Deep Research In Pepsico Commerce Essay

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During these weeks, we have done a deep research in PepsiCo. According to our research, we learn about the history, their reason came to China, the form they taken in China and the organization they have etc. Based on information, our group wrote a paper about the international expansion of PepsiCo especially in China. Our paper including the form or organization or entry vehicle; joint venture, distribution partners, expansion through new production facilities or shipping in products only to retailers, etc. We put our attention mostly on the management part of PepsiCo's expansion in China.

Every group member has involved in this paper. Benjamin finished the part 'History of PepsiCo'. Lyn and Jean completed the part-Why PepsiCo came to China. The globalization strategy and the potential difficulties PepsiCo may meet are what they put major effort in. Cissie and Sue worked on the part-The form PepsiCo came into China. After communicating with our group members who did section 2, we decided to explain the form by 4 strategies PepsiCo has taken. About the part- the organization structure taken by in PepsiCo coming to China, our whole group did this part. The information is found from book. Then, we mix them with the situation PepsiCo faced. Lyn, Cissie, Sue and Jean completed the last part-conclusion. We looked through all sections we written. Summary finished by Cissie and Lyn.

We choose PepsiCo to do some search. Many of the people around me like drinking Pepsi and eating foods which PepsiCo products. Recent years, PepsiCo really has great development in China. So we want to learn it more and better and we want to know the reasons.

We take five steps to learn more about PepsiCo. Firstly, we have learned about the history of the company. As we all know, to learn a company must learn its past. From its step-by-step development, we can see the corporate positioning and corporate culture. History likes a mirror ,so then we can infer the future path of development in the enterprise.

Secondly, we study about why PepsiCo came to China. We think the problem is important. And it is one of the core problems in our research. Now, everyone favor that China has a huge potential market and companies should come to China to develop. But at that time, coming into China is a risky behaviour. So we all think it is a wise decision and we want to know who decided and what measures did they take to overcome difficulties.

Thirdly, we learn about The Form PepsiCo Came Into China. This time, we focus on PepsiCo China market. So we want to learn how they enter into China and the different measures taken in China than other areas.

Last but not the least, we study PepsiCo's structure. We have learned the course of the Management. So we should use these knowledge into our research.

So finally we can draw some conclusions from our research. And now we have learned PepsiCo better and more.

Section I History of the PepsiCo

Born in the Carolinas in 1898, Pepsi-Cola has a long and rich history. The drink is the invention of Caleb Bradham (left), a pharmacist and drugstore owner in New Bern, North Carolina.

In the 1902, Caleb Bradham set up the Pepsi-Cola Company. After five years development, the new company can sell more than 100 thousand gallons of syrup every year. At the same year, the Pepsi trademark is registered in Mexico. In the 1966, Pepsi enter the consumer market of Japan and Eastern Europe. PepsiCo's sale volume pass one billion dollars mark. And at the same time, there are 36 thousand employees working in PepsiCo in 1970. PepsiCo becomes the first American consumer product to be produced, marketed and sold in the former Soviet Union in the year of 1974. After two years, Pepsi become a best-selling soft drinks in the supermarket in the whole United States. In the 1981, PepsiCo's sale volume is over 7 million dollars. After 1984's restructuring, PepsiCo focus on its three core businesses: soft drinks, snack foods and restaurants. And the company sell transportation and sporting goods businesses. In order to mark the opening of Pepsi's second bottling plant in China. PepsiCo's Board of Directors visits the People's Republic of China. In that year, PepsiCo achieve an agreement with the Chinese government. In that agreement, PepsiCo is allow to manufacture soft drinks. In the development of PepsiCo acquire Pizza Hut in 1977 and KFC in 1986.

In 1981, PepsiCo was one of the first American companies to enter China when it signed a contract with the local government to establish its first bottling plant in Shenzhen. In 1995, PepsiCo Investment (China) Limited established its headquarters in Shanghai, enabling PepsiCo's strategic expansion and growth in one of the world's most significant emerging market. Today, PepsiCo has established 24 bottling plants and one concentrate plant with a distribution network spanning the entire Greater China Region. Since 1993, our foods presence has grown to five plants and seven farms in the Greater China Region. As of early 2010, PepsiCo Greater China has embraced our company's unique "Power of One" model. To date, PepsiCo's total investment in China has exceeded RMB 10 billion, anchoring its position as a market leader in the fast-growing food and beverage sector in China. Across China, we currently employ more than 30,000 people and indirectly create thousands of other jobs. In five years' time, PepsiCo Greater China has paid over RMB 5.2 billion in taxes to the Chinese government. In 2008 and 2010, PepsiCo committed to total additional investments of USD 3.5 billion by the end of 2013. The new investment will fund facilities expansion, research and development scale-up, and expansion of agricultural and brand-building initiatives. (PepsiCo Our History. PepsiCo. Com

http://www.pepsico.com/Company/Our-History.html , November 5, 2012)

Section II Why PepsiCo Came to China

Pepsi has an ambition that PepsiCo can become a world's leading company which sells convenient foods and beverages. So Pepsi must constantly open up new markets and expand market shares. While once the United States, Australia, Japan, and Western Europe were the leading consumer markets, the growth has slowed down obviously, but they are still important markets for Pepsi. However, Eastern Europe, Mexico, China, Saudi Arabia, and India have become the new markets. PepsiCo devotes itself to developing these areas now. They all have large markets. It's a tribute to globalization and Pepsi realizes it. So Pepsi sets up in different countries. PepsiCo has become a well-multinational company. It products and sells in many areas.

China has nearly one fifth of the world's population. What's more, china's economy develops rapidly and strength the communication with other counties. Chinese people also change a lot. They are willing to accept new things and lifestyles. It is a very potential market. In China, it is easier to expand because of policies supporting. There are so many reasons that China has become part of a bigger globalization strategy.

Pepsi wanted to seek greater development. Of course, when Pepsi decided to entry into China, they considered a lot of differences. The United States is a capitalist country. The government maintains free competition. American government always cooperates with large companies to commit to develop better together. China is a socialist country. The government controls everything and decides the directions of development. But China was in a period of reform and opening up. China's leaders established opening up as a basic national policy. They took tax breaks to attract foreign investors and wanted to make the country strengthen. In fact, PepsiCo invested the majority but occupied little shares. But for Pepsi, China has a huge potential market. So PepsiCo and Chinese government reach an agreement. Chinese government expended staff and the land while PepsiCo invested fund to create a win-win situation.

Of course, PepsiCo consider differences in business practices and customs.

In China, PepsiCo should create a believable human relationship that shows people's respect. Business relationships are often established on personal relationships in China. PepsiCo has a connection with China, helping from local people, business partners or service agency specialized for foreigners.

In the USA, Business communication may take place during meals. Many times you will find more social conversation taking place during the actual meal. Business meetings may be arranged as breakfast meetings, lunch meetings, or dinner meetings depending on time schedules and necessity. If you are someplace with a line or queue, go to the end and wait your turn. United States Communications China and The USA should consider about each other to get more something.

There were many personal differences within the company in deciding that China was a good market for them. Personal power can change economic development in PepsiCo. The person called Li Wenfu. He made PepsiCo enter China. In 1981, PepsiCo was one of the first American companies to enter China when it is the symbol of a contract with the local government to establish its first bottling plant in Shenzhen. In 1995, PepsiCo Investment (China) Limited established its headquarters in Shanghai, enabling PepsiCo's strategic expansion and growth in one of the world's most significant emerging market. Li Wenfu was honered that he made a great and right choice in 1981. Today, PepsiCo has established 24 bottling plants and one concentrate plant with a distribution network spanning the entire Greater China Region. He opened Pepsi in China.

(PepsiCo Company | PepsiCo.com

http://www.pepsico.com/Company.html

November 5, 2012)

(Pepsi Americas Beverages | PepsiCo.com

http://www.pepsico.com/Company/The-PepsiCo-Family/PepsiCo-Americas-Beverages.html

November 5, 2012)

(PepsiCo MORE | PepsiCo.com

http://www.pepsico.com/Global-Sites/More.html

November 5, 2012)

(Chinese business practise

http://www.jyschinabusiness.com/news/china-business-practices.html

November 5, 2012)

(US-United States American Business Etiquette, Vital Manners, Cross Cultural Communication, and Greet Hofstede Analysis for USA

http://www.cyborlink.com/besite/us.htm

November 5, 2012)

(Company information. PepsiCo.com.cn

http://pepsico.com.cn/media/Fact-Sheets.html

November 5, 2012)

Section III The Form PepsiCo Company Came Into China

When Pepsi came to China, they took a four-step strategy. First step, from 1979 to the early 1980s, Pepsi brought its products into the mainland by train from Hong Kong. Pepsi took commissioned consignment. First, they entered the Beijing Friendship hotel and other hotels for foreign tourists. The consignment will not spend any money but earn some more, initially annual sales of only about 200 tons. By this way, Pepsi has once again opened the door of the Chinese market.

The second step is donating equipment, promoting imports of puree. Pepsi headquarters in the United States has donated production equipment for bottling to Shanghai, Beijing and other places, since 1981. However, the local producers must be imported the PepsiCo recipe confidential puree, mixed with water and sugar, and then paste Pepsi logo on bottles made in China.

The third step is investments and expanding market. In 1988, Sino-US joint venture Shanghai Shen-Mei Beverage & Food Co., Ltd. was founded. This new founded company has established two manufacturing plants; one is to manage production formula confidential puree made in the United States, The other is to mix puree with sugar, then put into the China-made bottles. The China Productivity PepsiCo expanded the Chinese market. The annual sales have increased to 17 million tons.

The fourth step is to expand the social impact of the Pepsi-Cola. Mainly from the 1990s, Pepsi-Cola in China, actively involved in various social welfare and sports activities. This series of activities not only expanded the impact of the Pepsi and Pepsi's reputation in China, but also helped Pepsi-Cola to become best-selling drinks.

They are not forced to take these four steps. There are other options they can choose is taking PepsiCo in other country. For the part of advertising, Pepsi-Cola can establish a partnership to develop international programming with channel like MTV, cross promotions, marketing tie-ins and special events. In this way, it is easier for them to appeal more costumers. However, it is not suitable for the Chinese marking, because MTV is not popular as it outside China in that period. For selling, PepsiCo run it in a Chinese way. For example, in Brazil, PepsiCo chose Brazilian's preference-biscuit, into the market. However, PepsiCo chose to put the soft drink into China first.

PepsiCo made decision to take these four steps, for one reason, they are more suitable in China, for another reason, they are more reflect on the PepsiCo's organization culture. Pepsi has the '3 P' principles, that "everywhere", "value for money" and "preferred corporate image" (pervasiveness, price / value, preference). The goal, which Pepsi catching after is that when people think of the beverage, Pepsi will be the first choice in their mind. No matter where they are, Pepsi will be able to get. Pepsi is the world's first company came up with the idea-- localization thought, which means, "Think local, and Act local". The major point of this theory is to make related decisions based on local needs including the Chinese market. They made this decision because their principles and localization thought.(Our History - 1996

http://www.pepsico.com/company/our-history/1996.html

October 28, 2012

《百事可乐在中国的广告营销ç­-略》 PepsiCo advertise strategy in China p1~8

October 28, 2012)

Section IV The Organization Structure Taken by PepsiCo Company in Coming to China

I think human resource is the most important contingencies. A company cannot run without staffs. Staffs are necessary since they can do much work. And, the manager can have more time to think about the plan of the company in future. An excellent staff or a manager can be helpful to solve problems. In PepsiCo, it organized in the best way. PepsiCo employs the local people as the staffs or the managers. It is helpful to enter the local market and make better products to appeal to local people.

Based upon the Job Characteristics Model, the job should be motivating since skill variety, task significance, task identity, autonomy and feedback are high. For many of PepsiCo team members, working in PepsiCo is often their first job. So we strive to develop their life skills - foundational abilities such as teamwork, responsibility, problem solving, positive energy, and a relentless drive to serve and satisfy customers - so they can grow to their full capability and achieve their dreams. Furthermore, All PepsiCo employees are expected to embrace the principles of our Code. We believe acting ethically and responsibly is not only the right thing to do, but also the right thing to do for our business.

As far as I am concerned, the employees of the PepsiCo can do many things to enlarge or enrich their jobs. Firstly, they can invent more tastes of cola for consumers. Secondly, they can reduce the volume of calorie in the PepsiCo because ladies care about their weight. Last but not least, the employees of the PepsiCo can do more promotion to others.

PepsiCo is an international company. It uses Hybrid structure. It is the structure of a large organization that has many divisions and simultaneously uses many different organizational structures. Most large organizations use product division structures and create self-contained divisions; then each division's managers select the structure that best meets the needs of the particular environment, strategy, and so on. Divisional structure is an organizational structure composed of separate business units within which are the functions that work together to produce a specific product for a specific customer. It has some advantages. Divisions create smaller, manageable, parts of firm. Divisions develop a business-level strategy to compete. Divisions have marketing, finance, and other functions. PepsiCo is an adaptive organization, as they are continuously seeking constant improvement and keeping new ideas in the marketplace while its products progress along their life cycles. PepsiCo has a decentralized organizational structure, with operational decisions made within the separate business units while being governed by policies at the corporate level.

There are 3 levels in the organization's hierarchy. It includes CEO, Top-managers, Middle-managers, First-line managers and employees. The authority is decentralized. This makes organization's structure more flexible. Each person has his authority to decide the company's action and the use of organizational resources. Middle or First-line managers can report directly to top-managers. When it comes to PepsiCo, it becomes the senior leadership, board of directors and corporate officers. In essence, it is the same as the organization's hierarchy theory in the book. Certainly, the distribution of authority is appropriate for PepsiCo and its activities. Every employee has to perform his duties. From my perspective, it may not be possible to flatten the hierarchy by decentralizing authority and empowering employees. Decentralizing authority allows an organization and its employees to behave in a flexible way and that is why managers are interested in empowering employees. However, too much decentralizing authority has certain disadvantages. If divisions, functions, or teams are given too much decision-making authority, they may begin to pursue their own goals at the expense of organizational goals.

When it comes to the principal integrating mechanisms used in the organization. Direct contact, liaison roles, task force, cross-functional teams, integrating roles and department and matrix structure are used in PepsiCo Company. PepsiCo always insists on six guiding principles, care 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 and respect others and succeed together.

Certainly, they provide sufficient coordination among individuals and functions. PepsiCo Company can keep an organization responsive to changes in its task and general environment as the organization grows and becomes more complex. To be improved, PepsiCo Company's managers must decide on the best way to organize their structure to create an organization architecture that allows them to make the best use of organizational resources.

Since we have analyzed the way the PepsiCo is organized, there are some advices we give its managers to help them improve the way it operates. To begin with, to coordinate the activities of people, functions, and divisions and to allow them to work together effectively, managers must develop a clear hierarchy of authority. Then, Integrating mechanisms are organizational tools that managers can use to increase communication and coordinate among functions and divisions. So, making it complex can help company improve the way it operates. Last but not the least, PepsiCo can strengthen strategic alliance and network structure.(PepsiCo Values & Philosophy PepsiCo. com http://www.pepsico.com/Company/PepsiCo-Values-and-Philosophy.html, October 29, 2012)

Conclusion

PepsiCo always has great ambitions and goals. What's more, all the employees try to their best and make a lot of efforts. So the company has become better and better. And I think PepsiCo is one of the best companies which sell convenient foods and beverages now. As far as I am concerned, the company operates successfully.

Leading to success is a very long way. And PepsiCo has done many things differently. When Pepsi came to China, they took a four-step strategy.

First step, from 1979 to the early 1980s, Pepsi brought its products into the mainland by train from Hong Kong. Pepsi took commissioned consignment. First, they entered the Beijing Friendship hotel and other hotels for foreign tourists. The consignment will not spend any money but earn some more, initially annual sales of only about 200 tons. By this way, Pepsi has once again opened the door of the Chinese market.

The second step is donating equipment, promoting imports of puree. Pepsi headquarters in the United States has donated production equipment for bottling to Shanghai, Beijing and other places, since 1981. However, the local producers must be imported the PepsiCo recipe confidential puree, mixed with water and sugar, and then paste Pepsi logo on bottles made in China.

The third step, investments and expanding market. In 1988, Sino-US joint venture Shanghai Shen-Mei Beverage & Food Co., Ltd. was founded. This new founded company has established two manufacturing plants; one is to manage production formula confidential puree made in the United States, The other is to mix puree with sugar, then put into the China-made bottles. The China Productivity PepsiCo expanded the Chinese market. The annual sales have increased to 17 million tons.

The fourth step is to expand the social impact of the Pepsi-Cola. Mainly from the 1990s, Pepsi-Cola in China, actively involved in various social welfare and sports activities. This series of activities not only expanded the impact of the Pepsi and Pepsi's reputation in China, but also helped Pepsi-Cola to become best-selling drinks.

Pepsi has the '3 P' principles, that "everywhere", "value for money" and "preferred corporate image" (pervasiveness, price / value, preference). The goal, which Pepsi catching after is that when people think of the beverage, Pepsi will be the first choice in their mind. No matter where they are, Pepsi will be able to get. Pepsi is the world's first company came up with the idea-- localization thought, which means "Think local, Act local". The major point of this theory is to make related decisions based on local needs including the Chinese market. They made this decision because their principles and localization thought.

PepsiCo has proper promotional strategy. At different times, it has different advertisement and adverting slogans to adapt the development of the times. So PepsiCo and consumers establish a good communication bridge. People have to admit that Pepsi's adverting strategy is unique and help it successful.

When we come in a restaurant, we always face a dilemma that to choose Pepsi or Coca-Cola. This is what I found the most interesting problem Pepsi involved in. The competition between Pepsi and Coca-Cola has begun longtime ago. They both put every effort to trying to win. Advertising, the powers of brand, management are all they competed in. To make sure they can win the war, they want to persuade everybody in favor of Pepsi. However, they just have the market share in a small amount of people at first. It is possibly because Coca-Cola is older than Pepsi is. Pepsi marketed their soda of the new generation, even hired celebrity spokespeople like Michael Jackson. Pepsi cares about details. They even change their flavor, becoming a little bit sweeter than Coca-Cola to appeal customers. These all effort works. In 2011, according to the accuracy number, Pepsi has brought 38 percent more revenue than Coca-Cola did. However, the revenue is not only based on the Pepsi's cola, it is also benefit from the diversification of PepsiCo's business. PepsiCo is increasingly relying on the other brands it owns, like Frito Lay, Quaker, and Tropicana etc.

As far as I am concerned, the way that they handled the problem is wisdom and appropriate. Since China has nearly one fifth of the world's population, it is a very potential market. Therefore PepsiCo chose China as a part of a bigger globalization strategy. When PepsiCo decided to entry into China, they considered a lot of differences. The United States is a capitalist country, while China is a socialist country. But China was in a period of reform and opening up. China's leaders established opening up as a basic national policy and took tax breaks to attract foreign investors. So PepsiCo reached an agreement with the Chinese government and invested the majority but occupied little shares. When PepsiCo came to China, they took a wisdom strategy. Pepsi took commissioned consignment. First, they entered the Beijing Friendship hotel and other hotels for foreign tourists. The consignment will not spend any money but earn some more, initially annual sales of only about 200 tons. By this way, Pepsi has once again opened the door of the Chinese market. What's more, in order to attract public attention, PepsiCo donated equipment, promoting imports of puree and actively involved in various social welfare and sports activities. This series of activities not only expanded the impact of the Pepsi and Pepsi's reputation in China, but also helped Pepsi-Cola to become best-selling drinks. Then, two new founded companies were established to invest and expand market in 1988. One is to manage production formula confidential puree made in the United States. The other is to mix puree with sugar, then put into the China-made bottles. The China Productivity PepsiCo expanded the Chinese market. It made a great success that the annual sales increased to 17 million tons.

In PepsiCo, Fayol's principles of management has been reinforced by completing this assignment. In the class, there are four principles of scientific management. In the class, I know four principles of management. Study the ways jobs are performed now and determine new ways to do them. Codify the new methods into rules. Select workers whose skills match the rules. Establish fair levels of performance and pay a premium for higher performance. Fayol's principles of management pointed out that when organizations are split into different departments or functions, each with its own hierarchy, it is important to allow middle and first-line managers in each department to interact with managers at similar levels in other departments.

In PepsiCo, managers manage company through performance, human, environment, talent and sourcing. For example, for performance in PepsiCo, with faster population and GDP growth than in developed countries, emerging markets represent a significant opportunity for PepsiCo to continue to grow. Managers have many ways: distributing global brands while ensuring local relevance, Creating affordable products that meet consumer needs, Strengthening advantaged local supply chain and go-to-market capabilities and Encouraging people to live balanced and healthy lives.

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