Introduction
PepsiCo Inc. is among the largest companies in the world, being included in the well-known index S&P 500. Over one billion people worldwide purchase PepsiCo foods daily in more than 200 nations and regions (PepsiCo, n.d.-a). The product line of PepsiCo offers a variety of foods and drinks, comprising numerous renowned brands (PepsiCo, n.d.-a). Therefore, the organization managed to become a firm with a billion-dollar market capitalization and a mission to promote sustainability, meeting the needs of customers and employees.
Brief History
The history of PepsiCo dates back almost a hundred years ago. Herman W. Lay founded a potato chip company in Nashville in 1932 (PepsiCo, n.d.-a). The business consolidated with the Frito Company in 1961 to establish Frito-Lay Inc., which then joined Pepsi-Cola in 1965 to establish PepsiCo (PepsiCo, n.d.-a). After these pivotal moments, the company started to experience rapid growth and development in the product range.
The organizational model of PepsiCo is based on locations and businesses. The year after its IPO, PepsiCo already made an expansion to Eastern Europe and Japan (PepsiCo, n.d.-a). The company’s growth was seen through its revenue after five years, which doubled, accounting for $1 billion (PepsiCo, n.d.-a). In 1986 PepsiCo began an immense approach to business acquisitions, starting with KFC and 7-Up (PepsiCo, n.d.-a). The success of the company is illustrated in the financial reports, with the sales increasing by 268% from $32 billion in sales in 2005 to 118 billion in 2017 (PepsiCo, n.d.-a). Therefore, after 57 years, PepsiCo managed to not only expand to almost every country in the world but make it one the strongest conglomerates of foods and beverages.
Competitive Environment
The competitive environment of the corporation is filled with just as large and diverse companies as PepsiCo. With many companies doing business in the consumer staples industry, Coca-Cola is among PepsiCo’s key beverage business rivals. Coca-Cola has a higher customer loyalty and awareness globally (Tepper & Hearn, 2018). Another competitor of PepsiCo is Dr. Pepper Snapple Group, which is an American beverage-making corporation that sells juices, carbonated drinks, and other beverages (Tepper & Hearn, 2018). Finally, global food manufacturer Kellogg’s is additionally based in the U.S. and operates in the same market. In the marketplace for breakfast goods, Kellogg’s rivals PepsiCo, notably its subsidiary, Quaker Oats Company (Tepper & Hearn, 2018). According to Tepper and Hearn (2018, p.115), these “top three firms dominate more than 85% of the market.” As a result, PepsiCo must maintain its economic moat and facilitate it.
Planning
Strategy Management Approach
The way the company facilitates and maintains its competitive edge is through its strategic management approach. The pricing policies of PepsiCo’s rivals and consumer demand are what determine its strategy. According to the corporation, they are “managing [their] costs so [they] can reinvest and win in the marketplace” (PepsiCo, n.d.-e). The company additionally chooses to manage its strategy through technological advancements and recruiting and retaining talented employees, which increases the quality of services.
Distinctive Competence
The distinctive competence of PepsiCo is its distribution of products using a chain that is robust and adaptable. This should be considered a key competence because it fits all four requirements for sustained competitive advantage. First, the company’s products and chain are uncommon, expensive to copy, non-substitutable, and expensive to acquire. Therefore, the technology and quality of goods produced by PepsiCo are exceptional and give the company an advantage.
Corporate-Level Strategy
As for the corporate-level strategy, it centers on the question of which companies to acquire. PepsiCo constantly reorganizes its food and beverage operations in America to encompass additional countries, such as North America and South America, along with Europe, Asia, Africa, and the Middle East (PepsiCo, n.d.-e). This is done in order to drive global development and brand presence. According to PepsiCo, they are “broadening [their] portfolios with new foods and beverages’ by strengthening the businesses and “accelerating [their] international expansion and focusing on “right to win” markets” (PepsiCo, n.d.-e). Thus, the corporate-level strategy is focused on the acquisition of businesses within the consumer staples industry and the reinforcement of existing businesses in different locations.
SWOT Analysis
In Table 1, there is an analysis of the biggest strengths, weaknesses, opportunities, and threats of the business.
Table 1: SWOT Analysis of PepsiCo
Organizing
When it comes to the organizational structure, division is the most noticeable aspect of PepsiCo’s corporate structure. It can be determined by two factors, such as location and business (PepsiCo, n.d.-d). Among the divisions in different regions of the world are Frito-Lay North America, Quaker Foods North America, North America Beverages, Latin America, Europe Sub-Saharan Africa, Asia, Middle East, and North Africa (SEC, 2019). The control system is based on the C-suite representatives working in these divisions.
Leading
Regarding the leading aspect, the company’s success should mainly be attributed to its employees. The HR management and the company’s future success rely on its ability to attract and maintain a talented employee pool. As PepsiCo emphasized, it is critical that the company keeps up with modern practices in a society where workplace standards are continuously changing (PepsiCo, n.d.-b). Therefore, HR practices are based on benefits to the employees to retain the workforce.
In order to ensure that the company gives employees the greatest unique experience, the management always listens to staff recommendations and needs. There are three programs that aim to improve employee engagement and incentives (PepsiCo, n.d.-c). Be Well Programs improve one’s health, activity level, and safety (PepsiCo, n.d.-c). Programs that help people manage anxiety, develop resilience, and enhance their financial security and work/life balance are called Find Balance (PepsiCo, n.d.-c). Get Involved Programs to promote familial, social, and community ties, which are essential for wellness (PepsiCo, n.d.-c). Lastly, flexible working conditions in the teams and a positive work climate improve productivity, work-life balance, and the general well-being of the employees.
Controlling
The final aspect is controlling, based on operations management, quality, and productivity controls. When it comes to quality, PepsiCo has implemented globally applicable systems and quality control processes that track performance in relation to regulatory goals established in every industry, which illustrates effective control (PepsiCo, 2022). The mechanisms used in these initiatives, which provide checks and balances for the firm’s end-to-end activities, comprise internal and outside inspections and verification processes (PepsiCo, 2022). Then, the definition of operations management is the organizing, coordinating, and supervising of all processes. The example of operations management at PepsiCo can be seen via technology development and market research, and advancement (PepsiCo, 2022). As for the productivity example, the 2019 Productivity Plan was based on the use of new technology and organizational concepts to streamline further, coordinate, and automate business processes (SEC, 2019). It aimed to re-engineer the systems and go-to-market strategies, implementing the appropriate digitization for each sector (SEC, 2019). Therefore, there are different types and levels of control at PepsiCo.
Recommendations
Lastly, the recommendations to PepsiCo are based on the change of packaging of the products. In this case, PepsiCo could incorporate recyclable materials in order to further promote sustainability. Moreover, it would be a good recommendation to introduce an organic food line, which will support those who adhere to a healthy diet. This way, such a diversification will suit all customers’ needs, with fewer risks.
Summary
In sum, was able to grow into a billion dollar company with a purpose to advance sustainability while serving the requirements of both consumers and employees. It was founded in 1965 when merged with Frito Company founded by Herman W. Lay. Its main competitors are Coca-Cola, Kellogg’s, and Dr Pepper Snapple Group. However, its planning aspects illustrate its competitive advantage in terms of prices and technology, although weakened and threatened by employee and customer behavior factors. While a company’s organization is based on divisions, its leadership is based on HR approaches, which rely on meeting the requirements of employees to retain workforce. Finally, controlling is dependent on various levels of control, by incorporating technology, external and internal audits, and re-engineered systems.
References
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PepsiCo. (n.d.-a). About PepsiCo. Web.
PepsiCo. (n.d.-b). Employee engagement. Web.
PepsiCo. (n.d.-c). Employee well-being. Web.
PepsiCo. (n.d.-b). Leadership. Web.
PepsiCo. (n.d.-c). Mission and vision. Web.
PepsiCo. (2021-a). Our ESG approach. Web.
PepsiCo. (2021-b). PepsiCo announces strategic end-to-end transformation: pep+ (PepsiCo Positive). Web.
PepsiCo. (2022). Product safety and quality. Web.
SEC. (2019). PepsiCo, Inc. Web.
Tepper, J., & Hearn, D. (2018). The myth of capitalism: Monopolies and the death of competition. Wiley.