Discuss about the International Business For the Pepsico India.
Schwartz (2017), states that as the business environment has become considerably dynamic in nature, it becomes important for the different organizations to ensure that they are successfully able to engage in practices which will go a long way in assisting the company to gain a competitive edge. These business practices are often referred to as the practices of Corporate Social Responsibility whereby the firm engages in activities which not only have a short term benefit for the overall organization but also have a sustainable future impact (Kanter et al. 2011). In this context, it can be stated that it becomes quite important for the businesses as present to ensure that they are successfully able to align their business goals with the social responsibility goals so that their image in the industry improves and they are able to contribute successfully towards a good future for the society (Grayson and Hodges 2017). The given report underlines the case of Pepsi Co India and aims to present an analytical and discursive study which will not only analyse the PepsiCo India`s mission of ` Performance with purpose` but also include an analysis of the measures which the company has been adopting in order to ensure considerable success in the domain.
According to Grayson and Hodges (2017), the corporate social responsibility is considered to be an essential part of the organization. This is because a business can be stated to be the part of the society and in this regard, it has the ethical responsibility to engage in the activities which shall contribute towards the welfare of the society. Another reason, why the business is required to concern itself with issues other than profitability and towards societal and ethical responsibility towards the stakeholders is because it offers a series of benefits to the organization. These benefits can be stated to be as follows:
It helps in improving the corporate image. This is because, the image of any organization can be stated to be at the mercy of the social responsibility program and the manner in which the consumers are aware of the particular program (Kanter et al. 2011). The corporate social responsibility helps the firm to improve its overall public image in a way whereby they can engage in schemes and monetary donations which would assist them to ensure stronger partnerships and indirectly, better organizational image. Secondly, it also assists the firm to increase the media coverage. According to Cheng, Ioannou and Serafeim (2014), when an organization invests soundly in various social and other related activities then it will be successful in ensuring that the media covers the different activities and that if the firm engages in a negative act, it is also covered by the media.
Other reasons why a firm may extend its obligation towards the social activities is that it boosts the employee engagement activities and tends to attract and retain the investors towards the company. According to Kanter et al. (2011), when the companies reflect that they are highly concerned with the overall benefit to the society and the consumers in general, they are successfully able to gain the support of the different consumers and lift their image. Lastly, they are also successfully able to attract as well as retain the investors by reflecting that they are not just concerned with the profits but with the overall welfare of the society as well (Trevino and Nelson 2016). In the case of Pepsi Co India it can be stated that the reason why Indra Nooyi successfully came up with the new mission `Performance with Purpose` is because they believed that the operations believe that they add costs to the society and that they are required to ensure that the company is able to add value to the investors’ money. According to Kanter et al. (2011), another reason why Pepsi Co is obligated towards the societal activities rather than only concerning themselves with the performance of the organization is that the company wants to engage in long term benefit and cost leadership.
The extent of obligation for Pepsi
According to de Wit and Meyer (2005), when any firm engages in the act of a corporate social responsibility, it would often be required to ensure that it is able to resolve the strategic tension which exists with respect to the deciding factor between the business performance and the responsibility as well as the ethical concerns of the business at large. According to Bowie (2017), a situation like this arises because, any business does not have an unlimited resource base, it has a limited number of resources with specific budget constraints which tends to form a barrier and creates strategic tension with respect to the fact that the firm is required to decide upon the fact whether it will be required to undertake the performance measures or seek to improve its social image in the eyes of the different consumers. According to de Wit and Meyer (2005), the main concern which PepsiCo India dealt with was that they were required to ensure a strategic balance between the short term performance of the company and the sustainability goals which it was required to form at large.
Buckler (2017) mentions that an interesting factor which helped the company to make strategic decisions in this type of a strategic tension situation is that the investment which they make in the sustainable practices not only assists the firm in yielding costs savings for the future but also ensures that the firm is successfully able to revenue opportunities, deliver cost containment, reduce the company`s exposure to legislation and also ensure that the firm is successfully able to ensure that it is able to attract a large house of talent. Tai and Chuang (2014) states that this will then ensure that the firm is able to optimise its global supply chain and also ensure that the firm is successfully able to build the brand of PepsiCo. According to de Wit and Meyer (2005), also exists strategic tension with respect to the allocation of the resources for the overall purpose of the firm at large which means that the firm wants to invest considerably in maintaining its product portfolio and also engage in performance measures which might ensure that the firm is able to ensure long term success and development. As stated by Collins and Porras (2002), the firm also faces a dilemma with respect to deciding whether the firm should invest in maximising the short term results and profitability of the business or it should invest in new platforms which will then ensure that the `Performance with Purpose` can take place adequately. This presents a strategic challenge for a firm with respect to this, it becomes considerably important for the organization to divert the funds and invest in the new ventures (Ferrell and Fraedrich 2015). The achievement of the balance in these two measures is important to achieve but very often there exists a clash of interest of the stakeholders which then leads to problems with respect to the interest of the stakeholders who believe that they should be provided with a share of profits which the company earns instead of that amount being invested for the additional purposes of the firm at large (Lins, Servaes and Tamayo 2017).
The challenge of resolving the strategic tension
According to Collins and Porras (2002), the companies are often faced by a compromise between the corporate social responsibility activities which a firm is trying to engage in and the financial and managerial duties of the firm at large. This is because, although the company is aware of the fact that it is required to engage in acute consideration which shall ensure that the firm is successfully able to gain an overall development, it needs to see to it that the firm is successfully able to oblige by the general duties of the firm at large along with fulfilling these duties. However, achieving this compromise between the two different purposes can be largely difficult for the firm and the organization may be faced by a huge number of challenges as well when it tries to achieve this balance. Huda et al. (2018), believes that this is because, the engagement of a firm in the corporate social responsibility task is not an easy responsibility as it requires strategic innovation, compromising of resources, adequate man power and other related activities to ensure the same. In the same way, the firm is also required to achieve a considerable market share and leadership which then requires investment in the business activities as well. In addition to this, as agreed by Kanter et al. (2011) there exists certain responsibilities which a firm is required to fulfil at large and with respect to this, it is important for the organization to maintain a balance which becomes important to maintain (Collins and Porras 2002).
The shareholders of the firm who have a vested interest in the company and this requires them to provide them with adequate returns which then makes it difficult for the firm as they would rather prefer the particular amount is being invested in the long term development functions of the company at large. In the case of Pepsi Co, the organization is aiming to achieve a balance between the two purposes and ensure that they are able to engage in the achievement of the long term and the short term objectives and focus on the growth of the core brand and successfully be able to improve the overall brand image as well as be able to engage in the sustainability efforts which would allow them to ensure the immediate performance measure (Kanter et al. 2011). Throughout its various activities in Pepsi, it has not been able to successfully be able to ensure that the balance is maintained. This is because, the market of India is a rather competitive one which requires continuous marketing and brand awareness measures which needs to be done adequately by the brand. According to Collins and Porras (2002), the firm faces huge problems in this scenario whereby it is often unable to ensure that it is able to take the right activity for the purpose of the firm. In addition to this, if it invests an entire amount on its objectives of the market, it will not be able to abide by the purpose of its mission which is Performance with a Purpose.
The extent to which the company can achieve a compromise
Very often the challenge which the business faces with respect to the achievement of its mission can act as a barrier and a conflict. This is because, the internal departments may require considerable funds for the achievement of their goals and objectives and these goals as well as the objectives may not always be fulfilled by the organization at large and with respect to this, it becomes highly difficult for the organization to manage these goals at large. According to McDonough and Braungart (2002), the management of the mission. Performance with purpose may also bring about an Agency problem where their might arise a conflict between the stakeholders of the firm who are the principals and the agent of the organization who are the managers. This may then lead to certain conflicts between the two parties which may be very difficult for the firm to solve at large. This can be stated because, Pepsi co on one hand is required to pay its shareholders adequate returns and reinvest the money as well for the long term development as well as to ensure that the firm is successfully able to engage in the continuity of various operations and related activities. This means that the firm would be required to ensure that it is successfully able to invest in sectors like Research and Development, Marketing and Operational activities so that the firm may be able to perform well and generate a larger share of income. However, this may often not be the case as the organization may not be able to divide its funds accordingly and face considerable challenges which may then turn out to be case for a conflict at large (Rossouw and Van Vuuren 2017).
In this aspect, it needs to be mentioned that, the firm would be in a dilemma as the shareholder would demand an adequate return but the organization may not be necessarily be able to provide this return to the firm (Crane and Matten 2016). In addition to this, the different departmental managers may also be required to ensure that they are successfully able to e give the autonomy of performing well and be given considerable funds as well as resource so that they are successfully able to achieve their objectives at large (McDonough and Braungart 2002). Hence, with respect to this, it can be mentioned that Pepsi has faced considerable conflicts in its operations to maintain its mission at large. With respect to the Environmental sustainability, the firm faced considerable constraints with respect to the Environmental sustainability whereby it did not have the adequate funds to invest successfully in the different programs as it could not allocate adequate funds for the research and development activities at large. Moreover, Kanter et al. (2011) argue that if the firm engages in the training and other related activities then it will not be able to engage its funds in the different operational purposes and hence, this arose as a considerable conflict for the overall purpose of the organization. As mentioned by Chadha, the financial element is the most challenging aspect and leads to considerable conflicts as these mission oriented activities are for the long term element in nature but do not reflect any profits in the present which tends to have an impact on the operations of the firm at large.
Although the different executives and managers have been stating that this does not give rise to case for business and therefore, the main purpose of the given mission, `Performance with Purpose` is for the benefit of the overall community, it needs to be agreed to it that this does to an extent form a business case for PepsiCo India. Having said this, it needs to be understood that as stated by Shaw (2016), the company is a profit making organization with a good number of shares for which the company would be required to engage in considerable profit and therefore engage in high returns. Although the company reflects that the different social activities like employee welfare, contribution to the society, ethical relations with the suppliers and others is a way in which the company can give it back to the society (Schrempf-Stirling, Palazzo and Phillips 2016). However, according to McDonough and Braungart (2002), there are several business perspectives to the given initiative which is being taken by the company. This can be stated because, for every corporate social responsibility activity in which the firm is engaging, the company is gaining considerable business advantage.
According to Chell et al. (2016), believe that the programs like The Performance with Purpose mission goes a long way in assisting the different customers to view the form as an ethically responsible one and also lifts the image of the company to the extent that it is able to gain a considerable investment. In various instances of the company, it can be reflected that, for the human sustainability purpose, the overall benefit is actually being experienced by the firm in the form of a better talent and a better overall productivity of the firm (Kanter et al. 2011). In the same manner, by engaging in the dealings with the people at the bottom of the pyramid, the firm is being able to ensure considerable success which shall ensure that the target base of the firm increases considerably.
Hence, from the particular case study, it can be stated that, although Pepsi Co India is stating that it has been engaging in the mission of `Performance with a Purpose` due to its ethical responsibility which it considers crucial to be fulfilled, the firm along with the ethical responsibility can be to a certain extent be accused of ethical washing (McDonough and Braungart 2002). This means that, it is a considerable fact that there have been several cases of Pepsi whereby the company has been accused of mismanagement with respect to the use of Pesticides in the product and the India head agreed to it that they failed to communicate well but did not accept the mismanagement. Hence, with respect to this, it can be mentioned that this initiative of the company can be termed as ethical washing whereby to hide its misdeeds it has engaged in the ethical activities so that it can act as a considerable correction measure to the fault that it has committed earlier (Weiss 2014).
Therefore from the given analysis it can be mentioned that the case of Pepsi Co India presents a typical case of the competition which exists in the Indian markets and the manner in which the different companies as present have been aiming to take a considerable measure to improve their market positioning. Although the competitive business practices act as a considerable performance initiative, the activities of Corporate Social responsibility can be viewed as an initiative being taken by the firms to increase the brand image. The report analysed the case study of Pepsi Co India and the manner in which it has performed with respect to its mission, `Performance with Purpose ‘in India which aims to maintain the short term objectives of the company along with the long term ones. However, the firm is faced by several conflicts and challenges admits this. The report highlight and critically analyses the challenges.
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