PepsiCo is one of the largest food and drinks corporations in the world. Today, the Corporation produces and retails 18 brands of snack foods, as well as beverages, and its annual turnover is approximated to be $98 billion (Ferrel, Fraedrich, & Ferrell, 2016). In addition, the Corporation retails its products to over 200 nations in different parts of the world and holds 36% of the total snack-food market in the U.S. (Ferrel, Fraedrich, & Ferrell, 2016). The company also holds 25% of the refreshment beverage industry in the U.S. Since its inception, the corporation has faced numerous challenges, revolving around its ethical issues (Ferrel, Fraedrich, & Ferrell, 2016). This essay is an analysis of the corporation’s past ethical issues through the usage of philosophical and business ethical theories and also a discussion of how the identified ethical issues affected the corporation’s stakeholders.
PepsiCo Business Ethical Issue
The largest business ethical issue that the corporation faced was in 2007, when it produced Aquafina Water (Ferrel, Fraedrich, & Ferrell, 2016). It was purified water sold in plastics bottles and through thousands of retail outlets in the U.S. In this case, the corporation was involved in false advertising of its products. This is because it was retailing the bottled water through the supposition that it was obtained from the mountains. Although the bottles used did not have the name “Spring Water” on them, it was packaged in clean containers with a blue label, illustrating pictures of snow-capped Highland mountains (Ferrel, Fraedrich, & Ferrell, 2016). In addition, the container was labeled as pure water with perfect taste. In the light of this, the largest proportion of consumers made a conclusion that the water produced by the corporation had been sourced from the mountain springs.
Analysis through Philosophical and Business Theories
Altruism is a philosophical theory that can be used to analyze the PepsiCo’s ethical issue. It is an ethical doctrine that states persons or entities have a moral responsibility in helping, serving or benefiting others, if necessary, at the sacrifice of their own interests (Joseph, 2015). In this context, PepsiCo has failed in its ethical obligation of sacrificing its own interests of making profits, so as to produce high-quality products with correct guidelines. The Aquafina product had only been attained from the ordinary tap water (Ferrel, Fraedrich, & Ferrell, 2016). Although, the water was both filtered and purified, it had not been attained from mountain springs, as customers could think. By using the images of snow-capped mountains, the corporation misled thousands of persons who used the products.
Moral Realism Theory
Moral realism is also a different philosophical ethical theory that could be employed in the analysis of the PepsiCo’s ethical issue. The ethical theory holds that there should exist an objective moral value that is supposed to ensure evaluative statements used in a business context are essentially factual claims (Sterelny & Fraser, 2016). PepsiCo’s production of the Aquafina product failed to uphold the ethical theory of moral realism because the evaluative statements offered to the consumers on the bottle labels were not the factual statements. In this case, the phrase “Pure Water, Perfect Taste” on the bottle label was misleading to the public (Ferrel, Fraedrich, & Ferrell, 2016).
Virtue Ethics Theory
The virtue ethics theory could uphold PepsiCo retention of its ethical standards in the company’s business operations. According to the theory, a person’s character, as the fundamental factor of ethical thinking, should be emphasized, rather than emphasizing on the rules about the acts themselves or the consequences of similar acts (Sandler, 2013). According to the virtue of ethics theory, it is arguable to say that PepsiCo did not compromise its ethical standards in business by producing the Aquafina product. Despite the wrongful perception of the product by the public, the corporation had still produced a clean, and refined product for its consumers (Ferrel, Fraedrich, & Ferrell, 2016). The Aquafina water was clean, and filtered before being sold to the public (Ferrel, Fraedrich, & Ferrell, 2016). For this reason, the corporation acted keeping the interest of the public in mind, through the production of high-quality water that was ready for consumption.
Utilitarianism is also a business ethical theory that could support the Aquafina product ethical issue that faced the PepsiCo Corporation. According to the Utilitarianism theory, the moral worth of using a particular product should only be measured by the contribution of the product in achieving the desired overall utility and in maximizing the pleasure or happiness among all persons (Marques, 2015). In this context, through Utilitarianism, PepsiCo did not compromise their ethical issue when producing the Aquafina product. Therefore, before the inquiry into the ethical issue, pertaining the production of the product, it had been sold to millions of people in the U.S. and other parts of the world (Ferrel, Fraedrich, & Ferrell, 2016). In addition, from all those sales, no consumer had actually complained of attaining any kind of health complications, as a result of consuming the product. This means that the product was of a good quality and offered satisfaction to all its consumers.
Discussion of How the Ethical Issues Affected the Stakeholders Groups
The repercussions of the PepsiCo ethical issue had far-reaching effects on the stakeholders of the corporation. This is because after the public had learned that PepsiCo was using tap water in the production of Aquafina product, thousands of consumers lost their confidence in using the product (Ferrel, Fraedrich, & Ferrell, 2016). As a result, the sales of the company’s product in the U.S. fell significantly (Ferrel, Fraedrich, & Ferrell, 2016). This decrease in sales consequently resulted in reduced revenues and profitability for the corporation’s shareholders. In addition, the decline in the sales volume of Aquafina product translated to the reduced revenue for the government in the form of taxes.
In conclusion, PepsiCo is among the largest food and drinks corporations in the world. Today, the corporation produces and retails 18 brands of snack foods, as well as beverages (Ferrel, Fraedrich, & Ferrell, 2016). In 2007, the corporation faced an ethical issue in its production of the Aquafina product. The company chose to offer an erroneous depiction of the source of the water used to be from the springs, instead of the actual tap water. The moral realism and altruism theory supported the existence of ethical problems in the Aquafina production. However, the virtue ethics and Utilitarianism business theories can support the argument that the corporation did not compromise its ethics in producing the Aquafina product.