PepsiCo's Leadership [10] Company Review

More than Chips and Soda: PepsiCo's Leadership and Vision

More than Chips and Soda: PepsiCo's Leadership and Vision

While the PepsiCo Company is known primarily for its flagship brand, Pepsi-Cola, the organization is a global leader in the snacks and beverages industry. Throughout the company's history, PepsiCo executives have demonstrated the ability to lead the company to new heights. From the pharmacist formulating a refreshing new soft drink over 100 years ago, to today's executive team overseeing strategic mergers and acquisitions, their actions set PepsiCo apart. The vision of PepsiCo executives is responsible for its success taking PepsiCo to a position of global leadership. Through examining the company's history, I highlight the ability of PepsiCo executives to discern opportunity and capitalize on it, to pursue their mission of becoming the foremost consumer products company in the world. This essay summarizes PepsiCo's leadership achievements.

PepsiCo's Leadership

This paper examines PepsiCo, reviewing the company history and organization, and discussing its mission and vision statements.

PepsiCo is one of the two largest beverage and snack food companies in the world, employing more than 285,000 people worldwide and producing $60 billion in revenues. Founded in 1965, PepsiCo resulted from merging Pepsi-Cola with Frito-Lay. PepsiCo acquired Tropicana in 1998, then was involved in a merger with the Quaker Oats Company in 2001 (PepsiCo.com, 2011).

Some of the world's best-known brands are owned by Pepsi, including Pepsi-Cola and other carbonated soft drinks, Doritos and other corn and potato chip products, Gatorade and other non-carbonated soft drinks and juices, as well as Quaker. PepsiCo has 19 brands that are each responsible for generating more than $1 billion in retail sales. As a consequence of becoming increasingly global, almost half of PepsiCo revenue comes from non-U.S. sales, and about 30% comes from emerging and developing markets. On a global basis, PepsiCo operates over 100,000 routes, serving about 10 million outlets weekly, and generating retail sales totaling more than $300 million every day (PepsiCo 2010 Annual Report, 2011, p. 9).

Pepsi-Cola the beverage was invented in 1898 by pharmacist Caleb Bradham in New Bern, Carolina. Over the hot, humid summer Bradham tried out test recipes that included spices, syrups and juices as he tried to concoct a refreshing new drink for people flocking to his soda fountain. The name Pepsi-Cola comes from the primary ingredients, kola nuts and pepsin. The soft drink became so popular that Bradham trademarked the Pepsi-Cola name in 1902 and continued expanding. By 1910, there were Pepsi-Cola franchisees throughout 24 states (Pepsi Brattleboro, 2007).

Some highlights from PepsiCo history include the company's redesign of the bottle crown in 1941, changed to patriotic colors that symbolized support for America's war effort. Also, in the 1960s, recognizing how significant the post-war baby boom would be, Pepsi positioned the Pepsi brand to be associated with the new generation. The marketing tagline the Pepsi Generation resulted. Over the years, Pepsi continued to enjoy growth and expansion, achieving its current position of leadership in the snack food and beverage business (Pepsi Brattleboro, 2007).

The following flowchart depicts the PepsiCo leadership structure at the executive and subsidiary levels:

CEO Diversity and Inclusion

China

Pepsico Europe European Sustainability

PepsiCo Beverages Company Sales Pepsi Beverages

PepsiCo Americas Beverages Marketing and Joint Ventures

Latin America

Tropicana Beverages

North America Functional Beverages

PepsiCo Americas Foods North America Frito-Lay

South America Foods

Mexico, Central America and Caribbean

North America Quaker and Snacks

PepsiCo Asia, Middle East and Africa

CFO Control

Treasurer

Research and Development

Sales and Marketing

Corporate Affairs

Operations

Government Affairs

Marketing

Human Resources

Procurement

CIO

Strategy and Development

Legal Secretary

Communication

(The Official Board.com, 2011).

PepsiCo organizes its operations into four primary business units:

PepsiCo Americas Foods (PAF)

PepsiCo Americas Beverages (PAB)

PepsiCo Europe

PepsiCo Asia, Middle East and Africa

PepsiCo Americas Foods (PAF) is the company's food and snack business in the Americas. This division includes Frito-Lay North America, along with Quaker Foods and Snacks. Other divisions in this business unit include Sabritas, Gamesa, and Latin American Foods (PepsiCo Americas Foods, 2011).

The Frito Company and H.W. Lay Company combined in 1961 to form Frito-Lay, Inc. Today, the Frito-Lay North America division of PepsiCo makes many of the best-selling snacks in the U.S. Its portfolio includes potato chips by Lay's and Ruffles, tortilla chips produced by Doritos...

This division also produces pretzels manufactured by Rold Gold, along with multigrain snacks by SunChips, and candy coated popcorn by Cracker Jack (PepsiCo Americas Foods, 2011).
Quaker Foods North America had its beginnings in 1901 when the leading oat milling businesses joined to create the Quaker Oats Company. In 1926, the company acquired the Aunt Jemima Mills Company, which became the leading producer of syrup and pancake mixes in later decades; Pepsico also bought Gatorade in the 1980s. During that same period PepsiCo bought the Golden Grain Company, manufacturer of Rice-A-Roni. PepsiCo and the Quaker Oats Company merged in 2001 (PepsiCo Americas Foods, 2011).

Acquired in the late 1960s, Sabritas of Mexico City controls approximately 80% of the snack and fun food market in Mexico. Gamesa, which was also acquired during that period, is located in Monterrey, Mexico and is the country's largest cookie manufacturer. The Latin Americas Foods business includes operations in Columbia, Peru, Brazil, Venezuela and Argentina (PepsiCo Americas Foods, 2011).

PepsiCo Americas Beverages (PAB) includes such top selling brands as Aquafina bottled water, Pepsi, Gatorade sports drink, Mountain Dew, Tropicana juice drinks, Diet Pepsi, Sierra Mist, Propel, Mug, Slice, Dole, and SoBe (PepsiCo Americas Beverages, 2011).

PepsiCo Europe is one of the foremost food and beverage companies in the region, employing more than 60,000 people and selling to nearly 900 million consumers. The division is located across 11 time zones and 45 countries, spanning from Russia west to Portugal, and from Turkey north to Norway, and it generates net revenues of $13 billion. PepsiCo Europe has committed to reducing sodium, saturated fat, and sugar per serving by targeted amounts over a five-year period beginning in 2015. As part of PepsiCo's global commitment, PepsiCo Europe plans to increase its water use efficiency by 20% per production unit and to decrease its energy use by 25% by 2015, measured against the baseline year 2006 (PepsiCo Europe, 2011). PepsiCo Asia, Middle East and Africa produces and sells leading snack food brands that include Lay's and other well-known brands (PepsiCo Asia, Middle East & Africa, 2011).

PepsiCo believes that responsible corporate citizenship is not only ethically correct, but is also a winning business strategy. The company's mission, as described on its website, is "to be the world's premier consumer products company focused on convenient foods and beverages" (PepsiCo.com, 2011). In addition, the company strives to produce financial rewards for its investors at the same time it provides growth opportunities and enrichment for its employees and other stakeholders, including its business partners and the communities in which PepsiCo does business (PepsiCo.com, 2011).

PepsiCo's vision focuses on their responsibility to "continually improve all aspects of the world in which we operate -- environment, social, economic -- creating a better tomorrow than today" (PepsiCo.com, 2011). The company works to transform their vision statement into reality with initiatives that further their goals, and that focus on environmental stewardship. They also plan to translate their vision into reality by advancing activities that benefit society, as well as build shareholder equity, all the while building PepsiCo into a genuinely sustainable company. PepsiCo clearly articulates its commitment to achieving success on behalf of business and financial stakeholders at the same time that the company makes a positive impact on society (PepsiCo.com, 2011).

Reflection Page

The research I conducted to write this paper on PepsiCo expanded my horizons and exposed me to a corporate culture I was not familiar with. This research was a valuable experience because it gave me an opportunity to compare the PepsiCo organization with my current job; it started me thinking about characteristics to look for in a future employer.

Researching this paper allowed me to get to know PepsiCo in-depth, so to speak. Beyond what I ate for snacks and meals, or what I drank when I was thirsty, I knew little about PepsiCo. Before writing this paper, I had no idea that the original Pepsi organization was over 100 years old, or what ingredients made up the Pepsi formula. The more I read about Pepsi, I realized that it is also worthwhile to have an appreciation for the history of one's employer, which after all, the employee is a part of as well.

I found that I was especially impressed with PepsiCo's achievements in the areas of sustainability and diversity. In reviewing PepsiCo's history, I found literally hundreds of awards for and recognition of their efforts to promote sustainability and diversity. Apparently PepsiCo is not just talking the talk; they back it up, and their efforts have been consistently recognized by a fairly impressive list of organizations.

I was impressed with their candid explanations as to why they invest in human capital and sustainability efforts: they do it in part because it helps them make money. I love it! In an age when there is so much corporate BS and self-serving promotion, I found their candor to be refreshing and compelling. "We treat our people well and we take good…