Pepsi Cola Case Analysis

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Category: Business and Industry

Date Submitted: 10/23/2011 08:06 AM

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2. List Key Issues pertinent to Cast (be concise and use bullets)

* High government intervention

* Entry to foreign market

* Low per capita consumption of soft drinks

Analysis of Key Issues here is where you can articulate more details relative to “why” you believe they are key issues (about 1 page)

The government of India played a major factor in letting foreign companies enter into their market. With Pepsi the government rejected the proposal on the grounds of it did not accept the clause regarding the import of cola concentrate and it the use of a foreign brand name was not allowed as per regulatory framework. Before the government would accept any of Pepsi proposals they needed to be convincing and make promises to the government. Those promises included; a focus on food and agro-processing, 25% of the investment would be directed towards soft drinks, it would create 50k job openings, and it would drop the foreign brand name of Pepsi and become Lehar Pepsi, and Pepsi had also promised to advance the food technology in India.

It was in 1977 that Coca-Cola was forced out of India. This made it a prime opportunity for Pepsi to enter the foreign market of India. Pepsi was eyeing India for a couple of reasons; every MNC giant company wanted to enter because of the vast population, urbanization familiarized the people of India with global brands, and the US market was beginning to become over saturated. It took Pepsi half a decade of negotiating, 20 debates in parliament and a big public relations campaign that allowed the push for Pepsi to enter India. The office of Pepsi in New York received its letter of approval in 1988 from George Fernandez.

Before Pepsi entered into India soft drinks were not popular and the numbers reflect it. In the late 1980’s the consumption of soft drinks in India was only 3 bottles per year, this is opposed to Egypt at 63 and Thailand and 38. I think this is one of the main reasons as to why Pepsi wanted to...