Pepsi's Entry into India: A Lesson in Globalization


IBS CDC IBS CDC IBS CDC IBS CDC RSS Feed
 
Case Studies in Business, Management Cases | Case Study

ICMR HOME | Case Studies Collection

Case Details:

Case Code : BSTR062
Case Length : 11 Pages
Period : 1994 - 2003
Organization : Pepsi
Pub Date : 2003
Teaching Note : Available
Countries : USA
Industry : Beverages & Snack Food

To download Pepsi's Entry into India: A Lesson in Globalization case study (Case Code: BSTR062) click on the button below, and select the case from the list of available cases:



Price:

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

Business Strategy Case Studies
Business Strategy Short Case Studies
View Detailed Pricing Info
How To Order This Case
Business Case Studies
Area Specific Case Studies
Industry Wise Case Studies
Company Wise Case Studies



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.

<< Previous

"Convincing India that it needs Western junk has not been easy." 1

- A New Internationalist Magazine Article, commenting on Pepsi's struggle to enter India, in August 1988.

A Letter to Pepsi

In 1988, the New York office of the President of the multi-billion cola company PepsiCo received a letter from India. The company had been trying for some time to enter the Indian market - without much success.

The letter was written by George Fernandes (Fernandes), the General Secretary of one of the country's leading political parties, Janata Dal. He wrote, "I learned that you are coming here. I am the one that threw Coca-Cola out, and we are soon going to come back into the government. If you come into the country, you have to remember that the same fate awaits you as Coca-Cola."2 This development did not seem to be a matter that could be ignored. PepsiCo's arch-rival and the world's number one cola company, Coca-Cola, had indeed been forced to close operations and leave India in 1977 after the Janata Dal came to power.3 Even in the late 1980s, India had a closed economy and government intervention in the corporate sector was quite high.

However, multinational companies such as PepsiCo had been eyeing the Indian market for a long time for a host of reasons. As the major market for PepsiCo, the US, seemed to be reaching saturation levels, the option to expand on a global scale seemed to have become inevitable for the company.

India was a lucrative destination since its vast population offered a huge, untapped customer base. During the late 1980s, the per capita consumption of soft drinks in India was only three bottles per annum as against 63 and 38 for Egypt and Thailand respectively. Even its neighbor Pakistan boasted of a per capita soft drink consumption of 13 bottles. PepsiCo was also encouraged by the fact that increasing urbanization had already familiarized Indians with leading global brands. Given these circumstances, PepsiCo officials had been involved in hectic lobbying with the Indian government to obtain permission to begin operations in the country. However, the company could not deny that many political parties and factions were opposed to its entry into the country. It had therefore become imperative for PepsiCo to come up with a package attractive enough for the Indian government.

Pepsi's Entry into India: A Lesson in Globalization - Next Page>>

1] 'Pepsi's Push,' www.newint.org.

2] 'Coke Returns from India Exile,' (Interview with Fernandes), International Monitor, July/August 1995.

3] In the regulatory environment of the late 1970s, foreign enterprises operating in any non-priority sector in India could not own more than a 40% stake in the ventures. Coca-Cola ran its operations through a 100% subsidiary. After the company refused to partner with an Indian company and share its technology, it had to stop its operations and leave the country.

 

Case Studies Links:- Case Studies, Short Case Studies, Simplified Case Studies.

Other Case Studies:- Multimedia Case Studies, Cases in Other Languages.

Business Reports Link:- Business Reports.

Books:- Textbooks, Workbooks, Case Study Volumes.