Select one of the following cases. Answer all the questions.

• 1-1 Starbucks – Going Global Fast
• 1-3 Coke & Pepsi Learn to Compete in India 

USE THE UPLOADED TEMPLATE AND READ THE CASE STUDY GRADING FILE
Within your paper, do not cite your case – everyone has access to that information – the important thing is what you add to the case responses via your research.  

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Starbucks—Going Global FastCASE 1-1
The Starbucks coffee shop on Sixth Avenue and Pine Street in
downtown Seattle sits serene and orderly, as unremarkable as
any other in the chain bought years ago by entrepreneur Howard
Schultz. A few years ago, however, the quiet storefront made front
pages around the world. During the World Trade Organization talks
in November 1999, protesters flooded Seattle’s streets, and among
their targets was Starbucks, a symbol, to them, of free-market capi-
talism run amok, another multinational out to blanket the earth.
Amid the crowds of protesters and riot police were black-masked
anarchists who trashed the store, leaving its windows smashed and
its tasteful green-and-white decor smelling of tear gas instead of
espresso. Says an angry Schultz: “It’s hurtful. I think people are
ill-informed. It’s very difficult to protest against a can of Coke, a
bottle of Pepsi, or a can of Folgers. Starbucks is both this ubiqui-
tous brand and a place where you can go and break a window. You
can’t break a can of Coke.”

The store was quickly repaired, and the protesters scattered to
other cities. Yet, cup by cup, Starbucks really is caffeinating the
world, its green-and-white emblem beckoning to consumers on
three continents. In 1999, Starbucks Corp. had 281 stores abroad.
Today, it has about 7,000—and it’s still in the early stages of a plan to
colonize the globe. If the protesters were wrong in their tactics, they
weren’t wrong about Starbucks’ ambitions. They were just early.

The story of how Schultz & Co. transformed a pedestrian com-
modity into an upscale consumer accessory has a fairy-tale quality.
Starbucks grew from 17 coffee shops in Seattle to over 19,000 outlets
in 58 countries. Sales have climbed an average of 20 percent annu-
ally since the company went public, peaking at $10.4 billion in 2008
before falling to $9.8 billion in 2009. Profits bounded ahead an aver-
age of 30 percent per year through 2007, peaking at $673 million,
then dropping to $582 million and $494 million in 2008 and 2009,
respectively. The firm closed 475 stores in the U.S. in 2009 to reduce
costs. But more recently, 2017 revenues rebounded to $22.4 billion
profits with an operating profit of $4.1 billion.

Still, the Starbucks name and image connect with millions of
consumers around the globe. Up until recently, it was one of the
fastest-growing brands in annual BusinessWeek surveys of the top
100 global brands. On Wall Street, Starbucks was one of the last
great growth stories. Its stock, including four splits, soared more
than 2,200 percent over a decade, surpassing Walmart, General
Electric, PepsiCo, Coca-Cola, Microsoft, and IBM in total returns.
In 2006 the stock price peaked at over $40, after which it fell to just
$4, and then again rebounded to more than $50 per share.

Schultz’s team is hard-pressed to grind out new profits in a
home market that is quickly becoming saturated. The firm’s 12,000
locations in the United States are mostly in big cities, affluent sub-
urbs, and shopping malls. In coffee-crazed Seattle, there is a Star-
bucks outlet for every 9,400 people, and the company considers
that to be the upper limit of coffee-shop saturation. In Manhattan’s
24 square miles, Starbucks has 124 cafés, with more on the way.
That’s one for every 12,000 people—meaning that there could be
room for even more stores. Given such concentration, it is likely to
take annual same-store sales increases of 10 percent or more if the
company is going to match its historic overall sales growth. That, as
they might say at Starbucks, is a tall order to fill.

Indeed, the crowding of so many stores so close together has
become a national joke, eliciting quips such as this headline in The
Onion, a satirical publication: “A New Starbucks Opens in Restroom
of Existing Starbucks.” And even the company admits that while
its practice of blanketing an area with stores helps achieve market
dominance, it can cut sales at existing outlets. “We probably self-
cannibalize our stores at a rate of 30 percent a year,” Schultz says.
Adds Lehman Brothers Inc. analyst Mitchell Speiser: “Starbucks is
at a defining point in its growth. It’s reaching a level that makes it
harder and harder to grow, just due to the law of large numbers.”

To duplicate the staggering returns of its first decades, Starbucks
has no choice but to export its concept aggressively. Indeed, some
analysts gave Starbucks only two years at most before it saturates the
U.S. market. The chain now operates more than 7,000 international
outlets, from Beijing to Bristol. That leaves plenty of room to grow.
Most of its planned new stores will be built overseas, representing a
35 percent increase in its foreign base. Most recently, the chain has
opened stores in Vienna, Zurich, Madrid, Berlin, and even in far-off
Jakarta. Athens comes next. And within the next year, Starbucks plans
to move into Mexico and Puerto Rico. But global expansion poses
huge risks for Starbucks. For one thing, it makes less money on each
overseas store because most of them are operated with local partners.
While that makes it easier to start up on foreign turf, it reduces the
company’s share of the profits to only 20 percent to 50 percent.

Moreover, Starbucks must cope with some predictable chal-
lenges of becoming a mature company in the United States. After
riding the wave of successful baby boomers through the 1990s, the
company faces an ominously hostile reception from its future con-
sumers, the twenty- or thirty-somethings. Not only are the activists
among them turned off by the power and image of the well-known
brand, but many others also say that Starbucks’ latte-sipping sophis-
ticates and piped-in Kenny G music are a real turnoff. They don’t
feel wanted in a place that sells designer coffee at $3 a cup.

Even the thirst of loyalists for high-price coffee cannot be taken
for granted. Starbucks’ growth over the early part of the past decade
coincided with a remarkable surge in the economy. Consumer
spending tanked in the downturn, and those $3 lattes were an easy
place for people on a budget to cut back.

To be sure, Starbucks has a lot going for it as it confronts the chal-
lenge of regaining its fast and steady growth. Nearly free of debt, it
fuels expansion with internal cash flow. And Starbucks can maintain
a tight grip on its image because most stores are company-owned:
There are no franchisees to get sloppy about running things. By
relying on mystique and word of mouth, whether here or overseas,
the company saves a bundle on marketing costs. Starbucks spends
just $30 million annually on advertising, or roughly 1 percent of
revenues, usually just for new flavors of coffee drinks in the summer
and product launches, such as its new in-store web service. Most
consumer companies its size shell out upwards of $300 million per
year. Moreover, Starbucks for the first time faces competition from
large U.S. competitors such as McDonald’s and its new McCafés.

Schultz remains the heart and soul of the operation. Raised in
a Brooklyn public-housing project, he found his way to Starbucks,
a tiny chain of Seattle coffee shops, as a marketing executive in the
early 1980s. The name came about when the original owners looked

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to Seattle history for inspiration and chose the moniker of an old
mining camp: Starbo. Further refinement led to Starbucks, after the
first mate in Moby Dick, which they felt evoked the seafaring romance
of the early coffee traders (hence the mermaid logo). Schultz got
the idea for the modern Starbucks format while visiting a Milan
coffee bar. He bought out his bosses in 1987 and began expanding.

The company is still capable of designing and opening a store in
16 weeks or less and recouping the initial investment in three years.
The stores may be oases of tranquility, but management’s expansion
tactics are something else. Take what critics call its “predatory real
estate” strategy—paying more than market-rate rents to keep com-
petitors out of a location. David C. Schomer, owner of Espresso
Vivace in Seattle’s hip Capitol Hill neighborhood, says Starbucks
approached his landlord and offered to pay nearly double the rate
to put a coffee shop in the same building. The landlord stuck with
Schomer, who says: “It’s a little disconcerting to know that some-
one is willing to pay twice the going rate.” Another time, Starbucks
and Tully’s Coffee Corp., a Seattle-based coffee chain, were com-
peting for a space in the city. Starbucks got the lease but vacated the
premises before the term was up. Still, rather than let Tully’s get the
space, Starbucks decided to pay the rent on the empty store so its
competitor could not move in. Schultz makes no apologies for the
hardball tactics. “The real estate business in America is a very, very
tough game,” he says. “It’s not for the faint of heart.”

Still, the company’s strategy could backfire. Not only will
neighborhood activists and local businesses increasingly resent the
tactics, but also customers could grow annoyed over having fewer
choices. Moreover, analysts contend that Starbucks can maintain
about 15 percent square-footage growth in the United States—
equivalent to 550 new stores—for only about two more years. After
that, it will have to depend on overseas growth to maintain an
annual 20 percent revenue growth.

Starbucks was hoping to make up much of that growth with
more sales of food and other noncoffee items but stumbled some-
what. In the late 1990s, Schultz thought that offering $8 sand-
wiches, desserts, and CDs in his stores and selling packaged coffee
in supermarkets would significantly boost sales. The specialty busi-
ness now accounts for about 16 percent of sales, but growth has
been less than expected.

What’s more important for the bottom line, though, is that Star-
bucks has proven to be highly innovative in the way it sells its main
course: coffee. In 800 locations it has installed automatic espresso
machines to speed up service. And several years ago, it began offer-
ing prepaid Starbucks cards, priced from $5 to $500, which clerks
swipe through a reader to deduct a sale. That, says the company, cuts
transaction times in half. Starbucks has sold $70 million of the cards.

When Starbucks launched Starbucks Express, its boldest experi-
ment yet, it blended java, web technology, and faster service. At
about 60 stores in the Denver area, customers could pre-order and
prepay for beverages and pastries via phone or on the Starbucks
Express website. They just make the call or click the mouse before
arriving at the store, and their beverage would be waiting—with
their name printed on the cup. The company decided in 2003 that
the innovation had not succeeded and eliminated the service.

And Starbucks continues to try other fundamental store
changes. It announced expansion of a high-speed wireless Internet
service to about 1,200 Starbucks locations in North America and
Europe. Partners in the project—which Starbucks calls the world’s
largest Wi-Fi network—include Mobile International, a wireless sub-
sidiary of Deutsche Telekom, and Hewlett-Packard. Customers sit
in a store and check e-mail, surf the web, or download multimedia

presentations without looking for connections or tripping over
cords. They start with 24 hours of free wireless broadband before
choosing from a variety of monthly subscription plans.

Starbucks executives hope such innovations will help surmount
their toughest challenge in the home market: attracting the next gen-
eration of customers. Younger coffee drinkers already feel uncom-
fortable in the stores. The company knows that because it once had
a group of twentysomethings hypnotized for a market study. When
their defenses were down, out came the bad news. “They either can’t
afford to buy coffee at Starbucks, or the only peers they see are those
working behind the counter,” says Mark Barden, who conducted
the research for the Hal Riney & Partners ad agency (now part of
Publicis Worldwide) in San Francisco. One of the recurring themes
the hypnosis brought out was a sense that “people like me aren’t
welcome here except to serve the yuppies,” he says. Then there are
those who just find the whole Starbucks scene a bit pretentious.
Katie Kelleher, 22, a Chicago paralegal, is put off by Starbucks’ Ital-
ian terminology of grande and venti for coffee sizes. She goes to
Dunkin’ Donuts, saying: “Small, medium, and large is fine for me.”

As it expands, Starbucks faces another big risk: that of becom-
ing a far less special place for its employees. For a company mod-
eled around enthusiastic service, that could have dire consequences
for both image and sales. During its growth spurt of the mid- to
late-1990s, Starbucks had the lowest employee turnover rate of any
restaurant or fast-food company, largely thanks to its then unheard-
of policy of giving health insurance and modest stock options to
part-timers making barely more than minimum wage.

Such perks are no longer enough to keep all the workers
happy. Starbucks’ pay doesn’t come close to matching the work-
load it requires, complain some staff. Says Carrie Shay, a former
store manager in West Hollywood, California: “If I were making
a decent living, I’d still be there.” Shay, one of the plaintiffs in the
suit against the company, says she earned $32,000 a year to run a
store with 10 to 15 part-time employees. She hired employees, man-
aged their schedules, and monitored the store’s weekly profit-and-
loss statement. But she also was expected to put in significant time
behind the counter and had to sign an affidavit pledging to work
up to 20 hours of overtime a week without extra pay—a requirement
the company has dropped since the settlement.

For sure, employee discontent is far from the image Starbucks
wants to project of relaxed workers cheerfully making cappuccinos. But
perhaps it is inevitable. The business model calls for lots of low-wage
workers. And the more people who are hired as Starbucks expands,
the less they are apt to feel connected to the original mission of high
service—bantering with customers and treating them like family.
Robert J. Thompson, a professor of popular culture at Syracuse Uni-
versity, says of Starbucks: “It’s turning out to be one of the great 21st
century American success stories—complete with all the ambiguities.”

Overseas, though, the whole Starbucks package seems new and,
to many young people, still very cool. In Vienna, where Starbucks
had a gala opening for its first Austrian store, Helmut Spudich,
a business editor for the paper Der Standard, predicted that Star-
bucks would attract a younger crowd than would the established
cafés. “The coffeehouses in Vienna are nice, but they are old. Star-
bucks is considered hip,” he says.

But if Starbucks can count on its youth appeal to win a welcome in
new markets, such enthusiasm cannot be counted on indefinitely. In
Japan, the company beat even its own bullish expectations, growing to
over 900 stores after opening its first in Tokyo in 1996. Affluent young
Japanese women like Anna Kato, a 22-year-old Toyota Motor Corp.
worker, loved the place. “I don’t care if it costs more, as long as it tastes

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sweet,” she says, sitting in the world’s busiest Starbucks, in Tokyo’s
Shibuya district. Yet same-store sales growth has fallen in Japan, Star-
bucks’ top foreign market, as rivals offer similar fare. Meanwhile in
England, Starbucks’ second-biggest overseas market, with over 400
stores, imitators are popping up left and right to steal market share.

Entering other big markets may be tougher yet. The French
seem to be ready for Starbucks’ sweeter taste, says Philippe Bloch,
cofounder of Columbus Cafe, a Starbucks-like chain. But he won-
ders if the company can profitably cope with France’s arcane regu-
lations and generous labor benefits. And in Italy, the epicenter of
European coffee culture, the notion that the locals will abandon
their own 200,000 coffee bars en masse for Starbucks strikes many
as ludicrous. For one, Italian coffee bars prosper by serving food as
well as coffee, an area where Starbucks still struggles. Also, Italian
coffee is cheaper than U.S. java and, say Italian purists, much bet-
ter. Americans pay about $1.50 for an espresso. In northern Italy,
the price is 67 cents; in the south, just 55 cents. Schultz insists that
Starbucks eventually will come to Italy. It’ll have a lot to prove when
it does. Carlo Petrini, founder of the antiglobalization movement
Slow Food, sniffs that Starbucks’ “substances served in styrofoam”
won’t cut it. The cups are paper, of course. But the skepticism is real.

As Starbucks spreads out, Schultz will have to be increasingly
sensitive to those cultural challenges. For instance, he flew to Israel
several years ago to meet with then Foreign Secretary Shimon
Peres and other Israeli officials to discuss the Middle East crisis.
He won’t divulge the nature of his discussions. But subsequently,
at a Seattle synagogue, Schultz let the Palestinians have it. With
Starbucks outlets already in Kuwait, Lebanon, Oman, Qatar, and
Saudi Arabia, he created a mild uproar among Palestinian support-
ers. Schultz quickly backpedaled, saying that his words were taken
out of context and asserting that he is “pro-peace” for both sides.

There are plenty more minefields ahead. So far, the Seattle cof-
fee company has compiled an envious record of growth. But the
giddy buzz of that initial expansion is wearing off. Now, Starbucks
is waking up to the grande challenges faced by any corporation bent
on becoming a global powerhouse.

In a 2005 bid to boost sales in its largest international market,
Starbucks Corp. expanded its business in Japan, beyond cafés
and into convenience stores, with a line of chilled coffee in plas-
tic cups. The move gives the Seattle-based company a chance to
grab a chunk of Japan’s $10 billion market for coffee sold in cans,
bottles, or vending machines rather than made-to-order at cafés. It
is a lucrative but fiercely competitive sector, but Starbucks, which
has become a household name since opening its first Japanese
store, is betting on the power of its brand to propel sales of the new
drinks. Also, introducing tea to the menu in 2015 caused a 7 per-
cent increase in sales. Stores in Japan now number close to 1,700.

Starbucks is working with Japanese beverage maker and distrib-
utor Suntory Ltd. The “Discoveries” and “Doubleshot” lines are
the company’s first forays into the ready-to-drink market outside
North America, where it sells a line of bottled and canned coffee. It
also underscores Starbucks’ determination to expand its presence
in Asia by catering to local tastes. For instance, the new product
comes in two variations—espresso and latte—that are less sweet
than their U.S. counterparts, as the coffee maker developed them
to suit Asian palates. Starbucks officials said they hope to establish
their product as the premium chilled cup brand, which, at 210 yen
($1.87), will be priced at the upper end of the category.

Starbucks faces steep competition. Japan’s “chilled cup” market
is teeming with rival products, including Starbucks lookalikes. One
of the most popular brands, called Mt. Rainier, is emblazoned with

a green circle logo that closely resembles that of Starbucks. Conve-
nience stores also are packed with canned coffee drinks, including
Coca-Cola Co.’s Georgia brand and brews with extra caffeine or
made with gourmet coffee beans.

Schultz declined to speculate on exactly how much coffee Star-
bucks might sell through Japan’s convenience stores. “We wouldn’t
be doing this if it wasn’t important both strategically and economi-
cally,” he said.

The company has no immediate plans to introduce the beverage
in the United States, though it has in the past brought home prod-
ucts launched in Asia. A green tea frappuccino, first launched in
Asia, was later introduced in the United States and Canada, where
company officials say it was well received.

Starbucks has done well in Japan, although the road hasn’t always
been smooth. After cutting the ribbon on its first Japan store in 1996,
the company began opening stores at a furious pace. New shops
attracted large crowds, but the effect wore off as the market became
saturated. The company returned to profitability, and net profits
jumped more than sixfold to 3.6 billion yen in 2007, declined again to
2.7 billion yen in 2009, and increased again to 6 billion yen by 2013.

In Japan, the firm successfully developed a broader menu for its
stores, including customized products—smaller sandwiches and less-
sweet desserts. The strategy increased same-store sales and overall
profits. The firm also has added 175 new stores since 2006, including
some drive-through service. But McDonald’s also has attacked the
Japanese market with the introduction of its McCafé coffee shops.

Starbucks opened its first store in Africa in 2016, hoping to tap
into an expanding consumer class, despite an overall weakness in the
economy. It will open up just 12 to 15 stores initially, despite a capac-
ity on the continent of 150 stores, according to company estimates.

In 2018, China was opening a new store every 15 hours, with 3,000
planned over the next few years. Shanghai now boasts the largest Star-
bucks store in the world. Starbucks is pushing “a coffee culture in China
where the reward will be healthy, long-term, profitable growth for decades
to come,” CEO Kevin Johnson said. Meanwhile, in North America,
Starbucks is struggling to maintain growth above inflation rates.

QUESTIONS
As a guide, use Exhibit 1.3 and its description in Chapter 1, and do
the following:

1. Identify the controllable and uncontrollable elements that
Starbucks has encountered in entering global markets.

2. What are the major sources of risk facing the company? Dis-
cuss potential solutions.

3. Critique Starbucks’ overall corporate strategy.

4. What advice would you have for Starbucks in Africa? In China?

Visit www.starbucks.com for more information.

Sources: Stanley Holmes, Drake Bennett, Kate Carlisle, and Chester Dawson, “Planet
Starbucks: To Keep Up the Growth It Must Go Global Quickly,” BusinessWeek, Decem-
ber 9, 2002, pp. 100–110; Ken Belson, “Japan: Starbucks Profit Falls,” The New York
Times, February 20, 2003, p. 1; Ginny Parker Woods, “Starbucks Bets Drinks Will
Jolt Japan Sales,” Asian Wall Street Journal, September 27, 2005, p. A7; Amy Chozick,
“Starbucks in Japan Needs A Jolt,” The Wall Street Journal, October 24, 2006, p. 23;
“McCafe Debuts in Japan, Challenging Starbucks, Other Coffee Shops,” Kyoto News,
August 28, 2007; “Starbucks Japan Sees 55% Pretax Profit Jump for April-December,”
Nikkei Report, February 6, 2008; see the most recent annual report at www.starbucks
.com; Alexandra Wexler, “Starbucks Opens First Africa Store,” The Wall Street Journal,
April 22, 2016, p. B6; Sherisse Pham, “China is Getting Nearly 3,000 new Starbucks,
money.cnn.com, May 16, 2018.

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THE BEVERAGE BATTLEFIELD
In 2007, the president and CEO of Coca-Cola asserted that Coke
has had a rather rough run in India, but now it seems to be getting
its positioning right. Similarly, PepsiCo’s Asia chief asserted that
India is the beverage battlefield for this decade and beyond.

Even though the government had opened its doors wide to for-
eign companies, the experience of the world’s two giant soft drink
companies in India during the 1990s and the beginning of the new
millennium was not a happy one. Both companies experienced a
range of unexpected problems and difficult situations that led them
to recognize that competing in India requires special knowledge,
skills, and local expertise. In many ways, Coke and Pepsi managers
had to learn the hard way that “what works here” does not always
“work there.” “The environment in India is challenging, but we’re
learning how to crack it,” says an industry leader.

THE INDIAN SOFT DRINK INDUSTRY
In India, over 45 percent of the soft drink industry in 1993 con-
sisted of small manufacturers. Their combined business was worth
$3.2 million. Leading producers included Parle Agro (hereafter
“Parle”), Pure Drinks, Modern Foods, and McDowells. They
offered carbonated orange and lemon-lime beverage drinks. Coca-
Cola Corporation (hereafter “Coca-Cola”) was only a distant
memory to most Indians at that time. The company had been pres-
ent in the Indian market from 1958 until its withdrawal in 1977 fol-
lowing a dispute with the government over its trade secrets. After
decades in the market, Coca-Cola chose to leave India rather than
cut its equity stake to 40 percent and hand over its secret formula
for the syrup.

Following Coca-Cola’s departure, Parle became the market
leader and established thriving export franchise businesses in
Dubai, Kuwait, Saudi Arabia, and Oman in the Gulf, along with Sri
Lanka. It set up production in Nepal and Bangladesh and served
distant markets in Tanzania, Britain, the Netherlands, and the
United States. Parle invested heavily in image advertising at home,
establishing the dominance of its flagship brand, Thums Up.

Thums Up is a brand associated with a “job well done” and per-
sonal success. These are persuasive messages for its target market
of young people aged 15 to 24 years. Parle has been careful in the
past not to call Thums Up a cola drink, so it has avoided direct
comparison with Coke and Pepsi, the world’s brand leaders.

The soft drink market in India is composed of six product seg-
ments: cola, “cloudy lemon,” orange, “soda” (carbonated water),
mango, and “clear lemon,” in order of importance. Cloudy lemon
and clear lemon together make up the lemon-lime segment. Prior
to the arrival of foreign producers in India, the fight for local
dominance was between Parle’s Thums Up and Pure Drinks’
Campa Cola.

In 1988, the industry had experienced a dramatic shakeout fol-
lowing a government warning that BVO, an essential ingredient in
locally produced soft drinks, was carcinogenic. Producers either
had to resort to using a costly imported substitute, estergum, or
they had to finance their own R&D in order to find a substitute
ingredient. Many failed and quickly withdrew from the industry.

Competing with the segment of carbonated soft drinks is
another beverage segment composed of noncarbonated fruit
drinks. These are a growth industry because Indian consumers
perceive fruit drinks to be natural, healthy, and tasty. The leading
brand has traditionally been Parle’s Frooti, a mango-flavored drink,
which was also exported to franchisees in the United States, Brit-
ain, Portugal, Spain, and Mauritius.

OPENING INDIAN MARKET
In 1991, India experienced an economic crisis of exceptional sever-
ity, triggered by the rise in imported oil prices following the first Gulf
War (after Iraq’s invasion of Kuwait). Foreign exchange reserves fell
as nonresident Indians (NRIs) cut back on repatriation of their sav-
ings, imports were tightly controlled across all sectors, and industrial
production fell while inflation was rising. A new government took
office in June 1991 and introduced measures to stabilize the econ-
omy in the short term, then launched a fundamental restructuring
program to ensure medium-term growth. Results were dramatic. By
1994, inflation was halved, exchange reserves were greatly increased,
exports were growing, and foreign investors were looking at India, a
leading Big Emerging Market, with new eyes.

The turnaround could not be overstated; as one commentator
said, “India has been in economic depression for so long that every-
thing except the snake-charmers, cows and the Taj Mahal has faded
from the memory of the world.” The Indian government was viewed
as unfriendly to foreign investors. Outside investment had been
allowed only in high-tech sectors and was almost entirely prohib-
ited in consumer goods sectors. The “principle of indigenous avail-
ability” had specified that if an item could be obtained anywhere
else within the country, imports of similar items were forbidden. As
a result, Indian consumers had little choice of products or brands
and no guarantees of quality or reliability.

Following liberalization of the Indian economy and the disman-
tling of complicated trade rules and regulations, foreign investment
increased dramatically. Processed foods, software, engineering
plastics, electronic equipment, power generation, and petroleum
industries all benefited from the policy changes.

PEPSICO AND COCA-COLA ENTER THE
INDIAN MARKET
Despite its huge population, India had not been considered by for-
eign beverage producers to be an important market. In addition to
the deterrents imposed by the government through its austere trade
policies, rules, and regulations, local demand for carbonated drinks
in India was very low compared with countries at a similar stage
of economic development. In 1989, the average Indian was buying
only three bottles a year, compared with per-capita consumption
rates of 11 bottles a year in Bangladesh and 13 in Pakistan, India’s
two neighbors.

PepsiCo PepsiCo entered the Indian market in 1986 under
the name “Pepsi Foods Ltd. in a joint venture with two local part-
ners, Voltas and Punjab Agro.” As expected, very stringent condi-
tions were imposed on the venture. Sales of soft drink concentrate

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to local bottlers could not exceed 25 percent of total sales for the
new venture, and Pepsi Foods Ltd. was required to process and dis-
tribute local fruits and vegetables. The government also mandated
that Pepsi Food’s products be promoted under the name “Lehar
Pepsi” (“lehar” meaning “wave”). Foreign collaboration rules in
force at the time prohibited the use of foreign brand names on
products intended for sale inside India. Although the requirements
for Pepsi’s entry were considered stringent, the CEO of Pepsi-Cola
International said at that time, “We’re willing to go so far with India
because we want to make sure we get an early entry while the mar-
ket is developing.”

In keeping with local tastes, Pepsi Foods launched Lehar 7UP
in the clear lemon category, along with Lehar Pepsi. Marketing and
distribution were focused in the north and west around the major
cities of Delhi and Mumbai (formally Bombay). An aggressive pric-
ing policy on the one-liter bottles had a severe impact on the local
producer, Pure Drinks. The market leader, Parle, preempted any
further pricing moves by Pepsi Foods by introducing a new 250-ml
bottle that sold for the same price as its 200-ml bottle.

Pepsi Foods struggled to fight off local competition from
Pure Drinks’ Campa Cola, Duke’s lemonade, and various brands
of Parle. The fight for dominance intensified in 1993 with Pepsi
Food’s launch of two new brands, Slice and Teem, along with the
introduction of fountain sales. At this time, market shares in the
cola segment were 60 percent for Parle (down from 70 percent),
26 percent for Pepsi Foods, and 10 percent for Pure Drinks.

Coca-Cola In May 1990, Coca-Cola attempted to reen-
ter India by means of a proposed joint venture with a local bot-
tling company owned by the giant Indian conglomerate Godrej.
The government turned down this application just as PepsiCo’s
application was being approved. Undeterred, Coca-Cola made its
return to India by joining forces with Britannia Industries India
Ltd., a local producer of snack foods. The new venture was called
“Britco Foods.”

Among local producers, it was believed at that time that
Coca-Cola would not take market share away from local com-
panies because the beverage market was itself growing consis-
tently from year to year. Yet this belief did not stop individual
local producers from trying to align themselves with the market
leader. Thus, in July 1993, Parle offered to sell Coca-Cola its
bottling plants in the four key cities of Delhi, Mumbai, Ahmed-
abad, and Surat. In addition, Parle offered to sell its leading
brands Thums Up, Limca, Citra, Gold Spot, and Mazaa. It
chose to retain ownership only of Frooti and a soda (carbonated
water) called Bisleri.

FAST FORWARD TO THE NEW
MILLENNIUM
Seasonal Sales Promotions—2006 Navratri
Campaign In India the summer season for soft drink con-
sumption lasts 70 to 75 days, from mid-April to June. During
this time, over 50 percent of the year’s carbonated beverages are
consumed across the country. The second-highest season for con-
sumption lasts only 20 to 25 days during the cultural festival of
Navratri (“Nav” means nine and “ratri” means night). This tra-
ditional Gujarati festival goes on for nine nights in the state of
Gujarat, in the western part of India. Mumbai also has a signifi-
cant Gujarati population that is considered part of the target mar-
ket for this campaign.

As the Regional Marketing Manager for Coca-Cola India stated,
“As part of the ‘think local—act local’ business plan, we have tried
to involve the masses in Gujarat with ‘Thums Up Toofani Ram-
jhat,’ with 20,000 free passes issued, one per Thums Up bottle.
[‘Toofan’ means a thunderstorm and ‘ramjhat’ means ‘let’s dance,’
so together these words convey the idea of a ‘fast dance.’] There are
a number of [retail] on-site activities too, such as the ‘buy one—get
one free’ scheme and lucky draws where one can win a free trip
to Goa.” (Goa is an independent Portuguese-speaking state on the
west coast of India, famed for its beaches and tourist resorts.)

For its part, PepsiCo also participates in annual Navratri cel-
ebrations through massive sponsorships of “garba” competitions
in selected venues in Gujarat. (“Garba” is the name of a dance,
done by women during the Navratri festival.) The Executive Vice
President for PepsiCo India commented: “For the first time, Pepsi
has tied up with the Gujarati TV channel, Zee Alpha, to telecast
‘Navratri Utsav’ on all nine nights. [‘Utsav’ means festival.] Then
there is the mega offer for the people of Ahmedabad, Baroda, Surat,
and Rajkot where every refill of a case of Pepsi 300-ml. bottles will
fetch one kilo of Basmati rice free.” These four cities are located in
the state of Gujarat. Basmati rice is considered a premium-quality
rice. After the initial purchase of a 300-ml bottle, consumers can
get refills at reduced rates at select stores.

The TV Campaign Both Pepsi-Cola and Coca-Cola
engage in TV campaigns employing local and regional festivals and
sports events. A summer campaign featuring 7UP was launched
by Pepsi with the objectives of growing the category and building
brand awareness. The date was chosen to coincide with the India–
Zimbabwe One-Day cricket series. The new campaign slogan was
“Keep It Cool” to emphasize the product attribute of refreshment.
The national campaign was to be reinforced with regionally adapted
TV campaigns, outdoor activities, and retail promotions.

A 200-ml bottle was introduced during this campaign in order to
increase frequency of purchase and volume of consumption. Prior
to the introduction of the 200-ml bottle, most soft drinks were sold
in 250-ml, 300-ml, and 500-ml bottles. In addition to 7UP, Pepsi
Foods also introduced Mirinda Lemon, Apple, and Orange in
200-ml bottles.

In the past, celebrity actors Amitabh Bachchan and Govinda,
who are famous male stars of the Indian movie industry, had
endorsed Mirinda Lemon. This world-famous industry is referred
to as “Bollywood” (the Hollywood of India based in Bombay).

Pepsi’s Sponsorship of Cricket and Football
(Soccer) After India won an outstanding victory in the India–
England NatWest One-Day cricket series finals, PepsiCo launched
a new ad campaign featuring the batting sensation Mohammad
Kaif. PepsiCo’s lineup of other cricket celebrities includes Saurav
Ganguly, Rahul Dravid, Harbhajan Singh, Zaheer Khan, V. V. S.
Laxman, and Ajit Agarkar. All of these players were part of the
Indian team for the World Cup Cricket Series. During the two
months of the Series, a new product, Pepsi Blue, was marketed
nationwide. It was positioned as a “limited edition,” icy-blue cola
sold in 300-ml, returnable glass bottles and 500-ml plastic bottles,
priced at 8 rupees (Rs) and Rs 15, respectively. In addition, com-
memorative, nonreturnable 250-ml Pepsi bottles priced at Rs 12
were introduced. (One rupee was equal to US 2.54 cents in 2008.)

In addition to the sponsorship of cricket events, PepsiCo
also has taken advantage of World Cup soccer fever in India by fea-
turing football heroes such as Baichung Bhutia in Pepsi’s celebrity

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and music-related advertising communications. These ads featured
football players pitted against sumo wrestlers.
To consolidate its investment in its promotional campaigns, Pep-
siCo sponsored a music video with celebrity endorsers including
the Bollywood stars, as well as several nationally known cricketers.
The new music video aired on SET Max, a satellite channel broad-
cast mainly in the northern and western parts of India and popular
among the 15–25-year age group.

Coca-Cola’s Lifestyle Advertising While Pepsi’s
promotional efforts focused on cricket, soccer, and other athletic
events, Coca-Cola’s India strategy focused on relevant local idioms
in an effort to build a “connection with the youth market.” The
urban youth target market, known as “India A,” includes 18–24 year
olds in major metropolitan areas.

Several ad campaigns were used to appeal to this market seg-
ment. One campaign was based on use of “gaana” music and ballet.
(“Gaana” means to sing.)

The first ad execution, called “Bombay Dreams,” featured A.
R. Rahman, a famous music director. This approach was very suc-
cessful among the target audience of young people, increasing sales
by about 50 percent. It also won an Effi Award from the Mumbai
Advertising Club. A second execution of Coke’s southern strategy
was “Chennai Dreams” (Chennai was formerly called Madras), a
60-second feature film targeting consumers in Tamil Nadu, a region
of southern India. The film featured Vijay, a youth icon who is
famous as an actor in that region of south India.

Another of the 60-second films featured actor Vivek Oberoi
with Aishwarya Rai. Both are famous as Bollywood movie stars.
Aishwarya won the Miss World crown in 1994 and became an
instant hit in Indian movies after deciding on an acting career.

This ad showed Oberoi trying to hook up with Rai by deliber-
ately leaving his mobile phone in the taxi that she hails, and then
calling her. The ad message aimed to emphasize confidence and
optimism, as well as a theme of “seize the day.” This campaign
used print, outdoor, point-of-sale, restaurant and grocery chains,
and local promotional events to tie into the 60-second film. “While
awareness of soft drinks is high, there is a need to build a deeper
brand connect” in urban centers, according to the Director of
Marketing for Coca-Cola India. “Vivek Oberoi—who’s an up and
coming star today, and has a wholesome, energetic image—will help
build a stronger bond with the youth, and make them feel that it
is a brand that plays a role in their life, just as much as Levi’s or
Ray-Ban.”

In addition to promotions focused on urban youth, Coca-Cola
India worked hard to build a brand preference among young people
in rural target markets. The campaign slogan aimed at this market
was “thanda matlab Coca-Cola” (or “cool means Coca-Cola” in
Hindi). Coca-Cola India calls its rural youth target market “India
B.” The prime objective in this market is to grow the generic soft
drink category and to develop brand preference for Coke. The
“thanda” (“cold”) campaign successfully propelled Coke into the
number three position in rural markets.

Continuing to court the youth market, Coke has opened its
first retail outlet, Red Lounge. The Red Lounge is touted as a one-
stop destination where the youth can spend time and consume
Coke products. The first Red Lounge pilot outlet is in Pune, and
based on the feedback, more outlets will be rolled out in other
cities. The lounge sports red color, keeping with the theme of the
Coke logo. It has a giant LCD television, video games, and Inter-
net surfing facilities. The lounge offers the entire range of Coke

products. The company also is using the Internet to extend its
reach into the public domain through the website www.happiness
.coca-cola.com. The company has created a special online “Sprite-
itude” zone that provides consumers opportunities for online gam-
ing and expressing their creativity, keeping with the no-nonsense
attitude of the drink.

Coca-Cola’s specific marketing objectives are to grow the per-
capita consumption of soft drinks in the rural markets, capture a
larger share in the urban market from competition, and increase
the frequency of consumption. An “affordability plank,” along with
introduction of a new 5-rupee bottle, was designed to help achieve
all of these goals.

The “Affordability Plank” The purpose of the “afford-
ability plank” was to enhance affordability of Coca-Cola’s prod-
ucts, bringing them within arm’s reach of consumers, and thereby
promoting regular consumption. Given the very low per-capita
consumption of soft drinks in India, it was expected that price
reductions would expand both the consumer base and the market
for soft drinks. Coca-Cola India dramatically reduced prices of its
soft drinks by 15 to 25 percent nationwide to encourage consump-
tion. This move followed an earlier regional action in North India
that reduced prices by 10 to 15 percent for its carbonated brands
Coke, Thums Up, Limca, Sprite, and Fanta. In other regions
such as Rajasthan, western and eastern Uttar Pradesh, and Tamil
Nadu, prices were slashed to Rs 5 for 200-ml glass bottles and
Rs 8 for 300-ml bottles, down from the existing Rs 7 and Rs 10 price
points, respectively.

Another initiative by Coca-Cola was the introduction of a
new size, the “Mini,” expected to increase total volume of sales
and account for the major chunk of Coca-Cola’s carbonated soft
drink sales.

The price reduction and new production launch were
announced together in a new television ad campaign for Fanta
and Coke in Tamil. A 30-second Fanta spot featured the brand
ambassador, actress Simran, well-known for her dance sequences
in Hindi movies. The ad showed Simran stuck in a traffic jam.
Thirsty, she tosses a 5-rupee coin to a roadside stall and signals to
the vendor that she wants a Fanta Mini by pointing to her orange
dress. (Fanta is an orangeade drink.) She gets her Fanta and sets
off a chain reaction on the crowded street, with everyone from
school children to a traditional “nani” mimicking her action.
(“Nani” is the Hindi word for grandmother.) The director of mar-
keting commented that the company wanted to make consumers
“sit up and take notice.”

A NEW PRODUCT CATEGORY
Although carbonated drinks are the mainstay of both Coke’s and
Pepsi’s product lines, the Indian market for carbonated drinks is
now not growing. It grew at a compounded annual growth rate
of only 1 percent between 1999 and 2006, from $1.31 billion to
$1.32 billion. However, the overall market for beverages, which
includes soft drinks, juices, and other drinks, grew 6 percent from
$3.15 billion to $3.34 billion.

To encourage growth in demand for bottled beverages in the
Indian market, several producers, including Coke and Pepsi,
launched their own brands in a new category, bottled water. This
market was valued at 1,000 crores.1

1One crore = 10,000,000 rupees, and US$1 = Rs 48, so 1,000 crores = US$208,300.

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CS1−12 Part 6 Supplementary Material

Pepsi and Coke responded to the declining popularity of soft
drinks or carbonated drinks and the increased focus on all bever-
ages that are noncarbonated. The ultimate goal is leadership in the
packaged water market, which is growing more rapidly than any
other category of bottled beverages. Pepsi is a significant player in
the packaged water market with its Aquafina brand, which has a
significant share of the bottled water market and is among the top
three retail water brands in the country.

PepsiCo consistently has been working toward reducing its
dependence on Pepsi-Cola by bolstering its noncola portfolio
and other categories. This effort is aimed at making the company
more broad-based in category growth so that no single product or
category becomes the key determinant of the company’s market
growth. The noncola segment is said to have grown to contribute
one-fourth of PepsiCo’s overall business in India during the past
three to four years. Previously, the multinational derived a major
chunk of its growth from Pepsi-Cola.

Among other categories on which the company is focusing
are fruit juices, juice-based drinks, and water. The estimated fruit
juice market in India is approximately 350 crores and growing
month to month. One of the key factors that has triggered this
trend is the emergence of the mass luxury segment and increasing
consumer consciousness about health and wellness. “Our hugely
successful international brand Gatorade has gained momentum
in the country with consumers embracing a lifestyle that includes
sports and exercise. The emergence of high-quality gymnasiums,
fitness and aerobic centres mirror[s] the fitness trend,” said a
spokesperson.

Coca-Cola introduced its Kinley brand of bottled water and in
two years achieved a 28 percent market share. It initially produced
bottled water in 15 plants and later expanded to another 15 plants.
The Kinley brand of bottled water sells in various pack sizes:
500 ml, 1 liter, 1.5 liters, 2 liters, 5 liters, 20 liters, and 25 liters. The
smallest pack was priced at Rs 6 for 500 ml, while the 2-liter bottle
was Rs 17.

The current market leader, with 40 percent market share, is the
Bisleri brand by Parle. Other competing brands in this segment
include Bailley by Parle, Hello by Hello Mineral Waters Pvt. Ltd.,
Pure Life by Nestlé, and a new brand launched by Indian Railways,
called Rail Neer.

CONTAMINATION ALLEGATIONS
AND WATER USAGE
Just as things began to look up for the American companies, an
environmental organization claimed that soft drinks produced in
India by Coca-Cola and Pepsi contained significant levels of pes-
ticide residue. Coke and Pepsi denied the charges and argued that
extensive use of pesticides in agriculture had resulted in a minute
degree of pesticide in sugar used in their drinks. The result of tests
conducted by the Ministry of Health and Family Welfare showed
that soft drinks produced by the two companies were safe to drink
under local health standards.

Protesters in India reacted to reports that Coca-Cola and Pepsi
contained pesticide residues. Some states announced partial bans
on Coke and Pepsi products. When those reports appeared on the
front pages of newspapers in India, Coke and Pepsi executives were
confident that they could handle the situation. But they stumbled.

They underestimated how quickly events would spiral into
a nationwide scandal, misjudged the speed with which local

politicians would seize on an Indian environmental group’s report
to attack their global brands, and did not respond swiftly to quell
the anxieties of their customers.

The companies formed committees in India and the United
States, working in tandem on legal and public relations issues.
They worked around the clock fashioning rebuttals. They com-
missioned their own laboratories to conduct tests and waited
until the results came through before commenting in detail. Their
approaches backfired. Their reluctance to give details fanned con-
sumer suspicion. They became bogged down in the technicalities
of the charges instead of focusing on winning back the support of
their customers.

At the start, both companies were unprepared when one state
after another announced partial bans on Coke and Pepsi prod-
ucts; the drinks were prevented from being sold in government
offices, hospitals, and schools. Politicians exploited the populist
potential.

In hindsight, the Coke communications director said she could
see how the environmental group had picked Coca-Cola as a way of
attracting attention to the broader problem of pesticide contamina-
tion in Indian food products. “Fringe politicians will continue to be
publicly hostile to big Western companies, regardless of how eager
they are for their investment,” she said.

Failing to anticipate the political potency of the incident, Coke
and Pepsi initially hoped that the crisis would blow over and they
adopted a policy of silence. “Here people interpret silence as guilt,”
said an Indian public relations expert. “You have to roll up your
sleeves and get into a street fight. Coke and Pepsi didn’t under-
stand that.”

Coca-Cola eventually decided to go on the attack, though indi-
rectly, giving detailed briefings by executives, who questioned the
scientific credentials of their products’ accusers. They directed
reporters to Internet blogs full of entries that were uniformly pro-
Coke, and they handed out the cell phone number for the director
of an organization called the Center for Sanity and Balance in Pub-
lic Life. Emphasizing that he was not being paid by the industry,
Kishore Asthana, from that center, said, “One can drink a can of
Coke every day for two years before taking in as much pesticide as
you get from two cups of tea.”

The situation continued to spin out of control. Newspapers
printed images of cans of the drinks with headlines like “toxic cock-
tail.” News channels broadcast images of protesters pouring Coke
down the throats of donkeys. A vice president for Coca-Cola India
said his “heart sank” when he first heard the accusations because
he knew that consumers would be easily confused. “But even termi-
nology like P.P.B.—parts per billion—is difficult to comprehend,” he
said. “This makes our job very challenging.”

PepsiCo began a public relations offensive, placing large adver-
tisements in daily newspapers saying, “Pepsi is one of the safest
beverages you can drink today.”

The company acknowledged that pesticides were present in the
groundwater in India and found their way into food products in
general. But, it said, “compared with the permitted levels in tea and
other food products, pesticide levels in soft drinks are negligible.”

After all the bad press Coke got in India over the pesticide con-
tent in its soft drinks, an activist group in California launched a
campaign directed at U.S. college campuses, accusing Coca-Cola
of India of using precious groundwater, lacing its drinks with
pesticides, and supplying farmers with toxic waste used for fertil-
izing their crops. According to one report, a plant that produces

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Cases 1 An Overview CS1−13

300,000 liters of soda drink a day uses 1.5 million liters of water,
enough to meet the requirements of 20,000 people. Other unsub-
stantiated reports surfaced that farmers in India were spraying
Coke on their crops because it is one-tenth the cost of pesticide but
just as effective at killing bugs.

The issue revolved around a bottling plant in Plachimada,
India. Although the state government granted Coke permission to
build its plant in 1998, the company was obliged to get the locally
elected village council’s go-ahead to exploit groundwater and other
resources. The village council did not renew permission in 2002,
claiming the bottling operation had depleted the farmers’ drinking
water and irrigation supplies. Coke’s plant was closed until the cor-
poration won a court ruling allowing it to reopen.

The reopening of the plant in 2006 led students of a major
Midwestern university to call for a ban on the sale of all Coca-
Cola products on campus. According to one source, more than 20
campuses banned Coca-Cola products, and hundreds of people in
the United States called on Coca-Cola to close its bottling plants
because the plants drain water from communities throughout
India. They contended that such irresponsible practices rob the
poor of their fundamental right to drinking water, are a source of
toxic waste, cause serious harm to the environment, and threaten
people’s health.

In an attempt to stem the controversy, Coca-Cola entered talks
with the Midwestern university and agreed to cooperate with an
independent research assessment of its work in India; the university
selected the institute to conduct the research, and Coke financed
the study. As a result of the proposed research program, the uni-
versity agreed to continue to allow Coke products to be sold on
campus.

In 2008 the study reported that none of the pesticides were
found to be present in processed water used for beverage produc-
tion and that the plants met governmental regulatory standards.
However, the report voiced concerns about the company’s use of
sparse water supplies. Coca-Cola was asked by the Delhi-based
environmental research group to consider shutting down one of
its bottling plants in India. Coke’s response was that “the easiest
thing would be to shut down, but the solution is not to run away. If
we shut down, the area is still going to have a water problem. We
want to work with farming communities and industries to reduce
the amount of water used.”

The controversies highlight the challenges that multinational
companies can face in their overseas operations. Despite the huge
popularity of the drinks, the two companies are often held up as
symbols of Western cultural imperialism.

THE BATTLEGROUND SHIFTS
Coca-Cola turned a profit in India in 2010 for the first time since
its reentry in 1993. Coca-Cola now leads the industry in sales: It
owns the #1 and #2 brands, Thums Up and Coke, respectively.
Rather than killing the Thums Up brand, Coca-Cola executives
wisely have maintained that name, with its nationalistic popularity.
The nonalcoholic beverage industry also has experienced a growth
surge in the past decade, at some 10 percent per year. And now
the competitive battle is shifting from urban areas to the vast rural
regions of India.

In a community relations campaign, Coke also pointed out
the company is supporting sustainable development and inclu-
sive growth by focusing on issues relating to water, environment,

healthy living, women empowerment, sanitation, and social
advancement. In 2010 Coca-Cola India launched its 5by20 ini-
tiative, which is the company’s global program to empower eco-
nomically 5 million women entrepreneurs across six segments
by 2020.

In 2017, Coke and Pepsi were once again accused of nonsus-
tainability in the production of its product. More than a million
wholesalers and small retailers in India’s soft drink channel boy-
cotted the products, along with other carbonated drinks, over alle-
gations of the amount of water used. Amit Srivastava, director at
the NGO India Resource Centre, said, “According to our research
Coca-Cola is the number one buyer of sugarcane in India and
Pepsi is number three. If you take into account the water used for
sugarcane, then we’re using 400 litres of water to make a bottle of
Cola. . . . Sugarcane is a water-guzzling crop. It is the wrong crop
for India.” The controversy was heightened by a severe drought
that small farmers faced that year in the Tamil Nadu region in
southern India.

The Indian Beverage Association (IBA), which represents many
soft drink manufacturers, said it was disappointed with the boycott.
“Coca-Cola and PepsiCo India together provide direct employment
to 2,000 families in Tamil Nadu and more than 5,000 families indi-
rectly. . . . IBA hopes that good sense will prevail and that consum-
ers will continue to have the right to exercise their choice in Tamil
Nadu,” it said.

In 2017 government officials were considering a “sin tax” on
sweetened, carbonated soda drinks in India.

QUESTIONS
1. The political environment in India has proven to be critical

to company performance for both PepsiCo and Coca-Cola
India. What specific aspects of the political environment have
played key roles? Could these effects have been anticipated
prior to market entry? If not, could developments in the politi-
cal arena have been handled better by each company?

2. Timing of entry into the Indian market brought different
results for PepsiCo and Coca-Cola India. What benefits or dis-
advantages accrued as a result of earlier or later market entry?

3. The Indian market is enormous in terms of population and
geography. How have the two companies responded to the
sheer scale of operations in India in terms of product poli-
cies, promotional activities, pricing policies, and distribution
arrangements?

4. “Global localization” (glocalization) is a policy that both
companies have implemented successfully. Give examples for
each company from the case.

5. How can Pepsi and Coke confront the issues of water use
in the manufacture of their products? How can they defuse
further boycotts or demonstrations against their products?
How effective are activist groups like the one that launched
the campaign in California? Should Coke address the group
directly or just let the furor subside?

6. Which of the two companies do you think has better long-
term prospects for success in India?

7. What lessons can each company draw from its Indian expe-
rience as it contemplates entry into other Big Emerging
Markets?

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CS1−14 Part 6 Supplementary Material

8. Comment on the decision of both Pepsi and Coke to enter
the bottled water market instead of continuing to focus on
their core products—carbonated beverages and cola-based
drinks in particular.

9. Recently Coca-Cola has decided to enter the growing Indian
market for energy drinks. The competition in this market is

fierce with established firms including Red Bull and Sobe.
With its new brand Burn, Coke initially targeted alternative
distribution channels such as pubs, bars, and gyms rather
than large retail outlets such as supermarkets. Comment on
this strategy.

This case was prepared by Lyn S. Amine, Ph.D., Professor of Marketing and International Business, Distinguished Fellow of the Academy of Marketing Science, President,
Women of the Academy of International Business, Saint Louis University, and Vikas Kumar, Assistant Professor, Strategic Management Institute, Bocconi University, Milan,
Italy. Dr. Lyn S. Amine and Vikas Kumar prepared this case from public sources as a basis for classroom discussion only. It is not intended to illustrate either effective or
ineffective handling of administrative problems. The case was revised in 2005 and 2008 with the authors’ permission. Sources: Lyn S. Amine and Deepa Raizada, “Market
Entry into the Newly Opened Indian Market: Recent Experiences of US Companies in the Soft Drinks Industry,” in Developments in Marketing Science, XVIII, proceedings of
the annual conference of the Academy of Marketing Science, Roger Gomes (ed.) (Coral Gables, FL: AMS, 1995), pp. 287–92; Jeff Cioletti, “Indian Government Says Coke
and Pepsi Safe,” Beverage World, September 15, 2003; “Indian Group Plans Coke, Pepsi Protests After Pesticide Claims,” AFP, December 15, 2004; “Fortune Sellers,” Foreign
Policy, May/June 2004; “International Pressure Grows to Permanently Close Coke Bottling Plant in Plachimada,” PR Newswire, June 15, 2005; “Indian Village Refuses Coca-
Cola License to Exploit Ground Water,” AFP, June 14, 2005; “Why Everyone Loves to Hate Coke,” Economist Times, June 16, 2005; “PepsiCo India To Focus on Non-Cola
Segment,” Knight Ridder Tribune Business News, September 22, 2006; “For 2 Giants of Soft Drinks, A Crisis in a Crucial Market,” The New York Times, August 23, 2006; “Coke
and Pepsi Try to Reassure India That Drinks Are Safe,” The New York Times, August 2006; “Catalyst: The Fizz in Water” Financial Times Limited, October 11, 2007; “Market-
ing: Coca-Cola Foraying Into Retail Lounge Format,” Business Line, April 7, 2007; “India Ops Now in Control, Says Coke Boss,” The Times of India, October 3, 2007; “Pepsi:
Repairing a Poisoned Reputation in India; How the Soda Giant Fought Charges of Tainted Products in a Country Fixated on its Polluted Water,” Business Week, June 11, 2007,
p. 48; “Coca-Cola Asked to Shut Indian Plant to Save Water,” International Herald Tribune, January 15, 2008; “Coca Cola: A Second Shot at Energy Drinks,” DataMonitor,
January 2010. “Coca-Cola India: Winning the Hearts and Taste Buds in the Hinterland,” The Wall Street Journal, May 4, 2010. Vidhi Doshi, “Indian traders boycott Coca-Cola
for ‘straining water resources’,” The Guardian, March 1, 2017.

cat12354_case1_CS1-1-CS1-20.indd 14 4/3/19 11:04 AM

Shortened Title Goes Here 4

Running head: TITLE IN LESS THAN 51 CHARACTERS CAPITALIZED

Assignment #

Your Name Here

Central Michigan University – MKT560

Date (optional)

Introduction

Start your paper here. An introduction paragraph is a good idea. It should state the purpose of the paper and provide a roadmap for the reader.

Please run the spelling and grammar checker before you submit your paper. It will catch mistakes like more than one space between sentences, spelling errors, punctuation mistakes, and split infinitives. Specific errors common in student papers that are not standard APA format include not having 1 inch margins on all sides of your paper and use two spaces between sentences. Note that in this example, there are no blank lines between paragraphs. This is correct in APA format.

Question # 1

Paragraphs start with an indentation using the ruler setting. Do not use spaces or the tab key. Do not use the “enter” key to get to the next line, just keep typing, and let the computer do the work. Please note that the references at the end of this paper are not cited in the text. This is not okay. They are there to give you examples of correct APA format for references. You must use APA citation format for all sources you use to write your paper.

Question # 2

Paragraphs start with an indentation using the ruler setting. Do not use spaces or the tab key. Do not use the “enter” key to get to the next line, just keep typing, and let the computer do the work. Please note that the references at the end of this paper are not cited in the text. This is not okay. They are there to give you examples of correct APA format for references. You must use APA citation format for all sources you use to write your paper.

You might not use this level of heading in your papers. However, consider it is to your advantage to ensure the reader, i.e., the instructor, sees the organization of your content fits the assignment criteria. Every paragraph should have at least three sentences and contain only one idea (this is not a good example of that!)

Question # 3 (if there is one – if not, delete)

Paragraphs start with an indentation using the ruler setting. Do not use spaces or the tab key. Do not use the “enter” key to get to the next line, just keep typing, and let the computer do the work. Please note that the references at the end of this paper are not cited in the text. This is not okay. They are there to give you examples of correct APA format for references. You must use APA citation format for all sources you use to write your paper.

Conclusion

Your final paragraph should provide a summary of your paper. This reminds the reader of where you took them on your road trip. It is similar to reviewing your photographs after a vacation. There should be no new information included in the conclusion.

References

Do you need help with your APA format of references? Check out http://www.calvin.edu/library/knightcite/index.php

In answering the assigned questions, please always note the following:

· Answer only the assigned question(s)

· A well-developed answer is required

· Thoughtful and thorough answers are expected

· Avoid rehashing case facts

· Make reasonable assumptions

· Don’t confuse symptoms with problems

· Make effective use of financial and other quantitative developed in the case

· Make good use of evidence developed in the case

Case Study Grading

You will be graded on the following criteria:

· Case Studies should have 500-words MINIMUM.  The best work exceeds the minimum word count above.

· Include cover page, abstract, and reference pages — these do not count towards your total word count.

· Use TWO authored outside references with all submissions (an outside reference is something in addition to our class textbook).  You must quote from this reference!.

· Utilize APA formatting at the end of your submission FOR all assignments…if you do not, you will lose points.

· Case studies must be submitted in a Microsoft Word document. 

Writing Style Expectations

The following are writing style expectations:

· Use subject headers for all papers – your reader appreciates and expects that level or organization to your work!

· No contractions & No abbreviations – if you are referring to the United States of America, write it out…do not write ‘US’ – this is not stellar academic writing.

· Use Times New Roman 12-point font, 1″ margins, double-spacing  with 0 point spacing.

· Only one citation credit allowed per sentence in this course.

· Indent the first line of each new paragraph five spaces.

· No extra blank lines inserted between sections – deliver a tight paper.

· No bullet points, alphanumeric lists, or numbered list – write formally in full sentences / paragraphs.

· Numbers one through nine within your paper should be written out

· Cover page and reference page required for ALL paper submissions

· Never use all capital letters

· Use authored references for your research to earn full points.  An authored source is simply one that is associated with a human(s) NAME.   For example, your textbook is an authored source.  The United States Census Bureau is not an authored source.  But it is fine to use as long as you ALSO use an authored reference source.

· Always include the full URL as to where you found your research online articles – never just the home page.

· Avoid wikis, blogs, tweets, videos, dictionaries, and encyclopedias as outside references – use Masters-level sources like the Journal of Marketing or the Journal of International Business – No wikis, prezis, slideshares, dictionaries, encyclopedias, videos, interviews, & podcasts allowed as references – only scholarly written sources from well-respected sources.

Be sure to use the Writing Resources (see left menu) view the “Instructor’s Writing Guide and Reminders” under “Writing Guide & Resources”.

Plan ahead and do not wait until the last minute! Upload and submit completed Case Study assignments via the associated submission link (see below) by the end of assigned week.

CASE STUDY GRADING CRITERIA

POINTS POSSIBLE

POINTS EARNED

Substance of Paper – Minimum 500-words – solid MARKETING content. Template must be used & submitted in MICROSOFT WORD document. Minus 5 points if template is not used. Subject headers required – Introduction, Question # 1, etc. & Conclusion – minus 5 points if not used for organization. Writing caliber includes spelling, grammar, etc. (SEE announcement in classroom – non-adherence to those items will be deducted here). Do not write out questions – minus 3 points if you do.

No Abstract is desired.

35

Two AUTHORED Outside Reference cited in APA format and credited within your reference page at the end of your paper. One source MUST be a peer reviewed Marketing reference – specifically from the Journal of Marketing (if you deviate from this peer-reviewed source, gain pre-approval 48-hours before the paper is due by sending the actual article to your instructor to gain approval). Minus 3 points if you do not use the Marketing Journal but have two other authored sources that are valid. Citations must be appropriately done within paper in APA FORMAT. Always provide the exact web site address for this course in your recap of references for full credit.

If reference page and citations do not match 100% – minus 10 points. Verify BEFORE you submit your paper.

No wikis, prezis, slideshares, dictionaries, encyclopedias, videos, interviews, & podcasts allowed as references – only scholarly written sources from well-respected sources.

10

APA formatted paper with cover page and reference page, Times New Roman 12 font, 1″ margins, double-spacing, etc.

5

Total Points Earned

50