Case study 15 pepsico’s journey toward an ethical and socially responsible culture

MINISTRY OF EDUCATION AND TRAINING NATIONAL ECONOMICS UNIVERSITY -*** - BUSINESS ETHICS INDIVIDUAL ASSIGNMENT Lecturer: Nguyen Bich Ngoc CASE STUDY 15: PepsiCo’s Journey Toward an Ethical and Socially Responsible Culture Student: Nguyen Khanh Minh - 11224243 Class: International Business Management 64A School of Advanced Education Programs (AEP) MINISTRY OF EDUCATION AND TRAINING NATIONAL ECONOMICS UNIVERSITY -*** - BUSINESS ETHICS INDIVIDUAL ASSIGNMENT Lecturer: Nguyen Bich Ngoc CASE STUDY 15: PepsiCo’s Journey Toward an Ethical and Socially Responsible Culture Student: Nguyen Khanh Minh - 11224243 Class: International Business Management 64A School of Advanced Education Programs (AEP) This is a preview Do you want full access? Go Premium and unlock all 14 pages Access to all documents Get Unlimited Downloads Improve your grades Upload Share your documents to unlock Free Trial Get 30 days of free Premium Already Premium? Log in Abstract PepsiCo is a multinational corporation operating in the food and beverage industry, present in over 200 countries with more than 290,000 employees worldwide Throughout years of development, PepsiCo has faced numerous challenges and difficulties However, with the relentless effort of its employees and leadership, PepsiCo has become one of the leading corporations in the world in the food and beverage industry During its development, PepsiCo has not only focused on the goal of increasing revenue and profit but also on social responsibility and long-term value The company has implemented a strategy called "Performance with Purpose" with the aim of working to protect the environment, improve quality of life, and benefit the community With this philosophy, PepsiCo has worked to minimize the impact of products and business operations on the environment, promote supplier diversity, and support communities in the areas where the company operates With a long-term history of development and a commitment to social responsibility, PepsiCo is attractive research subject to explore how a leading global corporation can achieve sustainability and create value for both society and shareholders Therefore, I have chosen Case Study 15:” PepsiCo’s Journey Toward an Ethical and Socially Responsible Culture” in this individual assignment to gain a better understanding of the company's business philosophy and social responsibility activities Table of contents AB ABST ST STR RACT SU SUMM MM MMA ARY COMPANY OVERVIEW COMPANY AND MARKETING HISTORY Building a brand Celebrity Endorsements Recent Years PEPSICO DIVISIONS AND BRANDS Pepsi-Cola Brands Frito-Lay Gatorade CRITICISMS India Health SOCIAL RESPONSIBILITY & SUSTAINABILITY PepsiCo Guiding Principles 10 Sustainability 10 Employee Commitment 10 PepsiCo Foundation 10 Dream Machine 11 CONCLUSION .11 ANSWER THE QUESTION 12 How does PepsiCo balance those stakeholders such as consumers and shareholders interested in good tasting products and financial performance with special-interest groups and regulators that are more concerned about nutrition? 12 How effective you think PepsiCo has been in responding to stakeholder concerns about nutrition and sustainability? .13 Do you think it is logical for PepsiCo to partner with nutrition and water conservation nonprofit groups since it received heavy criticism for unhealthy products and wasteful water practices? 14 Summary COMPANY OVERVIEW - PepsiCo is a global food and beverage company based in New York • Owning 22 brands of snacks and drinks • Making over $1 billion in retail sales each • Operating in more than 200 countries • Employing almost 300,000 people - CEO: Indra K Nooyi (2007) - PepsiCo has received several accolades: • Top 25 global brands • The Green Award from the Environmental Protection Agency COMPANY AND MARKETING HISTORY - 1890s: Pepsi was invented by Caleb Bradham, originally named "Brad's Drink” - 1898: It was renamed Pepsi-Cola because of its main ingredients, pepsin and kola nut - 1902: Bradham founded the Pepsi-Cola Company - 1910: • The company had a wide distribution network • Sold over 100,000 gallons of syrup annually - World War I: The company went bankrupt due to fluctuations in sugar prices - 1923: It was sold to Craven's Holding Corp and then to Roy C Megargel, who unsuccessfully tried to revive it - 1931: • The company went bankrupt again • It was purchased by Charles Guth and became a million-dollar business within two years Building a brand - Pepsi-Cola faced many challenges during the Great Depression and World War II Through innovative marketing campaigns and product positioning, the brand was able to survive and even thrive: • Selling with low cost • Using the nation’s first jingle “nickel, nickel” This is a preview Do you want full access? 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Log in • Changing color on the label  Pepsi’s success allowed it to begin marketing internationally in 1945 - After the war, Pepsi recognized the changing marketplace and adapted its slogans and marketing campaigns • Introducing more slogan • 1963: The "Pepsi Generation" campaign set a new standard for advertising in America • Pepsi pursued a major acquisition strategy and expanded its product line, such as Diet Pepsi, Mountain Dew, and Aquafina bottled water • The company's biggest milestone was its merger with Frito-Lay, Inc., to become PepsiCo, Inc • Pepsi also profited through corporate partnerships, such as with Starbucks to develop coffee drinks Celebrity Endorsements - Pepsi used celebrity branding to appeal to the younger generation: • Michael Jackson helping the brand become trendy and gain market share • 2012, Pepsi celebrated its 25th anniversary of the Michael Jackson - Pepsi made inroads into the Soviet market through a favorable relationship with Soviet Premier Nikita Kruschev  The company became the first foreign consumer product sold in the Soviet Union in 1972 & the first advertiser to buy time on Soviet television in 1988 Recent Years - PepsiCo has been using celebrity marketing since the 1990s with endorsers such as Ray Charles, Cindy Crawford, and Shaquille O'Neal - 2006: Indra Nooyi became CEO, reorganizing the company: • Focusing on international expansion • Developing healthier snacks, environmental sustainability • Improving working conditions  These strategies have led to PepsiCo's current revenues of over $66.5 billion PEPSICO DIVISIONS AND BRANDS - PepsiCo consists of four divisions: • PepsiCo Americas Beverages • PepsiCo Americas Foods • PepsiCo Europe • PepsiCo Middle East, Asia, and Africa - These divisions are further split up into different businesses: • Pepsi Beverages • Frito-Lay • Quaker • Tropicana • Gatorade Pepsi-Cola Brands - Achievements: • PepsiCo has expanded its brand portfolio beyond Pepsi to include various other brands in the US and internationally • The company has been working on acquiring or creating healthier brands such as Muscle Milk, Honest Tea, and vitamin water Problem The soft drink industry has seen a decline in growth due to health consciousness among consumers, which has affected Pepsi's most popular brand Solution PepsiCo merged its two largest bottling companies and split into two businesses to create better integration between its units: the Pepsi Beverages Company and PepsiCo Beverages Americas, which includes Tropicana, Gatorade, and Latin American brands Frito-Lay - Infomation: • Frito-Lay was established in 1932, merged with Pepsi-Cola in 1965 • It contributes $13 billion to PepsiCo • It owns over 50% of the snack food industry in America, including well-known brands - Trouble: Frito-Lay faced controversies, including the use of a negative stereotype of Mexicans and Mexican-Americans through the Frito Bandito cartoon character  The controversy highlighted the importance of cultural sensitivity and stakeholder analysis in launching any campaign Gatorade - Infomation: • Gatorade was created in 1965 to help athletes replenish electrolytes and carbohydrates during games • The brand was acquired by Quaker Oats Co in 1983 and then by PepsiCo in 2001 Problem Solution Gatorade faced declining sales due to a PepsiCo revitalized the brand and lack of appeal to younger generations targeted a younger demographic by creating the "G Series", which includes three core product lines, different types of Gatorade for different stages of an athlete's game, low calorie options, and a natural alternative called G natural CRITICISMS - PepsiCo faced challenges in entering new markets and cultural differences, as well as criticism for unhealthy products and excessive packaging waste - They also experienced a decline in US soda consumption, compounded by regulatory actions such as bans on certain drink sizes and sales in schools India Problems - PepsiCo faced allegations of using toxic water and creating pollution in India: • The water used in Pepsi contained pesticides that contribute to cancer and immune system breakdown • Pepsi manufacturing plants were also accused of polluting the land, creating plastic waste, and taking groundwater, making it difficult for farmers to grow crops Solutions • Pepsi replenished more water than it removed and partnering with water conservation organizations • A thorough stakeholder orientation is needed to discover ethical courses of action and avoid negative repercussions This is a preview Do you want full access? 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Log in Health Problems - Pepsi-Cola has caused health problems for the company due to increased health consciousness in America - The company has also faced regulatory battles, including attempts to ban large sugary drinks in New York City Solutions - PepsiCo has diversified into other product lines and created low-calorie and low-sugar sodas - PepsiCo has many defenders, with a poll revealing that 51 percent of New Yorkers disliked the ban, and minority-owned businesses claiming the ban would harm them - Frito-Lay Company tried to address this - PepsiCo faced criticism from healthcare issue by offering healthier alternatives such as professionals due to the high amount of Baked Lays, Baked Cheetos, and SunChips sodium, sugar, calories, and fat in its - PepsiCo is investing in research and product traditional snack items development to offer healthier products and is hiring health officials to work on this issue - PepsiCo's sponsorship of the Academy of Nutrition and Dietetics indicates the company's commitment to healthier snack foods - PepsiCo announced in 2013 that it would remove the controversial additive, brominated vegetable oil, from its citrus flavored Gatorade  The ethical dilemma faced by business leaders in balancing the interests of different stakeholders, including society and investors Business ethics is rarely straightforward, and companies must carefully manage these conflicts to balance the different interests of various stakeholders - The company has faced criticism from investors who are concerned about profitability SOCIAL RESPONSIBILITY & SUSTAINABILITY PepsiCo's "Performance with Purpose" plan promotes social responsibility and sustainable growth through addressing products, environment, and employees They partner with organizations to promote nutrition and demonstrate social responsibility through various efforts such as sustainability and employee commitment PepsiCo Guiding Principles PepsiCo is committed to high standards and has developed six guiding principles to remain focused It strives to understand consumers' needs, be transparent, and analyze both short and long term consequences TABLE 1: PepsiCo Guiding Principles We must always strive to: For our customers, our consumers and the world we live in Sell only products we can be proud of Speak with truth and candor Balance short term and long term Win with diversity and inclusion Respect others and succeed together Sustainability - PepsiCo committed to reducing its environmental impact for social responsibility - It focuses on reducing negative effects through water, energy, and packaging initiatives, and partners with Nature Conservancy to study sustainable water use - PepsiCo uses a 5R system to improve environmental impact: reduce, recycle, use renewable resources, remove sensitive materials, and promote packaging reuse - It has already taken steps such as reducing plastic in Aquafina bottles, using recycled materials, and developing lighter-weight packaging Employee Commitment - PepsiCo values social responsibility, reducing environmental impact and supporting employee engagement - Encourages diverse corporate culture, providing employees with leadership training and ethics programs, and a Code of Conduct - Maintains 24-hour anonymous ethics hotline for reporting concerns or ethical violations PepsiCo Foundation - The PepsiCo Foundation was established in 1962 for philanthropic contributions to non-profits - PepsiCo encourages employee engagement through Matching Gifts Program and supports education for employees’ children 10 - PepsiCo contributes to disaster relief efforts and partners with organizations to improve access to clean water and children's lives in India and Bangladesh Dream Machine - PepsiCo partnered with Waste Management, Inc to launch Dream Machine recycling initiative to increase US beverage container recycling rate to 50% by 2018 - Dream Machine kiosks act as reverse vending machines, giving consumers points for recycling plastic bottles and cans - Greenopolis, LLC working with PepsiCo to bring recycling systems to public areas and stores - Points can be redeemed for rewards at www.greenopolis.com - PepsiCo extends partnership with Entrepreneurship Bootcamp for Veterans with Disabilities to offer training in business management for disabled veterans CONCLUSION The article discusses PepsiCo's history of success and controversy, as well as its efforts to become more stakeholder oriented The company faces challenges balancing nutritional concerns with consumers' desire for tasty food and has experienced ethical lapses in the past However, it has also become a leader in sustainability and social responsibility The article concludes that PepsiCo's future success will depend on its ability to learn from past mistakes and continue developing an ethical corporate culture that considers the needs of all stakeholders 11 This is a preview Do you want full access? Go Premium and unlock all 14 pages Access to all documents Get Unlimited Downloads Improve your grades Upload Share your documents to unlock Free Trial Get 30 days of free Premium Already Premium? Log in Answer the question How does PepsiCo balance those stakeholders such as consumers and shareholders interested in good tasting products and financial performance with special-interest groups and regulators that are more concerned about nutrition? PepsiCo is a global company that produces and sells a variety of beverages and foods under multiple brands To satisfy the needs of different customer categories, PepsiCo has created numerous brands that cater to each targeted group By doing so, the company can provide a wide variety of products that can exist in people's everyday lives, leading to the fact that every single person has at least tried the product of PepsiCo one time in their life In the food and beverage industry, it is crucial to provide good-tasting products that can be suitable for the taste of the vast majority of consumers Therefore, when PepsiCo introduced many brands with tasty products that can satisfy consumers, the number of products from PepsiCo being sold significantly increased, leading to higher profits The higher profits simultaneously satisfy shareholders while satisfying consumers However, the company works in an industry where it is hard to provide the healthiest food and beverages directly to consumers Most of PepsiCo’s snack foods are processed and sometimes deeply fried, containing high amounts of saturated fats, sodium, and sugar - all bad for health This has caused regulatory authorities and health-conscious customers to start harassing PepsiCo Despite the challenges, PepsiCo strives to achieve good results in nutrition and tries to produce a line of nutritional food for special interest groups such as people who want to reduce their weight or only to eat healthy food PepsiCo has reduced the sugars, fats, and other unhealthier ingredients of its products The company also hires health officials to research what ingredients are healthy enough for the snacks produced by the company The result is the development of a non-caloric sweetener that earned 100 million dollars, which was able to meet both the financial and taste needs of stakeholders However, ethical leaders must attempt to balance stakeholder interests, including those of society - who have concerns over the growing issue of obesity and diabetes - and investors who care about profitability and the financial viability of the company In 2012, while PepsiCo was ready and willing to expand into healthier food products and make major changes, they faced criticism from their investors because of the decrease in profit In this case, it is easy to put the blame on the investors, who have more of a 12 short-term perspective on this issue However, PepsiCo still has to carefully manage this ethical conflict to balance the different interests of various stakeholders In reality, PepsiCo asserts that they will continue to strive to please their stakeholders by becoming faster, stronger, and better The company aims to grow faster by winning in the marketplace, being even more consumer-centric, and expanding their investments They want to become a stronger, more unified PepsiCo by transforming their capabilities and costs; using advanced technologies in their production procedures; and investing in talent and creating an inclusive workplace culture PepsiCo commits to even more for our planet and communities by integrating a sense of purpose into their business strategy They are using their global reach and expertise in areas where they can make the biggest environmental impact: Agriculture, Water, Packaging, Products, Climate Change, and People In conclusion, PepsiCo's success is largely due to its ability to satisfy the needs of different customer categories while balancing the interests of various stakeholders The company acknowledges the challenges it faces in the food and beverage industry and strives to meet the needs of health-conscious customers by producing healthier food options while maintaining profitability Through its commitment to becoming faster, stronger, and better, PepsiCo aims to continue pleasing its stakeholders while contributing to a better planet and community How effective you think PepsiCo has been in responding to stakeholder concerns about nutrition and sustainability? From my perspective, PepsiCo has been successful in addressing the concerns of stakeholders regarding nutrition and sustainability Although most of PepsiCo's products are processed and high in calories, sugar, sodium, and fat, people are becoming increasingly health-conscious and desire healthier options To address this issue, PepsiCo has taken several steps Firstly, they have created low-calorie and low-sugar sodas and have even introduced sodas with zero calories and natural sweeteners like organic stevia Secondly, Frito-Lay, one of PepsiCo's largest branches, has started offering healthier alternatives like baked lays, Baked Cheetos, and Sunchips instead of deep-fried snacks Thirdly, they have removed the controversial additive brominated vegetable oil (BVO) and are researching healthier ingredients to use in their snacks Furthermore, PepsiCo's CEO, Indra Nooyi, has introduced a program called "Performance with Purpose" to address sustainability concerns The program has three parts: products, the environment, and employees Firstly, PepsiCo has made many 13 changes to its product line by incorporating healthier options and reducing fat, sugar, and other unhealthy ingredients Secondly, the company has made significant efforts to minimize the negative impact on the environment through various energy, water, and packaging programs They have also reduced waste products and their carbon footprint Thirdly, PepsiCo is committed to social responsibility and employee support by offering courses, training programs, and investing in education programs, training, and mentoring Finally, the PepsiCo Foundation is dedicated to creating sustainable solutions for critical socio-economic issues such as food security, safe water, and economic opportunity Overall, PepsiCo is recognized as a leader in sustainability and social responsibility, focusing on generating healthy returns while giving back to society While their products may not be the healthiest option, they have taken significant steps to address nutrition concerns and offer healthier alternatives Additionally, their commitment to sustainable growth and social responsibility has made them stand out in the industry Do you think it is logical for PepsiCo to partner with nutrition and water conservation nonprofit groups since it received heavy criticism for unhealthy products and wasteful water practices? To address its criticisms, PepsiCo has formed partnerships with non-profit organizations focused on water and nutrition conservation At the core of PepsiCo's values is Performance with Purpose, which acknowledges the interconnectedness of the company's success and the sustainability of the world PepsiCo strives to continuously improve its products while operating responsibly to protect the planet and empower individuals worldwide Collaborating with organizations such as The Nature Conservancy is a key strategy in PepsiCo's efforts to achieve this goal PepsiCo seeks to demonstrate its commitment to environmental responsibility and restore its image as an environmentally-conscious corporation By implementing its "go green" program, which emphasizes low-calorie and healthy options, PepsiCo hopes to earn the trust of its customers and improve its reputation Additionally, PepsiCo's sustainable development strategy involves partnering with organizations across a range of industries, not solely those focused on nutrition and water conservation 14