Journal Entry (Week 10) - Internal and External strategic analysis

Questions:

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?

2. Should organization 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 

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?

Organizational purpose can be defined as the core reason why the company exists. It compromises of organizational belief, values and their business definition. When an organization aligns its organizational strategy with their organizational purpose, it is called strategy by organizational purpose. Such organizations that abide by such strategies are those that fulfill their reason for existence. 

Corporate social responsibility (CSR) is the commitment by organizations to ‘behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as the local community and society at large’. - World Business Council for Sustainable Development 

Therefore, in own words can be defined as the responsibility (ethical, moral, and social) that an organization has towards its society (stakeholder, public, union, conservationist, etc). 

In my view, a company should focus on responsibility and shareholder satisfaction. In this context, I’ll be considering responsibility as “Corporate social responsibility”. The concept of CSR is somewhat new to the society however its impact is visible. While profit maximization focuses on short term wealth gathering, CSR focuses of sustainability development. CSR is a long term commitment; however, the results are prominent. Companies that adopt CSR have acquired long term profit while still satisfying its shareholders. 

Globalized economy has given prominent highlight to the role played by Multinational corporations. MNC's face global pressures from concerned groups to take up corporate social responsibility. Though they have no legal responsibility , yet their increase in power gives rise to increased responsibility towards the society at large by setting a code of conduct. 

Let’s take an example of Apple Inc. Previously there was lot of finger pointing going on towards Apple's CSR mismanagement. Though it made huge profit yet global criticism kind of tattered its image bring lots of dislikes towards it. Therefore, Apple has been seen more prominent and transparent in its CSR moves making it more globally appreciated.

The case study of Indra Nooyi was really interesting. It mainly focused on CSR of a company. I understood that there is always two sides to a coin. The case pointed out flaws as well as positive actions taken by Indra Nooyi during her reign as the CEO. Moreover, I gained knowledge on facts about PepsiCo. It has gained huge respect from me. Being a parent company and umbrella of many brands and yet successfully running in varied countries by adapting to the surrounding and yet maintaining its authenticity is a big move. 

Case study questions:

1. What are Pepsico‘s strategic objectives? Why does the firm exist? 

As observed Pepsico’s strategic objectives are: 

• Strategic acquisitions 
• Product Reformations 
• Related Diversification 
• Achieve Synergies 
• Close Relationships with distribution allies 
• International expansion 
• Maintain Efficient distribution system 
• Direct Store Delivery 
• Broker Warehouse (Source: Teacher's notes)

2. Reasons why PepsiCo exist: 

• To be the world's premier consumer product company focused on convenient foods and beverages 
• To produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate 
• And in everything we do, we strive for honesty, fairness and integrity 

3. What are the possible strengths and benefits of the strategy?

Growth strategy targeted at CSR is designed for economic, social upliftment of society at large. Therefore the possible benefit of this strategy is that the society is happy with the organization thus raising its brand image. Moreover, CSR focuses on sustainability. Thus, CSR strategy is designed for long term profitability and development of an organization.

4. What are the possible weaknesses and disadvantages of the strategy?

The possible weakness of this strategy are:

• As seen previously in PepsiCo during the competition of "Refresh project", it successfully aided the homeless and orphanage but was unable to raise its sale of soda. Thus, Profitability may decrease during the pursuit of CSR if the strategic planning is not done carefully. 
• Decrease in profitability indicates shareholders dissatisfaction
• The 2004 launch of Pepsi edge, a low calorie drink designed for healthier living failed though designed for the public good. Therefore, it can be concluded that sometimes such strategies fail.

5. Do you think the organisation has the right balance between profitability and responsibility? 

Yes, As per my view the organization has the right balance between profitability and responsibility. From the video link, I observed that the CEO pointed on PepsiCo.'s interest towards Corporate social responsibility. PepsiCo's product ranges of fun for you, good for you, better for you shows it's concern towards the society yet it has huge gross profits in those products too.
Indra Nooyi even pointed out the companies responsibility towards the over nourished and under nourished groups and indicated their responsibility of generating awareness among them to create a healthier society. Moreover, PepsiCo is among the 2 best organization in health and wellness.


I was inspired by the talk of Indra Nooyi. The way she portrayed her organization and explained her points without hurting the opposing anchor was great. I specially loved her talk on "how a country cannot run without having open conversation with the business leader and how businesses help countries to become innovative and creative".

Reference: 

Corporate Social Responsibility: What does it mean? , Business Respect. Available at: http://www.businessrespect.net/definition.php [Accessed on: 10 January, 2013]

Corporate social Responsibility. World Business Council for Sustainable Development. Available at: http://www.wbcsd.org/work-program/business-role/previous-work/corporate-social-responsibility.aspx [Accessed on: 10 January ,2013]