Strategic Management and Sense of Mission - Pepsi Co - Essay Example

? Strategic Management Table of Contents Task 3 Task 2 7 Task 3 11 References 13 Task Mission The mission of an individual means strong determination towards some goal. Every organization has its mission statement. Mission statement explains the purpose of the company. The mission statement is a representative of a company. It gives the guidance to decision making to a company. Through the mission statement a company can explain how they can serve the society. Mission statement generally includes some information though that varies from company to company. Aims of an organization. The way by which an organization can serve its clients, suppliers, distributers, shareholders and other stakeholders. Present organization’s situation in terms of explaining their business segment. It can include the declaration of organization’s core purpose of existing. Sense of Mission Sense of Mission creates a strong behaviour among the individuals so that they can fulfil their Mission of life. Creating the “Sense of Mission” is not creating the purpose only but it helps to achieve the purpose. “Sense of Mission” is a very important marketing principle. It states that an organization must define its mission in such a way that it should not only focus on their product and profit. They should focus on the broader social concept rather than the mere product orientation. The new generation managers are trained with a sense of social responsibility and they have a passion for achieving of bigger causes. Corporate Social Responsibility Every organization has some obligations towards its society in which it operates. Every organization should take some initiatives to work for the environment. CSR is the contribution of an organization to the society. Corporate Social responsibility means sustaining the equilibrium between economic welfare of the organization with the social welfare. The trade off between two components can provide a balance sustainable growth for the organization. Many companies are engaged in serving the society through their corporate social responsibility. Following ethics and serving responsibility towards its society is an important part of the today’s business. For this analysis, Pepsi-Co organization has been chosen. Pepsi Co Ins. Is a multinational food and beverage company headquarter is in New York, USA. They are in the manufacturing, distribution and marketing of food items and beverages and other products also. PepsiCo started its business after the merger of Pepsi-Coca and Frito-Lay. Now PepsiCo has expanded their business in many dimensions. In 2012, Pepsi-Co was able to generate more than $1 billion of retail sales. PepsiCo is the second largest food and beverage company in the World. The Mission of Pepsi-Co is to be the World’s premier consumer products in foods and beverages. Their Mission is to serve financial benefits to its investors, the opportunities for growth to their employees, business partners, other stakeholders and the society in which they operate. They want to achieve this mission in the right ethical way with honesty and transparency. PepsiCo has a strong sense of mission also. Their sense of mission states that they are not focusing on the product orientation, they focus on Customer orientation. They emphasise on satisfaction of the customers. The focus of achievement is very strong. Not only the customization but also they believe that serving customers consistently and efficiently can create a stable customer relationship management. Retaining customers sometimes causes a conflict between its short term objectives. Pepsi-Co‘s sense of mission says that they are not in the business for profit purpose only but their goal is to serve people (Randall, 2008, p.45). Objectives including CSR: Pepsi-Co supports continual growth of shareholders. Their objective is to use best class design for packaging. Meets value, cost and performance criteria for customer satisfaction. Maintaining hygiene standards. Strives for least environmental footprint. Pepsi-Co strives for the least possible environmental footprints. They have different sustainable packaging aim: The increase the use of recycled materials to save the renewable resources. Design the packaging materials in a way that can reduce the material use. Minimization of waste. Promoting the use of those kinds of materials like beverage containers or cereal containers that can be easily recycled. They take the knowledge from previous environmental impact and try to avoid those events that have negative impacts previously on the environment. They focus on ensuring energy usage efficiently and for that they reduce the footprint of carbon. For achieving this CSR objectives Pepsi-Co has designed some principles. Using of simple and common language. Setting up achievable goals. Developing long-term as well short-term packaging strategies for improvement. In this respect, Pepsi-Co has developed sustainable objectives that focus on empowering the employees. As a part of their social responsibility, Pepsi-Co purchases the fibre Woods from the selected suppliers. They do purchase from the suppliers so that they would harvest Wood fibre illegally or from legally protected forests. Pepsi-Co does not purchase any raw material directly from the forest and it purchase only from the reliable sources. Pepsi-Co maintains a control over its suppliers so that their supply will also harvest in an environment friendly way, and maintain a proper forest management principle. Pepsi-Co’s suppliers need to maintain following standards: CSA, FSC, SFI, PEFC, CERFLOR. Etc. If the suppliers can able to achieve the above certifications then only Pepsi-Co purchase the raw materials from them. Key objective of the company is to achieve their broad mission within the short term period. By the objectives of REMOVE, RECYCLE, RENEW, REDUCE and REUSE Pepsi-Co helps itself to achieve its Mission. Task 2 SWOT The term SWOT stands for Strength, weakness, Opportunity, Threat. Strength and Weakness these are the two components used to describe the internal environment of an organization. Weakness and opportunity are the two components that describe the external environment of a company. The SWOT analysis if the Pepsi-Co company is following: Strength: One of major strengths of Pepsi-Co is the diet Pepsi. Diet Pepsi is a soft drink that has a variety of flavour across countries. Diet Pepsi has many sizes that provide customization and satisfaction to the customers. Now the sweet lovers also can get the Diet Pepsi as it has included zero calorie sweeteners. In the competitive market, the diet Pepsi has a great significance. Weakness: One of the Weakness of Pepsi is lacking of creativity in their products. Pepsi is not a leader of world in the soft drinks sector and their move depends on the competitor’s move. For sustainable development they require creation. Opportunity: Pepsi-Co’s presentation itself as a socially balanced organization is an important brand positioning. As one of the CSR activities, Pepsi-Co has introduced a new ways of packaging by using recycled materials and this CSR activity has created a new dimension in the soft drink world. The introduction of diet Pepsi and healthy oil sunflower, grain based product Kurkure and soft drink diet Pepsi all these are indication of health consciousness. The consumers of snacks and soft drinks generally belong from young age group and they are very health conscious. In future, people will be more health conscious and will have only those foods that harm minimum to the health. Threat: Coca-Cola is always a big threat for Pepsi and all other companies who claim themselves as healthy soft drink manufacturer are also big threat to Pepsi. Most of the companies claim that they are using the same ingredients that Pepsi uses. PEST ANALYSIS For understanding the external environment Pest Analysis has been done where P stands for Political, E stands for Economic, S stands for Social and T stands for technological. Pest analysis of Pepsi-Co is as follows: Political: Pepsi-Co deals with non alcoholic beverage and it is regulated by FDA. The products are under the supervision of federal law. Pepsi-Co is facing obligations while acquiring land for new factories. For tough water pollution norms by Government Pepsi-Co is facing problem. The increasing of cross boarder raw materials price is another political issue that PepsiCo has been facing (Warren, 2008, p.90). Economic: The global economic condition gives a positive vive to the multinational companies’ future worldwide. Though the recession bring downtrend in the overall world economy but Pepsi-Co’s sales was not affected by it. Because it is a consumable product and though people lost their job they used to have more and more Pepsi with their family. It is also evident that, the demand for Pepsi-Co product is inelastic in nature that’s why the recession could not affect much. The global economic perspective is also in favour of Pepsi-Co as it can expand its business worldwide. Social: For Pepsi-co it is very easy to associate itself as a socially accepted firm. Its activity towards the social cause makes the Pepsi-Co most acceptable firm in the soft drink segment. The replenishment of water, recycle of materials make Pepsi-Co different from other brands. Technological: Pepsi-Co has applied State of the Art technology by introducing plastic bottles, cans and new designs for packaging. All these activities will help them to sustain in the competitive market. Threat on New entrants: For Pepsi the threats of new entrants are relatively low. Because, the establishment cost of manufacturing plant is very high for the new entrants. Threats of substitute products: There are many substitutions for the soft drink products. Tea coffee, fruit juice, health drinks, energy drinks all these major threats of Pepsi. Even the distilled water is also a kind of substitution. The ease of getting substitution product is very high. Rivalry among the competitors: Rivalry comes mainly from the Coca-Cola. Pepsi-Co and Coca cola are the major players in the market. In the advertisement, promotion, they always take a move to each other. Bargaining power of Supplier: The suppliers are the key focus of Pepsi Product. Pepsi-Co is very specific while selecting their suppliers. The increasing price of suppliers is a threat for Pepsi-Co. Bargaining power of buyers: After the acquisition with the big giants KFC, PIZZA HUT, the buyers bargaining power has been weakened. The master Bottler Contract provides the right to Pepsi to force to purchase raw materials from Pepsi at their fixed up prices. Strategic Mapping: Every company has its product range, they follow different pricing strategies, distribution network, and they serve different geographic market. Strategic Mapping helps to understand the competitive positions of different firms. Pepsi-Co always follows competitive pricing strategies with coca-Cola. In USA they are taking new pricing policies to reduce gap between soda prices on regular days and holidays. Game theory: Game theory is used to make decisions in the business. This is a decision making tools for the firms. It includes Pay-off, strategies and players. Pepsi has a rivalry with Coke (Warren, 2008, p.569). Both of these firms together called players, strategies means their move and responses and pay offs means what they are getting. In a game theory model Pepsi and Coke can take the pricing decision, they can choose the price that is to be charged. RBV: RBV is the resource based view of watching the organization Pepsi-Co. It is resourceful company. By using its valuable resources it can achieve long term sustainable development. Resources are valuable and non renewable sources are limited also that is why Pepsi-Co is focusing on renewable resources. Blue Ocean Strategy: It is the strategy by which a company can differentiate its product to the extent that the competition remains irrelevant. Samsung follows this strategy and become product innovator. Pepsi-Co is a follower which not able to apply this strategy. Delta Model: Pepsi-co has formulated their major strategies which are customer focused. Their Mission statement represents customer orientation (Warren, 2008, p.550). Energy and Environmental Research Centre (EERC) helps to conduct research on development and use of no emission coal, water sustainability. The consumer surplus, gained by the consumers by Pepsi is its valuable theme of social responsibility. Pepsi-Co does not need to follow major reconstruction as the product is inelastic in nature and shows its popularity (Warren, 2008, p.789). Task 3 Recommendations After the study, the major recommendations would be given in the following: Analysis the Blue Ocean strategy, it is clear that Pepsi-Co does not have any major initiative to become the leader in the world. Whatever strategy they take is that basically a copycat strategy? The diet Coke is one of the better introductions in the market as the young generation is more likely to have healthy soft drinks. But the problem is that, there are many other substitutes for this kind of product. Coke also has its diet product. The major mergers with KFC and with other restaurants are very helpful for the Pepsi-Co, as its products are sold in bundle as B2B sales and the customers have no choice other than purchasing Pepsi products. Pepsi-Co is a follower of social concept of Marketing. Social media marketing can really help them to sustain in the long run. Even, the latest arguments against the use of pesticides in their ingredients could not able to hamper their brand image to a large extent. Pepsi-co has being able to establish itself as eco friendly, socially accepted brands. The present situation where the fuel price is high and the supplier’s prices are high it is quite difficult for Pepsi-Co to stay indifferent with the situation. Pepsi-Co does not purchase any products or raw materials directly from forest but they have taken a step to set a manufacturing unit near a forest. That initiative directs towards buying products directly from the forest and setting manufacturing process by their own. Pepsi-Co should use its financial resources to set up new advanced manufacturing units in different countries. Overall, Pepsi-Co needs to continue its social responsibility and also the business pattern to avail sustainability. References Bensoussan, B. E., 2012. Tools to Make Better Strategic Decisions. FT Press: New Jersey. Henry. A., 2008. Understanding Strategic Management. Oxford University Press: USA. McEachern, W., 2006. Contemporary Economics Series. Cengage Learning: Stanford. Randall, G., 2001. Principles of Marketing. Stanford: Thomson Learning. Vives, X., 2001. Oligopoly Pricing: Old Ideas and New Tools. MIT Press: USA. Warren, K., 2008. Strategic Management Dynamics. UK: Wiley.com. Read More