Jamia Millia Islamia

Centre for Management Studies

PEST ANALYSIS

FOR

STUDY OF COLA WAR BETWEEN PEPSI AND COCA-COLA PURSUED IN U.S.A., INDIA AND RUSSIA

UNDER THE GUIDENCE OF

Prof. U.M. Amin

BY

Neha Sharma

10-MIB-32

V/s

PEST analysis of the macro-environment

There are many factors in the macro-environment that will affect the decisions of the managers of any

organization. Tax changes, new laws, trade barriers, demographic change and government policy

changes are all examples of macro change. To help analyze these factors managers can categorize them

using the PESTEL model. This classification distinguishes between:

Political factors. These refer to government policy such as the degree of intervention in the

economy. What goods and services does a government want to provide? To what extent does it

believe in subsidizing firms? What are its priorities in terms of business support? Political

decisions can impact on many vital areas for business such as the education of the workforce,

the health of the nation and the quality of the infrastructure of the economy such as the road

and rail system.

Economic factors. These include interest rates, taxation changes, economic growth, inflation

and exchange rates. As you will see throughout the "Foundations of Economics" book economic

change can have a major impact on a firm's behavior. For example:

- higher interest rates may deter investment because it costs more to borrow

- a strong currency may make exporting more difficult because it may raise the price in terms of

foreign currency

- inflation may provoke higher wage demands from employees and raise costs

- higher national income growth may boost demand for a firm's products

Social factors. Changes in social trends can impact on the demand for a firm's products and the

availability and willingness of individuals to work. In the UK, for example, the population has

been ageing. This has increased the costs for firms who are committed to pension payments for

their employees because their staff is living longer. It also means some firms such as Asda have

started to recruit older employees to tap into this growing labor pool. The ageing population

also has impact on demand: for example, demand for sheltered accommodation and medicines

have increased whereas demand for toys is falling.

Technological factors: new technologies create new products and new processes. MP3

players, computer games, online gambling and high definition TVs are all new markets created

by technological advances. Online shopping, bar coding and computer aided design are all

improvements to the way we do business as a result of better technology. Technology can

reduce costs, improve quality and lead to innovation. These developments can benefit

consumers as well as the organizations providing the products.

PEST ANALYSIS FOR COCA-COLA

U.S.A

Political Variables

Non-alcoholic beverages fall within the food category under the FDA. The government plays a role within the operation of manufacturing these products in terms of regulations. There are potential fines set by the government on companies if they do not meet a standard of laws.

The following are some of the factors that could cause Coca-Cola company's actual results to differ materially from the expected results described in their underlying company's forward statement:-

Changes in laws and regulations, including changes in accounting standards, taxation requirements, (including tax rate changes, new tax laws and revised tax law interpretations) and environmental laws in domestic or foreign jurisdictions.

Many of the soda drinks apparently fell below the US Environmental Protection Agency's minimum standards for drinking water; regulations state that samples cannot test positive for E.coli bacteria. In total, 20% of soda fountains had more than the maximum recommended levels of bacteria.

Changes in the non-alcoholic business environment. These include, without limitation, competitive product and pricing pressures and their ability to gain or maintain share of sales in the global market as a result of action by competitors.

Political conditions, especially in international markets, including civil unrest, government changes and restrictions on the ability to transfer capital across borders.

Their ability to penetrate developing and emerging markets, which also depends on economic and political conditions, and how well they are able to acquire or form strategic business alliances with local bottlers and make necessary infrastructure enhancements to production facilities, distribution networks, sales equipment and technology.

Economic Variables

Before recession the U.S. economy was strong and nearly every part of it was growing and doing well. However, things changed. Most economists loosely define a recession as two consecutive quarters of contraction, or negative GDP growth.

However, because of aggressive action by the Federal Reserve and Congress it will be short and mild.

The non-alcoholic beverage industry has high sales in countries outside the U.S. According to the Standard and Poor's Industry surveys, "For major soft drink companies, there has been economic improvement in many major international markets, such as Japan, Brazil, and Germany." These markets will continue to play a major role in the success and stable growth for a majority of the non-alcoholic beverage industry.

Social Variables

Many U.S. citizens are practicing healthier lifestyles. This has affected the non-alcoholic beverage industry in that many are switching to bottled water and diet colas instead of beer and other alcoholic beverages. Also, time management has increased and is at approximately 43% of all households. The need for bottled water and other more convenient and healthy products are in important in the average day-to-day life.

Consumers from the ages of 37 to 55 are also increasingly concerned with nutrition. There is a large population of the age range known as the baby boomers. Since many are reaching an older age in life they are becoming more concerned with increasing their longevity. This will continue to affect the non-alcoholic beverage industry by increasing the demand overall and in the healthier beverages.

Technological variables

Some factors that cause company's actual results to differ materially from the expected results are as follows:

The effectiveness of company's advertising, marketing and promotional programs. The new technology of internet and television which use special effects for advertising through media. They make some products look attractive. This helps in selling of the products. This advertising makes the product attractive. This technology is being used in media to sell their products.

Introduction of cans and plastic bottles have increased sales for Coca-Cola as these are easier to carry and you can bin them once they are used.

As the technology is getting advanced there has been introduction of new machineries all the time. Due to introduction of this machineries the production of the Coca-Cola company has increased tremendously then it was few years ago.

India

Political variables:

Coca-cola India was the leading soft drink brand in India till 1977 when it left rather than revealing its formula to the government. They reentered in 1993. However the primary barrier for coca-cola's entry into the Indian market was its political environment. Despite the liberalization of the Indian economy in 1991 and introduction of the new industrial policy to eliminate barriers such as bureaucracy and regulation. There was still lot of protectionism.

India's past promotion of "indigenous availability" or "Swadeshi movement" depicted its affinity for local products. Due to India's suspicion of foreign business entering Indian markets, coca-cola received alien status its re-entry. This and some of its policies imposed on foreign enterprises proved as hindrance to the growth of the company in the country. To make things worse, the policies were neither clear nor changing.

In 2003, the centre for science and environment, an activist group in i8ndia focused on environmental sustainability issues issued a press release stating "12 major cold drink brands sold in and around Delhi contain a deadly cocktail of pesticide residues". And tests said that the level of pesticide residues was 30-36 times the global standard leading to big problem for coca-cola.

Effects of government regulations & deregulations. The government regulations are there regarding beverage industry in general and not anything in particular about coca-cola in India. Though there were several hurdles faced by coca-cola when they decided to re-enter India in 1993. For now there is neutral effect of government regulations in India on Coca-cola.

Effect of environmental protection laws if any. There are various environment protection act passed by the govt. of India for the industry and coca-cola do abide by all of these laws regarding hence having a favorable edge in this regard.

Import and export regulations. In the post liberalization period there were several restrictions put on coca-cola for importing its drink in India and selling over here due to which it left India. But after liberalization when it re-entered India the import export regulations were relaxed and now coca-cola is having a neutral environment in this regard.

Effect of political conditions in India. Though political tenure is of 5 years in India but still at times there are some political disputes leading to difficulties for companies to operate smoothly. Thus there is no real effect particularly on coca-cola in this context.

Any effect of election, military takeover, revolution etc. As all of the before said events effects the spending pattern of a person thus have a negative impact on the coca-cola.

Now I would like to conclude the above where it could be seen that there are very little chances of “political variables” to effect the coke’s production and selling behavior.

In the “political variables” most of the things are related to Governmental activities. So, they don’t leave any good or bad impact in the Industry of coke.

And there are some exceptional things like: “environmental protection laws” they somewhat effect the industry of Coke. From last two years Government is going to be really very much conscious about the environment. But after making the adjustments in plants and applying the proper way of wastage the chances of being affected by the “protection laws” are going to be diminished. So it impact good for the Coke’s reputation. And the second thing in political variables which effects Coke is “elections & military takeover” Because in the days of elections and marshal law’s condition the countries production in any field is declined. So it affects slightly the revolution of Coke.

Economic variables:

India is ranked second in economic growth just behind china. Analysts have said that India will be the biggest economy of the world in the coming years behind china and USA.

When coca-cola had growth rate of just 5% worldwide, the growth rate in India was 22% in their unit case volume.

Interest rates in India are soaring for a very long period of time which is making it difficult for business to survive in such circumstances when fuel prices and cost of raw material is rising every day. This is having very negative impact on the growth of coca-cola leading to negative growth.

Inflation is one of the main problems that Indian economy is facing now. Rising prices of food and other products doesn't only effects consumers it also has an adverse effect on a company. As prices have gone up in India for various products, especially oil, there has been uncertainty in decision making of almost every company. Coca-cola India has also been affected by the same; it has been forced to think about their input costs, as they have been rising due to inflation.

Effect of inflation. The rate of inflation is recorded as 7.65 according to customer price index and food inflation is even higher. This is having a very negative impact on the coca-cola's growth in India as India is mainly dominated by middle class which is highly influenced by inflation.

Unemployment. As it is well known that unemployment is very prevalent and when coca-cola did various things for generating employment in India it has created a favorable atmosphere for itself here in India.

The exchange rate of rupee to US dollar has been varying tremendous which in turn poses difficulty for any company in international business.

It could be seen that “economical variables” highly affects the Coke’s resolution. Economic factors are those actors who effect the production of any industry. So, Coke is not the out of question. If the economic conditions of the country is not that strong and Coke increases its Price in this situation. Then it would impact highly negative. And inflation is also not a good position for any country’s production point of view. It also impacts highly negative in the Coke’s production.

Social Variables:

Coca-cola returned to India in 1993 after a 16 year hiatus, amidst competition from leher Pepsi which had advantage of entering in the country 7 years earlier. Initially, it struggled to find acceptance as there were other brands already such as parle's thumps up which existed in the market. Coca-cola had earlier focused on the American way of life in their advisement campaigns, which the Indian consumers could not identify with. Also, they did not focus on competition from other alternatives such as lemonade, lassi etc.

however, things were brought under control when thumps up was brought under control when thumps up was brought over by coca-cola, and more attention was paid by the company on its marketing mix.

With the lowering of the lowering of the prices, introduction of newer products which appeal to the Indian tastes, more investment in market research and focusing on the target group of 18-24 year olds, they were able to increase their market share and build brand loyalty.

Coca-cola today, has made significant investments to build its business in India. It has also generated employment for almost 125000 people in related industry through its procurement, supply and distribution-cycles.

With the increase in health consciousness among customers, the company has introduced newer products such as diet coke, which contains lesser calories than ordinary coca-cola. This is also responsible for the company shifting from carbonated drinks to fruit drinks/juices and bottled water.

The rural market has also been identified by coca-cola India as an attractive target, with almost 70% of the country's population. The company has recorded significant growth in recent years in this regard.

Coca-cola India has taken many initiatives as a responsible corporate citizen, by tying up with many NGOs such as BAIF (or Bhartiya Agro Industries Foundation); SOS Children's Village and save the Children.

It has also taken initiatives to promote education in rural areas.

The advertisements of coca-cola have very deep impact on its customers like "Thanda Matlab Coca-Cola".

Technological variables

Coca-cola has started operations of its R&D facility in India, with a view of localizing its product portfolio.

The major focus would be on non-carbonated drinks and flavors. The company's R&D team has already rolled out drinks such as Maaza aam panna and also a

Maaza mango milk drink and is exploring options to enter new categories in India such as juices of localized flavors, energy drinks and flavored water. These initiatives are being taken by the company to further expand its product portfolio.

with the increasing importance of 360 degree media tools and overall ad spend on social media sets likely to grow by almost 44%, coca-cola has increased its ad-spend on the internet .

Russia:

Political environment:

New political stability, the improving economy and a rise in real incomes in Russia has boosted demand for soft drinks

Access to Large, Growing Market (150 million people)Presently 80% of Coke sales from 16 largest marketsRemaining 20% from 179 countries

Purchasing PowerPurchasing power in developing Countries e.g. Chinese spend 5%of household income on food, shelter, & transportation while Americans spend 50%

Per Capita consumption of Coke rises with purchasing powerIn Eastern Europe in early 90s consumption increase from 20 to 31 Cokes in two years. In U.S. per capita consumption is nearly 376 per year.

Russia is a federated state with a republican government. The territory of the state consists of 89 constituents of the Federation. The Head of State is the President elected for 4 years’ term.

The Federal Government regulates the soft drink industry, like any industry where the public ingests the products. The regulations vary from ensuring clean, safe products to regulating what those products can contain. For example, the

government has only approved four sweeteners that can be used in the making of a soft drink

The soft drink industry currently has had very little impact on the environment. One environmental issue of concern is that the use of plastics adversely affects the environment due to the unusually long time it takes for it to degrade. To combat this, the major competitors have lead in the recycling effort which starting with aluminum and now plastics. The only other adverse environmental impact is the plastic straps that hold the cans together in 6-packs. These straps have been blamed for the deaths of fish and mammals in both fresh and salt water.

Everything has changed in Russia over the past 25 years and political stability in the country is now one of the highest in the world, Deputy Premier Igor Sechin, said in an interview with The Wall Street Journal.

Russia has a large and well educated labor market that remains generally inexpensive by Western standards, although some categories of sought after employees command a significant premium.

However, in our consideration of its potential investment in a huge but somewhat under-developed economy such as Russia’s, cultural considerations must be heavily influenced by ethical imperatives.

Economic environment:

The general growth of the economy has had a slight positive influence on the growth of the industry. The general growth in volume for the industry, 4-5 percent, has been barely keeping up with inflation and growths on margins have been even less, only 2-3 percent

Given limited progress in containing the euro zone debt crisis, Russia are growing increasingly concerned about contagion spreading towards the wider banking sector in the region, including the Russian economy, although the strong private consumption component does make it less vulnerable to external fluctuations.

The benchmark interest rate in Russia was last reported at 8 percent. In Russia, interest rate decisions are taken by the Central Bank of the Russian Federation. The official interest rate is the refinancing rate, which is seen as a ceiling for borrowing money and a benchmark for calculating tax payments

The most well known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy. Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. The inflation rate in Russia was last reported at 3.7 percent in February of 2012.

Operations in international markets involve the study of unpredictable changes in foreign

exchange rate. The economic impacts of such movements are serious because these affect the

growth. currently, 1 USD = 29.7044 RUB

Coca-Cola is part of the fabric of Russia's economic development and they will continue to invest in Russia to create jobs and stimulate growth across our supply chain.

Social Environment:

In the post-Soviet era, the position of women in Russian society remains at least as

problematic as it was in previous decades. In both cases, a number of nominal legal protections

for women either have failed to address the existing conditions or have failed to supply

adequate support.

New political stability, the improving economy and a rise in real incomes in Russia has boosted

demand for soft drinks, with urban consumers in particular adopting Westernized lifestyles,

becoming increasingly health conscious and looking to experiment with new products and

brands.

While the health craze has left the carbonates market sluggish, manufacturers are responding

to consumer demand by focusing on natural juices, ready-to-drink teas and water.

There are a number of religions with adherents in Russia. The preamble to the 1997 law

regulating religious organizations names Christianity, Islam, Buddhism, and Judaism as

important in Russian history. Orthodox Christianity Russian is Russia's traditional and largest

religion, deemed a part of Russia's "historical heritage".

It is generally seen that customer ethnocentrism exists in Russia. Customers favor the domestic

products and products from similar cultured countries over the product of foreign countries.

Of all the languages of Russia, Russian is the only official language. 27 different languages are

considered official languages in various regions of Russia, along with Russian. There are over

100 minority languages spoken in Russia today. Coca-Cola serves approximately 141 million people by producing and distributing a unique

portfolio of quality brands, bringing passion to marketplace implementation, and demonstrating leadership in corporate social responsibility.

Population density in Russia is 8.4 people per square kilometer.

Population distribution in Russia is 74% urban, 26% rural.

Population growth rate in Russia is 0.15%.

Median age in Russia is 38.8 years (male: 36.1 years female: 41.1 years)

Sex ratio in Russia is 0.86 male(s)/female. (2009)

Technological environment:

Coca-Cola is an active member and advisor to the Committee on Environment of the Russian Chamber of Trade and Industry, and to the expert Council for Technical Regulation of the Ministry of Industry of the Russian Federation.

The production process and product innovation that determines the success or failure of any

business changes at a very rapid pace. The productivity savings will span every aspect of the business: leveraging new technologies and

processes across operations, go-to-market and information systems; heightened focus on best practice sharing across the globe; consolidating manufacturing, warehouse and sales facilities; and implementing simplified organization structures, with wider spans of control and fewer layers of management

PEST ANALYSIS OF PEPSI

U.S.A.

Political Variables:

Politics has a significant impact on the control of business, and the consumer capability of expenditures.

The following should be considered while analyzing this element:

Pepsi was first introduced as "Brad's Drink" in New Bern, North Carolina, United States, in 1898 by Caleb Bradham, who made it at his home where the drink was sold.

Speaking of political stability, it is necessary to speak about the political system of the country. According to the Constitution the US is a representative presidential democracy. Some authors believe that only by virtue of parliamentarian institutionalism is it possible to reach upward democracy.

Many of the soda drinks apparently fell below the US Environmental Protection Agency's

minimum standards for drinking water; regulations state that samples cannot test positive for

E.coli bacteria. In total, 20% of soda fountains had more than the maximum recommended levels

of bacteria

Political stability in the environment. The political environment of U.S.A. is very much stable as its

stability affects the stability of almost all countries of the world.

Influence of government policies that control the business. The manufacture, delivery, and use of

numerous Pepsi products are subject to many federal regulations, like the Food, Drug and

Cosmetic Act. The business is also governed by government and foreign rules.

Government directions regarding market ethics, and consumer protection. There is lack of

importance of ethics in U.S. but government has several laws and regulations for consumer

protection.

Government economic policies play a very important role in determining the political stability of a

country and this in turn determines the fortune of a company in any country.

Influence of government on religion and culture is also a very important and determining factor

when it comes to determining a country's political stability. And USA is known as a colorful salad

bowl when it comes to religion and culture.

Involvement of government in trade agreements also decides a company's fortune in a country

and in US there is lots of autonomy given to companies in this regard.

Laws of employment. In USA there are stringent laws of employment which the companies have to

abide by who are operating over there.

Economic Variables

Market analytics should examine the short and long term state of the business. This is particularly

important while forecasting international markets. The following are important to consider:

Rate of interest. In the United States, authority for interest rate decisions is divided between

the Board of Governors of the Federal Reserve (Board) and the Federal Open Market

Committee (FOMC). The Board decides on changes in discount rates after recommendations

submitted by one or more of the regional Federal Reserve Banks. The FOMC decides on open market

operations, including the desired levels of central bank money or the desired federal funds market

rate.

State of inflation. The most well known measures of Inflation are the CPI which measures

consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic

economy. Inflation rate refers to a general rise in prices measured against a standard level of

purchasing power. Currently it is 2.9% in US.

Per capita income of USA is $39,945 which is a handsome amount for anybody to spend so

scope of Pepsi is good in USA.

Gross Domestic Product (GDP) of USA is $14.59 Trillion US dollars at current prices - 2010.

Economic progress trend. The American economy is one of the strongest economies of the

world and hence everyone is having confidence in it.

Rate of exchange. . Operations in international markets involve the study of unpredictable

changes in foreign exchange rate. The economic impacts of such movements are serious because

these affect the growth.

Consumer confidence and its affect on aggregate demand. Pepsi is there in the market serving

people for more than a century and hence is having good market image and market share.

Production level. The products of Pepsi are influenced by the raw material yield being used in

the soft drinks, juices, etc. All distribution is affected by the cost of fuel. Pepsi is also subjected to

availability of energy, supply of money, business cycles, etc.

Research US federal and state labor laws and employment laws, and worker, workplace and

employee rights. Labor laws typically deal with employer-union relationships. Employment laws

typically deal with employer-employee relationships. But the terms are often used interchangeably

Social Variables

The social factors influence the business at various levels, and need to be carefully examined. These

factors are:

Leading religion is Christianity in USA but people of different religions coming from different

parts of the world come and reside in USA.

Attitude towards foreign goods and services. America is the country that promoted the

concept of global integration of countries along the globe so there is no problem regarding

acceptance of foreign goods.

Influence of language on use of products in the markets. The official language of USA is English

and it is the most widely used language of the world so it is having a favorable edge in this regard.

Time available with the consumers for leisure. The basic necessities of people of US are itself

the luxuries for people of the other countries hence there is enough scope for this soft drink industry

in USA.

Role of women and men in the society. Men and women both are active partners in the

American society.

Opinion of people on green issues. The US government is very much concerned about

environmental issues and has stringent rules in this regard. In this direction Pepsi also have done lot

like waste water conservation etc.

Demographics of the population of USA are very dynamic and versatile. So it is in favor of

Pepsi.

Lifestyle, education, health, fashion trends, earning capacity. Lifestyle has great influence on

the use of Pepsi products, and their advertisements are designed accordingly. Introduction of Pepsi

products in the international market requires an in depth study of the local social structure.

Technological Environment

Technology is commonly identified as an essential element of the organization since it is a useful tool

for the attainment of market advantage. Technology can be used, and this is affected by government

support. Technological advancement can produce new industries, and also provides valuable input to

service and manufacturing industries. The following are important features in this regard:

Technology permit the manufacture of products at economical rates, without compromising

quality

The technologies present original products, like mobile telephone, internet banking, the

purchase of books through internet, etc.

Modern communication channels, like Customer Relationship Management, banners, etc. is

very effectively used by Pepsi in U.S.A.

Pepsi is influenced by the modern manufacturing techniques applicable to their business

divisions of soft drinks, juices, and snack food. Pepsi has to focus on the latest distribution

techniques, and other technological advances in their industry.

India

Political environment:

In 1988, PepsiCo gained entry to India by creating a joint venture with the Punjab government-owned Punjab Agro Industrial Corporation (PAIC) and Voltas India Limited. This joint venture marketed and sold Lehar Pepsi until 1991 when the use of foreign brands was allowed; PepsiCo bought out its partners and ended the joint venture in 1994.

When it entered India in 1989, the Indian government had made it mandatory for the company to do contract farming in the country, to help farmers improve crop yield through adoption of latest agricultural technologies.

India's past promotion of "indigenous availability" or "Swadeshi Movement" depicted its affinity for local products. Due to India's suspicion of foreign business entering Indian markets, coca-cola received alien status its re-entry. This and some of its policies imposed on foreign enterprises proved as hindrance to the growth of the company in the country. To make things worse, the policies were neither clear nor changing.

PepsiCo’s India operations were met with substantial resistance in 2003 and again in 2006, when an environmental organization in New Delhi made the claim that, based on its research, it believed that the levels of pesticides in PepsiCo (along with those from rival Coca-Cola Company), exceeded a set of proposed safety standards on soft drink ingredients that had been developed by the Bureau of Indian Standards.

Effects of government regulations & deregulations. The government regulations are there regarding beverage industry in general and not anything in particular about Pepsi in India.

Economic Environment:

India is ranked second in economic growth just behind china. Analysts have said that India will be the biggest economy of the world in the coming years behind china and USA.

Interest rates in India are soaring for a very long period of time which is making it difficult for business to survive in such circumstances when fuel prices and cost of raw material is rising every day. This is having very negative impact on the growth of Pepsi’s leading to negative growth.

Inflation is one of the main problems that Indian economy is facing now. Rising prices of food and other products doesn't only effects consumers it also has an adverse effect on a company. As prices have gone up in India for various products, especially oil, there has been uncertainty in decision making of almost every company. Pepsi India has also been affected by the same; it has been forced to think about their input costs, as they have been rising due to inflation.

Effect of inflation. The rate of inflation is recorded as 7.65 according to customer price index and food inflation is even higher. This is having a very negative impact on the Pepsi's growth in India as India is mainly dominated by middle class which is highly influenced by inflation.

Unemployment. As it is well known that unemployment is very prevalent and when Pepsi did various things for generating employment in India it has created a favorable atmosphere for itself here in India.

The exchange rate of rupee to US dollar has been varying tremendous which in turn poses difficulty for any company in international business.

Government of India pegged the India’s GDP growth rate for 2011-12 at 8.2% as compared to 8.5% registered last year. Given the current adverse global circumstances and high Inflation to boot, expected growth rate of 8.2% looks quite good.

Social Environment

The most dominant religion in India today is Hinduism. About 80% of Indians are Hindus, after that it is Muslim which constitutes 12% of India. These three ancient religions, Hinduism, Buddhism and Jainism, are seen as the molders of the India philosophy.

It was found that the quality of foreign brands was perceived to be generally higher and superior to local brands. Most consumers also associated greater accessibility of foreign brands in the Indian market with better quality at lower prices. Despite high levels of nationalism and preference for indigenous manufacture, as evidenced in high factor ratings on an ethnocentrism scale, which might indicate a positive bias towards local brands, Indian consumers were not prejudiced against foreign brand names. In fact, they evaluated them higher on technology, quality, status and esteem than Indian brands, and attributed higher credibility to those countries-of-origin.

The official language of the Republic of India is Hindi with English as an additional language for official work;

Although marriage and raising a family are the roles usually associated with women in India, they are not the only options women have. There are more women doctors in India per capita than in the United States; more women members of Parliament and more women lawyers; it was India, not the United States that had a woman Prime Minister for 19 years.

The two most contested environmental issues of PepsiCo India are the quality and quantity of water extracted for its beverages, and the resulting water pollution due to the company’s industrial residue. Another challenge faced by the company is the amount of plastic use and waste generated in bottling and packaging of its products.

These variations of lifestyle are found among the people of India mainly because of its geographical diversity conditioned the entire way of life.

Technological Environment:

PepsiCo had opened an R&D centre in Punjab to develop quality seeds and evolve other related agro-based technologies.

As part of PepsiCo's commitment to have a positive impact on the environment, it is minimizing global water use through greater efficiency, innovative processes and new technologies.

Pepsi is influenced by the modern manufacturing techniques applicable to their business

divisions of soft drinks, juices, and snack food. Pepsi has to focus on the latest distribution

techniques, and other technological advances in their industry.

Modern communication channels, like Customer Relationship Management, banners, etc. are

effectively used by Pepsi in India.

Russia

Political environment:

Pepsi’s love affair with Russia dates way back to the early days of the cold war. It all started with Nikita Khrushchev taking a harmless sip of the drink at an American trade exhibition in Moscow in 1959.

Fifteen years after the 1959 Pepsi binge, the first Pepsi can was sold in the sparse grocery shelves of the USSR. Due to its horrendous price tag a Pepsi can became more of a trophy item in grocery stores rather than the mass beverage it was in the U.S.

The Federal Government regulates the soft drink industry, like any industry where the public ingests the products. The regulations vary from ensuring clean, safe products to regulating what those products can contain. For example, the government has only approved four sweeteners that can be used in the making of a soft drink

The soft drink industry currently has had very little impact on the environment. One environmental issue of concern is that the use of plastics adversely affects the environment due to the unusually long time it takes for it to degrade. To combat this, the major competitors have lead in the recycling effort which starting with aluminum and now plastics. The only other adverse environmental impact is the plastic straps that hold the cans together in 6-packs. These straps have been blamed for the deaths of fish and mammals in both fresh and salt water.

Even in the glasnost era Pepsi remained a rare delight. One would know to impress a date with a can or a western candy bar as it symbolized both sacrifice, some degree of affluence and genuine affection for the counterpart. So did a trip to McDonalds, which often topped of an exclusive date. It becomes somewhat affordable to the masses in the 1990’s.

Today Pepsi is no longer an idle shelf-item but part of one of Russia’s largest and most vibrant multinational investors. PepsiCo at large has invested $19bn in Russia, at a time been increasing amount of investors are worried with Russia’s authoritarianism and at times, its volatile political situation.

The close cooperation of both PepsiCo and the Kremlin has ensured smooth acquisitions such as PepsiCo’s deal last year in which it acquired Wimm-Bill-Dann, the Russian dairy producer for a whopping $5.4bn.

Like other countries the prices of raw materials used by Pepsi in Russia is rising day by day which a matter of great worry is for the company.

Economic environment:

Russia is the 12th largest economy in the world by nominal value today and the seventh largest by purchasing power parity.

The Russian economy is expected to become the second-largest European economy behind Germany by 2013.

Russia has outpaced global GDP growth with a 7% compound rate since 1998 and is showing strong signs of recovery from the recent global crisis with GDP up 4% this year.

Russia has a rapidly growing middle class and an increasingly affluent population – almost 300 million consumers when combined with neighboring markets – which drives growth in branded consumer goods.

Positive macroeconomic trends in Russia, including a rising GDP, low inflation and an uptick in consumer spending, has created an attractive operating environment and a consumer products market structure that allows for healthy, sustainable margins.

The general growth of the economy has had a slight positive influence on the growth of the industry. The general growth in volume for the industry, 4-5 percent, has been barely keeping up with inflation and growths on margins have been even less, only 2-3 percent

Given limited progress in containing the eurozone debt crisis, Russia are growing increasingly concerned about contagion spreading towards the wider banking sector in the region, including the Russian economy, although the strong private consumption component does make it less vulnerable to external fluctuations.

The benchmark interest rate in Russia was last reported at 8 percent. In Russia, interest rate decisions are taken by the Central Bank of the Russian Federation. The official interest rate is the refinancing rate, which is seen as a ceiling for borrowing money and a benchmark for calculating tax payments

The most well known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy. Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. The inflation rate in Russia was last reported at 3.7 percent in February of 2012.

Operations in international markets involve the study of unpredictable changes in foreign

exchange rate. The economic impacts of such movements are serious because these affect the

growth. currently, 1 USD = 29.7044 RUB

Social environment

There are a number of religions with adherents in Russia. The preamble to the 1997 law

regulating religious organizations names Christianity, Islam, Buddhism, and Judaism as

important in Russian history. Orthodox Christianity Russian is Russia's traditional and largest

religion, deemed a part of Russia's "historical heritage".

It is generally seen that customer ethnocentrism exists in Russia. Customers favor the domestic

products and products from similar cultured countries over the product of foreign countries.

Of all the languages of Russia, Russian is the only official language. 27 different languages are

considered official languages in various regions of Russia, along with Russian. There are over

100 minority languages spoken in Russia today.

In the post-Soviet era, the position of women in Russian society remains at least as

problematic as it was in previous decades. In both cases, a number of nominal legal protections

for women either have failed to address the existing conditions or have failed to supply

adequate support.

New political stability, the improving economy and a rise in real incomes in Russia has boosted

demand for soft drinks, with urban consumers in particular adopting Westernized lifestyles,

becoming increasingly health conscious and looking to experiment with new products and

brands.

While the health craze has left the carbonates market sluggish, manufacturers are responding

to consumer demand by focusing on natural juices, ready-to-drink teas and water.

Technological environment:

In Russia, Pepsi’s biggest challenge was producing soft drinks quickly enough to meet the

demands of the growing Russian market. When PBG decided to add a new plant in South

Moscow, the company had the chance to build a showcase facility.

The production process and product innovation that determines the success or failure of any

business changes at a very rapid pace.

In Russia, Pepsi’s biggest challenge was producing soft drinks quickly enough to meet the

demands of the growing Russian market. When PBG decided to add a new plant in South

Moscow, the company had the chance to build a showcase facility.

PepsiCo PepsiCo’s ability to build and sustain proper information technology infrastructure,

successfully implement its ongoing business process transformation initiative or outsource

certain functions effectively, increases its future borrowing costs.

The productivity savings will span every aspect of the business: leveraging new technologies

and processes across operations, go-to-market and information systems; heightened focus on

best practice sharing across the globe; consolidating manufacturing, warehouse and sales

facilities; and implementing simplified organization structures, with wider spans of control and

fewer layers of management.