Delailah B.

Galera

Grade 11 Block 3 St.Charles Garnier

CASE 1-3 COKE AND PEPSI LEARN TO COMPETE IN INDIA

1. The political environment in India has proven to be critical to company performance for
both PepsiCo and Coca-Cola India. What Specific aspects of the political environment
have played key roles? Could these effects have been anticipated prior to market roles?
If not could developments in the political arena have been handled better by each
company?

 The key specific aspects of the political environment have India seen as unfriendly
to foreign investors for many years, The "Principle of Indigenous Availability"
(Policy banning imports being sold in India), The Liberalization of India's
Government in 1991("New Industrial Policy", Trade rules & regulations simplified,
Foreign investment increased), Pepsi enters in 1986 became "Lehar Pepsi",
Coca-Cola follows in 1993 became "Coca-Cola India". These effects couldn't have
influence to market role. Coke could have agreed to start new bottling plants
instead of buying out Parle, and thus wouldn't have had to agree to sell 49% of
their equity.

2. Timing of entry into the Indian market brought different results for PepsiCo and Coca-
Cola India. What benefits or disadvantages accrued as a result of earlier or later market
entry?

 Pepsi >> Advantages - Entered the market Before Coca-Cola and was able to
gain a foothold in the market while it was still developing. - Gained 26% market
share by 1993
 Disadvantages -Were forced to change their name to Lehar Pepsi -Govt. limited
their soft drink sales to less than 25% of total sales
 Coca-Cola >> Advantages -Were able to buy 4 bottling plants from industry leader
Parle -Also bought Parle's leading brands: Thums Up, Limca, Citra, Gold Spot,
Mazaa
 Disadvantages -Denied entry until 1993 because Pepsi was already there -Harder
to establish market share with Pepsi there

3. The Indian market is enormous in terms of population and geography. How have the
two companies responded to the sheer scale of operation in India in terms of product
policies, promotional activities, pricing policies, and distribution arrangements?

 Product policies >> - Entering with products close to those already available in
India such as colas, fruit drinks, carbonated waters, Coca-Cola introducing Sprite
 recently, and Introducing new products is bottled water. Promotional activities >>
- Both advertise and use promotional material at Navrartri are Pepsi gives away
premium rice and candy with Pepsi and Coca-Cola offers free passes, Coke
giveaways as well as vacations. Pricing policies >> - Pepsi started out with an
aggressive pricing policy to try to get immediate market share from Indian
competitors, Coca-Cola cut its prices by 15-25% in 2003. Distribution
arrangements >> - Production plants and bottling centers placed in large cities all
around India, More added as demand grew and as new products were added.

4."Global localization" (glocalization) is a policy that both companies have implemented

successfully. Give examples for each company from the case.

 Pepsi - In keeping with local tastes, Pepsi launched its Lehar 7UP in the clear
lemon category. - In 1990, Pepsi Foods Ltd. changed the name of their product to
"Lehar Pepsi" to conform with foreign collaboration rules. Coca Cola - For the
festival of Navrartri, Coca-Cola issued free passes to the celebration in each of its
"Thums Up" bottles. -Also ran special promotions where people could win free
vacations to Goa, a resort state in western India.

5. How can Pepsi and Coke confront the issues of water use in the manufacture of their
products? How can they defuse future boycotts or demonstrations against their products?
How effective are activist groups like the one that launched the campaign in California?
Should Coke address the group directly or just let furor subside?

 The Company confront that pesticides were present in the groundwater in India
and found their way into food products in general "compared pesticide levels in
soft drink are negligible". I think they can demonstrations against their products.
After all the bad press Coke got in India over the pesticide content in its soft drinks,
an activist group in California launched a campaign directed at U.S. college
campuses, accusing Coca Cola of India of using precious groundwater, lacing its
drinks with pesticides, and supplying farmers with toxic waste used for fertilizing
their crops. Then Coke should address the group directly.

6. Which of the two companies do you think has better long-term prospects for success
in India?

 In my opinion, Pepsi because Pepsi has better marketing and advertising

strategies, more widely accepted and more market share than Coca cola.

7. What lessons can each company draw from its Indian experience as it contemplates
entry into other Big Emerging Markers?

 Pepsi's lessons learned that are advertising is done during the cultural festival,
beneficial to keep with local tastes, market trends, Celebrity appeal makes for
exceptional advertising, and It pays to keep up with emerging trends in the market.
Coca-Cola's lessons learned that are establish special promotions where people
could win free vacations and Coca-Cola know about should have been more
careful of when they entered the market what they were promising when they
entered, pay specific attention to deals made with the government and advertising
is crucial.
Delailah B. Galera
Grade 11 Block 3 St.Charles Garnier

CASE 1-1 STARBUCKS-GOING GLOBAL FAST

1. Identify the controllable and uncontrollable elements that Starbucks has encountered in entering
global markets.
 For the controllable elements or aspects that Starbucks has encountered in entering global
markets were promotion price, product, channels of distribution and research. For the price
and promotion, Starbucks Vienna is usually known for its low marketing costs. They had a
gala opening for the first store all over Austria. A big marketing campaign is not what
Starbucks stands for. It got popular mainly by word-of-mouth recommendations, but
in Austria it was decided to adapt the promotion and introduce Starbucks with a
gala, because over there Starbucks had to defend a very modern reputation. In North-
America, they already regarded as an ordinary Starbucks outlet that still attracts a lot of people
in Europe especially on the younger generation. Adapting the price level is a possible step to
simplify the expansion into another country. In general, the coffee in Italy is much cheaper
than Starbucks´ coffee. An espresso in northern Italy is offered for approximately 67 cents; in
the south just 55 cents. By that reason Starbucks would have to lower the prices, entering the
Italian market. Italian coffee experts also consider Starbucks coffee of a low quality. Therefore
an adaption of the taste needs to be made by changing the coffee making process or using
different beans. We also considered that one of the controllable elements of Starbucks is
through their channels of distribution.. For the uncontrollable elements or aspects that
Starbucks has encountered in entering global market are the political/legal forces wherein in
France, they face not only political but legal constraints; with many regulations. Another
aspect would be the Cultural force wherein in Vienna, they have cultural issues where they
embrace what is new in that they will always seek new trends. In Japan they have suffered
two uncontrollable aspects. One is the economic forces wherein they experienced an
economic depression due to the rivalry between coffee shops and other convenience stores
in there. And on the other hand is the competitive forces wherein they have some instances
that some of the products sold their have lookalikes, not just in coffee taste, packaging but
also in its logo. They were strategically and economically challenged with this kind of situation
in Japan.

2. What are the major sources of risk facing the company? Discuss potential solutions.

• Risks that Starbucks faced were: losing customers, age group, and being in an
engrossed market environment in the U.S.
  Ways that they could alleviate these problems could be:
I. Bringing more variety and an overall better product to its consumers, this
should consecutively increase customer business
II. Respositioning , re-pricing and re-market products so as to cater to all ages.
III. In an engrossed market they may branch out seeking more international business.
IV. They could also increase quality of service and incentives so as to have a
better customer-employee relationship that could in-turn bring repeated business.

3.Critique Starbucks overall corporate strategy.

• With Starbucks overall corporate strategy has them at somewhat of a loss in a few
ways. In trying to become a global force they have not been spending what is required for
them to be extremely successful. With proper advertising strategies they could find
themselves ahead of the rest. In certain cities they have as much as 129 while in other are
as many as two or even none. Rather than fully compacting one city and believing that
many outlets mean great business, they should satisfy customer needs and

4.How might Starbucks improve profitability in Japan?

 The Japanese people are very much less conscious when it comes to the price.
Now a days, the younger generation in Japan are inclined towards spending their
time in a more constructive manner. According to some source from the internet, it
says that they have very less time for their leisure. Aside from sipping a cup of coffee
in a coffee shop that they go to, they also love or they are interested in learning the
language of English. And, they don’t hesitate to spend thousands of yen in
an internet café just to sleep. In other words, to improve the profitability in
Japan, they should reposition their products and services
 .Here are the following strategies that they should do:

The Starbucks and its competitors in Japan

are providing the same
fare. As a result, competitors can easily eat up
at Starbucks’ share.
In short, they should either reduce the price or
increase the benefits in Japan.

They can also introduce the style in the US

online system in Japan.This would let the
Japanese to order their products through the
internet.

Lastly, they can introduce various cultural

entertainment or campaign in Japan. This would
make the youths will be attracted to enter the
coffee shop. This kind of extra activities are
very helpful especially during the economic
recession that can boost up their sales.