Overview
Apparently, one of the PepsiCo plans is to extend its operations to Thailand. As an entry strategy to the Thailand market, PepsiCo seeks to use joint venture approach (Kieso, 2017). It would, therefore, be prudent to ensure that the company studies the viability of starting its operations in Thailand and the type of entry to this market segment (Kieso, 2017). On this basis, the main issues the company needs to consider include the economic, physical, and social aspects relating to Thailand. It is critical to note that Thailand is the second largest economy among the ten ASEAN countries after Indonesia. Therefore, it would be advisable to enter into the Thailand market as service forms the largest sector in the country’s economy with fifty-five percent share of the GDP, while the industrial sector is the second with thirty-six percent (Beath & Ross, 2016). Additionally, it would be important to emphasize that in Q2 in 2017, the economy grew by close to four percent. Consequently, the expansion of the economy has been attributed to robust growth in key sectors such as agriculture, trading, communication, transportation, hotel, and restaurants, among others. Having a joint venture partnership is where two or more firms or businesses decide to pull their resources together and achieve a specific goal. PepsiCo intends to form a joint venture with Suntory Beverage & Food Asia Pte Ltd, which is one of Asia’s soft drink giants.
Cultural Exchange
The importance of cultural exchange, especially when a company plans to expand and enter into another country for business operations, cannot be underestimated. Thus, it is critical to understand that business is all about ensuring that a rapport as well a level of communication is established effectively and quickly. On this note, it would be pivotal for PepsiCo to integrate into the cultural practices of Thais, which will be important for the success of its strategy. Notably, one of the best approaches of ensuring that time is reduced in operating in a new environment is employing the local people in different aspects of business especially in dealing with customers directly such as sales teams, customer support staff among others. However, it would be important to note some of the key issues to address regarding the cultural exchange.
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The first cultural issue to understand would be the respect to national and religious celebrations in Thailand. As part of their heritage, Thais take seriously national holidays and religious festivals, and they expect every person to follow through. Although it may sound common-sense, giving a different gesture could be seen as not only disrespectful but also insulting.
In order to show the level of interest to the new culture, it would be prudent for the foreign employees in Thailand within the company to learn few phrases of the local language. The gesture is instrumental in illustrating that as a company, one intends to be part of the society, thus leading to the positive public image. However, it would also be essential to teach the locals few phrases of a foreign language such as English.
Although the exchange of culture is good for business sustainability, employees should beware of some gestures and how or what to avoid during social integration. Notably, some of the gestures that are harmless in the West could be harmful or insulting to the Thai cultural practices. Therefore, learning simple and common gestures will be helpful. Other concerns that should be noted include dressing style, and ideas about “personal space” when conversing with others. Understanding such fundamental cultural issues will go a long way in addressing any cultural exchange problem during business operations.
Cultural Differences
Business operations and organization can be positively or negatively affected by cultural differences. On this end, the effect of culture on business operations depends on how the new entrant in a given market segment or country embraces the business culture in comparison to other regions. It is always prudent to ensure that business organization and operations understand the business practices including general organization. In Thailand for example, most organizations adopt a vertical organizational structure with a hierarchy that is clearly defined. Therefore, PepsiCo has to incorporate this form of structure or analyze the effects of the same to the success of the company.
On the other hand, the creation of relationships and business dealings are some of the key social aspects that are practiced within the Thais’ business culture. On this end, Thailand people prefer face to face communication instead of emails or use of phones. By strongly valuing relationships, insider, and personal connections, Thais show that the success of the business will be based on how the company entrenches such cultural attributes in its operations.
Distribution Methods
Strategizing on the distribution method is paramount for any new entry. This applies to the kind of product to be distributed, pricing, and promotion. Regarding PepsiCo and in relation to the Thailand’s cultural, political and economic realities, it would be prudent if the company concentrates first on its soft drink mixture of products. As noted, the hotel and tourism industry would make a high demand for these products (Bachmeier, 2015). The promotion of the products should be done through different advertisement methods such as social media, road shows and social media, digital and print platforms. Finally, differentiation will work for the company as a pricing method since most customers will be eager to experience the new products in the market.
References
Beath, M. & Ross, J. (2016). Pepsi America: Building an information savvy company. Center for Information Systems Research. Massachusetts. Massachusetts Institute of Technology.
Bachmeier, K. (2015). Analysis of Marketing Strategies Used by PepsiCo Based on Ansoff's Theory . Grin Verlag,
Kieso, D. E., (2017). PepsiCo’s Expansion Strategy (6th Ed.). Hoboken, NJ: Wiley.
