Coca Cola Case Study

COCA-COLA

CASE STUDY

Question 1 What aspects of US and Indian culture may have been a cause of Coke’s difficulties in India?

Answer:

        Coca-Cola, one of the biggest soft drink brand known worldwide, covering over half the market began its investment in India since 1997. The company faced some difficulties for being accused of using water with pesticides in 2006-2007. In its expanding of India market, Coca-Cola might be influenced by those 6 cultural conflicts, which led it surrounded by various problems.

1. Way of doing business: Ethnocentrism vs. Geocentrism

1. Ethnocentric approach

Ethnocentrism emphasizes the superiority of the home country. Bowie and Buttle (2004) summarized that best culture was applied by the host country. Foreign operations are regarded as the optional choice for the local market. Companies where ethnocentric approach oriented, the standards of performance are mainly based on the home-made products and men. India applies ethnocentrism, before 1991’s economic reform, if international companies wanted to open the door of India market, the largest part of shares must belong to India locals. Coca-Cola refused to accept the government’s requirements and pulled out India. After that, the company invested in a local Coke company named ‘Thumb Up coke’. Even though Coca-Cola returned to the India market by using its own brand name after the economy reforms came into form. The Economist Time (2012) reported that ‘Thumb Up coke’ remained the leader in the Coke segment India, governing almost half of market share in the Indian soft drinks market. Because Indian underlines the Thumb Up coke is an India Coke which is superior to Coca-Cola, the foreign one

        Geocentric Approach  

        Geocentric approach is also called a world-oriented approach. The ultimate

        goal of geocentrism is to apple the concepts not only in host country but also its         subsidiaries. According to Journal of American Business review, implementing      

the geocentric approach to their strategy is one of the key to success. Coca-Cola adopts its own country’s secret formula in drinks production, but hiring the local employees and cooperating with local supplying services in India.

The different attitudes of international marketing orientations are one of the main reasons caused trouble.

1. Individualism-Collectivism dimension

The fundamental issue addressed by individualism-collectivism dimension is the degree of members in a society maintains their interdependence. In individualism societies, there is no closely connection among members and people need to look after themselves and their immediate family members. Contract to individualism, in Collectivist societies, people belong to strong and cohesive in groups that look after them exchanging for loyalty. According to the graph demonstrated below, the United States with 91 scores in individualist is one of the most individualistic countries. India, with a score of 48, almost half of the United States, is combined with individualist and collectivist (Hofstede, 2016).