Impacts of Globalisation on Pepsico
PepsiCo, Inc. was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. Tropicana was acquired in 1998. In 2001, PepsiCo merged with the Quaker Oats Company, creating the world’s fifth-largest food and Beverage Company. Today PepsiCo is a world leader in convenient snacks, foods and beverages with revenues of more than $60 billion and over 285,000 employees. With headquarters in Purchase, New York, the company consists of Frito-Lay North America, PepsiCo Beverages North America, PepsiCo International, Quaker Foods North America, Pepsi-Cola UK, Walkers snack Foods Limited and Pete & Johnny Plc.
Their main businesses – Frito-Lay, Quaker, Pepsi-Cola, Tropicana and Gatorade – make hundreds of nourishing, tasty foods and drinks such as Aquafina, Aunt Jemima, Cap’n Crunch, Cheetos, Cracker Jack, Diet Pepsi, Doritos, Frito-Lay, Gatorade, Life, Mountain Dew, Pepsi, Propel, Quaker, Rice-A-Roni, Rold Gold, Ruffles, 7UP, Sierra Mist, SoBe, SunChips, Tostitos and Tropicana that are consumed by consumers in more than 200 countries. PepsiCo’s people are united by their unique commitment to sustainable growth, called Performance with Purpose.
By dedicating themselves to offering a broad array of choices for healthy, convenient and fun nourishment, reducing their environmental impact, and fostering a diverse and inclusive workplace culture, PepsiCo balances strong financial returns
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Globalisation is the result of a number of interrelated developments including:
- The growth and relative importance of foreign direct investment and multinational enterprises;
- The internationalisation of financial markets;
- The continuing development of communication and transport technology;
- Deregulation and liberalisation;
- Privatisation of public sector services.
It has many definitions and there is many perspectives to it and is a difficult term to define and is easier to understand through examples of how it works.
It can be noted that the global in globalisation demonstrates how our lives are intertwined with people on the other side of the world via the food we consume, the clothing we buy, the music we listen to, the information we get and the ideas we hold. This interconnectedness amongst humans on the planet is sometimes also referred to as the ‘global village’ where the barriers of national and international boundaries become less relevant and the world, figuratively, a smaller place. Below are varying opinions on globalisation, showing the diversity of opinions within the debate: ‘Globalization is a fact of life.
But I believe we have underestimated its fragility. The problem is this. The spread of markets outpaces the ability of societies and their political systems to adjust to them, let alone to guide the course they take. History teaches us that such an imbalance between the economic, social and political realms can never be sustained for very long. ’ Kofi Annan, Secretary-General of the United Nations ‘What are doing, in the name of globalisation, to the poor is brutal and unforgivable. This is especially evident in India as we witness the unfolding disasters of globalisation, especially in food and agriculture.
Dr Vandana Shiva, environmentalist ‘Globalization is about worldwide economic activity – about open markets, competition and the free flow of goods, services, capital and knowledge. Consumers are its principal beneficiary. Its benefits in terms of faster growth, quicker access to new technology, cheaper imports and greater competition are available for all. Globalization has made the world economy more efficient and has created hundreds of millions of jobs, mainly, but not only, in developing countries.
It generates an upward spiral of jobs and rosperity for countries that embrace the process, although the advantages will not reach everybody at the same time. ’ ICC (International Chamber of Commerce) brief on globalization, Nov 2000 ‘Globalization, as defined by rich people like us, is a very nice thing… you are talking about the Internet, you are talking about cell phones, and you are talking about computers. This doesn’t affect two-thirds of the people of the world. ’ Jimmy Carter, former US President To take advantage of globalisation, many large companies have become transnational corporations or TNCs.
Transnational corporations have offices and factories all over the world. The headquarters are usually located in developed countries such as the USA or Japan. Smaller offices and factories tend to be in developing countries where labour is cheap and production costs are low. They have outlets to sell their products throughout the world. PepsiCo is such a transnational corporation with its head quarters located in New York and has smaller offices and factories mainly in North America, Canada, and the UK Impact of Globalisation on PepsiCo
The several macro factors, which affect the global market and the business organisations, are important to assess and examine for they can largely determine the success of the business organisation in the market. Pepsi Co must be able to have skills in developing new products and innovating new technologies to cope with the changes happening in the society today. Along with developing new products, Pepsi Co must also produce effective marketing strategies to provide solutions to the challenges that they face.
In addition, it will also be necessary to anticipate problems and plan, in case a specific problem comes their way. This would help the company prepare and come up with alternative solutions for easy implementation of plans. PepsiCo has investments in many countries around the world in order to strengthen its global market share. Over the next years, PepsiCo plans to boost manufacturing ability along with marketing and R & D South Asian countries. Another way PepsiCo is increasing product lines to more beverages and foods is by purchasing stakes (shares) of other beverage and food companies.
The liberalisation of many developing countries has helped PepsiCo enter and establish market share in many countries The main products of PepsiCo are soft drinks and beverages which are distributed worldwide. These products are available for the customers anywhere to host countries (i. e. China, India and Europe). Through diversification, PepsiCo is able to cover all food and beverage alternatives. Its beverages alone are not limited to carbonated drinks but also, ready to drink teas, orange and fruit juices, mineral water and through the recent acquisition of Quaker Oats, isotonic drinks.
Once, it had only catered to salty snack foods, but today, it also caters to sweet snack foods through ready to eat popcorn and healthy alternatives through Quaker Oats. This provides a wide variation of choices for consumers who may opt for a tasty food or healthy food lifestyle. PepsiCo also began acquiring quick fast-food restaurants and services such as Pizza Hut, Kentucky Fried Chicken and Taco Bell (all of which remain dominant in each respective market). These restaurants were also used as a means to capture customers into drinking PepsiCo’s beverages.
At the same time, PepsiCo continues to acquire products such as 7UP, Lipton, Aquafina and Mug, and restaurants such as California Pizza Kitchen, East Side Mario’s, and Chevys Mexican Restaurants. Celebrities such as Michael Jackson, Ray Charles, Billy Crystal, Shaquille O’Neal, Andre Agassi and Madonna appeared in their many advertising campaigns, boosting sales. Over the past years PepsiCo has been trying to increase its market share, competing with its rival Coca Cola. Its presence in international markets such as India and Russia remain their strength. Also read Mountain Dew case study
PepsiCo’s emerging market growth opportunities (it has presence in more than 200 countries) and its namesake cola, Pepsi has successfully positioned itself in the health and sports drink segment with its Gatorade and Aquafina brands, and Tropicana is still the standard in branded, mass-appeal orange juice. The company is constantly growing in size with mergers and acquisitions of different companies around the world. Such as their resent acquisition of Pepsi Bottling Group, Inc. and Pepsi America, Inc. as well as their merger with Russian dairy, baby food and juice make Wimm-Bill-Dann.
This strengthens its market share and gives the company an international market advantage. Globalisation enables PepsiCo to establish its factories and businesses around the world and needs to meet the demand of local tastes and cultures. To do this they need to understand the lives of their consumers. The businesses success depends on the prosperity of the community where they operate. Possible strategies Out sourcing When transnational companies decide to outsource, they have a major goal in mind and that is cutting costs.
In April 2005, PepsiCo signed a 10year agreement with Hewitt Associates, a global human resource firm. The firm provides PepsiCo with a comprehensive HR business process outsourcing (BPO) service in the US and HR application development and hosting for the US plus 67 additional countries globally. HR services provided for the U. S. include workforce and benefits administration, payroll and contact centre support.
The HR application development and hosting will support PepsiCo’s approximately 64,000 employees in the U. S. and approximately 38,000 of PepsiCo’s employees in 67 countries globally. Pepsi Bottling Group, which is the world’s largest bottler of Pepsi-Cola beverages, made the decision to outsource the management and monitoring of its physical security technology, enabling the department to focus its efforts on high priority risks. Security at its 100 facilities throughout North America are networked into a central server and Aegis Protection Group’s Security Support Centre monitors and administers the PBG-owned solutions, which include video surveillance, access control and central badging.
All photo IDs for all PBG employees across the country are produced out of SSC’s office in Louisville, Ky. PepsiCo has also signed a deal with BT and HP having BT manage data, LAN, security, conferencing, remote access and internet services across more than 900 locations for PepsiCo’s international division and migrate the networks to an IP-based multi-protocol label switching (MPLS) infrastructure. As part of the deal, BT’s strategic partner HP will consolidate PepsiCo’s technology infrastructure from a distributed server environment into three global data centres located in Mexico, Singapore and the UK.
The data centres will support PepsiCo business operations in more than 60 countries outside Canada and the US. PepsiCo’s aim in doing this to get better cost-efficiency and control from a standardised and “future-proof” communications platform that will allow the company to provide enhanced service levels to its employees. Mergers In the world of business, it is not unusual for various industries to undergo a series of mergers as the business landscape undergoes some type of change.
Often a merger is undertaken for the purpose of combining resources in order to provide a higher quality of goods and services to consumers. Mergers can generate cost efficiency through economies of scale, enhance revenue through gain in market share and can even generate tax gains. PepsiCo has recently gone into a few mergers. It recently announced its move to buy Russian dairy, baby food and juice make Wimm-Bill-Dann, first taking 66%, as stipulated by Russian regulations.
Over 50 years after PepsiCo first entered the Russian market (with Pepsi-Cola being the first western consumer product on sale in the former USSR) the country will become its largest market outside the US. They also just went into a merger with its two largest bottlers, the Pepsi Bottling Group, Inc. and Pepsi Americas, Inc. A decade ago PepsiCo sold off the bottlers with a view to streamline its business. Recently, the company revised its earlier strategy and planned for a vertical integration.
Some of PepsiCo’s past mergers have included: 1965 – The Pepsi-Cola Company collaborated with Frito Lays. This merger formed a new company known as PepsiCo Inc. * 1988 – PepsiCo purchased ‘Tropicana’, which gave the company the strongest brand name in juice under its portfolio. * 2001- The Quaker-Oats Company merged with PepsiCo, bringing two successful food and beverage companies under one roof. With the union, PepsiCo also acquired the hold of the brand Gatorade. PepsiCo has added more and will continue to add more brands under its umbrella.