Pepsi’s Entry into India – A Lesson in Globalization
Pepsi’s Entry into India – A Lesson in Globalization, p318
1. What different types of strategies can you identify in the case?
Pepsi Co. gained entrance to India through a clever marketing strategy, they first learned from the mistakes of their fiercest competition Coca Cola Co. and their initial venture; they tailored their proposal to suit the cultural and political environment of the country. They used the country’s own plans for development and progress, to sugar-coat their business proposal to the government. Then, they offered the government attractive promises that on the surface were beneficial for the greater number of people which was difficult to resist. They also masked their primary objective that of exporting cola concentrate in a number of ways which would not be obvious to observers and critics. They also kept some of their promises which was strategically chosen to be the most visible and observable, it was also designed to increase their popularity to the country, although some of their promises too longer to materialize, it was argued that projects like those needed more funds and research which actually is logical. Their branding also corresponded to India’s requirement that no foreign brands should be used to market the soft drinks, but this cleverly was also tailored to boost their image since the name Pepsi was more prominent. In the following years, Pepsi maximized the liberalization of the economy of the country and instead of forming partnerships with local businesses as they did at the onset; they took full control of the shares.
2. What did Pepsi do right? What did they do wrong? What hurdles did they face entering the Indian market?
Pepsi employed the right approach when they took careful notice of the political and cultural scenario in India, they offered India a proposal that was difficult to resist by feeding the government with their own advocacy. Then they kept up appearances to indicate that they kept their end of the proposal which was although not in the same way they promised to do but it did somehow compensated for their lack of keeping their promises. They also made an alliance with the local companies which helped in assuring the government and the public that they were being true to their proposals. Pepsi however committed errors when they padded their statistics and numbers to mislead the public, they also did not respond to their critics’ arguments which in turn led to a ministry of commerce investigation; they also were not able to create jobs for the number of people they promised. Lastly, the exporting of agricultural produce also included items that were already being exported and was not part of the original agreement. The major hurdle that Pepsi faced in their move to enter India was the political climate of the country as well as the regulated economy which was largely controlled by the government and dominant political parties. The company in its agricultural venture also had difficulty in convincing farmers to se their technology and to work for them as subcontractors.
3. What actions should Pepsi take in the future to protect its market position?
Pepsi should renew its commitment to develop the agricultural sector of the country and provide a nationwide campaign for their products and the things they are doing for the country. With market liberalization, many global brands have now entered India and they must compete with the promotional strategies and product enhancement for the Pepsi brand. Moreover, the company has begun diversifying its food products and it has now become a major player in India but it should not be complacent because if they concentrate on using India as the grower of their raw products for their food products then they should give more in return to the country in terms of socially relevant projects, charities and educational foundations that would improve the agricultural sector and the food sector as well as developing environmentally sensitive factories and packaging. Also read Desperate Air case analysis
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“Pepsi’s Entry into India – A Lesson in Globalization”, in International Management: Managing Across Borders and Cultures by Helen Deresky, 5th ed. Pearson: Prentice Hall 2006. pp. 318-322.