When an organization has made the big decision to enter into an overseas market, there are many options in relation to entry modes it must consider. The options vary from cost, risk and control measures associated to each. Here I will try and evaluate the Indian market and the benefits and disadvantages faced by PepsiCo and Coca Cola as they entered the market.
Timing of Entry:
PepsiCo formerly known as Pepsi Cola Company was formed in 1898, 12 years after its closest rival Coca Cola was formed. Due to strict regulation in entering the Indian market companies could only enter by means of a joint venture with another Indian company as part of their anti-foreign policy laws which lead to it trading under the name of Lehar Pepsi. Coca Cola was formed in 1886, it is today the world’s largest soft drink manufacturing company with a host of different variety of drinks under its name, unlike Pepsi they had already been in India in 1958-1977 but left as they were being pressured by governments over their secret formula. It traded under the name of Britco Foods (joint venture with Britannia Industries India Ltd.)
The timing of entry by both companies lead to them experiencing different reactions. To enter the highly regulated Indian economy, the company PepsiCo had to struggle hard to 'sell' itself to the Indian government. It promised work towards uplifting the rural economy of the terrorism affected north Indian state of Punjab by getting involved in agricultural activities. In addition, it made a host of other promises that made its proposal very attractive to the regulatory authorities.
Advantages of Entry: PepsiCo
* 1st mover advantage- being the first of the big beverage companies to enter into the market helped it a lot and limited the difficulties...