Summary
The case traces the history of the struggles both companies encountered during the start-up phase of their business. During the 1990’s, India’s government opened its door to foreign investors and PepsiCo entered into India and Coca-Cola re-entered four years later. Both companies had many difficult situations to overcome and eventually had to recognize that India’s market was very different and a special knowledge, skills and local expertise was needed to be obtained if both companies wanted to succeed. Along with the adopting to the different culture, the two companies faced bad press over the pesticide content in its soft drinks. Overall, the case highlights the many challenges the two companies faced going overseas to India.
1. The political environment in India has proven to be critical to company performance for both PepsiCo and Coca-Cola India. In Coca-Cola's first entry into this market, they withdrew from India because of the policy of no foreign company could own a majority equity stake greater than 50% and the government wanted them to share their secret recipe. During this time, it is clear there is corruption in the India's government. In 1991 a new government took office which made it easier for foreign companies to do business in India. Coca-Cola re-enter the Indian market in the early 90’s becoming a major competitor of PepsiCo who had entered the Indian market in 1986. Because Coca-Cola had chosen to leave the market than re-enter it cost them time, energy and money to build the relationships again with the government officials and they were spending large amounts of money on advertising to try to win over the Pepsi’s customers.

During PepsiCo entrance into the country, they had many of their own problems. They had to deal with stringent conditions placed by the Indian government. PepsiCo had to limit their sales so they did not exceed