Sustainability

Pepsi and Sustainability Why is sustainability important for success Affects of economic decisions Affects on profits Sustainability Successes and Failures The Pepsi-Cola Company (Pepsi) began operations in 1898 and has placed emphasis on sustainability. Pepsi is an outstanding example of how sustainability is used to ensure longevity in business. Team B will define sustainability and explain why sustainability is important for success using Pepsi as an example. Team B will evaluate Pepsi in terms of sustainability, in particular, identifying financial and non-financial stakeholders, affects of economic decisions on financial and non-financial stakeholders, affect on profits when stakeholder reactions are considered, and sustainability successes and failures.

Pepsi and Sustainability Industry comparison Creating growth with sustainability successes Developing shortcomings into growth Methods to advance stakeholder relationships Implementing specific actions and policies Moreover, Pepsi will be compared with businesses in the industry in terms of sustainability. Pepsi’s sustainability strategy is discussed illustrating how Pepsi may create growth based upon sustainability successes, developing shortcomings into areas of sustainability growth, and identifying methods to advance stakeholder relationships. Last, Team B will clarify how specific actions and policies must be implemented.

Sustainability Sustainability defined Importance of Sustainability to success Re-use of materials Save on costs 1. Sustainability is “of, relating to, or being a method of harvesting or using a resource so that the resource is not depleted or permanently damaged.”(Merriam-Webster, 2010) 2. Many consumers are looking for products that are re-useable or products that have been made out of reusable products. For example: plastic, plastic is reused and reused to make many products, we reuse plastic so that we can save on materials and save on the environment. We look at sustainability giving a business or a manufacture the opportunity to save on costs by re-using products to help with the environment and their pocket book.

Sustainability and Stakeholders Financial and Non-Financial Stakeholders Protect consumers and the planet Replenish the needs of the consumer 1. Therefore, PepsiCo looks at wanting to protect their consumers and the planet, so that they are continuing replenishing the needs of their consumers and they are also saving on their resources which will protect our planet. Here is a good example of what PepsiCo is doing to help protect their consumers and the planet, “we will continue to build a portfolio of enjoyable and wholesome foods and beverages; find innovative ways to reduce the use of energy, water and packaging; and provide a great workplace for our associates. Additionally, we will respect, support and invest in the local communities where we operate by hiring local people, creating products designed for local tastes and partnering with local farmers, governments and community groups.” (PepsiCo, 2010)

Economic Decisions and Stakeholders Affect of Economic Decisions Performance Sustainability Human Sustainability Environmental Sustainability Talent Sustainability 1. Sustainability can be looked at in many different ways, for example PepsiCo looks at sustainability in four different ways. These four different ways are: “performance, human sustainability, environmental sustainability, and talent sustainability.” (PepsiCo, 2010) Each one of this sustainability focuses on different things for example: performance is the “promise to strive to deliver superior, sustainable financial performance.” (PepsiCo, 2010) Human sustainability is the “promise to strive to deliver superior, sustainable financial performance.” (PepsiCo, 2010) Environmental is the “a promise to be a good citizen of the world, protecting the Earth’s natural resources through innovation and more efficient use of land, energy, water and packaging in our operations.” (PepsiCo, 2010) Talent is the “a promise to invest in our associates to help them succeed and develop the skills needed to drive the company’s growth, while creating employment opportunities in the communities we serve.” (PepsiCo, 2010)

Effects on Profits Improved relations Shareholders Customers The community Stakeholders can be the community, shareholders, or customers and are all affected by the companies ability to operate sustainably. Because sustainability affects everyone, stakeholders are likely to react positively to efforts that increase sustainability. 7

Measuring Success Successes Areas for improvement Addressing current issues Continuing improvement Areas for improvement Parity between areas Parity between products Pepsi is a well-known company that has introduced many initiatives in several areas of sustainability. The areas identified by the company have been addressed with success in various areas throughout the company. While addressing current issues is a good thing, the flipside to that is improvements in all areas of operation do not mean that all departments in the company find results with the same level of sustainability. 8

Industry Comparison Product design Improvements in packaging Nutritional Improvement Promoting better products Creating products that differentiate Pepsi in terms of sustainability by design is one way Pepsi can stand out. Sun chips, for example, shows two areas of Pepsi’s commitment being both better for the environment and consumers than many competing snack options. 9

Expanding on Successes: Environmental Sustainability Commitment to Water Efficiency Rinsing Gatorade bottles with purified air instead of water. Improving processes to manufacture bottled water. Capturing from potatoes to make a potato chips factory in the United Kingdom self-sufficient in water. Success Water usage per unit has decreased by more than 10% from 2007-2009. How to Expand Success Use water efficiency guidelines in all operations including: manufacturing plants farming Many of PepsiCo’s subsidiaries use many natural resources and have a huge impact on the planet. Pepsi has made a commitment to “…improve water efficiency use by 20% per unit of production by 2015” (Pepsi, 2009, para. 1). The company has tackled this problem by implementing the following changes: Rinsing Gatorade bottles with purified air instead of water, improving processes to manufacture bottled water, and capturing naturally occurring water found in potatoes to make a potato chips factory in the United Kingdom self-sufficient in water. Since Pepsi made this commitment, water usage per unit has decreased by more than 10% from 2007-2009 (Pepsi, 2009, section 1). Pepsi can be an even more environmentally sustainable company by expanding water efficiency guidelines into all operations from corporate offices to manufacturing plants and farmers.

Expanding on Successes: Performance Sustainability Goal To be ranked among the top two suppliers in customer (retail partner) surveys Happy Customers Result in: More revenues More customers Continuous cycle Expanding this Goal Why be #2 when the company can be #1? Sustainability is guaranteed with a ranking of #1 PepsiCo’s focus on company sustainability includes a goal to “Rank among the top two suppliers in customer (retail partner) surveys where third-party measures exist” (Pepsi, 2009, section 1). Happy retail customers translate into more orders hence more revenues. This cycle ensures Pepsi is sustainable and has a future in the business market. Pepsi can expand this goal into being the number one supplier to retail customers. A ranking of number one is a guarantee of company sustainability for current and future stakeholders.

Shortcomings to Growth Human Sustainability Offer healthier products for consumers Can it be done? Difficult to offer healthy products when flagship product is so unhealthy 41 grams of sugar in one can of Pepsi Human Sustainability Growth Make other products as natural and healthy as possible Stay active campaign Translates into: Healthier products Sets positive image in customer views PepsiCo’s sustainability focus also includes human sustainability. To PepsiCo human sustainability is “…a promise to encourage people to live healthier by offering a portfolio of both enjoyable and wholesome foods and beverages” (PepsiCo, 2010, para. 1). It is a difficult situation because the company wants to offer healthy products to help consumers live healthier lives, but the company’s flagship product is so unhealthy as are many of Pepsi’s other products. One can of Pepsi has 41 grams of sugar in it. The company can turn this shortcoming around by making its other products as natural and healthy as possible and start or support a stay active campaign. This growth will lead to healthier products and a positive image in the eye of the consumer.

Improving Stakeholder Relationships Stakeholder Relationship Management requires: Identifying stakeholders Understanding expectations Managing those expectations Monitoring the effectiveness of stakeholder engagement activity Continuous review of the stakeholder community Requires communication and commitment and results in: Loyalty Profitability Sustainability The first step to improving stakeholder relationships is to make sure the company knows who the stakeholders are and what the stakeholders need from the company. “Managing stakeholder relationships is achieved through a long-term commitment to a structured process focused on… identifying stakeholders, understanding expectations, managing those expectations, monitoring the effectiveness of stakeholder engagement activity, and continuous review of the stakeholder community” (Bourne, n.d., p. 4). Addressing the needs of the stakeholders require communication and commitment from the company. This commitment leads to stakeholder loyalty, which translates to productivity, profitability, and sustainability.

Conclusion Importance of stakeholder relationships Pursue new business Developing distribution networks Creating opportunities through sustainability Pepsi has realized the importance of obtaining relationships with stakeholders for creating improvements to gain success. By doing so, Pepsi acquires a valuable position in the market through sustainability. Pepsi is also able to pursue new business by offering affordable products acquired through sustainability practices. Pepsi is consistently growing with a mission to expand by using sustainability to improve products. Pepsi further enjoys productive support in developing and creating distribution networks across the globe to influence new ideas for the benefit of low-income consumers. Therefore, Pepsi has created opportunities through sustainability and produced positive outcomes that can bring benefits and advantages to improve international business.

References Frankel, Carl. (2009). Corporate responsibility: Pepsi-Cola’s 41 grams weigh heavily on sustainability. Retrieved from http://www.matternetwork.com/2009/1/pepsi-cola-issues-annual-sustainability.cfm PepsiCo. (2009). 2009 Annual report: Environmental sustainability. Retrieved from http://www.pepsico.com/annual09/ environmental_sustainability.html PepsiCo. (2010). Home. Retrieved from http://www.pepsico.com/Index.html PepsiCo. (2010). Human sustainability. Retrieved from http://www.pepsico.com/Purpose/Human-Sustainability.html TNS Stakeholder Management. (n.d.). Stakeholder management: Are you building sustainable and profitable stakeholder relationships? Retrieved from http://www.tnsglobal.com/_assets/files/Stakeholder_Management_Sales_Sheets_Stakeholder_Management.pdf