Summary
The purpose of this work is to give an idea of the main aspects that ensure the economic stability of PepsiCo. The impact of globalization and industrial progress is considered in relation to the activities of PepsiCo. Evaluation models will be applied: industrial organization and resource-based, each of which provides unique perspectives on assessing the financial success of a corporation. The company’s vision and mission are interpreted as defining the direction of PepsiCo’s activities. Finally, the assessment and classification of stakeholders gives an idea of the prospects and aspirations of the company for further development.
Globalization
In modern realities that combine the concept of multinational corporations with the reality of a global pandemic, it is necessary to consider how the ideas of globalization are implemented in the current activity of the corporation. Globalization is the special economic conditions of modernity, in which corporations are becoming less and less dependent on countries and geography due to the free flow of finance and products. This established system of global economic relations means that companies are in a state of constant competence and must adapt to constantly changing rules. The globalization model of PepsiCo functioning is based not only on the fact that it is one of the largest corporations in the world with branches open all over the globe. The corporation presents the world as a huge ecosystem in which nutrition plays a significant role. Food resources such as grains, for example, are mined by PepsiCo in 60 different countries, which underlines how dependent the company is on the global economic model of operation. At the same time, the Corporation is aware that natural changes only emphasized by the pandemic increase gaps and inequalities in the food system and society itself. PepsiCo is forced to take into account soil damage due to global warming. Thus, globalization is both an aspect on which the company depends and a factor that offers ever new challenges.
Technology
Technological changes and improvements that are rapidly happening in the modern world require constant regulation in order to make their use not only practically useful, but also ethically meaningful. Perpetual innovation, or the tendency of ever-new emerging technologies to supplant ever-faster obsolete ones, presents a complication for a company seeking to maintain a policy of innovative solutions. PepsiCo is aware of the rapid development of artificial intelligence and understands that the creation of generalized standards is required in order to manage the introduction of new technologies.
Ethical principles here imply the secure transfer of information, together with the transparency of the entire information chain. At the same time, the visibility of information should be both complete for specialists and closed from external interference. The company must take into account, first of all, the people themselves who are affected by technical changes and, in this regard, set limits and red lines in the implementation of new developments of Artificial Intelligence. The human factor, which must be preserved when using AI, seems to be the dominant factor that determines technological development. PepsiCo’s goal is not to replace humans with computers, but to improve the working apparatus with a focus on the end user (World Economic Forum, 2021). Thus, the use of technology requires a responsible approach, which must first of all be ethically meaningful and human-centered.
Industrial Organization Model
The Industrial-Organizational Model is basically a set of characteristics describing the external circumstances that present challenges for a company seeking to generate above-average profits. The model includes external forces influencing the company’s activities, taking into account other firms that use resources in a similar way for the purpose of rivalry (Hitt, 2020). Taking into account the sufficient motivation of decision makers in the organization and their focus on the interests of the company are also important because they provide the maximum amount of profit. Through this model, organizations have the opportunity to discover the most attractive industry for competition.
As external factors that play an integral role in this model, the risks associated with climate change are taken into account. Taking into account the scenario of a constant rise in temperature in the climate affects the warehouses, research centers, the agricultural supply chain. Given these factors, PepsiCo plans to move to fully renewable energy as part of its operations and invest in research looking for ways to lower emissions into the atmosphere, limiting the global rise in temperature. In the long term, this can provide serious financial security for a company that will be less affected by climate change. Considering the very significant share that PepsiCo holds in the snacks and soft drinks industry, it is safe to say that their choice of industry guarantees their high profits. The CEO’s statement affirms PepsiCO’s strategy to work within the data constraints of a changing planetary landscape and invest in these changes to continue to evolve. In the global long term, these investments will save the company’s costs and guarantee it a secure existence and high profits associated with their dominant position in their market segment.
Resource-Based Model
The idea of a resource-based analytical model is to put an emphasis on resources and opportunities that are unique to each company. If one takes resources, including equipment, finances, talents of employees, as the basis for building a company’s strategy, one can create an idea of the company’s profit through this perspective. Taking into account the core competencies or most innovative functions of the company is extremely important in this model because it demonstrates the positive difference of the company from similar competitors. The main advantage of the company in terms of resources is its intellectual property. This implies already formed and developed brands of products that are popular and in demand among the audience. The company’s numerous partners and various shareholders of various sizes also guarantee PepsiCo’s profitability. The strong infrastructure of the company and a global logistics model that is capable of transformation also guarantee the company a reliable profitable growth.
Vision
The vision of the company implies the main goals and objectives necessary for its improvement. The vision of PepsiCo is expressed not only in the desire to be the main and the best in the environment of drinks and fast food, but also in the presence of purpose. For PepsiCo, that is helping the planet and society through investments in natural regulation. The company’s aspirations, presented on the official PepsiCo website, are categorized into three dimensions – faster, stronger and better. The company seeks to quickly strengthen its position in the market, strengthen and focus investments for the company’s growth. PepsiCo wants to become an even stronger corporation by using holistic cost management – which means that finances are reinvested with great regularity.
Mission
The mission of the company is expressed in the statement: Create More Smiles with Every Sip and Every Bite. Due to this motto, the company seeks to win and maintain its popularity with the audience, creating a positive experience when interacting with the products it produces (PepsiCo, 2022). Considering ever new requests, such as greater safety and benefits of products, the problem of packaging and their environmental friendliness, PepsiCo strives to meet the current requirements of consumers, which affects the company’s assessment and increases its attractiveness for both investors and the average buyer. By interacting with the customer through advertising, social media, research and surveys, PepsiCo is committed to its mission statement by satisfying the needs of its audience.
Stakeholders
Stakeholders are any individuals and legal entities that are affected by the activities of the firm and who also have an impact on the firm itself. The classification of stakeholders into several categories allows you to determine the importance of each of these groups for achieving the company’s goals. First of all, one should mention the shareholders who provide the main financial injections into the company. PepsiCo claims that investors are extremely valuable to the company and its success. For 2020, the company’s largest shareholders represent nearly half of the company’s market share, highlighting their importance to PepsiCo’s success. The corporation interacts with a variety of investors and seeks to maintain constant communication with them and be available for dialogue.
Consumers and suppliers constitute a separate group of stakeholders, since all the company’s material products are transmitted through them. Managers and employees of the company are also formally stakeholders, since their participation in the company’s activities mutually determines both the future of the company and the financial security of employees. Among the stakeholders are also non-governmental organizations with which the company consults on various globally and locally important topics related to natural changes, public health and human rights. Engagement with stakeholders in general gives the company the opportunity to improve various aspects of PepsiCO, including ethical, legal and public affairs.
Sources
Michael A. Hitt. 2020. Strategic Management: Concepts and Cases: Competitiveness and Globalization 13th ed. Cengage Learning.
World Economic Forum. (2021). Fostering responsible AI leadership. Web.
PepsiCo. (2022). Mission & vision. Web.