In the current business world, communication is indispensable to the success of an organization. Understanding political, legal, economic, technological, social, and cultural differences and overcoming these challenges helps to ensure that daily operations of international businesses are carried out successfully (Murphy, Laczniak, & Prothero, 2012). When dealing with people of diverse cultures, it is important to take the time to learn about their culture since cultural differences impact directly on the profitability of the organization. Today, many organizations strive to expand internationally; however, their efforts continue to be hampered by the ever-present cultural barriers.
Coca-Cola is an American soft drink company based in Atlanta, Georgia. It is the world’s largest soft drink manufacturer. As part of its plans to expand operations globally, Coca-Cola ventured into India, which is characterized by a great level of competition in the soft drink market. Prior to Coca-Cola’s entry into the Indian market, it is noticeable that several international companies had failed. This failure is mainly because of inadequate knowledge of the country and the culture of its people, which directly influences consumer behavior. Coca-Cola has experienced a considerable amount of difficulty in strengthening its brand name and reputation mainly due to the issues related to cultural barriers that it faces in the Indian market. Since there are significant differences between the American culture and the Indian culture, the company is yet to realize its full market potential in India.
While culture is by itself quite stable, present-day issues affect culture. Technological progress is an essential contributing factor in both culture and cultural interactions (Carté, & Fox, 2008). Technology promotes culture as well. Internet tools give emphasis to the significant role of language in business communications. Globalization, on its part, fosters multiculturalism and the consumption of the same products and services in the world (Hamilton, & Webster, 2012). Most multinational companies want their personnel to learn about other national cultures and obtain some level of cross-cultural understanding (Cavusgil, Knight, & Riesenberger, 2012). Over time, culture has proven extremely complicated to identify and understand. Its impact on international business is vast and profound.
Culture affects both interpersonal exchange and value-chain operations. As such, unfamiliar cultures may be present in almost all dealing whether domestic or international. Coca-Cola’s initial entry and re-entry into the Indian market is a good example of cultural barriers in international dealings. The company had exited the Indian market in 1977 due to poor relations with the sitting government, which wanted it to share its trade secrets (something that is uncommon under the American policy of protectionism) (Amine & Kumar, 2013). However, such a demand was tantamount to asking the company to relinquish its source of a competitive edge against its rivals. Like PepsiCo, Coca-Cola regained entry into the Indian market through a joint venture agreement in 1990, choosing Britannia Industries India Ltd as its locally-based partner (Amine & Kumar, 2013).
Coca-Cola needs to give more importance to the culture of the Indian people because the culture has a major effect on consumer behavior and buying patterns. Unlike the American society, which is largely multicultural, Indians are keener towards maintaining their national culture. Since the American and Indian cultures are immensely diverse, it is rather challenging for Coca-Cola to increase its share of the Indian soft drink market. As a result, the company should conduct a detailed study of the Indian culture so that the company can initiate a successful market penetration program for the Indian market.
References
Amine, L. S., & Kumar, V. (2013). Coke and Pepsi Learn to Compete in India.
Carté, P., & Fox, C. (2008). Bridging the culture gap: A practical guide to international business communication. London: Kogan Page.
Cavusgil, S. T., Knight, G. A., & Riesenberger, J. R. (2012). International business: The new realities. Upper Saddle River, NJ: Prentice Hall/Pearson.
Hamilton, L., & Webster, P. (2012). The international business environment. Oxford: Oxford University Press.
Murphy, P. E., Laczniak, E. R., & Prothero, A. (2012). Ethics in marketing: International cases and perspectives. Abingdon, Oxon: Routledge.
