Business Functions of PepsiCo - Case Study Example

PepsiCo of Introduction PepsiCo is an American multinational corporation that operates in the global food andbeverage industry. The company was incorporated in 1986 and presently has operations in more than 200 countries (Reuters, 2014; PepsiCo, 2014a). The paper focuses on the recent discussion between Fox business and current CEO (Chief Executive Officer) of PepsiCo, Ms. Indra Nooyi (PepsiCo, 2014a). In this paper, overall business functions of the second largest food and beverage multination company will be assessed with respect to various environmental aspects. In the following sections, the changing world of PepsiCo will be discussed in the lights of its operations, human resource and sustainability approaches. Amidst these discussions, the paper will aim at answer several questions related to the company’s survival during global economic slowdown, its balance food portfolio, workplace culture and diversity and commitment of company towards environmental sustainability. 1. Operations Market Segmentation It was ascertained that PepsiCo is the largest manufacturer and distributor of food and beverage in the United States and from its traditional business of soft drinks, the company has adopted a multi segment approach over the years. The present offerings of the company can be segmented in terms of variety of snacks, sports drink, juice, bottled water and cereals. The soft drink segment of the company includes Starbucks ready-to-drink beverages, Mountain dew, Sierra Mist, Sobe, Pepsi-Cola, 7UP, diet Pepsi and Lipton iced tea. The juice segment of PepsiCo comprises brands such as Naked Juice and Tropicana. The snack segment of the company includes brands such as Lays, Cheetos and Tostitos (PepsiCo, 2014a). The complete set of global brands of PepsiCo can be classified in three categories, namely, fun-for-you, good-for-you and better-for-you brands. Fun-for-you brands include basic savory products such as chips and cold drinks. Good-for-you brands are focused on delivering healthy choices that include vegetables, dairy products and fruits. Lastly, Better-for-you brands offer mostly low calorie food products that have low sugar and fat content (YouTube, 2011a; PepsiCo, 2014a; 2014b). Impact of external factors PepsiCo is a global company and it can be naturally assumed that the company is susceptible to various social, economic and geo-political issues. Social factors comprise lifestyle and cultural aspects of consumers. PepsiCo is well-aware of its consumers’ preference which is significantly influenced by their lifestyle. Consequently, PepsiCo classified its products in three unique categories that help consumers to buy products that suit their needs and lifestyles (PepsiCo, 2014b). Economic factors that have significant impact on the company’s business include global economic slowdown and recession. Recession had strong negative impact on consumer purchasing power which made consumers to choose cheaper substitute of PepsiCo’s offering so that they can save the extra penny (PepsiCo, 2009). PepsiCo revealed that operations beyond territory of the US contribute significantly to the company’s profit and growth. The CEO expressed that the company is aware of the growing social and geopolitical instabilities such as income inequality, social unrest, and political conflict and will make possible efforts to ensure that its supply chain and consumers in challenging environments stay protected (PepsiCo, 2013a). Impact of recession on PepsiCo’s operation strategy PepsiCo recognized that the recession has affected the purchasing power of consumers significantly and consumers were more interested in saving their disposable income instead of spending it on unnecessary consumption. Indra Nooyi during this period proposed that the company should modify its operational model and offer products that consumers can afford. The CEO appended that innovation need to be incorporated for premium as well as value consumers. Consequently, PepsiCo developed products that delivered marginal profit while satisfying price-conscious consumers (CNN Money, 2009). 2. Environmental sustainability PepsiCo recognizes that agriculture is an essential source of survival for human being and food and beverage companies but contributes largely towards environmental footprint. Therefore, the company strives to make an effort that will make agriculture processes sustainable and efficient. Alongside, the company has adopted measures that will help in enhancing livelihoods of small scale farmers. It was also gathered that PepsiCo is also working towards minimization of risks associated with biodiversity loss and deforestation (PepsiCo, 2014c). In this regard, PepsiCo outlined its key targets related to environmental sustainability. The company is aiming at delivering safe water to approximately three million people in various developing nations. The other targets include reduction of packaging weight, elimination of solid waste from the production facilities of the company and maximum reduction in emission of greenhouse gases (PepsiCo, 2010; YouTube, 2011b). The company is presently seeking innovative way-outs to enhance water conservation and reduce energy consumption. It was observed that PepsiCo make maximum use of local landfill gas for supplying energy at different plants. Since agriculture consumes maximum level of water, the company is making effort towards efficient water consumption through drip irrigation facilities. PepsiCo further revealed that the company is committed to water stewardship by minimizing its upstream usage of water and that in it its activities as well. The company aims at maximum reutilization of treated water which is processed through various recovery systems. This helps PepsiCo to deliver clean and safe water to the local communities. The company is significantly dedicated towards management and treatment of wastewater (PepsiCo, 2013a). PepsiCo has a number of wastewater treatment plants in Chile, Australia, the US, Colombia and Mexico, which apply a number of technologies such as membrane bioreactors, UV disinfection, sand and carbon method and reverse osmosis for water purification. PepsiCo has rainwater recycling reservoir in a number of plants along with community water projects in many developing countries such as India so that safe water is preserved. The community water projects also develop low cost tensiometers that help farmers understand water need at farms. PepsiCo is one of the major companies that are using recyclable packaging materials for storing food and beverages (PepsiCo, 2013a). It was observed that PepsiCo sells various juices such as Tropicana and Naked Juice in recyclable packaging. The company is further working towards weight reduction of packaging materials without compromising on its safety and quality. PepsiCo enjoys significant level of competitive advantage in area of recyclable plastic packaging. The other measures of environmental sustainability are conversion of vegetable wastes to natural fertilizers, minimization of solid waste at production zone, reuse of packaging such as carrying cartons and so on. PepsiCo exhibit heavy dependency on various alternative source of energy that does not contribute towards green house effect (PepsiCo, 2013a; YouTube, 2011b). 3. Human resource PepsiCo boast largely about its skilled human resources and holds them as the reason behind the company’s undeniable success. Regarding human resource management, PepsiCo invest significantly in areas such as culture, talent development, diversity and benefit. 1. Culture At PepsiCo, a global culture has been adopted in order to delegate right mix of resources to right task. The company aims at global dreams while fulfilling each of them from local bases. PepsiCo is constantly innovating for better sustenance of the communities, employees, consumers and business practices. The global culture at PepsiCo not only delivers professional growth but also personal growth opportunities to its employees by mitigating health issues and cultural differences (PepsiCo, 2014d). 2. Diversity PepsiCo is a global company and accommodate employees from different locations. However, cultural diversity was not observed to be a barrier for employees and the organization. Instead, the company brings together various individuals who are success-focused through strong collaboration. It was further gathered that teams at PepsiCo reflect diversity across communities and consumers and thereby helps the firm in developing better products. PepsiCo aims at delivering success to every employee at personal as well as team level and through mutual respect, opportunities to success is developed (PepsiCo, 2014d). 3. Development Talent development is possible through intensive training, skill development sessions and knowledge sharing by experienced employees and managers. Career possibilities at PepsiCo suggest that the company is neither conventional nor traditional in its recruitment approach. Instead it adopts a highly proactive approach to talent development. The company hires entrepreneurs, doers, shakers, rainmakers and dreamers to encourage creativity and innovation at the organization. Furthermore, external hiring at PepsiCo is relatively less while it motivates employees through internal promotion. The talent development strategies at the company include stretch assignments, job rotation, early responsibility and mentoring facilities (PepsiCo, 2014d). 4. Benefits PepsiCo believes in disbursing a comprehensive package to its employees which is beyond mere compensation of salary. The company provides a number of benefits to its employees such as health care benefits, retirement plans, wellness programs and benefits associated with work life balance. The company provides an array of insurance facilities in various areas, namely, medical, vision, dental, life insurance, group legal and so on and so forth (PepsiCo, 2014e). 5. Comment on Ronald Conner’s viewpoint about PepsiCo Ronald Conner is presently associated with PepsiCo as unit sales manager but started his career as a member of shelve and stock management team. He expressed his experience that on his way up the ranks, he had a number of learning moments from his mentors. He also indicated that PepsiCo is not only about personal achievements but also about sharing knowledge and teaching others from one’s own experience. Mr. Conner presently manages a team of 56 workers and feels that team management at workplace has helped him significantly in managing his personal relations (PepsiCo, 2014f). 4. Human sustainability At PepsiCo, human sustainability stands for health and wellbeing and the company makes continuous effort to enhance the level of sustainability among its consumers through various efforts such as healthy product choices, responsible marketing and creation of an inclusive culture. Product choices PepsiCo makes significant contribution towards health and wellbeing of its consumers through continuous refining of food offerings and beverage choices. The company is making efforts towards maximum reduction in sodium level, added sugar content and level of saturated fat in its products. Furthermore, with every passing year the company is broadening its arena of offerings so that various consumer needs such as convenience, natural ingredients and functional nutrients are delivered in an appropriate manner. The growing trend of healthy lifestyle was anticipated by the company and consequently the company acquired firms such as Quaker, Gatorade and Tropicana. The sustainability report of the company also reflects company’s effort towards development of sustainable product choices. The company has broadly classified its offerings on basis of health needs in three categories which have already been discussed in this paper (PepsiCo, 2013b; 2014g). Responsible marketing PepsiCo is a marketer of a number of iconic brands that serve numerous consumers every day, thus the company feel accountable for maintaining transparency in product information and communicating the same in a responsible manner. The primary aim in this regard is to deliver clear information regarding the nutrition level of products as the company not only serve local consumer but also global consumers. It was noted that the labeling practice of the company goes beyond legal needs and reflects genuine concern of the company towards its consumers, which consist of 35 percent of children. As a part of its responsibility marketing, PepsiCo not only generate awareness regarding nutrition level in its products but also encourage consumers, especially children to undertake physical activities for various health reasons (PepsiCo, 2013b; 2014g). Inclusive culture PepsiCo has taken so far a number of measures that encourage and promote a holistic healthy culture among its consumer. The company has adopted various WHO recommended actions for prevention and awareness of various non-communicable diseases. PepsiCo creates an inclusive environment by working in collaboration with various NGOs, government, industrial sectors and civil society. Food for Good is an interesting social initiative by PepsiCo where the company utilizes various sustainable business frameworks to deliver nutrition to low income groups across the globe. The company partners with various government and local agencies to deliver healthy food to underprivileged children. This initiative is extremely popular in Chicago, Dallas, Austin and Houston (PepsiCo, 2014g). Conclusion PepsiCo is a perfect example of a multinational that balance business as well as its social responsibilities as a corporate citizen. PepsiCo is a multi-brand company that has occupied a significant position in the global food and beverage industry. The paper reflects the company’s approach to business and corporate sustainability through diversified practices. Being an old company in the industry, the company has weathered various external situations such as economic slowdown, political disturbance, change in consumer preference and cultural diversity. It was further observed that the company is not only concern about its consumers but take good care of its employees through work-life balance facilities and growth opportunities besides compensation. Human sustainability was ascertained to be an essential factor for the company and it was gathered that PepsiCo makes sufficient efforts to deliver health and wellbeing to its consumers and the society by large. References CNN Money, 2009. PepsiCo’s recession strategy. Retrieved from http://money.cnn.com/video/fortune/2009/09/08/f_mpw_nooyi_economy.fortune/. PepsiCo. (2009). PepsiCo Business Risks. Retrieved from http://www.pepsico.com/annual09/financialContent_mda_our_business_risks.html. PepsiCo. (2010). The Promise of PepsiCo - new global commitments announced on nutrition, environmental sustainability and financial performance. Retrieved from http://www.pepsico.co.uk/news-and-comment/pepsico-inc-announce-global-nutrition-environmental-sustainability-and-employee-well-being-targets. PepsiCo. (2013a). PepsiCo: annual report 2013. Retrieved from http://www.pepsico.com/Assets/Download/PEP_Annual_Report_2013.pdf. PepsiCo. (2013b). PepsiCo: sustainability report 2013. Retrieved from http://www.pepsico.com/Assets/Download/PEP_2013_Sustainability_Report.pdf. PepsiCo. (2014a). Our History. Retrieved from http://www.pepsico.com/Company/Our-History.html. PepsiCo. (2014b). top global brands. Retrieved from http://www.pepsico.com/Brands. PepsiCo. (2014c). Sustainable agriculture. Retrieved from http://www.pepsico.com/Purpose/Environmental-Sustainability/Agriculture. PepsiCo. (2014d). Why work at PepsiCo. Retrieved from http://www.pepsicojobs.com/why-work-at-pepsico. PepsiCo. (2014e). Benefits of working at PepsiCo. Retrieved from http://www.pepsicojobs.com/benefits-of-working-at-pepsico. PepsiCo. (2014f). People of PepsiCo. Retrieved from http://www.pepsicojobs.com/people-of-pepsico. PepsiCo. (2014g). Human Sustainability. Retrieved from http://www.pepsico.com/Purpose/Human-Sustainability.html. Reuters. (2014). PepsiCo Inc (PEP). Retrieved from http://www.reuters.com/finance/stocks/companyProfile?symbol=PEP. YouTube, 2011a. Fox business’s interview with Indra Nooyi. Retrieved from http://www.youtube.com/watch?v=FJ1qPic5_r0. YouTube, 2011b. PepsiCo environmental sustainability. Retrieved from http://www.youtube.com/watch?v=QuXM9ylA0_o&feature=player_embedded. Read More