Coke and Pepsi Learn to Compete in India
CASE STUDY 2
1. The political environment in India has proven to be critical to company performance for both PepsiCo and Coca- Cola India. What specific aspects of the political environment have played key roles? Could these effects have been anticipated prior to market entry? If not, could developments in the political arena have been handled better by each company?
There are several specific aspects of the political environment, such as the principle of “indigenous availability”. Which was very difficult to trade and also establish the rules and the regulation. Secondly, it was forbidden the use of foreign brands in India. But, since 1991, the liberalization of India’s government permitted for instance, a new industrial policy and news trade rules and regulations. So, the foreign investment increased. We do not think these effects could be anticipated because investment roles in India were unclear and altering during in 1990’s To avoid some restrictions of Indian government, Coca- Cola could run new bottling plants instead of buying out “Parle”, and thus would not have to sell the half of its equity.
2. Timing of entry into the Indian market brought different results for PepsiCo and Coca- Cola India. What benefits or disadvantages accrued as a result of earlier of later market entry?
Pepsi enters in the Indian market before Coca- Cola Company and also gained the 26% of the market by the year 1993. On the other hand Coca- Cola Company bought more plants from the leader industry “Parle” of soft drink. Also its leading brand such as, “Thums Up, Limca, Citra, Mazaa, etc… Another achievement of Coke was the two new joint ventures with “Parle”. One was the bottle and the other one was the market product. DISADANTAGES
According to Pepsi, it has to change its name by “Lehar Pepsi”, the government limited their sales to less than the 25% and also it has to fight off in the...
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