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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"Deciding to do business in Burma was one of the toughest decisions. But we believe that trade is a positive factor in changing the world."

- Pepsi sources, quoted in an article on www.motherjones.com, in March 1994.

"If you are buying Pepsi products, you are supporting human rights abuses." 1

- 'Free Burma Coalition' activists, in October 1995.

"Companies such as Pepsi prolong the agony of my country."

- Aung San Suu Kyi, Nobel Peace Prize Winner and renowned political and human rights activist from Burma, quoted in an article on www.christis.org.uk.

Boycott Pepsi - Save Burma

The mid-1990s were a period of turmoil for Pepsi, the US-based multi-billion dollar cola company. Thousands of customers in the US and Canada were boycotting the company's products as well as those of its affiliate companies such as Taco Bell, Frito-Lay, KFC and Pizza Hut. In addition, Pepsi was under attack from a host of human rights organizations as well as its own shareholders and various other stakeholders.

The reason for this opposition was Pepsi's presence in the South-Asian country, Burma. In April 1996, one of Pepsi's major institutional customers in the US, Harvard University (Cambridge, MA), decided not to allow Pepsi to sell its products on its campus. This move came in the wake of protests by students against the company for conducting business in Burma, a country ruled by military dictators. Commenting on the decision to keep Pepsi off the campus, the Food Services director of Harvard University dining services, Michael Berry, said, "I am a businessperson who says that we have to be socially and ethically responsible. I do think there is a problem doing business with such a company."2

Though losing out on Harvard University's business cost Pepsi only $1 million, the damage this incident caused the company proved to be severe in the days to come. Soon after, Pepsi lost contracts at other leading universities such as Stanford, Colgate, and U.C. Berkeley. Stanford University even refused to let Pepsi open a Taco Bell fast food outlet the company had been planning for.

The 'Boycott Pepsi' movement spread to many other colleges and schools across the US (over 100 in number), with students asking Pepsi to discontinue operations in Burma. Even before Pepsi could react to these developments, it received another blow - this time from the municipalities of various cities in the US.

By the end of April 1996, the municipalities of Berkeley, Oakland, San Francisco and Santa Monica (California), Madison (Wisconsin) and Ann Arbor (Michigan) had agreed to stop taking food product supplies from Pepsi and decided to stop conducting business with it in any manner whatsoever. Many more municipalities were expected to pass similar 'restrictive purchasing' orders against Pepsi.

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1] 'As we see it: A Protest? At Albion?' www.albion.edu, October 27, 1995. The Free Burma Coalition coordinated various groups from around the world that worked towards bringing freedom and democracy in Burma. Modeled after South-Africa's anti-apartheid movement, it is supported by many governments, companies, colleges/universities and over 40 organizations (like Amnesty International) in 15 countries.

2] 'Harvard Dumps Pepsi,' www.ibiblio.org, April 08, 1996.

 

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