December 4, 2012
Ethics and Compliance
Beverage companies operate in highly competitive markets. Coca Cola currently has a larger share of carbonated soft drinks and PepsiCo. has a larger of liquid refreshments beverage consumption. Determining, who is better can be a difficult task. Both companies have to conduct themselves in compliance within ethical and legal parameters. A company’s code of conduct can influence public preference. Pepsi has set itself apart by high ethical standards and responding to consumer feedback. These steps will help Pepsi standout in the marketplace and contribute to shareholder value.
PepsiCo. has simplified its operating model, by doing this the company will be able to make decisions faster, reduce cost, minimize duplication of effort, increase the speed to market and better match innovations with market needs. PepsiCo. Has a goal to double the company productivity in three years.
Pepsi has several new projects they plan on launching. The products are low sugar cola beverages named Pepsi Next. The flavors will include Pepsi Next, Pepsi Next Cherry Vanilla, and Pepsi Next Paradise Mango. Spanish heartthrob William Levy will lend his face to the marketing campaign of these products in the Hispanic market.
The objective of this paper is to detail the strategic planning initiative and discuss Pepsi Next information from the annual report. The strategic planning is to achieve Pepsi’s mission of their new product takeoff of Pepsi Next and Pepsi Next Cherry Vanilla. The company has a history of delivering strong financial growth by developing ways to strengthen its products to enhance shareholders value. Although any new initiative requires additional funding, it is worth the investment to maintain a company’s growth.
The strategic planning of the new products affects the financials in different ways that involve costs and current budget. Before Pepsi decides to move forward with the plan, they need to analyze the costs involved before investing on the new strategy. Management needs to ensure funds are available to support the mission of launching new products; they need to look at expenditures and income and compare the figures to former salaries and future earnings. Once analyzed, management needs to sit down and outline the financial position and reconcile the plans with available funds.
Funding new programs in any organization is expensive and need coordination to be successful. There are risks to consider if the new plan is unsuccessful; however, based on Pepsi’s history of success, their goal is to avoid any mistakes. Once the new strategy is in place, Pepsi needs to reach out to stakeholders, measure the progress of their new plan, and ensure the new strategy reaches every employee, especially the front-line staff, to avoid interruption with channels of communication. The following actions are important factors in how well Pepsi succeeds launching new products.
The launch of a new product initiative, such as Pepsi Next can affect cost in several ways. Currently, PepsiCo spends $3.4 billion annually on advertising and marketing. PepsiCo has increased advertising and marketing expense spending by $500-$600 million in 2012. The cost is spent on advertising on many mediums such as social media sites, packaging, and marketing campaigns. There is no guarantee that the above-mentioned vehicles will promote successfully Pepsi Next.
The launch of Pepsi Next affects sales in several ways. The launch of Pepsi Next is susceptible to many economic factors including preference. First is the ability for consumers to purchase the product. A turndown in economic conditions or an increase in taxes may reduce consumers’ willingness to purchase the new product. The next effect is consumer preference and consumption. An aging population may not purchase the product because of health issues associated with sugar,