PepsiCo was founded in 1965 with the union of Frito-Lay and Pepsi-Cola. In the present day, PepsiCo is the leading Food and Beverage Industry in the world with more than 63 billion dollars net income as recorded in 2015. In addition, the company has a global collection of diverse and favorite brands. PepsiCo’s products are sold in over 200 nations all over the world and it aims at delivering top-tier economic operation over the long-term by incorporating sustainability into the business plan. The company consists four sections: PepsiCo Americas Foods, Beverages, PepsiCo Europe and PepsiCo Africa, Asia and Middle East. In this report, the impact of external business environmental factors on Fast Moving Consumer Goods organization (FMCG) will be assessed.
THEME 1: Corporate Governance and Managing Ethically
Impact on FMCG Organization
Corporate governance is the system that involves different set of relationships between administration of organization, its board, its stakeholders and shareholders (Fernando, 2010). The system also provides an ethical practices as well as a distinct structure where the objectives of the organization, the systems of examining performance and the means of achieving such objectives are also set. Corporate governance and ethical management is therefore about obligation to morals, ethical organization behaviour and transparency and makes a different between corporate and personal resources in the management of an organization (Fernando, 2010).
Fast Moving Consumer Goods (FMCG) sector is experiencing a remarkable growth internationally and locally (Meister, 2012). Most retailers and manufacturers of FMCG are testifying that sustainability is progressively more important to their firms; with the economic recession putting financial plan under pressure, the necessity to lower prices was the most commonly reported rationale for organizations to introduce sustainability to their businesses. Apparently, FMCG industries have started taking sustainability seriously. Most products in this industry associate themselves with the social causes, thus linking customers with the products and winning goodwill in the market (Meister, 2012).
As a result, FMCG started considering the problem of consumer demand, product development and the operations involved in their manufacture and delivery so as to provide opportunities for the organization to moderate its impact on environment (Meister, 2012). The industry thus reduce its impact by moderating excessive spend as well as reducing unnecessary resources. FMCG retailers and manufactures raising ethical principles by for instance, upholding fair-trade, introducing global standards about sustainable animal and sourcing interests, focusing on wellbeing, endorsing ethical consumerism as well as supporting social activities. Corporate governance and ethical management plays a vital role in enhancing the economic growth and efficiency within organizations (Meierer, 2011). In FMCG, Meister (2012) argues that practices of corporate governance provide a positive indication to investors. On the other hand, access to fairness is a key constraint to organization growth in many developing nations.
Impact of this Theme on Operation Function
In today’s global market, corporate governance is becoming more and more recognized as a main factor affecting the success of organizations in emerging economies (Meierer, 2011). Operative corporate governance maintains a foundation for continuous growth and a firm and vibrant global market in the future. Competitive threats and opportunities created by the global market make setting up good governance practices important to building on a strategy for the organization to flourish (Fernando, 2010). Improving ethical management and corporate governance allows organizations to attract greater deal at a lower cost, makes clear accountability, improves protection for shareholders and helps to welcome and maintain quality employees. Significantly, for an organization as a whole, corporate governance improves productivity as well as clarifies responsibilities and increases organization value (Meierer, 2011).
In addition, corporate governance is at the basis of a contemporary organization’s performance and strategy because it deals with issues important to the organization’s operation and to its continued existence (Brink, 2011). From tactical decision making and board selection to everyday legal compliance and operations, corporate governance is a way for organizations to design a framework for risk management, constant growth and rigorous organization practices. As stated by Meierer (2011) the fundamental concept of corporate governance is a major-agent form used to ensure the cost-effective operations of organizations and the economical use of resources.
According to Fernando (2010), ccorporate governance grants organization board adequate autonomy from the management groups and other investors in organizations. It empowers organization boards to carry out duties without too much interference from the leading shareholders or management. On the other hand, ethical and integrity conduct play a critical role in public relations particularly in instances of ethical management. As noted earlier in the paper, corporate governance is necessary in risk control management. Thus, PepsiCo has developed comprehensive ethical codes for its executives that encourage honest and rational decision making (Weygandt, Kimmel & Kieso, 2015).
Response of PepsiCo Americas Foods to this Theme
To exhibit transparency, a principle we resolutely uphold, Weygandt, Kimmel & Kieso (2015) claim that PepsiCo has embraced a variety of policies and statements that are overtly available below. PepsiCo Americas Beverages has adopted rigorous corporate standards that oversee its operations and guarantee accountability for the company’s dealings. Such principles cover areas public policy, ethical management and corporate governance (Brink, 2011). It terms of food safety and quality, the company is dedicated to manufacturing the safest, best-tasting and high-quality foods in each part of the world. Increasing and maintaining healthy food safety measures is how the PepsiCo assure safety for each package, each day in all markets. Further, the industry has detailed procedures and programs for food safety (Weygandt, Kimmel & Kieso, 2015).
In addition, PepsiCo use its relationships within its large-scale supply to ensure those they work with function responsibly and ethnically (Weygandt, Kimmel & Kieso, 2015). The corporate governance for the industry has been implemented to establish a general set of opportunities to assist the board and its teams in performing their functions compliant with appropriate requirements. PepsiCo highly value transparency and therefore have made its officials policies and statements available on the company’s website. For risk management, PepsiCo Americas Foods is subject to risks in the standard course of business because of unfavourable developments regarding several areas, as well as those concerning sustainability (Brink, 2011).
Another response towards corporate governance is where the company has code of conduct which applies all directors and employees of the company contain apparent guidelines about conflicts of interests (Fernando, 2010). The corporate governance principles also include director independence principles to deal with potential manager conflict of interests. The company’s corporate law unit assesses all communications conveyed to the board of executives and often provides a review of communications to the board that is about the functions of the board or that else require attention from the board (Weygandt, Kimmel & Kieso, 2015).
THEME 2: Information and Technological Development (ICT)
Impact on FMCG Industry
The impact of ICT on our daily lives and economic relationships is unquestionable (Haftor, Mirijamdotter & Brandley, 2010). Along with megatrends such as aging populations, climate changes and urbanization, ICT is helping to change our society and financial structures that have fashioned the basis of organizations ever since the industrial insurgency. For instance, the retail industry is being radically changed by the growing ubiquity of modern technologies. It is evident that ICT has played a vital role in retail industry thus building a large developed supply chains. This section will discuss the impact of ICT on Fast Moving Consumer Goods (FMCG) industry.
Companies in the FMCG industry are faced with process combination, increasingly restraining regulations, high consumer expectations and strong competition (Meister, 2012). In order to survive is such a stiff environment, FMCG industries should be at the forefront of contemporary technology and embrace efficient practices. However, many FCMG organizations are working to carry on with the transformation to their multi-channel processes since their infrastructure basically can’t muddle through. So as to remain competitive, industries must give to the appropriate ICT infrastructure from familiarity and steadfast IT outworker (Haftor, Mirijamdotter & Brandley, 2010). The right provider must have a strong comprehension of the compound lifecycle of the product and distribution approaches that naturally accompany FMCG ventures.
The Fast Moving Consumer Goods (FMCG) industry is distinct and a very competitive (Meister, 2012). Therefore, organizations are looking to increase effectiveness and lower costs. ICT is now basic motivator in reducing the manufacturing costs and changing the way FMCG operates. It is vital that IT infrastructure is developed so it is suitable for purpose and maintains the significant business operations. ICT can provide FMCG with fast data processing and storage (Meister, 2012). These industries have large capacities of data processing from various causes such as sale data that need considerable data storage services. In general, there is a gigantic force in FMCG towards extrapolative logistics, social media logistics and business analytics. These drives together compel demand for fast data processing ability and storage. In this industry, information technology is largely used to access the definite data record (Bachmeier, 2013).
According to Meister (2012) ICT plays a vital role in FMCG in improving capacity and productivity within the industry. Surviving in a competitive environment is critical for any business; however, this turns out to be a huge challenge when one operates in a fast moving company. In this case, FMCG Company is naturally one of the fastest developing sectors and therefore capacity, productivity and speed are fundamental. Influential infrastructure that upholds software for supply chain management helps to develop the effectiveness of industries as well as the distribution system at large. In addition, Haftor, Mirijamdotter & Brandley (2010) argue that a well managed IT infrastructure help the industry enable its personnel and develop business liveliness.
Another impact of ICT in the industry is that it enables FMCG to maintain its competitive edge. A first-class IT outworker should perform a 360 assessment of the contemporary IT setting that focuses on the relationship between the business applications and brands that incorporate with the infrastructure (Bachmeier, 2013). This will in turn help both participants to realize how to reform an imminent confirmed infrastructure that will aid the success of the organization. However, owing to the very size of the IT network in FMCG industry, it is not shocking that various industries still run on legacy schemes. As a result, there is urging of the FMCG industries to transform from archaic legacy schemes to strong and well-organized systems that restructure the production process. The lifecycle of the product and changing consumer demands indicates that there is need for the IT infrastructure to be lively in order to take action on the changes (Meister, 2012).
Impact of this Theme on Human Resource Function
ICT create globalization that influences business environment and organization’s performance around the world (Haftor, Mirijamdotter & Brandley, 2010). Normally, it is understood that human resource is the most important and fundamental asset for the growth of several industries. On the other hand, ICTs has improved the competitiveness of HR of the organizations and play a vital role in the operations of the organizations by managing the work setting as it plays an important role in human development itself. Evidently, HR management strategies and organizations are practically affected by ICT ranging from personnel growth using internet, tracking apps, databanks and electronic employment (Haftor, Mirijamdotter & Brandley, 2010).
In most cases, the development of ICT in the contemporary world has largely affected the e-business setting and HRM within the organizations. Another significant impact is that ICT has been ascertained as a useful tool in organizations. ICT can develop and improve the quality of the existing employees especially through ample development and training. Thus, according to Haftor, Mirijamdotter & Brandley (2010) it can be indicated that the overall impact of ICT on human resource operations are positive and it is benefiting both the HR department and the organization at large.
Response of PepsiCo to this Theme
As stated by Meister (2012) the contemporary times illustrate a very promising image of the industry. PepsiCo has been effectively able to create a diverse product collection that appeals to the customers. Not only does PepsiCo Company have copyrights for foods innovations, it has filled various copyrights for supplying devices. With the advent of new technology, the company has provided a high number of unit systems and selling machines. Apparently, PepsiCo absolutely wants to counteract Coca Cola’s actions of inventing interactive retailing machineries by filling design copyrights (Bachmeier, 2013).
Using modern technology, the company’s social marketing system enables any consumer to gift a companion by selecting a product and entering their names (Bachmeier, 2013). PepsiCo has embraced ICT where its innovative application of telemetry with the social retailing system also offers incredible operational benefits. This allows customers to narrowly manage stock levels and delivery arrangement distantly and also update content online easily. Lastly, the PepsiCo uses its website to communicate and convey important information to the customers around the world (Bachmeier, 2013).
THEME 3: Environmentally Friendly Products and Services
Impact on FGCM industry
Today, every company is focusing towards environmental friendliness and building up on quality control of products and services and cost effectiveness (Vasil, 2012). However, business organizations have realized that meeting basic requirements is not enough. Fast Moving Consumer Goods is a very large industry in the world and it is very important for FMCG to be in frontline work on environmental friendliness. The industry have to focus on engaging in green marketing, a field that covers various activities such as adjustment in packaging, production process and marketing to inspire towards eco friendliness. Environmental friendly products and services of interest are FMCG brands since they are most infected by environmental matters and are traded in retail markets (Vasil, 2012).
FMCG companies are stepping up to grow to be socially responsible (Ottman, 2011). Thus, the industries have various reasons to produce green or environmentally products and services. The impact of this theme on FMCG is that it is based on the principle of preventing pollution which attempts to eradicate or to moderate risks on the environment and human health. Practicing environmentally friendly products illustrate an organizations devotion to considering and moderating the environmental effects of its activities. According to Bjelan and Dyllick (2014) the organization thus makes both economic and environmental implications.
Impact of this Theme on Management Function
As awareness of the significance of the environmental preservation continues to develop, organizations are searching for approaches to become environmentally friendly (Ottman, 2011). Not only can environmentally friendly organization practices and operations help safeguard the environment, it can also help an organization increase its outcomes. Organizations that focus on decreasing energy use not help the environment, but also lower their costs in terms of lower power charges. For instance, smaller enterprises can benefit from low-price energy bills though taking easy steps such as turning lights and PCs off when not in use (Meister, 2012).
As environmental awareness develops, consumers are demanding more environmentally friendly products and services. Environmentally mindful consumers often inspect product and packaging labels manufactured from second-hand materials. As a result of this growing awareness, the market share for environmentally friendly products has continued to develop in various companies. Ottman (2011) argue that industries can take advantage of this market by making and delivering more environmentally friendly products and services to meet consumer requirements.
Response of PepsiCo to this Theme
Helping to develop a friendly and better relationship between food and people involve protecting the environment and discovering sustainable ways to deliver more food in the market (Ottman, 2011). PepsiCo Americas Foods business mainly bank on the accessibility of the natural resources to manufacture our products. Overall, agriculture uses the substantial mainstream of the world’s accessible fresh water simultaneously availability of water is becoming even more limited. As the general population increases, the demand for energy and water will also go up. As a result, has enhanced its attempts in the preservation and safety of natural resources in the course of the pressure of these issues and their link to public health and business at large (Bachmeier, 2013)..
The company has unveiled a container manufactured completely of plant materials which largely outshine the technology of rival Coca Cola Inc (Ottman, 2011). and decreases its latent carbon imprints. A comprehensive research for the safety of the container is done and the results indicate that it does not affect flavours. A predominantly interesting feature of PepsiCo’s novel bottle design is that the organization can use its immense resources as both food and beverage producer to supply the bio-materials it requires for the bottle from the trash produced in its processes giving it full management above its sourcing. According to Bachmeier (2013) it is evident that PepsiCo company as one of the leading food and beverages industries in the world is in a exceptional position to source farming by-products from foods industry to produce a more environmentally friendly product and services.
Based on the above discussion, operations of practices of ethical management and corporate governance are perceived to have a positive implication towards organizations. Therefore, organizations should ensure that system of corporate governance is followed to the latter to ensure success of the its operations and also build a strong relationship with the shareholder. On the other hand, supplier of FMCG industries need to be engaged to ensure that food packaging they apply is easily accessible and environmentally friendly. Lastly, embracing information and communication technology will enable PepsiCo company do well and survive in a competitive market. As noted above, the company exploits modern technology to become more innovative and as a result invent a bottle that is environmental friendly.
List of References
Bachmeier, K. (2013). Analysis of marketing strategies used by pepsico based on ansoff’s theory. [Place of publication not identified], Grin Verlag.
Bjelan, S., & Dyllick, T. (2014). Efforts of Fast-moving Consumer Goods Companies to Make Consumer Behavior More Environmentally Sustainable. St. Gallen.
Brink, A. (2011). Corporate Governance and Business Ethics. Dordrecht: Springer.
Fernando, A. C. (2010). Business ethics and corporate governance. Delhi, Dorling Kindersley (India), licensees of Pearson Education in South Asia.
Haftor, D. M., Mirijamdotter, A., & Bradley, G. (2010). Information and communication technologies, society and human beings: theory and framework. Hershey PA, Information Science Reference.
Meierer, M. (2011). International corporate brand management: evaluating standardized corporate branding across countries. Wiesbaden, Gabler Verlag.
Meister, S. (2012). Brand communities for fast moving consumer goods: An empirical study of members’ behavior and the economic relevance for the marketer. Wiesbaden: Springer Gabler.
Ottman, J. A. (2011). The new rules of green marketing: strategies, tools, and inspiration for sustainable branding. San Francisco, Calif, Berrett-Koehler Pub.
Vasil, A. (2012). Ecoholic: your guide to the most environmentally friendly products, information and services in Canada. Toronto, Vintage Canada.
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2015). Financial & managerial accounting. Hoboken, NJ: Wiley.