According to the circumstances of this case, the plaintiff, Leonard, saw a Pepsi advertisement that said that points could be gained by purchasing Pepsi goods and exchanging them for Pepsi items. After the ad, a child was shown landing a Harrier Plane at school, with a caption suggesting that the plane cost 7,000,000 points (Cooper & Kirk, 2021). The regulations of the offer allow for the purchase of additional points for ten cents. With the support of various friends, the plaintiff was able to raise enough money to buy the Harrier Plane and mailed a form to the respondent demanding the plane. The defendant refused, writing the plaintiff a letter emphasizing that the aircraft was not meant for sale and pointing him to the marketing brochures rules. The plaintiff filed a breach of contract claim (Pivateau, 2020). The defendant filed a petition for summary judgment. The court approved the motion, noting that advertisements are invitations to bargain rather than contracts or offers to sell.
Issues
The question, in this case, is whether the advertisement represented an offer for a Harrier Jet. The Restatement (Second) of Contracts states that advertisements for commodities made through handbills, newspapers, display signs, radio, and television are not often intended or interpreted as offers to sell stands out as a troublesome fact that conflicts with the whole case. This case demonstrated when an advertisement is not a solicitation. The advertisement referred to the catalog, which contained a genuine deal. Second, the idea itself was absurd.
Rule
An advert cannot be regarded as an offer if it would not taken seriously by a reasonable person. An invite to give specifies one partys readiness to consent to an offer. It may also be comprehended as a call to discuss, but it is not an agreement since no legally binding agreement is imminent (Cooper & Kirk, 2021). Offers must be prepared and delivered in such a manner that a sensible man would envision it to effect a binding contract if it is accepted
Analysis
According to the Restatement (Second) of Contracts, the advert portrayed the aircraft never established an offer. Even when the advert had been an offer, the court, in its decision, stated that no rational being could have thought the company was serious about moving an aircraft valued at approximately 23 million US dollars for $ 700,000, meaning that this was all exaggeration (Cooper & Kirk, 2021). The price of the purported contract rendered it subject to the requirements of the New York Statute of Frauds, but the statutes need for a written covenant between the parties was not contented, and so no agreement was created (Aaron & Caterina, 2018). Leonard appealed the ruling to the United States Court of Appeals for the Second Circuit, but the court upheld the initial ruling. This was the same case in the case of Pepsi, and thus no offer would have amounted to binding agreements.
Conclusion
An advert in the newspaper, a handbill, a brochure or magazine, or a sign in a shop window may all be used to make a compelling offer to purchase or sell items. Unless the circumstances are unique and the language used is highly apparent and unambiguous, such advertisements are recognized to be only pleas to gauge, scrutinize, and discuss. No individual can rationally perceive them as anything other. The commercial was only a public service announcement, not a one-time offer, because the commercial set aside the contents of the agreement to a particular publication; the Ccatue, the commercial, cannot be considered sufficiently clear in and of itself.
References
Aaron, S. D., & Caterina, J. (2018). Inadvertent Contract Formation Under New York Law: An Update. Syracuse L. Rev, 68(4), 777-784.
Cooper, T., & Kirk, E. (2021). Contract Llaw. Routledge.
People at various levels are waking up to the reality of the impact of carbon emission. It was in this context that PepsiCo undertook a study to find out how green its orange juice was. This paper gives a summary of the study and the significant resolutions that were made as was reported by Bryan Walsh.
Article Summary
Walsh gave a brief report of the findings of a study carried out by Columbia Universitys Earth Institute and a firm called Carbon Trust. The study was carried out on behalf of PepsiCo, and it was aimed at assessing the carbon footprint of its orange juice. The study showed that the complete process of juice production to the point of customer acquisition, for a 64-oz carton, led to an emission of 3.75 Ib. of greenhouse gases. Against the majority expectation, the study pointed out the single most significant contributor to the emission of greenhouse gases as the fertilizers used in the farming of the orange trees used for the production of the juice; fertilizers contributed approximately a third (35 percent) of the total emission. The fertilizers used were inorganic, and consequently, they were very carbon intensive. Manufacturing of inorganic fertilizers required natural gas, and this made them very expensive. It was reported that nitrogen fertilizers were extremely used in the U.S. farms and therefore, if alternative fertilizers could be developed then the war on the carbon footprint could enjoy a significant victory. This study, therefore, evidently showed that there was a need for a change in the farming technique used especially the fertilizers used if at all PepsiCo was committed to producing green juice. This led to PepsiCo undertaking tests on two low-carbon fertilizers. One of the fertilizers was calcium-nitrate based and was manufactured by Yara International. This fertilizer was said to emit less nitrous oxide, and fortunately, it had a powerful greenhouse effect than that of carbon dioxide. It was reported that the production of the new fertilizer could cut the emission in the production process of fertilizers by up to ninety percent. The other fertilizer under PepsiCos test was an organic product fertilizer. This organic fertilizer was manufactured by Outlook Resources, which was based in Toronto. The company aimed at avoiding the use of natural gas as a raw material and substituted it for locally available resources that have less carbon emission. Instead of using natural gas, Outlook Resources used food waste, and bio fuels among other renewable materials to manufacture the organic fertilizers. It was reported that the fertilizer made by Outlook Resources was efficient as compared to the conventional fertilizers and thus less of its volume was used in farming. The test on the two fertilizers ran by PepsiCo was to last for five years after which the company was to assess the impact on the orange production and carbon footprint.
Conclusion
The need to find ways of reducing greenhouse gases emission is urgent. All the stakeholders need to engage each other in a collaborative manner towards seeking a solution to emission of rare gases. If the two fertilizers tested by PepsiCo will give positive results then it would be a huge victory for PepsiCo but more significantly for the whole world as the same will be emulated all over the world to eventually reducing, by a significant factor, the emission of greenhouse gases and making the world a better place to live.
Organizations use celebrity endorsement to popularize their brands. Nevertheless, the marketing strategy may fail to achieve the indented purpose due to the negative projection of information. Such an incident happened to PepsiCo recently. The multinational corporation was forced to remove its advert featuring Kendall Jenner and apologize to the public. The advert featured protesters from diverse racial backgrounds who were demanding peaceful coexistence and were against the harassment of black people by the police. It showed Jenner abandoning her celebrity life to join the protesters. She walked to a police officer, handed him a can of Pepsi. The police officer sipped the soda and smiled leading to the protesters going wild (Arceneaux par. 3). Even though the company intended to relay an appropriate and innocuous message of social unity, the public regarded the advertisement as an inauthentic and opportunistic marketing maneuver. This article will critique the advert and identify what the company could have done to prevent the public from misconstruing the intended message.
Intended Message
According to PepsiCos leadership, the advertisement was meant to send an international message of peace, unity, and understanding. The company had no intention of trivializing any serious issues that affected the country or a particular race. PepsiCo Inc. alleged that the advert featured people from diverse cultural backgrounds coming together to promote peaceful coexistence (Watercutter par. 4). The company believed that such a message was essential and resonated with the demand for the respect of black lives that ensued following the killings of African-Americans by the police. PepsiCo stated in its YouTube that the advert featured a short film about the moments when we decide to let go, chose to act, follow our passion and nothing holds us back (Channick par. 10). It depicted the fortitude and actions of individuals who make good use of every moment that comes their way. It also featured multiple stories, lives, and emotional connections that depicted joy, passion, unrestrained, and limitless moments.
Unintended Message
Opponents of the advert argued that the company took advantage of the national protest movement to market its brand. The move was utter ridicule of the urgency of the existing issues and diminished the severity and magnitude of why people go on streets to demand respect for the lives of minorities in the United States. The release of the advert resulted in an extensive sharing of a photo showing Leshia Evans standing calmly in front of the police during the protest against the murder of Alton Sterling. Evans, who was an African American, was arrested despite not confronting the police. Conversely, Jenner, who is white, exchanged a smile with the police. The police officer even accepted a drink from Jenner in spite of her being one of the protesters. The majority of the people failed to understand how a can of soft drink could resolve the injustice meted on the minority groups by the police. Bernice King, daughter of Dr. Martin Luther King Jr., shared a picture of her father being harassed by police despite partaking in a peaceful demonstration. She wondered why the father had to go through such humiliation while PepsiCo had the capacity to resolve the problem. Bernice writes in her Twitter account If only Daddy would have known about the power of Pepsi (Smith par. 13).
Criticism of the Advertisement
Today, marketers are trying to take advantage of sensitive social issues to market their brands without alienating the target audiences. The majority of the marketers are exploiting cultural zeitgeist as a way to remain relevant. In the case of PepsiCo, the company tried to take advantage of Jenners publicity and the increase in demand for social justice to market its soft drink. Unfortunately, the company failed to appreciate that Jenner was not renowned for fighting for social justice. Her involvement in the advertisement resulted in the oversimplification of the challenges facing the minority groups in the United States.
PepsiCos advert failed to meet the intended goal. One of the weaknesses of the advertisement was authenticity. The majority of the people were against the ad because it did not look authentic at a moment when realism is so critical, especially amid the millennials. The company was not conscious of the existing political environment. The success of an advertisement depends on its capacity to paint a current condition in a pleasant manner without seeming to ridicule any of the affected parties. Production of politically incorrect ads may have far-reaching repercussions on business. PepsiCo failed to consider the reaction of the movements that fight against social injustice in the United States. The inclusion of Jenner, a white woman, in a public demonstration comprising the blacks undermined the purpose of the protest.
The advert undermined the significance of political action. Currently, most employees are not members of trade unions. Moreover, the majority of the organizations that are bestowed the responsibility of fighting for social justice have abdicated their duties. Consequently, people view political action as the ultimate means of filling the gap left by trade unions. Research indicates that at least one out of a hundred Americans have ever participated in political action. Indeed, the public demonstration is an integral constituent of the modern vernacular. Given that, the controversial advertisement by PepsiCo was in line with the contemporary ways of advertising. In the past, companies like Burger King, McDonalds, and Coca-Cola have taken advantage of political issues to popularize their brands. Even though the PepsiCo advert may be commended for acknowledging the existence of the minority groups in the United States and the challenges that they encounter, it did that with the assumption that they were consumers. The company told the protesters angered by a government, which jeopardized and ignored them that it understood their predicament. The corporation reminded the demonstrators to try its calorie-free Pepsi Max. Jones and Yu aver, The intentional creation of the ad with people of so many ethnicities seemed compelled (par. 16).
The advert dubbed Live for Now Moments Anthem failed to appreciate the severity of issues like racism, divisiveness, and protests that affect the United States. Most advertising consultants argued that the advert degraded the seriousness of critical issues by attempting to show that a can of soda could resolve grave problems on the streets. One wonders how the company could use Jenner in such an advertisement. The ad depicted a rich, white celebrity as a public hero. The issue of presenting white stars as heroes are common in Hollywood as well as most of the advertising firms. PepsiCos ad relegated the African Americans and other minority groups to props in the milieu. There is nothing wrong with depicting a white person as the central character in an event featuring minority groups and vice versa. Nonetheless, it is imperative to use the right person. In the case of the PepsiCo advert, Jenner did not have a legitimate association with the cause, leading to the advert appearing phony. Moreover, it undermined the significance of the protest by portraying it as a social outing. The most upsetting part of the advertisement was where Jenner approached the police in a manner that other folks could not even dare.
The advert was a clear demonstration of how capitalism takes advantage of pandemonium and blunts its potential. Vilanova avers, When the mainstream subsumes political action, we lose track of its target and purpose (par. 8). A good example is when the Republican politicians intentionally capitalized on Bruce Springsteens Vietnam-Protest anthem for their benefits. The politicians used the song dubbed Born in the USA to rally the public to support them. The move resulted in the loss of the meaning of the anthem. Corporate culture has neutralized the mainstream music industry. The song Lion that is featured in the PepsiCos advert is meant to encourage people to continue the struggle. Just like the lion is the king of the jungle, the song serves an assurance to those struggling that there is no obstacle that they cannot overcome. Unfortunately, using the track in the PepsiCos advert affects the inspirations behind the song.
In spite of PepsiCo pulling the advertisement, it did not change the ignorance that contributed to its creation. The companys ad tagline is Live bolder. Live louder. Live for now (Vilanova par. 11). Such a tagline is despicable given the conditions at play. Victims of police brutality like Philando Castile cannot benefit from the companys products. In spite of Trayvon Martin had purchased a soft drink, it did not protect him from George Zimmerman. One wonders how dead people can live for now . Pepsi issued an apology to Jenner for putting her in an awkward situation because of the public outrage that followed the advertisement. The apology showed that the company did not pay attention to the plight of the black women who partake in movements that fight for social justice. Instead, it only considered the fate of the famous, affluent white woman. Today, many women play significant roles in the movements that advocate social justice in the United States. Trivializing such movements amounts to demeaning the women. PepsiCo ought to have understood that social injustices affect the lives of women from minority groups. The company owes black women an apology for failing to feature them in the advertisement.
PepsiCos Response
An attempt by PepsiCo to defend its ad did not change the public perception of the advert. The company argued that the ad sought to champion peaceful coexistence amid people from diverse cultural backgrounds. It underlined the reason the advert featured people from different ethnic backgrounds. The company released a statement that described the commercial as an international advert that called for harmony amid people from diverse walks of life. PepsiCo believed that such a message was worth communicating to the public. Despite the explanation, all features of the advertisement did not reflect the intentions that the company gave. The public was not ready to buy for the reasons that PepsiCo outlined. Eventually, the company resolved to pull the advertisement and issue an apology. The corporation retaliated that it did not intend to trivialize serious matters that affected the minority groups in the United States. It also apologized to Jenner for implicating her in its slip-ups. The companys apology did not seem genuine as it failed to consider the individuals who were directly affected by the advert. For instance, PepsiCo should have issued an apology to the families of those who died due to police brutality. One wonders why PepsiCo had to apologize to Jenner. She agreed to feature in the advertisement because it earned her handsomely. Therefore, she should have understood the possible repercussions of featuring in such an advertisement.
How the Company could have Avoided Criticism
In the contemporary world, organizations must be conscious of racial politics. The Internet enables businesses to reach the global market, thus the need to come up with well-thought-out concepts when structuring an advertisement. Ads that bear words or actions, which appear to alienate a particular group of people, may have adverse impacts on the image of an organization. PepsiCo should have considered the political environment in the United States when developing the advertisement. Even though the company had good intentions, co-opting images of individuals involved in political actions resulted in the public believing that the advert was in bad faith. It showed contempt of the injustices that force the minority groups into the streets. Some people may argue that PepsiCo meant no harm in its advert. However, it is imperative to understand that making whiteness the center of attention, unconsciously or not, is a political proclamation that might have negative impacts on the organization.
PepsiCo should have ensured that it used the right persons for the advertisement. The company should have used individuals who are known to fight for social justice. It would not have appeared as if the company is not serious about what the African Americans experience in the hands of the police. Additionally, the advert would not have seemed to alienate the minority groups. Experts claim that PepsiCo failed by letting the in-house content creation team assume the responsibility of developing the advertisement. The company should have consulted an outside agency before releasing the advert. It would have enabled PepsiCo to test the advert with a broader network of clients to determine its reception.
Conclusion
In conclusion, organizations are increasingly using current political issues to popularize their brands. Experts warn that organizations require understanding the prevailing political environment to avoid the target market misconstruing their advertisements. It is imperative to ensure that an advertisement does not appear to alienate a particular group of people. Recently, PepsiCo was forced to take away an ad that meant to popularize the companys soft drink. The advertisement featuring Jenner, a renowned celebrity, received harsh criticism, particularly from the minority groups. Even though PepsiCo intended to send a message of harmony and promote peaceful coexistence amid the public and law enforcement agencies, the public thought otherwise. The company was criticized for trivializing serious matters that impacted the lives of many African Americans. A major mistake that the corporation committed was to feature a celebrity who is not renowned for partaking in the fight for social justice. The company could have avoided the backlash by ensuring that the advert featured individuals who are directly affected by social injustices.
Pepsis advertising campaign for its Mountain Dew is directed at the right market segment. The company uses new campaigns in order to attract new consumers. Most of the targeted consumers include young African Americans and Latinos (Stanford, 2012). Pepsi Company appears to attract more consumers in Dakota and Nebraska. The products advertising campaign does not define its marketing objectives.
The marketing strategy appears to attract every racially diverse group in urban regions such as New York City (Stanford, 2012, p. 1). The decision to identify and target this market segment can be profitable for Pepsi Company (Finch, 2012). The use of celebrities such as Lil Wayne, Paul Rodriquez, and Jason Aldean also supports the companys marketing strategy for Mountain Dew.
The biggest concern is whether the company differentiates its product from its competitors. The current level of competition arises from leading companies such as Coca Cola. The advertising campaign does not consider the best strategies in order to differentiate its product from the competition (Stanford, 2012).
The advertising strategy identifies the targeted consumer. The company uses the best distribution networks and campaigns in order to promote the product. This strategy attracts more customers from the targeted locations. The advertising campaign for Mountain Dew should also consider the level of competition. The company should also use the best practices (Finch, 2012).
The other subject is communicating the benefits of the products to the customers. Pepsi Company utilizes the best advertising campaign for Mountain Dew. This campaign informs every potential customer about the availability of the drink. The marketing strategy also identifies new market segments where the level of consumption is low for the product.
The advertising campaign also includes several celebrities in order to attract every targeted African American and Latino youth (Stanford, 2012). The company has also included new distribution channels in order to supply the product in different urban centers.
The company will also use different gas stations and convenience stores to market this product. This strategy explains why the companys advertising strategy will attract more customers. The weakness of this advertising campaign is that it does inform the consumers about the unique benefits of the product. This approach might affect the marketing strategy for Mountain Dew.
The above discussion explains why the company should redesign its advertising campaign for Mountain Dew in order to have a universal appeal. The first strategy is using the best communication channels and strategies in order to attract a wide range of consumers. The company should ensure the advertising campaign uses different channels such as televisions, videos, and e-mails.
The marketing plan should consider the needs of every potential consumer (Wood, 2010). This process will create an advert that appeals to every global consumer. The company should also use social media such as Facebook and Twitter. The practice will attract many consumers in every racially diverse society.
The proposed design of the campaign will also communicate the benefits of the product. These benefits will help more customers understand the health benefits of the product. The use of celebrities will also support the advertising campaign. The company should use the best communication channels such as televisions, e-mails, and social networks in order to inform more customers about the product (Finch, 2012).
Pepsi Company should support this advertising strategy using proper pricing approaches and distribution practices. The marketer should also update every consumer about the available flavors for the product. The company should also distribute the product to every market segment. This approach will create a successful advertising campaign.
Reference List
Finch, J. (2012). Managerial Marketing. New York: Bridgepoint Education.
Enrico is contemplating changes that would have a wrenching impact on the Pepsi organization. What specific problems is he trying to solve? Dont simply recite symptoms; dig down and identify the root economic issues
Roger Enrico, President, and CEO of Pepsi Cola are concerned about the following three problems in the company.
Whether the conflict between the three divisions hinder the company to compete in the market;
Whether the present structure is cost-competitive; and
Whether the present organizational structure will be able to meet the challenge posed by the competitors;
Among the three problems identified by him the first problem relates to Human Relations, the second one relates to finance and the third one relates to operations and marketing. It is necessary to sort out all three problems to solve the present critical situation.
There is less cohesion between the three subdivisions of Pepsi Cola. A good organizational relationship is indispensable for the success of any business concern. The present structure of the company seems to be less cost-effective. The present decentralized setup requires individual managerial resources for each division. Every additional resource will add to the total cost structure. Over the years the companys market share has increased marginally but profitability remains constant as evident from the given financial statements of the company. This shows that the company is not having an effective cost control system. For profitability to increase with the increase in the sales volume, the cost should be minimized accordingly.
Pepsi USA is the major marketing division of the company. They supply the concentrate for the bottling division and perform advertising and other marketing function. The responsibility to supply the bottled product rests with the bottling division. They have a complicated marketing setup and their margin is lower compared to Pepsi USA. Pepsi USA doesnt have a direct relationship with the customers. But Pepsi Bottling Group takes continuous effort to maintain a good relationship with the customers. Therefore a proper reorganization should be done to solve the problem. Each division should be aware of its responsibility so that there will be less conflict in the future.
Each division should be considered as a cost center and the profitability of each division should be worked out separately. Centralization of activities may reduce the overall cost. In a centralized setup, there will be only one organization and one department for each function. For example, in the present case, there are separate marketing departments for the three divisions of the company. But when centralized a single department will carry out the whole marketing activities.
Roger felt that the present organizational structure cannot meet the challenges posed by the competitors since they had an organizational structure different from its competitors. Coca-Cola is the major competitor of Pepsi Cola who has a greater share in the market. To work out a revised organization Roger appointed a task force consisting of three divisional presidents and the vice president of the HR division. They had given two options for the reorganization of the company. They are fully decentralized and matrix organizations. The pros and cons of these two alternatives are discussed in the next portion.
What are the pros and cons of reorganizing around geographic regions? If you were forced to select one -full decentralization or matrix reorganization- which would you recommend and why?
The two options available for the company are full decentralization or forming a matrix organization. As per the new idea of full decentralization all three divisions will be brought under one umbrella. Only one superior authority will be there for each function. For example, the marketing head of Pepsi in Canada will manage the whole marketing function of his region Canada. This is the case with other functions of financing, HR, etc.
The second option is matrix organization. Under the matrix organization, the marketing function will be decentralized. There will be several regional heads for the marketing function. But the other functions will remain centralized. In short, this follows a mix of centralization as well as decentralization. An overview of the pros and cons of both options will help to understand the right choice for the situation.
Under a decentralized setup, there will be good efficiency of operation as every function will be managed by a single person. Responsibility can be easily identified because there is only one person to whom everybody is accountable. There will be good control over the situation. Duplication of activities is absent in the case of a fully decentralized setup. Though full decentralization has these merits it also faces certain demerits that prevent them from being applied in the organization. Full decentralization will be a hindrance for innovative ideas as there is only one person on the top for each function. Costing will be difficult in the case of full decentralization as the costing information of the whole company has to be managed at a single level.
Under the matrix organization, the marketing function is decentralized and the others are centralized. The major advantage of this method is that except for sales and marketing HRD and Finance would report to the corporate office. So there is no change in the traditional work culture of Pepsi which is a key factor in its success story. Sales and marketing are the major activities of the company. When it is decentralized it will lead to more freedom for regional managers. They can design their advertising strategies and sales incentives depending upon the region.
While comparing both the options it can be seen that the matrix method is much more advantageous. Full decentralization makes a drastic makeover in the organization whereas matrix organization doesnt make a full change in the existing system. Thus if the system is changed to matrix organization employees will feel at ease as it is leading only to minor changes in the existing setup. The key function of the company is marketing and sales which when decentralized will give an extra competitive advantage to the company. Delivery and service are given great prominence in the new setup.
As the coronavirus pandemic continues and new global and local crises emerge, many commercial entities, especially those of the size of international corporations, face new businesses and supply chain challenges. Among them is PepsiCo, which is also preparing its human and monetary resources and technical and infrastructure capacities for new market difficulties. For example, its analysts argue that there is higher demand from shoppers as the global economy recovers from & the Covid-19 pandemic (Sebastian & Maloney, 2021, para. 2). However, they also note supply-chain disruptions and increased costs for aluminum cans, plastic bottles, labor and trucking (Sebastian & Maloney, 2021, para. 1). The corporation will offset future associated costs by slightly tightening the pricing policy of its products (Sebastian & Maloney, 2021). However, one should remember that an untimely or incorrect response might lead to the strengthening of PepsiCos competitors in the food and beverage market.
Adapting Structurally to Coronavirus Crisis
As one can see, the coronavirus crisis has put significant pressure on PepsiCos key marketing sectors. The corporation decided to carry out an internal reorganization as another coping measure. According to Biscotti (2022), it nearly halved the number of operating units. The new division is based on global categorization and looks simplified and generalized (Biscotti, 2022). There are high hopes in PepsiCos top ranks that this organizational upgrade will make the core structure of the corporation more nimble, flexible, and less vulnerable to harmful external marketing, infrastructure, and political influences (Biscotti, 2022). Such a measure may also solve the existing financial and logistical problems with the production and transportation of their items. Interestingly, almost all top international market players experience similar corporate hardships and challenges in these days of lockdowns.
References
Biscotti, L. (2022). Pandemic accelerates big food and beverage company strategies. Forbes. Web.
Sebastian, D., & Maloney, J. (2021). PepsiCo juggles strong demand and supply-chain challenges. The Wall Street Journal. Web.
PepsiCos strategic approach, mission, and vision statements are effectively presented on the companys website. The provided mission and vision statements are formulated appropriately and address the criteria set for these elements of the strategy. Additionally, the companys goals are also provided in connection with the vision statement.
However, it is necessary to pay more attention to formulating the companys values as they are not stated clearly, and visitors refer to the companys mission and vision statements, as well as information provided on other pages of the website, to find out potential values. Therefore, the formulation of values needs to be improved, and the mission statement can be edited to become more effective. Furthermore, the alignment between mission and vision statements, values, and goals, and stakeholders interests is evident as their needs are mentioned directly.
Introduction
PepsiCo is one of the international leaders in producing beverages, snacks, and other products. The company was established in 1898, and now it operates worldwide. To keep its leading position in the market, the company needs to adjust its strategy to modern trends (PepsiCo, 2020). Therefore, it is important to evaluate PepsiCos mission statement, vision statement, values, and goals as the basic elements of its strategy to understand how they address stakeholders interests. The purpose of this report is to conduct a strategic analysis of PepsiCos mission statement, vision statement, values, and goals through focusing on the material under analysis and criteria and conclude on the effectiveness of aligning these statements with stakeholders expectations.
Companys Mission Statement and Analysis
Mission statements usually present a specific reason for an organizations existence and development with a focus on its purpose and contribution to society. From this perspective, mission statements should address the following criteria: state a companys purpose, identify customers and determine activities according to the purpose to address stakeholders needs and expectations. The mission statement of PepsiCo is presented in the following sentence: Create more smiles with every sip and every bite (PepsiCo, 2020, para. 1). On the companys website, this statement is supported by an explanation of how this action will be completed for each stakeholder group.
For example, it is stated that, for consumers, the mission will be realized By creating joyful moments through our delicious and nourishing products and unique brand experiences (PepsiCo, 2020, para. 2). Additionally, for customers of the company, the mission will be addressed By being the best possible partner, driving game-changing innovation, and delivering a level of growth unmatched in our industry (PepsiCo, 2020, para. 3). Similar statements are provided concerning associates, communities, the planet, and shareholders.
Although PepsiCo selected a wordy approach to formulating a mission statement, it can be discussed as of high quality because all the discussed components are addressed. Thus, the company states its purpose to create more smiles referring to customers experiences of using its products. All possible stakeholders and customers are effectively addressed separately, and an individual approach to covering their expectations is observed (Heathfield, 2009). Even though the actions associated with the companys purpose are not obvious at once, they are presented in detail with a focus on the individual needs of the stakeholders and community.
Companys Vision Statement and Analysis
If a mission statement represents the purpose of a companys activities and products its proposes, vision statements demonstrate a companys wider purpose to achieve. The vision statement is formulated based on an organizations values, beliefs, and cultural views. PepsiCos vision is the following: Be the global leader in convenient foods and beverages by winning with purpose (PepsiCo, 2020, para. 7).
This vision statement is expanded by the further explanation: This reflects our ambition to win sustainably in the marketplace and accelerate our top-line growth, whilst keeping our commitment to do good for the planet and our communities (PepsiCo, 2020, para. 8). It is also mentioned that the companys vision is based on the aspirations of becoming stronger, faster, and better for its consumers in the industry.
According to the criteria set for vision statements by researchers, effective visions should present broad or even global purposes for an organizations strategic development. Vision statements should also be based on core values and beliefs. In addition, they need to represent the direction of an organizations further progress. Finally, vision statements are usually motivating and inspiring for a company to achieve its goals. When assessing the quality of PepsiCos vision statement, it is possible to state that clearly defines a broad purpose for the company to become a leader in the industry.
Additionally, core values are also referred to because of the companys focus on making business sustainably and addressing the planets and communitys needs. The direction for further progress is determined concerning accentuating the necessity for top-line growth (PepsiCo, 2020, para. 8). Lastly, the overall tone in which the vision statement is written can be described as motivating and adding to inspiration for achieving the set goals. Thus, PepsiCos vision statement can be discussed as being of high quality.
Companys Values and Goals and Analysis
A companys values are specific priorities and beliefs according to which an organization plans and organizes its activities to achieve certain goals and objectives. The value statement usually reflects a companys cultural and ethical ideology followed at all levels. Goals usually come from the vision statement as actual steps to achieve the major purpose of a companys existence ( The strategic planning process, 2007). PepsiCo does not provide a clear values statement, but its priorities are identified concerning mission and vision statements, and this approach is typical for many companies. Thus, PepsiCo values focusing on sustainability, integrity, honesty, responsibility, top-level quality, and diversity.
The company also presents a concept of aspirations based on these values that support the vision and determine the goals. These aspirations are to become stronger, faster, and better. From this perspective, goals that come from the companys vision statement are to broaden our portfolios to win locally in convenient foods and beverages, fortify our North American businesses, and accelerate international expansion, with a disciplined focus on right-to-win markets (PepsiCo, 2020, para. 9).
It is possible to note that these goals directly address PepsiCos vision statement, and they can be discussed as effective steps toward winning the leading position in the world regarding following the companys core values. However, the provided values are not obvious, and they are mentioned on different pages of the corporate website. Furthermore, goals and objectives also have weaknesses as they are not formulated as quantifiable and measurable goals with specific deadlines.
Alignment of Companys Mission, Vision, Values, and Goals with Stakeholders Interests
Stakeholders of a company include shareholders, customers and consumers, employees, communities, and other groups and agents who experience the impact of a companys activities (McNamara, 2009b). The stakeholders of PepsiCo are numerous, and their needs and interests are mentioned in the companys mission and vision statements. The mission statement is most detailed in this case as it responds to the needs of consumers, customers, associates, communities, the planet, and shareholders.
For example, PepsiCo is focused on creating smiles By creating joyful moments through our delicious and nourishing products and unique brand experiences for consumers (PepsiCo, 2020, para. 2). This experience is achieved for customers through being the best possible partner (PepsiCo, 2020, para. 3).
In addition, the needs of associates and communities can be addressed through creating meaningful opportunities to work, gain new skills and build successful careers, and a diverse and inclusive workplace (PepsiCo, 2020, para. 4). For the planet, PepsiCo can contribute to conserving natures precious resources and fostering a more sustainable planet (CITE). Moreover, for shareholders, the emphasis is put on delivering sustainable top-tier TSR and embracing best-in-class corporate governance (PepsiCo, 2020, para. 8). As a result, PepsiCos mission statement is an example of a detailed explanation of how the companys activities and products can address stakeholders interests.
The vision statement is also aligned with stakeholders needs, interests, and expectations. It is stated in the explanation of the vision that PepsiCos commitment is to do good for the planet and our communities (PepsiCo, 2020, para. 7). Thus, both mission and vision statements directly address stakeholders in their formulations. Still, in the description of values and goals, the connection with stakeholders interests is not so clear, and the main focus is on principles to follow and objectives to achieve (Hammonds, 2007). However, it is assumed that the realization of the goals should be completed in the context of focusing on communities and stakeholders interests.
Recommended Changes
Although the mission and vision statements of PepsiCo, as well as the description of values and goals, are rather effective, it is still possible to improve these statements to reflect better the companys strategic path. First, it is necessary to reword a mission statement to make it more concise but still reflecting the purpose and stakeholders. In this case, the message will become clearer and efficient. The companys vision statement is effective, and it does not require any changes. Values need to be stated on the companys website more effectively, and it is possible to use a form of a list (McNamara, 2009a). In addition, goals and objectives can also be reformulated to make sure they are quantifiable and measurable to state clearly what needs to be reached in the context of PepsiCos strategy.
Conclusion
The report has provided the analysis of such components of PepsiCos strategy as the mission statement, vision statement, values, and goals. It has been found that the mission statement is effective, but it can be edited to become more purposeful and concise, and the vision statement does not require editing and changes. Values are not specified on the corporate website, and this element needs to be improved. Goals should also be adjusted to become more measurable and achievable. However, the strength of the company is its accentuation of the link between the activities and outcomes for stakeholders. Thus, the respect for stakeholders and their interests is reflected in the discussed statements, especially, in the mission statement.
The soft drink industry has competitors and the main competitors are Coca-Cola and Pepsi Companies. This industry deals with the mass distribution of soft drinks to vast environments that pose marketing challenges that it has to deal with. Developing the soft drinks brands perhaps is the most important step in the success of the product because Coca-Cola and Pepsi were majorly emanated as a product that stood out of the crowd as distinct brands.
A good brand is the cornerstone of marketing and Coca-Cola and Pepsi are no exception. It is definitely a way of life. Coca-Cola is a brand that relies on entirely word of mouth or buzz marketing strategy when brand ambassadors or those who have used the product before making people come in and begin to use the product. Making a product to be accepted fully in the market takes a long time and requires long-term investment. Coca-Cola and Pepsi became a way of life when most people began to start their attachment to the brand. To do the companies started by targeting hot spots such as families, parties, communities, and pop star joints to create brand visibility and then made the product look hard to get brand so that people could have that urge to have it.
Coca-cola specifically had a specific set of features that made it look nice a way of life rather than a product it had good sets of features benefits and good consistent attributes to the buyers or target market and it had that quality. Good advertising through the use of sponsoring events and the youth culture like extreme events the product had a large following especially with the youth who longed to be associated with the brand young men from the age of 18 29 wanted a share of the fund and the Olympic.
Industry players, Coca-Cola and Pepsi through vigorous advertising realized that he had to develop a new culture by making the product available to most people who liked it in times. He made it a style rather than a product and made it part of the people. This was done through sponsoring youth events, pop culture events, and because he used the idea of participation where most of the participants had one on one experience with the products, there was their development of the brands that had great persuasive power and value in the marketplace. The industry players also concentrate on the packaging of soft drinks into cheaper means thus increasing profitability.
They have also improved in innovation and brand diversification as the key to beating product challenges and once Coca-Cola or Pepsi identified its major challenges it had to ascertain its characteristics and specify strategic, objectives look at its strengths and weaknesses, reaction patterns, and ways to react to these challenges to overcome them. For example, to keep profits, the two competitors monitored the competitors expansion plans, size, and other factors and decided to plan and game plan to counter the challenges. Coca-Cola and Pepsi continued to defend their market share by continuously expanding their total market size and defended their product against rival attacks. This competition has had a negative effect on the profitability of the competitors.
The quality of the product and the design are the same all around the world. The packaging and brand name are also similar so that everyone gets the same Coca-Cola or Pepsi experience. Because the quality of these products depends on the packaging, the competitors have decided to venture into bottling. They also produce the bottles to ensure safety. The distribution of Coca-Cola products is fast and efficient due to a good relationship with retailers, wholesalers, and distributors that have a large number of trucks to ferry the products from the factories to the consumers.
Automation of factory activities has made production easier and more in line with the demands of the customers. During high seasons there is more demand for the same products and the marketing team that has a close relationship with retailers will relay this message to the production team. The marketing mix of Coca-Cola also includes an offering mix of products, services, and prices and a promotional mix of sales promotion, advertising as well as a sales force to promote the product. The price of the product will depend on many variables but most importantly for the Coca-Cola marketing team is that the carbonated drink or bottled drink can be bought by the widest range of people all over the world.
All brands in a competitive market have various challenges that they have to adhere or adjust to. As in the case of Coca-Cola and Pepsi are to face various challenges and when discussing competitors. Just like other products, the major challenge that a product may face is the rise of competition. All companies in a competitive world have to accept real competition unless in a monopolistic type of market.
Competition can be defined as a group of firms, that offer a product, or class of products that substitute the products of a company. In the late 1990s, new drinks were introduced into the market and this was because some people realized that the success of Coca-Cola and Pepsi meant that there was an opportunity in the soft drinks market. The introduction of competition to the market meant that Coca-Cola and Pepsi had to face a number of brands that were trying to initiate similar techniques to get the market share that Coca-Cola and Pepsi had acquired over the years and marketing techniques.
To deal with this type of challenge, Coca-Cola and Pepsi had to challenge some of the competitors through challenging the products legally in court through them urging that the products had infringed their trademark rights because simple products poised a challenge by producing products that had products similar to those of Coca-Cola and Pepsi and this led to brand confusion some of this products were the softa that had a can that resembled that of coca-cola and which could confuse customers in the market. This was a great challenge that the companies had to deal with.
The second and perhaps the most serious challenge that Coca-Cola and Pepsi faced was the issue of legislature challenges because most people went to court to challenge their brands business. For example, people who went to court to challenge the coca-cola brand received a blow in Belgium. The Coca-Cola brand received a blow because as a result of this the product was at one point banned in this country because there was a health argument against the use of the product. This meant that Coca-Cola and Pepsi had to focus more on the research and development of new products. Other challenges that Coca-Cola and Pepsi faced were the reduction of the target market because as time went by most of the target market tended to reduce.
The other challenge that Coca-Cola and Pepsi faced was the entire focus on one product and this made it easy for a competitor to create a product that could easily counter them in the market and to deal with this challenge they had to produce a product that was low in sugar in 1990s and to deal with the issue of their customers growing and changing form the target market.
References
Armstrong G. & Kotler P. (2007). Consumer Markets: Influences on consumer behavior, Principles of Marketing.
Kotler, P. (2005) Principles of Marketing. New York.Melbourne Press.
Schaik J.L., (2002); The Task of Marketing Management; J.L. van Schaik (Pity) ltd.
Every organization is expected to undertake strategic analysis to determine its market position as well as its current and anticipated performance. Through the application of different environmental analysis tools, managers are able to determine the strong and weak points of an organization. One of the activities carried out by organizations is scenario analysis.
Scenarios are used to map the future based on uncertain and predetermined elements. These elements are explored with the aim of helping an organization to seek solutions to some of the foreseen problems which may have an effect on the company. The purpose of the current essay is to undertake a scenarios analysis and offer their respective strategic responses in respect to PepsiCo Company.
The first task involves the development of three future scenarios and strategic responses for PepsiCo. Scenario one predicts no major future changes scenario in the external environment. Scenario two predicts negative future changes in the external environment.
Scenario three predicts positive future changes in the external environment. The second task of the essay involves evaluating the contribution of scenario planning to effective management.
Introduction to the PepsiCo Company
PepsiCo Company is a multinational company whose headquarters are in Purchase, New York (Berch, Montoya & Sawayda 2010, p.1). The multinational company operates in the drinks and beverage industry. The company which was formed as a merger between Frito-Lay Inc and Pepsi-Cola is a major competitor of the Coca-Cola Company.
PepsiCo has a presence in 200 countries across the globe. Some of the areas where it has subsidiaries include Africa, Asia, Middle East, Europe, and Australia, among others. Globally, the company is second after Coca-Cola in the food and beverage industry.
Over the years, the company has undergone several mergers and acquisitions which have promoted its success and presence in the international markets. Through M & A, the company has been able to diversify in its areas of production. For example, PepsiCo product base has expanded to increase products like snacks and foods (Berch, Montoya & Sawayda 2010, p.1), PepsiCo competes with Kraft Foods.
The company has diversified its product mix where majority of the product mix are foods and the rest are beverages. Both carbonated and un-carbonated beverages are available although the carbonated beverages no longer dominate the market.
Despite the success of the company, it has in the recent past been involved in challenging situations like environmental problems such as pollution and disposal of its biodegradable wastes (Berch et al. 2010, p.8)
Rationale for its selection
PepsiCo Inc is a large US company which controls about thirty six percent of the US drinks market (Berch et al. 2010, p.1). The company operates in an industry that is greatly affected by season. For example, most of the drinks are drunk seasonally and more so during summer.
As a result, the company has to undertake a scenario analysis in order to determine its current and future operations. Furthermore, the company is normally faced with stiff market competition from Coca Cola, the number one market shareholder.
Following the recent global market financial crisis it is imperative to acknowledge that PepsiCo was financially affected by the crisis. According to a case analysis by Berch and colleagues (2010), the operations of PepsiCo in the beverage industry has been faced with a lot of controversies.
For example, the company has been accused of engaging in price wars with its main rival Coca Cola, contamination, and false labeling of its products. To remain relevant in the industry, there is need for PepsiCo to undertake a scenario analysis which would assists in strategic management.
Scenario Analysis
Scenario analysis has been described as the process by which several informed, alternative, plausible and imagined alternative future environments in which decisions about the future may be played out, for the purpose of changing current thinking, improving decision making, enhancing human and organization learning and improving performance (Chermack 2004, p15).
In this case, environmental scanning is an essential process which enables the success of scenario planning or analysis. Different factors in the external environment are considered in the process.
To better conduct scenario analysis, SWOT and PESTEL analytical tools have been adopted. On the one hand, the PESTAL analytical tool looks at the external environment on which the organization operates.
Some of the elements analyzed include economic, political, technological, legal, social, and environmental factors that could have an impact on an organization. On the other hand, the SWOT analysis is normally concerned with the future opportunities available to an organization, as well as the threats that such a company may anticipate in the future.
Scenario 1: no major future changes
Competition in the beverage and drinks industry is not expected to change a lot in the future. Since the inception of the PepsiCo, its major competitor has been the Coca-Cola Company in as far as drinks are concerned (LTONEWC FIASCO 2005, p.34).
On the other hand, Kraft Foods has been the major competitor of PepsiCo in the food snacks industry (Marketing Teacher Ltd, 2012). The current competition in these two industries is less likely to intensify hence the trend can be classified as stagnant.
For instance, a new entrant into the industry would normally be required to have substantial amounts of capital and infrastructure. This creates stronger market entry barriers which prohibits other companies from entering the market.
As a result, competition is not expected to increase greatly as the two companies enjoy some kind of monopoly. The company has a strong brand which ensures that the company stays competitive in the market.
Although other companies like Nestle and Groupe Danone may try hard to compete, the brand of PepsiCo is a worldwide brand, well known and diversified brand (Marketing Teacher Ltd, 2012). With more than 60 brands, the company is well placed in the beverage and food industry. As such, other brands from emerging companies are less likely to influence the drinks and the food snacks industry.
Scenario 2: negative future changes
One of the major negative effects that PepsiCo is expected to encounter in the future is the government regulations and laws. These could either be from the political or the legal environments. In the 21st century, there is an increased awareness on the environmental changes, health and safety issues.
In the future, laws and regulations related to the three fields are likely to change, thereby affecting the operations of PepsiCo negatively (Marketing Teacher Ltd 2012). For example, environmentalists and communities have been complaining on the environmental damages Pepsi has especially in India (Berch et al. 2010, p.6).
Pepsi has been accused of using chemicals in its products which jeopardizes the health and the safety of human beings. If the government imposed bans or restrictive measures on Pepsi then the company is likely to lose the second largest market in Asia after China.
This will definitely affect the company operations, market share, and sales negatively leading to lose. The changes in laws could also be future changes in taxation requests, tax rates and ecological laws. All these will negatively impact the company.
A memorable incidence is when the company was accused of using pesticides in its bottled water drinks (Berch et al. 2010, p.6). As a result, the company was partially banned in five Indian states.
This is an indication of the excepted laws and regulations regarding the environment, safety, and the health of the customers. With these noticeable incidents, the company is faced to face the same bans in different countries if it engages in similar unethical issues in the future.
Environmental laws are aimed at ensuring environmental conservation, and these are also expected to rise in the near future. As such, PepsiCo may be affected negatively bearing in mind that the companys products are developed and packaged in plastic bottles which are non-biodegradable.
For example, Aquifina is a bottled water drink packaged in plastic bottles. Upon use, people discard the plastic containers anywhere thus causing environmental contamination. So far, international environmental watchdogs have been calling for the ban of these plastics as they cause landfills and other pollution-related problems (Berch et al. 2010, p.10).
Other emerging concerns on laws and regulations are the labeling of water containers. For example, although labeling laws are not very strict in the United States, countries in the Middle East and Asia have strict relations which are expected to increase in the future.
Scenario 3: positive future change
Increased market base: PepsiCo has the likelihood of witnessing an increase in its market base in the future. This is because the company has diversified its operation through the incorporation of bottled water and snacks. So far, the company has a presence in two hundred countries in the world.
In 2009, the company announced its plans to expand in countries with already existing operations (Berch 2010, p.3). Through the use of its adoptable expansion strategy, the company is expected to continue expanding in the years to come.
Some of its brands like the Cola diet have been increasing in terms sales and popularity. This increase has been necessitated by the fact that people have become self conscious on their health and well being. As the awareness continues to take place, the brand will catch many people.
As such, its market share will increase as its customer base increases. With a broad product base, the company will expand its market share. The diversification of the companys products to include foods and snacks has prompted its future increase in market base at present and in the future.
According to Berch et al. (2010, p.7) the company is on the verge of developing health products and health foods. For example, the company has been planning to invest over USD 10 billion to support the production of healthy snacks. This trend will have positive future changes on the market base of PepsiCo.
This is based on the fact that many people are becoming health conscious which represents a new untapped market. In the future, the company expects to reap over USD 30 billion in this new market (Berch et al.2010, p.7).
Healthier PepsiCo snacks which incorporate the demands of the health conscious customers are more than likely going to expand the market for PepsiCo. The current collaboration with researchers from Mayo Clinics and the WHO promises to develop new healthier products which will see the market of expand its market share.
The bottled water and food snacks have a perfect market in the US which is anticipated to get the attention of consumers (Marketing Teacher Ltd 2012). As such, the sales of the organization are anticipated to increase and so is its market share. The company has also been experiencing high returns from the diet Cola. With the trends continuing the same as they are, the company will experience an increase in market share in different parts of the globe.
Proposed strategies for the scenarios
The negative scenario of change in the regulations and laws regarding aspects of environment, health, and safety will definitely have negative effects if the company does not put into place strategic mechanisms. The company will have to set a legal team which oversees that all the ethical and legal regulations in different countries are followed.
In the process, it will ensure that the mentioned accusations are not witnessed in the future. In case of changes in the operational laws and regulations, the company will have to comply with the set rules and regulations. By following the laws and regulations, the company will be able to keep off from legal battles and bans. As such, its operations will continue to be operative.
Health, safety, and environmental laws are increasing and are expected to increase in the near future. PepsiCo will have to carry tests on its products before entering in the market to avoid the repetition of past incidents in India.
The strategy will ensure that the company does not get a bad reputation, calling back of products and face bans in major markets. Environmental conservation initiatives could be taken in future to conserve the environment. In order to solve these ethical related dilemmas, it is necessary that PepsiCo takes different levels of government into account, as well as the concerns of NGOs (Berch et al. 2010, p.6).
This strategy will involve all the stakeholders and deal with any negative repercussions. Furthermore, the company could carry thorough stakeholder orientation with the aim of discovering ethical course of action and avoid the uncalled bans.
The company can develop biodegradable PepsiCo drinks bottles which would ensure environmental safety and avoid similar incidents to the one faced in India in 2006. This would reduce environmental pollution and ensure safety. Additionally, the dream machine project currently present in US could be initiated in other countries.
This would encourage customers to discard their products wastes in a more planned manner which ensures conservations. On the issue of labeling the drinks bottle, the company needs to follow the regulatory laws and regulations in every country.
Positive changes are expected in the future in the external environment in which PepsiCo operates. The market share for PepsiCo may increase in the future given that people are becoming health conscious. To accommodate the anticipated positive change, the company has invested a lot in research and development.
Therefore, the organization should continue to invest in R & D in order to come up with products that can accommodate the expected changes in the future. Furthermore, the organization has already started collaboration with WHO and Mayo clinic to develop snacks and foods which are health conscious.
The same has been done on the drinks sector. In the future, the same processes are required to continue to meet the anticipated changes.
Contribution scenario planning make to effective strategic management
To begin with, strategic management has been described as the process by which organizations manage the relation with the current environment while aligned to the organization mission (Sung 2004, p.12). It can also be defined as the manner in which a balance is maintained between strategies and the internal activities to manage the external environment.
Therefore, to achieve the definition and the purpose of strategic management, scenario planning has to be carried out. This ensures that the relationship between the organization and the changes anticipated in the future is monitored. With the changes exhibited in the external environment, managers depend on the scenario planning to plan future planning of the organization.
One of the major benefits associated with scenario planning is the ability to help an organization information center from repeating past mistakes (Schoemaker 2011, p.43). As such, the organizations strategic management team thrives to develop ways of mitigating the anticipated future negative scenarios.
For example, PepsiCo scenario planning will assist the organization avoid past mistakes related to ethical issues and regulations. When an organization knows the anticipated change, it carries out up-front investment. As such, an organization avoids unnecessary thinking of the anticipated future problem change like laws and regulations.
This saves the company time, energy, and costs that would result from the anticipated change if it was not carried up-front. As part of strategic management, planning prepares an organization from possible changes (Schoemaker 2011, p.43).
As such, a company like PepsiCo would be in a position to reduce overexposure. Uncertain risks associated with resources and capitals are reduced if scenario planning is carried out in advance.
The investment of the present and the future depends heavily on scenario planning for efficient and effective decision making process (Van Der Heijden 2011). Strategic decisions made by the strategic management team should depend on facts and collected data on external environment.
As a result, the decision making process is improved since the management is aware of the possible future external environment changes (Schoemaker 2011, p.43). Managers are assisted as they are made to think in a certain systematic way.
For example, through scenario planning, managers are provided with the possible predetermined changes which a manger cannot ignore or reject. Compared to the traditional method of decision making, scenario planning is much better and effective process (Schoemaker 2011, p.43; Van Der Heijden 2011).
Uncertainties resulting from different variables are easily adjusted at the same time without any difficulties. Issues of imperfect reasoning and bias by the managers are overcome through the use of this method.
Scenario planning influences strategy development positively. For example, the management is forced to think beyond the current position and situation of the company. This enables the company to focus on the future of the company.
Van Der Heijden (2011) adds that the process of planning energizes the management system of an organization. Attention is paid while the top management team is making decisions. Unlike in the traditional way of decision making and management, using the results of scenario planning enables the management to justify the operation on a single line or department (Schoemaker 2011, p.43).
Scenarios provide contexts in which decisions are passed down the chain of command. Through the provision of a context for decisions and decision making, the communication process in an organization is improved. The decisions made are well communicated through set up channels which define the direction of an organization.
Monitoring of weak signals and recognizing them until they are fully coalesced enhances corporate perception. For example, a company is enhanced to effectively incorporate any changes no matter how small it may be. This creates a corporate attitude that ensures that all problems have to be solved.
As a result, strategic management process is improved. Van Der Heijden (2011) note that the commitment by a company to scenario planning makes it become part of the organization language. The reason behind this is the way in which a complex inter-disciplinary reality is transferred in effortless manner.
As part of the strategic management, an organization has to ensure that it educates its managers to make quality scenarios. Consequently, the organization is in a better position to make realistic decisions both in the present and in the future of the company.
Stretching mental model is achieved which is used by planners to determine the driving forces of an organization in respect to the business environment (Van Der Heijden 2011). In reference to the case study, PepsiCo would be in a position to know the drivers of its business in respect to the business environment.
Leadership is an essential tool in strategic management which coordinates the different tasks of an organization. Van Der Heijden (2011) has advised that scenario planning acts as a leadership tool. Scenario process or planning reinforces the interests of the management.
Consequently, the managers become involved in the process of developing scenarios in occasional basis thus improving their leadership qualities. As the process continues, managers get more involved in the process of generating scenarios which becomes contextual and influential tool.
Ideas are easily communicated enhancing development of projects. According to organizational theory, the external environmental creates pressure on the internal environment of an organization (Fuhs n.d, p.6). The different pressures on the organization can be determined through the use of scenario planning.
The claim can be supported by the views of Van Der Heijden (2011) who adds that the scenarios analysis which was first carried out more than 35 years ago at Shell have enabled the company deal with any external pressures. Because of the benefits associated with the process, Shell has been carrying scenario planning even to-date.
The purpose of scenario planning is to envisage alternative views of the future in the form of distinct configurations of key environmental variables (Grant 2003, p.494). Therefore, scenario planning enables organizational managers to get on thinking and have the available mental models of thinking changed to accommodate the specified changes.
As a result, managers and strategic analysts are able to synthesize different knowledge coupled with sharing of information. Russell (2005, p.11) note that managers and team players are able to discuss the possibilities of the future in relation to the stated scenario.
This allows the management to solve the problems and note the possibility of the anticipated future outcomes (Russell 2011, p.11). It should be noted that scenario planning does not give alternatives to the anticipated changes from the external environment. Chermack (2004, p.15) note that scenario planning is more of the intended outcomes of the external factors than offering alternatives.
Conclusion
In summary, scenario planning is an essential undertaking which plays an integral role in strategic management. In reference to the essay, PepsiCo which is a MNC is more prone to changes and pressures from the external market hence the need for scenario analysis.
Essentially, with increased competition and changes in laws and regulation on the areas of environment, health, and safety, the organization is required to carry scenario analysis. Based on the analysis, the major negative changes in the future are change in the environmental, safety, and health related laws and regulations.
These may reduce the sales and market share of the organizations. News markets segments are a positive change which PepsiCo is more likely to depend on in the future. However, the current competition trends are not expected to reduce or increase as the market has strong entry and exit barriers.
The major benefits associated with scenario analysis/planning is enabling leadership and effective decision making process which aids in strategic management of an organization. Others include creation of effective communication of decisions from management to other departments in an organization.
It also allows the development of the stretching mental model which allows better thinking among the managers. As a result, corporate perception is enhanced which enables coalesce of weak points. Lastly, the leadership of an organization is developed as the managers develop the attitude of scenario planning. This promotes the process of strategic management in an organization.
Reference List
Berch, K., Montoya, J. & Sawayda, J. 2010, PepsiCos journey toward an ethical and socially responsible culture. Web.
Chermack, T. 2004, The role of system theory in scenario planning, Journal of Futures Studies, vol. 8, no.4, pp.15 3
Fuhs, C. Toward an integral approach to organization theory: An integral investigation of three historical perspectives on the nature of organizations. Web.
Grant, R. M. 2003, Strategic Planning in a Turbulent Environment: Evidence from the Oil Majors, Strategic Management Journal, vol. 24, no. 6, pp. 491-517
LTONEWC FIASCO 2005, Cola Wars: Coca-Cola vs. PepsiCo. Web.
Russell, L. 2005, Leadership development. Alexandria, ASTD Press
Schoemaker, P. J. H. 2011, General environment. Web.
Sung, M. 2004, Toward a model of strategic management of public relations: scenario building from a public relations perspective, University of Maryland Press, Maryland.
Van Der Heijden, K. 2011, Scenarios: The art of strategic conversation, John Wiley & Sons, Chichester.
The case Coca Wars Continue: Coke and Pepsi in 2010 highlights the major issues that has been confronting these two marketers of carbonated drinks. The multinationals have been engaging in endless competition. The firms have been fighting for more suppliers and bottlers. They also identify new suppliers in order to reduce their production costs (Yoffie & Kim, 2011). These firms produce similar products in an attempt to compete successfully.
Coca Cola has produced different drinks to cater for the emerging needs of its customers. Pepsi has also been using the same strategy to produce new products. Pepsi launched new products such Diet Pepsi, Teem, and Mountain Dew in order to remain competitive (Yoffie & Kim, 2011, p. 6).
The companys advertising strategies have also focused on the expectations of many customers. For instance, Coke used its famous Americans Preferred Taste campaign in order to market its products in 1955. Pepsi also came up with Pepsi Challenge (Yoffie & Kim, 2011, p. 7).
Coke responded to Pepsis strategy using numerous price reductions, rebates, and advertisements (Yoffie & Kim, 2011). As well, Pepsi introduced new products in the market. Such products were also marketed using cheaper prices. Coke went ahead to identify new ways to acquire cheaper concentrates. The important goal was to minimize its production costs. The move was undertaken in order to make the firm successful.
As well, the changing health needs of different consumers continue to force these corporations to produce appropriate products. For instance, Diet Coke was aimed at addressing the health issues of many Americans. In order to improve its performance, Coke decided to introduce Dasani (Yoffie & Kim, 2011). Pepsi responded by producing its Aquafina. Cokes decision to operate internationally forced Pepsi to undertake similar strategies.
Price wars have also continued as the organizations try to dominate the industry. The declining sales recorded today will force the corporations to identify new competitive advantages. Many companies are currently producing non-carbonated drinks. This trend will revolutionize the nature of this rivalry in the future. However, the agreeable fact is that the wars have led to new opportunities for different players. The strategies continue to satisfy the needs of different customers.
Recommendation
This case study shows clearly that the Cola Wars will continue in the next years. That being the case, every company should identify the most appropriate strategy that can create a difference. Coke can produce new non-carbonated drinks in order to attract the attention of many consumers.
This approach is relevant because many people have become aware of the health issues associated with carbonated products (Yoffie & Kim, 2011). The greatest fear is that such a strategy might encourage Pepsi to use a similar approach. The issue of bottler-consolidation should be taken seriously in order to support the best business processes.
The firms can also acquire new resources and production facilities in an attempt to reduce their expenses. These strategies will ensure the firms products are produced and delivered to the targeted buyers in a timely manner. The firms should also use the power of research and development (R&D) to produce new products that can serve the needs of the global consumer.
The issue of sustainability should also be embraced in order to have a successful business venture. In conclusion, the ongoing wars will continue to support the changing needs of different global customers (Yoffie & Kim, 2011). This is the case because every strategy embraced by the two companies will eventually empower more consumers.
Reference
Yoffie, D., & Kim, R. (2011). Coca Wars Continue: Coke and Pepsi in 2010. Harvard Business School, 1(1), 1-22.