Professional Documents
Culture Documents
Yuliya Rudenko
10/01/2007
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Case Analysis #1
Introduction
Many companies plan to do their business internationally. However, they are not
always successful because they have to face culture differences, which they were not
prepared for. Therefore, it is critical to do internal research of that country before doing
any business in the specific country. Nevertheless, there is always going to be some
issues that they can only face when the company gets there; issues always arise when
these issues and create a plan that will help the corporation in the future in a similar
situation.
Coca-Cola and Pepsi Cola are the two leading beverages company in the world.
Both companies moved to international market. PepsiCo entered in the Indian market in
July 1986 and they were working with two local partners, Voltas and Punjab Agro. The
Indian government approved this application with the exception that the sale of soft
drinks concentrate to local bottles could not exceed 25 percent of total sales of the new
venture. Coca- Cola on the other had a different story. They entered into the Indian
market in 1958; however they face many problems from the government such as cutting
its equity stake to 40 percent and handing over its secret formula for the syrup, so they
Both companies tried their best to succeed in the Indian market. They were well
aware of tolerance and the cultural differences. Both companies were trying to compete
with the local business in the same industry by using many different strategies. In my
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opinion, to bring something new to the culture it takes a lot of strategic marketing in
order to make that product acceptable. It was mentioned in the case that the average
Indian was buying only three bottles a year. Also, India was not big on carbonated drinks;
they preferred more natural beverages, so Coca-Cola made a foray into the premium juice
segment with the launch of Minute Maid juice (Prasda, 2006). Therefore, the companies’
goals were to make this product more likable for the Indians. Coca Cola for instance, was
doing discounts by reducing product price and also giving away drinks through “buy one
and get one free” specials. Both companies also focused on hiring well known stars from
Bollywood to do their advertising and some what they were successful. In the article of
Finally, Coke Gets it Right, Alex von Behr, who is the president of Coke India, mentioned
“The environment in India is challenging but we are learning how to crack it” (Manjeet,
2003). Those small issues were nothing compared to what Coke companies had to face in
India.
Issues
When Coca-Cola reentered the market in May 1990 they were trying to joint the
local bottling company owned by the giant Indian conglomerate, Condrej. They did
everything that the Indian law required but for some reason the Indian government turned
down their application; however, they approved Pepsi Co. Coca-Cola did not give up;
they made their return again by joining forces with Britannia Industries India. In 1991
there were some changes within the government and many international companies
only a promise that the government made in order to attract multinational companies. In
the past the Indian government was known for being unfriendly to foreign investors. The
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video that we saw in the class about India, in the film an editor mentioned that many
things changed in India, however, the India government does not welcome international
companies with welcome arms. While everyone was trying to enter into the Indian
government’s promises. If a company goes into the Indian market, it seems like the
government tries it’s hardest to make it hard for them by issuing ridiculous laws and
It‘s seems as though the Indian government is squelching any investments from
foreign companies. First the government wanted to know the secret ingredients for Coca-
Cola and then they wanted to control the company equity stake. The most important
thing they forget is that they are the ones who are going to benefit from the multinational
corporation. The government benefits from taxes and foreign investments. Also,
multinational companies bring demand for jobs. For instance when people in India
boycotted against all American companies because of the Iraq war they thought they
would stop American industries from selling their products in India; however, they forgot
One of the laws that the Indian government called “principle of indigenous
availability” had specified that if an item could be obtained anywhere else in India,
imports of a similar product are forbidden. Therefore, the government thought by doing
this it would bring more revenue and jobs to the country. However, this law made the
country be self-reliant in its defense industry. Consumers had little choice of products or
In the “Contamination Allegation Water Usage” section in the case both Coca-
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Cola and Pepsi got sued because they contained significant levels of pesticide residue in
their drinks. Some states in India such as Gujarat, Punjab, Madhya Pradesh, Rajasthan,
Kerala and Karnataka were asking educational institutions and hospitals to stop stocking
these soft drinks. (Cioletti, 2003) Both companies denied the charges because their
argument was that they were required by law to use local own products and the extensive
use of pesticide in Indian agriculture had resulted a minute degree of pesticide in sugar
used in their drinks. They also argued that their products are safe and they measured that
against the most stringent standards. (Bremner and Lakshman, 2006) After this argument
the case was dismissed because the Indian government had nothing to say to the fact that
they were the ones who had this problem in their agriculture products.
Recommendations
I really like how Coca-Cola responded to some of these cultural issues. First of all
they hired some of the local people who understand the culture to deal with some of the
above issues. They tried their best to play fair with the locals and at the same time stay
competitive with other business in the same industry. The second solution would be to
think twice before reentering the market for the second time. Because often an individual
From reading this cause it did not seem as though many of these companies made
any significant profit in the Indian market. Therefore, before entering to a new country
the company should do internal research of the new country and especially when bringing
government and ask them to negotiate their laws. Because of the way it is right now, it is
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really hard for multinational businesses to function in India. The government should
provide some kind of protection. It would be really nice if the multinational companies
would have a representative in the government. Just in case any issue arise they could
bring them to their representative and they would negotiate within themselves. However,
The other recommendation would be make their own products in India, and do not
ask locals to supply them with their products. Though, they could hire locals to do the
agriculture work, as long as the company is in charge of it. By doing this, they would
avoid any problems from the agriculture and environmental side. Because they would be
Both companies should be more involved in the community that they are trying to
promote their drinks. This would include helping them celebrate their festivals or even
support local soccer players. People would notice this right away and recognize they are
In conclusion, every country has its own negative and positives sides. If a
multinational company wants to invest their money in a specific country they have to see
if the positives will overcome the negatives. In other words, would it be possible to make
any money with all the struggles they have to go trough do deal with the cultural
differences.
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Reference
Bremner, B. and Lashman, N. (2006) Pesticide Claims Shake Up Coke and Pepsi.
Cioletti, J. (2003) Indian government says Coke & Pepsi safe. Beverage World,
Vol. 122, Issue 9. Retrieved from EbscoHost.com Business Source Premier on 9/29/2007.
Manjeet, K. (2003) Finally, Coke Gets it Right. Business Week, 0077135, Issue
on 09/30/2007.
Orr, D (2003) The Coke Challenges. Forbes Asia, Vol.1, Issues5. Retrieved from
Prasad. G. ( 2006) Coca-Cola rolls out juice offer in India. Media Asia. Business
9/29/2007.