Pepsi and Coca-Cola are periodically compared in the business world. The reason for this is that they are selling very similar products that are compared periodically around the world. Many scholars wondered why Coca-Cola did not fare as well as Pepsi on the first go around in India. The reason for this is that the Indian government wanted Coca-Cola to disclose their secret formula, which is an industry legend in the soft drink industry, (Hills, J., 2005). Coca-Cola would not do this because it would compromise one of their trade secrets that could be detrimental to their business model. Even though India would have been a great market for Coca-Cola to expand into in theory, it is clear that Coca-Cola would have also lost a great deal by disclosing their secret formula, (Hills, J., 2005). This relates to a cultural barrier that Pepsi did not face upon entering into the market in India. The reason that this relates to the United States Foreign Corruption Act is that United States companies are prohibited from bribing foreign officials regardless if it is within the normal course of business, (Foreign Corrupt Practices Act, 2016). This is pivotal because arguably Coca-Cola could have done this initially in order to get by the government officials blocking their market entry into the Indian market without disclosing their formula, (Foreign Corrupt Practices Act, 2016). However, Coca-Cola instead waited for the legislation to change in India and then entered into the Indian market later on and has possessed a great deal of success.
One company that is a fascinating example of entering into the UAE market is Hilton Hotels. The reason for this is that the market within the Middle East overall is very luxury oriented, particularly in the UAE. Some of the world’s most impressive result resides in this country due to the oil money. As a result of this, it was a wise move for Hilton to enter the market, but could they really compete? What this meant for their business was to take a course on Arab hospitality to see how the American model needs some development, (Hilton Worldwide Expands UAE Portfolio With Hilton Sharjah, 2011). Having been to the Middle East, I can attest to the standards of customer service that are light years ahead of the United States. What Hilton had to do was to shape their business model to cater to these wealthy clients in order to make their business successful in the UAE, (Hilton Worldwide Expands UAE Portfolio With Hilton Sharjah, 2011). Additionally, they had to customize the more public parts of their hotels and resorts in order to accommodate the sector of the Islamic population that were more conservative in order to not offend their guests who were active practices of the faith, (Hilton Worldwide Expands UAE Portfolio With Hilton Sharjah, 2011). Hilton, all in all, has done a remarkable job in UAE by adapting to the culture, which is crucial when entering into Middle East markets. Even thought UAE is one of the more reform sectors of the region, it is still a hub for many cultures of the Middle East to vacation and thus, cultural adaptation was crucial to their business success.
Cultural training is imperative for any expatriate company that is sending their operations or a specific team to another country to do business. Many companies lose sight of how crucial this is, which invariably leads to many cultural misunderstands that can sometimes even lose the company business or experience sanctions with the local government. This is a factor of international commerce that companies must invest in in order to remain competitive. If they do not, they could experience a major backlash that could be detrimental to their prospective operations in the country in which they are trying to enter. This is especially crucial in Middle East markets and Asian markets in that the cultures are entirely different and thus, training is essential for success in penetrating these markets.
References
Foreign Corrupt Practices Act. (2016). United States Department of Justice Retrieved from: https://www.justice.gov/criminal-fraud/foreign-corrupt-practices-act/.
Hills, J. (2005). Coca-Cola in India – A Case Study. Retrieved from: http://csr-asia.com/csr-asia-weekly-news-detail.php?id=4146/.
Hilton Worldwide Expands UAE Portfolio With Hilton Sharjah. (2011). Hilton Hotels and Resorts. Retrieved from: http://news.hilton.com/index.cfm/news/hilton-worldwide-expands-uae-portfolio-with-hilton-sharjah-
