The PepsiCo headquarters are located in Purchase, New York. The company is in the food and beverage industry and is a public corporation. Pepsi's biggest competitors are Coca Cola, Dr. Pepper Snapple Group, and Kellogg U.S. Snack. Pepsi has official sponsorship deals with three of the four major North American professional sports leagues: the National Football League, National Hockey League, and Major League Baseball. Pepsi also sponsors Major League Soccer. In addition, the corporation has sponsorship deals in international cricket teams. The Pakistan cricket team is one of the teams that the brand sponsors. The team wears the Pepsi logo on the front of their test and One International Day (ODI) test match clothing (Wikipedia, n.d.).
Mission and Values
According to the PepsiCo website, the company's mission is to be the world's premier consumer products company focused on convenient foods and beverages. Pepsi seeks to produce financial rewards to investors as it provides numerous opportunities for growth and enrichment to their employees, their business partners, and the communities in which PepsiCo operates. Pepsi strives for honesty, fairness, and integrity. Pepsi is committed to delivering sustained growth through empowered people acting responsibly and building trust.
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Caleb Bradham was a pharmacist who first created Pepsi in New Bern, North Carolina in 1898. It was originally called Brad's Drink and was claimed to cure indigestion. The trademark was registered on June 16, 1903. Pepsi introduced the world's first radio jingle in 1939. In 1941, Loft Candy merged with its Pepsi subsidiary and became the Pepsi-Cola Company. In 2003, PepsiCo found opportunities for growth overseas. It surfaced that year that Pepsi products bottled in India that contained traces of DDT, Malathion, and other pesticides that exceeded government limits (Hoovers).
Bowing to the public's growing concern about childhood obesity, in 2006 Pepsi, along with Coca-Cola, Cadbury Schweppes, and the American Beverage Association, agreed to sell water, unsweetened juice, and low-fat milk only to public elementary and middle schools in the US. As for high schools, the agreement called for no sugary sodas to be sold and one-half of the obtainable drinks to be water, diet sodas, lemonade, or iced tea (Hoovers).
Corporate Social Responsibility
PepsiCo is one of the top companies to top the 2010 Corporate Social Responsibility Index. The rankings are based on public perceptions of U.S. companies' corporate social responsibility efforts. In order to predict and then maximize the potential of market opportunities as they arise, it is important that the company reflects the market in which it seeks to operate. In 2004, Pepsi was ranked as number 7 in Fortune's Magazine 50 Best Companies for Minorities. Five of Pepsi Company's 13 top officials are minorities-the highest percentage on our list (Werther & Chandler, 2008).
"Pepsi is initiating life-cycle assessments, using recent innovations to measure the carbon footprint (the total amount of carbon emitted during the life cycle of a product, from production to consumption) for each of their products. The advantages of Pepsi are clear-in addition to understanding their value chain more completely and highlighting potential CSR transgressions before they read about them in the media. By analyzing the amount of waste Pepsi is contributing, Pepsi can have the potential for cost savings" (Werther, 2010, p. 135, paragraph 3).
PepsiCo has demonstrated a consistent commitment to corporate social responsibility. The company's vision for sustainability, Performance with Purpose, aims to deliver sustainable growth by investing in a healthier future for people and the planet. In April, PepsiCo launched the Dream Machine recycling initiative, which will introduce thousands of new recycling kiosks in popular public venues such as gas stations, stadiums, and public parks to make it more convenient and rewarding for consumers to recycle when they are on the go. The initiative includes computerized recycling receptacles that allow users to scan the bar code on bottles and cans recycled in a Dream Machine to collect points that can be redeemed online for prizes (CSR Wire, 2010).
Pepsi received an Environmental Excellence Award from the U.S. Environmental Protection Agency SmartWay Transport Partnership for its leadership in conserving energy and lowering greenhouse gas emissions from its transportation and freight activities. PepsiCo has set a standard for the industry by having 100% of its transportation needs executed by SmartWay carriers and affiliates. PepsiCo and SmartWay's combined efficiency and fuel conservation projects have driven reductions in fuel use of nearly 15 million gallons of diesel, eliminating 340 million pounds of CO2 emissions and lowering PepsiCo's fuel costs. (CSR Wire, 2009).
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Pepsi created a project called Project Refresh. According to Mehra (2010), the project harnesses social media tools to empower communities to support projects that benefit social and environmental causes by supporting organizations with cash donations. Pepsi looks for businesses, people, and non-profit organizations with ideas that will have a positive impact. The project has given more than 7 million in the first five months of the year and expects to invest $20 million in worthy causes. It has been a "public relations coup for Pepsi and has drawn a huge volume of suggested projects and online buzz" (Silverstein, 2010, paragraph 8).
The purpose of the project is to donate money to worthy charities and causes. Candidates apply with their ideas for a grant on the website-it is a contest. Online voters decide what the company should contribute to, and if a candidate wins, they are awarded a certain amount of money for their cause or charity. Some causes that the project has funded include ending modern-day slavery in the United States, providing pet care to ill or disabled pet owners, funding less toxic therapies for children with cancer, and supporting nonpartisan civic engagement in the United States.
When the BP oil spill occurred, Pepsi immediately set up a campaign to donate money to the cause. Pepsi decided to donate 1.3 million through its Pepsi Refresh Project towards the cause. That sum is in addition to $20 million that Pepsi has vowed to give away in 2010 in the cause marketing effort, the term for collaborating with nonprofit organizations to bolster both charities and the reputations of companies (Newman, 2010). Candidates can apply on the Pepsi Refresh website and submit their ideas for ways to help the oil spill. The company awarded 32 "Do Good for the Gulf" grants-two for $250,000 and 10 each for $50,000, $25,000, and $5,000 (Newman, 2010).
The ideas for the "Do Good for the Gulf" contest have been voted on. Grants were given to causes such as giving injured Gulf coast sea turtles a place to get well, shelter for animals whose humans have lost their homes due to the spill, to provide mental health services, to create jobs for oil spill victims, and to build a second cottage on children's home campus to serve families in crisis.
PepsiCo Dream Machine
The PepsiCo Dream Machine recycling initiative is a sustainable business model that reinforces PepsiCo's commitment to utilizing innovation and technology to engage consumers and make a positive impact on our environment. We look forward to joining ThinkSocial and the other innovative companies and leaders to discuss how we can work together to achieve our "Promises" said Jeremy Cage, PepsiCo and Head of the Dream Machine recycling initiative. (CSR Wire, 2010, paragraph 5).
The recycling initiative was designed around PepsiCo's goal of increasing the U.S. beverage container-recycling rate from 34 percent to 50 percent by 2018 (American Recycler, 2010).
The company is concerned that consumers are throwing away the Pepsi bottles instead of recycling them, so they came up with the solution of putting recycling kiosks at concert venues, in grocery stores and along city sidewalks. PepsiCo has also entered into a partnership with Keep America Beautiful to boost community involvement in the initiative. The program will deliver funding to the Entrepreneurship Boot Camp for Veterans with Disabilities, which helps veterans start businesses (Fredrix, 2010).
Here is how the program works: People bring any recyclable aluminum cans or PET plastic bottles-not just those containing PepsiCo products-to a kiosk and scan them as if they are at a grocery store self-check out. When the containers are accepted, that adds points to an account at Greenopolis.com. Alternatively, consumers can get a receipt with codes to enter later on another website, which run by an offshoot of Houston-based Waste Management (Fredrix, 2010).
Free Burma Coalition
In 1990, Pepsi began their operations in Burma. The spotlight was on Pepsi when activists discovered that Pepsi was one of the companies that support the military regime and its cruel measures against the Burmese people (U.S. Dept. of Defense, 2001). Pepsi is a major contributor to the Union Solidarity and Development Association (USDA), the junta-supported patriotic organization (Manheim, 2001).
According to Manheim (2001), Free Burma Coalition called out Pepsi because, in the words of one Coalition document, Pepsi claims that:
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â€¦. its Burmese partnerâ€¦ is a "private entrepreneur." In fact he is chairman of a joint venture with the military called JV3, and was chosen by Pepsi because of its close military connections.
Pepsi claims that it "competes with the government" in the soft drink business. In fact, the military, which controls all aspects of business and the economy, has essentially granted Pepsi a monopoly in the Burmese market, where Pepsi now has a 90% market share. In return, Pepsi sponsors international trade fairs where the junta woos other foreign investors, and Pepsi funds youth and sports activities organized by the military. Pepsi's support of the military regime has been consistent and steadfast.
Pepsi is a major contributor to the USDA, the junta-sponsored "patriotic organization". Nobel Peace Prize winning Burmese democracy leader, whose NLD has been subject to rising violence and intimidationâ€¦ compared USDA thugs to "Hitler's brown shirts".
Pepsi purchases agricultural products in Burma to sell abroad, as a method of repatriating its profits. With forced labor pervasive in the agricultural sector, activists are concerned that Pepsi's purchases are connected to forced labor. It ties PepsiCo to the main themes of the campaign-profiting from slave labor, supporting antidemocratic activity, general duplicity, and propping up an illegitimate regime (p. 103-104).
PepsiCo's eventual exit from Myanmar illustrates global concerns about their license to operate. In 1993, social activists began protesting PepsiCo's operation of facilities in Myanmar. The activists' position was that revenues from PepsiCo operations helped to fund the SLORC government and its violation of human rights. Through the use of the Internet and the media, the NGO known as the Free Burma Coalition raised awareness of PepsiCo in Myanmar. Many stakeholders joined the activists in calls for PepsiCo to leave Myanmar. In 1997, PepsiCo severed all ties with Myanmar" (Coombs & Holladay, 2007, p. 114, paragraph 2).
In today's business world, events like natural disasters, terrorist's attacks, product recalls, and corporate scandals are more common and potentially devastating to organizations if they are ill prepared. "Recovering from a crisis in the "right" way may sometimes even improve brand image. By the same token, using the "wrong" communication strategy could damage the brand beyond repair" (Johar, Birk, & Einwiller, 2010, p. 58). Uncertainty and risks can be detrimental to companies that are not prepared to deal with events that required a plan of action. This means having systems and procedures, as well as, company personnel in place to deal with unplanned and unexpected events that could cause harm to stakeholders and the company. "Crisis communication encompasses those messages delivered to stakeholders during an emergency event that threatens them" (Ferrante, 2010, par. 5). Therefore, crisis management is essential for all organizations.
According to the text, "Crisis management, the process of handling a high-impact event characterized by ambiguity and the need for swift action" (Thorne, Ferrell & Ferrell, 2011, p. 66). This discussion will explore how Pepsi-Cola Corporation managed a product-tampering crisis. First, the focus will look at the crisis itself...how and what happened. Secondly, this report will discuss and explain how Pepsi-Cola handled the crisis evaluated based on the crisis management process, which looks at the four stages of a crisis. Finally, look at how Pepsi-Cola fared in each phase of the crisis.
The Crisis - Product Tampering Case at Pepsi-Cola
A hypodermic syringe was purportedly found in a can of Diet Pepsi in the Seattle area on June 10, 1993. This was the first report to Pepsi-Cola about alleged product tampering and within a week, 50 more reports came in from 23 states (Mohr, 1994). The alleged product tampering reports stated that consumers found not only hypodermic syringes, but also a broken sewing needle, a crack vial, and a bullet among other things.
Within a few days, the Pepsi syringe product tampering case was a major news story on television, radio station, as well as, major newspapers. Furthermore, viewers saw a hypodermic needle next to a can of Pepsi in leading news reports (Mohr, 1994). This was a nightmare with no ending in sight for Pepsi. This could potentially take many years to reverse the damage done to the Pepsi brand and gain consumer confidence in Pepsi products again. Pepsi-Cola's response to this crisis was crucial to consumer safety and the company's image. "The longer a problem remains publicly unacknowledged or played down, the more the outside world and the media fume" (Macaulay, 2010, p. 1). The Pepsi organization took control of the crisis and its final resolution using already in place procedures for product tampering and crisis management plan.
Prodromal Stage of the Pepsi Syringe Crisis
"To better understand how crises develop and move toward resolution, some researchers use a medical analogy" (Thorne, et al, 2011, p. 66). The crisis management process consists of four different stages and is as follows: Prodromal Stage, Acute Stage, Chronic Stage, and Prodromal Stage. The first stage "is a precrisis period during which warning signs may exist" (Thorne, et al, 2011, p. 67). This phase for Pepsi-Cola and other companies like it in the beverage & food industries are well aware of the potent of product tampering. The Food and Drug Administration (FDA) regulate these companies; thus, need to have procedures and standards in place to avoid contamination of their products either through their production processes or through sabotage.
Product tampering took on new meaning in the aftermath of the "Tylenol Scare" in the 1980's, and many companies made improvements to tamper-proof their products. At the time of the crisis, according to then Pepsi-Cola North America President, CEO, Craig Weatherup "explained cans are probably the most tamper-proof containers in the food industry" (Magiera, 1993, p. 3). Furthermore, Pepsi-Cola has a consumer hotline for its consumers to call with questions or concerns with its products.
In addition, the company has a cross-functional crisis team in place in order to deal with product tampering or other crisis. "In fast-pace, rapidly changing situations, the team leader, and members might have to work in concert to assess the situation accurately" (Northouse, 2007, p. 212). Pepsi-Cola has done very well to prepare itself for a potential crisis. Specifically, in this case of product tampering Pepsi knew it was highly unlikely that the tampering took place in the bottling process because of their production line process. They were further convince that it did not happen in production because the product tampering case reports were from 23 states with a total of 50 different reports.
Acute Stage of the Pepsi Syringe Crisis
Once Pepsi-Cola started receiving the product tampering reports it went into action by assembling its cross-functional crisis team to investigate the reports. Rebecca Madeira, vice president of public affairs for Pepsi-Cola stated the room next to her office "The Pepsi's crisis response team lived for nearly 96 hours during the summer of '93 while the nationwide Diet Pepsi syringe tampering scare raged" (Elsasser, 1994, par. 2).
Their first objective was to ensure consumer safety, and called in FDA officials for help. Once they were certain that the tampering did not come from the production lines, Pepsi wanted to use the media to ensure product safety for consumers while still protecting their brand. Transparent communication is essential at this stage in order inform the public. "Transparency ensures that firms would present accurate and truthful customer warnings for any health and safety issues that could impact the customer's use of a product" (Stanwick & Stanwick, 2009, p.10).
The product tampering event actually entered the acute stage that is became a national crisis is when the media began running news report about the hypodermic syringe in the Diet Pepsi can. This shows that "some crises happen so quickly and without warning that the organization may move from the prodromal to acute stage within minutes" (Thorne, et al, 2011, p. 67). In this specific case, Pepsi-Cola moved from the prodromal to acute stage within days once the media broadcast the syringe in the Diet Pepsi can story, the company was in a crisis mode. It is important to understand that "once a crisis strikes, the firm's stakeholders need a quick response in the midst of the duress and confusion" (Thorne, et al, 2011, p. 67).
Pepsi-Cola decided to use the media to obtain the facts out to consumers by demonstrating how their bottling and production lines work, and how unlikely it is to tamper with their products. According to president - CEO, Craig Weatherup, he explained that "the cans were produced at different plants-some six months ago, some six weeks ago, and some six days ago" (Greenberg, 1993, p. 2). The crisis team determined that there was no correlation between the complaints and when the cans were produced.
Chronic Stage of the Pepsi Syringe Crisis
The chronic stage represents that the crisis "is ongoing and requires explanation and decision-making" (Thorne, et al, 2011, p. 67). Pepsi-Cola and FDA officials determine that a product recall would not be necessary because the crisis team already determined the product tampering was not a production or packaging problem. Therefore, having a product recall would probably make the crisis worse. According to CEO, Craig Weatherup, he explained that their "point of view was a recall would give credence to a problem that did not exist" (Magiera, 1993, p.2).
Pepsi-Cola decided to use the media to inform consumers and tell its side of the storyâ€¦that product tampering inside Pepsi was considered a hoax. CEO, Craig Weatherup, went on many television programs like "Nightline" and "Larry King Live" to inform viewers that there was no danger to the public and get the accurate story told. "The more you saw that visual of the can and the syringe, the greater the concern became. "The challenge, therefore, was to convince the public that the image wasn't possible unless somebody opened the can first" (Greenberg, 1993, p.3).
Consumers and other stakeholders want and need to know how that the crisis will be handled in a safe and effective manner. Pepsi-Cola did an excellent job in its crisis communication strategy by using the media along with the FDA to get the accurate story out. In addition, Pepsi produced and distributed video news releases to give facts and show that the "Pepsi scare" was a hoax (Magiera, 1993).
Prodromal Stage of the Pepsi Syringe Crisis
The final phase of the crisis management process is crisis resolution. The prodromal stage is the "success and failure outcomes for the firm and stakeholder" (Thorne, et al, 2011, p. 67). Pepsi-Cola was able to take immediate action when the crisis happen because it already had systems and procedures in place. The company was able to investigate and determine a product recall was not necessary.
Once this was completed, Pepsi-Cola determine how it would communicate the findings of their investigation and go onto protecting the Pepsi brand. "Transparency is essential. All efforts undertaken to contain the situation, as well as the regulations and safety procedures that will prevent similar accidents have to be communicated" (Johar, et al, 2010, p. 59).
Recovery from a crisis handled correctly can lead to improving the company and the brand image. Pepsi-Cola was able to accomplish this using their crisis management and communication strategies. "Openness is increasingly necessary to protect a firm's reputation and establish trust with stakeholders" (Steiner & Steiner, 2009, p.165). Immediately after the crisis was over, Pepsi-Cola went on to run nationwide advertisements that read, "Pepsi is pleased to announceâ€¦nothing" and advertisements that said "Thanks, America" with coupons for Pepsi products. At this point, it was beneficial to the company to launch an offense and focus on selling their products (Kohnen, 2010). Pepsi-Cola did an excellent job of rebounding from this crisis with no lingering negative effects. Pepsi-Cola's reaction and response to this product tampering scare crisis could be used as a model for other organizations on how to prepare and handle an organizational crisis.
Global Environmental Issues
In 1989, PepsiCo established its business operations in India. The company is now one of the largest consumer products company in India. PepsiCo currently employs 150,000 people in India. The company has more than 36 bottling plants, including 13 companies and 23 franchises owned ones (Pepsi website).
There were problems in India with PepsiCo and the groundwater in 2003. Pepsi uses the ground water in India in order to make the soda. The major ingredient in a soft drink is water. It constitutes close to 90% of the soft drink content. The Centre of Science and Environment discovered through a report that Pepsi drinks in general had much higher levels of toxin than Europe's limits. CSE found that the India produced Pepsi's soft drink products had 36 times the level of pesticide residues permitted under European Union regulations. CSE tested the same products in the United States and found no such residues (Fernando, 2009).
Groundwater, the major source of water for 90 percent of rural and 50 percent of urban customers in India may be contaminated throughout the country. The test results prompted the government to adopt the European Union's standard for bottled water (Waldman, 2003). The village government of Pudussery, a rural community in the Palghat district of Kerala state, said last week that it had revoked the water-use license of the Pepsi bottling plant there because the plant had depleted the community's groundwater to the point of causing a shortage. The license was not due to expire until 2005 (Rai, 2003). As a result of the recent drought, water is already scarce in the area. The local people are agitating that Pepsi is over utilizing water resources, making the shortage very acute (Rai, 2003).
Contamination and depletion of water used by locals for farming and drinking occurred (Chamberlain, 2008). The state of Kerala in India banned the production and sale of Pepsi because of continued worries over scarcity and possible health effects of pesticides believed to be contained in the soft drinks (Pellow, 2007). Pepsi has continued to sell soft drinks in India with dangerously high levels of pesticides-even three years after the government of India confirmed that these products were dangerous.
An August 2006 study by the CSE, a leading public interest research and advocacy group in India proved this. CSE tested 57 samples of Pepsi from 25 different bottling plants across 12 states and found pesticide residues in all samples. On an average, the pesticide residues were 24 times higher than EU standards (Fernando). The director of CSE stated that "such residues can cause cancer and birth defects as well as harm nervous and immune systems if the products were consumed over long periods of time" (Carroll, 2008, page 855, paragraph 4).
Majumder (n.d.) states that "in the Indian state of Kerala, sale and production of Pepsi-Cola, along with other soft drinks, was banned by the state government in 2006. Five other Indian states have announced partial bans on the drinks in schools, colleges, and hospitals" (paragraph 2).
On the Pepsi website, it says that in 2009, Pepsi conserved, recharged, and replenished more water to nature instead of wasting more water than what was given back. As a user of tens of billions of gallons of water in its food and beverage operations globally, including in many nations facing water shortages, PepsiCo has recently adopted a water policy dedicated to fulfilling the human right to water as defined by the United Nations. This water policy is exactly the outcome that stakeholders should be heralding and seeking to encourage (Mehra, 2010).
Pepsi is a national supporter for Keep America Beautiful. Keep America Beautiful includes cleaning up parks, playgrounds, and recreation centers to conducting educational workshops and hosting community beautification events. Participants removed liter from waterways, beaches, and nature trails; planted trees and flowers, and removed graffiti to enhance urban areas and collected clothing, paper, batteries, and electronics for reuse and recycling (DeAngelis, 2010).
According to the Pepsi website, in 2007, Pepsi announced major renewable energy projects including plans for the plant in Casa Grande, Arizona. With plans to run almost entirely on renewable fuels and recycled water, this plant is scheduled to begin production by 2010. Our bottlers are also sourcing power from the sun. In 2007, The Pepsi-Cola Bottling Company of Eugene installed a 250-kilowatt solar electric system in their Oregon facility, which is now the second-largest photovoltaic system in the Pacific Northwest. The renewable energy generated from this system is the equivalent to the average annual energy consumption of approximately 21 Eugene homes and has a regional carbon dioxide offset of about 140 tons per year.
Projects in other regions went live last year as well. PepsiCo India launched their first remote wind turbine, harnessing one of the most efficient, clean and renewable sources of energy. This turbine is connected to the public electricity grid with sufficient power to meet more than 75% of the electricity needs of the company's local Mamandur plant, and it directly offsets up to 7% of our company-owned bottling operations' power requirements for 2008. The initiative is estimated to help reduce carbon emissions by more than 3,500 tons annually, with the potential to offset 70,000 tons of carbon emissions over its entire 20-year life cycle (Pepsi Website).
Business Response to Sustainability Issues
Performance with Purpose Mission
The mission is focused on generating healthy financial returns while giving back to communities the company serves. This includes meeting consumer needs for an array of convenient foods and beverages, reducing the company's impact on the environment through water, energy, and packaging initiatives, and supporting its employees through a diverse and inclusive culture that recruits and retains world-class talent. This mission is Pepsi's promise to its community and investors. The goals of the Performance with Purpose mission is human sustainability, environmental sustainability and talent sustainability.
"Have we met before?" campaign
It is designed to communicate the benefits of aluminum can recycling and encourage the consumers of Pepsi to practice recycling. Recycling facts and messages will be featured on around 500 million Pepsi cans and 250 million Diet Pepsi cans nationwide each month. The initiative is worth it because research has shown that people are more inclined to recycle when they learn about the benefits of recycling, particularly the energy savings (American Recycler, May 2008).
Recycling Issues in India
Greenpeace activists and Indian SMO leaders discovered through an investigation that plastic was being dumped on the site of a plastic recycling operation outside Madras. A mountain of plastic waste stood on the site. According to environmentalist Satish Vangal, there were "piles and piles of used soda bottles stacked behind a wall". Every bottle that was seen had the label "California Redemption Value" on it. All of the bottles were from California's recycling program and they were sitting in a pile in India (Pellow, 2007).
In order to minimize its environmental impact, Pepsi has improved water, fuels, and electricity efficiency - saving about five billion liters of water and nearly 500 million kilowatt hours of energy from 2006 to 2007. By the end of 2008, the company started using a recently installed natural gas heat and power system to bottle beverages at its plant in Queens, NY - saving a potential $408,000 a year (www.pepsico.com).
The Global Marketplace
Pepsi is known as a global corporation because it has been expanding and reaching to numerous foreign markets, which seem appealing to them, for many years. It is important to understand that "the expanding global marketplace requires that executives and managers develop the ability to conduct business effectively and socially responsibly in different regions of the world" (Thorne et al, 2011, p. 444). This shows how Pepsi developed to be an international corporation because Pepsi has been reaching many countries as much as they can and be part of their culture. Because of this, it has been told that the corporation "comes in the success ranking of the world leading multinational companies at number 10 in the review of 2007 among top 50 companies in fortune ranking" ('2007 all-stars' 2007, p. 39).
Consumers all around the world seem to enjoy drinking Pepsi that comes in different kinds of product packing, such as cans, glass bottles, plastic bottles, etc. The corporation has been very successful in developing a marketing plan in order to reach a specific target market in each country. This demonstrates that Pepsi "has the ability to interpret and adapt successfully to different national, organizational, and professional cultures", which is known as cultural intelligence (Thorne et al, 2011, p. 444).
In addition, Pepsi has been very successful in promoting some of its brands in a certain culture that completely satisfy their consumers' needs and wants. The corporation found several good ways to advertise and promote their new and current products of Pepsi in order to attract its consumers in a certain country. It can be on television, billboards, print ad (magazine), newspaper, or the Internet. The corporation's social responsibility in a global environment will be discussed more in this paper.
Popularity of Pepsi in Pakistan
Old-fashioned glass bottles of Pepsi can be seen and found on the food streets or markets in major cities in Pakistan, such as Islamabad, Lahore, and Karachi. People do really enjoy drinking a glass bottle of cold Pepsi with a straw. That is what their Pepsi cola looks like. It is not similar to a can of Pepsi in the United States. It can be difficult to locate a regular can of Pepsi in Pakistan, not the glass bottle ones.
It is because people are accustomed to living an "old-fashioned" life. Major cities and even small towns of Pakistan tend to be very traditional and old-fashioned. Seeing so many Pepsi bottles in almost every store indicates that the most popular soft drink certainly has dominated the market by the corporation.
Coca cola is Pepsi's major competitor that does exist and sell its products in the country. However, regarding the popularity of Pepsi, Ghazi Akhtar Khan who is currently a managing director of Pepsi's local bottle in Lahore, Pakistan and he explained his reason why Pepsi is number one soft drink in the nation. He said that Pepsi's share of the market for carbonated soft drinks is currently sixty-five percent while Coca cola only has thirty percent, which makes Pepsi the leading soft drink in the country (Wright 2010).
According to Khan, the statistics proved that the corporation has sold 240 million of 24 Pepsi bottles each in the country in the past year while the competitor only sold around 140 million (Wright 2010). This fact and statistics demonstrate why Pepsi remains very popular and people prefer to purchase and consumer Pepsi than other well-known brands or competitors, such as Coke, Mountain Dew, Fanta, etc.
Culture and Language
Pakistan's culture is completely different compared to the culture here in the United States. People in the United States normally wear t-shirts, blue jeans, and sneakers. However, the way people live and work in Pakistan can be quite different as well. The way people dress is called shalwaz kameez, which is an Urdu word for traditional clothing. This demonstrates that certain kinds of cloths in a specific culture create some meanings from cultural artifacts (Martin & Nakayama, 2004).
The Pepsi Corporation should be familiar with their culture because when they would like to advertise a new product from Pepsi, they need to feature a Pakistani woman wearing shalwar kameez in their Pepsi ad. That way, when people see the new ad of the Pakistani woman drinking a glass bottle of Pepsi in her shalwar kameez, they really can feel related to this ad because wearing shalwar kameez is part of their cultural and traditional clothing. This is a good way for the Pepsi Corporation to understand their culture and get involved with their culture.
Language can be described as "the mirror of the culture which contains the spoken words and non-spoken communication as the gestures, body language, and the eye contact" (Czinkota & Ronkainen 1998, p.67). People in one whole country or one specific location usually speak the exact same language and that is the only way that they can understand each other. Sometimes, they do use hand or body gestures when communicating with each other. In addition, it can be defined as the language in terms of high and low context cultures where people use the direct and clear langue in low context and in some other society people use the expressions or most of the information spread as unsaid (Morrison, 2002).
Urdu is an official language of Pakistan where almost everyone knows, understands, reads, and speaks Urdu only. However, English is considered as the second language in the country-they do have signs, billboards, or any kind of advertisement that are read and written in English but it is more like British English. For example, they frequently see or read words such as "favourite" or "colour", instead of "favorite" or "color". Therefore, it is very important for the corporation to know the main language as well as English so they can advertise Pepsi in their language and English language.
It is extremely important to acknowledge the importance of religion because it "impacts people's habits, their outlook on life, the products they buy, the way they buy them, even the newspaper they read" (Cateora & Ghauri 2000, p. 111). Islam is the main religion that everyone in Pakistan follows and practices. Muhammad was the last prophet that created the religion of Islam. It is known as the world's fast-growing religion. The religion "unites its followers through shared faith, shared ritual in everyday life and belief in the word of the Qur'an", which is known as the holy or scared book of Islam (Morrison 2002, p. 130).
The corporation should be familiar with the religion that they follow because there are some things in Islam that people are not allowed. For instance, women are not allowed to reveal their skin or body, except their hands and feet due to "the influence of Islamic revivalism Muslim women across the Middle East began, once again, to don Islamic dress as a symbol of their commitment to their faith" (Barlow & Akbarzadeh, 2006, p. 1486). That means if Pepsi would like to make a new advertisement for their current or new product, they should be cautious about using a female person to be included because Muslim men in Pakistan are not permitted to view women in the ads with so much skin that are revealing, such as a nice-looking woman wearing a mini skirt with a tank top, drinking a can of Pepsi. It is extremely inappropriate in Islam.
As stated previously, the corporation should respect their religion and use a kind of advertisement that is much more appropriate in the country by including a female product user who is fully clothed that is very similar to how women in Pakistan dress. In addition, people who follow Islam in the country are not allowed to consume haraam food items. Haraam can be defined as "anything that is forbidden by Islamic law" (World English Dictionary, 2009). Haraam food include alcohol and other intoxicants, pork by-products, blood by-products, animals that have not been slaughtered properly, dead animals, and carnivores. Those should be avoided by Muslims.
Muslim should also avoid eating any food that contains gelatin, such as marshmallows, jell-o, or gummy bears. This example shows that religion defines ideal for life, which reflect the values and attitudes which shape their behavior and practices (Czinkota & Ronkainen, 1998). As a result, what the corporation did was motivational-intrinsic desire to learn about different cultures and subcultures and the confidence to function effectively in situations where differences are present and behavioral-ability to use appropriate verbal and non-verbal actions when interacting with people from different cultures and subcultures (Thorne et al, 2011).
When Pepsi was expanding its business in Pakistan, they did consider developing the product features such as packaging, size, quality, taste, style, design and appearance that matches customers or the target audience's preferences. Therefore, the Pakistan-based corporation has chosen what kind of style that should be used to present its products in several different ways in the country and the consumers seem compatible to it. In Pakistan, Pepsi represents several carbonated and non-carbonated beverage brands. There are different sizes and different kinds of packaging that can be found in the products. The size includes from 250 ml to 2.25 liter (www.pepsico.com). Clearly, Pepsi is the leading soft drink in the country because people do like the taste and quality of these products.
Surprisingly, the taste of Pepsi between the U.S. and Pakistan is slightly different because it has been told that Pepsi in the U.S. tastes too sweet than Pepsi in Pakistan because it has less sugar and has the right amount of sugar-not too much or not too little. To compare Pepsi with other soft drinks in the market, it is a bit sweeter and people actually enjoy the taste of the soft drink.
The employment policy in Pakistan is very similar to the U.S.'s Equal Employment Opportunities but they are slightly different in several ways. Like U.S., the corporation in Pakistan offers employment opportunities for females, disabled people, and minorities. However, it has been told "employment legislation can influence employers' practices of choosing to offer certain level of benefits to workers on different employment contracts" (Sheikh, 2008). According to Sheikh, they have required minimum benefits for their employees, such as Social Security, Group Life Insurance, Gratuity/Provident Fund and Employee Old-Age Benefit (commonly known as pension) in the nation (Sheikh, 2008).
The corporation's workplace policy in Pakistan is very similar to many Pepsi corporations in the U.S. and other countries. The workplace policy requires every employer and employee to follow properly. According to the policy, it is extremely important for the corporation to:
Deal fairly and honestly with their employees regarding wages, benefits, and other conditions of employment.
Prohibit discrimination based on race, religion, and disability in order to ensure that employees receive equal opportunities.
Agree with all applicable laws, regulations, and other employment standards. It doesn't matter where they work.
Encourage its partners, suppliers, and contractors and vendors to support the workplace policy.
In addition, the corporation does not permit unfair practices of workplace, such as using compulsory or child labor (www.PepsiCo.com, 'Human Rights Workplace Policy', 2009). This should be avoided in every Pepsi corporation in the country.
However, there are several serious issues regarding the employment in Pakistan because "agency employment has changed the contours of employment relations in many parts of the world and raised concerns about employment protection, statutory benefits, and collective bargaining rights of agency workers" (Sheikh, 2008, p.1).
Donations from Pepsi
Last summer, Pakistan was unfortunately hit by extreme flooding that killed and dispatched thousands and thousands of people. In addition, there were so many houses that are destroyed by the natural disaster. The country was in a real need of food, water, and home due to the fact that the country has a high rate of poverty.
In August, PepsiCo Foundation announced that they are committed to donating $500,000 to assist those who had suffered the extreme flooding. The donations "will help provide humanitarian aid, including supplies and food assistance, to some of the estimated six million Pakistanis whose homes and livelihoods have been impacted by the heavy monsoon rains" (PRNewswire, 2010, p. 1).
This demonstrates that PepsiCo Foundation is a philanthropic organization that supports and donates to any kind of charity and other non-profit organizations for good causes. In addition, the organization is committed to having partnerships with other programs and creating programs in improvised locations that provide opportunities for having a better education, an improved health, and a good environment (PRNewswire, 2010).
Advertisements in Pakistan
Cricket is a well-known and favorite sport that is always played by its citizens in Pakistan. The country does have its cricket stadiums, which are located in several major cities, such as Karachi, Lahore, Multan, and Rawalpindi. This example proves that a sport is considered as the world's popular way to use in an ad to target a certain group of people, which vary from country to country which become the part of the culture (Mandell, 1984). It is a good idea to include the favorite sport in any kind of advertisements because playing cricket is part of their culture and citizens in Pakistan can feel related to the ads since cricket is considered as the hobby of theirs and they enjoy playing it.
In addition, the corporation "used cricket to entrench its brand in Pakistan" (Wright, 2010, p. 1). Mr. Ajit Varghese is a COO of Madison Media Infinity and he explained that "cricket is a good window for new or partially fresh commercials" (Businessline, 2006, p. 1). High profile programs and sports events are great ways to include the advertising because they "provide a good platform for advertisers to innovate their advertising" (Businessline, 2009, p. 1). This is a similar concept to the advertising in the U.S. where they feature special TV commercials during the half-time of the National Football League's Superbowl football game.
In addition, Pepsi used celebrity endorsers by inviting well-known and popular Bollywood actors and actresses such as Shahrukh Khan, Hrithik Roshan, Preity Zinta, Aishwarya Rai, and some more. Bollywood is very similar to Hollywood in America but it is located in India where all the movies include Indian actors and actresses. The corporation indeed did a good job including the celebrity endorsers for TV commercials, print ads, or billboards to promote Pepsi products in order to convince people in Pakistan to buy and drink Pepsi instead of other competitors, such as Coca Cola, Fanta, etc.
Pepsi did this because they exactly know that many people in Pakistan do watch Bollywood films and are huge fans of Bollywood celebrities. Therefore, it will convince its citizens to buy Pepsi because they do see or like the fact that celebrity endorsers like to drink Pepsi as their "favorite" soft drink. As a result, this is an example of how the corporation comprehends and blends their Pepsi products with the country's culture, interests, and preferences, which can be their lifestyle, because the country has "the pattern of a person's living in the environment which is shown in his or her thinking, activities, interests, and the opinion about the things" (Kotler, 2006, p. 183).
The Pepsi-Cola company is a leading corporation in the food and beverage company. Pepsi continues to strive to be the world's premier convenient food and beverage company while being an excellent corporate citizen. The company is very committed to their stakeholders, and provides opportunities not only to their shareholders, but also to their many employees, business partners, and the communities in which it operates.
Pepsi-Cola's mission statement and values is consistent with its corporate social responsibility agenda. They are one of the top companies to top the 2010 Corporate Social Responsibility Index. Pepsi-Cola continuously assesses and implements programs that help the communities in which it operates, and is consider a "neighbor of choice". The company's vision for sustainability is an ongoing corporate objective by creating a better and healthier future for all its stakeholders, as well as, the environment.
The Pepsi-Cola company is vigilant in its preparation to handle any crisis that could cause harm to stakeholders and the corporation. Its crisis management strategies include having systems and procedures, and qualify personnel in place to handle unexpected events. In the global marketplace, Pepsi-Cola has demonstrated its ability to successfully expand into foreign markets. The company strives to be socially responsive, and to completely satisfy consumers' needs and wants in these new markets.
Pepsi-Cola is one of the world's leading multinational companies and continues to reach out to every region of the globe. The company develops marketing initiatives in order to reach specific target markets in each region and country. Pepsi has demonstrates how it uses cultural intelligence to successfully reach their targeted markets. In addition, Pepsi-Cola promotes their brands in a culturally sensitive and responsible matter in order to satisfy their consumers' needs and wants.