The case provided examines the importance of leadership and strategy in changing the image of a company. The major issue highlighted in the case in the strategic vision and Indra Nooyi’s leadership style as the Chief Executive Officer of PepsiCo. Indra Nooyi joined PepsiCo in 1994 where she first served as the Senior Vice President concerned with strategic planning in the company. In 2001, Indra Nooyi rose to the post of Chief Financial Officer and later to that of Chief Executive Officer in 2006. She took part in a number of strategic initiatives during her tenure at PepsiCo. Some of the changes initiated by Indra Nooyi at PepsiCo include spinning of Pizza Hut, Taco Bell and KFC claiming that PepsiCo could not bring adequate value to the fast food industry with hotel-based businesses since the company required a very committed management. Through Nooyi’s influence, PepsiCo succeeded in acquiring Quaker Oats Company and Tropicana in 2001 and 1998 respectively. This case shows how Indra used a mix of various leadership styles including ethical leadership, servant leadership, and charismatic leadership styles (ICMR, 2011).
Factors that shaped Indra Nooyi as a leader
As a leader, Indra Nooyi was motivated by a number of factors that have influenced her performance to date. Born in October 1955 in Chennai, India, Nooyi grew up in the hands of her mother who inspired her and who acted as her first management teacher from her childhood life. Nooyi’s grandfather also ensured that she adequately prepared for her school lessons. Indra pursued business related courses as part of her post-secondary studies such as Masters in public and Private Management. Further influence and inspiration was received throughout her College life and in her places of work (ICMR, 2011). Indra Nooyi has successfully applied her leadership skills in transforming PepsiCo.
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Factors that could have made Nooyi Change her decision about corporate sustainability
When she became the Chief Executive Officer of PepsiCo, Indara Nooyi advocated to achieve a “Performance with Purpose.” This encouraged him to implement various measures to advance the sustainability of PepsiCo’s operations. Nooyi majorly focused on improvements of health through products offered by PepsiCo. Having grown up in India, Nooyi was impressed by the success that the Green Revolution had brought to the country (ICMR, 2011). She therefore wanted to lift the standards of PepsiCo as far as sustainability is concerned. Her initial attempts yielded positive results which encouraged her to continue with her human and environmental sustainability strategies (Epstein and Buhovac, 2014).
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Did Nooyi have a life outside PepsiCo?
Yes. Nooyi had a life outside PepsiCo. Nooyi balanced between the company and her family. However, she experienced a number of challenged when she became the company’s Chief Executive Officer. Nooyi confirms that there are so many sacrifices and tradeoffs in life because she has to serve the role of a wife, a mother and a daughter, and at the same time as a leader. While at work, Nooyi would receive calls from her daughters even during work hours. She also called her family back at home when she was on long trips associated with her professional duties. Such kind of life indicates that Nooyi had a life outsie PepsiCo (ICMR, 2011).
Leadership style used by Nooyi at PepsiCo.
The leadership style used by Nooyi at PepsiCo is autocratic leadership style. Autocratic leadership style is where a leader dictates procedures and policies, makes the best decisions on what goals are to be achieved, and controls and directs all activities while coordinating the subordinates’ participation ( Bass and Bass, 2009). When going through difficult times, Nooyi made changes that transformed the company’s restaurant business. Additionally, Nooyi implemented measures that ensured that PepsiCo maintained human and environmental sustainability. Due to her autocratic leadership characteristics, Nooyi was elevated to president during Steven Reinemund’s subsequent tenure. It is due to autocratic leadership qualities that Nooyi was eventually chosen to be the Chief Executive Officer of PepsiCo (ICMR, 2011).
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Nooyia also used a mix of various leadership styles including transformational leadership, ethical leadership, servant leadership, and charismatic leadership styles. According to Bass and Bass (2009), a transformational leader strivse to motivate his or her followers to accept changes and implement new ways of doing things. Nooyi continuously believed that a good leader should emphasize on long-term outcomes rather than short-lived outcomes, and she managed to change PepsiCo what it is today. Ethical leaders demonstrate moral conducts though interpersonal relationships and personal actions, through reinforcement, decision-making and communication (Brown et al., 2005). Nooyi made decisions that ensured that PepsiCo’s operations and products yielded beneficial results to human beings and to the natural environment (ICMR, 2011).
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A charismatic leader inspires and motivates his or her followers through traits and abilities (Conger, 1989). Indra Nooyi was known to be a highly charismatic leader. She inspired and motivated her employees at PepsiCo to take even difficult tasks. According to Bass and Bass (2009), a servant leader listens to the plights of his or her followers and is committed to their growth. A servant leader also demonstrates conceptualization, empathy, persuasion, stewardship, and development of followers and the entire community. Indra Nooyi was a servant leader because she served as a mother to all workers at PepsiCo and to the entire community. She attended to company issues as she would do to her own family (ICMR, 2011).
SWOT analysis of PepsiCo
Major strengths of PepsiCo include; a close collaboration between retailers and PepsiCo’s marketing team, a proactive and responsive management team, extensive product innovation, the company’s strong stand on sustainability and its quick response to health demands of customers, a broad portfolio and leadership across many product categories, and excellent ability to make successful acquisitions (ICMR, 2011). PepsiCo’s weaknesses include; inability to internalize the Quaker brands, low profitability from international operations, high independence on the United States market for revenue, and persistent changes in the organizational structure of the company that results to internal instability (ICMR, 2011).
Read more on Strengths, Weaknesses, Opportunities, and Threats Analysis (SWOT)
PepsiCo also has a number of opportunities and threats. PepsiCo has a strong growth rate in international markets such as Turkey, Russia and the Middle East where it can intensify business activities to increase sales, PepsiCo can grow significantly in the global non-carbonated beverage market, the company has an opportunity of reformulating snack foods due to the growing desire for healthy foods, availability of other distribution channels for Gatoarde as used in other products, and flexible international business laws that allow the company to expand its business to other countries (ICMR, 2011). PespsiCo’s threats include; increasing concern about health may affect sales of sweet and salty products produced by the company, growing environmental concerns across countries may prevent customers from purchasing bottled water and beverages, economic crisis may affect demand, threat of new entrants into the beverage industry, and fluctuating consumer taste and preferences (ICMR, 2011).
Corporate-level strategy pursued by PepsiCo
PepsiCo’s corporate level strategy is evident in its struggle to maintain an impressive performance that does not only yield profits to the company, but that also ensures human and environmental stability (Johnson, Scholes and Whittington, 2008). PepsiCo has strived to meet its corporate goals through successful acquisitions in 1998 and 2001. The key parts of corporate-level strategy for PepsiCo are continuous introduction of new products and innovation. The company developed “better for you” snack foods to take care of ever fluctuating consumer preferences. This strategy effectively fits with the company’s SWOT analysis because they demonstrate how PepsiCo has used its strengths and opportunities to take care of its weaknesses and threats (ICMR, 2011).
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Issues raised in the case
The case presents the qualities of Indra Nooyi as a leader and how effective leadership is related to improved organizational performance. The case also provides relevant information about how value-based leadership affects businesses and their stakeholders. Other issues presented in the case include; the relationship between unique leadership qualities of Indra Booyi and how such qualities are related to leadership theories, the role of company leaders in achieving corporate social responsibility, and the relationship between a effective leadership and a firm’s financial numbers (ICMR, 2011).
PepsiCo should continue to implement the aggressive growth strategy and expand Pepsi brand globally (Johnson, Scholes and Whittington, 2008). Additionally, Indra Nooyi use vertical integration strategy through acquisition of new bottlers in order to increase profit margins in its North American market. Finally, PepsiCo should continue to focus on innovation and invest heavily on research and development in order to achieve competitive advantage in the beverage industry (Johnson, Scholes and Whittington, 2008).
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