Pioneer Foods – Maintaining a Competitive Advantage

Understanding Competitive Advantage in Organizations

The executive teams at all the subsidiaries of PepsiCo International, including Pioneer Foods, need to ensure that they stay ahead in the game by adding value to their clients and consumers that are a cut above the rest. Nandipha Ngumbela, (Pioneer Foods Group Executive for Human Resources) and her management team also need to do their part at Pioneer foods to ensure that they keep their competitive advantage in the Southern African market as the effective application of the appropriate human resources has become a crucial source of competitive advantage. 

Nandipha knows that only defending the current market share of Pioneer Foods, and providing quality goods and services. Pioneer Foods will not be able to create and fulfil new strategies if they do not skilfully apply their resources. Therefore, it is essential for Pioneer Foods to follow a resource-based view (RBV) and to acknowledge that resources within the fast-moving consumer goods (FMCG) industry are not distributed equally and thus, Pioneer Foods might not have access to the same resources as its competitors, and vice versa. Increased employee involvement in strategy creation and execution can contribute to increased competitive advantage for Pioneer Foods. The management of Pioneer Foods need to realise that the human resources should be seen as a long-term and unique mechanism to achieve a competitive advantage. 

The HR management will investigate the importance of the RBV in achieving a competitive advantage. They need to analyse what resources are available and how the available resources can be used to create and implement strategies that will lead to a competitive advantage within the FMCG industry. Pioneer Foods will need to determine which resources place them in a unique position to advance better than competitors. 
Human capital resources, such as unique knowledge, experience and insight, will need to be applied in conjunction with other categories of resources such as financial capital resources, physical capital resources, and organisational capital resources. 

The financial capital resources refer to the money, credit, and other forms of funding that the organisation can directly use to build wealth. Physical capital resources include physical technology, machines, manufacturing facilities, and buildings. Organisational capital resources refer to the company history, networks and relationships, confidence by investors, consumers and employees, and the organisational culture. 

The HR management team however need to keep in mind that the strategic importance of the resources will be determined by the value of the resource to the company, the rarity of the resource, the difficulty to reproduce the resource, and the company’s readiness to utilize the resource to its full potential. 

Pioneer Foods need to ask whether resources add value to the company by enabling it to use the opportunities in the company's environment and/or neutralise the threats against the company. The managers need to carry out an analysis of the internal resources and an analysis of environmental opportunities and threats, and weigh these up against each other. Pioneer Foods also need to determine if the resources they possess are scarce, and whether their competitors also hold these resources or will they be able to reproduce these resources by means of duplication or substitution. Management will need to ensure that they can fully utilise the full competitive potential of its resources. They need to put in place fitting flexibility, reporting structures, explicit management-control systems, and compensation policies to support the strategic resources. The company need to establish system flexibility in order to apply strategic resources adapt rapidly to external and internal changes. Pioneer Foods need to a “sustainable strategic fit” between strategies and resources to achieve and keep up performance which is superior to that of competitors. This need to become part of Pioneer Foods’ organisational culture, combined with creativity and high responsiveness. 
The executive management of Pepsico International, Pepsico (Sub-Saharan Africa) and Pioneer Foods are all in agreement that Nandipha Ngumbela, (Pioneer Foods Group Executive for Human Resources) and her management team have a crucial role to play in achieving and maintaining a competitive advantage. They will need to establish of the human intellectual capital to the stock of Pioneer Foods by means of determining the contribution of HR to the company's overall performance. They furthermore need to establish the best HR practices that lead to high performance by the workforce. 

HR management will need to establish specifically whether the human resources in the organisation contribute to their competitive advantage based upon the value, rarity and ability to duplicate the human resources. It is important that the human resources within Pioneer Foods should contribute to the overall value of the company, and rare in terms of skills and abilities, as well as difficult to emulate. It should also be considered whether certain human resources can be replaced with various forms of machinery and technology, and what the cost of that replacement will be. 

The flexibility of Pioneer Foods as an organisation will most likely contribute significantly to the success of the company. Pioneer Foods will need to manage the number of people they employ very carefully, not only because of the financial strain it places on the company. The need to have the correct number of people, but also people with the correct skills and abilities. And as these employees need to be available to Pioneer Foods at the correct times, it is essential to have a balance between their permanent employees, temporary employees, leased employees and consultants, as well as outsourcing of work. Pioneer Foods might also want to consider being flexible in their approach to design the jobs with relation to work hours and work location. Even their compensation packages may need to be adapted to accommodate some employees. Pioneer Foods will do some investigation to determine whether they can apply a specific model to manage the balance between permanent employees and temporary employees. 

Question 1

Explain the concept of competitive advantage within organisations by defining the term, stating the sources of competitive advantage, and the role of HR in gaining a competitive advantage. Refer to examples from the case study or your own examples. Include at least 2 additional academic sources, apart from your textbook, in your answer. 

Question 2

Analyse the possible forms of flexibility that Pioneer Foods can apply to increase its chances for achieving a competitive advantage, and explain the flexible-firm model or core-periphery model that can be used. Refer to examples to support your answer. Include at least 2 additional academic sources, apart from your textbook, in your answer.