Case Study: COCA-COLA FACES ANOTHER UNIVERSITY BAN

The University of Michigan became the tenth US University to have put on hold the sale of Coca-Colas products in its campus, with effect from January01, 2006. Other prominent US universities that have banned Coca-Cola areNew York University, the largest private university in the US, RutgersUniversity in New Jersey, and the Santa Clara University in California. Both the University of Michigan and New York University were Coca-Colas largestcampus markets in the US.Coca-Colas annual contracts with the University of Michigan alone wereworth around US$ 1.4 million in sales. However, Michigan University officialsmentioned that this was a temporary suspension and sales of Coca-Colasproducts could resume if the company made satisfactory progress onaddressing these problems. Both Coca-Cola and the university have agreedto keep the negotiations on. Kari Bjorhus, a spokesperson for The Coca-ColaCompany said, The University of Michigan is an important school, and Irespect the way they worked with us on this issue.We are continuing to try hard to work with the university to addressconcerns and assure them about our business practices. This ban was the outcome of a relentless campaign by student activists and human rightsgroups, who have pressurized universities to boycott Coca-Cola for nothaving done enough to address concerns regarding its labor practices inColumbia and environmental problems in India.The University of Michigan decided to take this step when Coca-Colainformed the university officials that it could not meet a December 31stdeadline that needed Coca-Cola to agree on a protocol to review its laborpractices in Columbia. Coca-Cola also had yet to develop a protocol to review environmental concerns in India. Columbia is widely considered as one of the most dangerous countries in the world for trade activists and union leaders. It was reported that in the year 2000, three out of every five trade union is skilled in the world were from Colombia. In 2001, the International Labor Rights Fund, a non-profit human rights organization, the United Steelworkers of America, and SINALTRAINAL, a Columbian labor union, file the lawsuit in a Florida court against Coca-Cola and two of its bottlers, as they were believed to be linked to violence against unions in Columbia. Around eight union leaders of Coca-Colas plants in Columbia were murdered since 1989, and many others have 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. Coca-Cola, in an official statement, denied that it had used death squads saying that two judicial investigations in Colombia had not found any evidence to support the allegations. In India, Coca-Cola faced the ire of activists when its Plachimada plant in Kerala was accused by locals of being responsible for depletion of groundwater levels in the surrounding area. In 2003, a BBC report revealed that Coca-Cola was distributing improperly treated sludge containing toxic carcinogens and heavy metals like cadmium and lead, as fertilizer to farmers in the region. Coca-Cola shut down this plant in March 2004 owing to mounting pressure. The company had decided to shift its operations to a nearby industrial zone, the Kanji ode Industrial Area. There have also been protests at Coca-Colas Mehdiganj plant in North India. In addition to these accusations, both cola majors Coca-Cola and Pepsi were accused of having a cocktail of harmful pesticide residues in their cola products sold in India in a study conducted by the Center for Science and Environment (CSE) in 2003. Coca-Cola claimed that there was no

evidence linking it or its bottlers to the groundwater problems at its factory location sand that its products sold in India were perfectly safe in accordance with global quality standards. For CocaCola, the worlds most widely recognized brand and one of the largest non-alcoholic beverage companies, it clearly wasnt good news to begin the New Year 2006.Earlier Coca-Cola had to contend with sluggish growth rates, stagnant cola sales in developed markets, and being perceived by investors to have been slow to diversify into non-cola beverages. In early December 2005, the companys bitter rival PepsiCo overtook it in terms of market capitalization for the first time in 112 years. This incident also highlights the growing trend of consumer activism witnessed in recent years. After Nike and Wal-Mart, it seems to be CocaColas turn to face the ire of human rights activist groups for its labor practices.

Question: 1. Evaluate Amazon's response to the entire controversy. Considering its own interests, as well as the interests of other stakeholders, what were the alternative responses that it could have considered? 2. In your opinion, will Amazon action have a significant impact on Kindle's sales? Why, or why not?