Pepsi Strategy to India
Pepsi's Entry into India: A Lesson in Globalization
Case summary:
The case discusses the major strategies adopted by Pepsi Co (Soft drinks & snack food major) to enter the Indian market in the late 1980s. Initially the company found it very hard to sell itself to the Indian government as the Indian economy was highly regulated. So to lure Indian government Pepsi Co made promises of working towards enrichment of the rural economy Punjab by getting involved in the agricultural activities. Pepsi Co also made several promises to make its proposal look very attractive to the Indian government.
The case also highlights the criticism faced by the company. Its failure to keep many of the promises after it started the operations in India, invited wrath of many politicians & activists. The case also discusses how liberalization of Indian economy helped Pepsi Co & how they used it to their own benefit. Lastly, the case also talks about the contract farming initiatives taken up by Pepsi Co since the 1990s & analyzes the strategies used by the company to enter the Indian market.
Case questions: 1. Why do companies like Pepsi need to globalize? What are the various ways in which foreign companies can enter a foreign market? What hurdles & problems did Pepsi face when it tried to enter India during the 1980s?
The companies like Pepsi need to globalize because their domestic markets are getting saturated. The external environment can have serious implication on the profitability of a company. The changes in markets (in this case saturation of domestic market), changes in consumer behavior (decreasing health consciousness) led Pepsi to search for new markets. In such cases companies prefer markets of emerging countries where there are less educated people who are easy to persuade to use their product. PepsiCo was also encouraged by the fact that increasing urbanization had already familiarized Indians with leading global brands. Hence Pepsi
Case summary:
The case discusses the major strategies adopted by Pepsi Co (Soft drinks & snack food major) to enter the Indian market in the late 1980s. Initially the company found it very hard to sell itself to the Indian government as the Indian economy was highly regulated. So to lure Indian government Pepsi Co made promises of working towards enrichment of the rural economy Punjab by getting involved in the agricultural activities. Pepsi Co also made several promises to make its proposal look very attractive to the Indian government.
The case also highlights the criticism faced by the company. Its failure to keep many of the promises after it started the operations in India, invited wrath of many politicians & activists. The case also discusses how liberalization of Indian economy helped Pepsi Co & how they used it to their own benefit. Lastly, the case also talks about the contract farming initiatives taken up by Pepsi Co since the 1990s & analyzes the strategies used by the company to enter the Indian market.
Case questions: 1. Why do companies like Pepsi need to globalize? What are the various ways in which foreign companies can enter a foreign market? What hurdles & problems did Pepsi face when it tried to enter India during the 1980s?
The companies like Pepsi need to globalize because their domestic markets are getting saturated. The external environment can have serious implication on the profitability of a company. The changes in markets (in this case saturation of domestic market), changes in consumer behavior (decreasing health consciousness) led Pepsi to search for new markets. In such cases companies prefer markets of emerging countries where there are less educated people who are easy to persuade to use their product. PepsiCo was also encouraged by the fact that increasing urbanization had already familiarized Indians with leading global brands. Hence Pepsi