A Case Study of Coca - Cola in India

Strategic Alliances For Reentry Into Abandoned Markets:

A Case Study Of Coca- Cola In India

Dinker Raval and Bala Subramanian

INTRODUCTION

The current trend of internationalization of business and the global movement towards free trade has created an intriguing and unique trend of multinationals reentering markets which they once left or abandoned. In such reentry scenarios, strategic alliances across borders offer an attractive option to recapture former market positions.

The cases in point are those of Coca-Cola and IBM reentering the Indian market that they once left. Similar situations can be found in South Africa, which was abandoned by companies opposed to the apartheid policy, and countries, which formed the now defunct Soviet Union, which had historically excluded or expelled foreign businesses.

REVIEW OF LITERATURE

A careful review of literature in International Business and International Marketing reveals considerable work on strategic options for entering foreign markets and on the use of strategic alliances in international markets. Two prominent models, which have become a part of the strategic guidance framework for multinationals to enter foreign markets, are provided by Franklin Root (Root 1994) of the University of Pennsylvania and Warren Keegan's Product/ Communication model (Keegan 1995).

The Franklin Root Model suggests export, contractual and investment modes as entry options into foreign markets and provides a range of alternatives in each category. The Keegan model emphasizes twin criteria of product and communication variables and their variations as entry strategies in the international markets. Michael Porter has given a seminal analysis of interrelationships between competitors (Porter 1985) and a framework for strategic alliances is set forth by Bonoma and Kosnik (Bonoma and Kosnik 1990). Since the phenomenon of reentry is fairly recent, literature searches in the areas of strategic management and marketing reveal very little work with enough theoretical foundation on issues relating to reentry into abandoned markets.

DIFFERENCES BETWEEN ENTRY AND REENTRY

There are significant differences between the decisions to enter a market for the first time and reenter the same market after a time lapse. These differences are as follows:

1. The motivation for reentry is different from that of entering a foreign market for the first time. While the initial entry may be motivated by growth, expansion, profitability or similar motives, the motives for reentry may include these and some others. The reentering firm may want to overcome reasons for abandonment,