Pepsico

Performance With Purpose

By – Ms. Joyner Gwendolyn Rodrigues. Student Number – 3769537 11th November 2009

PepsiCo Performance With Purpose

UNIVERSITY OF WOLLONGONG in DUBAI College of Business Project report Title: Pepsico – Performance With Purpose (Beverage Industry) in partial fulfilment of requirement of the subject: TBS981 Managing in Multinational Companies for the MIB Program Autumn 2009 By Ms. Joyner Gwendolyn Rodrigues Student ID: 3769537 Submitted to: Dr. Gwendolyn Rodrigues Date: 11th November 2009

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L

INDEX

Sr

Topic

Pg

1

The Beverage Industry

6

2

PepsiCo At A Glance

9

3

PepsiCo – The World Is Flat

13

4

PepsiCo’s Organizational Structure

16

5

PepsiCo’s Organizational Culture

19

6

Leadership At PepsiCo

21

7

PepsiCo’s Motivation Strategies

23

8

Performance With Purpose

25

9

Conclusion

28

10

References

30

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TABLE OF CONTENTS 1. The Beverage Industry ( Pg 6 – 8 ) a. An Overview.......Pg 7 2. PepsiCo At A Glance ( Pg 9 – 12 ) a. Introduction....................Pg 10 b. Competitive Advantage...Pg 10 c. S.W.O.T Analysis...........Pg 12 3. PepsiCo – The World Is Flat ( Pg 13 – 15 ) a. Mergers..........................Pg 14 b. Joint Ventures................Pg 15 c. Effects Of Globalization..Pg 15 4. PepsiCo’s Organizational Structure ( Pg 16 – 18) a. Pre – November 2007...............Pg 17 b. Post – November 2007..............Pg 17 c. Reasons for Change..................Pg 18 5. PepsiCo’s Organizational Culture ( Pg 19 – 20) 6. Leadership At PepsiCo ( Pg 21 – 22 ) a. Indra Krishnamurthy Nooyi.....Pg 22 7. PepsiCo’s Motivation Strategies ( Pg 23 – 24 ) a. Recognition....Pg 24 b. Rewards.........Pg24 Page 4 of 32


8. Performance With Purpose ( Pg 25 – 27 ) 9. Conclusion ( Pg 28 – 30 ) 10. References ( Pg 30 – 32 )

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Chapter One The Beverage Industry  An Overview

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An Overview The Beverage Industry is one of the rapid growing industries in the world. The segmentation of the industry is as below 1. Alcoholic Beverages – Wines, Beers and Spirits 2. Non Alcoholic Beverages a. Dairy Beverages – Milk , Flavoured Milk b. Brewed Beverages – Coffee and Tea c. Carbonated Beverages – Flavoured Soda like cola, orange, lime etc and Soda d. Non Carbonated Beverages – Juices e. Energy Beverages – Carbonated and Non Carbonated f. Other - Water and Flavoured Water

With consumers taste and preferences becoming more and more sophisticated and the demand for new and healthier product, the beverage industry as expanded and grown in all aspects. The industry which trying to provide to the changing lifestyles and health concerns of its drinkers, has become accustomed to a new healthier look in the 21st century.

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As the world becomes flatter day by day, the industry faces aggressive competition from the direct as well as indirect competitors. There is competition within the industry because a single company produces a number of beverages, which offers a variety of taste and flavours. Moreover the same variety of beverages are produced other manufactures, with fairly the same taste and flavour. Consumers find it difficult to make a distinction between same zest of two brands when they are served in a unadorned container. In addition to the above, comparable brands have alike price. As the industry expands and the competition becomes more and more aggressive. Each company within the industry has to improve on their respective service quality along with their product quality, in order to achieve their end goals.

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Chapter Two PepsiCo At A Glance  Introduction  Competitive Advantage  S.W.O.T Analysis

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Introduction PepsiCo is one of the foremost companies of food and beverages was formed with the merger of Pepsi – Cola and Frito – Lays in the year 1965. The company manufactures or uses contact manufacturing as well as markets, distributes and sells a assortment of snacks and beverages. It operates approximately in 200 countries worldwide. Main rivals of PepsiCo comprise The Coca-Cola Company, Nestle, Kraft Foods Inc and Archer Daniels. In the soft drinks industry, however, their main opponent is Coca-Cola. Presently the company has revenue of $43,251 million (PepsiCo 2008 Annual Report) and employees around 170,000 workforce speaking more than 40 languages universal. Indra Krishnamurthy Nooyi is the present CEO of PepsiCo. PepsiCo has 18 mega brands under its umbrella (PepsiCo 2008 Annual

Report).

The

company accept the truth that being a responsible corporate citizen is not only the right thing to do, but the right thing to do for their business. PepsiCo has a well-built plan to carry on expanding with a vast array of convenience foods and drinks that grant great taste, nutrition and fun nonstop.

Competitive Advantage PepsiCo Competiive advantage comes from the below equation –

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PepsiCo competitive advantage is the outcome of their extraordinary talented and dedicated workforce who work on their three major sustainable advantages which comprises of its big huge brands, its demonstrated skill to innovate and produce differentiated products and its powerful marketing systems. Due to these competitive advantages the company can sustain itself high competitive markets. PepsiCo also has an advantage over the industry in the way they operate using cost saving initiatives.

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S.W.O.T Analysis

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Chapter Three PepsiCo – The World Is Flat  Mergers  Joint Ventures  Effects Of Globalization Page 13 of 32


Mergers During the summer of 1898 a young pharmacist name C. Bradham invented a drink and called it ‘Pepsi – Cola’. As sales grew he launched ‘The Pepsi – Cola Company’ in 1902.With vision to take Pepsi – Cola to the world, the company collaborated with many companies. Year 1965 – The Pepsi – Cola Company collaborated with Frito Lays. The merger formed a new company know as ‘PepsiCo Inc’. Since its origin, PepsiCo has grown and added more and will continue to add more brands underneath its umbrella. Year 1988 – PepsiCo purchase ‘Tropicana, which gave the company the strongest brand name in juice under its portfolio. Year 2001 – ‘The Quaker – Oats Company’ merged with PepsiCo, bring two suceeful food and beverage companies under one roof. With the union, PepsiCo also acquired the hold of the brand ‘Gatorade’.

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Joint Ventures Year 1994 – PepsiCo and Starbucks coupled together to established the North American Coffee Partnership (NACP). Year 1993 – PepsiCo and Unilever shaped the Pepsi Lipton (Unilever acquired Lipton in 1971) Joint venture

Effects Of Globalization PepsiCo has investing in many countries around the world in order to strengthen it global market share. Over the next years, PepsiCo plans to boost manufacturing ability along with marketing and R & D South Asian Countries. Another way how PepsiCo, is increasing product line to more beverages and foods is by purchasing stakes (shares) of other beverage and food companies. The liberalization of many developing countries has helped PepsiCo enter and establish market share in many countries. Due to its various mergers and joint ventures, PepsiCo has emerged from being an American favourite brand to a World favourite. To be recognized brand in all the household of the world is PepsiCo aim. International operations are growing vigorously, and account for almost 50% of revenue. The company plans to drive more growth and enlarge globally. Middle classes customers around the world are generating strong development in returns by the per capita consumption of PepsiCo commodities. Thus proving that going global was the right step to take.

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Chapter Four PepsiCo’s Organizational Structure  Pre – November 2007  Post – November 2007  Reasons For Change Page 16 of 32


Pre – November 2007 Before November 2007 PepsiCo organizational structure comprised of two following sections – 1. PepsiCo North America

a. Frito-Lay North America b. PepsiCo Beverages North America c. Quaker Foods North America. 2. PepsiCo International

Post – November 2007 After November 2007 PepsiCo organizational structure changed from two units to three main units which are 1. PepsiCo Americas Foods a. Frito-Lay North America b. Quaker c. All Latin American food and snack businesses

2. PepsiCo Americas Beverages a. Pepsi-Cola North America b. Gatorade c. Tropicana d. All Latin American beverage businesses

3. PepsiCo International

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Oversees all PepsiCo business in the Africa, United Kingdom, Asia, Europe and Middle East

Reasons For Change With completion increasing around the globe, and in order to maintain its go-getting plans for international sales and continued growth, PepsiCo reorganized and added new senior-level workforce to take advantage of on opportunities worldwide. Moreover the CEO, Indra Nooyi, states that, due to the expansion and growth of PepsiCo, the company can manage better as three units instead of two. As the dollar rate is depreciating, the more business the company does outside the U.S.A, will benefit the company revenue. The change in structure will help to manage the firms robust growth. PepsiCo divides its operation in order to conquer the world. PepsiCo believes in a decentralized organizational structure, with empowerment to its employees will help them to reach the sky.

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Chapter Five PepsiCo’s Organizational Culture

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PepsiCo has a unique culture as compared to other companies within it industry. They have a performance driven culture where the squeezes the best from all their employees at all levels. Everything at the organization is measured. PepsiCo believes in empowering its employees at individual level. Due to this empowerment accountability and trust streams in all directions of the firm. PepsiCo is a diverse culture. Diversity according to the company is the simple sound business. People of different race, cultures and speaking different languages work for PepsiCo and enjoy doing so. Everyone is treated with equally and with respect. At PepsiCo every one of its employees is a leader. The company encourages its staff to be risk takers and initiators. Employees are allowed to make their own decisions to a certain extent. At PepsiCo individual are allowed to pursue their own goals without strict structure. Senior management encourage their junior to come up with ideas. There is both upward and downward communication. The company culture also stress on sincerity and reality in all walks. PepsiCo is a meritocracy where hard work is appreciated, recognized and rewarded. According to Trompenaars organizational cultural analysis, PepsiCo is a company with

all

its

dimensions

because even though there is structure in the firm there is

also

a

nurturing

environment,

where

individual can grow and develop their skill along with

the

company.

at

PepsiCo the task as well as the man behind the task is given importance. Senior managers

guides

workforce individual

the

achieve as

well

as

organizational goals.

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Chapter Six Leadership At PepsiCo’s  Indra Krishnamurthy Nooyi

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Indra Krishnamurthy Nooyi Indra Nooyi, is the present CEO of PepsiCo. She had been listed as the 3 rd powerful women by Forbes. She is a smart and business confidence woman. She is also experienced of and in sync to worldwide needs and scenario. She connects her employees to a charge. She is a transformational leader who changed the outlook of PepsiCo from a Generation Next Company to a company who now delivers Performance with Purpose. Her focuses is on innovation as a replacement for acquisition. She demonstrates zeal for her dream and energizes her employees to achieve her vision fir PepsiCo. She has positive appreciation for diversity and cut across boundaries. In spite of being at the top, she is attentive and appreciates feedback from her employees. She has a keen ear to all the ideas of her workforce along with their complaints. Nooyi style of leadership has eminent the spotlight of the company by making its brands eye-catching and revitalizing to consumers. According to Indra Nooyi, the five important talents of a good leader are – competence in your field, take a stand in what you believe is right, invest and have good communication skills, moral compass always be at the north and listen, and coach yourself.

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Chapter Seven PepsiCo’s Motivational Strategies  Recognition  Rewards

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Recognition PepsiCo accepts it workforce to deliver international standards and thus offers a comprehensive pay package of global standard to its employees at their individual level. The main motivation strategy is that their employees are empowered and are allowed to make their own decisions and speak out their ideas. By doing so PepsiCo is motivating each of their employees to take responsibility for their respective actions. PepsiCo is not blind these actions. At PepsiCo individual are provided with the training and tools to succeed along with the company. Priority is given to recognise the achievements of each and every employee.

Rewards PepsiCo offers a rewards package that tends be a magnet for new employees as well as helps to preserve its very best. With exciting pay package, a generous benefits package also comes along which include, abundant retirement package, a tuition repayment, and even legal aid. Simply Flex is a scheme which allows employees to select the benefits. Benefits can swap also. PepsiCo also issues stocks to its workforce without taking a single penny.

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Chapter Eight Performance With Purpose

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PepsiCo believes that its financial success and growth i.e. Performance, is obligated to along with social and environmental responsibilities i.e. Purpose. The company has an accountability to bring about sustainability to its customer, the environment and also to its workforce. Thus PepsiCo Performance with Purpose is divided into three sections Human, Environment and Talent Sustainability.

Nourishing our consumers with a range of fun and healthy products, and making the healthful choice an easier choice.

Replenishing the natural resources we can, and minimizing the impact we have on our environment.

Cherishing our employees, and making PepsiCo the most desirable place for people of all backgrounds to establish personal and professional growth.

PepsiCo considers that its duty to understand the diet and nourishment need of the global population. Therefore PepsiCo is creating a variety of healthier and fun products to keep their customers health and nourished. PepsiCo is one of the companies to sign the "Global Commitment to Action on the Global Strategy on Diet, Physical Activity and Health," from the World Health Organization. PepsiCo is committed to minimize it environmental footprint in its operation so tht it can protect the earth natural resources. Efforts are principally persistent on water, weather change, cultivation and packaging-areas. Their objective is to diminish water utilization by 20%, electricity usage by 20%, and fuel utilization by 25%.

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Besides having a purpose and responsibility to the external environment, PepsiCo understands that it had a responsibility towards it workforce. Thus the company helps them to realize their full potential and in turn achieve success. PepsiCo is involved in many initiatives to stop the spread of HIV/AIDS, e.g. establishment of an HIV/AID testing and treatment facility in South Africa. It is a member of the Global Business Coalition on HIV/AIDS. PepsiCo contribute toward many non profit organizations across the globe and is give a hand to humanitarian aid worldwide. The company also supports all the United Nations' Millennium Development Goals, together with the purpose to exterminate severe poverty and hunger by 2015.

Contribution Summary (in millions) PepsiCo Foundation Corporate Contributions Division Contributions Estimated In-Kind Donations Total

2008 $30 $ 3 $ 9 $45 $87

Source – Pepsico Annual Report 2008

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Chapter Nine Conclusion

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Since its conception, PepsiCo has grown and expanded in all areas. It has completely emerged from an American Company to a global mammoth company. Today it is the world leading food and Beverage Company. Unlike its competitors, PepsiCo diverse portfolio of brands. The company plans on maximizing shareholders profits along with having a purpose the world in which they operate. The company has reputation of generous giving back to the communities in which its commodities are sold, with a focus on health, wellness, environmental conservation and education. PepsiCo is an egalitarian which promotes unity in diversity in its organizational culture. The organizational structure is one which has low power distance, moderate uncertainty avoidance – takes some risks. PepsiCo has both individualist appeal and a collectivist appeal in it organizational culture. PepsiCo acts as an incubator where its employees can grow and develop their skill. Indra Nooyi, is a leader who will take PepsiCo to new heights. Her vision ‘Performance with Purpose’ is a unique one which is need in today cut throat competitive world. Due to its leadership under Indra Nooyi and its culture, PepsiCo is performing with purpose which is excellent as the company is achieving success as well as creating a positive impression on society and the environment. The future looks bright for PepsiCo

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References

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Anbusivam. (2008). PepsiCo's Leadership Philosophy of Performance with Purpose.

Available:

http://anbusivam.blogspot.com/2008/06/pepsicos-

leadership-philosophy-of.html. Last accessed 30 Oct 2009. Caggeso, Mike. (2007). Dividing To Conquer Pepsi Shifts Organizational Structure And Management- To Focus On Emerging Markets. Available: http://www.moneymorning.com/2007/11/07/dividing-to-conquer-pepsi-shiftsorganizational-structure-and-management-to-focus-on-emerging-markets/. Last accessed 1 Nov 2009. Goudreau,

J.

(2009).

Indra

Nooyi.

Available:

http://www.forbes.com/lists/2009/11/power-women-09_IndraNooyi_1S5D.html. Last accessed 2 Nov 2009. Knnap, D. (2008). PepsiCo: Long-Term Growth and Dividend Play. Available: http://seekingalpha.com/article/95027-pepsico-long-term-growth-and-dividendplay. Last accessed 30 Oct 2009. PepsiCo Corporate Site (2009) Available: http://www.pepsico.com/index.html .Last accessed on 19 0ct 2009 Pepsico,

Inc.

(2009).

Pepscio

2008

Annual

Report.

Available:

http://www.pepsico.com/Annual-Reports/2008/index.html. Last accessed 1st Nov 2009. Unknown.

(Not

Known).

PepsiCo.

Available:

http://www1.excite.com/home/careers/company_profile/0,15623,1329,00.html. Last accessed 3 Oct 2009.

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Zubko,

N.

(2008).

PepsiCo

Inc.:

Globalization

Next.

Available:

http://www.industryweek.com/articles/pepsico_inc_globalization_next_17392.aspx. Last accessed 30 Oct 2009.

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Pepsico

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