ANSWER ALL QUESTIONS (5Q X 10MARKS) CASE STUDY 1

Ice-Cola started its business in 1886 as a local soda producer in Atlanta, Georgia (US) selling about nine beverages per day. By the 1920s, the company had begun expanding internationally, selling its products first in the Caribbean and Canadian markets and then moving in consecutive decades to Asia, Europe, South America and the Soviet Union. By the end of the 20th century, the company was selling its products in almost every country in the world. In 2005 it became the largest manufacturer, distributor and marketer of non-alcoholic beverages and syrups in the world. Ice-Cola is a publicly-held company listed on the New York Stock Exchange (NYSE).

Several campaigns and demonstrations followed the publication of a report issued by the Indian NGO Centre for Science and Environment (CSE) in 2003. The report provided evidence of the presence of pesticides, to a level exceeding European standards, in a sample of a dozen Ice-Cola and Thunder Cola beverages sold in India. With that evidence at hand, the CSE called on the Indian government to implement legally enforceable water standards. The report gained ample public and media attention, resulting in almost immediate effects on Ice-Cola revenues. The main allegations made by the NGO against Ice-Cola were that it sold products containing unacceptable levels of pesticides, it extracted large amounts of ground water and it had polluted water sources. Ice-Cola was also accused of causing water shortages in among other areas the community of Plachimada in Kerala, southern India. In addition, Ice-Cola was accused of water pollution by discharging wastewater into fields and rivers surrounding Ice-Colas plants in the same community. Groundwater and soil were polluted to an extent that Indian public health authorities saw the need to post signs around wells and hand pumps advising the community that the water was unfit for human consumption.

The long legal procedures against the Indian government that Ice-Cola had to face were not the only consequence of the conflict. The brand suffered a great loss of consumer trust and reputational damage in India and abroad. In India there was an overall sales drop of 40% within two weeks after the release of the 2003 CSE report. The impact in annual sales was a decline of 15% in overall sales in 2003 in comparison to prior annual growth rates of 25-30%. This highly publicized conflict in India also caught the attention of consumers in the US. After a series of demonstrations by students who joined two activist groups in the US, Ten American Universities temporarily stopped selling Ice-Cola products at their campus facilities. Although Ice-Cola still denies most of the allegations, the reputational damage experienced after the controversy in India pushed Ice-Cola to take damage-control measures. Those measures at first consisted of statements to confirm Ice-Colas integrity. For example, Ice- Cola dedicated a page in the Corporate Responsibility Review of 2006 to address the controversy.

Required: Q1. Discuss in detail various conflicts, Coco Cola Company involved in relation to Corporate Social Responsibility. (3Marks) Q2. What are the learning experiences that motivated the company to adopt a more proactive CSR policy? (3 Marks)

Q3. What suggestions will you give to the management of Ice Cola Company to avoid conflicts like above in mere future? (4Marks)

CASE STUDY 2

Many people pointed out that it is very difficult to value human resources. Some others have cautioned that people are sensitive to the value others place on them. A machine never reacts to an over or under-valuation of its capacity, but an employee will certainly react to such distortion. Conventionally human resources are treated just as any other services purchased from outside the business unit. As a result conventional balance sheets fail to reflect the value of human assets and hence distort the value of the business. The treatment of human resources as assets is desirable with a view to ensuring comparability and completeness of financial statements and more efficient allocation of funds as well as providing more useful information to management for decision-making purposes. Human resources information of a particular company are mentioned in below table.

Particulars	Skille d	Semi- Skilled	Un Skilled
Annual average earning of an employee till the retirement age	90000	62000	37000
Age of retirement (Years)	70	65	60
Discount rate	12%	12%	12%
No. of employees in the group Average age (Years)	30 67	30 61	45 57

Q1. You are required to measure human resources value for the above company using suitable valuation model by applying present values at given discount rate factor. In what way the model you applied is superior than other valuation models? (6 Marks)

Q2. Also calculate percentage of human resources value of each category to the total value of human resources and identify the category with maximum value to the company. On what grounds the above model was criticized? (4Marks)