Pepsi is a company that has been in the business of selling drinks for many years. They have had to face many ethical dilemmas and pepsi ethics is one of them. This essay will explore pepsi ethical philosophy, pepsi’s past ethical stances, and how their actions can impact the society we live in today.
In recent years, corporate ethics have grown in popularity as businesses attempt to integrate ethical values and principles into their operations. Companies no longer prioritize profit maximization and company growth alone; instead, they’re looking at means of treating consumers, staff, and the environment in a moral way (Shaw, 2011).
Prices start at $12
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Prices start at $12
It’s a standard practice in today’s businesses to establish special departments dedicated to meeting the company’s ethical requirements. In fact, various impartial organizations assess organizations’ management and ethics practices in order to recognize their efforts and impact better services. On the one hand, organizations are also catching on to the link between their ethical policies and financial results, with both aspects considered (Shaw, 2011). This paper aims to discuss business ethics in depth by looking at PepsiCo’s approach.
Pepsi’s Morally Responsible Actions. Environmental management
PepsiCo has a well-defined environmental, health, and safety management policy in place. The goal of the policy is to ensure that the firm effectively serves its immediate business environment. The list of eight key points includes ownership culture, corporate integration, regulation compliance, and resource allocation (PEPSICO, n.d.). It also covers areas such as performance measurement and continuous improvement, as well as stakeholder collaboration and yearly review.
In terms of corporate culture, for example, the firm’s policy states that in order to build and maintain a proactive attitude at all levels, individuals must be empowered through environmental ownership, health and safety awareness, and overall environmental management. The company engages its employees in influencing active participation in order for these objectives to be realized.
The topic of stakeholder collaboration is also an essential component of the environmental management plan. To minimize the health, environmental, and safety repercussions associated with its everyday activities, PepsiCo works with a variety of stakeholders, including contractors, suppliers, licensed bottlers, as well as local communities and consumers (PEPSICO, n.d.). PepsiCo collaborates with a number of stakeholders in order to seek to form sustainable and effective solutions for health, environmental, and safety issues or challenges, all of which are confronted by the company’s operations.
Ethical Consumer Treatment
PepsiCo tries to ensure that it treats its clients in a morally acceptable manner, even if this means tolerating unethical practices in order to preserve its corporate human resource policies. Because it is a large multinational corporation with offices all around the world, the beverage and food firm undoubtedly deals with a large number of clients that might be too difficult to manage or control effectively.
The company has established a worldwide code of conduct that sets forth the firm’s major aim in conducting business ethically as part of its corporate mechanism to verify that clients are treated fairly (n.d.). Employees are expected to adhere to these codes of conduct and embrace the underlying ideas as a method of ensuring that the firm meets and maintains its objectives for extended.
Employees are required to follow these standards at all times, unless they qualify for an exemption. The code includes a demand that employees demonstrate total respect at work, an obligation to act with integrity in the market, as well as a request that all workers practice ethics in their business activities.
Furthermore, and more significantly, workers must carry out their tasks in a more responsible manner to successfully satisfy the shareholders’ needs (PEPSICO, n.d.). To make the corporate code of conduct more effective, the firm updates its acceptable practices on a regular basis to incorporate any changes in legislation that may have an influence on its corporate operations.
Moral Action towards Employees
The company believes in fostering a diverse corporate culture where any qualified individual from whatever race, tribe, nationality, or gender can apply for job vacancies with the firm and be considered for employment without prejudice. The aim of this goal is valued by the company as an important one that encourages employees to think creatively while also providing the opportunity to benefit from fresh and innovative views (n.d.).
Pepsi is committed to ensuring that its employees are central in helping the company meet its customer objectives. The importance of Pepsi maintaining mutual respect, workplace safety, and honesty are mentioned in its corporate vision. Recruiting, as well as retaining world-class talent by ensuring that employees are satisfied at work or “Talent Sustainability,” is a focus for Pepsi’s inspiration of a collaborative culture (PEPSICO, n.d.). The organization’s efforts to encourage employees to speak up may be seen in the form of a two-year Organisational Health Survey, which is given out to all staff members.
Effects of the Morally Conscious Decisions on the Company’s Bottom line. Customers. Trust
The firm’s morally acceptable behaviour and decisions are likely to boost customer trust and confidence in the company. Because employees are demonstrating greater dedication in serving clients, clients are more likely to conduct business with the company than they would be if the staff had not been concerned about ethical and moral behavior. As a result of numerous potential customers’ growing confidence in the business,
The firm may also assist the workers in fulfilling their moral duties to one another by providing training, tools, and other resources. By rewarding employees for exceeding production goals and encouraging them to develop new skills, the company fosters a sense of community among them that encourages them to work harder.
Employees’ enthusiasm for their work and their eagerness to put in even more effort for the company raises the probability of success. As a result, more consumers are adequately served, which increases employees’ confidence in PepsiCo.
Because of its continued employee moral programs, PepsiCo is more likely to have a workforce that is completely happy with its job. Employees who are aware that their material and emotional needs are being met are less inclined to search for new jobs. Instead, the majority of them would prefer keeping working for the same satisfying employer until they die at retirement age.
Because of this, employers are no longer required to go through employee recruiting every now and then. In fact, high employee turnover rates disrupt the company’s overall planning and operation since management must continuously train new employees who only last for a short period before leaving in search for higher-paying jobs.
Because PepsiCo has made a commitment to support local communities through many environmental management projects, the organization is anticipated to receive more assistance and positive collaboration from organizations. Foreign governments will be eager to grant the firm with operation licenses in their respective countries because they recognize the long-term benefits of the society. This kind of goodwill on part of the communities allows the business to develop its market and increase its revenue potential.
Critical Review of PepsiCo’s Ethical Policies
The first is that it informs its customers about the potential risks associated with a product or service, as well as how to reduce those risks. The second gesture demonstrates respect for others—the company’s slogan is “Respect Others As a Way to Be Successful.”
PEPSICO has divided these six fundamental guiding principles into separate categories to address all of the company’s key areas of operation. In particular, the principles deal with issues such as customers, goods, spoken communication with investors, and the company’s future ethical plan (n.d.). It also considers employee behavior and conduct toward both consumers and workers in terms of a multiethnic workforce (n.d.).
Ethical Areas Needing Improvement. Environmental Management
Because of its large range of goods, PepsiCo consumes a substantial quantity of packaging materials that have an unfavorable effect on the environment (Wilburn & Wilburn, 2013). Alternative packaging solutions should be created by the firm to prevent communities from harm.
PepsiCo produces and sells a variety of food products that are classified as “junk.” These meals are responsible for an increase in hazardous health issues like obesity and high blood pressure. The business should not only consider the lucrative earnings it makes from the sale of these products, but also whether or not to offer healthier alternatives (Hall, 2007).
Due to a large staff that is apparent at PepsiCo, deserving workers have been overlooked from planned advancements and other employee advantages. Human resource management at PepsiCo must ensure that it uses effective computerized systems to prevent these unfortunate events.
As a means to increase acceptability, PepsiCo, which is a major worldwide producer of diverse items such as meals and beverages, has implemented various ethical policies in its company strategy. Its ethical practices benefit local communities, workers, and customers. To guide the actions and activities of its personnel, an ethical code of conduct has been established. This code of conduct was created with the intention of ensuring that employees provide consumers with the most morally acceptable service possible.
The firm, on the other hand, has a thorough strategy in place to guarantee that its personnel are treated in the most morally acceptable fashion possible. This increases their passion and has the potential to influence revenue and profits attainment. However , the company must consider the environmental effect of its packaging. A significant proportion of its meals products are also mostly junks, putting many of its customers’ health at risk.
PepsiCo is a multinational corporation that specializes in the production of food and beverages. The firm is ranked among the world’s top foodstuff producers, with over 18 items available in its chain stores. PepsiCo has an annual revenue of $98 billion and sells its products in nearly 200 countries across the world. Furthermore, PepsiCo has about 36% of the overall snack-food market in the United States (Pepsico Inc). For years, PepsiCo has been involved in a number of ethical issues.
Brief Summary of the Ethical Issue
In 2007, when accused of compromising its ethical standards by providing false information about one of its items, PepsiCo faced a worldwide ethical issue (Berch, Montoya, & Sawayda, 2010). This was demonstrated when the firm launched the Aquafina Water brand. What went wrong was the use of a picture of a mountain and springs on the container to convey that the bottled water sold in bottles had been sourced from mountain springs (Berch et al., 2010).
Thousands of items were sold to customers in the United States and other parts of the world after the launch of Aquafina. Despite the fact that Aquafina bottles did not say “Spring Water,” they were captioned “Pure Water, Perfect Taste” on their labels (New York Law Journal, 2008). This claim convinced people to believe that the company’s product was derived from mountain springs.
Analysis of the Issue Using Philosophical and Business Ethical Theories
The Altruism theory may be used to examine PepsiCo’s ethical issue. This is a philosophical thesis that advocates for the duty of individuals or organizations to serve, assist, and benefit the general public even at the expense of their own interests (Batson, 2011). In the case of PepsiCo, the company had failed in its attempt to maintain its claimed ethical standards.
The reason for this is that the business had neglected to create a product with the appropriate instructions on the substances used in its manufacture. The Aquafina beverage was only obtained from city tap water. However, pictures of mountains and springs were included on the water container’s labeling, which misled customers into believing that the water came from mountain springs.
The psychological altruism theory, on the other hand, may support PepsiCo’s ethical issue. It can also be contradicted by virtue ethics (Hooft, 2014). According to this view, instead of emphasizing the actions or consequences of completed phenomena in accordance with virtue ethics, an individual’s character should be focused on. PepsiCo did not deviate from its ethical criteria as a result of taking these steps.
The company appears to have acted as a genuine advocate for consumers, as evidenced by its efforts to ensure that the container labeling was not misleading. This may be supported by the fact that, while the labeling of the container was somewhat deceptive, the business nevertheless created a high-quality product for its clients. It is justifiable to claim that the firm had consumer interests in mind when developing the product on this basis.
The legality of the arrangement may be supported by the notion that Coca-Cola’s refusal to clarify its deceptive advertising practices violated their ethical standards. On the one hand, according on moral realism theory, there should be an objective moral value to ensure that all evaluative statements describing a phenomenon are essentially truthful claims (Sterelny & Fraser, 2016).
On the other hand, utilitarianism may rebut such claims by claiming that when the PepsiCo Corporation created its Aquafina beverage, it did not violate any ethical norms (Gandjour, 2007). According to utilitarianism, a product’s moral worth can only be determined through the product’s contribution to its intended utility for targeted individuals. Despite misleading labeling, the Aquafina product was still enjoyable to everyone who used it.
In terms of the four philosophical and business theories evaluated in the study, the product satisfied the ethical, altruistic, and moral realist ideals. This is due to the fact that it was unethical for a corporation to put its own self-interests before targeted client’s ethical interests by putting their goods on sale. The firm had to make certain that good imagery or statements about Aquafina were printed on bottle labels and that they were not deceptive in any way to preserve its good name as an ethical company.
Description of How the Ethical Problem Affected the Corporation’s Stakeholders Groups
After the company’s ethical problem had been made public, it incurred significant consequences for its stakeholders. The first is that millions of consumers who had already begun consuming PepsiCo’s products lost trust in them (Batson, 2011). A large number of customers have changed their consumption habits to replace products manufactured by rivals (Batson, 2011). As a result of this, the corporation’s annual sales turnover has decreased, as well as the shareholders’ dividends. In addition, because of the decrease in revenue, the federal government is receiving less money from the company in the form of taxes.
PepsiCo is one of the world’s largest food and beverage businesses. It has expanded considerably in recent years, reaching 200 countries across the world (Pepsico Inc). Nonetheless, it has faced several ethical concerns throughout the years, which have impacted its operations. In 2007, when PepsiCo provided misleading representations regarding the source of its ingredients on the Aquafina bottle, it was accused of compromising its ethical standards.
The moral realism theory, the altruism argument, and the notion that businesses compromise their ethical norms when they develop goods with false information on product labels may all be applied to support the hypothesis that Aquafina water bottles were produced in violation of its corporate ethics. Furthermore, utilitarianism and virtue ethics can also be used to support the contention that when it came to creating Aquafina products, the corporation did not stand in violation of its ethical standing.
The Role of Ethics and Compliance in Pepsi-Cola PepsiCo has a long history of being ahead of the curve when it comes to corporate social responsibility. Employees at the firm embrace a culture that promotes accountability and offers the framework for trust (PepsiCo Inc., 2011). This sense of pride is earned by six basic principles, according to the company.
The goals of PepsiCo included total customer and consumer care, offering the highest quality goods, operating honestly, establishing an equal balance of short- and long-term objectives, triumph through inclusion and diversity via a document titled “PepsiCo Commitment to Inclusion.”
Many legislation are designed to decrease particular compounds, such as sugars, fats, and salt (PepsiCo Inc., 2011). PepsiCo has a variety of policies and procedures in place to guarantee regulatory and legal compliance. Suppliers or an occasional employee, for example, may commit significant violations that might trigger the enforcement of civil and criminal penalties. This may have a detrimental impact on the company (PepsiCo Inc., 2011).
In terms of accounting, there are rigid rules in place that must be followed in order to have a handle on financial data (PepsiCo Inc., 2011). The rules at PepsiCo require management to make some tough choices when confronted with uncertainties that might influence the company’s financial results (PepSiCo Inc., p. 43). PepsiCo does not engage in alternative accounting methods beyond those relating to pension plans (PepsiCo Inc., 2011).
PepsiCo (PepsiCo Inc., 2011) applies estimation methods and important accounting concepts on a regular basis, which are then reviewed by the Audit Committee. The maintenance of critical accounting policies is linked to pension and retiree medical insurance, intangible assets including goodwill, and other assets, accruals and income tax expense, and revenue recognition.
The Role of Ethics and Compliance in Pepsi-Cola PepsiCo has a strong dedication to helping its people grow sustainably by empowering them (PepsiCo Inc. , 2011). Employees at PepsiCo are committed to maintaining a culture that encourages responsibility while also providing the foundation for trust (Pepsysco Inc. , 2011). The company is proud of its environmental responsibility, as well as social awareness, which it achieves through six guiding principles (2011).
This is consistent with the principles outlined by The Coca-Cola Company (n.d.) in which they promoted total consumer and customer care, high quality goods, honest business conduct, equal balance of short- and long-term objectives, victory through inclusion and diversity, careful attention to detail since there’s no second chance when it comes to brand reputation repair efforts.
The compliance committee makes proposals that are later implemented via the use of problem resolution methods (PepsiCo Inc. , 2011). The Anti-trust, Safety and Environment, Human Resources, and Finance subcommittees make up the compliance committee. They oversee fleets, factories, and personnel that staff them in the Safety and Environment Committee. This committee handles issues such as employment and human resources. All financial integrity is covered by the umbrella of this committee’s finance department .
In the United States and abroad, there are numerous state, local, and federal judicial, legislative, administrative, and policymaking authorities that impose laws and rules. Because any principles of interpretation are susceptible to significant change (PepsiCo Inc. , 2011), changes that are made are typically political, economic, or social in nature. Food and drug rules; how the goods are labeled; marketing and advertising strategies; the various components utilized in the manufacturing of the product (PepsiCo Inc. 2011).
The reduction of various substances, such as sugars, fats, and salt (PepsiCo Inc. , 2011), is a goal of several laws. PepsiCo has numerous policies and procedures in place to guarantee regulatory and legal compliance. Suppliers or an occasional employee, for example, may commit serious infractions that might result in the enforcement of civil and criminal penalties; this could have a negative impact on the company (PepsiCo Inc. , 2011).
In terms of accounting, there are strict rules in place that must be followed in order to comprehend financial results (PepsiCo Inc. 2011). PepsiCo’s policies call for management to make frequently tough decisions regarding uncertainties that could have a bearing on the company’s financial performance (PepsiCo Inc. , 2011). Other than pensions, alternative accounting methods aren’t used by PepsiCo (2011).
Estimation procedures and important accounting regulations are applied on a regular basis, with updates reviewed by the PepsiCo Audit Committee (PepsiCo Inc. , 2011). Accruals and income tax expense, as well as intangible assets including goodwill, are maintained in conjunction with pension and retirement medical plans, while revenue recognition is adhered to (PepsiCo Inc. , 2011). At PepsiCo Corporate governance is critical, and all efforts have been made to encourage it (PepsiCo Inc. , 2011).
As outlined in the PepsiCo Inc. Political Contributions Policy (2011), the company follows a rigid procedure for authorization. Business and strategic interests at PepsiCo are displayed by contributions made by PepsiCo (PepsiCo Inc. 2011). Individual officers or directors of the firm do not solicit funds in any way.
There are no reimbursements for individual contributions; there is no indication of a contribution when it’s made strictly in the course of an official act; and all donations are fully acknowledged on the company’s website (PepsiCo Inc., 2011). The Board of Directors at PepsiCo conducts periodic reviews of spending and political donations and practices and policies (2011).