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• Describes the organization’s
  • Basic legal environment
  • Social environment
  • Economic environment
• Describes the management structure
• Describes the operational issues
• Describes the financial issues
• Identifies the impact of potential change factors including the role of technology

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Pepsi is a non-alcoholic beverage company. PepsiCo has a neck-to-neck rivalry with Coca-Cola. In this paper, the social, legal and economic environment of PepsiCo, management structure, operational issues and financial issues will be discussed. Along with this assignment help, impacts of changes and role of technology in organizational strategy will be described in this paper. Legal environment: There are various legal implications on the beverage industry related to used water, chemicals, process, impact on environment and health of customers. It is regulated by FDA and provides products across the world according to a different set of regulations and laws.

 

Legal environment presents restrictions on equity through FERA and FEMA. Social environment: Social factors impact PepsiCo. Pepsi has to communicate its image as a global brand so the people can associate themselves with this brand that connects the world together. The social implications are seen in marketing campaigns of this company. For example, certain countries have religious festivals, so Pepsi has to keep in line with all those festivals to understand the psyche of market and gain the opportunity of sales. Economic environment: Economic conditions have the highest influence on a business. Due to economic downturn, company had to restructure its sales and marketing strategy. With declining profits and sales, company had to undergo downsizing internally and modify their strategies to penetrate the market. In 2008, economic downturn resulted in increased sales because people were being laid off from jobs and spending more time with friends and family or at home.

 

Management structure: PepsiCo formed a new worldwide management structure that includes a fresh chief executive for Pepsi Americas Foods. This change in the food-and-beverage organization comes as to grow its share price in the market. Brian Cornell, a former exec, is to become CEO of PepsiCo Americas Foods. Cornell was the president and CEO of Sam’s Club division of Wal-Mart Stores, and worked with other retailers (Goldberg, 2012). In present, he holds a number of management positions within PepsiCo. At the same time, PepsiCo unveiled plans to give current Americas Foods CEO John Compton a newly-created title of president of PepsiCo, making him the company’s No. 2 exec (Egan, 2012).

 

It is an important and essential step in PepsiCo to deliver sustainable growth. The management of the company focuses on a global expansion that helps to increase growth potential, gain global scale and achievement of geographic diversity. In growing GDP and faster population, management of PepsiCo sees a significant opportunity for growth (PepsiCo: Management Approach, 2012). Its business development strategies are focused on distributing global brands, creating affordable products, strengthening advanced local supply chain and encouraging people to live balanced and healthy lives.

 

Operational issues: The operation department of PepsiCo could not handle the quality of the Cadbury products. The company has faced issues related to pesticides in its beverages that resulted into product banned in most of the places. Along with this, it affected the organization in terms of monetary value and loss of trust and brand name (Carroll & Buchholtz, 2008). The stock of Pepsi was seized and the production in factories was stopped. This act presented an opportunity for other brands to make their place in the market. This operational issue raised questions about existing operations management techniques and quality assurance processes. Now, company uses effective quality control and strict monitoring and checking techniques to maintain the quality of products and reduce operational issues within the organization.

 

Financial issues: The financial condition of the company is very sound, but government implies taxes on soda products to reduce consumption and improve public health. This tax increases cost of products and operations. It is well known that sugared sweetened beverages are a contributor of poor health and obesity among public (Puhl, 2012). Along with this, the company faces the highest levels of input price inflation in many years. The rise in the price of oil and agricultural commodities increases broad pressures on global food companies. PepsiCo, snacks and soft drinks Company, expected an additional $1.4bn to $1.6bn in extra input costs in its 2011 financial year (Birchall, 2011). It is equivalent to cost inflation of 8 to 9.5 percent. You can also get Pepsi case study assignment help from our experts.

 

Potential changes: Organizations must change according to the changes in internal and external environment. Climate changes have an adverse impact on global temperatures, weather patterns and the frequency and severity of extreme weather and natural disasters (PepsiCo: Climate Change, 2012). The company is working to address climate change with the help of using renewable fuel resources and reducing energy consumption. The company is using solar solutions for energy in US and renewable energy sources in India. Along with this, a new proprietary and patent-pending technology changes the crystal structure of salt. It allows the company to reduce sodium by 25% with no changes in taste of snacks (PepsiCo Reduces Sodium by Restructuring Salt, 2010). Apart from this, technology advancement in operations improves overall workflow efficiency and productivity through using robotics in manufacturing, new machines and new process of making products. Conclusion It can be concluded that PepsiCo is a leading organization in snacks and soft drinks industry. Recently, company has faced issues related to production and ingredients that affected the global brand image and sales of company. In present, it uses effective quality control tools and techniques and sales and marketing campaigns to recover its sales and brand image.

 

References: Birchall, J. (2011). Pepsi faces steep input price inflation. Retrieved from: http://www.ft.com/cms/s/0/bd3aa372-3517-11e0-9810-00144feabdc0.html#axzz23m1KXHJH Carroll, A. B. & Buchholtz, A. K. (2008). Business and Society: Ethics and Stakeholder Management. USA: Cengage Learning. Egan, M. (2012). Pepsi Shakes Up Management Structure. Retrieved from: http://www.foxbusiness.com/industries/2012/03/12/pepsi-shakes-up-management-structure/ Goldberg, D. (2012). PepsiCo Formed New Management Structure for Pepsi Americas Foods – NYSE:PEP. Retrieved from: http://news.stockmarketvideo.com/pepsico-formed-new-management-structure-for-pepsi-americas-foods-nysepep/5844/ Krug, J. A. (2009). Mergers and Acquisitions: Turmoil in Top Management Teams. USA: Business Expert Press. PepsiCo Reduces Sodium by Restructuring Salt (2010). Retrieved from: http://www.foodprocessing.com/industrynews/2010/050.html PepsiCo: Climate Change (2012). Retrieved from: http://www.pepsico.com/Purpose/Environmental-Sustainability/Climate-Change.html PepsiCo: Management Approach (2012). Retrieved from: http://www.pepsico.com/Purpose/Overview/Management-Approach.html Puhl, R. (2012). PepsiCo’s Financial Penalties for Obese Employees: Discriminatory and Hypocritical. Retrieved from: http://boards.medscape.com/forums?128@30.fjqDauMLhiq@.2a30fed9!comment=1

 

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