Coca-Cola entering a new market

Introduction

To give a short introduction to the circumstances affecting this case of Pepsi & Coca Cola it has to be said that in general it is not just simple for MNEs to invest and enter foreign markets as regulations and restrictions differ from coutry to country and hence ifluence international business negotiations to a great extend. Therefore MNEs investigating in foreign markets have to either adopt to those condition given by the host country government, which of course to a certain extend has to be negotiated as no one of those parties want to loose their maximum independence- or the MNE decides not to take further steps towards the foreign operation and leaves the feeld by assumingly – in turn – missing out a great opportunity, but this again depends on a complexity of economic and cultural reasons influencing international trade, which I will develop critically in the further case study of Pepsi & Coke in accordance to the following questions.

1.) Did PepsiCo make too many concessions in order to enter the Indian market?

Could the company have negotiated better?

In this case study PepsiCo – for the second time – intends to enter the Indian market, though already having experienced major problems which consequently led to their first departure (for non profitability). As well Coca Cola departured India after harsh disagreements with the government.

Why after all did Pepsi enter again, facing a country with such strongly adverse feelings towards foreign companies – which is rooted in Indians history of colonialistic times when the British, French and Portuguese were extracting the country‘s recources ‚‘its wealth‘ without returning noticeable benefits to its economy.

Moreover they feared that national companies would not be able to compete with foreign investors and as a result of this high artificially prices and profit margins reduced incentives for national companies to enter. This almost irrepairable bad approach towards foreigner went even that far that journalist widely reported that PepsiCo had a CIA connection aimed at undermining India‘s independence.

However returning to the argument of PepsiCo having too many concessions or not, first as should have become clear now, the company was confronted with a govvernmental volatility and unwillingness to negotiate. It was rather a one-way game wherein PepsiCo had to agree with completely, or take its departure, as the company was not only faced with economic but also with moral issues (as mentioned above). Especially the confidence factor plays a great part in her which for the company turned out to be a rather costly factor as PepsiCo had to make various concession before they could enter the Indian market.