A Comprehensive Analysis of Leadership and Governance: Indra Nooyi

This essay provides an in-depth analysis of Indra Nooyi's leadership and governance strategies during her tenure as the CEO of PepsiCo. It highlights her adoption of situational leadership, particularly her use of the "5 C’s Model of Leadership," which emphasizes competency, courage, confidence, communication skills, and compass. The essay details her strategic decisions, such as redirecting the company's focus towards healthier products and her emphasis on teamwork and ethical decision-making, including the removal of aspartame from Diet Pepsi. It also discusses her strengths in adapting to various situations and taking calculated risks, as well as potential weaknesses in prioritizing company goals over individual needs. The essay concludes that Nooyi's leadership was instrumental in PepsiCo's significant revenue growth and transformation.

Running head: LEADERSHIP AND GOVERNANCE
Leadership and Governance
Name of the Student:
Name of the University:
Author’s Note:

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“Success is not how high you have climbed, but how you make a positive difference to the
world.”
The above quoted lines of Roy T. Bennett from his famous book “The Light in the
Heart” speak volumes about the role of an effective leader. The concepts of leadership and
effective leader have been in much debate in the present times. It is often seen that in the
present day business world the various business organizations as well as companies take the
help of effective leaders to bring about an overall growth and development of their overall
business (Goleman, Boyatzis & McKee, 2013). Therefore, it would not be too far-fetched to
say that the concept of leadership forms an important part of the overall business plan of the
various business organizations as well as companies (Goleman, 2017). This paper intends to
shed light on the CEO of the company PepsiCo, Indra Nooyi and various related aspects of
leadership.
Indra Krishnamurthy Nooyi born in the year 1955 is an “Indian American business
executive” and the current “Chief Executive Officer” of the company PepsiCo (The
Guardian, 2018). It is to be noted that many people are of the opinion that it was the effective
leadership provided by Nooyi which enabled the company to become the second largest
beverage company of the world in terms of the annual revenue which the company generates
(The Guardian, 2018). As per a report of the Forbes Magazine Nooyi was among the top 20
business executives of the world from the various business organizations as well as
companies of the world(Forbes Welcome, 2018). In addition to that, recently she was also
recognized as one of the founding members of the "Heroes of Conscious Capitalism" along
with the other 27 business executives from the diverse parts of the world (Forbes Welcome,
2018). She made a humble start in the company PepsiCo in the year 1994 but was soon
promoted to the position of CFO of the company in the year 2001 (Khaleeli, 2018).She was
promoted to the post of the President of the company in the year 2006 after the exit of its

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CEO Steven Reinemund (The Guardian, 2018). It is to be noted that after taking over the post
of the CEO of the company she redirected the international strategy of the company and
focused more on globalization in a bid to achieve the overall growth as well as the
development of the company concerned. She was also instrumental in the “1997 divestiture
of Tricon, now known as Yum! Brands”(Khaleeli, 2018). She was also instrumental in the
acquisition of the brand “Tropicana” in the year 1998 (The Guardian, 2018). It is to be noted
that this particular acquisition was instrumental in improving the prospects of the company in
the longer run. She also undertook “the merger with Quaker Oats Company, which also
brought Gatorade to Pepsi Co” (The Guardian, 2018). It is a reflection of this that the revenue
of the company from the years 2001 to the year 2018 has undergone a significant change
from a mere $2.7 billion to $18.2 under her leadership (The Guardian, 2018).
Nooyi has received several accolades for her effective leadership skills and the way
she transformed the fortunes of the company PepsiCo within such a short time. She appeared
on the “Wall Street Journal's list of 50 women to watch in 2007 and 2008” (Khaleeli, 2018).
In addition to that, she also appeared on the among “Time's 100 Most Influential People in
The World in 2007 and 2008” (Deutsch, 2018). Furthermore, she was also named by the
Forbes Magazine as the “3 most powerful woman in 2008” (Forbes Welcome, 2018). In
addition to that, she was named as the “1 most powerful woman in business in 2009 and
2010” by the Fortune Magazine (Deutsch, 2018). The same magazine rated on the list of
“Most Powerful Women List of September 15, 2015, as 2nd” (Deutsch, 2018).
It is to be noted that after Nooyi undertook the reign of the company PepsiCo she
undertook a redirection of the company and segregated the products offered by the company
into three distinct categories namely “”fun for you” (such as potato chips and regular soda),
“better for you” (diet or low-fat versions of snacks and sodas), and “good for you” (items
such as oatmeal)” (Deutsch, 2018). It is significant to note that she shifted the focus of the

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company from the various unhealthy snacks and drinks offered by the company and moved it
to the healthier products offered by the company in a bid to improve the health of the
customers. The year 2015 was significant for the company as well as Nooyi as she removed
“aspartame from Diet Pepsi, furthering the shift towards healthier foods, despite lack of
evidence of aspartame's harmful effects” (The Guardian, 2018). It is a reflection of this
policies as well as strategies adopted by Nooyi that the fortunes of the company underwent a
rapid transformation.
Leadership can be defined as the ability as well as the capability of an individual to
lead other individuals or groups of people towards the achievement of a particular goal or
objective (Hargreaves & Fink, 2012). Therefore, it forms an important part of the overall
business plan of the various business organizations as well as companies and helps them in
the achievement of the particular goals or objectives set by them. There are various styles of
leadership and the effectiveness of a particular leadership depends on the scenario or the
context in which it is being used (Chemers, 2014). The most popular leadership styles are
transformational style of leadership, transactional style of leadership, situational leadership,
autocratic leadership and others (Chemers, 2014). It is to be noted that among these the
situational style of leadership is one of the most popular styles of leaderships and various
companies often take the help of this particular style to bring about their overall growth as
well as development (Antonakis & Day, 2017). In the opinion of Paul Hersey and Ken
Blanchard (1969), situational leadership is the kind of leadership in which “the leader or
manager of an organization must adjust his style to fit the development level of the followers
he is trying to influence” (Hersey, Blanchard & Johnson, 2007). This particular style of
leadership is also called by the name of "Hersey-Blanchard Situational Leadership
Theory" and is widely used by the various leaders keeping in view the ever changing nature
of the business world (Hersey, Blanchard & Johnson, 2007). The “Situational Leadership

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Model” or more commonly called “Life Cycle Theory of Leadership” propounded by “Paul
Hersey and Ken Blanchard” gives a pertinent account of the various precepts of the
situational leadership (Hersey, Blanchard & Johnson, 2007). A typical example of the
situational style of leadership is the leadership style of Indra Nooyi which was used by her to
bring about a change in the business process of the company PepsiCo.
The major focus of this particular style of leadership is on the concept of teamwork
(Goleman, Boyatzis & McKee, 2013). It is to be noted that teamwork forms an important
aspect for the improvement of the performance level of any company or business
organization. Therefore, the major focus of the situational style of leadership is on the
concept of teamwork. In addition to this, a situational leader also seeks to maintain an
ethically correct position with the aim to do the thing which is not only correct from the
perspective of the business but also the thing which is ethically correction (McCleskey,
2014). Therefore, it would not be too far-fetched to say that a situational leader is confronted
with the ethical dilemma situations wherein he or she needs to choose between the action
which is ethically correct and the action which is correct from the perspective of the business.
Another factor which affects the situational style of leadership is the concept of change
management (Hersey, Blanchard & Johnson, 2007). It is often seen that the various
situational leaders often take the help of the concept of change management in a bid to bring
about the overall growth as well as the development of the concerned company or the
business organization.
In the opinion of Indra Nooyi “Leadership is hard to define and good leadership even
harder. But if you can get people to follow you to the ends of the earth, you are a great
leader” (Deutsch, 2018). In the opinion of many people she is an excellent example of the
situational kind of leadership. It is to be noted that in her role as the CEO of the company
PepsiCo she takes the help of the “5 C’s Model of Leadership” with the 5C’s being

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“competency, courage, confidence, communication skills and compass” (Deutsch, 2018). She
is a believer in the concept of teamwork and talking about the importance of teamwork and
her accountability to the team she says “Look, this is my company, this is my living, my
livelihood. And 300,000 people in PepsiCo depend on PepsiCo for their life and their
livelihoods. There are pensioners and investors out there who are hoping PepsiCo will remain
a successful entity forever” (Deutsch, 2018). In addition to that taking about the importance
of effective bonding within the team and team relationships she says “If you only want
people to help you when you need them and not have an ongoing relationship with them, they
don’t know you, they don’t know where you come from, and they are doubtful whether you
really are interested in the issue, or are you just trying to skate over a current problem?”
(Deutsch, 2018). Another significant aspect of the leadership style of Nooyi is her insistence
on making decisions which are ethically correct. This becomes apparent with her decision on
behalf of the company PepsiCo to remove “aspartame from Diet Pepsi” which was one of the
most popular drinks sold by the company at that particular point of time. In addition to that,
Nooyi also took the help of the process of change management for effective growth as well as
development of the company PepsiCo. Therefore, it would not be too far-fetched to say that
Nooyi displays almost all the major attributes of a situational leader and she used her skills as
well as effective leadership styles for the overall growth and the development of the company
PepsiCo.
The primary strength of the leader Nooyi can be said be her ability to the different
situations and apply her knowledge as well as effective leadership skills for the resolution of
the issue at hand. It is her ability to adapt to the various situations which is responsible for the
success which she attained as the CEO and the president of the company PepsiCo. Another
factor which can be considered as the strength of the leader Nooyi can be said to be her
ability to take chances which involves a significant amount of risk. A typical example of this

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was her decision to remove the unhealthy products sold by the company PepsiCo and also
remove the “aspartame from Diet Pepsi”. It is to be noted that at time when these decisions
were made by Nooyi they were thought to be too drastic as well as misplaced. However, the
significance of the decisions made by her soon showed results as she and the company
PepsiCo along with her was able to get the results of the decisions made by her. The
weakness of the leader Nooyi can be said to be fact that during her entire tenure as the CEO
and the President of the company PepsiCo she took into account the goals as well as the
objectives of the company and did not put emphasis on the individual needs as well as the
requirements of the employees. Another common weakness of Nooyi and the situational style
of leadership which she followed is that his particular leadership style fails to take into
consideration the cultural requirements of the individual employees. Therefore, it would be
much advisable for her to incorporate the individual needs as well as the requirements of the
individual employees and also their cultural requirements. It is to be noted that taking into
consideration these factors will not only enhance their level of job satisfaction but would also
help them to perform in a much better manner.

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