Q1
The political environment in India has proven to be critical to company performance for both Pepsi and coca colaWhat specific aspects of political environment have played key roles? Could theseeffects can be anticipated prior to market entry? If not could developments in thepolitical arena have been handled better by each company?
Political environment has a very important impact on every business operation no matter whatits size, its area of operation. Whether the company is domestic, national, international, large or small political factors of the country it is located in will have an impact on it.In this case
specific aspects of political environment
were the following:-
Coca cola
chose to leave India rather than cut its equity stake to 40% and hand over itssecret formula of the syrup, based on a dispute with the government over its tradesecrets, this move by India's government displays the corruption that is present. In 1991a new government took office which made it easier for foreign companies to do businessin India.- Another aspect was the government warning
that BVO, an essential ingredient in localproduced soft drinks.- The boycotting
of American and British products after the attack by USA and Britain onIraq which decreased the sales of Coca and Pepsi by 50 %- The outside world had viewed the Indian government as unfriendly to foreigninvestors; outside investments had been allowed only in high tech sectors and werealmost entirely prohibited in consumer¶s good sectors.- During the crisis with the contaminated water, Pepsi and Coca-Cola were both under firewith the consumers and government. Politicians made it exceptionally difficult for bothcompanies to redeem themselves with the facts they had. Coca-Cola seemed to have amore difficult come-back than PepsiSome of these effects may have been anticipated, especially foreseeing the corruption withinIndian government. Taking that into account more proactively might have helped Coca-Colaavoid...