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
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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

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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

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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 the
workforce achieve
individual 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 2008

(in millions)
PepsiCo Foundation $30
Corporate Contributions $ 3
Division Contributions $ 9
Estimated In-Kind Donations $45
Total $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-shifts-
organizational-structure-and-management-to-focus-on-emerging-markets/. Last
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Goudreau, J. (2009). Indra Nooyi. Available:

http://www.forbes.com/lists/2009/11/power-women-09_Indra-
Nooyi_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-dividend-
play. 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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