Pepsi Cola Company - Innovative Business Operation Strategies - Research Paper Example

? Report Inception Operation management is considered as an important area of management deals with overseeing, controlling and designing the manufacturing process and redesigning business operation processes in the production of different products and services. This report will go through the development of the operation management of PepsiCo. PepsiCo is one of the leading US based multinational food and beverage corporation deals with manufacturing and distributing of soft drinks, beverages and snack foods. The organization was formed with the merger of Frito-Lay Inc and Pepsi-Cola Company. Now the products of the organization is broadly known and accepted as Pepsi in global market place. The organization has implemented strong brand and product extension strategy since 1965 in order to gain competitive advantages within the industry. The organization has able to achieve huge success and potential competitive advantages due to continuous improvement in the operation management process (Heizer, 2011). This report will compare the old and new operation management process of the organization and will determine the competitive advantages of the company. In addition to this, the report will analyze several facts in order to prove following thesis statement. Thesis Statement Constant innovation in operation management, and integration of technology, sustainability and cost reduction strategy helped Pepsi to become one of the leading organizations within food and beverage industry. Analysis PepsiCo is considered as one of the leading organizations in the global food and beverage industry. The organization always tries to ensure fairness and business ethics in each and every business operation process to achieve potential competitive advantages and develop global client base. The organization tries to take care of all stakeholders such as society, community; employees, shareholders, consumers and suppliers by maintain sustainability in the business operation process. It is true that the organization constantly changes its operation management process in order to improves its brand image and meet market demand. Honesty, fairness and integrity are the three aspects of the business operation process of PepsiCo. Comparison between Old and New Position PepsiCo was previously known as Pepsi Cola. Pepsi Cola Company achieved huge success initially through the implementation of business operation strategy. Unfortunately the organization went bankrupt in the year 1931. However, the brand redeveloped and repositioned later. The organization merged with Frito-Lay Inc. in the year 1965 and formed PepsiCo, Inc. The soft drinks of the organization are broadly known as Pepsi among the people in this world. The mission statement, corporate values and operation management processes have changed of the organization throughout these long operating years. Previously the organization was aiming on becoming one of the most profitable consumer products organization by maintain honesty, integrity and fairness in the business operation process. However, the organization changes its business value and aim quite slowly and steadily in order to address the critical changes in several external environmental factors. Recently the organization is focusing on several corporate social responsibility activities, community engagement programmes in order to maintain its strong global brand image. Pepsi Cola Company used to follow three different steps in the operation process such as manufacturing of the soft drinks, transferring of the soft drink to the packaging house and storage of the soft drink products. The organization used to incorporate ingredients like flavour oil, kola nuts, vanilla beans and sweeteners as the major ingredients to manufacture soft drinks. This product got huge popularity among the people in this world. The organization always used to focus on the adoption and implementation of advanced technological processes and tools in the business operation processes in order to maintain efficiency in the business operation management process and to gain potential competitive advantages. The organization transfer the manufactured soft drink products in can to packaging centre by the implementation of several advanced technological processes and tolls in order to ensure high quality of the products. In addition to this, the organization always ensured proper packaging of products before they are delivered to several retailers and stores. Earlier the organization followed traditional supply chain management network. Pepsi always uses water, sugar, flavours and water as major raw materials for the production of soft drinks. The manufacturing process of Pepsi included clarifying the water, filtering, sterilizing and de-chlorinating the water, mixing the ingredients, carbonating the beverage, filling and packaging, and quality control (Greasley, 2007). Pepsi Cola Company used to adopt and implement modern and advanced technological processes and tools in order to provide products according to the needs of target customers and current market demand. The organization changed its business operation processes and adopted several unique and differentiated strategies in the business processes in order to maintain its strong brand image and potential global client base. It is true that the soft drinks of Pepsi Cola Company were considered as high carbonated soft drink products. Too much consumption of these high carbonated soft drink products can seriously affect the human body. Looking into these issues people reduced the level of consumption of these soft drink products. Slowly and gradually, people were shifting towards the healthy soft drinks and fruit juices in order to meet their satisfaction level and keep themselves feet and healthy. Looking into these changes in market demand and needs of consumers around the globe, several leading organizations came up with different and unique strategies. Several organizations introduced healthy soft drinks and fruit juices to meet market demand. PepsiCo thought that if they failed to reposition their brand and products, they can find it difficult to survive in this industry as the organizations within the global food and beverage industry were facing high degree of intense industry competition. The management of the organization adopted new product development and brand extension strategy in order to address the issues and challenges. Moreover, PepsiCo made some changes in the operation management processes to offer sustainable products to the target customers according to their needs and demand. Slowly and gradually, Pepsi Company increased its product portfolio and started to offer products like Diet Pepsi, Gatorade and Tropicana that are developed in order to target health conscious customers. The organization merged with different organizations to enhance effective brand extension strategy. This strategy helped the organization to increase its product portfolio. In addition to this, the organization reduced the level of carbonate beverage and sugar ingredients in the manufacturing process of traditional carbonated soft drink products to compete with different potential competitors that were trying to grab the market share of Pepsi Company. Recently, the organization changed its mission statement and business values. Now-a-days, the organization is aggressively focusing on community engagement programmes and valuable CSR activities. In addition to this, the organization is highly concerned about the quality control aspects in the newly developed products to gain the trust and faith of target customers. It is clear from the above comparison that the organization adopted reposition and brand extension strategy in order to address several issues, such as environmental challenges, social issues, intense market competition and several legal issues. In addition to this, the traditional carbonated soft drink reached to the maturity stage in the product life cycle. Therefore, it was necessary for the organization to adopt and implement brand extension strategy to maintain its competitive position in the global market place. Comparison of Operation with the Competitors in the Industry Global food and beverage industry has become highly competitive as the leading organization like the Coca Cola Company and PepsiCo are implementing unique operation management processes and strategies in order to gain potential competitive advantages. Kingdom of Saudi Arabia can be considered as emerging market for this industry as the country is achieving significant economic growth and the demand of the people for the soft drink products among the people are significantly increasing. PepsiCo implemented unique operation management strategies in the business processes in order to maintain its global market share and client base. The competitive strategies of PepsiCo mainly lie in quality control, productivity management, consistent product quality and aggressive target marketing and promotional strategies for the people of young generation. The organization always tries to accomplish developed tasks with an extreme sense of pressure. This urgency in the task accomplishment helps the organization to provide solutions for several problems before they become serious challenges and issues for the organization. In addition to this, it is the passion of the management and the employees of the organization to accomplish the developed task way before the deadline in order to gain competitive advantages and develop benchmark within the food and beverage industry of the Kingdom of Saudi Arabia. The management of the organization highly concerned about appropriate target setting and winning while developing business and corporate goals. Employees are considered as the strongest asset for an organization. Their hard work, knowledge, level of skills or competencies and passion for work help an organization to achieve significant business growth rate. The management of PepsiCo always motivates and supports the employees who are considered as real assets and business growth drivers. In productivity management, the managers of the organization always implement own organizational operational management tools to refine the organization’s goal and accomplish the reformed tasks or goal successfully. The organization always considers effective quality control in product manufacturing and distribution process in order to maintain the customer loyalty. It can be considered as significant competitive strategy adopted by the organization. PepsiCo operates within the most sensitive food and beverage industry in which quality concerns can be considered as one of the major business growth drivers. The organization implemented several local and international standards in order to ensure high quality of several soft drinks and snacks food products. The organization received ISO 9002 industry standard to ensure effective quality control. Sustainable manufacturing process is important for these types of organizations (Jones & Robinson, 2012). PepsiCo always tries to improve its manufacturing and distribution process in order to create benchmark within the food and beverage industry of the Kingdom of Saudi Arabia. In quality control process the management of the organization always evaluates the capability and competency of each and every individual within the organization. The management of the organization always put appropriate measures of several key performance indicator factors in order to make sure that the sustainability and reliability of the facilities are at the required level. Apart from all these things, the management of PepsiCo adopts different steps to maintain high quality control. The research and develop team used to test the quality of raw materials that are used in the manufacturing process. In addition to this, the organization tests the quality of finished products in order to maintain its consistent quality. Adoption and execution of both internal and external audit process helps the organization to ensure high quality control aspect. These aspects help the organization to maintain its high brand image and significant business performances in the Kingdom of Saudi Arabia. It is true that the leading organizations in this world are trying to capitalize on the potential business opportunities that are developed due to globalization and technological advancements. Each and every organization is trying to implement advanced technological tools and processes in business operations in order to gain competitive advantages. PepsiCo applies process oriented technologies across its supply chain network to include entire core operation management processes. This helps PepsiCo to maintain great efficiency along the supply chain network. The organization is considered as the market follower as the Coca Cola Company is considered as the leading organization within the industry. It is quite essential for the organization to implement aggressive marketing and business operation strategy to grab the market share of the Coca Cola Company. The organization adopted cost leadership strategy to create huge brand value and gain customer preferences. The organization reduces business operation cost by adopting several key strategies. This cost leadership strategy is helping the organization in several ways. Recent financial crisis and economic recession affected global economic environment. Low disposable income of people and limited purchasing power are the major consequences of the global economic slowdown. Looking into these issues and challenges, the organization adopted cost leadership strategy to back the affected purchasing power of people. Low operating cost is helping the organization to invest in several community engagement programmes and CSR activities. In addition to this, the organization implements several aggressive marketing communication strategies to attract its target customers. People of young generation are the major target customers of this organization. Therefore, the organization always developed aggressive and attractive promotional strategies in order to attract the people of young customers towards the brand. It is quite important for an organization within the food and beverage industry to maintain the consistent quality of the products. Therefore, the organization developed a strong research and development team in order to maintain each and every operation management process to ensure high quality of the products. Last but not the least; it is the product line expansion and global diversification strategy that are helping the organization to create a significant benchmark within the industry. Several organizations within this industry are facing different types of legal or environmental issues, on the other hand, PepsiCo is becoming successful to avoid these issues and problems as the organization is focusing on high quality control, less maintenance time, low supply chain lead time, low inventory turnover and low supply chain cost. These strategies are helping the organization to gain potential competitive advantages among its global competitors. Findings It has been analyzed that PepsiCo adopted cost leadership strategy by the implementation of operational cost reduction strategy. It is quite essential for the organization to maintain its strong brand value in this competitive industry to attain significant business growth rate. It is true that the products of PepsiCo are economic priced. Therefore, people of several places around the globe prefer to buy these products despite their affected purchasing power. The organization understood the significance of operational cost reduction strategy. It helped them to retain its market share and client base. On the other hand, it helped them to gain potential competitive advantages over its potential industry competitors. It is highly important for the management of the organization to focus on the quality of the products beside of all the operation management activities. Few years back, PepsiCo faced several legal problems due to presence of high pesticides in the carbonated soft drinks. It is true that too much consumption of carbonated soft drinks can affect the human body. Obesity, overweigh and heart diseases are the major consequences of too much consumption of carbonated soft drinks. However, the organization has able to overcome these issues through the help of its strong research and development team. They reduced the level of carbonated ingredients in the soft drink products. On the other hand, the organization succeeded to reduce the level of cholesterol and sugar from the soft drinks to reduce the possibilities of child obesity as the children and people of young generation are the major target customers of the products of PepsiCo. It is quite important for the organization to maintain constant product line extension activities by introducing healthy soft drink items to meet the market demand and satisfaction level of the health conscious customers. Process strategy is quite important to consider. The organization adopted and follows effective and sustainable supply chain process strategies. It is important for the organization to maintain its community engagement programmes and corporate social responsibility activities. It is highly important for PepsiCo to maintain environmental sustainability, talent sustainability and human sustainability in its business operation processes. It is true that the organization adopted several strategies, such as water recycling, zero solid waste and employee engagement in the business operation process. But it is highly essential to maintain all these aspects for a longer period of time, due to saturated market place. Several organizations are trying to use fuel efficient long headed trucks in the logistics management process to reduce the carbon emission level and attract both external and internal stakeholders (Collier & Evans, 2011). However, it is quite essential for PepsiCo to use substitutes of fossil fuel as the major energy resources in the manufacturing, processing and distribution management process to keep the environment clean, green and highly sustainable. Last but not the least; the organization should highly focus on employee retention aspect by implementing several motivational tools to reduce the possibilities of high employee turnover. Conclusion It is clear from above discussion, analysis and findings that PepsiCo continuously adopts and implements unique and innovative business operation strategies in order to address several external environmental issues. It is true that global business environment is changing rapidly as the needs and demand of the customers is changing significantly. In addition to this, the organizations within the industry are introducing sustainable and high quality products in order to meet market demand and needs of target customers. The organization adopted brand positioning and brand extension strategy as the organization reached to the maturity stage of the product life cycle. It was important for the organization to increase its product line and introduce differentiated products for the target customers in order to gain competitive advantages. In addition to this, the organization always maintains effective quality control in the manufacturing and distribution processes. Apart from all these things, PepsiCo adopted advanced technological processes and tools across the entire supply chain and operation management process to maintain efficiency in business output. On the other hand, several community engagement programmes and different valuable corporate social responsibility activities helped the organization to gain potential competitive advantages and create benchmark in the global food and beverage industry. It is important for PepsiCo to address several external or internal issues. It has been discussed that the organization faced huge legal issues due to high pesticides in the carbonated soft drinks. The organization should motivate its research and development team to introduce quality products in low price (Bettley, Mayle & Tantoush, 2005). In addition to this, the research and development team should try to reduce the level of sugar and carbonated ingredients in the soft drink products to avoid the possibilities of future issues. On the other hand, the organization should also ensure low inventory turn over and low supply chain lead time to increase its core competency that can help the organization to retain its brand value and profitability. References Bettley, A., Mayle, D., & Tantoush, T. (2005). Operations Management: A Strategic Approach. London: Sage. Collier, D., & Evans, J. (2011). Operations Management. Stamford: Cengage Learning. Greasley, A. (2007). Operations Management. London: Sage. Heizer, J. (2011). Operations Management. 10th ed. New Jersey: Pearson. Jones, P., & Robinson, P. (2012). Operations Management. London: Oxford University Press. Read More