Coca Cola and Pepsi Cola Case Study
Question 1
India, a“sovereign, socialist, secular, democratic republic” (India 2010), has a nationalist and protectionstic political landscape with foreign-biased policies including “principle of indigenous availability” (Catero 2009) and “License Raj” (Nirmalya Kumar 2009). This limited free market economy made it challenging for foreign businesses to operate in India (e.g. PepsiCo had to promote under Lehar Pepsi). In 1991, the country’s capitalistic economic reform improved its business climate but some discriminatory protectionism laws still existed.
As “political leadership openly used state-control over economic resources to maintain and exercise power” (Sanyal 2008), power struggle among the frequently changed political parties through legislations was very common. The resulted in the federal republic’s “inconsistency in implementation of government rules’ (Catero 2009) due to its complicated legal system. With the strong pressure from the independent non-government groups, both companies faced high political and economic risks (“domestication”, Kerala temporaral ban, India’s foreign colas boycott and pesticide allengations). Though most of the factors in the political environment are unpredictable and existed within the macroenvironment, steps could have been taken to anticipate and minimize the impact of the political risks. Coca-Cola could have worked with local partners and the host government. As “political sensitivity to foreign influences can be catastrophic – often driven by perception and not reality” (William Nobrega 2008) in India, PepsiCo and Coca-Cola could deploy “corporate social responsibility” (CSR) to create a positive image among the special interests group’ interests and promote sustainability in the community.
Question 2
Being the first foreign cola brand to enter into India during its economic liberalization, PepsiCo had “an early entry while the market is developing” (Catero 2009) through its local joint venture. The
India, a“sovereign, socialist, secular, democratic republic” (India 2010), has a nationalist and protectionstic political landscape with foreign-biased policies including “principle of indigenous availability” (Catero 2009) and “License Raj” (Nirmalya Kumar 2009). This limited free market economy made it challenging for foreign businesses to operate in India (e.g. PepsiCo had to promote under Lehar Pepsi). In 1991, the country’s capitalistic economic reform improved its business climate but some discriminatory protectionism laws still existed.
As “political leadership openly used state-control over economic resources to maintain and exercise power” (Sanyal 2008), power struggle among the frequently changed political parties through legislations was very common. The resulted in the federal republic’s “inconsistency in implementation of government rules’ (Catero 2009) due to its complicated legal system. With the strong pressure from the independent non-government groups, both companies faced high political and economic risks (“domestication”, Kerala temporaral ban, India’s foreign colas boycott and pesticide allengations). Though most of the factors in the political environment are unpredictable and existed within the macroenvironment, steps could have been taken to anticipate and minimize the impact of the political risks. Coca-Cola could have worked with local partners and the host government. As “political sensitivity to foreign influences can be catastrophic – often driven by perception and not reality” (William Nobrega 2008) in India, PepsiCo and Coca-Cola could deploy “corporate social responsibility” (CSR) to create a positive image among the special interests group’ interests and promote sustainability in the community.
Question 2
Being the first foreign cola brand to enter into India during its economic liberalization, PepsiCo had “an early entry while the market is developing” (Catero 2009) through its local joint venture. The