Pepsico Vs Nestle Case Study

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INTRODUCTION
Compare and contrast the distribution decisions of multinational corporations PepsiCo and Nestlé in India. In particular conduct research and identify significant cultural issues that would be relevant to the development of those strategies.
PepsiCo and Nestle are two similar types of organizations in that they both produce consumables that are not deemed a basic commodity. Although PepsiCo makes primarily a soft drink beverage, Nestle produces thousands of types of snack foods, candy, and chocolate, as well as owning thousands of brands that produce every day items. Both organizations saw the untapped market potential available in India. India has a vast untapped population estimated at over 1.27 billion people, yet both organizations had been delayed in introducing their products to the country (Population, 2014). As both companies attempted to enter the market, they adopted different strategies with common goals.
PEPSICO ENTRY
PepsiCo attempted to enter the Indian market through a classic strategy, by bringing jobs to the region. During the 1980’s, the 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 the leading business strategists in India, the R.P. Goenka group, to begin operations. The organization planned to import the cola concentrate and sell drinks under the Pepsi label. To make this opportunity attractive to the Indian government, PepsiCo offered to help India export juice concentrate throughout its country. The Indian government rejected this offer from PepsiCo on the grounds that they didn’t like Pepsi importing their cola concentrate, as well as the use of the foreign brand. PepsiCo dropped its assoc...

... middle of paper ...

...ehouses around the nation in a network of distribution. Nestle opened itself to using milk from local farmers in order to produce goods. Unlike the government, Nestle paid the farmers immediately, giving them an incentive to produce more milk and increase their own production.
COMPARISON
Nestle and PepsiCo, although different brands and utilizing different entry strategies, both realized that in order to be welcomed to the new emerging market of India they needed to embrace local culture and realize how they could help the nation meet common goals. He cultural issues of India both had them initially struggling to meet these goals, as Nestle is a profit oriented organization. Once Nestle and PepsiCo realized that India was less worried about profits and more worried about Socio-political issues, they were able to meet a middle ground of succeeding in the market.

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