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Taking Pepsi Cola to Leadership in Dominican Republic vs. Coca Cola

Taking Pepsi Cola to Leadership in Dominican Republic vs. Coca Cola

Mr. Gonzalez was given the additional responsibility of head of HR for North Latin America, with full personnel authority to choose the best talent in the region to grow the business. After assigning the best people to key operating roles, including CFO and Market Managers, he was asked by the Area Manager to help with the Dominican Republic.


The Actors

  • The Division CEO, who wanted this underperforming unit to catch up to and surpass the other regions in Latin America
  • The Area Manager — an American who spoke no Spanish on his first international assignment, trying to meet the Division CEO's expectations
  • The Bottler in the Dominican Republic, who had received millions of dollars to grow the market
  • The founder of the bottling company, who saw his role as providing jobs to the people rather than growing volume, and was still at the helm
  • The Pepsi Cola franchise managers trying to implement the changes

The Stakes

At the time, Pepsi trailed Coca-Cola nearly everywhere in the world except Venezuela, Argentina, and the Middle East. Any market share gain was great news for PepsiCo's stock.


The Situation

Mr. Gonzalez was asked to visit the market to support the CFO and the Head of Technical Services in getting the Bottler to move on the country's transformation. He arrived from Miami late at night to Santo Domingo, where the franchise manager and head of training picked him up for a late dinner — a typical market visit. Instead, Mr. Gonzalez asked if the plant was still operating; told yes, he asked for a plant tour, past 11:00 PM. Unorthodox, but they obliged.


He toured the plant, the warehouse, and even the small museum the founder had created — still displaying the manual lines used to fill and cap bottles one by one when the operation first started decades earlier. During the visit, Mr. Gonzalez observed workers building pallets eight men at a time, while the remaining 56 stood by until those eight tired out. The process took all night to load and unload the trucks. He also saw 20,000 to 30,000 cases of new half-liter returnable glass bottles, received for the launch of Pepsi's half-liter presentation into the Dominican market. After the tour, dinner with the PepsiCo team turned into a litany of complaints about how slow the Bottler was to change. Around 1:00 AM, heading back to the hotel, they found the main street closed for the start of Merengue Week — a major festivity that shuts down Santo Domingo for four or five days.


The Solution

After dinner, Mr. Gonzalez built his action plan. He woke early and returned to the plant to meet the founder, his son (the General Manager), the Operations Director (the founder's son-in-law), and the CFO — the one trusted employee with no family ties. The discussion started cordially; Mr. Gonzalez knew the Bottler wanted an additional $10M from PepsiCo for market activities on top of what had already been given, and he watched through the morning as the General Manager was repeatedly asked to sign checks for $10,000 to $50,000.


After a break, Mr. Gonzalez asked for the Company's organizational charts. The General Manager answered, in Spanish, that they didn't have "organigramas," they had "crucigramas" — literally, "we don't have org charts, we have puzzle charts." Mr. Gonzalez followed up with his observations about the excess headcount and wasted time in the distribution center. The founder took offense, noting his pride in being one of the island's largest employers. Mr. Gonzalez then asked how long before they could launch the half-liter Pepsi presentation; the son-in-law answered they lacked both capacity and shells to bottle the product — reinforcing the need for the additional $10 million.


Taking every actor's interests into account, Mr. Gonzalez proposed:

  • Use the four or five holiday days to bottle the 20,000–30,000 cases of product
  • Use the cardboard boxes the new bottles arrived in to transport product to market
  • Use the extra warehouse labor to pack those boxes by hand
  • Then reduce the size of the distribution team, redirecting the savings to fund market activities — which, combined with new revenue, would eliminate the Bottler's need for additional Pepsi Cola funding

If they declined, Mr. Gonzalez would recommend PepsiCo cut all funding to the Bottler, as he wasn't willing to put any more money into this market. The founder was irate, the son-in-law didn't know what to do, and even Mr. Gonzalez's own PepsiCo colleagues disliked the plan, since it meant staying behind to oversee the work. The CFO worried that threatening a fellow Dominican would backfire.


Despite the resistance, the bottles were filled and taken to market during Merengue Week. PepsiCo caught Coca-Cola off guard, which took 18 months to introduce its own half-liter package — and lost its market leadership in the Dominican Republic as a result. Another win for Blue over Red.