Pepsi Challenge

Topics: Marketing, Economics, Soft drink Pages: 7 (2381 words) Published: May 19, 2010

Topic Page Analyze Russia at the time of the case, 1992, 1-2 (Using the PEST and Geography framework) Analyze Pepsi as a company using only the information in the case 3-4 Recommendations for Pepsi to become successful in Russia4-5 Answer the specific questions asked by Bill Shaddy in the last paragraph of the case 5-6

Pepsi challenge – Russia 1992
Pepsi is a soft drink produced and manufactured by PepsiCo. It is sold in many retail stores, places, restaurants, schools, cinemas and from vending machines. However, the article of “The Pepsi Challenge-Russia 1992” discusses on the challenge of hiring people as well as develop staffing compensation and training for the new Russia organization after finding the ineffective business. It is very important that an organization as Pepsi considers Russia environment before beginning re-organization. In fact, environmental analysis should be continuous and treat all aspects of planning. One of marketing tools that often uses to analyze environmental economic is PEST including political factors, economic factors, social factors, and technological factors. Political factor;

According to beginning of year 1992 in Russia, the politics at that time is concerned to be communist before changing to democracy in May 1992. The regulation of business is based on government. Government policy influence laws that regulate all businesses and every international business agreement involve government to participate in every activity. The one of examples is that Pepsi hires employees through one of the government employment bureaus unless Pepsi forms a joint stock company, which is the window that allows foreigners to hire Russians directly. The politics in Russia seems to be unstable such as the sensitive between Russia and Ukraine resulting to Pepsi cannot hire people from Ukraine to be the part of PepsiCo in Russia. The country also lacks a legal framework for property rights. The movement of privatization is slow and controversy between different republic. The business contract has to renegotiate under turmoil situation. It can be conclude that the government influence in economics and social aspect. Economic factor;

This is the one of significant factors which influences on PepsiCo. Business needs to consider the state of economy in short and long terms, and economic factors are the important tool for international marketing. In Russia, the economics seems to be capitalism, and a free market, but in fact people still stick to the communist system, so that the free looks unreal. There is less competition on market due to government regulation and control system. The economic environment has the unappreciated sign. The workers are inefficient, the organization presents overstaffing and nepotism, and the system also identifies as nepotism. The people are employed as presenting high employment rate, but they work with low efficiency and effectiveness. All of these result to low productivity and high inflation rate that is also mention on first paragraph; economic output declines around 20 percent on an annual basic, and the monthly inflation rate is double digits. The country lacks of a financial system and knowledgeable business. The writer compares the economic system of Russia with another country; In Russia does not have a well developed business system like India. If comparing GNP with Ukraine and Kazakhstan, Russia is quite lower than others. The number of GNP presents only US$ 5,400 per 149 million people. A globally traded currency should serve as a reliable and stable, but it does not act in Russia. “Some companies have paid in hard currency which fuels...
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