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REAL WORLD SITUATIONS
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PepsiCo versus The Coca-Cola Company
To better understand the Food and Beverage industry, carefully examining a company
that already operates in the industry is beneficial. For instance, one could examine PepsiCo,
which is the producer of numerous food and non-alcoholic beverage items at varying
healthfulness. However, truly understanding their position within the industry is not possible
without examining a competitor within the industry such as The Coca-Cola Company.
Environments in which the Organizations Operate
Both PepsiCo and The Coca-Cola Company operate in similar external environments,
including the legal, social, and economic environments. The two companies both face the same
environmental regulations in their domestic market, as well as those regulations in their shared
international markets. This includes avoiding patent and copyright infringements, sales
regulations, and regulations regarding the use of natural resources, such as the use of water. For
instance, PepsiCo found themselves with immense resistance with their bottling plant in India
due to the overuse of scare water supply in villages (“Annual report,” 2010). Such issues would
affect both PepsiCo and Coca-Cola.
This example also shows that there are social environments that the companies must also
meet. Social uprising against PepsiCo caused the company to change their operations to put more
fresh water into the community than what was actually used by the company. Likewise, both
companies are affected by the social opinion of consumption of such beverages. For instance,
both companies could suffer if social opinion drastically turns negative against drinking soft
drinks, as those are major sellers for the two companies.
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The economic environment will also affect PepsiCo and Coca-Cola. If consumers
have low disposable income then they may be less willing to purchase products they do not
deem necessary such as power drinks, soft drinks, and snacks. While both companies operate
internationally, PepsiCo is more affected by the domestic economy. Meanwhile, Coca-Cola
is more affected by the international economy due to a larger percentage of sales being based
outside of the United States.
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Issues Affecting the Organizations
Just as these two companies must take into consideration the environments in which they
operate, they must also look inward towards other internal issues affecting the organizations.
Company Culture and Performance
PepsiCo operates as a family, working diligently to hire from within the ranks for
managerial and upper-level positions. There are numerous programs in place which focus upon
education current employees in leadership skills that will assist them on their climb up the
corporate ladder. Similar to PepsiCo, Coca-Cola operates as one cohesive team. The company
provides employees with support systems to help employees continue to learn and improve the
skill set of current employees.
Promotion Policies
PepsiCo’s company culture is heavily based upon their promotion policies of hiring from
within. By placing focus upon this aspect of hiring, the company is able to groom entry-level
employees into employees that will help move the organization forward in the future (“The
power,” 2011). Meanwhile, like PepsiCo, Coca-Cola focuses upon building relationships with
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current employees, which will help facilitate their career growth within the company.
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Strategic Decision Making
Both companies must continuously make strategic decisions that help more the company
forward. The various environments in which PepsiCo and Coca-Cola operate can change at any
given moment, and it is up to management to stay on the lookout for these strategic decisions
that can drastically influence the future of the organization.
Decision-Making, Management, and Leadership Style
The decision-making and management style of the two companies vary. PepsiCo’s
decision-making and management style focus more upon the input from upper-level
management. While the company focuses upon replacing management and upper-level staff
from within, few ideas and suggestions are taken from employees. In other words, PepsiCo
growth is generated solely from management. The Coca-Cola Company, on the other hand,
strongly encourages employees to provide their input to help the organization continue moving
forward (“Workplace,” 2012). Therefore, growth for Coca-Cola is spurred by input from
employees.
Communication Style
The two companies also differ on communication style. PepsiCo focuses upon open lines
of communication for employees to report problems, but not to communicate ideas about
products or operations. Meanwhile, Coca-Cola encourages an ongoing dialogue. This is
encouraged as it is believed that it leads to better understand amongst employee, supplies,
stakeholder, customer, and success in the marketplace.
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Use of SWOT Tool
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Given the competitive nature, both companies utilize the SWOT tool, which analyzes the
company’s strengths, weaknesses, opportunities, and threats. Each company goes through this
metric annually and adjusts their strategic plan accordingly. While many aspects of the SWOT
analysis are kept confidential, general details are shared with stockholders and investors through
their annual reports.
Operations Strategy Framework
Just as PepsiCo and Coca-Cola both perform SWOT analyses, they also maintain similar
operations strategy frameworks. Both companies manufacture their own concentrates and syrups,
which are then distributed to bottling companies (“Coca-cola,” 2011). While PepsiCo and Coca-
Cola do own some of their own bottling plants, they often work with franchise bottling
companies as well to assist in the production and distribution of their product, both domestically
and abroad. Likewise, both companies are looking to continue expanding into international
markets, while continuing to modify their product offerings to meet fluctuating consumer
demand.
Impact of Changing External Conditions
The conditions of the external environment can also affect the operations of PepsiCo and
Coca-Cola. This is especially true regarding legal changes and social changes. Legal changes
may prevent both companies from using particular ingredients or operations that are signature
for their product, which may adversely affect sales and thus hurt the companies. Likewise, a
change in social perception related to the soft drinks, which are major sellers for both companies,
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would also adversely affect sales and hurting the company.
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Conclusion
In conclusion, there are many different factors, both internal and external, that can affect
an organization within an industry. While two competitors in the same industry may operate in
very similar circumstances, their actions, strategies, and styles help to differentiate the
companies and their products from each other.

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