Pepsi's Entry into India: A Lesson in Globalization


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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

Case Details:

Price:

Case Code : BSTR062 For delivery in electronic format: Rs. 300;
For delivery through courier (within India): Rs. 300 + Rs. 25 for Shipping & Handling Charges

Themes

MNCs in India
Case Length : 11 Pages
Period : 1994 - 2003
Organization : Pepsi
Pub Date : 2003
Teaching Note : Available
Countries : USA
Industry : Beverages & Snack Food

Abstract:

The case discusses the strategies adopted by the soft drinks and snack foods major PepsiCo to enter India in the late 1980s. To enter the highly regulated Indian economy, the company had to struggle hard to 'sell' itself to the Indian government. PepsiCo promised to 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. The case also discusses the criticisms levelled against the company, in particular, criticism of its failure to honour many of its commitments after it started operations in the country and after the liberalization of the Indian economy.

Finally, the case takes a look at the contract farming initiatives undertaken by Pepsi since the 1990s and seeks to critically analyze the strategies used by the company to enter India.

Issues:

understand the kind of strategy a multinational company develops to enter highly regulated economies that have immense market potential

analyse the importance of formulating and selling a business proposal in such a manner that it becomes attractive to the regulatory authorities of a foreign country

appreciate how and why a company changes its strategies in tune with changes in the regulatory environment of a foreign country

understand the role big private sector corporations can play in the development of the economies in which they operate, and the financial and social implications (reputation, goodwill) of doing so. The case is aimed at MBA/PGDBA students, and is intended to be part of the strategy and general management curriculum

Contents:

  Page No.
A Letter to Pepsi 1
The Promises That Helped Pepsi Enter 2
Pepsi's Promises - Keep Some, Break Some! 3
India Liberalizes - A Boon For Pepsi 5
Pepsi Goes Farming - Finally 6
Doing Business on its Own Terms 7

Keywords:

Pepsi, PepsiCo, Indian soft drink market, Globalisation, Entry strategy, Mega-marketing, Lobbying, Contract farming, Political environment, India's liberalisation, Business environment

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