Pepsi in Burma - A Globalization Catastrophe

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Case Details:

Case Code : BECG026
Case Length : 13 Pages
Period : 1990 - 2003
Pub. Date : 2003
Teaching Note :Not Available
Organization : Pepsi
Industry : Food and Beverage
Countries : USA and Canada, Burma

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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MNCs Enter Burma

Business in Burma comprised a small number of state-owned corporations that provided products/services to customers in line with the terms set by the government. According to the leading Asian business magazine, Far Eastern Economic Review (FEER), even small traders could not do business in Burma without having connections with the army.

Most of the money was channeled to the army; reportedly, the country spent 60% of its budget on defense. Naturally, economic development had taken a backseat all along. Even basic facilities such as telecommunications were severely underdeveloped. Devoid of the benefits of global trade, Burma's economy was in shambles at the end of the 1980s. Over the years, the government had sold vast tracts of forest land to foreign companies to earn the much-needed foreign currency (as a result, Burma became one of the most rapidly deforesting countries in the world). The SLORC was reportedly finding it difficult to generate the required funds to expand the armed forces and finance its other plans. Under these circumstances, the decision to open the economy to foreign players was but natural...

Pepsi Tries to Fool the Protestors

Within a few years of Pepsi's entry into Burma, the ABSDF called for a customer boycott of its products. In its April 1990 newsletter (DAWN News Bulletin), the ABSDF referred to Pepsi's decision to enter Burma as a direct and unwelcome interference in the country's politics.

ABSDF sources said, "The urgent need of the Burmese people today is not Pepsi-Cola, but the restoration of democracy, human rights, and peace." Instead of trying to understand the protestors' point of view, Pepsi tried to justify its presence in Burma.

The company argued that its presence would help solve the country's problems.

However, critics were not willing to accept this stand; they said that there was absolutely no indication that the presence of Pepsi (and that of other MNCs) was improving the political environment of the country. On the contrary, since the entry of MNCs into Burma, the country's army had increased in size...

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