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Pepsi Co.’s Sustainability in Business

Executive Summary

The notion of sustainability has been discussed extensively in the context of global business recently, mostly due to the increase in the importance of environmentalism. An array of organizations have transitioned to the sustainable use of resources, shaping their manufacturing, supply chains, and the overall approach to performance management. PepsiCo is one of these organizations, with its innovative outlook on the management of its production processes and, particularly, the use of resources, as well as the disposal of wastes. Due to the emphasis on the stakeholder-based approach, as well as the innovation-driven approach toward the use of water and other finite resources, PepsiCo has been quite efficient in the promotion of sustainability across its organizational environment and especially in its manufacturing framework.

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Compared to other companies, such as Coca-Cola and Shell, PepsiCo has established a very effective strategy for developing sustainability. Moreover, the company has turned its approach to sustainable resource management into one of its competitive advantages, integrating it successfully into its core production processes. As a result, PepsiCo has shown impressive resilience toward external factors and the ability to navigate its internal ones, thus creating a powerful and viable framework for maintaining sustainable development. However, even with the high efficiency of the developed approach, PepsiCo could use additional improvements by increasing the range of its scope for appealing to the global community. Thus, the rise in acceptance of sustainable solutions will be observed worldwide.

Development and Value of Sustainability in Business

Sustainability is a relatively recent addition to the set of frameworks used in the business context, yet it has already been given substantial attention needed to warrant legitimacy as a crucial construct in the global economy. Due to the rise in concerns for the environmental changes and the impact that manufacturing, as well as other activities linked to waste production, has on ecosystems, the weight of sustainability in business has grown.

To approach the process of sustainability development, one will need the definition of the subject matter. Svensson et al. (2016) interpret sustainability as a combination of two critical concepts, namely, the promotion of corporate growth without environmental degradation and firm-level sustainability. The latte, in turn, is defined as “each discrete sustainability effort carried out by each company contributing to global sustainability” (Ferro et al., 2019, p. 1). In turn, the value of sustainability in the organizational context is expected to be substantially high since it allows increasing the organization’s competitive advantage in several critical areas (Biloslavo et al., 2018). Namely, by implementing a sustainable approach, a company tends to seek the methods of reducing expenses and improving the current allocation of resources, decreasing the amount of waste and, ultimately, the associated expenses.

However, apart from the opportunity to address the issue of financial leverage within an organization, the adoption of sustainable techniques will also have a tangibly positive effect on a company’s position in the global market. Namely, the positive publicity that an organization will receive once choosing the environmentally safe options for its manufacturing process is likely to improve a firm’s reputation. In addition, the options for collaboration will increase once an organization improves its reputation by adhering o the established standards for sustainable use of resources.

The outlined effects align with the theoretical framework of the Stakeholder Theory, as the examples of companies such as PepsiCo show. Namely, the presence of the mutual sustainability interest, primarily, that one of keeping the available resources replenished and reducing the extent of environmental damage, incentivizes companies to select the pathways that will be mutually beneficial for all stakeholders involved in the long term, specifically, the environmentally positive ones (Raki & Shakur, 2018). From the specified perspective, PepsiCo has been following the charted path quite accurately by choosing the sustainable solutions that would keep its reputation intact in the eyes of the global market participants concerned with the scarcity of resources and the waste levels (Miles, 2017). Due to the integration of the emphasis on the needs of key stakeholders, namely, customers, suppliers, local and global communities, and investors, PepsiCo has managed to introduce the notion of responsibility into its framework.

Likewise, the examples of Coca Cola and Apple indicate that sustainable strategies constitute the basis of modern business decision-making and manufacturing. The elaborate six-tiered approach toward maintaining sustainability that PepsiCo has developed over the past several years has helped it to keep the key stakeholders invested and reduce the negative impact on the environment by updating its entire supply chain (Torkornoo & Dzigbede, 2017). Namely, the company has sharpened its focus on the issues associated with agriculture, the use of water, the approach to packaging, product, climate and people-related concerns (Foo et al., 2018). The described framework has led to a sustainable use of resources, causing the firm’s expenses to drop and its popularity as an eco-friendly business to skyrocket (Meherishi et al., 2019). Therefore, the case of PepsiCo illustrates the value of sustainability both from the business perspective as a money-saving and competitive-advantage-building technique and the tool for gaining loyalty and attention of primary stakeholders.

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Compared to the framework utilized by PepsiCo, other companies following the principles of sustainable development have also added to the understanding of the value of sustainability as a production principle. Coca-Cola’ 2020 “A World without Waste” program has contributed to the dialogue by reinforcing the role of a conscious approach to business (Brondoni, 2020). Thus, the value of sustainability as a vehicle for improving the performance of organizations in the long term is extraordinarily high.

Moreover, comparing the cases under analysis, one will realize the challenges of developing a sustainable approach, both currently and in the future. As seen in the cases of PepsiCo and Coca-Cola, the current dilemmas associated with sustainability involve mainly the skill of balancing between the profitability of the selected strategy and its harmlessness to the environment and the well-being of key stakeholders (Iivonen, 2018). Moreover, the cases at hand indicate quite clearly that the described challenge can be addressed by using the latest technological advances, investing in research, and using the strategy based on compromise and searching for cost-efficient solutions.

In turn, the future challenges that a company implementing sustainable practices will have to meet include the need to industrialize biological systems in the way that would allow limiting the waste levels. As the example of Shell shows, it is crucial to find the ways to mimic the solutions that the global ecosystem has already developed. Since the specified options represent the shortest path to achieving balance between consumption and prediction, they need to be taken example of in the context of modern industries. Consequently, it would be reasonable to presume that the future of sustainability will imply integrating the solutions located in the current ecosystem into the production process in an organizational environment.

Consequently, the value of sustainability is only going to grow in the nearest future. The described change aligns with the main tenets of the Corporate Social Responsibility (CSR) principle. Implying that organizations should integrate the idea of responsible action into their decision-making framework, the CSR theory is likely to guide organizations in the future as well, prompting the further progress of sustainable manufacturing, supply chain management, and other processes within the corporate context.

Analysis and Comparison of Companies

Although the notion of sustainability remains homogenous across organizations, strikingly different strategies are used to maintain the notion of sustainability in the corporate context. Nevertheless, similarities can be observed across organizations and industries. The specified intersections in the development and application of sustainable strategies can be explained by the common goal and similar issues in waste management and CO2 emissions.

PepsiCo

PepsiCo’s approach toward sustainability might seem as mostly generic, yet it has proven to be pliable enough to adjust it to the rapidly changing context of the global market, which has allowed the organization to remain relevant in the present-day era. Attempting at encompassing the needs of all major stakeholders in its sustainability approach, the company has reinvented its supply chain entirely, incorporating new sources of energy and waste management into it. Specifically, the firm has shifted toward the 100% use of renewable energy in the management of its key operations, which is a financially taxing decision in the environment of the global market affected by the COVID-19 (Martin et al., 2020).

In addition, the strategy that the company has been using as its leading approach toward encouraging effective management of the company’s resources has been taking the issue of CO2 emissions as the leading problem to be addressed in the target economic setting. Although the problem of CO2 does constitute the list of concerns that organizations currently strive to reduce in the global economic environment, the emphasis on the reduction in CO2 levels can be considered a comparatively recent development (Aishwarya & Thahriani, 2020). Indeed, previously the concept of green production and sustainable use of resources appears to have revolved mostly around the

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Coca-Cola

In turn, Coca-Cola adopts slightly different framework for keeping its sustainability standards intact. The strategy that Coca-Cola deploys is notable for its ability to incorporate newly emerging factors into its framework and allow tweaking it in the way that helps the company to avoid new threats. For instance, the sustainability approach designed by Coca-Cola has revealed the opportunities for maintaining ethical use of resources even in the setting of the COVID-19 threat (Annan-Diab & Molinari, 2017). Specifically, opportunities for sustainable sourcing for the company’s supply chain have been discovered with the help of the strategy deployed by the company to keep the sustainability of its performance high. Coca-Cola has discovered the opportunity to retain its green policies.

The practise adopted by Coca-Cola offers a range of short- and long-term benefits, the key ones being the chance to keep the costs low in the environment that is rife with challenges and risks. However, the sustainability policy that Coca-Cola upholds also has the problem of being not extensive enough to take into consideration the multitude of factors shaping the availability of resources. For example, the company has admitted to suffering from the shortage of competent workforce. As the company has admitted, “There are already reports, for example, of farmers not being able to harvest crops due to labor shortages and packaging waste collectors not being able to collect recycling materials” (Coca-Cola, 2020, para. 4). Therefore, the organization would have benefitted from the development of a multilateral approach that could encompass a wider range of factors and affect them accordingly. For instance, the problem with the workforce shortage could have been addressed by reconsidering the present choice of suppliers, as well as using outsourcing and similar techniques (Chua et al., 2020). Overall, Coca Cola’s sustainability appears to be quite strong, yet it lacks the resilience that PepsiCo has been showing.

Shell

In turn, the framework used by Shell is worth considering as the exemplary case of using the resources at the company’s disposal in the manner that allows maximizing the profits and reducing the environmental damage to the minimum. However, there are certain similarities to be found across the companies listed above. For example, each of the organizations deploys the concept of SCR in their organizational settings (Gehani, 2016). The SCR notion keeps the decision-making process focused on the needs of every stakeholder involved, including customers, suppliers, and the global community at large. As a result, the organization retains its ethical stance toward the issues of waste management, use of renewable energy, and the related concerns. Compliance with the set international agreements concerning the application of environmentally sustainable practices is what makes Shell a particularly important agent in promoting change.

Compared to PepsiCo and Coca-Cola, the framework used by Shell could be improved by introducing practices for better waste management. However, it is noteworthy that Shell operates in an entirely different industry, where extraordinarily high rates of pollution and ecological footprint are inherent to the key elements of the production process. Whereas with Coca-Cola and PepsiCo, the use of renewable packaging and the reduction in CO2 omissions represent the main points of concern, Shell’s case is much more convoluted due to the specifics of the oil and gas industry (Ubini, 2018). Namely, given high toxicity of oil byproducts, as well as the environmental damage caused by crude oil, the ability of Shell to retain its environmentally safe policies is refreshingly impressive.

Overall, comparing the strategies described above, one should mention the fact that PepsiCo’s present approach toward managing sustainability concerns appears to be the most effective and resilient one. Despite the presence of the evident problem concerning a more general focus on sustainability as opposed to mere reduction in the greenhouse effect and the amount of CO produced by the organization, the current technique appears to be the most efficient one (Aishwarya & Thahriani, 2020). Namely, addressing the issue of sustainability on the supply chain level and revisiting the organization’s infrastructure and the framework for producing its goods. As the methods of keeping up with the existing demands for sustainability can be regarded as impressive changes.

One could also make the case for Coca-Cola with its focus on the recent changes to the target environment as the foundational issue to be prioritized in the corporate setting. Indeed, alterations to the existing setting, especially in regard to innovative solutions for managing sustainability, are critical for the effective and sustainable performance. However, PepsiCo’s strategy is arguably quite resilient to market changes as well since it strives to incorporate external influences into its context as well.

Pepsi Co. Case Study

The fact that PepsiCo has singled out several critical areas that it seeks to address in its sustainability framework, as well as the focus on flexibility that the company has been keeping as the means of remaining resilient in the highly competitive setting of its target market, can be considered the highlights of its sustainable approach. The intention to create a sustainable food system is a doubtless advantage of the approach that PepsiCo has been using in advancing its sustainability agenda and promoting the principles of environmentalism across the food and beverage industry (Torkornoo & Dzigbede, 2017). However, even with the current advances in managing sustainability issues, PepsiCo will still have to consider several recommendations for improving its sustainable approach.

Options for creating stronger partnerships for the enhancement of its supply chain and a more expeditious management of the emergent concerns need to be created so that PepsiCo could improve its current sustainability strategy. In addition, PepsiCo would benefit to a great extent from the focus on cross-cultural collaboration and conflict management strategies. Given the fact that PepsiCo has been prioritizing the idea of empowering people across the globe to contribute to the increase in sustainability, the company needs to create the communication model for speaking to the target stakeholders as convincingly as possible (Sehrawat, 2019). In turn, the described goal will involve the creation of a communication framework for appealing to a wider range of audiences. Specifically, PepsiCo will have to serve as an example for every organization with which it collaborates, no matter its geographical location, to convince it to accept the principles of sustainable development and integrate them into its framework for cooperation with PepsiCo.

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Finally, waste reduction and the more effective management thereof should be recognized as a crucial goal for PepsiCo to accomplish in the nearest future. Although the range of waste management options is quite few for the company presently, none of them suggests a perfect solution, especially given the fact that plastic is being used as the main packaging material (Foschi & Bonoli, 2019). Therefore, PepsiCo will have to address the use of plastic and its further disposal accordingly. Presently, the range of actions for PepsiCo to take includes appealing to its customers to convince them to accept the principles of sustainable living and recycle plastic packaging used by PepsiCo appropriately.

Finally, locating options for entirely recyclable or biodegradable packaging should be considered the priority for the company. The latter option is preferable given the increase in the consumption of products that typically sue plastic wrapping (Torkornoo & Dzigbede, 2017). Additionally, the issue of engaging with communities and involving every possible stakeholder in the sustainable management of resources should be regarded as the essential focus of PepsiCo’s further sustainability policies. Although the organization has been addressing the specified issue already, it needs a better communication model that would appeal to every possible stakeholder, including not only PepsiCo’s partners in the third-world countries, but also average citizens (Torkornoo & Dzigbede, 2017). Remarkably, when considering the specified setting, one should note that even the task of converting organizations to the path of the sustainable use of resources already implies a massive effort due to the economic challenges and the absence of legal support for the specified change. Therefore, the task of engaging communities of average customers across the globe in a sustainable consumption of resources implies an even greater challenge than currently appears to be impossible to accomplish.

Nevertheless, given PepsiCo’s massive global presence and the tremendous impact that it has on shaping its customers’ preferences and attitudes, introducing the specified change in their behaviors remains a possibility. With a well-designed and carefully implemented campaign involving the dialogue with the target audience adjusted to the setting in which it is implemented, PepsiCo will be able to convince its buyers to follow more sustainable principles of using resources, from the importance of recycling to the idea of a more thoughtful management and disposal of resources. Moreover, accomplishing the specified task will help PepsiCo to build global awareness concerning the harmful effects of wasteful use of resources. Overall, the dialogue that PepsiCo will establish with its target audience by appealing to people’s culture and perceptions will help to create the platform for the global transitioning to sustainable production and consumption.

Gibb’s Reflective Cycle

Reflecting upon the experience of studying the issue of sustainability, one should consider using Gibbs’ Reflective Model. Gibbs’ framework suggests transferring from one of the following stages to another in the described order: Description, Feelings, Evaluation, Analysis, Conclusion, and Action Plan. Thus, the model suggests assessing one’s experiences, attitudes, and lessons learned, providing an impetus for change.

Description

In the course of the analysis, key theories and the relevant concepts were applied to assess the performance of PepsiCo, as well as other major companies, in relation to their compliance with sustainability principles. Namely, the frameworks used by the specified organizations in their attempt at pursuing sustainability goals were explored. Furthermore, the described approaches were compared to elicit the further course of action for PepsiCo to consider to improve its sustainability strategy.

Feelings

The work described above allowed me to experience the process of business analysis firsthand, thus allowing me to test my skills and understanding of the critical ideas. I felt very confident when applying the covered theories successfully and observing the results. Moreover, watching theory transforming into practice as the case under analysis showed the multiple facets of adopting sustainable approach toward manufacturing was fascinating.

Evaluation

Overall, the described experience has had a tremendous effect on the development of understanding of sustainability in business. Namely, the factors that shape companies’ approach toward sustainable manufacturing and overall performance have been identified. Moreover, the strategies that can be used to improve the effects of the sustainable development have become apparent.

Analysis

The main outcomes that the described experience entailed include an improved knowledge of how sustainability functions in the economic setting. Moreover, the assessment of the changes that PepsiCo has experienced during the redesign of its production process and supply chain has helped to shape the idea of how theory transforms into practice. In addition, insights into the concept of sustainability were made.

Conclusion

In the context of the target case, the model has led to the acceptance of innovation-driven framework and the further study of opportunities for its integration for improving sustainability issues.

Action Plan

To continue the development process that the specified project has launched, it will be necessary to examine the notion of sustainability in the context of future opportunities that it entails. Specifically, one may want to connect the learned theories to the analysis of the current situation to make future projections and delineate the outcomes of proposed strategies. Thus, the platform for continuous innovation will be set for PepsiCo, as well as other organizations functioning in this industry.

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