Part A: Question 1 - A

Strategy is the long-term direction of an organization; a long-term direction includes deliberate, logical strategy
and more incremental, emergent patterns of strategy. Long-term direction can include strategies that emphasize
difference and competition, and strategies that recognize the roles of cooperation.

There are 4 ways in which organizations typically define their purpose. That is through the organization’s
Mission, Vision and Value statements. In order to understand if the strategies of PepsiCo are in alignment with
its organizational purpose, I have studied PepsiCo’s Mision, Vision, Value and Objectives statements.
- Pepsico Mission Statement: PepsiCo’s mission statement is to “to provide consumers around the world
with delicious, affordable, convenient and complementary foods and beverages from wholesome
breakfasts to healthy and fun daytime snacks and beverages to evening treats.”
- The statement signifies the company’s purpose to have the best impacts on everyone, combined with the
continued efforts of PepsiCo to build its workforce and partners to grow together with the company as well.
- The mission statement also defines the basic characteristics of PepsiCo’s products. The point on
affordability implies PepsiCo’s approach to pricing. Moreover, based on the mission statement’s
convenience point, PepsiCo makes its products easily accessible, implying the firm’s market strategy.

- PepsiCo’s vision statement is “to deliver top-tier financial performance over the long term by integrating
sustainability into our business strategy, leaving a positive imprint on society and the environment.”
PepsiCo adds that this vision statement is built on the idea of “Performance with Purpose.” Based on these
considerations, PepsiCo’s vision statement has the following main points:
o Top financial performance
o Sustainability
o Corporate social responsibility
- PepsiCo’s vision statement indicates that PepsiCo integrates sustainability in business activities.
Sustainability enhances corporate and brand image. Also, PepsiCo’s vision statement includes corporate
social responsibility. This factor is a major influence on the company’s policies and strategies on
organizational development, especially with regard to its impact on stakeholders. All of these points of the
vision statement motivate PepsiCo to achieve high performance.

- PepsiCo’s Core value is “PepsiCo is committed to delivering sustained growth through empowered
people acting responsibly and building trust.” For analysis, the statement can be broken down into three
parts.
o Sustained Growth: Pepsico expects its employees to have a vision of sustained growth. It’s a
skill that harnesses other skills such as innovation, ambition, and purpose.
o Responsibility and Trust: PepsiCo expects its employees to be responsible and trustworthy.
The company believes that these two core values are of the utmost importance leading to the
growth of the company

Part A: Question 1 - B

i. The 2018 CSR report published from PepsiCo stated that “We recognized a simple truth: there is profit in
purpose. Sustainability is not something to support with the profits we make, but rather a path to delivering
profitability. Weaving sustainability into the very fabric of our organization is a way to help future-proof
our business for the changing world around us.” Pepsi is focused on three pillars of sustainability explained
below: Human, Environmental and Talent. These three pillars form the foundation of they call Performance
with Purpose, and they help to drive their financial results through these pillars.
- Human: We are working to improve the nutritional profile of our products and offer a wider
selection of nutritious foods and beverages in response to growing consumer demand.
 Key Strategies formulated to address social responsibilities:
 Continue to refine food and beverage choices to meet changing consumer needs
by reducing sodium, added sugars and saturated fats, and developing a broader
portfolio of product choices.
  Continue to provide clear nutrition information on our products in line with
global policies and accepted global standards.
- Environmental: We are striving to reduce our impact on the environment and conserve natural
resources, reducing our operating costs in the process.
 Key Strategies formulated to address social responsibilities:
 conserve global water supplies, especially in water-stressed areas, and provide
access to safe water.
 Innovate packaging to make it sustainable, minimizing impact on the
environment.
 eliminate solid waste to landfills.
 Work to achieve an absolute reduction in greenhouse gas emissions
 Continue to support sustainable agriculture by expanding best practices with
growers and suppliers.

- Talent: We are continuously investing to build a diverse and engaging culture inside PepsiCo that
allows us to attract the next generation of talent we need to propel our company forward.”
 Key Strategic Goals
 Create a safe, healthy, diverse and inclusive workplace that reflects the global
communities in which it operates.
 Respect human rights in the workplace and across the supply chain.

Different organisations take different stances on CSR. The type of CSR activities by PepsiCo suggested
that their stance for CSR can be categorized under Enlightened self-interest type. Here the justification for
social responsibility is that it makes good business sense. For most organizations a good reputation in the
eyes of customers and suppliers is important to long-term financial success.

ii. Due to PepsiCo being a large organization, its corporate social responsibility strategies are supported
based on how stakeholders impact the business. PepsiCo’s CSR strategy adapts with the changing business
environment to keep stakeholders’ interests satisfied. The company’s prioritization of stakeholders is stated
in its corporate beliefs and purpose of business. The following are PepsiCo’s major stakeholder groups,
arranged according to the company’s prioritization:

1. Consumers and customers (top priority): This stakeholder group determines the financial standing of
the company in terms of revenues.
2. Communities: Part of PepsiCo’s thrust in corporate social responsibility is to ensure that it always has
a positive impact on society. As such, the company considers communities as a second-priority
stakeholder group.
3. Employees: PepsiCo believes that employees are significant determinants of the company’s long-term
growth. This stakeholder group is interested in career development and fair compensation.
4. Investors: As stakeholders, investors are interested in PepsiCo’s higher financial performance.
Investors significantly affect the company through availability and cost of capital.
5. Government (least priority): This stakeholder group is interested in ensuring that companies comply
with regulations. PepsiCo’ global legal team and public relations team address issues related to
governments

Part A: Question 2 - A
a) For the above question, I am using the PESTEL framework to analyze the external environment of
PepsiCo.
Political Factors:
- Political stability in major economies (opportunity)
- Improved intergovernmental cooperation (opportunity)
- Government initiatives against carbonated drinks (threat)
 Economic Factors:
- Economic stability of most major markets (opportunity)
- Rapid growth of developing economies (opportunity)
- Slowdown of the Chinese economy (Threat)

Social Factors:
- Higher health consciousness (can provide both threat and opportunity)
- Increasing busy lifestyles (opportunity)
- More discriminating attitudes about product quality (opportunity)

Technological Factors:
- Moderate R&D investments in the food and beverage industry (opportunity)
- Improving knowledge management systems (opportunity)
- Increasing automation in business (opportunity)

Ecological Factors:
- High focus on business sustainability (opportunity)
- More complex expectations and standards on waste disposal (opportunity)
- Climate change (threat & opportunity)

Part A: Question 2 - B

Primary activities
Inbound logistics
- Has established warehouses at key locations worldwide and in close proximity to its suppliers to reduce
transportation and logistics-related expenses.
- Uses advanced software for inventory management and to manage logistics. 
Operations
- Frito-Lay North America (FLNA): engages in manufacturing, marketing, distributing and selling branded
snack foods.
- Quaker Foods North America (QFNA). assigned with producing, marketing, distributing and selling
cereals, rice, pasta and other branded products.
Outbound logistics Pepsi primarily uses 
- direct-store-delivery (DSD): The DSD systems deliver beverages, foods, and snacks to the retail stores
- customer warehouse: The less fragile and perishable products with lower turnover are mainly distributed
through this channel.
- distributor networks: utilizes third party distributors and operators to distribute beverages, food, and snacks
to restaurants, businesses, schools, and stadiums.
Marketing and sales
- digital channels
- social media,
- outdoor promotions
- Video marketing

Service:
- Pepsi offers a large and diversified range of beverages, snacks, and food products

Each of the above-mentioned groups of Primary Activities are linked to the below listed support activities to
help ensure effectiveness and efficiency of the primary activities listed.

Technology Development:
 uses technology for employee training as well as inventory management and to grow customer
-
relationships.
- Invests in technology to develop environment-friendly solutions, minimize its carbon footprint, and
leverage data and analytics for serving customers better.
Human Resource Management:
- Employees are a source of competitive advantage in the industry, therefor the company continues to focus
on their training, retention, and continuous growth.
Procurement:
- Overseas Code of Conduct as well as supplier audit and training.

Infrastructure:
- the company manages its global business operations on a functional basis, and the management of its global
business is handled through various departments and functions.
- This has helped the company with efficient management and a leadership model which ensures higher
success and organizational productivity

Part B: Question 1 – A
I. A strategic business unit (SBU) supplies goods or services for a distinct domain of activity. A small
business focused on a single market, such as a restaurant or specialist retailer, would count as a strategic
business unit. Usually, SBUs refer to the distinct businesses within a large, diversified corporation.
II.
- Frito-Lay North America (FLNA). engages in manufacturing, marketing, distributing and selling branded
snack foods.
- Quaker Foods North America (QFNA). assigned with producing, marketing, distributing and selling
cereals, rice, pasta and other branded products.
- Latin America segment produces markets, distributes and sells a several snack food brands for Latin
American market. These brands include Doritos, Cheetos, Marias Gamesa, Ruffles, Emperador,
Saladitas,Sabritas, Lay’s, Rosquinhas Mabel and Tostitos.
- Asia, Middle East & North America (AMENA). AMENA segment makes, markets, distributes and sells
a number of leading snack food brands including Lay’s, Kurkure, Chipsy, Doritos, Cheetos and Crunchy
through consolidated businesses, as well as through non-controlled affiliates.
- Europe & Sub-Saharian Africa (ESSA). This segment engages in manufacturing, marketing, distributing
and selling a number of snack food brands either independently or in conjunction with third parties.
- North America Beverages (NAB). Operations in NAB segment revolve around producing, marketing,
distributing and selling concentrates, fountain syrups and finished goods under various beverage brands
including Pepsi, Gatorade, Mountain Dew, Diet Pepsi, Aquafina, Diet Mountain Dew, Tropicana Pure
Premium, Sierra Mist and Mug.

iii. PepsiCo uses cost leadership as its primary generic competitive strategy. This strategy focuses on cost
minimization as a way to improve financial performance and overall competitiveness.
o to compete against Coca-Cola products, PepsiCo offers low prices based on low operating costs.
o has special promotional offers with discounted prices.
PepsiCo also uses differentiation as its secondary generic competitive strategy. This enables business
competitive advantage by attracting consumers to some unique features of the firm’s products.
o PepsiCo’s Lay’s potato chips are marketed as a healthful snack product because of reduced
saturated fat content.
o PepsiCo’s strategic objective for the broad differentiation generic strategy is to innovate products
to address concerns about their health effects.

Part B: Question 1 – B
i. Latin America Segment: Cannibalise bases of success:
When PepsiCo first launching other brands in Latin America; it took sales away from the flagship Pepsi product.
This drove them to take certain measures to develop strategies to minimize impacts to their existing portfolio. 

ii. Evaluate the impacts / possible impacts of the interactive strategies described in part a.ii.

Part B: Question 2
i. Cash Cow: (Low market growth rate and High Market Share)
- For Pepsi, Frito Lays is undoubtedly the Cash Cow for the company.
 Frito Lays dominates the savory snacks market in the U.S with a 36.6% market share.
Stars: (High Market Growth rate and High Market Share)
- Pepsi falls in the Star quadrant of the BCG Matrix of Pepsi.
- Aquafina is one other brand which can be placed in star quadrant, Aquafina holds 15% of bottled water
market share.
Question Mark: (High Market Growth rate and Low Market Share)
- Diet Pepsi was launched with an aim to help PepsiCo regain their market share but failed to capture the
desired response from the customers and one of the major reasons for that was tough competition from Diet
Coke.
- 7up Nimbooz is one more brand which failed to succeed, launched in India in 2009, the brand was not able
to achieve significant sales volume.
Dog: (Low Market Growth rate and High Market Share)
- Because of stiff competition from Coca-Cola and changing customer preferences towards healthy and low-
calorie drinks, Pepsi is seeing a shift from STAR quadrant to Dogs quadrant.

ii. Frito-Lay North America (FLNA). Proposed Strategy Option: Global Strategy can be included into
cash cow category. Segments has witnessed growth in the revenue compare to previous years, 22% of
revenue was generated by FLNA of total revenue. This segment deals in snacks, some of the prominent
products are as follow; Tostitos tortilla chips, branded dips, Lay’s potato chips, Doritos tortilla chips,
Cheetos, Ruffles potato, Tostitos tortilla chips, Fritos corn chips, Ruffles potato chips and Santitas
tortilla chips. FLNA can be considered for Global Strategy because such segment can, keep on
generating good revenue for company for long-term.

iii. Discuss whether the international strategies help or could help the organization to achieve its strategic
objectives.
A global strategy is most beneficial when there are substantial cost or quality efficiency benefits from
standardization and when customer needs are relatively homogeneous across countries. Hence in the case of
Frito-Lay North America, will surely help to achieve its strategic objectives.
Other advantages:
o Costs can be reduced by operating internationally
o increasing volume can give scale economies
o to take advantage of variations in country specific differences such as labour cost and favorable
logistics

Part C: Question 1
Compare and contrast any two examples (from different organizations) of your choice with regard to change
management. You would need to:
i. Describe the changes that were to be implemented.

Coca Cola:
- Upgrade Factories with new manufacturing machineries
PepsiCo
- Implement a self service HR system
 ii. Use Forcefield analysis to identify and explain the blockages and potential levers for change.

Coca Cola:
Levers for change:
- Improved speed of production
- Raise volumes of output
- Reduce maintenance costs
Blockages for change:
- High cost
- Environmental impact of new technologies in machineries
- Disruption to the flow of operations
- Staff unfamiliarity with new technology
Pepsico:
Levers for change:
- Eliminates re-keying errors
- Faster execution of administrative works
- Reduces need for clerical staff
- Online documentation eliminates paper
Blockages for change:
- Some activities costs shift to high-paid staff
- Start-up costs
- Requires more trainings

References:
Pepsico.com. 2020. [online] Available at: <https://www.pepsico.com/docs/album/sustainability-
report/2014-csr/pep_csr14_sus_overview.pdf?sfvrsn=efee4f64_4> [Accessed 9 December 2020].
Whittington, R., Regnér, P., Angwin, D., Johnson, G. and Scholes, K., n.d. Exploring Strategy.