Coca-Cola Amatil is a company from Australia that distributes and bottles soft drinks manufactured by the Coca-Cola Company (Donovan, 2009). This company does not only bottle and distribute Coca-Cola soft drinks, but also other companies’ alcoholic and non-alcoholic drinks. Some ventures undertaken by Amatil in recent years include bottling energy and sports drinks, coffee, fruit juices, ready-to-drink teas, packaging vegetable products and ready-to-eat fruits. In addition, the company started distributing and selling spirits manufactured by Beam Global Spirits and Wine Company. Amatil Company is owned by many shareholders since it is listed in the Australian Stock Exchange. The Coca-Cola Company owns minority shares of Amatil. A company with such varied business ventures has many stakeholders who have many expectations from the company (Boutilier, 2011). Moreover, operating in the global market, which is guided by different rules and regulations, has posed several ethical challenges for Amatil Company that it must address to gain a profitable market share (Carroll, 2011). To address these issues, the company needs to have certain features in its corporate governance. This research paper will explore these features, stakeholders’ issues and ethical challenges facing the company at the global market. Moreover, the paper will make connections between the features of corporate governance and the point at which the company has been able to address these issues.
Shareholders are concerned with the financial performance of the company. The financial performance of a company is directly related to the amount of dividends and earnings per share received by shareholders (Jacob, 2004). Therefore, the shareholders are concerned with good management of the company that leads to the increase in value of the company’s shares. For a company to achieve good financial performance, its management needs to know the factors that influence good performance. One factor that leads to successful financial performance of a company is constant monitoring of financial performance and taking actions promptly to avert any poor performance. Constant monitoring and instant remedy provision allows an organization to achieve its financial objectives. Secondly, publishing financial reports each reporting period ensures good financial performance of an organization. Information gained from the financial reports is used in decision-making for the next financial year. An evaluation of the financial reports points out mistakes that may have been done, which prevented achievement of some financial objectives. Action plans, are, therefore, drafted to overcome the challenges and improve performance. In the ever-changing business world, businesses face numerous risks. One of the duties of any organization’s management is to assess risks that their organizations may face. Assessing these risks and deciding the best ways of mitigating them can influence the financial performance of organizations. Good managers are proactive in identifying possible risks facing their organizations. Earlier risk identification provides the management with ample time to make policies to reduce the impact of the risk on the financial performance of the organization. Therefore, shareholders concerns relate to issues of the ability of the management to steer the organization towards good financial performance, which would increase earnings per share.
Customers are concerned with the value they get from purchasing products from an organization (Kotler and Lee, 2005). Organizations that balance the price of their products with the value the products deliver to the customers have a competitive edge over others. Customers purchase products to fulfill their needs and solve certain problems in their lives. The ability of the purchased products to serve the purpose for which they were bought is of great concern to the customer. Another issue customers are concerned with in their purchase decision-making is the safety of products (Freeman, Harrison and Wicks, 2007). In the case of Coca-Cola Amatil, there has been a major concern that Coke soda has negative health effects on consumers. Consumer watchdogs have raised concerns of certain chemicals used in the production of coke that harmful to health. Customers are also concerned with issues pertaining to the environmental conservation (Vukmir, 2006). Customers around the world favor companies that have shown genuine concern for environmental conservation.
The communities within the environment where Coca-Cola Amatil operates are important stakeholders that cannot be taken for granted. Communities provide organizations with the resources to use in their business ventures (Werther and Chandler, 2006). These resources can be either material or human. Organizations tap talents from communities surrounding them. Moreover, these communities serve as markets for organizations products. Therefore, any issues of concern from them regarding any organization should be treated with utmost importance. Even when the communities do not express many concerns, they may have innate expectations from an organization such as its contribution to the community’s development projects. Any organization with good corporate social responsibility is able to ensure quality life in communities within its environment (Crowther and Rayman-Bacchus, 2004). Amatil is not different from other organizations and has an obligation towards the communities within its operational environment (Yusoff, Lehman and Nasir, 2006).
Features of Amatil’s Corporate Governance
Coca-Cola Amatil has a well-defined corporate governance policy. This policy defines how the company engages with various stakeholders in the course of its business to ensure ethical conduct, transparency and satisfaction of all its stakeholders. The company’s corporate governance is committed to objectivity in its functioning. The company is composed of one executive Director and eight non-executive Directors. The existence of non-executive Directors ensures that shareholders’ concerns are taken care of and are not overridden by management’s goals and aspirations. The Board of Directors is diverse in gender, experience and fields of expertise. This helps the organization to execute its mandate effectively. The corporate governance policy has several features, some of which include financial reporting and effective communication, engagement with stakeholders and environmental concerns.
Financial reporting and effective communication is a feature of Amatil’s corporate governance that mostly affects the shareholders. Financial reporting keeps shareholders informed about the financial performance of the organization (Hopkins, 2007). Having just a financial reporting policy is not enough. The reporting must be timely to allow management to make decisions to correct any mistakes and improve performance (D’Aquila, 1998). To ensure transparent and objective financial review, the company has constituted an Audit and Risk Committee. The committee oversees internal and external audit of the company and recommends appointments to these two audit functions. The committee ensures the integrity of the financial report before it is. The committee requires independence so that it can function objectively. Therefore, it is composed of at least three non-executive members from the Board of Directors. For non-partisan functioning, the chairman of the Audit Committee is not the chairman of the Board of Directors. This composition builds shareholders trust towards the committee. The financial reporting feature of Amatil’s corporate governance, guided by the Audit and Risk Committee is critical because it provides a communication channel between the company and its shareholders. Any information that is not communicated through the financial reports is available to shareholders during annual general meetings. Moreover, any information concerning the financial performance of the company is available at the company’s website. Shareholders have also been encouraged to let the organization know about any concerns they may have. When the company is making any strategic move, shareholders are the first to know. This ensures that the organization and its shareholders are at par with the performance of the organization. Consequently, the shareholders gain confidence in the performance of the organization’s management and are more willing to invest in the company than before.
Coca-Cola Amatil has established a policy that guides its engagement with its stakeholders. The company values its customers highly because they are the support upon which its business lies. The company has established consumer information centers to respond to its customers; concerns. Moreover, following the current communication trends, the company has engaged its customers through social media such as face book and twitter. In addition, the company has established consumer hotlines to address the customers’ issues. All the concerns are reported to the Compliance and Social Responsibility committee (C&SR committee) three times a year. The C&SR committee is mandated to uphold the company’s reputation with regard to responsible corporate citizenship. Moreover, the committee ensures there is safety at the workplace; products are safe and the company adheres to acceptable trade practices. These practices enable the company to solve issues affecting its customers, communities, employees and other regulatory government institutions so that they can feel valued. Consequently, customers are likely to perceive value from their purchase compared to the money they use to buy products. Employees get motivated and the relationship with regulatory bodies becomes stronger.
Almost all companies have been confronted with the challenge of being socially responsible with regard to environmental conservation and preservation (Farrar, 2001). Consumers have shown increased concern for products manufactured using environmental friendly practices and materials. Moreover, communities within operational environments of many organizations stand to suffer if their surroundings are degraded by the operations of any company. To match these customer and communities’ expectations, many organizations have come up with policies addressing environmental concerns. Environmental policies at Coca-Cola Amatil are enforced by the Compliance and Social Responsibility Committee. Coca-Cola Amatil, water usage efficiency is very important. In the whole of coca-Cola global system, Coca-Cola Amatil in Australia is the most efficient in terms of water usage (Tomasic, Bottomley and McQueen, 2002). Efficient water usage such as recycling reduces green gas emissions by reducing the energy needs to pump the water (Siyaye, 2011). In addition to water usage efficiency, Coca-Cola Amatil re-uses its bottles for subsequent products to reduce the need to manufacture more of them, thereby reducing strain on the environment. In packaging its products, Amatil uses some of the lightest materials. This ensures that fewer materials, which come from the environment, are used. These environmental concerns have placed the company is a very good position in relation to communities and customers. Customers and communities who feel that the organization is genuinely concerned with environmental conservation values the products and relationships with the company (Du Plessis, McConvill and Bogaric, 2005).
When an organization is operating globally, there are many ethical challenges that can confront it (Carroll and Buchholtz, 2008). These ethical challenges stem from the cultural difference that exists in different countries and the varying laws across borders (Weiss, 2008). In its home country, Coca-Cola Amatil values diversity and has included minorities and women in its workforce. However, the challenge of ensuring that these endeavors are achieved is imminent. There are cultures that do not appreciate working women (Hansen and Smith, 2006). In countries with such cultures, it will be difficult for the company to achieve the goal of inclusiveness in its workplace. The current governance structure may not be able to avert this challenge because it was made with the Australian and Asian communities in mind.
Another ethical challenge that the company may face at the global market is the fear of coke being a health hazard. This claim has been raised by consumer watchdogs. Following these claims, Amatil has designed adverts that have tried to neutralize the effects of the concern. These adverts were later abolished on the basis that the company was misinforming the consumers. This move to neutralize the health concern may influence consumers’ acceptance of the company’s products in the global market. Consumers may view the company as a conspirator, trying to conceal information of vital concern from them (Holme, 2008). Consequently, they may boycott the company’s products. The current corporate governance strategies may not be able to deal with this challenge because Coke is manufactured by Coca-Cola Company in the United States. Coca-Cola Amatil has no power to change the composition of the drink since its work is bottling.
Stakeholders concerns are very influential to the performance of an organization. Shareholders concerns regarding the financial performance of an organization may determine their willingness to continue investing in the company. Customers’ satisfaction and safety concerns can lead to the collapse of any organization if the concerns are not amicably addressed. The concerns of communities can deny a company market, goodwill and source of talent if their concerns are not resolved. Coca-Cola Amatil has established a corporate governance to address these issues through features such as environmental concern, financial reporting and effective communication and engagement with stakeholders. However, ethical concerns such as health risks of taking coke and cultural difference in various countries need to be addressed through other mean apart from the existing corporate governance. The current corporate governance may not address the challenges effectively.
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