PepsiCo Training and Development Strategy Analysis

Company Overview

PepsiCo Incorporation is a leading global company that produces beverages, snacks, and food. The company's brands include Pepsi, Quaker Oats, and Frito-Lay. Over the years, these brands have become household names in the United States, Canada, the United Kingdom, and in more than 200 other countries where the company operates. The company's brands stand for quality, and PepsiCo has used them to achieve product differentiation and competitive market advantages. The company has also established regional brands such as Sabritas, Walkers, and Gamesa. Independently and through contract manufacturers, PepsiCo markets and sells a variety of enjoyable beverages and wholesome foods. Operating in more than 200 countries, the company's portfolio includes grain-based snacks, oats, rice, and carbonated and non-carbonated beverages.

While the company operates in several countries, its largest operations are in the United States, Canada, the United Kingdom, and Mexico. To maintain global leadership in the beverage industry, management uses a variety of key indicators to monitor the company's financial performance. Within the last five years prior to this report, the company enjoyed significant growth, recording an increase in net income from $5.6 billion in 2007 to $6.5 billion at the end of the 2011 fiscal year (PepsiCo Annual Report, 2011). Despite this financial growth, PepsiCo faces stiff competition from other beverage companies in the United States and internationally, which has become a significant challenge for PepsiCo Inc.

Training Needs Analysis (TNA)

One of the challenges that PepsiCo faces within the global business environment is stiff competition from other beverage companies. A major competitor is Coca-Cola, which leads PepsiCo with a market capitalization of $169 billion compared to PepsiCo's $107 billion. PepsiCo also faces competition from companies such as Dr Pepper Snapple Group and Kraft Foods Inc., all of which share market share with PepsiCo (Yahoo Finance, 2012). The table below summarizes the competitive comparison across key financial metrics.

Table 1: PepsiCo Direct Competitor Comparison (Yahoo Finance, 2012)

Given the stiff competition that PepsiCo faces within the industry, one of its greatest challenges is maintaining long-term growth and profitability. While the company is performing well in the current marketplace, PepsiCo intends to sustain long-term growth and maintain profitability in order to increase shareholder confidence. To achieve sustainable growth, employee training and development is a critical tool the company can employ. In a competitive market environment where businesses must deliver high-quality products at low prices and within short timeframes, product innovation is a key strategy. Because the industry is highly competitive, PepsiCo must consistently introduce new, innovative, and high-quality products. Therefore, implementing modern and effective employee training and development is a strategy that can help PepsiCo sustain long-term growth and improve product quality.

The fundamental objective of this report is to discuss training and development strategies that PepsiCo can implement to achieve competitive market advantages.

Training Objectives for PepsiCo Employees

Through the training and development methods presented in this report, PepsiCo Inc. aims to achieve the following objectives:

Training and Development Strategy

In the contemporary competitive business environment, training and development has become a valued component of modern human resources management. Investment in human capital is positively related to organizational performance (Srimannarayana, 2011). The success of an organization depends on the competency and skills of its workforce, and to build a competent workforce, organizations need to focus on employee training and development. Employee training and development not only enhances employee behavior but also improves job satisfaction, which in turn translates to organizational growth (Qayyum, Sharif, Tariq, et al., 2012).

While training can enhance the quality of employee performance, the scope of training and development varies from one organization to another. Traditional training methods have been implemented for several decades across many organizations.

Training through presentation methods involves communication through spoken words to impart knowledge to trainees. Communication in this method is typically one-way — from trainer to audience. The major benefit of the presentation method is that it is the least expensive of all training methods and can be used to deliver large amounts of training content. It can also be used to train large groups of employees efficiently and in an organized manner. More importantly, the presentation method is less time-consuming and can be easily deployed for large groups. Information presented through this method typically includes problem-solving techniques, processes, and factual content. Delivery formats include lectures and audiovisual presentations, with the lecture format encompassing standard lectures, panel discussions, and team teaching. Many organizations use presentation methods to enhance employee communication and customer service skills. However, the presentation method alone is not sufficient for training employees who must carry out highly skilled tasks; it should be combined with computer-based simulation methods to be fully effective.

The hands-on method is a traditional training approach that requires trainees to participate actively in learning. Hands-on training methods include on-the-job training (OJT), simulation, case studies, role-plays, behavior modeling, and business games.

Many organizations use on-the-job training to help new and inexperienced employees learn by observing peers, supervisors, or managers, assisting them to develop skills through behavioral imitation. OJT includes apprenticeship programs and can also be used to upgrade employee skills when new technology is introduced, to cross-train employees within a work unit or department, and to prepare employees who have been transferred to a new role.

Organizations can derive several benefits from OJT. Employees can learn at their own pace, organizations can quickly obtain feedback on learning performance, and the method is convenient for employees working shifts or variable schedules. Despite these benefits, OJT involves higher development costs and time investment. Additionally, a trainee must be motivated to learn for the method to be effective.

Simulation is another traditional training method that helps employees develop skills based on real-life situations. It is suitable when an organization needs to develop employee skills in production and process management, and can also be used to build management and interpersonal skills. Simulation is increasingly being used among production companies. One benefit of simulation is that it can improve employee competence with production machinery in a cost-effective manner, since it can be conducted within the organizational environment.

As Steve (2011) argues, "a well-designed sales simulation allows sales reps to address real-world challenges while providing high impact to the company" (p. 52). Sales personnel are important strategic assets, and in competitive business environments they must possess strong skills to enhance the organization's competitive advantage. Taking a sales team to a classroom for training involves significant costs — not only direct costs, but also the opportunity cost of time away from customers and sales activities. Simulation addresses this by providing a realistic environment in which trainees can make mistakes safely, and the learning cycle is shortened through immediate feedback. However, simulation training involving heavy machinery may be time-consuming to implement.

Despite the benefits of traditional training methods, computer-based training (CBT) is growing in adoption. CBT involves delivering training content through the internet, WAN/LAN technology, extranets, and satellite broadcast. The cost of implementing CBT is generally lower than that of traditional methods because it can train large numbers of employees located in different countries simultaneously. Unlike traditional training, which requires physical facilities and multiple instructors, computer-based training can be implemented in a virtual environment, significantly reducing costs for the organization.

This report recommends that PepsiCo employ both traditional training methods — such as presentation methods — and computer-based simulation or online training methods to create a comprehensive and effective training program.

References

Curtin, L. B., Finn, L. A., Czosnowski, Q. A., et al. (2011). Computer-based simulation training to improve learning outcomes in mannequin-based simulation exercises. American Journal of Pharmaceutical Education, 75(6), 1–6.

Dubois, D., & Rothwell, W. (2004). Competency-based or a traditional approach to training? T+D, 58(4), 46–57.

PepsiCo. (2011). PepsiCo Inc. Annual Report 2011. USA.

Qayyum, A., Sharif, M., Tariq, A., et al. (2012). Training & development practices in National Bank of Pakistan. Information Management & Business Review, 4(1), 8–17.

Srimannarayana, M. (2011). Measuring training & development. Indian Journal of Industrial Relations, 47(1), 117–125.

Steve, G. (2011). Simulations give sales training a dose of reality. T+D, 65(11), 52–55.

Yahoo Finance. (2012). PepsiCo Inc. USA.