HRM Strategies of PepsiCo: SWOT and PESTLE Analysis

This report analyses HRM strategies of one of the most reputed companies dealing in food and beverages, PepsiCo. The report includes SWOT and PESTLE analysis, HR functions performed by PepsiCo, challenges in HR system, and HRM plan.

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PEPSICO
HUMAN RESOURCE MANAGEMENT
INSTITUTIONAL AFFILIATION(S)
STUDENT NAME

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Table of Contents
Introduction................................................................................................................................3
Strategic Analysis of PepsiCo....................................................................................................3
SWOT Analysis.........................................................................................................................4
PESTLE Analysis.......................................................................................................................5
HR functions performed by PepsiCo.........................................................................................6
Challenges in HR system...........................................................................................................7
HRM plan...................................................................................................................................8
Conclusion..................................................................................................................................9
References:...............................................................................................................................10

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Introduction
This report will analyse HRM strategies of one of the most reputed companies dealing
in food and beverages, PepsiCo. The headquarters of the firm is situated in Purchase, New
York and the present CEO of the company is Indra Krishnamurthy Nooyi. While supplying
with major brands like KFC, Frito Lay, Tropicana, Taco Bell, Quaker Oats, etc. the company
has gained a superior reputation globally (PepsiCo Inc. Success Story, 2017). The company
has been doing many acquisitions and mergers to keep expanding their business globally.
Presently the company deals in more than 100 countries and employees more than 274,000
satisfied workers. Although many challenges came in the growth path of the company, but
with its strategic management and sound HR practices, PepsiCo has been able to overcome
those successfully. The mission of the company is to reach the top position in world in food
and beverage industry. The strategy company follows allows it to fulfil its mission and helps
in formulating company’s vision to serve its customers with best products. PepsiCo believe in
delivering “Performance with Purpose” and thus provides safe and inclusive workplace to its
employees along with taking measures to safeguard environment (Bailey, 2014).
Strategic Analysis of PepsiCo
Organisations have to face many challenges in the form of legal, social, technological
and economical where human resource practices have a strong influence and consequence on
those challenges. Strategic HR models and practice provides overview to organisation’s HR
teams to plan, develop and implement HR strategies in fulfilling the desired goals. In order to
evaluate PepsiCo’s requirement for HR model, SWOT and PESTLE analysis will be made
that can help in gaining information about challenges faced by it.

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SWOT Analysis
Source: (Minnesota)
The production and distribution system of the company realises an annual growth of
5% each year. The internal analysis of PepsiCo shows the strength of the company that lies in
its maintenance of staff by balancing personnel and work life. They provide flexibility in
work culture which is also anticipated by employees. Whereas weakness in this strategy
shows that errant workers may not like flexibility in work. Others may neglect their work that
may result in inefficiency. Opportunity PepsiCo’s work practice shows creation of healthy
lifestyle by creating friendly atmosphere in workplace. Employees feel less strained along
with getting motivated to work more. Moreover valuable employees are retained by the
company through this process. Threats associated are dealing with errant employees who
abuse the work systems. This might create low productivity for which the company has to
suffer (Young, 2017).

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PESTLE Analysis
Source: (Davis, 2017)
Products of PepsiCo are subject to several laws such as drug, food and cosmetic Acts.
Health and safety of people depend highly on the products available in market (Jeffery,
2017). Therefore, PepsiCo has to face many political barriers in its operation. Government
stability in the countries PepsiCo deals is also important. Change of government hampers
company’s distribution channels through alteration made in country’s regulatory systems.
PepsiCo’s strategy to introduce itself in underdeveloped and developing countries shows its
risk bearing attitude as issues can be faced while dealing with people of those countries.
PepsiCo’s food products are depended on food and beverage raw materials. Any fluctuation
in economic condition of country may affect PepsiCo economically as rise in fuel prices will
affect its distributions and transportation costs. Moreover foreign exchange rates and other
economic factors like energy supply, cost of raw materials and supply network can effect
PepsiCo’s operations. PepsiCo has always been subject to lifestyle changes for which it has
to perform regular campaigns and promotions. In order to connect with people, social factors
are highly regulated by company to pay attention in current trends and requirements of its
customers. Technologically, PepsiCo uses latest technologies and innovations for producing
its food and beverages (Pepsico , 2017).

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After making internal and external analysis of PepsiCo, the role of HR seems very significant
to minimise risks and challenges that are faced by the company. Through sound HR policies,
PepsiCo can eliminate its issues tactfully. But, to find gaps in their practices, finding out their
current practice is also necessary.
HR functions performed by PepsiCo
The human resource policy of PepsiCo stands upon values and principles in which
well being of employees are given priority. Even rules and regulations laid by the company
give equal opportunity to all of its employees to develop themselves through continuous
learning and training programmes. Out of many, five HR practices that are been carried in
PepsiCo are as follows.
Recruitment- Recruitment policy of PepsiCo is based on both internal and external selection
of employees. PepsiCo’s recent technique for recruitment has been seen by making online
recruitment through internet where applications and CV’s are received online. Companies
make internal announcements for recruitments based on competencies and if it is not
available, they depend on external applications (Bianca, 2017).
Selection: PepsiCo selects fresh applicants through forms filled by them after which written
or oral exams are taken by specialised teams of the company. Performance exams enable
company to get knowledge about the applicant and their work experience. The results are
then examined before making final interview of the applicant. Eligible candidates are then
sent for medical examinations to ensure safety in workplace along with making a thorough
investigation of background.
Training and development: Under this process, PepsiCo makes several programmes and
training session for fresh and existing employees to keep their knowledge upgraded and
advanced. Training opportunities are provided through seminars, workshops and training
classroom sessions (Foss, 2012).

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Performance management: The competent employees of PepsiCo are awarded with
appraisals and rewards to make them motivated to work more. A survey is also made through
this process as incompetent ones are given warnings or demoted.
Compensation plan and benefits: Promoting from one level to the other segregates
competent ones from the incompetents along with motivating employees to get promoted by
working hard for the company. Increments in salary along with other bonus are also made by
PepsiCo to retain their valuable staff (Business & Human Rights Resource Centre ).
Challenges in HR system
After reviewing the HR practices in PepsiCo, challenge related to them has also been
identified. Firstly, the recruitment process implemented in PepsiCo consists of principles that
can make suitable candidates unavailable. The internal staff of the company may feel
unmotivated if new people are given higher posts and they have to answer new ones. Since
the company follows recruitment on the basis of talent, senior staff of the organisation may
feel neglected. Secondly, the selection process of the company has to undergo group
discussion that may create confusion among people. While discussions are made, finding
talent can become difficult. Third challenge faced in HR technique is in training and
development programmes. Company gives special consideration to selected employees for
training purpose. The selection made by them may create favouritism within the company
that may provide adverse affects. Here ethical issue can also be seen in which company
violates its own vision i.e. treating each person equally. Fourth challenge in Hr practice of
PepsiCo is their promotion techniques. The company promotes those people who are
competent. Under this principle the less competent ones or the ones who have limited quality
but possess dedication towards their firm might feel appalling (Crawlability, Inc, 2011).

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HRM plan
Selection- The selection process in PepsiCo can be based on finding out number of resumes
received for job opening as compared to the number of qualified people in it. Qualified
candidates can be compared with MQL or according to the leading marketplace. In this way
qualified people will become in the top list in the job criteria. The KPI formula that can be
utilised here is ‘Number of Qualified Person per Cost’. Implementing this strategy is also
possible with the help of latest techniques as well as company’s responsibility to find
qualified people will also be fulfilled.
Recruitment: In companies, vacancies are filled by employees selected from internal or
external sources. In PepsiCo, since ethical challenge related to recruitment has been
observed, implementing new process of recruitment is feasible. The company can make
recruitment on timely basis where each employee gets equal opportunity to show their talent.
Along with it, recruiting outsiders through recruitment process can be made fast by finding
bottlenecks in hiring process. KPI formula of ‘Recruitment Timeline’ can be utilised to
eliminate the challenges related to recruitment process (HR in Asia, 2016).
Training and Development- PepsiCo face’s challenge in HR practice related to training and
development and making use of KPI metrics can solve this issue more ethically. There are
many ways through which metrics can be formulated according to the job criteria like finding
cost of training, average training hours and investments for payroll. After finding the initial
figure, metrics can be formulated at the time of training progress to find end results. This way
PepsiCo will be able to build a sound development program along with involving each
employee in the process (Mimeo, 2016).
Promotion- The challenges related to promotion practices in PepsiCo also needs to be
changed. The company can use ‘People Metrics’ from which they can evaluate individual
efforts along with considering internal promotions versus external hiring. This metric can be

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calculated by dividing salary of employee with salary offered by competitors. This system
can make present employees feel more secured and contended (Jackson, 2017).
Conclusion
After making analysis of HR practices in PepsiCo, it can be said that however
competent any organisation is, the need for change is necessary. The meaning of HR
strategies has not been limited to traditional systems only, but involving new techniques and
policies are also important. PepsiCo needs to work more on its HRM practices and plans to
reduce challenges faced by it. The HR plan recommended in this report can provide
assistance to the managers so that they can anticipate future challenges.

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References:
Bailey, S. (2014). PepsiCo: A company overview. Retrieved from
http://marketrealist.com/2014/12/pepsico-company-overview/
Bianca, A. (2017). The Role of Human Resource Management in Organizations. Retrieved from
http://smallbusiness.chron.com/role-human-resource-management-organizations-21077.html
Business & Human Rights Resource Centre . (n.d.). PepsiCo. Retrieved from https://www.business-
humanrights.org/en/pepsico-0
Crawlability, Inc. (2011). Human Resource Management of PepsiCo. Retrieved from
http://www.managementparadise.com/forums/human-resources-management-h-r/214313-
human-resource-management-pepsico.html
Davis, J. (2017). PESTLE Analysis. Retrieved from https://www.linkedin.com/pulse/pestle-analysis-
jared-davis
Foss, K. L. (2012). HUMAN RESOURCE MANAGEMENT PRACTICES AND INNOVATION.
Retrieved from
https://www.druid.dk/laursen/files/Handbook_of_Innovation_Management_LaursenFoss.pdf
HR in Asia. (2016). 5 Key Performance Indicators for Successful Recruiting Teams. Retrieved from
http://www.hrinasia.com/recruitment/5-key-performance-indicators-for-successful-recruiting-
teams/
Jackson, T. (2017). 18 Key Performance Indicator (KPI) Examples Defined. Retrieved from
https://www.clearpointstrategy.com/18-key-performance-indicators/
Jeffery, A. (2017). CNBC:PepsiCo profit beats on demand for healthier snacks, drinks. Retrieved
from https://www.cnbc.com/2017/04/26/pepsicos-quarterly-profit-surges.html

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Mimeo. (2016). The Top Training KPIs. Retrieved from https://www.mimeo.com/blog/top-training-
kpis/
Minnesota. (n.d.). SWOT Analysis. Retrieved from
http://www.health.state.mn.us/divs/opi/qi/toolbox/swot.html
Pepsico . (2017). Retrieved from http://www.pepsico.com/
PepsiCo Inc. Success Story. (2017). Retrieved from https://successstory.com/companies/pepsico-inc
Young, J. (2017). PepsiCo SWOT Analysis & Recommendations. Retrieved from
http://panmore.com/pepsico-swot-analysis-recommendations