Innovation

In recent years PepsiCo. has had to be more innovative than ever before. A company that is known for unhealthy foods and beverages is now working to stay competitive in a more health conscious world. PepsiCo.'s CEO says that the company is working to develop natural sweeteners to serve customers who like soda but want a lower calorie option, without losing out on taste. They have also added healthier brands to their portfolio with Tropicana, Quaker and Gatorade. PepsiCo. is continuing to build these brands by constantly developing new products within the lines. PepsiCo. has also worked in recent years to create products that fit with the various tastes around the world. To help with their new innovation goals, PepsiCo. opened a new Food and Beverage R&D Center in Shanghai. The new facility is designed to house R&D for products in their expanding Asian markets. The building is "equipped with an advanced culinary center and test kitchens focused on developing and tailoring PepsiCo food and beverage brands for distinct, locally relevant taste preferences throughout the region" PepsiCo. is listed as number 50 on Forbes list of 100 most innovative companies. 

Strategic Leadership

PepsiCo.'s current President is Zein Abdalla, who assumed the roll in September 2012. I believe that PepsiCo. is a learning organization because the have many of the traits that characterize a business as such. PepsiCo. inspires employees by making saying that the company and all of it's people  "have a responsibility to help develop solutions to such key global challenges as obesity and malnutrition". This goal inspires employees and creates a common mission for them to connect over. PepsiCo.'s works to have leaders within the organization that motivate employees to work hard and engage in self-directed learning to better themselves and the company. They also work to give employees on all levels responsibility because they believe that it is essential for employee morale and performance. PepsiCo. does not seem to share all knowledge between divisions but trains employees with "cross-divisional, functional competency" to give them some information about other areas of the business.  PepsiCo. is facing major changes in the food and beverage industry and their leaders are focusing on creative and innovative approaches to develop new products that fit into this changing market by empowering and motivating employees work towards these goals. 

Organizational Structure

Over the years PepsiCo has changed their organizational structure many times due to increased global expansion. Right now PepsiCo’s organizational structure is mainly based on geographical location, which can be seen in the graph below. On their first level PepsiCo has four categories of business units: Americas Beverages, Americas Food, Europe, and Asia, Middle East and Africa (AMEA). Their Americas Food category is also broken down further into Frito-Lay North America, Quaker Foods North America and Latin America Foods.  As you can see though their main breakdown id be geographical location there is also consideration of products for the Americas. This can be attributed to the fact that the Americas provide 71 percent of PepsiCo’s revenue, requiring a more specific breakdown to adequately serve this area.

Strategic Control and Corporate Governance

One of the ways that PepsiCo is able to maintain behavioral control is with their strong corporate culture aimed at working to help employees succeed. Pepsi allows employees to gain responsibility very early on it their careers, which helps build self-esteem in their work and a sense of being connected with the company that is essential for building a positive corporate culture. Another way to build up this culture is  by rewarding and recognizing those employees who meet the company standards. In 2009 PepsiCo launched a new program to do just that. Their "Chairman's Circle of Champions" recognizes employees for "safety, job performance, service and even people skills". The award is given to only 350 employees and includes a trip to New York. 

International Strategy

PepsiCo is an international business. PepsiCo has four business units:PepsiCo Americas Foods, PepsiCo Americas Beverages, PepsiCo Europe and PepsiCo Asia, Middle East & Africa. These business units cover the many diverse areas of the world that Pepsi does business in. PepsiCo products are distributed in over 200 countries and they are continuing to expand, especially in the Middle East. In 2009 sixteen percent of PepsiCo's net revenue came from their Europe operations and thirteen percent came from their  Asia, Middle East & Africa operations. In their efforts to expand PepsiCo has worked to bring their products to areas of the world that were previously inaccessible as well as creating new products catering to increasingly health conscious customers all around the world. 

Business Level Strategy

Because PepsiCo. has such a great number of products, I will focus on their soda products for my analysis of their business-level strategy. The strategy that Pepsi uses for their soda is differentiation. There are countless brands of soda on the market, many of which are cheaper that Pepsi, so they can not realistically be the cost leader in the market. Instead, Pepsi works to make their product stand out both in flavor and in name. Pepsi cola has a very specific taste that customers like, and that is different than the cheaper generic soda available, that makes the extra cost worth it for customers to continue to buy Pepsi. They also have a widely recognizable name known for quality helps them stand out in the market. When someone buys Pepsi, they know what they are getting. Because of differentiation, Pepsi has been able to stay strong in the competitive and somewhat flooded cola market.

Knowledge and Hiring

             One of the biggest assets Pepsi has is its workforce. For a huge company like Pepsi it is invaluable to hire the best people. Especially for higher up executives there is a lot to handle with such a large organization. Pepsi needs people that can keep the various parts of the company together, especially with their global spread. To find these people Pepsi says their "recruiters are out and about in countless networks, communities and campuses"  looking for future employees. Pepsi needs people that are talented and people that will stay with the company for the long hall. The information needed to make their products and how to do many of the organizational necessities is explicit knowledge the company has and can more easily be transferred to new employees in the case of turnover, but the relationships with customers and how to interact with them is some of the tactile knowledge that Pepsi needs to protect by hiring people that will be with the company for some time and working to retain these employees. They do this by offering a large variety and generous benefits to employees such as reimbursement for educational expenses, health insurance, and discounts on things like gym memberships. 

Important Value-Chain Componants

               There are some parts of the value-chain that are very important to Pepsi's business success. Outbound logistics are very important to a company like Pepsi because of there strong international presence. They not only need great distribution systems to get all around the United States, but also to difficult areas all around the world. To do this successfully Pepsi has to create and maintain strong relationships with distributors, such as their deal with Diamond Star Co., Ltd to distribute their products in Myanmar. Diamond Star has done business in Myanmar for over 50 years, so creating a relationship with them is key for Pepsi to be successful in their venture into the country.  Another link in the value chain that Pepsi must rely on is human resource management. Pepsi has 297,000  employees,  so having a successful HR system in place is invaluable. Pepsi needs to hire the right people, but they also need to develop the talent they have on board to make the most of their human resources. On their website Pepsi boasts about "Stretch assignments, early responsibility, job rotations and awesome mentors" as some of the ways they help employees develop within the company and set them up for success. 

Pepsi and Healthy Living

One of the biggest external forces affecting Pepsi today is the changing attitudes of people towards healthy living As people focus more and more on healthy eating and overall healthy lifestyles, Pepsi has tried a number of strategies to make their usually unhealthy drinks healthier and their more healthy options stand out.  An example of this is the new “Pepsi Special” released in Japan in late 2012 that contained fiber and is said to reduce the absorption of fat. The drink has even been given a FOSHU labeling, which stands for "Food for Specified Health Uses”, by the Japanese government. Pepsi has also seen a great opportunity in releasing healthier options in China that include ancient Chinese medicine ingredients. This has been especially successful for the Quaker brand. They have also worked to expand their Gatorade, Tropicana, and Quaker brands, as these have more potential in a health conscious market. People know of these brands as having healthier options, so expanding them seems to be a good strategy for where the market is heading. One challenge Pepsi has faced as of late is that in their efforts to focus on healthy options, they seemed almost forget about their soda brand, and because of the door was left open for another external factor: competition. Pepsi has been criticized in the past few years for dropping the ball on soda advertising, which became evident when they slipped to the number three spot of soda sales in mid-2011.