This article analyzes how sentiments affect the sociopolitical legitimacy of transnational corporations (TNCs) in Bangladesh, India, and Pakistan. It discusses 9 case studies of TNCs in these countries. Five key sentiments are identified that cause tensions: religiosity, ideology, ecology, nationalism/patriotism. The article recommends strategies for TNCs to gain legitimacy, such as collaborating with local partners, aligning with sociopolitical actors, using local names/staff, focusing on local development, and addressing key sentiments. Hibernation strategies are also discussed when tensions are high.

1. Culture, Institution &
Management in South Asia
Sentiments that Affect Sociopolitical Legitimation of TNCs in
Bangladesh, India, and Pakistan
Kartik, Sadat, Siddique

2. Summary of the Article

4. Introduction
• The article focus on TNC’s (Transnational Corporations) sociopolitical
legitimation in Bangladesh, Pakistan & India with a view to ensuring
sustainability in the greater institutional context.
• This is important because it eventually lead the firm to find out the
strategy to maintain their sustainability and earning in particular
social context.
• The article focused on finding out what sentiments of Bangladesh,
India & Pakistan are raising the issue for operating TNC’s in these
country and how to mitigate these issues.
• The article presented different theories and discussed 9 different
cases to find out the sentiments

5. •India is a seventh largest country across the world having a
population of more than 1.2 billion.
•India shares its border with many countries like China,
Pakistan, Bangladesh, Nepal, Myanmar and Bhutan.
•India is the 3rd largest GDP across the world. In 2016 India
GDP growth rate was more than 7%.
• India ranks 51st in global competitiveness,17th in financial
market sophistication, 24th in the banking sector, 44th in
business sophistication, and 39th in innovation, ahead of
several advanced economies, as of 2010.
Brief About India

6. • Pepsi is a American beverage corporate entered in India in 1950’s but due to loss they
pulled out and made their return in 1990’s.
• In 1990’s Indian economy was not liberalized due to which only 40% of FDI was allowed.
• To enter Indian market Pepsi has made joint venture with two Indian firms and they
were Tata industries and Punjab Agro Industries.
• Entering Indian market was not a cake walk for PepsiCo as their were 20 parliamentary
debates, 15 committee review and approx 5000 articles got published about the
proposed investment.
• Pepsico and their JV proposed to set their first plant in state of Punjab. To get the
support from Sikh (A religious group) and they promised to provide 25000 jobs.
• In order to adjust themselves with the public debates and sentiments they agreed to
place new logo, Lehar .
Lehar Pepsi

7. • Enron entered India in 1993 in association with GE & Bechtel to build a massive 2,015 MW
power plant worth around US$ 20 billion.
• They made a contract with Maharashtra state electricity board to buy their electricity for 20
years .
• Enron was accused of high degree of corruption , Bribery and exploitation of Indian economy.
• Later on it was found out that Enron will use Natural Liquidfy gas from one of its subsidiaries
back in middle east by neglecting Indian huge coal reservoir in order to make big profits.
• This scandal has made a negative impact against Enron in India when this information appeared
in Newspaper and on television.
• But due to high pressure from USA .government allowed this project but later on because of
High bills Indian electricity board was unable to pay the bills and Enron got bankrupted in India
in 2001.
ENRON India

8. • Almost half of the Indian population is vegetarian and India is the only country where
McDonalds don’t serve Beef & pork in their menu.
• McDonalds has 400 outlets across India and they are planning to open up more 1000
outlets in coming future.
• In 2001 the news broke out that the French fries contains natural extract of beefs .As
soon as this news spread across in India the public start reacting harshly .
• Cow is a sacred animal for Hindus and they start feeling cheated . A group of agitated
people even ransacked some franchisees.
• Later on , McDonalds publically apologized and allowed a investigation for wrong doing.
They also paid compensation of US$ 10 million to vegetarian and religious groups.
• Now they are providing 100% vegetarian food in India.
McDonalds India

9. • Hindustan Unilever was formed in 1933 its headquater in India and currently employ
16000 workers and indirectly employs 65000 people in India
• Hindustan Unilever is a well known brand in India they are offering variety of FMCG
products In India. It is owned by Anglo Dutch company
• Even though they were working with many local NGO’s for CSR and other public welfare
activities . They were blamed for damaging environment and unsafe working condition by
ex workers.
• The civil society group made allegation that Hindustan Unilever is damaging the
environment by mercury radiation at its thermometer factory in TamilNadu.
• Hindustan Unilever allowed government to investigate the matter but did not find any
wrong doing.
Hindustan Unilever

10. Brief About Pakistan
Population 201,995,540 (July 2016
est.)
Ethnic groups Punjabi 44.7%, Pashtun
(Pathan) Sindhi, Sariaki
Muhajirs, Balochi
Median age Male: 23.3 years
female: 23.4 years (2016
est.)
GDP
GDP (per capita)
$988.2 billion (2016 est.)
26th
$5,100 (2016 est.) 171th
GDP real growth rate 4.7% (2016 est.) 44th

11. Anti American Sentiment
• Be Pakistani, Buy Pakistani
• Started in the time of US invasion in Afganistan
• Unnamed leaflets, pamphlets were distributed
• Boycott US by boycotting their products
• Nestlé’s Polo, Lifebuoy of Unilever, McDonald’s
• Igloo, and KFC
• Brands became Pakistani & showed their commitment towards
Pakistan showed their commitment towards Pakistan

12. Mecca Cola
• “No more drinking stupid, drink with commitment!”
• A French company-Anti USA sentiment
• 20% charities
• 10% Palestine charities
• 10% EU Association for Palestine
• A production unit in various state
• A strong & first viable competitor based on political & national
identity
• A strong & first viable competitor based on political & national
identity

13. Brief About Bangladesh
• Capital: Dhaka
• Language: Bengali
• Ethnic Group: 98% Bengalis
02% Others
• Religion: 86.6% Islam, Hinduism,
Buddhism, Christian, Others
• 8th Most populated country
• GDP (PPP): 686.598 Billion
• GDP (Nominal): 248.853 Billion

14. Stevedoring Service America (SSA)
• Stevedoring Service America bought 200 acres of coastal land in
Chittagong to construct international container terminal worth $550
million.
• The port authority made agreed to gave freedom to hire workers from
Registered trade unions.
• Problem occurred when the labor union leader opposed the decision
• The opposition turned into continuous strike and movement again
the SSA
• The reason for striking was to protect the interest of the Interest of
the Chittagong port.

15. Lever Brothers
• Lever Brothers presently known as Unilever is been operating in Bangladesh since
1964.
• Despite their reputation and strong foothold in the market, their operation and
brand image faced jeopardy when a local company started campaign against them.
• The local company claimed the animal fat that were used by Unilever was imported
from pig fat.
• Being a Muslim majority population in Bangladesh, the local company claimed the
unilevers soap or other products were not “Halal” as they used pig fat to
manufacture those products. Pig is a taboo for Muslim's majority country.
• The local company claimed their product was made from vegetable fat and 100
percent Halal. Very soon their business reached top of the market while Unilever
products dropped and went to hibernation for quite a long time.

16. Asia Energy Ltd.
• A UK Based mining company entered in 2005 to extract coal at Dinajpur district, to
construct a power plant worth $ 1.4 Billion project.
• In return, Bangladesh was promised to return $ 21 Billion over 30 years.
• Problem occurred when the company began to use open-pit method to extract coal from
the mine.
• It largely affected the inhabitants surrounding the village.
• Many villagers were forced to leave the area, as coal mining affected not only the
villagers, but also the climate, crops and over all livelihood.
• More over, the company was using the natural resources which Bangladesh was not
prepare to give up at the certain moment.
• A huge movement break out and forced the government to stop the operation of the
company.

17. Analysis
• Five sentiments causes tension amongst sociopolitical legitimation of
TNC’s:
Religiosity (Beliefs, Values, Teachings, and Scripts)
Ideology (A system of ideas or believes shared by group of people.
Psychological or Political view point)
Ecology (Environmental issues and climate change)
Nationalism & Patriotism (National spirit or aspirations, devotion and
loyalty to one’s own nation)

19. Recommendation
• Collaborative strategies
Sharing ownership with local partners (joint ventures, strategic alliance)
• Partnership with a local champion
Pepsico with Tata, Transcom
Telenor with Grameen bank
• Local Development Strategy
TNCs tend to project an image of promoting local development through their ventures and
activities.
Pepsico agro processing plant in Punjab
Mecca Cola, factories in big cities
McDonald promoted the value chain across India
Reviewing the case 4 took collaborative strategies but only Mecca Cola survived strongly
 Enron and SSA left
 Asia Energy in hibernation

20. Recommendation
• Strategy of Alignment with Sociopolitical Actors
Strategically align with dominant sociopolitical actors
Pepsico aligned with Sikh leaders in Punjab
Enron tried to align with Media & charged for bribery
• Local Name and Staffing Strategy
Take a completely local name
Telenor > Grameenphone
Assuming a joint name with local partner
Recruit local CEO and personnel in top management

21. Recommendation
• Hibernation Strategy
Keep low profile, opt out promotion and go silent mode
US firms hibernated
Asia Energy still keeping low
Unilever (Lever brothers) opted out promotion
• Sentiment-Focused
Pepsico national feelings, KFC use of Pakistan logo
GSK, Arla, and Nestlé, now proactively focus on environmental protection
Use elements of tension to mitigate tension

22. Recommendation
• Isomorphism Strategy
Igloo, KFC, Nestlé, and other TNCs followed the same slogan—Be Pakistani-
Buy Pakistani
Lever brothers mimicked
• Openness Strategy
Give sufficient information on any alleged problems
Allow third party and fair investigation to legitimize

23. Further Research

27. Unique Features of South Asia
Presence of a Median youth age group
Countries with huge population and an increasing birth growth rate
Democratic government with presence of multiple political parities.
BD|32.1, India|33.9, Pakistan|30, China|42.1 Vietnam|35.6
Family First
Collectivism- Strong concern for Family, work, group and goals
Responsibility reigns on person not on the group as a whole.
Religion is life
Strong concern for family, society and values
Family owned large business groups

28. Scope of Further Research
• Strategy formulation
• Corporate value development
Case in hand: Fall of Nestle & Rise of Patanjali

29. Conclusion?

30. Thank You!

31. References
• Sentiments that Affect Sociopolitical Legitimation of TNCs in
Bangladesh, India, and Pakistan: Sustainable Strategic Management
from an Institutional Perspective by MOHAMMAD BAKHTIAR RANA &
OLAV JULL SØRENSEN
• www.Wikipedia.com
• http://hdr.undp.org/en/content/income-gini-coefficient