Pepsi tried unsuccessfully for years to get into the Indian market as a wholly owned subsidiary. However, due to the Indian government's ownership restrictions, they could never get approval to operate in that market. Finally the company found a powerful local partner in the Indian beverage industry with whom to enter into a joint venture. The joint venture was quickly approved. In this example, Pepsi chose to employ the ____ strategy for managing regulatory change.

Question

Pepsi tried unsuccessfully for years to get into the Indian market as a wholly owned subsidiary. However, due to the Indian government's ownership restrictions, they could never get approval to operate in that market.  Finally the company found a powerful local partner in the Indian beverage industry with whom to enter into a joint venture. The joint venture was quickly approved. In this example, Pepsi chose to employ the ____ strategy for managing regulatory change.

BlackTom AI · Accepted Answer

In this scenario, Pepsi faced regulatory barriers that prevented it from operating as a wholly owned subsidiary in India. After seeking to satisfy the regulatory requirements but encountering persistent obstacles, the company partnered with a local player to gain access through a joint venture. This illustrates a strategy of working with the local regime or environment to gain entry, rather than fighting or ignoring the constraints.
Option 1: ally. This option describes forming a strategic partnership with a local firm to navigate regulatory barriers and gain access through collaboration, which matches the description of a joint venture with a powerful local partner. It highlights leveraging local capability and political consonance to overcome restrictions.
Option 2: alter. Altering the regulatory environment or attempting to change the rules directly would imply lobbying, advocacy, or lobbying for policy changes. The passage does not describe efforts to change the regulations themselves, but rather to work within them via a local partnership.
Option 3: avoid. Avoid would mean staying away from the market entirely or withdrawing from the attempt rather than finding a way to operate, which contradicts the fact that Pepsi ultimately entered via a joint venture.
Option 4: apply. Applying a strategy implies attempting to implement existing rules or processes as they stand, but this wording doesn’t capture the essence of using a local partner to gain entry; it’s more general and less precise about leveraging local governance for access.
Option 5: accede. Accede would suggest yielding to the regulators or agreeing to comply or submit to their terms without pursuing a joint venture approach; the narrative shows proactive cooperation rather than mere compliance under duress.
Thus, among the choices, ally best aligns with forming a joint venture with a local player to overcome ownership restrictions and gain market entry through partnership.

MKTG 445 (003 - 12:20pm) EXAM # 1

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