PepsiCos Changing Business Environment - Case Study Example

PepsiCo’s Changing Business Environment Executive Summary This paper explores the changes that have taken place in PepsiCo Inc., from the perspective of the determinant forces and the manner in which the company has adjusted itself to the changes. The paper focused on the various business transformations that have taken place in the form of changes in the range of products, acquisitions, mergers, and other business processes that have shaped up in the course of the company’s history. The paper sought to determine the relationship between the specific aspects of change and the market forces as perceived from a global perspective. Also explored in this paper is the impact of change on the organizational structure and general performance of the company. Performance was assessed through a comparative analysis of the company’s strengths and that of the competitors. Financial reports were also used to establish the trends of performance as they relate to the various changes undertaken by the company. Introduction PepsiCo Inc., remains one of the leading food and beverage companies both in the United States and in different parts of the world. Over the years, the company has undergone structural and managerial changes aimed towards enhancing its market profile and general performance. Longitudinal inquiries into the company’s potential show that the company has continued to post impressive financial results as a result of strategic changes in its internal systems and supply chain (Bachmeier 141). PepsiCo’s expansion into Asia, Europe, Africa, and other parts of the world demonstrates a determined agenda of breaking into new market segments beyond its original geographical niche. The same determination manifests itself through the mergers, acquisitions, and purchases that the company has undertaken in the course of its operation. PepsiCo’s merger with Frito-Lay and later with Quaker Oats in the year 2001 exemplifies some of the landmark changes that the company has undergone in the recent past (Silzer and Ben 59). The immediate consequences of these mergers could be interpreted in terms of their impact on the company’s profile in the years that followed the development. These mergers allowed PepsiCo to include new products into its inventory of foods and beverages. A diversified range of products remains one of the strongest selling points by which PepsiCo manages to maintain an impressive lead on the global market. It might be argued that some of the changes that relate to the company’s change of profile are necessarily linked to market forces, which tend to favor multinationals and bid corporations. On this note, it remains evident that the changes in the processes and structures of the company had some significant impacts in terms of growth and profitability. Sustained competition with other food and beverage companies on the market has occasioned a shift in production methods with the aim of retaining its hold on the market share. The reliance on both carbonated and un-carbonated drinks has allowed the company to attend to the diverse tastes of the market, which also translates into increased revenue flow. One of the competitive advantages that PepsiCo enjoys over its main rival is the diverse product range. Essentially, the performance of PepsiCo could be assessed from the perspective of the various factors that attend to the dynamics of global competition. Consistently, PepsiCo has engaged in strategic corporate social responsibility programs that are aimed at promoting healthy nutrition in the wider society. This strategy weighs into public concerns of proper nutrition in the wake of diet-related lifestyle diseases. The Business Environment PepsiCo operates in a highly competitive business environment particularly because it relates to the health and nutrition of populations. The food and beverage business environment attracts new players every year due to the high returns on capital for the successful ventures. The competitive nature of the environment is further enhanced by the fact that populations in the developed world are quickly turning to processed and packaged foods instead of cooking their own meals at home (Penzkofer 64). The fast-paced lifestyles of the modern world have contributed to the increasing preference for fast foods and beverages. The environment is defined by high levels of innovations as competitors endeavor to out-perform their rivals by aligning their products to the tastes of the clientele. Concerns over matters of health have a regulating effect on the food and beverage industry. In the recent past, changes have manifested on the score of clients’ tastes due to the increasing awareness of matters of proper nutrition as understood within the agenda of health and nutrition. The desire to prevent themselves against the perils of lifestyle diseases such as diabetes, heard diseases, arthritis, and obesity have contributed to the changes that have taken care to the nature and quality of foods and beverages served in the industry. The capacity of firms to develop products that address these concerns usually defines their competitive advantage in the industry. On this score, it might be argued that some of the factors that determine the shape and pace of the food and beverages industry are largely controlled by trends in healthcare and the psychological conditioning of the clientele. Categories of the Business Environment The food and beverage industry could be classified into local and global categories. The local environment implies the domestic nature of business while the global category of the environment features international boundaries and processes as understood within the perspective of trade and commerce. The local environment mainly manifests within the boundaries of a single country. Many of them engage in one line of production, which attends to specific aspects of the clientele. The local environment is generally not subject to the global laws that define international trade although they are also affected by the impact of globalization and liberalization. These forces are not shielded entirely from the perils of adverse competition as understood within the context of globalization. The global category of the business environment is defined by the vast scope of operations, which transcends international boundaries. This environment features multinationals and big corporations that operate in several countries. The range of products is broad and certain laws and principles that define international trade regulate the nature of business. The players in the global environment have access to vast pools of capital and logistical resources. Resource and capital comprise the two major defining features that help the companies to engage in flexible systems and approaches, which give them leverage over the local businesses. However, the discourses of globalization and liberalization of the market economy have blurred the line between the two business environments. Although they remain essentially different, the two business environments mostly feature certain aspects that unite them in terms of objectives and strategies. This case has arisen due to the rapid innovation of information and communication tools. Theoretical Approach This paper adopted the SWOT analysis to determine the nature and impact of changes that reflect within PepsiCo structures and processes. An analysis of the strengths, weaknesses, opportunities, and threats of the organization could be determined from the perspective of the various issues that determine the company’s profile and its relationship with the competitors. On this note, it might be argued that some of the fundamental issues that relate to the operation of the company are necessarily related to matters of performance as understood together with the fundamental issues that regulate and determine the change processes. Case Study: PepsiCo Inc. PepsiCo is of American leading food and beverage companies. The company begun as Pepsi-Cola under the management of its pioneer, Caleb Bradham in the 1880s.Pepsi-Cola acquired the full status of a company in 1902 and was referred to as Pepsi-Cola Company. Over the times, the company changes ownership and structure in a consistent effort meant to enhance its image, performance, and growth. Its merger with Frito-Lay Inc. led to the adoption of the company’s current name, PepsiCo Inc. The company has demonstrated a determination of changing its systems and operations in ways that capture the essence of growth and flexibility. Analysis of Changes Since its inception, PepsiCo has undergone various changes in response to environmental factors, global forces, market forces, internal innovations, and customer preferences. Out of the multiple factors of change, market induced changes are the most noticeable. Market induced changes might be seem in terms of the high level of competition. Using the SWOT analysis, it is possible to analyze the strength of the company as one of the motivating factors that underpinned the process of change. In order to enhance the internal strength of the company, the management has routinely changed the nature of products to suit the particular needs of the organization. The ability to accurately interpret the needs of the market remains one of PepsiCo’s significant strengths. For instance, the introduction of healthy foods and beverage was consistent with public preferences for foods that would promote health and healthy living practices. Another important strength is noticeable from the perspective of diversity in the range of products. Initially, PepsiCo’s core objective was to offer carbonated drinks to the clientele. Upon acknowledging the tough nature of competition particularly from string players such as Coca-Cola, the company sought to invest into alternative kinds of products that would shore up its revenues to supplement what would be obtained from the core business areas. This change was significant in the development of a framework of action that would revamp the failing aspects of the company. These changes were measured to articulate the concerns and values that attend to the aspect of performance and the growth of the brand profile. The realization of the practical difficulties involved in parts of the strategies was one fundamental factor that was considered within the framework of change. One of the weaknesses that attend to the PepsiCo relates to the inability to engage well with the various segments of the market. The vast global market requires a focused approach that would be necessary in establishing sufficient control over the diverse aspects of the market. However, the company has consistently sought to change its ways of operation by developing a closer reliance on systems and processes that determine the levels of growth. An understanding of the relationship between the trading practices and the general objective of the firm must entail some determination of the kind of strength that engage the processes of change and management. Deliberate structural changes have ensured that the company stays the course of productivity and growth. Under the leadership of Indra Nooyi, the structure of the organization has changed significantly to reflect on the changes that determine the essence of reality and the operational environment. PepsiCo has carried out strategic changes in order to impact positively on its subsidiaries in areas outside the United States. The company shed off its early structured design of leadership, which featured a centralized leadership style to a more devolved system that provides opportunities for workers to take part in the decision-making processes. In essence, some of the factors that attend to issues of globalization should be seen from the perspective of change as exemplified in the PepsiCo model (Daft 24). PepsiCo style of management has made it possible for the workers to own processes and participate in the decision-making processes. In this regard, the company provides a range of benefits that allow workers the opportunity to realize and develop their skills in different aspects of the change processes. Changes in human resource management could be perceived from the context of the multiple issues that concern the impact of employee motivation on the levels of productivity. The changes that have taken place at PepsiCo are meant to illustrate the awareness of the threats in the business environment. This threat could affect the firm in the form of stiff competition, unfavorable policies in various parts of the world, and adverse interference in the commercial processes by hostile forces. As such, PepsiCo has adjusted its structures and systems in ways that respond to these changes. In essence, some of the factors that engage the attention of the forces are necessarily related to the impact of global pressures on the stability of multinationals. For instance, some of the change strategies adopted by the company provided some significant shield against the devastating impacts of the global financial crisis. In essence, the processes of change in the running of the affairs of the firm should be interpreted as a sum of influences and processes that relate to the performance, stability, and growth of the firm. Conclusion This paper established that PepsiCo Inc has undergone various changes in response to multiple factors. The changes were designed to minimize the impacts of competing forces on the market. The analysis of the various processes could be understood in terms of the different effects on the general performance and growth of the organization. The inevitability of change is made possible by various forces of the market, which keep shifting in response to the global economic and fiscal forces. It is necessary for companies and corporations to undertake the changes in order to remain relevant in the modern world of business. The adoption of technological solutions, changes in organizational structure, strategic expansion in the range of products, and diversification in the geographical areas of operation are some of the changes that have added value to the image, profile, performance, and competitive aspects of the competition. Change in the leadership structure and chain of products were the most significant in the country. Works Cited Bachmeier, Kristina. Analysis of Marketing Strategies Used by PepsiCo Based on Ansoff's Theory. New York: GRIN Verlag, 2009 Daft, Richard, L. The New Era of Management. London: Cengage Learning EMEA, 2008 Penzkofer, Andreas. The Market of Pepsi / PepsiCo. New York: GRIN Verlag, 2007 Silzer, Rob and Ben Dowell. Strategy-Driven Talent Management: A Leadership Imperative. New York: John Wiley & Sons, 2009 Read More