...Case Study – Coke in India Adapted by Lesley Fleischman from: Hills, Jonathan and Welford, Richard. Corporate Social Responsibility and Environmental Management. 12, 168–177 (2005) August 2003 • • • • • October 2003 • • Coke has 44 wholly owned and franchise owned bottling plants in India Indian NGO finds that Coke and Pepsi products bottled in India contain pesticides. Immediate impact on Coke stock price. Coke threatened legal action over allegations. Indian government tests confirm findings. Coke hires PR firm, develops strategy to deflect media attention away Escalating community protests at bottling plants, demonstrations, hunger strikes, etc. December 2003 February 2004 March 2004 • • • • • • • • June 2004 • • • September 2004 • • October 2004 • • • February 2005 • • April 2005 • • May 2005 • • Ordered by Indian court to stop drawing groundwater for its bottling plant in Plachimada, Kerala Judge ruled that no power to allow a private party to extract such a huge quantity of groundwater Protesters claim that Coke water use was reducing agricultural yields Coke cited lack of rainfall, not their operations, as cause of crop declines Parliamentary committee finds high amounts of pesticide residue in Coke and Pepsi products bottled in India Not illegal, Indian safety standards weak Coke application for new bottling plant in Plachimada denied by local authorities because...
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...promotion and advertising strategies to hopefully win back and gain new customers. 2. How would you evaluate the crisis? On a scale from 1-10 ten being the worst I would say it’s about an 8. No company that is involved in the food and beverage industry she be able to get away with what Coca-Cola did. Findings and statistics don’t lie, so on paper it seems as though Coca-Cola was purposefully taking advantage of the less enforced rules and regulations that they had to follow in India, most likely to save a couple of bucks though it was not violating any laws. 3. How well prepared was Coke India to deal with the CSE’s allegations? In terms of the amount of time it took them to respond to the media I think they did a great job. They denied the allegations and also made a promise to show data that proves the safety of their manufacturing and products. Both Coke and Pepsi attacked the CSE by questioning their credibility. Coke India also threatened legal action against the CSE which made it look as if Coke had the upper hand. 4. What is your recommendation for Coke’s communication strategy? Who are the key constituents? If I were Gupta I would continue handling the situation as he did right from the beginning. By questioning the credibility of the CSE and showing the public findings that their products are safe and made in a...
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...“Coke and Pepsi learn to compete in India” case 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 political arena have been handled better by each company? A/ The Indian government was unfriendly to foreign investors, because outside investment was only allowed in high-tech sector and the remaining industries were discriminated. In addition, the “Principle of indigenous available” played a major role in the political environment by forbidding imports of items that could be produced within the country. On the other hand, Indian laws required that Pepsi entered the market under “Lehar Pepsi” name and Coca-cola had to join Parle to became into “Coca-cola India” They could foresee the level of corruption that is present in India, and reduce the difficulties that they faced after entering the market. However, the contamination issue couldn’t have been anticipated, but they shouldn’t have stayed quiet during the legal process because it is taken as a sign of guilt, according to Indian culture. 2. Timing of entry into the Indian market brought different results for PepsiCo and Coca- Cola India. What benefits or disadvantages accrued as a result of earlier or later market entry? A/ Pepsi entered a few years before than...
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...Coca-Cola India Teaching Notes Introduction The Coca-Cola India case offers students a unique opportunity to look inside a crisis for one of the world’s most important brands as it occurs inside a developing nation. The case focuses specifically on issues related to brand, reputation, and Corporate Social Responsibility (CSR), and the intersection of all three. History reveals that companies with the strongest brands, most proactive policies of social responsibility, and deepest relationships with their consumers are the most attractive targets for NGO attacks. The very assets that define these leading companies provide the fodder NGOs are looking for to further their agendas. Global Exchange’s attacks on Starbucks over fair-trade coffee and against Nike over sweatshops in Asia, like the Center for Science and Environment’s (CSE) attack on Coca-Cola India, are all examples of NGOs using companies’ powerful reputations against them. Being an attractive target, however, need not imply vulnerability. Organizations and their leadership teams need to start thinking systematically, proactively, and strategically about their reputational risk from crises concerning CSR (corporate social responsibility) and take actions to mitigate these risks before they become reality. The CSE’s allegations of pesticide-contaminated Coke and Coca-Cola India’s response provide an important example of the world’s most important brand under attack and the steps taken in the aftermath...
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...COKE CASE STUDY: ISSUES IN THE GLOBAL SECTOR BY COREY J. GRIFFIN Coke is a major product brand that has grown from 1886 to becoming the number 1 brand in the world according to Interbrand’s Global Scorecard in 2003. All this success has not come with a little hardship, due to the fact that Coke is a global brand. Just as it was seen in the Nike case study, when a company becomes globalized it is hard to monitor and maintain every sector of the product name. On August 5, 2003 the CSE (Center for Science and Environment) released a critical press release that name 12 soft drinks brands, Coke brand included, that were sold in and around Delhi to have contain a deadly pesticide residues (CSE Press Release, “Hard Truths about Soft Drinks, 5 Aug 2003). CSE claimed that these dangerous pesticides were known to cause cancer, cause failure of the nervous and reproductive systems, birth defects, and damage to the immune system. Along with the hazardous chemicals found by CSE, there were very limited regulations in place for this industry to follow. These soft drink companies were receiving exemptions for the industrial licensing under the Industries (Development and Regulation) Act of 1951 that would have probably had a chance to take notice to these soft drink contamination events (CSE Press Release, 5 Aug 2003). In response to these very strong allegations from the Center for Science and Environment, Coke Enterprise of India launched their own internal investigation...
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...6/27/16 Pepsi Case Write Up Being indian myself, it is pretty interesting analyzing the pepsi case and their situation. After reading through the case, one thing stuck out to me the most and that is that Coke is like an older brother to Pepsi. I say this because Coke had made the bold move to push for international expansion earlier than Pepsi, who followed shortly after in Coke’s footsteps because of the sales potential it saw from what Coke was doing. Not only that, Coke over the years began to invest more heavily in advertising as they realized branding played a huge part in the consumers decision of what soft drink to buy, for which shortly after Pepsi began to take advertising more seriously as well after seeing Coke’s success. What ever way you look at the case, it’ll seem like Coke is always just one step ahead in the game. Coke is the best at its game, what Pepsi needs to ask itself is what can they be the best at! Because their only going to trail behind Coke if they don’t take a risk and make a bold move of their own! I believe that bold move can very well be reaching the full potential of their expansion into india. With the CEO of the company being Indra Nooyi an indian, she is someone who is familiar and knowledgeable about India which is a good thing for a company trying to expand its operations into that country because she would be able to handle obstacles and local issues of the country more effectively and efficiently than Coke because of her ...
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...Coca-Cola India On August 20, 2003 Sanjiv Gupta, President and CEO of Coca-Cola India, sat in his office contemplating the events of the last two weeks and debating his next move. Sales had dropped by 30-40%1 in only two weeks on the heels of a 75% five-year growth trajectory and 25-30%2 year-to-date growth. Many leading clubs, retailers, restaurants, and college campuses across the country had stopped selling Coca-Cola3 and only six weeks into his new role as CEO, Gupta was embroiled in a crisis that threatened the momentum gained from a highly successful two-year marketing campaign that had given Coca-Cola market leadership over Pepsi. On August 5th, The Center for Science and Environment (CSE), an activist group in India focused on environmental sustainability issues (specifically the effects of industrialization and economic growth) issued a press release stating: "12 major cold drink brands sold in and around Delhi contain a deadly cocktail of pesticide residues" (See Exhibit 1). According to tests conducted by the Pollution Monitoring Laboratory (PML) of the CSE from April to August, three samples of twelve PepsiCo and Coca-Cola brands from across the city were found to contain pesticide residues surpassing global standards by 30-36 times including lindane, DDT, malathion and chlorpyrifos (See Exhibit 2). These four pesticides were known to cause cancer, damage to the nervous and reproductive systems, birth defects, and severe disruption of the immune system.4 In reaction...
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...Coca-Cola India On August 5th, 2003 the Center for Science and Environment (CSE) issued a press release titled “Hard Truths about Soft Drinks”. Tests conducted by CSE at the Pollution Monitoring Laboratory (PML) found concerning amounts of pesticide residue in all twelve major brands of cold beverages sold in and around Delhi. Behind Tokyo, Delhi is the second largest agglomeration in the world with 23 million inhabitants2. Immediate reaction to CSE’s report on soft drinks ranged from the Indian government banning Coke (and Pepsi) products in Parliament cafeterias to widespread mistrust of the Coca-Cola India brand. Within weeks sales dropped by 30-40% and within months Coke’s stock dipped 10 percent on the NYSE1. While CSE’s report has resulted in declining sales, employee morale issues and a negative public brand perception more importantly the insecticides CSE identified are known to cause cancer, birth defects and inflict severe damage to the nervous, immune and reproductive systems. These possible health risks linked to product consumption is the single most significant ethical issue facing Coca-Cola India today. As you requested, I present the following three strategies to assist in the successful rebuilding of the Coca-Cola India brand. The objectives of each strategy are clear; sway public opinion to identify with Coca-Cola India’s dedication to offering the highest standards of social responsibility. The first approach suggests returning to Coke-Cola...
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...2. IDENTIFY STRATEGIC QUESTIONS FACING COCA-COLA INDIA. (FIVE AT THE MOST) The Coca Cola Company (Coca- cola) is a leading manufacturer, distributor and marketer of Non-alcoholic beverages concentrates and syrups, in the world the company owns licenses of more than 400 brands, including diets and light beverages, water, juice and juice drinks, teas, coffees, and energy and sports drinks. The company operates in more than 200 countries. Ever since, Coca-Cola India has made significant investments to build and continually consolidate its business in the country, including new production facilities, waste water treatment plants, distribution systems, and marketing channels. Coca-Cola India is among the country’s top international investors, having invested more than US$ 1 billion in India in the first decade, and further pledged another US$100 million in 2003 for its operations. However due to certain strategic problems, Coca-cola India had to face certain tough competition with PepsiCo. India. In this segment, we try to discuss the strategic questions facing Coca-cola India. WEAKNESSES • Low Export levels: The brands produced by the company are the brands produced worldwide. In India, major controversies lie regarding the quality of the drink available to consumers, thus decreasing the export levels in the country. • Smaller Scale Sector Reservations Limit Ability To Invest and Achieve Economies Of Scale: the company’s operations are carried out on small scale and due...
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...Case Analysis: (10 cases during the semester) a. Understanding the case b. All relevant issues India Low purchase power among buyers Low Consumption pre person in rural areas Low product coverage Low interest in soda consumption Low appeal of there 300ml Higher preference for replacement goods (tea, coffee, mixed fruit drinks) Low brand trust (not directly mentioned in case there was a govt ban ) China No issues dealing with pricing Usa Stale market Stagnat sales Heavy competition with pepsi Stale consumer demand Price decrimination No room for open expantion without direct competition High margins on concentrate allows for price undercutting c. Relationships among important issues India The low purchase power of the byers (make about 100 Rs a day) causes the people to view the 300ml (@10 Rs) and above as to expensive. The higher price and decreased brand trust caused lower consumption among lower income in rural areas. This lower consumption caused many store front to remove or not carry the brand. China No pricing issues so no relationships Usa The stale state of the market has eased sales growth and consumer demand. The Intense rivalry between pepsi cause wars on price suppliers spokespeople retail space and consumer interest. d. Relationships of case issues to aim of the company Indian The low income of India B and low interest in...
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...The case study prepared by Archie B. Carroll entitled, “Coke and Pepsi in India: Issues, Ethics, and Crisis Management”, describes issues two major, well known multinational corporations (MNCs) have been facing in India over the past several years, since 2003. Coke and Pepsi are known competitors in the world of soft drinks, but have become allies given the situations they are facing in India. There are allegations of highly contaminated soft drinks, which claim to cause cancer and birth defects. An interest group in India, Center for Science and Environment (CSE) made the allegations and stated tests can verify the products contain high levels of pesticide residue (Carroll & Buchholtz, 2012, p. 649). Another special interest group, India Resource Center (IRC) raised concerns of an issue Coke experienced which is the claim of overconsumption and pollution of scarce water resources due to plant operations and production. This affected many cities and regions of the country, especially in the communities of Kerala and Mehdiganj (Carroll & Buchholtz, 2012, p. 649). In addition to the scarcity of water, there were also complaints of the water around the soft drink giant’s plants tasting and smelling bad. Donated waste to farmers for fertilizer tested positive for cadmium and lead creating toxic waste (Carroll & Buchholtz, 2012, p. 649). The allegations made by these groups were taken very seriously and believed valid because of the support of a very powerful and influential...
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...Coca-Cola India On August 20, 2003 Sanjiv Gupta, President and CEO of Coca-Cola India, sat in his office contemplating the events of the last two weeks and debating his next move. Sales had dropped by 30-40% 1 in only two weeks on the heels of a 75% five-year growth trajectory and 25-30% 2 year-to-date growth. Many leading clubs, retailers, restaurants, and college campuses across the country had stopped selling Coca-Cola 3 and only six weeks into his new role as CEO, Gupta was embroiled in a crisis that threatened the momentum gained from a highly successful two-year marketing campaign that had given Coca-Cola market leadership over Pepsi. On August 5th, The Center for Science and Environment (CSE), an activist group in India focused on environmental sustainability issues (specifically the effects of industrialization and economic growth) issued a press release stating: "12 major cold drink brands sold in and around Delhi contain a deadly cocktail of pesticide residues" (See Exhibit 1). According to tests conducted by the Pollution Monitoring Laboratory (PML) of the CSE from April to August, three samples of twelve PepsiCo and Coca-Cola brands from across the city were found to contain pesticide residues surpassing global standards by 30-36 times including lindane, DDT, malathion and chlorpyrifos (See Exhibit 2). These four pesticides were known to cause cancer, damage to the nervous and reproductive systems, birth defects, and severe disruption of the immune system. 4 In reaction...
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...Coke and Pepsi Learn to Compete In India. Summary of the case The case of Coke and Pepsi in India is a lesson that all marketers can observe, analyze and learn from, since it involves so many marketing aspects that are essential for all marketers to take into consideration. Both companies had many difficulties, especially Coca-Cola, and it's useful to observe how it dealt with the different aspects, stating from the political environment of the Indian market and the trade barriers it faced, going through the market entry and penetration strategies considered and the flexible marketing mix used and how it was placed to increase consumption and market share, ending with the change in the environment and market due to boycott campaigns for different reasons. Discussion Political environment and trade barriers: Until the early 1990s, India was considered unfriendly to foreign investors, especially in consumer goods sector. If an item could be obtained within the country, imports of similar items were forbidden. Due to this environment, Coca-Cola had withdrawn from the Indian market in 1977. Looking back at Coca-Cola's withdrawal we can notice: Coke's refusal to give the formula and withdraw from the market wasn't a clever decision, because as a big company, coke must expect to face many challenges. It should have believed in it marketing capabilities and its ability to position its brand as a unique one, different from others even if they claim they are...
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...Summary of the Case On august 20, 2003 Sanjiv Gupta only six week in his new role as CEO of Coke India found himself in a contemplating event of sale drop 30-40% in two weeks. This crisis for the company took place just after the momentum gained from a highly successful two-year marketing campaign that had given Coca-Cola market leadership over Pepsi. This scenario takes back to august 5th when The Center for Science and Environment (CSE), an activist group in India focused on environmental sustainability issues press release stating: "12 major cold drink brands sold in and around Delhi contain a deadly cocktail of pesticide residues" According to PML (Pollution Monitoring Laboratory) of CSE from three sample of Pepsi and Coke found to contain pesticide residues surpassing global standards by 30-36 times including Toxic chemicals from which human body could suffer from cancer, damage to the nervous and reproductive systems, birth defects, and severe disruption of the immune system. In reaction the Govt. banned Coke and Pepsi products and took series of actions against them. As a result Coca-Cola Bottling Company lost its sock prices in New York in the six sessions following the August 5 disclosure, as did shares of Coca-Cola Enterprises (CCA). As a response to the problem immediately both Coke and Pepsi called the CSE allegations “baseless” and questioned the method of testing but the CSE claimed it had followed standard procedures documented by the US...
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...Case 1-3 1. gfrfg • India forced coke to sell 49% of its equity to india investor in 2002 Coke asked for a second extension that would delay it until 2007 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 FIPB • Probably not • Coke could of agreed to start new bottling plants instead of buying out Parle, and thus wouldn’t of had agree to sell 49% of their equity 2. Sđâsdet Earlier(Pepsi) Were forced to change their name to Lehar Pepsi Their soft drink sales to less than 25% of total sales Struggled to fight off local competiton Later(Coca) Denied entry until 1993 because Pepsi was already there Harder to establish market share with Pepsi there The beverage market was itself growing consistently from year to year. 3. Sđâsdư • Product Policies Catering to Indian tastes: entering with products close to those already available in Indian such as colas, fruit drinks, carbonated water. Waiting to introduce American type drinks: Coca-Cola introducing Sprite recently Introducing new products: bottled water • Promotional Activities Both advertise and use promotional material at Navartri: Pepsi gives away premium rice and candy with pepsi. Coca offer free passes, Coke...
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