola, Columbia...


5.         Discussion Questions:

a.            What are the issues and allegations faced by Coca-Cola in Colombia, India, and Mexico?

b.            Examine the challenges faced by multinational companies due to the rise in consumer    activism?

c.             What other options are available to Cocoa Cola for fighting the allegations made             concerning pesticide content in beverages?


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