Assignment 2 Shikha Wadhwa

Case 2: Pepsi Triggers Development

Q1. What is the rationale behind the agri-initiative of Pepsi? Is it consistent with its

objectives and philosophy?

The agri-business was started off by Pepsi to meet its export obligations and since then it

has become an estimated rs.210 cr business, and earns around rs.2750 million by way of

exports. Its brands includes Seasons harvest and Lehar which markets products like

basmati rice, tomato paste, chillie paste, garlic paste and ginger paste to places like the

middle east, Europe and the United States.

The corporate philosophy and objectives are as follows:

To create an industrial base through capital and technology investment To generate employment and To earn foreign exchange through exports

Thus we can say that Pepsis rationale and philosophy are not very consistent. Pepsi is

trying to take advantage of the low labor cost and resources available in India by

providing farmers best of technology and supervision and management to meet its export

obligations as been mentioned in the case. Though Pepsi is bringing in capital and

technology investment and providing employment opportunities by providing

employment to more than 350000 people but in a way its done to exploit the cheap

resources to earn and meet its own obligations by earning good foreign exchange.

Rural Marketing Indian Institute of Planning and Management

Assignment 2 Shikha Wadhwa

Q2. Explain Pepsis style of management and approach to farming practices?

Pepsi has always believed in

At the center of high yields, ofcourse, is the farmer his hard labor, his sweat

and thus has taken several initiatives to develop farmers.

From the day the seedlings are planted, the workers and scientists of the company remain

in constant touch with the farmers until the harvest time. They provide them with

technology and implements, advice them on farm management practices, on when, how

much and which fertilizers to apply and pesticides to spray. They even advice them on

when, how much water to give the fields. They provide machinery for digging, bedding

and applying fertilizers. Each day the company personnel work with thousands of famers.

When they notice a defective nursery, they replace it without cost. As a result, the import

costs of farmers have become low and earnings have gone up.

Q3. Can other companies emulate Pepsis practices? Can it be improved?

Yes. Other companies can very well emulate this practice. ITC is already doing this and

has taken much better initiatives than Pepsi. Pepsis can thus improve itself taking some

inputs from ITC model.

Rural Marketing Indian Institute of Planning and Management