International Business Strategy and the Strategic Role of International Human Resource Management
Brief Overview of Pepsi Co. Middle East
Staffing Policies
Strategy for competing on the global market
Diversified Business Model
Three-channel distribution network
PepsiCo Leveraging its dominant position
How pressure for cost reduction and pressures for local responsiveness influence strategic choice
Brief Overview of Pepsi Co. Middle East
PepsiCo is one of the biggest and leading food and beverage corporations in the world. The company as of 2012 generated over 65 billion dollars in net revenues. PepsiCo has a diverse global portfolio of brands that consists of numerous flavorful brands of snacks. PepsiCo Middle East is one of the six segments from which the primary company generates its revenues. PepsiCo Middle East, which is included in PepsiCo Asia, Middle East and Africa (AMEA), encompasses all businesses that deal with beverage, food as well as snack in the Middle East. Whether individualistically or in tandem with third-party associates, PepsiCo AMEA creates, advertises, retails and deals out a number of well renowned PepsiCo products (PepsiCo Website, 2015).
These product brands include Doritos, Lay's, Cheetos, different beverage brands such as Mirinda, Pepsi, Mountain Dew, Tropicana and 7Up, and also different branded cereals and snacks (PepsiCo Website, 2015). With the evolution and development in technology and in the face of increasing pressures in the global market, PepsiCo has employed numerous different strategies and approaches to gain a competitive edge and also to grow and develop.
Purpose of the project
The main purpose of this study is to identify the strategy used by Pepsi Co. Middle East to effectively compete on the global market. The paper will also identify the staffing policy used within Pepsi Co. Middle East and make an assessment of the extent to which Pepsi Co. Middle East's staffing policy is aligned with its international business strategy. Lastly, the paper will also seek to show how pressure for cost reduction and pressures for local responsiveness influence strategic choice.
The paper discusses the main staffing policies followed by the strategies employed by PepsiCo Middle East to compete globally and a conclusion of the research project. Finally, the paper will offer a reflection of what went well during the project period, what went wrong during the same period and also what can possibly be undertaken different if a similar project were to be done yet again.
Discussion
Staffing Policies
A company's staffing policy is focused on the selection of employees and personnel who have the skills that are essential to undertake and perform a certain job. A staffing policy can be employed as a tool for cultivating as well as promoting the company's organization culture. In particular, a strong corporate and organizational culture can assist the company to execute its strategy (Sharan, 2006).
For international businesses, there are three major approaches and methods for staffing policies: the geocentric method, the ethnocentric method, and the polycentric method (Sharan, 2006). The current staffing policies employed by PepsiCo utilizethe polycentric approach, wherein the international business appoints a host country executive, together with a resident country executive, to offer mutual and/or individual support as needed (Kottolli, 2015).
The polycentric staffing policy employs and enrolls host nation residents or citizens to manage subsidiaries and divisions in their own nation, and parent nation residents for positions at head office or center of operations (Matthews, 2013). This approach is beneficial for PepsiCo as the corporation is pursuant of a localization strategy and line of attack. In addition, being an international business, the polycentric approach enables PepsiCo to minimize cultural narrow-mindedness as it has diversity in terms of its employees (Wach, 2014). In addition, this particular approach is less costly to execute as compared to implementing an ethnocentric policy (Sharan, 2006).
With regards to international human resource management the current staffing policies employed by PepsiCo are in line with the polycentric approach as the international business appoints a host country executive together with a resident country executive to offer support (Kottolli, 2015). This approach is beneficial for PepsiCo as the corporation is pursuant of a localization strategy and line of attack. In addition, PepsiCo employs different business strategies in order to have a competitive advantage or edge in the global market. These strategies include having a business model that is diversified with a strong and resilient presence in terms of beverage products as well as food products (Bailey, 2014). In addition, the business is also able to compete in the global market by using its distribution channels which take into consideration the features of the products and the needs of the consumers.
Strategy for competing on the global market
Diversified Business Model
One of the strategies employed by PepsiCo Middle East is the diversity in its business model. The international business has a business model that is diversified with a strong and resilient presence in terms of beverage products as well as food products (Bailey, 2014). With regards to competing globally, in an instance where the industry of carbonated soft drinks has recurrently deteriorated, PepsiCo Middle East's significant presence in the snack or food industry gives the business a competitive edge over its biggest rival.This rival, the Coca Cola Company, is largely reliant on the sale of carbonated drinks for its success. In the year 2013, statistics indicate that the food business segment accounted for about 52% of the total revenue generated by the company, while the beverage business segment accounted for 48% of the total revenue generated by the company (Bailey, 2014).
The international business benefits and gains a competitive advantage from its global presence in the food snacks and beverage industries which are complementary. Statistics indicate that just above 50% of the consumers in the United States who purchase snacks such as Frito-Lay also purchase a beverage such as Pepsi carbonated soft drinks; this in turn enables the company to generate higher sales and greater revenues (Bailey, 2014).
Three-channel distribution network
PepsiCo is a prominent and top beverage and food company that has a remarkable and striking global presence. The international business is able to compete in the global market as it distributes its products through three different channels. These distribution channels include third party distributor networks, direct store delivery, and also consumer warehouses. In addition, the company is able to have a competitive edge over other rivals for the reason that the company selects the pertinent distribution channel centered in the needs of the consumer, the features and characteristics of the products, and also the local trade practices (Bailey, 2014).
i. Third-party distribution systems
PepsiCo distributes as well as allocates various beverage and food items to cafeterias, companies, institutes, and arenas by means of third-party food service along with retailing suppliers and operatives (Bailey, 2014).
ii. Direct Store Delivery (DSD)
With regards this Direct Store Delivery system, the company is able to deliver and distribute its products to retail stores and business directly. Out of these three particular channels of distribution, the DSD system facilitates and helps PepsiCo to retail products with maximum perceptibility. The approach is more suited for products which are time and again replenished and are susceptible to promotions, advertising and marketing (Bailey, 2014).
iii. Consumer Warehouse
This particular system or channel or distribution for products is a less costly channel as compared to the channels mentioned above. In particular, it is ideal or suitable for products that are less delicate or easily perishable, not bought impulsively by the consumers, and also have lower gross revenue (Bailey, 2014).
PepsiCo capitalizing on its market position
PepsiCo has been the 2 ndbiggest and leading non-alcoholic beverage manufacturer in the United States and has a massive rangeof operations. The business' leading and dominant position enables it to have favorable and promising affiliations with its retailers who in turn enable the business to have a lot of shelf space (Bailey, 2014).
As a result, PepsiCo is able to have an impact on the shopping patterns and inclinations of the consumers and increases the concurrence and chance of the buying and acquisition of its complementary beverages as well as its food products. Different stakeholders have the ability to invest in PepsiCo by means of exchange-traded funds (ETFs). Examples of this include Standard & Poors Depositary Receipt (SPDR) (Bailey, 2014). In addition, the international business produces as well as distributes different brands registered and accredited from Dr. Pepper Snapple Group, Inc. (DPS) which is comprised of products such as Schweppes and Dr. Pepper. This wide-ranging and all-encompassing distribution of PepsiCo gives the international business a competitive advantage in comparison to other nonalcoholic beverage manufacturers (Bailey, 2014).
How pressure for cost reduction and pressures for local responsiveness influence strategic choice
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