Site Loader

 

 

AM905001
Cross-cultural Management

Assessment 2 –
Report

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

“Cross-cultural
Management Issue”

On Coca-Cola Company (INDIA)

 

Submitted To- Dr. Lewis Tennant

Submitted By- Kajal Verma

Student Id- 1000043155

 

EXECUTIVE SUMMARY

We all live in a world which consists of
different religions, castes, values, ethics and customs. There are number of
human beings who follow different languages, style, thinking, attitudes etc.
but it is important to that every individual must respect every one’s culture. This
is report which provides a information that how cultural differences affect the
business and also the country in which these issues take place. In this report,
we are discussing about the case held between the Coca-Cola Company and its
working in India. The company was protested by the local people of India as
they were destroying the natural water of the country and also having a various
socio-cultural impacts on the country. Due to these reasons, the company was
affected a lot and it has to face certain challenges to sustain in India.

As India is very traditional country and
the individuals of India preferred to drink their traditional drinks as long as
Coca-Cola was not in too demand. This case gives the detailed information about
the origin of Coca-Cola in India and how they started their work. However,
Coca-Cola has to left India once due to some foreign exchange issues which are
explained below but after some time they make a came back in India. After
coming back, they face number of issues which affects the brand image as well
as their financial position. Furthermore, the case describes the major reasons
of failure of this company and these also include political issues. Farmers
were mostly affected by this company. The plant of Coca-Cola was using the natural
water more than the permit given to them which results in scarcity of water for
farmers in agriculture. The in-depth information about this case has been
explained below. 

 

 

 

TABLE OF CONTENTS
INTRODUCTION AND
AIMS- 4
DISCUSSION- 5
ANALYSIS. 7
RECOMMENDATIONS- 9
CONCLUSION- 10
REFERENCES. 12
 

 

INTRODUCTION AND AIMS-

Cross-Cultural management seeks to know
how different management practices are affected by the national cultures and
also to understand the similarities and differences among these cultures which
help in improving the effectiveness of global management (Cross-cultural managment , 2012).

In this report, the cross-cultural issues
of Coca-Cola Company in India have been described. Coco-Cola is one of the most
leading beverage corporation which was founded in 1886 and having its headquarters
in Atlanta, Georgia. It has been ranked in the list of top multicultural
business organizations and globally No.1 provider of sparkling drinks, juices,
ready-to-drink coffees etc. Coca-Cola is not serving its products only in US
but is a global company working worldwide. It is operating more than 200
countries worldwide across the 5 operating regions (Who we are, 2017) (History, 2012).

In India it was came in 1956 and at that time
India was not having any foreign exchange act. Whereas, Coca-Cola operated its
money under 100% foreign equity but when the foreign exchange act was
implemented, they stated that 40% equity must be invested by foreign companies.
When the Janata Party came into existence they pressurized Coca-Cola to either
accept the foreign exchange act or just leave the country. After that Coca-Cola
left India in 1977. Moreover, Coca-Cola Company was re-launched in 1993 by
re-entering India by its wholly owned subsidiary i.e. Coca-Cola Private Limited
and Jayadev Raja was the first CEO of Coca-Cola India (History of Coca-Cola in India, 2007).

AIMS OF THE REPORT-

·        
This
report includes number of cultural issues and their impacts which are faced by
the Coca-Cola Company in India.

·        
It
aims to understand how different nations and their culture affect positively or
negatively in business corporations.

·        
Coca-Cola
is the leading company and yet it has to face certain problems in India as
India carries a different culture as compared to US and due to these cultural
differences Coca-Cola is always in headlines.

·        
With
the help of this report, we can analyze that how and why different businesses
are fail and went to loss just because of cross-cultural management.

DISCUSSION-

There are number of business organization
that is working in foreign countries and it is important for them to understand
the cultures of that nation in which they want to work. As per Pukthuanthog and Walker, it is necessary
for everyone to be aware and responsive to that nation’s culture where someone
is planning to work. Worldwide markets might be fruitful when they understand
and meet people’s high expectations regarding their society. To understand the
impact of culture on the general population, a worldwide marketer would take a
look at intricacies of cross-culture through various speculations and models
that clarify social impacts, customer needs and conduct which lead to create
techniques to investigate buyers and consumers across cultures.

As Coca-Cola is one of the leading soft drink
Company working worldwide but still it has to face certain socio cultural
barriers. It was the first international soft drink brand which entered on
India but it has to leave the country due to issues made by Foreign Exchange
Regulations Act. Number of problems was faced by Coca-Cola in India regard to
its quality, resource exploitation and also market manipulation etc. Following
are some important issues which are faced by the Coca-Cola in India-

Ø  It has been also shown in news that numerous
protests occurred to force the working of Coca-Cola bottling factory in Northern
Province of Uttar Pradesh (India) as the plant was using groundwater more than
their limits and also polluting the environment. This problem was mostly faced
by the farmers. Farmers were facing issue of scarcity of water especially for
agriculture. In India farmers are given a very special place as they are the
food providers. So with the number of dramatic protests of local farmers the
bottling factory was ordered to stop its operations (Coca-Cola forced to close India
bottling factory over excessive water use, pollution, 2014).

Ø  Same problem was also occurred in Kerala and a
case study on that was also made. As per the reports, in the year 1999, the
company built up a plant in Plachimada, in the Palakkad area of Kerala,
southern India. The Village Council gave a permit to the organization to
initiate generation in 2000. Coca-Cola drew around 510,000 liters of water
every day from open wells. For each 3.75 liters of water utilized by the plant,
it delivered one liter of item and there was wastage of water. Complaint was
made by the people that water contamination and extraordinary water
deficiencies were jeopardizing their lives. Moreover, in 2003, ladies from the
Vijayanagaram Colony in the town of Plachimada dissented that their wells had become
scarce in light of the over-misuse of groundwater assets by the Coca-cola plant
which results them to walk about five kilometers twice daily to get water. Not
long after the occurrence, the Center for Science and Environment (CSE), a
Delhi-based natural NGO, discharged a report demonstrating the nearness of
pesticides, incredibly surpassing European measures, in twelve mainstream
drinks sold under the brand names of the Coca-Cola Company and PepsiCo (Case against Coca-Cola Kerala State: India)

Ø  Whereas, at company’s investor’s day conference
in Atlanta John Murphy, president of Asia Pacific Group OF Coca-Cola stated
that India is “a different story” and Coca-Cola is leading company but still it
has been not able to crack the section of Indian market also with some brands
such as Maaza, Sprite and Thumps up. “We have tried so
many times in my time in the Coca-Cola system to crack the code there and we
haven’t done it. We have got a team of pretty smart people who want to have the
legacy to be the first to do so,” he said
(Coca-Cola is yet to crack the code in Indian market: John Murphy, 2017)

Ø    Coco-Cola
also faced a competition with traditional refreshment drinks which were
preferred more and even today these are very popular such as lemon water, green
coconut water, tea, fruit juices and lassie etc. Also the prices of these
drinks are comparatively low as compared to fizzy drinks.

Complex issues encompass
multinationals working in a nation, for example, India. In light of this, Coca-Cola
has obviously thought about a phoenix-styled restoration of its notoriety and
item deals with the formation of a consultative board. The board, shaped in
December, involves a portion of the nation’s driving experts in the fields of
financial aspects, law and industry, working under the chairmanship of previous
bureau secretary Naresh Chandra. The gathering held its initially meeting on
December 16 and is relied upon to assemble three to four times each year, both
to survey the organization’s execution in India and guide it on a scope of
issues, including approach plan, operational and ecological issues, corporate
citizenship, social duty and corporate administration. The initially meeting
landed at the choice to frame an Indian ecological board, which will be going
by previous boss equity B N Kirpal. Furthermore, these important cultural and
environment issues are also impacting the parent company as well. Protestors
yelled outside the annual general meeting of company on 19 April, 2006 and
showing banners carrying a message “Coca-Cola stop De-Hydrating the world and
stop destroying our Lives, Livelihoods and Communities”

ANALYSIS

Mr. Kent started his essay with an amazing
description of India “If you come to India with some grand, predetermined strategy or
master plan, prepare to be distracted, deterred, and even demoralized.” India is a country which
carries a mix culture and certain values and ethics. People who live here
belong to different religions, caste, categories etc. Due to different
perceptions and values there has been an extraordinary rivalry between refreshment
drinks in Indian market. Coca-Cola is the world’s biggest and first soda pop
maker. As a feature of the Globalization program, India has made it simple for multinational
organizations to enter the Indian market. Globalization has made the entire
world into one market by diminishing the exchange hindrances and limiting the
hazard. It is discernible that numerous multinational organizations had bombed
in Indian market. This disappointment is fundamentally because of ill-advised
information about the nation and the national culture. It is vital to think
about the general population and their devouring conduct. Culture assumes a
critical part in devouring conduct. Coca-Cola is for the most part related to
the issues identified with the brand, notoriety and Corporate Social
Responsibility (Coca-Cola In India: Understanding Culture To Do Business, 2013).

Coca-Cola should give more
significance for the way of life of the general population since culture is a
noteworthy component which chooses the purchaser conduct and buying designs.
India is where individuals are quicker towards the way of life. Considering
Geert Hofsted’s social measurements here in this case, plainly, vulnerability
shirking India is less and individuals are not all that adaptable to embrace
the sudden changes. In India vulnerability shirking is filed at 50, which
demonstrates that individuals are delicate and passionate towards misuse and
intrusions from other individuals or culture; so that before entering to the
Indian market, it would be a decent procedure to keep away from such issues by
arranging the re- section as a well ordered process. As indicated by Geert
Hofstede, “culture is the aggregate programming of the human personality
that recognizes the individuals from one human gathering from those of another.
Culture in this sense is an arrangement of by and large held esteems.” It
is very comprehended from the beneath given diagram that the US and Indian
culture had got the immense contrast. So it is difficult to cop up with the
Indian market. Along these lines, it is vital to have an itemized examination
on Indian market with the goal that they can start a come up short confirmation
and precise market section (Socio-Culture imapct of Coca-Cola, 2014).

No doubt there was a sale of around nine
servings of coca-cola provider each day in its first year, but now it has
increased to nearly 1.9 billion of servings of its products. While doing the
marketing of the products, life style trend of target population was also
consider and it was concluded that Wellbeing has turned into a noteworthy worry
for the target market. It is, be that as it may, a matter of discernment. While
96% of respondents see themselves as solid/healthy or fairly sound, just 26%
watch their calorie admission. Consequently, while being sound is popular, few
take after a strict diet. Rather, they settle on their consumption choices in
view of impression of healthiness. The objective is for the most part open to
publicizing; it is less irritated by promoting than the more seasoned populace.
13-18-year-olds seek promoting for current patterns. They consider both
publicizing and their companions the most grounded impacts when obtaining the
correct items. Elements basically savor pop social settings with loved ones.

Despite of having a good reputation,
Coca-Cola has faced certain challenges as well. In view of the assaults by the
CSE and NGOs (Non-Governmental Organizations) on Coca-Cola, the brand
confronted many difficulties. To start with, being the world’s most important
brand whose respect is incredibly affected by the picture of the organization
and its items, their essential issue was attempting to remaking their picture
to the Indian open and recapturing Indian shoppers’ trust. This was a hard
undertaking since NGOs have high dependence by the general population, making
it troublesome for organizations to rival such dependability given to NGOs.
Another issue postured is the socially mindful notoriety of Coca-Cola as a
corporate organization in the U.S. The United States is a prospering, created
nation; yet, India is a creating country with an alternate arrangement of
measures. Should Coca-Cola withhold their social obligations universally? Is
the organization financially maintained to do as such?

Moreover, Indians are the individuals who
give more significance for quality and trust. It is practiced in India for some
long years. Indians desires unlimited supply of the item with low costs. So
India isn’t a place to catch up with Price – Quality Trade – Off. Regardless of
whether the costs are higher, Indians may think about this item because of its
quality. Indian culture and the way of life are particularly defenseless
against quality tradeoffs. In addition to this, In India; it is generally
realized that the administration frameworks and technique need
straightforwardness in its operations. In this manner, it is vital to have a
close connection with the legislature. This should be possible by currently
taking an interest in Government certain operations and government-started
framework advancement. Indian individuals and government dependably value any
obvious exertion towards the advancement of the nation. This additionally helps
in building goodwill among the general population. India is a nation where reputation
and connections are given high preference. Accordingly, it is vital to keep a good
association with the legislature/government. Moral issues like water asset
abuse and so on are accepted to be advertised by the media and not the overall
population. Notwithstanding, it is vital for the organization to produce and
execute a corporate social duty framework in India, and work inside the rules
of that framework, which will keep any such undesirable circumstances. 

RECOMMENDATIONS-

As indicated by Robert Tannenbaum
and Warren H Schmidt “management styles are characteristic ways of making decision
and relation to subordinates”. Distinctive administration styles can be
connected in light of the nature and culture of business, the nature of the
errand, the nature of workforce and abilities of the pioneer. This definition
is given to comprehend administration style when all is said in done. Each
nation has got its own style of administration. It is fundamental that they
ought to have a right perspective of the administration style of specific
nation. Coca-Cola needs to focus on numerous perspectives with the goal that
they can snatch more piece of the pie and gain regard from the group
individuals. The organization’s image notoriety and brand acknowledgment are
insufficient for them to develop in the Indian soil. Indians consider a
business so important and their approach is altogether unique with regards to
acquiring examples and propensities. Consequently, Coca-Cola needs to receive
exchange marking and advancement procedures to build up its fan base in India.

Moreover, in Indians give more preference
to their culture and ethics. It is difficult for them to adapt sudden changes.
As before fizzy drinks they preferred to have traditional drinks but when
Coca-Cola came they tried to shift on that but slowly. So, it is recommended
not only for Coca-Cola but also any other foreign company who is interested to
invest in India that they should do proper analysis on the consumer behavior
and also on the product requirements which do not harm their culture, values,
society and environment also. One more thing should be consider is long-term
orientation programs in India which will helps the company to reduce the
chances of any crisis based on customs and traditions. Coca-Cola is having
solid brand picture from number of years due to which they can make their good
presence in India. As Indian society give more significance for trust and
quality, this brand picture from past will help for its maintainability in Indian
market. Population of India is high they can get a decent client base. Apart
from this, in India customers incorporate huge number of youths and young
generation who is embracing towards modern culture and supporting
westernization. Subsequently, it is simple for the organization to make them as
target clients. Because of globalization, numerous multinational organizations
had entered Indian market and Indians had acknowledged a considerable lot of
those organizations which obviously say Coca-Cola still have substantial
potential and degree in the Indian market. As India is in the phase of
modernization and monetary change, the utilization of soda pops has been
expanded so it is a good opportunity for Coca-Cola to make an appropriate
remain in the Indian market. In the wake of considering the previously
mentioned arrangements and suggestions it is certain that the organization can
influence a legitimate remain in Indian market and re-to set up their
operations until the end of time.

CONCLUSION-

The conclusion is the important part
of this report. After analyzing the socio-cultural boundaries of Coca-Cola in
India, the most discernible factor is the organization isn’t following and thinking
about the social and cultural pattern and factors. The principle downside which
Coca-Cola is confronting is it is setting off to the earth or abusing the earth
or the environment. The organization is utilizing new water in such a huge
amount where there is an emergency for crisp drinking water aside from that,
because of its waste release; they have been ruining the water and soil. Along
these lines ranchers are confronting various issues with their harvests. Due to
these reasons, Coca-Cola is confronting issues in India. These issues are in a
roundabout way influencing the lives of the general population remaining
adjacent to the assembling plant. Aside from this culture is the most
imperative factor which organization should remember for promote advancement.
From the above-given proposal, recommendations, and investigation, plainly the
social and monetary conditions in India are steady and ideal for the
organization, however the natural issues are making g issues among people in
general and government. Subsequently, as recommended, the organization should
utilize a powerful corporate social duty group to screen their operations in
the Indian sub-mainland and make strategies to beat any such cases. With the
assistance of these proposals, Coca-Cola can make a splendid return to the market.

 

REFERENCES

Case against Coca-Cola Kerala State: India. (n.d.). Retrieved from The rights to water and sanitation:
http://www.righttowater.info/rights-in-practice/legal-approach-case-studies/case-against-coca-cola-kerala-state-india/

Coca-Cola forced to close India bottling factory over
excessive water use, pollution.
(2014, June 19). Retrieved from World News:
https://www.rt.com/news/167012-coca-cola-factory-closed-india/

Coca-Cola In India: Understanding Culture To Do Business. (2013, December 9). Retrieved from Value Walk:

Coca-Cola In India: Understanding Culture To Do Business

Coca-Cola is yet to crack the code in Indian market: John
Murphy. (2017, Nov 20).
Retrieved from Times of India: https://timesofindia.indiatimes.com/business/india-business/coca-cola-is-yet-to-crack-the-code-in-indian-market-john-murphy/articleshow/61720173.cms

Cross-cultural managment . (2012, September 30). Retrieved from Slideshare:

History. (2012,
January 1). Retrieved from Coca-cola Journey:
https://www.coca-colacompany.com/stories/the-chronicle-of-coca-cola-birth-of-a-refreshing-idea

History of Coca-Cola in India. (2007, July 10). Retrieved from Groovy Ganges:

History of Coca-Cola in India

Socio-Culture imapct of Coca-Cola. (2014, Feb 18). Retrieved from Scribd:
https://www.scribd.com/document/207692207/Socio-Cultural-Impact-of-Coca-Cola

Who we are.
(2017). Retrieved from Coca-Cola Journey: http://www.coca-colacompany.com/careers/who-we-are-infographic

 

Post Author: admin

x

Hi!
I'm Matt!

Would you like to get a custom essay? How about receiving a customized one?

Check it out