Case Study VI | Acquire Market Leadership in Mexico City 63% vs. Coca Cola

Situation:

Based on the success Mr. Gonzalez experienced in Latin America. The Division CEO who was even hungrier for more successes. Promoted Mr. Gonzalez to Mexico the largest Pepsi Cola market out of the US. The market share was in the low 30s. He was given a limited book of talent and he had to secure external talent to achieve his Mission. However, Mr. Gonzalez created a team quickly to take over the market. On November 1993, Mr. Gonzalez moved to Mexico. His welcome was the 300 % devaluation that took place in Mexico on December 1993.

Actors:

  1. Division CEO (Looking for more successes)

  2. President of Mexico (newly hired executive from Colgate Palmolive)

  3. PepsiCo Directors in Mexico all expatriates

  4. Mexican Bottlers (who had invested Millions into new equipment and glass and truck fleet)

  5. Mexican Consumer

Solution:

The first action was to launch the Pepsi Challenge. This happened concurrently with the devaluation. In addition, the New President of Pepsi Cola in Mexico had a strong relationship with the Vitro Group which got Pepsi Cola an exclusive on a new package called Plastic shield.

The Bottlers started to suffer the impact of the devaluation by August 1994 almost 8 months after it happened as their credits started to come due. By then the impact of the Pepsi Challenge and the exclusivity of the new Plastic Shield bottles in the country gave Pepsi Cola a + 60 % market share in Mexico City. Mr. Gonzalez worked with the Bottlers to reduce the negative impact of the financial crisis and inside of the Franchise Company. He reduced the benefits of the 5-or-6 expatriates whose cost had gone to represent over 50 % of the payroll of the country vs. the remaining 100 Mexican employees.

In addition, Mr. Gonzalez started a plan to replace all expats with local nationals to better represent the interest of the system. Through the economic crisis Mr. Gonzalez kept the Bottlers focus on the market and built strong relationships with the three largest Bottlers which allowed him to implement PepsiCo programs to grow volume. At the time of his departure, there were only 2 expats in Mexico. The costs were under control and Mr. Gonzalez had been promoted to the VP of HR Latin America.

Once again, Mr. Gonzalez played multiple game theory scenarios to benefit all Actors. The growth in share vs. Coca Cola gave the employees a major boost during the economic crisis. The volume growth made the Division CEO very happy and increased his prestige inside of PepsiCo resulting in his Promotion to COO of Pepsi Cola International Europe and Latin America. The Mexican Consumers benefited by a great product at a great price during a major economic crisis. The expats did not like Mr. Gonzalez but they were all relocated to bigger and better jobs in other markets. Eventually the local executives were also promoted to bigger and better jobs inside of PepsiCo.