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Budget and Budgeting Techniques Essay

Answer- 1: Answer- 1 India was a closed economy in the beginning. Policy banning imports. The Liberalization of India’s Government in 1991. New Industrial Policy. Strict policies regarding the entry of foreign brands. Trade rules & regulations simplified. Foreign investment increased. Pepsi enters in 1986. Coca-Cola follows in 1993. Contd …

Slide 14: Unlawful to market under their Western name in India Pepsi became “Lehar Pepsi”. Coca-Cola merged with Parle and became “Coca-Cola India”. Different Laws for Pepsi and Coke Coca-Cola agreed to sell off 49% of its stock as a condition of entering and buying out an Indian company. Pepsi entered earlier, and was not subject to this. Contd …

Slide 15: India forced Coke to sell 49% of its equity to Indian investors in 2002. Coke asked for a second extension that would delay it until 2007 which was denied. Pepsi was held to this since they entered India in a different year. Coke asked the Foreign Investment Promotion Board to block the votes of the Indian shareholders who would control 49% of Coke. Change in oversight of the FIPB: Past lobbying efforts made useless. Contd …

Slide 16: Could these problems have been forecasted prior to market entry? Probably not Inconsistent, and changing government. How could these developments in the political arena have been handled differently? Coke could of agreed to start new bottling plants instead of buying out Parle, and thus wouldn’t of had to agree to sell 49% of their equity.

Answer-2: Answer-2

Coca-Cola’s Pros & Cons of Timing of Entry in the Indian Market: Coca-Cola’s P ros & Cons of Timing of Entry in the Indian Market Benefits Parle offered its bottling plants in 4 major cities. Made its return to India with Britannia Industries India Ltd. Disadvantages Rigid Rules and Regulations. Buying of bottling plants leads to 49% disinvestment. Local demand of carbonated drinks is as very low. Harder to establish themselves.

Pepsi’s Pros & Cons of Timing of Entry in the Indian Market: Pepsi’s Pros & Cons of Timing of Entry in the Indian Market Benefits Own set up green filled bottling plants. Advantage of coming before Coca Cola. Government policies favored the company. Joint venture with Volta’s and Punjab Agro. Gained 26% share by 1993. Disadvantages Pepsi approached Parle but it was rejected. Launched 7up and there is stiff competition in the market for lemon drinks.

Answer-3 Responses to India’s Enormity : Answer-3 Responses to India’s Enormity Pepsi and coca-cola responded in many ways to the enormity of India in terms of it population and geography. Conti ..

Cont..: Cont.. Product Policies: Catering to Indian tastes Entering with products close to those already available in India such as colas, fruit drinks, carbonated waters Waiting to introduce American type drinks Coca-Cola introducing Sprite recently Introducing new products Bottled water Conti ..

Cont.. : Cont.. Promotional Activities: Both advertise and use promotional material at Navratri . Pepsi gives away premium rice and candy with Pepsi Coca-Cola offers free passes, Coke giveaways as well as vacations Use of different campaigns for different areas of India “ India A” campaigns try to appeal to young urbanites “ India B” campaigns try to appeal to rural areas

Cont…: Cont… 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 Attempt to encourage consumption to try to compete with Pepsi and gain market share

Contd ..: Contd .. 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

Answer-4 Coke and Pepsi’s “Glocalization Strategies”: Answer-4 Coke and Pepsi’s “ Glocalization Strategies” What is “ Glocalization ”? Global + Localization = Glocalization By taking a product global, a firm will have more success if they adapt it specifically to the location and culture that they are trying to market it in. Both companies have successfully implemented glocalization

Pepsi’s Glocalization: Pepsi’s Glocalization Pepsi forms joint venture when first entering India with two local partners, Voltas and Punjab Agro, forming “Pepsi Foods Ltd ”. In 1990, Pepsi Foods Ltd. changed the name of their product to “Lehar Pepsi” to conform with foreign collaboration rules . In keeping with local tastes, Pepsi launched its Lehar 7UP in the clear lemon category.

Pepsi’s Glocalization: Pepsi’s Glocalization Advertising is done during the cultural festival of Navrtri , a traditional festival held in the town of Gujarat which lasts for nine days. Pepsi’s most effective glocalization strategy has been sponsoring world famous Indian athletes, such as cricket and soccer players.

Coca-Cola’s Glocalization: Coca-Cola’s Glocalization First joined forces with the local snack food producer Britannia Industries India Ltd. in the early 90’s. Formed a joint venture with the market leader Parle in 1993. For the festival of Navratri , Coca-Cola issued free passes to the celebration in each of its “Thumps Up” bottles. Also ran special promotions where people could win free vacations to Goa, a resort state in western India.

Coca-Cola’s Glocalization: Coca-Cola’s Glocalization Coca-Cola also hired several famous “Bollywood” actors to endorse their products. Who could forget…

Answer-5: Answer-5 Yes, we agree that Coca-Cola India made mistakes in planning and managing its return to India. They wrongly forecasted Indian political environment due to which they had to dilute their stakes later (49% disinvestment). They rejected the plan to put up green fields bottling plants as they took over Parle’s existing bottling plants. Coca cola tried to get extensions twice.

Answer -6: Answer -6 Pepsi and Coke can confront the issue of water use in the manufacturing of their products by the use of canal irrigation & rainwater harvesting. Then they can also put water recycling plant to treat the discharged water from their factories and then they can provide that water to farmers for their agricultural use. This way the ground water problem can also be solved and managed.

Cont..: Cont.. Coke can further defuse boycotts or demonstrations against their products in California by doing Ad-campaigns in which they can ask the experts from the ministry of health to convey the message to the public that their products are safe and healthy. They can also hire celebrities to do the Ads for their products because the public follows them. Coke should address the group directly because their company was not wrong and they should justify themselves.

Answer-7: Pepsi Better marketing and advertising strategies Widely accepted More preferable More market share Less Political conflicts Coke Government conflicts Trailing Pepsi in market share Pepsi will fare better in the long run Answer-7

Answer-8 Pepsi’s Lessons Learned: Answer-8 Pepsi’s Lessons Learned Beneficial to keep with local tastes Beneficial to pay attention to market trends Celebrity appeal makes for exceptional advertising It pays to keep up with emerging trends in the market

Coca-Cola’s Lesson’s Learned: Coca-Cola’s Lesson’s Learned Pay specific attention to deals made with the government Establish a good business relationship with the government Investment in quality products Advertising is crucial

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