Coca-Cola's Challenges in India

This assignment analyzes Coca-Cola's business practices in India, highlighting the company's challenges in addressing social and cultural concerns. It discusses accusations against Coca-Cola regarding environmental degradation, water depletion, and negative social impact. The analysis emphasizes the importance of considering local culture and implementing sustainable practices to ensure responsible operations.

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AN OPERATIONAL PROBLEM FACED BY INTERNATIONAL FIRM
An operational problem faced by international firm A29722
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Executive Summary
This report focuses on the international operation of the Coca-Cola Company. The first part of
the report deals with the operational issues faced by the Coca-Cola Company in India. These
issues involve the competition, price wars and issues such as negative publicity. The other part of
the report involves the recommendations on strategies which the company should formulate to
succeed in the Indian consumer market. The company has the objective of gaining trust from the
population and the government. They also need to produce high products and at low prices.
Table of Contents
Executive Summary.....................................................................................................................................2
Introduction.................................................................................................................................................2
Terms of Reference.....................................................................................................................................3
The Situation...............................................................................................................................................3
Analysis of the Situation..............................................................................................................................4
SWOT Analysis of Coca-Cola Company....................................................................................................5
Strategies and solutions which can be implemented....................................................................................7
Conclusion...................................................................................................................................................9
Bibliography..............................................................................................................................................10

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Introduction
The Coca-Cola Company is considered one of the most valued brands globally dealing with non-
alcoholic beverages. It was established in the United States back in 1886 and has its operation in
more than 200 countries currently. It has managed to form partnerships with various bottling and
canning companies globally. The company has faced various changes in its business
environment in the recent years. The consumers of the beverages have become more health
conscious, and this has led to the development of new products to address the consumer needs.
These new products involve diet coke and coca cola zero. The company has managed to get
bottling businesses in various nations such as South Korea which has eased its entry into the
retail market. This has allowed the company to enter markets in countries like Japan, Malaysia,
and China. The Coca-Cola Company in the 1970s was the first beverage brand to establish its
market in India. The company was the leading beverage brand in India in 1977 but left the
country due to Foreign Exchange Regulation Act and had to return in 1993. The company has
faced various problems in its operations such as quality, exploitation of resources and market and
others such as price-quality trade-offs (SWAMINATHAN 2001). For example, the company has been
challenged by the India population for its abuse of the water resource. The company has been
accused of negatively affecting the quality and quantity of the groundwater because of the waste
products. It has also been accused of polluting the fresh and ground water and the soil in the
nearby area. It has been a problem for farmers due to the deterioration of the quality of soil and
water scarcity. Despite all the challenges the strong company brand still persuades the customers
to use its products. It can be seen that the Indian population is adopting the consumption of soft
drinks, especially the young population. It can be seen that with research and changes in its
policies, the company with being able to improve and establish its brand in Indian market
thereby enhancing its reputation and the market share ( Lothar 2008).

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Terms of Reference
As a business consultant, we have focused on the Coca-Cola Company in Indian Markets. We
have conducted surveys, and the company and the products offered. The Objective was to help
the company establish its brand reputation. The company would have a place to favorably
compete with the competitors, have a better market and product segmentation together with
better sales techniques.
The Situation
Coca-Cola Company has faced stiff competition from other refreshment companies in Indian
producing soft drinks. Due to the globalization strategy by the Indian government, it has been
easier for international companies to establish in the Indian market. The concept of globalization
has helped reduce trade barriers and minimized the risks to businesses. Despite globalization,
many international companies have issues establishing their market in India especially due to
lack of proper knowledge on market forces and the culture of the population. The Coca-Cola
Company has had issues about their reputation, brand, and the corporate social responsibility.
The current country situation has been made favorable for international companies to carry out
their operations. The Coca-Cola Company is the leading seller of soft drinks in the world, and
they have direct opportunities to gain market in India. Despite the social issues hindering its
operations, there is a good market, especially from the young Indian population. The company
should give a lot of thoughts in its culture policies since it is a determining factor in the
consumer behavior and purchasing patterns. A country like India is so skeptical on the issue of
the culture. According to Geert Hofsted cultural dimension and applying it to the Indian
population, it is easier to conclude that there is less uncertainty avoidance in India and
individuals are not accommodative of sudden changes. The uncertainty avoidance index in India

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is 50 which show that the population is sensitive and emotional towards any form of exploitation.
It responds negatively to culture invasion and therefore it is crucial to find strategies for avoiding
such issues while trying to enter the market. Given the company was founded in the United
States; the culture is different from that of the Indian Population ( Lothar 2008).
Analysis of the Situation
To understand the situation of the company and issues facing the operations, SWOT analysis is
deployed. It will uncover the strengths, weaknesses, opportunities and threats of the company.
The cultural diversity and linguistic difference hence it is an issue to determine the general
population response. The population usually value trust, value, and quality on the products and
services. It is, therefore, essential for the Coca-Cola Company to attach importance to price,
quantity, and quality. The Indian populations will most likely purchase those products at low
prices but with high quality. The company should ensure therefore not allow situations where
there will be price-quality trade-offs in its bid to establish its market in India. Below is an outline
of the SWOT analysis of Coca Cola Company which shows the strong points and weak points on
the competitors in the market (Robert and Warren 2006).
SWOT Analysis of Coca-Cola Company
Strengths
 It has a highly reputed international brand.
 It has a globally recognized brand.
 The bottling system is state-of-the-art.

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 The company has advanced technology.
 The management system in place is very efficient.
 The company has great marketing knowledge.
Weaknesses
 The company lacks vital knowledge on the Indian market.
 Uncertainty avoidance is low.
 The Indian conditions pose marketing problems.
 There have been issues with hazardous products which pose health complications.
 There are Issues with the exploitation of water and other resources in India.
Opportunities
 There is a huge market.
 There is more efficient technology.
 The Indian market is growing.
 There is a reduction of international trade barriers.
 There is the tendency of the young Indian population to adapt to the western culture.
Threats

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Threats from Substitutes: the company faces stiff competition from other competitors providing
soft drinks in India. These competitors already have established a good consumer base. The
competitor's products are of high quality and low prices (Detelin and Ivan 2005).
The company encounters price wars: the soft drinks industry is highly competitive and cases of
prices wars in not unlikely. The company has to compete with other international businesses. The
competitors include Pepsi.
Negative Publicity: The Company has been accused of issues related to issues which have
resulted in lawsuits against the Coca-Cola Company. Back in 2006, the Coca-Cola Company was
accused of using raw materials not meeting the required standards by the Centre for Science and
Environment.
There has been slow performance: A study carried out shows that weak market performance of
the Coca-Cola Company in India. The company has recorded a decrease in supply which has
negatively impacted the company revenue.
The tendency of the Indian consumers to avoid foreign products: The company is faced with the
problem of many Indians have problems with alien products. The company has the responsibility
of gaining trust through transparency in its operations.
The above is the outline of the strengths, weaknesses, opportunities and threats of the company's
operations in India. Using this SWOT analysis, it is evident that the Coca-Cola has opportunities
of exploiting the Indian Market. The Indian population has already accepted the taste hence
making it easier to enter the markets. To be successful, the company will need to formulate good
promotional techniques and public relation activities. This is due to the competitors already

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having a strong influence on the Indian consumers and also needs to deal with the socio-cultural
barrier's pressure.
Strategies and solutions which can be implemented
To better utilize the market share, the Coca-Cola Company has to earn the respect of the Indian
Community. The reliance on brand reputation and recognition are not enough for the company to
be successful in the Indian Market. The Indian population has a different approach to purchasing
behavior. It means that the company will need to formulation other branding and strategies to
promote its products to establish its consumer base in the Indian population.
Public relations
The Coca-Cola Company should ensure that they open to all stakeholders such as the general
public, media, employees, trade channels and other government agencies. There should be
transparency in communication to resolve the issues which have been identified. The Indian
population is always appreciative of a transparent approach to communication. Through good
communication, the consumer learns a lot about the company and its products. The company will
need to devise new communication strategies to which tolerate the cultural status and values of
the Indian society.
Improve the Relationship with Indian Government
The Indian government systems and procedures have issues with transparency and therefore the
company needs to foster a good relationship with the government. The Coca-Cola Company can
do this by being involved in activities initiated by the government such as charities and
development of the infrastructure. This will be helpful since the government and its people are
always appreciative of the efforts towards the development of public infrastructure. This gesture

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of good will helps in the establishment of a good reputation among the population. Some issues
such as water resource exploitation are known to be hyped by the media and to avoid negative
effect the company needs to have a good relationship with the government. To prevent the much-
unwanted situations, the Company will need to formulate and implement a corporate social
responsibility system in the country.
Initiate Marketing Campaigns
The Indian market requires a company to launch marketing campaigns to get to consumers by
creating awareness which makes easier to sell the products. The Indian population with always
choose a product which is of high quality and at a low cost (Hofstede 2001).
The company should listen to the customers
Strategies such as surveys and feedback systems should be initiated to learn what the consumers
want and their perception of the product and the company. This will provide information on what
the company can do better to provide better quality services at low price. The consumers will
always come back if the company creates a feeling value and consideration.
The Management Style
The quality of management is always determined by the management style and its efficiency.
Many international companies such as Coca-Cola have various management styles, but they need
to use a style which is designed for the specific country due to the cultural and social aspect. If
the company uses a management style which is not local, there might be the development of
issues with the local staff. A good management style will help in the provision of high-quality
products and will help in maintaining a good relationship with the employees.

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Avoid strategy of price-quality trade-off plans
The Indian population is known to follow products with high quality but low prices. This means
that the society is not a good place apply price-quality trade-off strategy. The consumer's
population in India is sensitive to quality trade-offs, and this means that they can consider high-
quality products despite having high prices.
Conclusion
It is evident that Coca-Cola has issues considering the social and cultural trends in the Indian
society. This has been seen due to the accusations of operating against the environment and
negatively exploiting the environment. The society claims that the company is using large
quantities of fresh water even in situations of water crisis among the population. The company
wastes have been degrading fresh water and land. The population is indirectly being affected by
this issues especially those who live next to the production product. Considering all issues the
company should highly consider the culture of the society when doing further development.
From the case analysis and recommendations, it evident that there is India provides a stable and
favorable environment for the business. The environmental issue is the one which is problematic
and therefore there should be a team monitoring the corporate social responsibility (Detelin and
Ivan 2005).

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Bibliography
SWAMINATHAN S ANKLESARIA AIYAR, 2001. What makes MNCs quit India. The Times of India, Published
on: 4th November 2001, [online] Available at:
http://timesofindia.indiatimes.com/business/india-business/What-makes-MNCs-quit-India/
articleshow/1602986123.cms Accessed on: 26th November 2016
Lothar Katz, 2008. Negotiating International Business – India. [online] Available at:
http://www.globalnegotiationresources.com/cou/India.pdf Accessed on: 26th November 2016
Detelin S. Elenkov and Ivan M. Manev, 2005. Top Management Leadership and Influence on Innovation:
The Role of Sociocultural Context. Journal of Management, Vol. 31 No. 3, pp. 381-402
Robert, Tannenbaum and Warren H. Schmidt 2006. The continuum of Leadership Behavior. [online]
Available at: http://www.stewart-associates.co.uk/leadership-models.aspx Accessed on: 26th
November 2016
Hofstede, G., 2001. Culture’s consequences: Comparing values, behaviors, institutions, and
organizations across nations. Thousand Oaks, CA: Sage.
Geert Hofstede, Cultural Dimensions of India, [online] Available
at:http://www.geert-hofstede.com/hofstede_india.shtmlAccessed on:26th November 2016
Casestudy.co.in, New Coke: A Classic Brand Failure, [online] Available at:
http://casestudy.co.in/wp-content/uploads/2009/11/Classic_Failure_Coke.pdf Accessed on:
26th November 2016