Pepsi Company Management - Case Study Example

Organisation and People Executive summary This report will focus on organisation and people, how the employees associate with each other and how they associate with the top management of an organisation. Furthermore, this report will analyse the background of Pepsi Company, the way it has implemented change using various approaches in their organisations, how it has dealt with resistance of people to change and the recommendation which Pepsi Company should adopt and implement. Background Pepsi Cola Company has been in the market for a long time. ‘Pepsi Cola’ replaced Brad’s drink which was founded by Caleb Bradham who was a pharmacist renowned for his creation of the famous drink dubbed ‘Brad’s Drink’. The drink was later renamed ‘Pepsi’ because the products which were produced started using Pepsi and cola nuts in its recipe. In 1898 the Pepsi Cola trade mark was founded and its full operation started in 1903, when one hundred shares of stock were issued to the public. The following years after that saw a success in the sales volumes of Pepsi, about 20,000 gallons being sold in 1905 (Pendergrass, 2001). The logo was redesigned again in 1906 to reflect the varied qualities and the reputation that the company had obtained. In 1926 another design was adopted again which was basically designed to reflect the new changes that the company had obtained (www.pepsiworld.com) The company saw a success over several years because of the frequent changes it has being adopting since the company was formed. Managing directors predicted rise in the prices of its products and for them to maintain the market they had to developed new brands so as to capture the attention of the customers. Currently, company has gain positive reputation as the leading soft drinking company. They gain this status because of the recent changes on package designed updates on Pepsi bottles. This change has being received positively by both the management and employees. Pepsi’s Chief Marketing Officer Dave Burwick has also proposed that they should adopt a graphical redesign of core Pepsi products. This idea was strongly supported by PepsiCo Chief Executive Officer Indra Nooyi. This report will explore all these changes in the discussion part. Discussion Approaches to change The major approaches that bring about change in the organisation comprise of education and communication (McDaniel, 2008, p 80). The human resource manager of Pepsi Company should arrange for training of employees so that they can equip them with communication skills. They should ensure that communication within the organisation is clear, this will be achieved by making communication channels available so that it can discouraged grapevine communication within the organisation. Grapevine is an informal means of passing communication in an organisation. This means is very discouraging and the employees might resist change because of unreliable source of communication (Lane and Daft, 2009, p 72) Participation and involvement is the second major approach that can bring change in the organisation. This occurs in the situation where there is lack of corporation in the organisation. For example, when some of the employees are favoured or have some considerable powers as compared to others. In such cases the human resource manager should ensure that all the employees have equal powers and others should not be favoured. Furthermore, the human resource manager should ensure that all the employees are involved in the change process. This will result to good relationship in the organisation and the possibility of resistant in the side of employees is reduced (Darnay, 2009, p 67-68) The third way of approaching change is the facilitation and support. Human resource managers and other mangers that hold higher position in an organisation should support the employees in adopting change in the organisation. They should do this by educating the employees on the importance of change. It has been a culture to many organisations that whenever there is a changed some people will loose their jobs. This has not been the fact it will never happened. This fear should be cleared in the mind of the employees. Fourthly, change approach can be through negation and agreement. This is an approach where the resistance comes from the top managers. This resistant can be dealt with through negation and agreements where the managers are given incentives to accept early retirement. The other approaches used when dealing with change is manipulation and co-option. This is the most effective means provided it is applied in a correct manner. This means has always been used a last resort when the other means has failed to work or they are very expensive for the company to adopt them (Rhinesmith and Dotlich, 2010, p 59). The last approach to change is explicit and implicit coercion. This is normally the last solution when the other approaches have completely failed to work. This means involve transferring those who failed to accept changed in the organisation. It some cases it may not go to extreme end of firing those who are not ready to accept change nor do they accept to be transferred. All these approaches are been used by the successful companies and they have achieved both their long and short term goals. Competition Many of the organisations are undergoing various changes in response to high competition in the market. For example Pepsi Company has adopted various changes in response to high competition in the market. The major competitor for this company is Coca-Cola Company. This is the leading company in offering soft drinking all over the world. The management of Pepsi company has developed strategies on how to compete with it competitors and the most effective one is change-to improve the services offered to customers- the management has adopted the use of Sybase iAnywhere technology, so that it can create a more effective mobile workforce solution within the company. The human resource manager had stated the likely benefited which will result in the use of technology. Some of these benefits include the increase in sales as a result of cross-selling, the increase in speed to shelf for new products and promotions. Management This change has been successful in Pepsi Company because of the following strategies which were adopted. The management of the company had given employees and other parties which are in contact with the company an opportunity to propose what should be done to improve the sales value of the company. This was very effective as everyone in the company had felt part of it. This strategy is the same as the Participation and involvement way of approaching the change in the organisation (Lane and Daft, 2009, p 72) In addition to this, the company is planning to launch a new brand in the market called calorie cola which, according to the company’s spokesman, will cost the company about $ 100 million for marketing the product. However, the company is projecting a return of $ 1 billion in annual revenue. Apart from this, the company’s management has educated employees and other associated parties to the company such as shareholders to support the projects as it will not only increase the sales revenue but also improve the health of users. They claim that the new diet drink, popularly know as Pepsi one, will contain the newly-FDA-approved sweetener, acesulfame potassium (Standard and Poor's Corporation, 2009, p 14). The latest changes in the Pepsi Company are the change in the structure of marketing in U.S. These changes have been initiated so that the company can meet the status of America's fastest growing beverage company. This will be achieved by making changes and implementing strategies which are related to marketing. Such strategies will comprise of reorganisation of executives. This will be important so that the competitive executives are appointed to sensitive represent departments such as sales department. The company also needs to emphasize on customer satisfaction so that they can compete effectively with the Coca Cola Company (Hartline, 2007, p 88) The management of Pepsi Company has also decided to plan for future changes in the company; this will be a drastic design of core Pepsi CSDC Pepsi, Sierra Mist, Mountain Dew and changing the brands which they offer. They will change Mountain to “Mtn Dew” and will be offered on packages, while Diet Max Pepsi will be called Pepsi Max for easy identification by the customers. Other changes within the company will include changing both the brand’s blue and red globe trademark to become “smiles” which will be arranged in a series form. Furthermore, the company will be changing constantly the central white band arcing to suit the product at different angles. Other brands such as Gatorade will have to be changed to have a complete different design which will be focusing the brand on the letter G. (Darnay, 2009, p 69) Strategies for change The changes above will be met successfully because of the effective strategies which are adopted while implementing them. Some of the strategies which the company has used include educating of employees. The human resource manager has been motivating his employees through various awards like promotions. These are the positions which were created as a result of changed. New position was created especially in IT department whereby new software was implemented. This strategy had work effectively because, at a time it makes the employees to accept changes and at the same time motivating them to contribute positively to the work in the company. For example, when the Pepsi Company adopted Sybase iAnywhere technology, it created vacancy to the employees. The human resource manager contributed a lot for success of these approaches because he had handled employees effectively in the company. The major constraint which had prevented the company from implementing change is people. An organisation needs to have a good relationship with employees for it to achieve its goals and objectives. Customers are very sensitive and they normally judge the company’s products through the image which the company portrays. This can also mean that the change should be implemented so that they can improve the image of the company and thus attracting many customers to the company (Pederson, 2008, p49). Another factor which has facilitated the company’s success in adopting this change is the corporation of top managers with the employees. The top managers of Pepsi Company were so cooperative and that they had a habit of working as a group. Change in the organisation is effectively achieved when there less resistant on the top management of the company and this could only be achieved by ensuring that these top managers are well educated on the important of the change. Leadership was also another important factor which contributed to the success of the change implementation in the Pepsi Company. The company has effective leaders who are in position of leading others well, these leaders used various strategies when they were dealing with some line managers who were resisting this change. They picked them to represent the change agent in the company and gave them symbolic role to play. This strategy made these line managers to accept change though they were not for the idea (Rhinesmith and Dotlich, 2010, p 60). Organization structure The last success of these approaches was the nature or the structure of the organisation. Pepsi Company has organic structure which is flexible and can easily adopt changes to compete effectively in the market. Organic structure as opposed to mechanistic structure is a kind of organisation which there is a lot of delegation. The kind of leadership or the managers behave in this structures in away that everybody is considered to know what is expected of them. The managers delegate work to juniors and they cannot supervise. Lastly, Pepsi company has successfully implemented change because there are international company whereby top managers are from different region making them to come up with different ideas which fits there environment. This means that the kind of strategy used in U.S. differs with the strategy used in Australia. This is very important because there marketing strategy are designed to satisfy the entire market segment which the company is serving. Other successful companies such as Coca Cola Company use this strategy when serving its customers in the market (McDaniel, 2008, p 79) Recommendation to Chief Executive of Pepsi Company I would strongly recommend that the company should adopt the latest technology so that they can maintain its loyal customers across the world. They should a adopt the latest technology such as the Pepsi vending machines and infrared technology to be sure that the money is given back to the customer if the Pepsi product chosen is not dispensed. This responsibility should be directed to the IT department and should implement these technologies especially in the North America to feature products such as the Diet Pepsi, Tropicana, Propel and Lipton Iced Tea (Pride and Hughes, 2009, p 47) Pepsi Company needs to improve their marketing strategy for it to compete effectively with the Coca Cola Company and other rivals in the market. The management should also emphasize on the training of employees on how to use these latest technologies which are to be implemented within the company and lastly, the company needs to improve on the communication means within the company. They should install a communication system such as suggestion boxes so that employees can raise their complaints without fear of being criticized. This responsibility should be handled by the human resource manager. Bibliography Darnay, A. 2009. Manufacturing & distribution USA, Volume 1 Manufacturing & Distribution USA, Arsen Darnay. 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