Topic > Pepsico Vs Nestlé Case Study - 681

INTRODUCTIONCompare the distribution decisions of multinational companies PepsiCo and Nestlé in India. In particular, conduct research and identify significant cultural issues that would be relevant to the development of such strategies. PepsiCo and Nestlé are two similar types of organizations in that they both produce consumer goods that are not considered basic goods. Although PepsiCo primarily produces soft drinks, Nestlé produces thousands of types of snacks, candies, and chocolate, as well as owning thousands of brands that produce everyday items. Both organizations saw the untapped market potential available in India. India has a large untapped population estimated at over 1.27 billion people, but both organizations have delayed introducing their products into the country (Population, 2014). When both companies attempted to enter the market, they adopted different strategies with common goals. PEPSICO'S ENTRYPepsiCo attempted to enter the Indian market through a classic strategy, bringing jobs to the region. During the 1980s, per capita consumption of soft drinks in India was only three bottles per year (Saylor, 2011). In May 1985, PepsiCo joined forces with one of India's leading corporate strategists, R.P. Goenka Group, to begin operations. The organization planned to import cola concentrate and sell drinks under the Pepsi label. To make this opportunity attractive to the Indian government, PepsiCo has offered to help India export juice concentrates across the country. The Indian government rejected this offer from PepsiCo because it did not like Pepsi importing its cola concentrate, as well as the use of foreign branding. PepsiCo has abandoned its membership locations across the nation into a distribution network. Nestlé has opened up to using local farmers' milk to produce goods. Unlike the government, Nestlé paid farmers immediately, giving them an incentive to produce more milk and increase their production. COMPARISON Nestle and PepsiCo, although different brands and using different entry strategies, both realized that to be welcomed into the new emerging market of India they needed to embrace the local culture and understand how they could help the nation achieve common goals. Both of India's cultural problems initially made them struggle to achieve these goals, as Nestlé is a profit-oriented organization. Once Nestlé and PepsiCo realized that India was less concerned about profits and more concerned about socio-political issues, they were able to find a middle ground to succeed in the market..