Cross-cultural Negotiation:

The Case Study Of

PepsiCo's Entry
Into India In 1988
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 No. Full name Student ID

1 Lê Hải Yến 2011140220

2 Lê Phương Anh 2112150011

OUR GROUP
3 Lê Thị Minh Hằng 2214150613

4 Nguyễn Kiều Trang 2112150171

5 Nguyễn Minh Phương 2112150190

6 Nguyễn Thị Ngọc Diệu 2114790002

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7 Vũ Ngọc Hà 2114110099

8 Vũ Phương Duyên 2212150050

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CONTENTS
01. Theoretical framework

02. Analysis of PepsiCo’s negotiation to enter

into the India market in 1988

03. Key Takeaways

01.
Theoretical
framework What is Cross-Cultural Negotiation ?
Cross-cultural negotiation is the process of
discussing common and conflicting interests
among two or more parties of people from
different cultural backgrounds in order to
reach a mutual agreement.

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01. Hofstede’s cultural dimensions and its
importance in negotiation
Theoretical
framework

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 Power Distance Index

01.
The power distance index describes the
extent to which the less powerful

Theoretical
members of an organization or
institution — such as a family — accept

framework and expect that power is distributed

unequally

Individualism vs. Collectivism

Individualism and collectivism,
respectively, refer to the integration of
individuals into groups

Uncertainty Avoidance

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Uncertainty avoidance deals with a
society’s tolerance for uncertainty and
ambiguity
 Masculinity vs. Femininity
This dimension looks at how much a
01. society values traditional masculine and

Theoretical
feminine roles

framework Long-Term Orientation and Short-

Term Orientation
The long-term and short-term
orientation dimension refers to the
degree to which cultures encourage
delaying gratification or the material,
social, and emotional needs of their
members

Indulgence vs. Restraint

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The restraint and indulgence dimension
considers the extent and tendency of a
society to fulfill its desires
 02. Analysis of PepsiCo’s
negotiation to enter into
the India market in 1988
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Source: Hofstede Insights

for India
of culture
Hofstede's
dimensions

and the USA

Po
w
er
20
40
60

0
80

In D
di is
vi ta
du nc
al e
is
m
vs
. Co
l le
ct
iv
U is
m
nc
er
ta
in
ty
A
vo
M id
as a nc
cu e
l in
it y
India

vs
LT .
O Fe
m
r ie
nt in
at in
USA

io it y
n
vs
. ST
O
r ie
nt
In at
io
du n
lg
en
ce
vs
. R
es
tr
ai
nt
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Power Distance

INDIA USA

High power distance (77) Low power distance (40)

Hierarchy is established for convenience,

A high respect for hierarchy and top-down
with
management
accessible managers overseeing employees

A reliant attitude from employees on their Subordinates are expected to contribute to

superior to give instructions and directions the discussion
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Individualism - Collectivism

INDIA USA

Collectivism (24) Individualism (60)

Identity is found through personal rights and

A high appreciation for the overall wellbeing
achievements rather than familial or societal
of an extended family or network
ties

Working relationships are based on

expectations - Loyalty and Obedience from A heavy emphasis on personal decision and
the employees and familial protection and less reliance on authority
guidance from the Employer
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Masculinity - femininity

INDIA USA

Both

The masculine trait emphasizes earnings, recognition, advancement and eagerness for
challenges
The feminine trait prioritizing feelings of empathy towards others has its roots in the
religious belief in various deities and philosophies
Humility and abstinence are also popular and widely disseminated among the
religious practitioner

However, the United States has a slightly higher score in this dimension (56 vs 62)
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Uncertainty avoidance

INDIA USA

Low uncertainty avoidance

Imperfection is acceptable and there is flexibility in changing the previous plans

Innovative products, novel concepts, and a desire to try new things are generally
accepted, whether they are related to technology, business, or cuisine
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Short vs long-term orientation

INDIA USA

Long-term orientation Short-term orientation

Indian who has stronger beliefs in Measure performance on a short-term

karma, have larger expectations basis

Accept the existence of multiple truths Emphasize on personal happiness and

and these truths depend on the seeker convenience in the short run
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Indulgence vs Restraint

INDIA USA

Restraint Indulgence

Professional life is given more importance

There is more work-life balance
than personal life

The mainstream culture put emphasis on

Indians are usually put under a lot of self-direction, universalism and
pressure benevolence
“Work hard, play hard”
 PEPSICO’S ENTRY PROCESS INTO
THE INDIAN MARKET
Timeline
In 1980s, PepsiCo was in
need of expanding on a
global scale
Saturate
Health consciousness of
consumers: surging
Enter market aboard: less
educated people who could
be persuaded to drink Pepsi
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PEPSICO
Lucrative destination: vast
population + huge, untapped
customer base + increasing
urbanization
3 bottles
the per capita consumption
of soft drink in India
INDIA
However, Coca-Cola has also
wanted to enter the market
yet indeed been forced to
close operation and leave
India in 1977.
India government
India had a close economy
and government intervention
in the corporate sector was
quite high
BIGGEST
OBSTACLES
 A letter to PepsiCo.
"I learned that you are coming here. I am the one that threw Coca-Cola out,
and we are soon going to come back into the government. If you come into the
country, you have. to remember that the same fate awaits you as Coca-Cola.”

In 1988, the New York office of the

The letter was written by George
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President of the multi-billion cola

Fernandes (Fernandes), the General
company PepsiCo received a letter
Secretary
from India
 PepsiCo’s effort
st
1 Attempt
In May 1985, PepsiCo joined hands with one of India's leading
business houses, the R. P. Goenka (RPG) group
Import the cola concentrate and sell soft drinks under the Pepsi label
Objectives of PepsiCo's entry into India focused on "promoting and
developing the export of Indian agro-based products and introducing and
developing PepsiCo's products in the country."

Government Reject
1. The government refused to accept the provision governing the import of
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cola concentrate
2. The use of a foreign brand name (Pepsi) was not permitted under the
regulatory framework
 nd
2 Attempt
Political and social problems that plague Punjab were an
extremely sensitive issue for India

New employment opportunities would

Link its entry with the development and
tempt many of the terrorists to return to
welfare of the state
society.

Punjab boasted a healthy agriculture

Plus point
sector

Since socio-cultural and economic

Central role in bringing about an
problems of a serious nature for many
agriculture revolution
families
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SInce young people in the state had

Create many employment opportunities
become terrorists
PEPSICO’S COMMITMENTS
TO INDIA GOVERMENT

• Focus on food and agro-processing and only 25 % of the investment

would be directed towards the soft drinks business.
• Not only bring advanced food processing technology to India but
also provide a boost to the image of products made in India in
foreign markets.
• Half of the production would be exported and the export-import
ratio would be 5:1 for a period of 10 years
• Creation of jobs for 50,000 people across the nation, of which
25,000 were to be in Punjab.
• Foreign brand names would not be used.
• An agricultural research center would be established.
 RESULT
THE GOVERNMENT WAS IMPRESSED BY PEPSICO’S TERMS AND CONDITIONS

HOWEVER, DURING THE NEGOTIATION PROCESS, MANY INDIAN SOFT DRINKS

COMPANIES AND SOCIAL AND POLITICAL GROUPS STRONGLY VOICED THEIR
OPPOSITIONS TO IT

PEPSI FOODS LTD. (PEPSI) VENTURE WAS FINALLY CLEARED BY THE

GOVERNMENT IN SEPTEMBER 1988.

LAUNCHED THE SOFT DRINKS BUSINESS ADVERTISING CAMPAIGN IN 1989.

PEPSICO’S ACTION
AFTER
PENETRATION
 PEPSICO’S ACTION AFTER PENETRATION

Negotiate toward government and

Negotiate with workers in India Persuade Indians to use Pepsi
politics

Pepsi claimed that providing jobs Introducing region-specific flavors

Agreed to alter its branding strategy
would help Punjab farmers and and culturally resonant advertising
in India
subdue Sikh terrorism campaigns

25,000 jobs in Punjab and Showcased a deep understanding of Introduced a new logo, “Lehar’, =>
25,000 in other states Indian culture resonate with Indian culture

Actual number of direct employees Invested heavily in building an The management of the joint
employed by 1991 amounted to a extensive and efficient distribution venture actively engaged in public
mere 783 network lobbying efforts
REASONS FOR PEPSICO’S
NEGOTIATION STRATEGIES
WITH THE INDIAN MARKET
 ENTRY PHASE FROM
HOFSTEDE’S PERSPECTIVE:

PepsiCo actively engaged in establishing

POWER DISTANCE relationships with the Indian government
through intense lobbying efforts

PepsiCo linked their entry with the

COLLECTIVISM
development and welfare of Punjab

PepsiCo skillfully tapped into patriotic and

nationalistic sentiments in their advertising
MASCULINITY campaigns, evoking a sense of pride among
Indian consumers

PepsiCo strategically focused on making

LONG-TERM sustained commitments and demonstrated
ORIENTATION their willingness to forge enduring
partnerships with the Indian government
 POLITICAL POLICY
&
PUBLIC OPINION
ENTRY PHASE
Numerous Indian soft drinks companies, as
FROM THE OTHER well as social and political groups, strongly
expressed their opposition to PepsiCo’s
CULTURAL proposal
PepsiCo not only embraced Phillip Kotler's 4
CHARACTERISTICS P's of marketing entry but also expanded
upon them by incorporating two
OF INDIA supplementary P's: Politics and Public
Opinion
PepsiCo offered various assurances to the
Indian government, demonstrating their
sincere dedication towards the growth and
progress of the regions
 03. Key Takeaways
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From Entry process

Alignment with Development Goals

Strategic Partnerships for Market Entry
Commitment to Social Responsibility
Adaptability and Persistence
 After Penetration
Tailored Strategies
Risk Mitigation
Realistic Goal Setting
Flexibility and Adaptability
Long-term Sustainability
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 Thank You
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Cross-cultural Negotiation: The Case
Study Of Pepsi Co's Entry Into India In 1988

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 Q&A
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Cross-cultural Negotiation: The Case
Study Of Pepsi Co's Entry Into India In 1988

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