Coca Cola & Pepsi Case

1. The political environment has proven to be critical to company performance for both PepsiCo and Coca-Cola India.

a. What specific aspects of the political environment have played key roles?

The Indian government has very severe trade policies, rules and regulations that did not benefit both companies in entering the Indian market and promote their products. The factor of cultural nationalism also played a major role. The Indian government would push the consumption of local products instead of the foreign ones and this is what drives to control of foreign investment. This political environment made Indian consumers had too little choices of products and no guarantees of quality or reliability.

The government in India ordered for Coca-Cola that they intent to approach the Indian market by joining with Parle and became Coca-Cola India and for Pepsi's products to be promoted under the "Lehar Pepsi" name. All this facts showed the level of corruption that was present in the Indian government.

b. Could these effects have been anticipated prior to market entry?

These results could probably be anticipated if Coca-Cola and Pepsi had studied the political regulations of India before getting into the market. The Indian government was viewed as unfriendly to foreign investors, outside investments had been nearly forbidden in goods consumer, authorized only in high-tech sectors.

In the contamination issues that might not have been easy to anticipate, but both companies could acted better when they trying to prove their products were within safe limits compared to the other products.

c. Could developments in the political area have been handled better by each company?

They could developments better in political arena if Coke could accepted to start new bottling plants instead of buying out Parle, and thus would not agreed to sell 49% of their equity.