- PepsiCo’s Strategy Implementation and Strategic Controls
- Structure, Systems, People, and Culture at PepsiCo
- Human Resources Concerns and Cultural Factors
- Organizational Design and Key Control Systems
- Company’s Mission and Organizational Components
- Ethical “Prescriptions”
- Possible Changes in the Company’s Strategy
PepsiCo is an example of a company that has made great efforts in order to align its policy to the rapidly changing market conditions. Its reaction to the change in customers’ preferences and implementation of the generic strategy would allow it to survive the crisis and receive the benefits of the new market entry. The orientation on international customers contributes to their general satisfaction and the consequent increase in the company’s profit.
Monitoring the process of the strategy implementation with the help of key control systems ensures the correspondence to the schedule. However, despite the positive expectations regarding the alleged outcome of PepsiCo’s strategic plan, there are certain drawbacks considering the human resources of the company. Therefore, it is necessary to take additional measures to increase the PepsiCo Company’s flexibility in the decision-making process.
PepsiCo’s Strategy Implementation and Strategic Controls
The necessity to adjust to social changes and react to the appearing political and economic circumstances has become an essential task for any big company, and PepsiCo is no exception to the rule. However, the practical implementation of the company’s strategic plans cannot fully correspond to the initial perception of the steps that are to be taken and the outcome that is expected. It is necessary to consider PepsiCo’s control systems that allow to track the progress of the implementation of its plans and reveal deviations if there are any. Hence, the purpose of this report is to consider the company’s essential control tools and their role in the successful implementation of the strategy for its further development.
Structure, Systems, People, and Culture at PepsiCo
The principal resources of the company primarily refer to its personnel and thereby are connected to the corporate culture of the organization. Due to their importance to PepsiCo’s strategic plans realization, the company emphasizes the motivation of its employees by occasionally promoting them to higher positions. In order to ensure the strength of the company’s human resources, they also encourage collaboration between all the employees and managers (Kissinger, 2017). The fact that the company’s structure is variable contributes to the increase in the motivation of its employees to improve the business indicators. Therefore, the primary focus of PepsiCo is a culture of high performance and strong connections.
The organizational structure of PepsiCo is highly adjustable to new circumstances. Depending on the current business situation, they change their leaders in order to achieve a better overall performance of the company’s activities (Kissinger, 2017). However, not only leaders matter as the employees of PepsiCo also play a significant role. The company’s managers actively encourage them to get involved in the process by addressing their particular concerns on the company’s operations and the appearing potential risks. In general, the cooperation of all types of employees contributes to finding better and faster solutions to problems and implementing the actual strategy of PepsiCo.
Human Resources Concerns and Cultural Factors
Strong human resources are one of the principal PepsiCo’s components of business success. Its policy towards managers and employees is distinguished by the increase in their motivation through promotions and the development of leadership skills required for it. This approach contributes to the low personnel turnover at PepsiCo as well. However, despite the overall success in the collaboration of the company’s employees, there are also certain drawbacks in the way it deals with human resources.
The biggest challenge of PepsiCo’s personnel derives from the lack of flexibility of individual employees. They are encouraged to collaborate, not to make decisions on their own (Kissinger, 2017). Therefore, it is becoming more challenging to develop the leadership skills necessary for further promotion. The performance under such circumstances can gradually decline, but this result is not even the worst possible option. The lack of flexibility of PepsiCo’s employees and poor leadership skills might eventually lead to the company’s inability to cope with a crisis or adjust to the new circumstances. In the current situation, when the company needs to adjust its activities to the new factors such as the population’s health concerns and economic changes, it is becoming more difficult to implement the intended strategy.
The possible changes in the perception of tasks and ways of their implementation might also result in eliminating cultural differences, which is essential for such a multinational company as PepsiCo. The orientation on the target customers requires a certain degree of flexibility for its managers and employees. Therefore, the PepsiCo Company should consider the possible failure to satisfy the customers’ needs by not providing the product, which corresponds to their culture. It should take extra measures to decrease the probability of such an outcome by creating more autonomy for its employees in addition to their strong skills of collaboration.
Organizational Design and Key Control Systems
The implementation of PepsiCo’s strategic choices within the preferred strategy requires the use of various control systems that allow to track their progress. In order to deal with the dysfunctional elements in the core plan, the company needs to realign them in such a way that they fit the current objectives. In the case of the PepsiCo Company, they relate to the research of market needs and the development of a new product corresponding to the changes in demand.
One of the key control systems the company uses is the computerized monitoring of inventory. As one of the primary strategic choices of PepsiCo relates to the decrease in operational costs for the further reduction in the new product’s price, this instrument is essential for the PepsiCo strategy successful implementation (Gregory, 2017). This system is complemented by CVP or Cost-Volume-Profit analysis that allows to figure out how to vary the company’s sales volume and product costs to receive a higher operating profit (Irfanullah, 2019). It also facilitates the decision-making process for the company’s inventory managers.
Another example of PepsiCo’s control systems is automated scheduling, which is vital for strategy implementation in a timely manner. As the PepsiCo Company is not the only player on the market, the competition with Coca Cola Company contributes to the necessity of tracking the actual progress to be the first to enter the new market (Gregory, 2017). Hence, the data gathered from the human resources and production space schedules ensure the understanding of the process advance.
Company’s Mission and Organizational Components
For the successful implementation of PepsiCo’s strategic choices, there is a need for alignment between its mission and the organizational components. As the mission of the company relates to the provision of food and beverages satisfying the tastes of the customers all over the world considering the latest health concerns, its components need to correspond to the global perception of the idea. The culture of the company is therefore oriented on applying the new desires of the customers to their innovative products. The leadership skills promoted by the PepsiCo’s managers also contribute to the appearance of new ideas on how to present the product to enter the market successfully.
The structure of the company and the developed cooperation between all its employees make it possible to exchange their vision most efficiently. As for the work processes and control systems, they complement the implementation of the PepsiCo Company’s vision in the way to make it correspond to its strategic choices. Thus, the organizational components perfectly fit the principal strategy of the PepsiCo Company and allow it to succeed in the new market entry.
For the implementation of the PepsiCo strategy, it is vital to include some ethical principles as a part of the plan. They are intended to ensure a better understanding of the purpose and values of the company. For this purpose, they need to become actions, not only words to draw attention to the company’s strategy. The first principle used for the PepsiCo Company is the creation of a proper organizational structure (Schulman, 2006).
It refers to the necessity of accurate responsibility distribution among the employees under the existing cooperation. The second principle focuses on the incorporation of ethics into the employees’ training while developing their skills under the chosen strategy (Schulman, 2006). This approach facilitates the understanding of the company’s ethics by the employees from the very beginning of their work for PepsiCo. And, finally, the third “prescription” is to explicitly articulate values, which should be real and correspond to the generic strategy (Schulman, 2006). As can be seen from the analysis of the PepsiCo Company’s values and their use while making the strategic choices, all the ethic principles mentioned above are successfully implemented.
Possible Changes in the Company’s Strategy
The implementation of the PepsiCo Company’s strategy and strategic choices is a process involving their mission, values, ethical principles, and many other components. In general, the use of the key control systems and organizational components described above prevents the failure of the generic strategy. It also creates the required conditions for the new market entry. However, the human factor remains the principal weakness of the PepsiCo Company.
The cooperation between its managers and employees is on a high level, whereas their individual choices might not be as efficient as the company’s general decisions. To eliminate this weakness, the PepsiCo Company should not only promote its employees in the context of finding solutions for specific current tasks but also increase their autonomy. The more autonomous the employees will be, the more flexible their decision-making process will become.
The response of PepsiCo to the appearing conditions reflects its ability to overcome the challenges of the new market entry. Their strategy is a powerful tool to ensure the future prosperity of the company. In this process, human resources play a significant role and contribute to the general flexibility of PepsiCo’s decisions. The use of key control systems within the strategy allows to assess its progress. Together with the incorporation of certain ethical principles and changes in the decision-making process of the company’s employees, PepsiCo would be able to survive the crises and remain one of the leaders in the industry.
Gregory, L. (2017). PepsiCo’s operations management, 10 decisions, productivity. Panmore Institute. Web.
Irfanullah, J. (2019). Cost volume profit analysis. Accounting Explained. Web.
Kissinger, D. (2017). PepsiCo’s organizational culture characteristics: An analysis. Panmore Institute. Web.
Schulman, M. (2006). Incorporating ethics into the organization. Markkula Center for Applied Ethics. Web.