Coca Cola India

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International Management Strategy MKT B890
Assignment 1
Student Name: Sin May Yin Jennifer
Student ID: S11005210
Tutorial Group: 01

Introduction:

To ease the discussion in the 4 areas required, an introduction has been added to summarize the challenges faced by Coca cola in India. More details have been added from various sources to provide a more detail picture outlining the plight of Coke in India.

Coke has suffered the below difficulties when operating in India. Reports of Center for Science and Environment (CSE) release in 2003 and 2006 claiming its drink contained unsafe level of pesticide. CSE tested the soft drink under European Economic Commission (EEC) standards and find out samples sold in India contained pesticides 30 to 36 times more than the EEC limits. However, the same test conducted to samples of Coke’s soft drinks sold in the US can meet the standards (R. Harish and Bharathi S. Gopal, 2008). This leaded to six states imposing restrictions on the sale of Coca Cola’s soft drink while the Kerala Government imposed a complete ban on the sale of soft drinks from Coca-Cola and Pepsi Cola across the state. Brand image of Coke were vastly affected in light of these government actions (Viswanathan, 2003).

Further, Indian government’s Central Pollution Control Board (CPCB) further found that the sludge at eight Coca-Cola bottling plants has high levels of lead contaminating soil and water sources nearby (Burnett & Welford, 2007).

It was also accused of setting up production facilities in drought prone areas in India like Mehdiganj and Kaladera, where the ground water has been depleted (refers to figure 1), water shortage was resulted and locals’ livelihood was worsened, which leaded to protests from local villagers (Viswanathan, 2003).

Further, Baker (2006) reported tests by an independent agency conducted on behalf of the British Broadcasting Corporation (BBC) had confirmed the plant’s sludge, which the company distributed to farmers as ‘fertilizer’, contained high levels of cadmium, which in turn contaminated the soil and groundwater. Coca-Cola India, however, maintained that the fertilizer was safe

Coke’s brand image and reputation has been seriously affected by the above issues. Srivastava (2007) claimed that Coca-Cola’s refreshing image “had been considerably dented in India because of the campaigns against it, and cost it millions of dollars in lost sales and legal fees in India, and growing damage to its reputation elsewhere.”

Although Coke had instant campaigns and rebuttals denying the claim of CSE and threatened to take legal course, a survey conducted in Delhi a few days after the release of CSE report found that most of the interviewers trust CSE instead of coca cola and support the ban of selling Coke’s parliament’s move to ban the sale of Coke’s soft drinks (Vedpuriswar, 2007).

1. What aspects of US and Indian culture may have been a cause of Coke’s difficulties in India?

Some selected culture aspects from three models of cultural framework will be discussed namely Hall, Hofstede and Trompenaars.

The difference in “context” from the Hall’s model (Hall & Hall, 1990) between the two nations leads to difficulties of Coke in India. For high context culture like India, the purpose of communication is to maintain harmony and foster relationship, not to gather information (Lewis, 1999). Hall & Hall (1990) stated that the USA is a low context culture (figure 5). Hall & Hall (1990) continued to explain that in low context cultures, communication is expected to make up for what is missing in the context. Therefore, to Indian, the directness of low-context communication styles from Coke seems aggressive. To Coke, it is simply conveying its stance towards CSE’s testing methodologies. Relationship cannot be effectively fostered between Coca cola and its Indian customer and Coke cannot win back Indian customers’ confidence. Hall’s context framework is...
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