Sustainable Practices of Pepsi Co in India - Case Study Example

 Sustainable practices of Pepsi Co in India Introduction It is easy to start a business; but it is difficult to sustain it. The above fact is true for all types of businesses irrespective of small scale, medium scale or large scale businesses. The sustainability of a business in a country mainly depends on the organization’s ability for innovation. It is difficult for an organization to sustain their operations in a country using a single product without any changes for a long period. Consumer trends are changing periodically and it is not necessary that a product successful in the twentieth century may enjoy the same success rate in the twenty first century if the organization failed to incorporate necessary modifications to the product. It is not easy for an organization to invent new product or incorporate new features to the existing product because of various types of the barriers to innovation. The success of the organization lies in their ability to overcome such barriers. PepsiCo has started its Indian operations in 1989, a little later than their arch rival Coca cola. But Pepsi, with their innovative business strategies and advertisement activities has gone far ahead of Coke in Indian market. Pepsi has invested more than 1 billion US dollars inn Indian market considering the size and huge business prospects in India. India, the second largest populated countries in the world, is currently rapidly progressing towards becoming a developed country. Moreover, many people believe that India would become a superpower within another 20 years of time as per the observations of political experts. Pepsi has realized the business potentials in India and at present they are planning to spread their operations across the entire regions of the country. Pepsi has implemented lot of innovative ideas in Indian market in order to attract the consumers. “PepsiCo India seeks to produce healthy financial rewards for investors as it provide opportunities for growth and enrichment to its employees, business partners and the communities in which it operates” (PepsiCo India’s performance with purpose, 2009) This paper briefly explains The Sustainability And Barriers To Innovation Of Business Operations Of Pepsi In India. Sustainability practices of Pepsi in India Pepsi has implemented good for you offer and waste to wealth policies in India to develop their business in India. Good for you offers Good for you offer consists of nutrition segment, whole grain and multi grain snacks and agricultural activities. Nutrition snack segment is one of the growing business areas in India. Some of the big corporate companies are now ruling this business in India and Pepsi has realized the business potential of this business segment slightly late. Pepsi has recently introduced a new product for the nutrition segment called “Cheetos”. They have realized that the kid segment is one of the major business areas for them and decided to give more emphasize to this area. Pepsi believes that Apart from kids, parents also will be attracted by their new product Cheetos. Moreover, they have decided to reduce the fat content in their products and for that purpose they decided to switch over to the healthier Rice Bran Oil instead of the traditional Palm Oil for making their new product Cheetsos. Pepsi is also trying to customize a soft drink for the Indian conditions. They are at present developing a new fruit flavored soft drink in order to cater the needs of the Indian community. Fresh juices are popular in India and Pepsi is trying to exploit that. India is climatically a hot country and soft drink industry has a much bigger potentials in Indian conditions. But compared to the Americans or the Europeans, Indians are more interested in fresh juices extracted from the fruits. Pepsi has realized it and they are planning for the fruit flavored drinks for the Indian conditions (Singh) Snack sector is another area concentrated by Pepsi. Indian people, irrespective of young or old equally interested in snacks. Most of the Indian people enjoy the tastes of snacks during their leisure times. For example, it is a common scene in India, that people consumes heavy loads of snacks when they watches a cricket match or a movie. Pepsi has realized the influence of cricket stars and film personalities upon the public and they utilized famous celebrities from the above segments for marketing these products. Different types of snacks with single grain and multi-grain are available in the Indian market. Whole grain Cheetos, whole grain kurkure, Chips like Lays and Uncle etc are some of the examples. Apart from the conventional fried snacks, Pepsi want to introduce extruded and baked whole grain and multi grain snacks (Sivakumar) The Indian farmers are facing severe shortage of labor to work in the paddy field. Labor shortage has forced many farmers to stop their agricultural activities in India. Pepsi has introduced a revolutionary technology in India, “Direct seeding” in order to help the farmers. Pepsi has experimented direct seeding in 100 acres of Punjab by providing the customers seeds, technology, machines etc. Pepsi also introduced a seeding machine in order to reduce the manpower required in the paddy field. The introduction of seeding machine and the direct seeding method helped the farmers to reduce their efforts in the land considerably. Direct seeding helped the farmers to avoid of transplantation of paddy saplings. The huge success of this experiment encouraged Pepsi to spread this new business strategy across the country. At present they have successfully implemented this strategy in many states like Punjab, Rajastan, Tamil Nadu and Karnataka (Kaur). The introduction of seeding machine helped to reduce the need of water in the paddy field because of the avoidance of transplantation of paddy sapling. Water shortage is another big head ache for the farmers. Farmers are looking for the monsoon season for heavy rain and to begin their cultivation in India. The direct seeding helped the farmers not only to reduce the labor, but it helped the farmers to reduce their water needs as well (Jain) Waste to Wealth PepsiCo India has implemented Waste to Wealth, policy in order to make cities cleaner. India is a heavily populated country and hence keeping the environment clean is a challenging task. Most of the solid wastes come out from different sources are usually kept unattended at the heavily populated areas in India which causes severe environment problems. This award winning initiative of waste to wealth has helped Pepsi to achieve Zero Solid Waste from the Pepsi products. Pepsi uses only recyclable materials for their products which helped them to convert the waste into wealth. In other words, Pepsi has converted waste materials into wealth by the recycling technologies. Social activities In order to provide some relief to the kids with hearing impairment in India, Pepsi with the help of US based Starkey Hearing Foundation is providing more than 7000 hearing aids for children with such problems in India (Metro plus). It is difficult for an organization to establish in a place especially in a foreign soil, simply concentrating on the business alone. Corporate social responsibility is a highly debated term in the business circle. Big organizations which operate in a place has certain commitments and responsibilities towards the community they deal with. Pepsi has realized the above fact and engaged in many social activities across the Indian nation to fulfill their social responsibility. The supply of hearing aids to the needy people is one such activity. “Performance with Purpose articulates PepsiCo India's belief that its businesses are intrinsically connected to the communities and world that surrounds it. Performance with Purpose means delivering superior financial performance at the same time as we improve the world” (PepsiCo mission) Barriers to Innovation Innovation is the core of sustaining a business. Traditional products need periodical changes in order to make it suitable for the changing needs of the customers. Technology and science are developing at a rapid pace and based on that the customer tastes also changing. For example, when the mobile phones for the first time introduced in the market, it was similar to a land phone without the cables. But at present because of the technological advancements, mobile phones are used for taking photographs, capturing videos, surfing internet etc. No consumers may go for a conventional mobile phone at present because of the technological advancement. Thus innovation is the core of sustaining a business in the market. But innovation is not an easy task. Innovations often required to overcome certain barriers, in order to achieve the objectives. Pepsi faces rising production costs and attacks on its core snack and soda products from both competitors and health-conscious critics. Critics still link Pepsi to poor health and diet. Reduction of fat in the soft drink products and other nutrition products are one of the major barriers to innovation for Pepsi (Moore). Reduction of fat content will reduce the taste of the product whereas the increased fat content may harmful to the health. A balance should be needed between the two parameters which are difficult and challenging for Pepsi in Indian conditions. India is a democratic country in which people have immense freedom and they will look for agitations against any of the undesired things in the society. The entry of Pepsi like foreign companies in India is still indigestible to some segment of people especially the believers of left ideologies. Rising production cost is one of the major concerns of the soft drink industries. Lack of fresh water availability and the strong resistance of the public against the exploitation of underwater resources forced Pepsi like soft drink manufacturers to look for other expensive options. Moreover, the environmentalists are more concerned about the prevention of plastic materials which forced Pepsi to look for other expensive materials for the drink container manufacturing. Advertising costs were also skyrocketing, which forces all the soft drink manufacturers including Pepsi to increase the prices of their products in India. Apart from the health conscious critics, competitors like Coke are also raising stiff challenges to Pepsi in India. Coke is the arch rival for Pepsi in majority of the countries and in India also there is no exception. Each and every product of Pepsi is countered by similar products by Coke. For example, for diet Pepsi, Coke has Diet coke. Moreover Coke has succeeded in acquiring one of the famous locally made soft drink Thumps up in order to strengthen their operations in India. Conclusions PepsiCo, India is one of the socially committed organizations in India even though it originates from a foreign country. Pepsi has realized the need for executing corporate social responsibility and they were ready to help the communities in which they operate. In order to sustain the business operations in India, Pepsi has introduced many innovative ideas in Indian market. They have introduced the revolutionary idea of direct seeding in agriculture which helped the Indian farmers to reduce their manpower cost for cultivation and also it helped the farmers to reduce the amount of water required for cultivation. Pepsi has also helping the people with hearing impairments by providing them with hearing aids. Being a committed organization, Pepsi has introduced a new product Cheetos which is less in fat content. For the making of Cheetos, Pepsi has avoided the fatty palm oil and used less fatty oils. Moreover, in order to attract the Indian consumers Pepsi is planning to introduce a new fruit flavored drink in India. Stiff competition from competitors, rising production cost and heavy criticisms from the health conscious people are some of the challenges faced by Pepsi in India. The Indian public is very keen in preserving their natural resources and Pepsi is facing many challenges and legal issues in exploiting the underwater resources of India. References 1. Jain Iti, Direct seeding: Pepsico to cover 1000 acres, The Hindustan times 28 June 2008. Retrieved on 30 November 2009 from www.hindustantimes.com/ 2. Kaur Swarleen,(2008), PepsiCo promotes direct seeding for paddy, The financial express, 25-Jun-2008 Kaur Swarleen, Pepsico promotes direct seeding for paddy, The financial express, 25-Jun-2008, Retrieved on 30 November 2009 from http://www.thefinancialexpress.com 3. Metro Plus, (2008), Loud and clear, Hindu - Metro Plus, Impact, 11-Dec-2008 Edition : Delhi Page No.: 2, Retrieved on 30 November 2009 from www.thehindu.com 4. Moore Angela, 2007, Indra Nooyi's Pepsi challenge, Retrieved on 30 November 2009 from http://www.marketwatch.com/story/indra-nooyi-puts-her-brand-on-pepsis-pressing-global-challenges 5. PepsiCo India’s performance with purpose, (2009), Retrieved on 30 November 2009 from http://www.pepsiindia.co.in/ 6. PepsiCo Mission, (2009), Retrieved on 30 November 2009 from http://www.pepsiindia.co.in/aboutus_corporateprofile.html 7. Singh Ananditha, (2008), PepsiCo target kids for nutrition segment, The financial express, 19-Jun-2008, Retrieved on 30 November 2009 from http://www.thefinancialexpress.com 8. Sivakumar Nandini, Pepsi to roll out healthy Cheetos and Kurkure snacks, The Economic Times, 29-Aug-2008 Retrieved on 30 November 2009 from http://www.theeconomictimes.com Read More