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...
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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