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04/01/2012

PepsiCo Inc. Towards Globalization


PepsiCo Inc. Towards Globalization

 

Nowadays, despite of the very tough world competition and globalization is fast emerging; there still companies exist that are eager to compete globally. Thus, this essay will argue about a sample of U. S. Company, specifically PepsiCo Inc., which operates globally, how this company is facing the competition, the political and economic policies that affect the firm and the impact of globalization for the company.

PepsiCo Inc. is one of the world’s leading food and beverage company that started on 1965. Create different food and beverage products that would soothe the taste of its consumer were its expertise. The major focus of the corporate strategy for PepsiCo is to present the analysis that it used to adapt to its marketing environment.  The changes in the environment had been sharply perceived by PepsiCo Inc., as it operates both within and beyond its national boundaries or in short as it operates globally.  

As the company knows that competing globally means taking a big risk and facing a big challenge for the company itself, the company used one of the economic concepts that became a useful tool in their continuous growth globally this is the competitive advantage.  Competitive advantage composed of cost leadership, product differentiation and focus. 

In cost leadership, PepsiCo attempt to become the producer of food and beverages with the lowest costs in its industry. Cost cutting and increased efficiency are the main routes that this company has done. Through cost cutting, the PepsiCo will be able to priorities which product should be given emphasize and which products were not.  Aside from cost leadership, the company used also the product differentiation, as part of the competitive advantage in economic concepts.  Here, PepsiCo differentiates its products from those of competitors by developing product features which the others do not have.

Furthermore, a company cannot operate unless they meet the conditions offers by economic and political policies. Government economic and political policies control the entry of goods and services into the realm of the public. Here, PepsiCo is affected since it cannot operate without the permission of the government.  Political and economic policy affects the company in a way that the company cannot decide on its own and cannot do immediate changes within the format of the company unless it has been approved by the policy. 

In relation to this, this paper will then discuss about globalization and how it affects PepsiCo. The term "globalization" has acquired considerable emotive force. Some view it as a process that is beneficial—a key to future world economic development—and also inevitable and irreversible. Others regard it with hostility, even fear, believing that it increases inequality within and between nations, threatens employment and living standards and thwarts social progress.

Economic "globalization" is a historical process which is the result of human innovation and technological progress. This came into common usage since the 1980s, reflecting technological advances that have made it easier and quicker to complete international transactions—both trade and financial flows. It refers to an extension beyond national borders of the same market forces that have operated for centuries at all levels of human economic activity—village markets, urban industries, or financial centers (IMF Staff, 2002).  On the other hand, global markets offer greater opportunity for people to tap into more and larger markets around the world. It means that they can have access to more capital flows, technology, cheaper imports, and larger export markets. But markets do not necessarily ensure that the benefits of increased efficiency are shared by all.

After knowing the definition of globalization, this paper will discuss the impact of globalization to the company.  To globalize means to "make worldwide in scope or application," and the globalization of trade means freer and more intense worldwide trade across national borders. Technology helps to make globalization possible. With computers linked across companies, countries and continents, geography and time no longer weigh down the flow of information. Expanding globalization brings stiff competition for international markets. Increased competition has resulted from: the new market-based economies of developing and former communist countries; the introduction of new products and processes; more efficient use of old materials; and innovations in information technology. These forces have transformed markets that were once regarded as a reliable source of earnings. Through globalization, PepsiCo had merged to different acquisitions that helped them became one of the largest food and beverage company.  Globalization had helped the company to be strong as they know that competing globally means reaching the goal of mission of the company and that is to serve the people by providing food and beverages that will soothe their taste.

 

Reference

PepsiCo, Inc., 2000

 

IMF Staff, (2002). Globalization: Threat or Opportunity? International Monetary

Fund.
 

SWOT Analysis and Marketing Analysis. Available at [eCommerce-Now.com]

            Accessed on [28/05//2001].

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