Case: Pepsi in Burma
The case mentions about how Pepsico had to withdraw all its assets from Burma despite the fact that they were doing very well in this country.
In July 1988, decline In economic conditions led to large-scale and bloody rioting In cities In Burma. In Septet 1988, the army under General U. Saw Magnum replaced the Government with the State Law and Order Restoration Council (COLORS), a group of military officers. In 1990, COLORS proposed a new government and allowed free elections with the confidence that It would win, but 80% of the seats were won by the villain opposition party led by SKU Sky.
But it refused to turn over the power to the civilian government. It outlawed the opposition party, and arrested its leaders including SKU Sky.
It invited foreign private investors and companies to invest in Burma to restore the economy. Pepsi Co responded favorably to the invitations of COLORS and other companies from US also started doing business in Burma. In 1991, Pepsi Co decided to enter a joint venture with Manner Golden Star Co, a Burmese owned company by Burmese businessmen named Then Tuna. Manner Golden Star would own 60 percent of the venture.
This Included setting up a bottling plant with 10 year license to bottle and distributes PepsiCo-owned products in Burma, Including Pepsi Cola, 7 up, and Miranda soft drinks. US department of State accused COLORS of numerous human rights.
Citizens continued to live subject at any time and without appeal to the arbitrary and sometimes brutal dictates of the military. Maltreatment of attendants, illness and even death was a standard practice Harsh working conditions to ordinary Burmese which included women and children Forced resettlement of civilians Detention of 400 r more political prisoners including 40 parliamentarians elected in 1990.
Restricted basic rights to free speech, association and assembly. They were not bounded by any constitutional provisions guaranteeing fair public trails or any other rights Workers restricted to form trade unions and were subject to arrest If unofficial labor associations were formed. PepsiCo was making huge money In Burma but It was helping the military rule to strengthen in the country which was major responsible for all the illegal practices In ten country.
Many toner us companies williwaw Its operations Trot Burma since heir image was getting deteriorated for supporting the military rule.
PepsiCo was also continuously getting opposed from its home country US and was getting constant pressure from its stakeholders to stop its business activities in Burma. Finally in 1996 PepsiCo took the step of moving all its assets out of Burma and sold its 40 % stake but it did not mention whether they will continue to supply its syrup to the bottler based in Burma. Indeed this was a smart and vague move taken by PepsiCo. Questions 1) In your Judgment did PepsiCo have a moral obligation to divest itself of all its Burmese assets? Explain your answer.
Which approach to ethics – utilitarian, rights, justice, caring or virtue- is more appropriate for analyzing the case events in this case? Answer: In our Judgment, PepsiCo did not have a moral obligation to divest itself of all its Burmese assets. The reason being: 1). They was losing the support and trust of their stakeholders due to their business operations in Burma. Their brand was deterring and they were losing continuous market share in other parts of the world (e. G. U.
S. ). 2). They did divest itself of all its Burmese assets in the end after all he American companies withdraw their business operations in Burma. ). They took the step when they were being seen doing their business unethically or supporting forced labor by the world.
4). Even in the end also they have taken this step very smartly by hiding the information with the stakeholders whether they’ll still continue to sell its syrup to bottlers in Burma. Their approach is virtue approach. They acted not by themselves but by the force of their stake holders and with other American companies withdrawing their business activities from Burma. Big Company like PepsiCo did not take this step earlier which they should have done.
In your Judgment does PepsiCo have a moral obligation to now pull its product and brand name out of Burma? Explain your answer. Answer: In our Judgment PepsiCo has a moral obligation to now pull its product and brand name out of Burma because a. By doing business in Burma they were actually supporting the military rule to strengthen their dominance through taxes and other means. As a result they were supporting more illegal practices in Burma which was ruining the country. B.
PepsiCo being involved in counter trade was promoting forced labor throughout the agriculture sector. . Being morally right in their conduct they could not do their business at the sacrifice of human rights and getting opposition from their stake holders.. D. Their respect was being questioned.
Their brand image was getting deteriorated which was not acceptable for a big company like PepsiCo. E. Though they were making profits in Burma, they were losing their share and support from the stakeholders. They could not overlook their responsibility towards their stakeholders. So it becomes moral obligation for PepsiCo to withdraw its operations in Burma.