Introduction: Legal, Social, and Economic Environments
Social, legal, and economic environments are the external drivers affecting both organizations’ functioning. The Coca-Cola Company is the top beverage industry actor, and Pepsi is its lifelong rival, so the settings in which they operate are quite similar. Taking this aspect for a basis of research, it seems viable to note that both Coca-Cola and Pepsi function in the same economic and legal environments. Legal settings involve laws and regulatory agencies while economic climate deals with the financial situation in the world’s market. A recent economic crisis, as well as consumers’ tendency to eliminate the consumption of unhealthy products, led to the deterioration of both companies’ economic status (Benstead & Reif, 2015). However, due to having altered some of its policies, Coca-Cola was able to reach a higher level of social welfare than Pepsi.
Managerial, Operational, and Financial Issues Impacting the Organizations
Company Culture and Performance
In any company, culture is determined by senior leaders and associated with substantial organizational outcomes (O’Reilly, Caldwell, Chatman, & Doerr, 2014). Coca-Cola has strong faith in its employees and their abilities. The company’s values include collaboration, passion, responsibility, and diversity (“Unique culture,” n.d.). In PepsiCo, high-performance standards, excellence, and collaboration are expected from each team member (Kissinger, 2017). Both organizations under analysis perform regular assessments of their workers’ achievements to reach the best performance possible.
Promotion is crucial for the two companies since it enables them to raise awareness about their products and increase their popularity. One of the most effective approaches in this dimension is the use of social media. Coca-Cola employs social platforms to advertise its sustainability and health initiatives (Austin & Gaither, 2016). Pepsi employs this method to create user-generated content (Yadav, Kamboj, & Rahman, 2016). Another popular promotion strategy adopted by Pepsi is inviting celebrities and making up catchy slogans to attract consumers (Hafiz, 2015). Coca-Cola also exploits a price penetration strategy where it changes low prices to enter large markets (Hassan, Amos, & Abubakar, 2014). Hence, the companies’ financial environment becomes more stable due to the usage of successful promotional campaigns.
Strategic Decision Making and the Decision-Making Style
Strategic decisions play a significant role in the two companies’ operating. Both in Pepsi and Coca-Cola, the most important strategic arrangements are made by the top-level management and the board of directors. The decisions included in this process involve capital investment, foreign market expansion, operation cessation, rebranding, and others. Coca-Cola boasts such unique strategic actions as profit growth, continuous investment, efficiency, simplification, and refocusing on the core business model (“Five strategic actions,” 2016).
Management, Leadership, and Communication Style
The communication style employed by managers and leaders affect the productivity and dedication of each employee. Both Coca-Cola and PepsiCo are aware of this aspect and encourage their top-level managers to use such approaches as motivating, coaching, advising, and listening when interacting with their subordinates (“Unique culture,” n.d.). In PepsiCo, specific emphasis is put on collaboration and teamwork which help to identify the strengths pertaining to each individual worker (Kissinger, 2017).
The Use of SWOT Tool
|Strengths||– a leading brand |
– high-profile presence all over the world
– high amounts of sales
– customer loyalty
– successful marketing strategies
|– brand equity |
– customer loyalty
– strong distribution
– a highly productive supply chain
|Weaknesses||– competition with PepsiCo |
– low product diversification
– water management issues
|– competition with Coca-Cola |
– the need for diversification
– value addition
|Opportunities||– increasing diversification |
– improving the supply chain
– marketing the products with low rates of sales
|– introducing healthy options |
– adding more flavors
– increasing corporate social responsibility efforts
|Threats||– indirect rivals |
– sourcing raw material (water) (Bhasin, 2018b).
|– competitors |
– negative associations due to health risks
– government regulations in different countries (Bhasin, 2018a).
Operations Strategy Framework
Operations strategy decisions are the ones made by a company’s managers. The goal of such resolutions is to plan the long-term opportunities and capabilities of an organization’s operations. In Coca-Cola, strategic decisions are aimed at shifting to the Just-in-Time system of inventory (Abdullah, Gohar, Majid, & Khan, n.d.). In Pepsi, the operations strategy framework involves such areas as the design of goods and services, supply chain management, maintenance and scheduling, and layout strategy and design (Gregory, 2017).
Conclusion: Management Teams’ Performance and Suggestions for Improvement
In both companies under analysis, the work of management teams may be regarded as highly satisfactory. In particular, the function of leading and controlling is performed well in the two organizations. However, planning and organizing should be enhanced by finding more sustainable approaches. Since Pepsi occupies a lower place in some characteristics, it may be assumed that its managers need to work on improvements with more vigor than those is Coca-Cola.
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Yadav, M., Kamboj, S., & Rahman, Z. (2016). Customer co-creation through social media: The case of ‘Crash on Pepsi IPL 2015.’ Journal of Direct, Data and Digital Marketing Practice, 17(4), 259-271.