Case 1‐3 Coke and Pepsi Learn to Compete in India

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Case 1‐3 Coke and Pepsi learn to Compete in India Marci Bunn 1. Both PepsiCo and Coca‐Cola were impacted by trade policy, rules, and regulations. PepsiCo faced quantitative restrictions where sales to local bottlers could not exceed 25% of total sales, they were required to produce local fruits and vegetables, and they had to modify their brand name. Coca‐Cola’s initial petition to enter the market was declined. While exact specifics could not have been anticipated, PepsiCo and Coca‐Cola should have been more aware that “a change in government, whether by election or coup, does not always mean a change in the level of political risk.” (International Marketing, p. 162) Although the Indian economy was liberalized between 91 and 94, it would be naïve to believe an entire country’s perspective in foreign trade would turn as quickly. As such, both companies could have been proactive in addressing the three main areas – provided in our text – that impact the public acceptance of foreign ventures of economic, social and human development. (p. 180) Instead of focusing on mainly sports and music celebrity (very US‐based approach), they could have used the opportunity to highlight production of local fruits and vegetables; the jobs created and education provided within those jobs; and any other platforms that contributed to the local environment. 2. The unwritten advantage, in my opinion, is development of taste preference to improve market share. Once someone gets attached to the taste of soda products, history has shown they can become very brand loyal. While early entry gave PepsiCo an advantage over Coca‐Cola, it also made it difficult for PepsiCo to compete with Parle. Being first to enter, PepsiCo battled government policy, foreign investment stigma and fierce local competition all at once. Essentially, they had to break through

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