How does PepsiCo balance those stakeholders

The concern for health has greatly affected the food industry significantly. PepsiCo has not been spared either especially on its leading brand Pepsi soft drink. In an effort to balance stakeholders` interest such as consumers who are looking for good tasting products and shareholders looking for better profits and for special interest groups and regulators concerned about health, PepsiCo has adopted a number of approaches.
In the recent times, PepsiCo embarked on a major restructuring exercise of its beverage division in order to achieve better integration between its units. This has enabled the company to be able to merge and acquire other subsidiary food processors in an effort to diversify their products and develop new products that are nutritionally health. Some of the products that the company has introduced to counter criticism by special groups entail Gatorade Nutrition Shake (Berch, Montoya and Sawayda, 2010). Gatorade is an energy drink that was targeted at sports people. In a research carried out on Florida Gators team, players lose a lot of energy and electrolytes during playing. As such, the product was introduced to help restore these lost energy and electrolytes. Besides being targeted to players, it is targeted to all market segments including the younger and the older generations. This has been achieved through offering a wide variety of the healthy Gatorade that suits every group of the population (Berch, Montoya and Sawayda, 2010). Through this, the company has been able to satisfy consumers` demand for a good tasting and quality product, while at the same time satisfying the special interest groups` quest for nutritious products.
Similarly the wide range of the healthy product that is offered by PepsiCo such as the “G Series” range of Gatorade products has seen the company sales increase tremendously. The Gatorade brand is currently the third most popular selling product after Pepsi and Mountain Dew. This has been a great boost to the company`s revenue and profitability which has greatly benefited shareholders. Besides, thorough research into healthy products such as Frito-Lay snacks including baked lays, SunChips, Cheetos and other healthy foods has helped the company deal with criticism and pressure from special interest groups, while at the same time offering good tasting snacks to consumers and maintaining high profits for the company. According to the company, revenue from healthy snacks amounts to $10 billion annually (Berch, Montoya and Sawayda, 2010). The CEO Indra Nooyi insists that, one of the company`s goals is to increase investment in health food, expected to yield $30 billion in the future (Berch, Montoya and Sawayda, 2010).
In addition, Pepsi has hired health officials (who are potential enemies of the company) to be part of its research team to develop more health products. The new target employees are former employees of organizations such as WHO and Mayo Clinic have been helping in researching on healthier ingredients to use in PepsiCo snacks. One of the milestone success achieved so far is the introduction of stevia (a zero calorie natural sweetener) into new products, which has become a $100 million brand in barely a year. Through this, the company has been able to satisfy special interest groups by working with professionals from health conscious organizations. In addition, consumers have continued to receive better tasting range of products whereas maintaining high profits for stakeholders. It is therefore “..clear that, not only is healthier snack foods socially responsible, but also good business in an increasingly health conscious market place” (Berch, Montoya and Sawayda, 2010)”
2. How effective do you think PepsiCo has been in responding to stakeholder concerns about nutrition and sustainability?
PepsiCo just like any other company in the food industry has faced criticism from stakeholders concerning nutrition and sustainability issues. Fortunately the company has been able to address these issues effectively.
PepsiCo has addressed the issues of stakeholders and special groups on nutrition amicably. The company was able to introduce new brands with nutrition aspects. The introduction of Frito-Lay snacks and energy drinks such as the Gatorade meant for sportsmen and the “G Series” of Gatorade products is a sure way the company considered nutrition benefits on its products. In addition, the approaches used by the company to respond to nutrition concerns are practical. The Frito-Lay company on their website for instance has a special section dedicated to health which describes the ingredients of Frito-Lay snacks and advices customers on the importance of moderation in consumption of snack food (Berch, Montoya and Sawayda, 2010). Investing in health foods has been termed as one of the company`s goals which clearly show how effective and committed PepsiCo is in addressing concerns on nutrition.
Besides, the company has been able to hire the best and the right people to aid in developing new recipes for their products to ensure that they are nutritious. One such achievement has been the hiring of experts formally working for organizations concerned with nutrition in the food industry such as the world Health Organization and Mayo Clinic (Berch, Montoya and Sawayda, 2010).
Knowing the need to balance between healthy products and customers desire to have easy access to food products is essential for the company. PepsiCo has tried tremendously to decrease the use of unhealthy ingredients such as sugars and fats in an effort to deal with the issue of obesity in the United States, which has become a major concern. To achieve this in the long term, the company engages in research to develop healthier products and minimize unnecessary editions (Berch, Montoya and Sawayda, 2010).
As part of its sustainability efforts, PepsiCo has done considerably good. Mainly, sustainability efforts at PepsiCo entail mitigating the negative effects caused by production and consumption of its products. Going green is one of the company`s strategies in responding to sustainability concerns. The company realized that, most of its production for most products involves a lot of water (New Word City, 2010). As a result the company embarked on a water conservation plan and reduction of wastes from their production and disposal of packaging materials after consumption of the products. This plan includes water recycling and treatment efforts and the recycling of waste from packaging as well as manufacture of biodegradable packaging materials. Recycled water is treated through a comprehensive procedure and is reused within its products. Through this water recycling projects, the company is said to have saves up to 11 billion litres of water in 2009 alone (Berch, Montoya and Sawayda, 2010).
As part of sustainability, the company has engaged in reducing its carbon print significantly. This has been realized through the use of clean energy sources such as wind power from its wind turbine project in India which provides more than 65 per cent of power used annually in its Mamandur beverage plant (Berch, Montoya and Sawayda, 2010).
Similarly, PepsiCo has considerably reduced the amount of plastic used in packaging its products, which has reduced the amount of wastes ending up in landfills considerably. In the United Kingdom, PepsiCo manufacturing plants no longer send waste into landfills. In the United States, Frito-Lay cut the amount of waste ending in landfills by over 45 per cent within two years (PepsiCo, n.d). PepsiCo has also started redesigning its bottles for its Aquafina water. The new bottles use less plastic hence reduce amount of waste. Currently, Aquafina bottles weigh just 10.9 grams as compared to the 18.5 grams in a decade ago. Consequently, the company projected to reduce its packaging by 350 million pounds by 2012 (New Word City, 2010). This shows the company`s commitment and effectiveness in response to sustainability issues.
More importantly, the company has actively involved community organizations concerned in recycling as part of its sustainability efforts. The corporate social responsibility at PepsiCo is superb. Through various initiatives such as We Inspire campaign, the Pepsi Foundation, Pepsi Refresh Project, and the dream Machine, PepsiCo has been able to engage in sustainable growth (New Word City, 2010).
3. While PepsiCo was trying to become a responsible and ethical company, how did the AMP Up Before You Score mobile app get distributed without proper oversight from those who are concerned about appropriate conduct and the reputation of the company?
Innovative advertisement at PepsiCo has always been adopted to market their wide range of products and survive the massive competition in the food industry especially from Cocacola. The AMP Up Before You Score app on iPhone was one of the innovative way of technology use in advertising. However, it was faced by controversy and great criticism from the public especially on social media (Berch, Montoya and Sawayda, 2010). The apps general consensus was that it was in poor taste. The company had to withdraw the app and stop its distribution as it was becoming a threat to the company.
The app was distributed despite the company having very high concerns over appropriate conduct and company`s reputation. Being not the first company to use such apps to market their product, the app was termed offensive and barbaric.
As part of ensuring that the company does not suffer humiliation or rejection from the public through advertising, PepsiCo should be cautious of its ads. They should be vetted by the ethical department and scrutinized by external auditors before being distributed in the market. Considering that consumers are very sensitive and well informed, there is need for any company to ensure that appropriate conduct is achieved at all levels starting from production to distribution and consumption. In this manner, the company can avoid losses through law suits and negative campaigns against their products.
In conclusion, PepsiCo`s journey towards ethical and socially sustainable culture has been a comprehensive one. The company has been able to address the most pressing issues of balancing between stakeholders` concern over nutrition and sustainability and consumers looking for good tasting products. This has been achieved through greening projects in the company such as use of green energy, recycling of water and wastes as well as use of environmental friendly packaging. The company`s response to issues of sustainability and nutrition has been remarkably effective. The company has gone to greater heights in ensuring that all stakeholders` interests have been met. The AMP app meant to promote EMP Energy Drink placed the company at an awkward position in explaining its decision. This probably was a lesson learnt and should not be repeated as it can be costly both in terms of reputation and revenues. Nevertheless, the journey of PepsiCo is a classical one that many companies in the food industry and probably in other industries would love to adopt to survive in the dynamic 21[st] century market.
References
New Word City (2010). How Pepsi Popped Its Top. New York: New Word City, 2010.
PepsiCo (n.d). Environmental sustainability. Retrieved on April 10, 2013 from http://www.pepsico.com/purpose/environmental-sustainability.html
Berch, K., Montoya, K. and Sawayda, J. (2010). PepsiCo`s Journey Toward an Ethical and Socially Responsible Culture.

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