Past and New Strategies: Case Study of Pepsi co - Essay Example

In traditional economic theorizing, the analysis of the firm and its behavior is built upon the assumption that firms operate in such a manner as to maximize their profits. The pursuit of other objects of desire such as, for instance, of power, prestige, a quite life, social service and others is not discounted. But, so far, no theory of the firm within the framework of a market-oriented economy has been developed on any one of the afore-mentioned premises. And so the theorem of profit maximization continues to be central to the study of the business firm.

A business, of course, must continually adapt to its competitive environment, but its core objectives and 'ideals' remain steady and constant and provide guidance in the process of strategic decision-making. These unchanging ideals form the company's business vision and are stated in the company mission statement. However, business management experts say that while firms exist to earn a profit, the profit motive should not be highlighted in the mission statement since it provides little direction to the firm's employees.

And what is more important is how the firm will earn its profit since the "how" is what defines the firm (Jeffrey Abrahams, 1999 and James Collins, and Jerry Porras, 1996). The mission statement talks about the firm's core values, principles, purpose, and the visionary goals that it will pursue to achieve its mission. In the Annual Report for 2003, of the Pepsi company, the following statement is found regarding the company's mission and values. "We aspire to make Pepsi the world's premium consumer product company, focused on convenient foods and beverages" (page23).

Again, on the same page of the 2003 Annual Report of the company, it claims regarding its values: "our commitment is to deliver sustained growth, through empowered people, acting with responsibility and building trust". (p.23)Strategies are the means through which the company seeks to attain these objectives. Fred Nickols says that "the concept of strategy has been borrowed from the military and adapted for use in business. In business, as in the military, strategy bridges the gap between policy and tactics.

Together, strategy and tactics bridge the gap between ends and means" (Fred Nickols,2000) Porter has defined competitive strategy as "a combination of the ends for which the firm is striving and the means by which it is seeking to get there."(Porter, 1980). Porter has refined his definition later to say that strategy is about competitive position, about differentiating yourself in the eyes of the customer, about adding value through a mix of activities different from those used by competitors (Porter 1996) Peter Drucker says that strategy is about knowing where your company is today, where you want to take it, and how you are going to get there.

(Hesselbein Frances and Marshall Goldsmith, 2006).The growth strategies In discussing the strategies associated with the Pepsi Company, it is logical to begin with the strategies of growth of a company. Growth strategy can be analyzed in terms of the 'hierarchical levels of strategy' considered on three different levels,