Instructor’s Notes on Text Cases
PART II
INSTRUCTOR’S NOTES ON TEXT CASES
CASE GUIDE: Click on a title below to go
directly to that case
CHAPTER
CASE
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
1–1 Starbucks – Going Global Fast
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X
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1–2 Nestlé – The Infant Formula Incident
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1–3 Coke and Pepsi Learn to Compete in India
X
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X
1-4 Marketing Microwave Ovens to a New Market
Segment
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X
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X
1-5 Living in a Box . . . The Way of the Future?
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2–1 The Not-So-Wonderful World of EuroDisney
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X
2-2 Cultural Norms, Fair and Lovely, and
Advertising
X
X
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X
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2–3 Starnes-Brenner Machine Tool Company – To
Bribe or Not to Bribe
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2-4 Ethics and Airbus*
X
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2–5 Coping with Corruption
X
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2–6 When International Buyers and Sellers
Disagree
X
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2-7 McDonald’s and Obesity
X
X
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X
2-8 Ultrasound Machines, India, China,
And a Skewed Sex Ration
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2-9 Counterfeit Mobile Phones in Southeast Asia
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3-1 International Marketing Research at Mayo
Clinic
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3–2 Swifter, Higher, Stronger, Dearer
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3-3 Marketing to the Bottom of the Pyramid
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3-4 Continued Growth for Zara and Inditex
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3-5 A Sea Launch Recovery?
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3-6 Club Med and the International Consumer
X
X
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X
3-7 Gillette: The 11-Cent Razor, India, and
Reverse Innovation
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4-1 Tambrands – Overcoming Cultural Resistance
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4–2 Futuram’s Risk Management Strategy
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4–3 Sales Negotiations Abroad for MRIs
X
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4–4 National Office Machines – Motivating
Japanese Salespeople: Straight Salary or
Commission?
X
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X
4–5 AIDS and Condoms
X
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X
X
X
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X
4–6 Making Social Responsibility and Ethical
making Decisions: Selling Tobacco to Third-
World*
X
X
X
4-7 The Obstacles to Introducing a New Product to
a New Market
X
X
4-8 Mary Kay in India
X
X
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X
4-9 Noland Stores Cleans Up its Act
X
X
X
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X
*There are three suggestions on using cases 2-4 and 4-7. (1) Have the students prepare the case in
conjunction with the discussion of ethics and social responsibility in Chapter 5; (2) In a two-stage
Instructor’s Notes on Text Cases
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Case 1 – An Overview
1-1 Starbucks – Going Global Fast
Case 2 – The Cultural Environment of Global Marketing
2-1 The Not–So-Wonderful World of EuroDisney
2-2 Cultural Norms, Fair and Lovely, and Advertising
Case 3 – Assessing Global Market Opportunities
3-1 International Marketing Research at Mayo Clinic
3-2 Swifter, Higher, Stronger, Dearer
4-1 Tambrands – Overcoming Cultural Resistance
4-9 Noland Stores Cleans Up its Act
Case 1 – An Overview
1-1 Starbucks – Going Global Fast
1-2 Nestlé – The Infant Formula Incident
1-4 Marketing Microwave Ovens to a New Market Segment
1-5 Living in a Box…the Way of the Future?
Case 1-1 Starbucks
The Starbucks case is excellent examples of how Wall Street pushes retailers to over– extend by
demanding fast growth. Maintaining historical 20% growth rates will be impossible in the future for the
1. Controllables – the pace of entry (and growth), research, pricing, product line, places and
methods of distribution, and promotion (advertising and personal selling). Indeed, most recently
Starbucks is expanding both its product line and distribution channels in the tough Japanese
market.
2. Risks – all of the above. Particularly trying to meet Wall Street’s expectations for 20% annual
growth. Lower profits overseas – must work with local partners. Difficulty of maintaining
3. Overall Strategy – the hyper-growth rates the company is trying to maintain will result in huge
blunders in new markets. While we laud growth through international expansion, it must be
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4. Japan – sales lagged until most recently. The firm seems to have solved its profitability problems
5. test marketed alcoholic beverages at three stores in Seattle previously, but decided to close them.
But, the test marketing will be the key to finding the right product/service mix for Japan. Also,
distribution channels may be experimented with as well. The company has recently put an
See the linked articles for the information available about Starbucks in Japan:
https://news.starbucks.com/news/a-stylish-launch-for-starbucks-new-frappuccino-in-Japan
http://www.reuters.com/article/2014/09/23/us-starbucks-japan-idUSKCN0HI2I820140923
The company’s most recent plan (2019 and beyond for that country:
https://www.foodbusinessnews.net/articles/12849-starbucks-unveils-strategic-growth-plan-for-japan
Case 1-2 Nestlé – The Infant Formula Incident
Summary of Case and Results
In response to a pamphlet entitled “Nestlé Kills Babies,” published in 1974 by the Swiss
consumer/activist group, Arbeitsgruppe Dritte Welt, Nestlé Alimentana filed a four-count libel suit
against members of the organization. The pamphlet was a reprint of an earlier one entitled “Bottled
to change its marketing methods to prevent further misuse of its products. The defendants were ordered to
pay $120 each in damages to Nestlé and two thirds of court costs.
Suggestions
Instructor’s Notes on Text Cases
and other milk products—has come under severe attack by various religious, consumer and governmental
organizations. Criticism focuses on two issues: (1) that companies allegedly use false advertising to
consumers to use infant formula. Critics charge that these women are often unqualified to speak on
market for the product and (3) helped to bolster the firm’s image.
Controlling distributors’ promotional activities. Manufacturers selling milk products through
distributors have often given them free rein over local advertising. Some corporate executives worry
about becoming too closely associated with distributors’ advertising, fearing possible liability for
erroneous claims made by distributors. However, such liability would be difficult to avoid in any
feeding newborn babies and the proper role for prepared formula in an infant’s feeding.
Developing promotional/instructional materials to help low-literacy users. The International Council
of Infant Food Industries, formed in 1975, is studying ways to improve communication methods for
use in areas of high illiteracy. Possibilities include cartoons, pictures, radio programs and even sound
trucks. (Use of new informational materials would be subject to approval of local authorities.)
Instructor’s Notes on Text Cases
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creating a greater need for infant formulas. Thus, it appears that firms will remain in these markets.
Notes to Instructors
The following considerations should be examined by the case discussants
1. The infant formula food was successful in certain countries and very detrimental in others.
3. Nestlé is being isolated as the major contributor to this problem.
5. The longer the controversy carries on, the more costly the settlement will be.
7. Corporate responsibility is not only what is defined by industry, but what is perceived by
consumers.
Update
The Nestlé infant formula controversy continues after more than forty years. In a 1984 agreement with the
International Nestlé Boycott Committee, Nestlé agreed to cease distribution of free and low-cost formula
Instructor’s Notes on Text Cases
In 1991, Nestlé announced it would stop all free and low-cost giveaways in developing countries except
interpret in need broadly and provide free and low-cost formula on request. The boycott has now spread
to 16 countries.
campaign is meant to promote breast-feeding to an undereducated audience.2 In the long run, they may
gain if this advertising campaign helps polish their tarnished image.
However, in another controversy, Nestlé has been accused of raising the specter of AIDS as a justification
for bottle-feeding when the head of public relations at Nestlé UK told schoolchildren that the spread of
diseases and malnutrition, breast-feeding should remain standard advice.
Films Available
1. The most complete discussion of the Nestlé infant formula controversy is now available in a CD–
ROM format from the Council for Ethics in Economics, 125 E. Broad Street, Columbus, OH
43215–3605, (614) 221-8661, FAX (614) 221-8707, http://www.businessethics.org.
2. Into the Mouths of Babes (CBS News, color, 35mm) is available through the National Council of
Churches, Room 860, 475 Riverside Drive, New York, New York 10015. It is likely that a local
chapter of INFACT, or a local third World Resources Center, will have a copy.
3. Bottle Babies (Dir. Peter King, Teldok Films, 1975 color, 26 min.) is the film mentioned in the
case, which heightened awareness of the issue. It is obviously oriented “against” the companies.
Some current articles on this controversial subject that the Professor may want to have students read in
preparation for this case discussion are:
6. Alex M. Freedman, American Home Infant-Formula Giveaway to End, The Wall Street
Journal, February 4, 1991, p. B4.g
7. Bradley Johnson, Ads Pitch Breast-Feeding, Advertising Age, December 2, 1991, p. 40 and
Vital Signs: A Medical Renegade Stands the System on Its Head; The Boycott is Back,
Health/Pac Bulletin, Fall 1990, V. 20, No. 3, p 42.
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Back to the bottle?
NAIROBI
MULTINATIONAL food companies have long been under attack for pushing milk powder at mothers
who do not need it and cannot afford it. But the anti-bottle-feeding lobby is now in a quandary. Evidence
is growing that around half the 3.8 million children infected with HIV contracted the infection at their
Case 1-3 Coke and Pepsi Learn to Compete in India
INTENDED USER:
This case is intended for use in an international marketing class, international business, cross-cultural
BRIEF SUMMARY OF CASE CONTENT:
This is a detailed and comprehensive case describing the market entry of two global consumer product
as they adjust to competing in an unfamiliar and rapidly-changing environment.
Instructor’s Notes on Text Cases
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Key themes include:
– the effects of the changing political scene resulting in the imposition of a non-standard
case of promotional strategies.
PEDAGOGICAL OBJECTIVES:
Students are often told that Coca-Cola and Pepsi are leading exponents of globalized marketing. This case
invites students to reflect on changes that the two companies have had to make to their global marketing
policies as a necessary response to specific environmental factors in the Indian market, resulting in use of
challenging, despite the global marketing expertise that both companies brought to this market.
VALUE OF THE CASE:
Students are presented with an objective account, told in retrospect, of market entry into India by two
the two companies.
TEACHING THE CASE:
It is strongly recommended that students be instructed to equip themselves with a map of India. This will
by various companies and people in the Indian marketplace.
Answers to Questions.
Q1. The political environment in India has proven to be critical to company performance for both
PepsiCo and Coca-Cola India. What specific aspects of the political environment have played key
roles? Could these effects have been anticipated prior to market entry? If not, could developments
in the political arena have been handled better by each company?
Instructor’s Notes on Text Cases
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Godrej it finally reentered the Indian market in the early 90’s via a joint venture with Britannia
Industries. This market entry was forced on Coca-Cola because its major competitor PepsiCo had
already entered the Indian market in 1986. Entering later in the market had costs associated with it
– (1) spending greater time, energy and money in building relationships with key government
officials because PepsiCo had a headstart of about four years in the game; (2) spending maximum
the rules. It was the Congress party under the leadership of P.V. Narasimha Rao that allowed
foreign investors into India. Given the instability at that time it was almost impossible to anticipate,
for how long this government would be in power, which party would follow, or what policies or
measures they might impose on foreign investment (FDI). Building a relationship with the major
political parties was crucial for any foreign company trying to make its way in India. In this regard,
Q2. Timing of entry into the Indian market brought different results for PepsiCo and Coca-Cola India.
What benefits or disadvantages accrued as a result of earlier or later market entry?
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Q3. The Indian market is enormous in terms of population and geography. How have the two
companies responded to the sheer scale of operations in India in terms of product policies,
promotional activities, pricing policies, and distribution arrangements?
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Q4. “Global localization” (glocalization) is a policy that both companies have implemented
successfully. Give examples for each company from the case.
A4. The concept of glocalization plays a very important role in making or breaking of the brand in
India. It is very clearly shown in the promotional campaigns of both PepsiCo and Coca-cola in
India.
Q5. How can Pepsi and Coke confront the issues of water use in the manufacturer of their products?
How can they defuse further boycotts or demonstrations against their products? How effective are
activist groups like the one that launched the campaign in California? Should Coke address the
group directly or just let the furor subside, as it surely will?
A5
Since the conclusion of the case, there has been a major controversy caused by findings of a
Instructor’s Notes on Text Cases
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The truth of this event is yet to found, but this controversy shows the strong sentiments of
Q6. Which of the two companies do you think has better long-term prospects for success in India?
A6. A definite answer to this question is difficult and calls into question the assumptions and
anticipations about strategy, structure and performance of both companies. Based on the past
Q7. What lessons can each company draw from its Indian experience as it contemplates entry into other
Big Emerging Markets?
A7. An important element for the long-term success of Coca-Cola and PepsiCo depends on how they
can transfer learning from one market to another, particularly Big Emerging Markets (BEMs). This
Instructor’s Notes on Text Cases
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Q8. Comment on the decision of both Pepsi and Coke on entering the bottled water market instead of
continuing to focus on their core products—carbonated beverages and cola-based drinks in
particular.
A8. Although non- carbonated drinks and bottled water are growing segments in the Indian market, one
can question the wisdom of focusing on those market segments at the expense of continuing to
Instructor’s Notes on Text Cases
being set up across nine cities. The strategy is working as well for microwaves as it is for its refrigerators
(2001) The current penetration level is low; the product category is still at a very nascent stage. LG
Electronics India is holding customized cooking classes catering to each part of Indian cooking.
(2001) LG has call-centers where a prospective customer can get information on microwave ovens, how
consumer gets a hands-on experience of our products through extensive live demonstration and cooking
(2002) LG Electronics India wants to break the myth that a microwave oven is a premium product. To
(2002) Samsung India Electronics Ltd (SIEL) which is targeting 25 percent market share in 2002, plans to
(2003)There is a need to reach out to the consumer, and companies are taking several direct marketing
initiatives as most consumers want to experience the product before buying it. We are sending small
(2003) Several consumer durables companies are taking a door–to-door approach for the product; similar
(2003) Microwave oven manufacturers are readying new marketing initiatives to push sales to 240,000
units in 2002. Samsung has launched a Spot the Van Cookie Fiesta campaign in Delhi and in North India
(2003) Although the sale of microwave ovens is by and large confined to the metros and the larger towns,
percent this year to 2.5 lakh units. Note: A lakh is a unit in a traditional number system, still widely used
(2003) This category (microwave ovens) has been showing a consistent growth. From the sale of 85,000
(2003) LG is extending its cookery classes to retail outlets and have even tied up with celebrity chefs for
demonstration shows. The companies are introducing new features and models to boost sales. The new
(2003) Samsung says that our consistent efforts at educating the customer on cooking benefits of
(2003) Samsung India has emerged the clear leader in 240,000-unit microwave oven market with a 33.5
(2005) With falling price points and changing lifestyles driving growth , the microwave oven category
(2005) Prices for the smallest units have dropped from Rs7000 to about Rs5000. Sales over the past two
(2005) According to industry data, while the solo microwave oven models sold some 70,838 units the
first eleven months of 2004, the combination models grew 73.1 percent with sales of 104,545 units.
Instructor’s Notes on Text Cases
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Hindu), April 19, 2005; and, BG Shirsat and Prabodh Chandrasekhar, “Consumer Durables Fetch Less,”
rediff.com, August 9, 2005; “Wallets Crack Open in India; Foreign Retailers Salivate as Tech Workers
Spur Consumer Boom,” Journal, January 3, 2006; “Western Grocer Modernizes Passage to India’s
Markets,” The Wall Street, Nov 28, 2007.
The most recent forecasts of growth of the industry in India and China from Euromonitor include:
Number of Households
India China
Penetration of microwaves/% of households
Case 1-5 Living in a Box…The Way of the Future?
Case Overview:
Sal Hatgan, a manager at Sustainable Solutions Company (SSCo), headquartered in Denmark, is
developing a presentation to company executives about sustainable housing solutions (used shipping
containers) to the U.S. market. Part of his approach involves an innovative analysis tool, Bottom Line
Cost of Ownership, or BLCO, used in Denmark successfully. How can SSCo leverage data and the
sustainable impact of its approach to successfully enter the large U.S. market?
To successfully do so, it will be important for Hatgan and SSCo to understand the market, competing
manufacturers, and how the BLCO methodology will best illustrate the competitive advantages of the
product. The U.S. is an attractive target because of its large housing market and, at least in some areas, a
growing consciousness about sustainable housing in particular. Some competitive domestic
manufacturers of such housing, utilizing container technology, pose a barrier to entry.
With this in mind, Hatgan must make decisions for his team and the C-Suite SSCo as to how to leverage
the BLCO analysis tool to enter the U.S. market. What measurements and indicators will best illustrate
SSCo’s competitive advantage and have the best financial, environmental, and socio-economic impacts in
a foreign market much different from where SSCo has used the BLCO methodology? What risks will the
company face in a new international market, and will these risks impact its sustainable housing sales?
Will SSCo be able to make a strong enough case for its product line, or will U.S. favor its domestic
options, or potentially some other international competitor? Hatgan ponders the next steps for his
company.
Questions: