Coke and Pepsi in India

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The political environment has played a key role in the performance of both Coke and Pepsi in India. At the time when Pepsi was entering the Indian market, India was generally seen as a very unfriendly place for foreigners to do business. In addition, in 1991 India experienced a severe economic crisis that was triggered by the rise in imported oil prices following the first Gulf War. This was around the time Pepsi was already in the market in India, and had already got a decent foothold in the market before Coke. Due to the strict regulations India had on foreign companies, Pepsi was forced to change its name to Lehar Pepsi, and its sales of soft drink concentrate to local bottlers could not exceed 25 percent of total sales. Pepsi was also required to process and distribute local fruits and vegetables. But Pepsi was willing to do whatever it took to penetrate and be successful in the Indian market. However, in June of 1991 a new government took office and introduced measures to stabilize the economy in the short term, then launched a fundamental restructuring program to ensure medium-term growth. This led to a rejuvenated Indian economy and the dismantling of complicated trade rules and regulation in the country, which further incentivized Coke to attempt to re-enter the Indian market. In regards to whether or not Coke and Pepsi could have predicted or anticipated these political events surrounding India, there is no way they could have. The political sector in India was much too unstable and unpredictable for Coke and Pepsi to accurately and successfully predict what was going to happen and when would be the opportune time to enter the market. The timing of Coke and Pepsi’s entry into India brought about several advantages and disadvantages for each company. Pepsi had the major advantage of being the first mover over Coke, so before Coke even entered the market, Pepsi had already established a good foothold and already understood the Indian market very well....
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