Coke and Pepsi Learn to Compete in India
The biggest issued face by both Pepsi and Coke was India’s strong feeling for the need to protect themselves from western companies, economic policies and unclear laws. Which meant that both companies had to follow laws that where in place to make it hard for foreign business to be successful. An example of this would Pepsi sales of concentrate to local bottlers could not exceed 25% of total sales. Another example is foreign companies had to change the brand names of their products.
Because Coke entered the market at a different time then Pepsi, Coke entered under different rules/laws. So Coke was forced to sell 49% of its equity in order to buy out local bottlers.
The political issues that both companies faced I feel could not have been foreseen. No matter how much investigation they did as Indian did not have a good foundation of law.
Pepsi’s earlier entry into the India market proved to be much more beneficial then just the standard 1st to market benefits due to Coke’s issues with the Indian government. Pepsi was also able to establish it self as a market power against the local competition with aggressive pricing that the locals could not keep up with.
Coke’s later entry into the market meant that not only would they have to deal with the locals but they would need to deal with Pepsi. With local competition focused on Pepsi Coke had the chance to “fly under the radar: and develop a market base. A big disadvantage Coke face was the issue with entering the market under different rules then Pepsi. Also with Coke being 2nd to the market many of the small local companies thought that they would be better suited to compete as one power and not as many small local producers so they align with Coke to keep their companies in afloat, which give Coke the advantage of a established supply chain.
Due to the future potential of India both companies saw the importance of entering the market they...