1. In your own words and using referenced quotes describe what is meant in strategy by 'Organizational Purpose' and describe what is meant by 'Corporate Social Responsibility'
Organizational Purpose
Organizational purpose is very important for every firm and business organizations. Without organizational purpose, your business will surely fail because organizational purpose is the foundational bedrock that every great businesses must have.
Reasons for the existence of the business is given by the organizational purpose. For every strategy formulation and decision makings organizational purpose serves as a guiding force for them.Hence, we can say that organizational purpose has a significant influence and effect on strategy. It is basically a bedrock for the successful strategy formulation and implementation.
Corporate Social Responsibility
Corporate social responsibility refers to the overall positive impact that the business manages to produce on the society. It can also be describes as the organization's responsibility towards the community & environment where they are operating. This can be achieved by providing employment opportunities to the locals, doing contribution on educational and social programmes, minimizing the waste and pollution by doing proper waste management and also by organizing various campaigns to provide knowledge regarding cleaning and proper waste management, etc.
2. Should organisations focus more on profit and shareholder satisfaction or responsibility and stakeholder satisfaction? Discuss your own thoughts but try to support your ideas with theory or examples
If we
choose to focus more on profit and shareholders satisfaction then this will
highlight that we care more about profitability over responsibility. Meanwhile,
if we decided to choose responsibility and stakeholders satisfaction then this
will highlight that we care more about our responsibilities over profitability.
It is very
familiar with all of us about the fact that maximization of profit is the
primary goal of all the business organizations. But that doesn’t mean that
focusing on profit maximization is the best option for us. Earning long run
goodwill is far more important for the business organizations than the wealth
and profit. Its not easy for business organizations to create goodwill in the
market, it takes long time and serious commitment and dedicated hard work to
gain goodwill. There are various factors upon which goodwill depends, and
contribution towards the community / society is one of them.
Business
organization might get profit if they focus on profit and shareholder
satisfaction, but this will not be a sustainable option for them because, it
cannot survive for long time if the business organization only focuses on the
profit and shareholder satisfaction. A business organization that focuses on
responsibility and stakeholder satisfaction will have a very good chance of
survival & sustainability in the long run because, it is the public who
buys the products and services from the business organization and a business
organization that has goodwill in mind of the public, and will ultimately have
a good future. This will ultimately result in profit gain too in a long run.
Therefore,
in my opinion business organizations shouldn't focus on profit and shareholder
satisfaction.. They should be focusing on responsibility and shareholder
satisfaction. Earning goodwill and brand is also considered as profit. If a
business organization does contributions towards the community and society and,
also completes its responsibilities towards the society and community then it
will be able to earn goodwill and brand loyalty from people. However, the business may not see
huge amount of profit at the early period but in the long-run it will do very
well. For example: Choudhary Group, which is the leading FMCG and Electronic manufacturing
Industry of Nepal contributes towards
the society and community in different ways. It has established its own schools
where it provides scholarships to poor, needy and talented students, organizes and promotes
various cultural programs and
activities all over the country, cleaning campaigns and many more. These all
activities has helped Choudhary Group to earn goodwill and establish itself as
a brand in Nepal and in south-east Asia, and people are very loyal towards this
brand, which has helped it to become a leading industry in Nepal as well as
south-east Asia too.
For all of
these reasons, business organizations should focus on responsibility and
stakeholders’ satisfaction rather than profit and shareholder’s satisfaction.
3. Write about your experience with today‘s case study. What answers did you give to the questions? What did you think of the CEO?
The
overall experience with today’s case study was very good. It was a really great
and fun experience learning about PepsiCo, its aspiring chairman & CEO Ms.
Indra Nooyi. It was a learning experience because i got the chance to know
about the success story of PepsiCo, its century long rivalry with Coca-Cola
and its current struggling phase to
regain the market share.
(The
answers that i have given to the questions are listed in another page with the
questions.)
I think
the CEO of PepsiCo, Ms Indra Nooyi, is a very talented and skillful personnel.
We can justify this statement by listing the honors and recognitions that she
has received from many reputed institutions, & magazines.
· Forbes
magazine ranked
her #3 most powerful women in 2008, & 6th most powerful women in the world on 7th October 2010.
· Fortune named her the #1 most powerful
women in business in 2009 & 2010.
· Time listed her in 100 most influential
people in the world in 2007 & 2008.
· Wallstreet
Journal put her in
the list of 50 women to watch in 2007 & 2008.
After she
started to work in PepsiCo as the CFO in 2000, the annual revenue of PepsiCo
had rised to 72%, and the net profit were more than doubled (to $5.6 billion)
in 2006, which is very remarkable. Since her joining with the PepsiCo, the Soda
makers which were only recognized by Pepsi brand has progressed very well.
Nooyi was the one who took the lead in Tropicana acquisition in 1998, and
merger with Quaker Oats Company, which also lead to the inclusion of Gatorade
to PepsiCo. Now, PepsiCo has got 19 different product fleets which amounts for
more than $1 billion in annual retail sales, which is huge.
This all
justifies that she is one of the great CEO at present.
Image Source : http://www.southdreamz.com/wp-content/uploads/2010/09/Indra-Nooyi.jpg
Case
Study (Indra Nooyi - PepsiCo)
What are Pepsico‘s strategic objectives? Why does the firm exist?
PepsiCo is a huge
multinational company that produces beverages and snack foods, some of the
strategic objectives of PepsiCo are as follows:-
- International expansion
- Achieve synergies
- Strategic acquisition
- Product reformation
· Making beverages and snack foods that are less
unhealthy
· Producing better-for-you (BFY), and good-for-you
(GFY) products, that can help in creating growth opportunities.
5. Maintaining
close relationships with distribution allies.
6. Maintaining
efficient distribution system.
·
By applying Direct store delivery
·
Broker warehouse
The firm exists because of its Mission, Vision and Values.
Mission:
Mission can be described as the factor which help the employees and
stakeholders to know clearly about the organization’s over-riding purpose. It aims
to give them the idea about:-
“what business are we in?”
“how do we make a difference?”
“why do we do this?”
Vision:
Vision majorly concerns with the organization’s desired future state. It is
simply an aspiration that helps to stretch performance, gain commitment &
enthuse. It provides the firm with the idea concerning “what do we want to achieve?”
Value :
Some of the examples of how values
are developed in firms are as follows:-
“how customers & stakeholders
will be treated?”
“how employees will be treated and
how they will treat each other?”
“how the values will relate to
organizational success?”
“which values people will use to
govern how they work?”, etc
These all are the reasons why firm’s exist.
What are the possible strengths and benefits of the strategy? Do you think the organisation has the right balance between profitability and responsibility?
Being a global and huge industry has its benefits too. PepsiCo is a globalized and internationally expanding organization which has a market in over 200 countries worldwide. Since PepsiCo manages 19 different product fleets, therefore it has a very large number of consumers / customers and market share. This is the possible strength and benefit of the strategy to the PepsiCo.
What are the possible weaknesses and disadvantages of the strategy?
Existence
of all the products under the same brand can be considered as the main weakness
for PepsiCo. Although, PepsiCo has got 19 different product fleets under its
management but, the consumer sometimes don’t even know that the products that
they are consuming are from PepsiCo. And also, because it has a wide range of
product lines which doesn’t belong to same brand, it faces challenges from
several competitors which is not good for the organization.
After observing the case study, i think that PepsiCo doesn’t believe in making profits only, but it also cares about its customers. PepsiCo has tried its level best to perform its responsibilities towards its customers / community in different ways. PepsiCo is taking it very seriously to make snacks and beverages more healthier, it is also trying to contribute towards the environment by investing in recycling programs in developing countries in Africa.
PepsiCo does a very huge soda advertisements during super bowl, but In 2010, it decided to skip the soda advertisement at the super bowl and rather use that money for other social causes by helping orphanages and homeless shelters.
This shows that
the organization has a perfect balance between profitability and responsibility.
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