Impact of Australian Legal Framework on Pepsico's Operations

This report provides an executive summary and detailed analysis of the impact of the Australian legal framework on the multinational beverage company, Pepsico Inc. It examines the company's compliance with the Privacy Act 1988, its strategies for addressing the sugar tax introduced in 2019, and the influence of international agreements, conventions, and treaties on product development and revenue generation. The report highlights Pepsico's privacy policy, which aligns with the Privacy Act 1988, and discusses how the company manages personal and credit-related information. It also explores the implications of the sugar tax on product development, including the reduction of sugar content. Additionally, the report analyzes the effects of agreements such as the Paris Agreement, agreements with Strauss Group, Portland Group, and HCL, and the Australia-United States Free Trade Agreement (AUSFTA) on Pepsico's operations and supply chain. The report concludes with recommendations based on the overall discussion.

LEGAL ASPECTS OF INTERNATIONAL TRADE AND
ENTERPRISE
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Executive summary
This report focuses on the impact of legal framework of Australia on large multinational
beverage company, Pepsico INC. it has been found that management of PepsiCo is concerned
about the legal system of Australia and they are complying with it. In this study, it has been
discussed that privacy policy of this company has been developed based on the guideline of
the Privacy Act 1988 of Australia. On another hand, a clear overview of their intention to
cope up with sugar tax after 2019 has been provided in this report. This report has mentioned
that agreements, conventions, and treaties are impacting on the product development of
Pepsico. Based on the current situation, they modify their strategies for product development
and it has a great impact on revenue generation. At the end of this report, conclusion and
recommendations have been added by considering overall discussion.
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Table of Contents
Introduction................................................................................................................................4
Overview of company................................................................................................................4
Discussion..................................................................................................................................4
Impact of legislative framework on Pepsico and reason behind impact................................4
Identification of the impact of agreements, treaties, and conventions on product and service
of Pepsico...............................................................................................................................6
Conclusion and recommendation...............................................................................................9
Reference list............................................................................................................................10
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Introduction
This report is focusing on impact of legal framework developed by Australian government on
multinational company, Pepsico. Clear overview of company is being provided and impact of
legal agreements, conventions, as well as treaties on product of this company, is being
identified and discussed.
Overview of company
Pepsico Inc is a large multinational firm, which is based on America. Headquarter of this firm
is located in Harrison, New York. This firm operates under beverage and food processing
industry, which is considered as one of the most competitive industries in the world. This
multinational firm operates in around 200 countries with about 267000 employees globally
(Pepsico.com, 2019). On 28th August 1898, Pepsico was incorporated and main products of
this company include snacks products, beverages, and other items. This firm has earned about
$64661 millions as net revenue in 2018 that is comparatively higher than that of 2017. In
2017, they have earned $63525 million, which is 2% less than in 2018 (Pepsico.com, 2018).
Australia is the home of many Pepsico brands that includes Gatorade and Quaker. Different
other products like smith's chips are also distributed by Pepsico Australia. About 2500 plus
employees are employed in this country in Pepsico (Pepsico.com.au, 2019).
Discussion
Impact of legislative framework on Pepsico and reason behind impact
The Australian government has introduced several legal guidelines in order to control
business operations of MNC such as Pepsico. This organization is serving top quality
products to its customers with consideration of legal guideline. As opined by Arel-Bundock
(2017), the country has its own privacy legislation that has been overseen by the Office of
Australian Information Commissioner (OAIC). Pepsico has mentioned in their official
website that they are concerned about confidentiality of information and they are complying
with the Privacy Act 1988 (Cth). They have developed a privacy policy for protecting
confidentiality of information. Credit-relation information is confidential and section 5 of
policy of this firm is covering this aspect (Pepsico.com.au, 2019). This company has defined
the term "personal information" as mentioned in the Privacy act of Australia. It has been
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mentioned that companies collect personal information such as name, phone number, address
and occupation for identifying individuals. Management of Pepsico company is liable to
maintain confidentiality of this kind of personal information.
Credit-related information is protected by the Privacy Act and this aspect has been considered
by this company while developing privacy policy. Detail of credit history, information about
late or missed payments and other related information are being protected by company
policy. This privacy concerned policy of this company is being able to influence more
potential customers to buy their products. This company is ensuring that they are collecting
personal information as required for business deal. This information cannot be used for
gaining any personal benefit. As mentioned by Bilchitz (2016), information provided by
consumers is being used by management of MNCs in order to market their products as well
as services. Pepsico is using information provided by their customers in various business
activities such as processing of payment, management of promotion, provision of discounts
and refunds, condition of market and product research. Personal information is also used in
case of direct marketing and communicating with customers by employees on behalf of
Pepsico. It is possible for consumers to complain about failure of Pepsico to maintain
confidentiality of credit-related information as per part IIIa of the privacy act.
It is clear that the Privacy Act 1988 is greatly affecting business operation of Pepsico. Owner
of this company prefer to comply with legal framework in order to avoid legal issues and this
is the main reason which is influencing the privacy Act to impact on business process of
Pepsico. As commented by Rohan and Moravec (2017), complying with this Act is helping
this firm to maintain confidentiality of data and customers trust this brand after studying their
policy. Customers understand clear organizational policy of Pepsico and this company is
getting more loyal customers. As a result, they are being able to generate maximum revenue
through their ethical business practice. This approach of this company is helping them to
provide values to their customers' trust in their brand.
Cases of obesity are increasing day by day and the Government of Australia have planned to
introduced 20% tax on sugary drinks by the middle of 2019. As commented by
Averchenkova et al. (2016), many countries have taken this initiative already and they have
been successful in reducing level of obesity from their country. Health experts are assuming
that this taxation may influence large beverage manufacturing MNC such as Pepsico to
reduce level of sugar in their products. Government of Australia has made this decision in
order to reduce rate of consumption of drinks with sugar. It is all about the wellbeing of
people live in Australia and Government is expecting to reduce level of sugar usage in
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preparing beverages. According to Kurtz and Nottage (2015), the debate has taken place by
stating that introduction of soda tax may prevent companies to earn maximum revenue
through selling beverages. MNCs under beverage industry of Australia such as Pepsico and
others have committed to reducing level of sugar to 20% by 2025. Pepsico may face
difficulties to cope up with this taxation policy of government and they are bound to comply
with this fact for avoiding legal issues. It may impact on the product development strategy of
this beverage company and they need to revise amount of ingredients used in preparing non-
alcoholic drinks.
People from young generation are major part of consumer base of Pepsico and this customer
group has supported the decision regarding soda tax. This aspect is forcing companies like
Pepsico to take this fact on serious note to retain existing consumers. As stated by Grafton et
al. (2019), this decision of government is already affecting business process of this company
as management is taking initiative to redesign their product. They have decided to maintain
same taste of their product after reducing the level of sugar. Management of this organization
is assuming that this approach of them may help them to maintain customer satisfaction. On
another hand, Riaz and Kirkbride (2017) have mentioned that this decision may help this
company to support health over taste and there is chance for this company to attract
maximum potent customers towards their newly designed non-alcoholic drinks. In addition, it
can be noticed that this taxation policy of government is potent enough to ensure well being
of country people.
Hence, it can be seen that this company is trying to comply with legal framework in order to
increase customer base. Pepsico has developed privacy policy for complying with the Privacy
Act 1988 (Pepsico.com.au, 2019). On another hand, they are planning about changes in
product by reducing sugar level as they are aware of decision of Australian government
regarding the sugar tax. They have understood that this kind of compliance of this company
may help them to maintain a good brand image. This aspect may help them to retain existing
customers and attract potential customers.
Identification of the impact of agreements, treaties, and conventions on product and
service of Pepsico
Australia has committed in Paris agreement that they can take strong international and
domestic actions in order to stop the rate of climate change. This is impacting on Pepsico
Australia on delivery of products. This agreement on climate change has forced to increase
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quality of packaging materials. As mentioned by Riaz and Kirkbridev (2017), many large
companies are generally reluctant in entering these conventions because that may increase
operational costs. However, large MNCs like Unilever and Pepsico has supported the Paris
agreement and decided to take proper steps in order to reduce the impact of climate change.
In addition, this firm has also committed to reducing environmental impact by 2025. They
have targeted to reduce greenhouse emission by 20% that can help to increase quality of
nature.
Pepsico has also entered into an agreement with Strauss group and sell dips and spread
products in different countries including Australia. This collaboration has helped Pepsico to
enter into health products sector and provided benefits to Strauss to sell new varieties of
products. Agreement of 50% of share is done between two given companies. As said by Riaz
et al. (2015), mutual benefits can be earned by entering collaboration regarding selling of a
product or service. Moreover, Pepsico has also entered into an agreement with Portland
group in the year of 2011. This organization provides efficient and professional services
regarding procurement. This agreement can help Pepsico to utilize infrastructure of portlands
like linehaul freight, distribution channels, and office infrastructure. In addition, contract
labors can also be used by this MNC in order to carry out their operations in procurement.
This can enable them, to produce and deliver good quality products in short span of time. As
mentioned by Ghemawat (2017), agreement with other company regarding supply chain
management helps to increase ace of production. Hence, revenue collection can be increased
by this firm in future.
Agreement and contracts are also signed between Pepsico INC and HCL for outsourcing.
Near about $500 million contracts were signed for outsourcing different services. As opined
by Cuervo-Cazurra (2016), outsourcing of essential services like information technology can
help large organizations to increase their operations. Hence, service and product delivery in
Australia has also increased due to this contract. This contract was signed in order to manage
information technology and management of data center. Hence, management and security of
consumer data have elevated by this contract. This can reduce the risk of breach of data and
thus consumer satisfaction rate can be increased.
Trade agreement is another essential factor that impacts on operations and product
development and delivery of an MNC. Parent country of Pepsico INC is USA and it can be
seen that there is a free trade agreement signed between Australia and the USA. AUSFTA or
Australia United States free trade agreement was done in 2004. However, this treaty came
into effect in 2005. This treaty has helped Pepsico to produce and sell goods in Australia and
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moreover, different barrier can be eliminated by this treaty. Barriers like technical obligations
in trading like regulations and standards can be mitigated by this treaty. As stated by
Boddewyn (2016), AUSFTA guides customs authority to in publishing law and rulings in a
proper way. This can help Pepsico to procure raw materials and other supports in a proper
way. Moreover, lenient procedures in customers can help Pepsico to conduct shipments in a
proper way. Thus, both achievement of raw materials and distribution of final products gets
easier. In addition, Meyer and Peng (2016) have contradicted that friendly policies of
customers are necessary to increase quality of supply chain management.
Both the countries have also signed food safety agreement that has also impacted business of
Pepsico. In 2017, both countries have signed a bilateral food safety agreement. According to
this agreement, duplication and delay in exportation can be minimized that occurs due to
huge regulatory practices. Hence, Pepsico can transport different products easily from
different points of Australia facing less complication. As mentioned by Jacobs (2017),
complex rules and regulations during transportation impacts on quality of products. Different
food prepared from agricultural products, juices, and other baked products falls under this
agreement. Application of this agreement has helped Pepsico to increase production and
transport in different other countries. Moreover, in November 2000, Council of Australian
governments has taken decision to sign food regulation agreement. This agreement can help
to increase quality of food and beverages that are sold in different regions of this country.
According to Ghemawat (2017), this agreement guided Pepsico to increase quality of food
according to standard set by this agreement. Hence, any legal implications can be avoided
and better profit can be gained.
Australia recently has signed trade deals with Britain that can impact on production of
PepsiCo. According to this deal, different things like food, manufactured products, wine can
be exported and imported between both countries. As opined by Riaz and Kirkbridev (2017),
trade deals open new opportunities for large multinational organizations and impacts on
revenue collection. Pepsico can distribute their Australian brands like Gatorade and lays to
Britain and less impact of Brexit can be faced by them. This trade deals worth $3.8 billion
and it's a two-way trade deal (Afr.com, 2019). It can be seen that PepsiCo is popular in both
the countries and hence they can encase this opportunity in order to gain further success and
become a leader of this industry.
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Conclusion and recommendation
From the above discussion, it can be concluded that management of this company is
complying with current legal framework introduced by Australian government. On another
hand, this report has mentioned impact of agreements, conventions, and treaties on the
products as well as services of Pepsico. It is recommended that this company needs to
maintain business ethics and provide values to both customers and their employees in future
for avoiding legal issues.
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Reference list
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Brexit, Available at: https://www.afr.com/news/economy/trade/australia-inks-trade-deals-
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April 2019]
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questions? A review of current knowledge and a new research perspective. Wiley
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Jacobs, M.N., 2017. Do bilateral investment treaties attract foreign direct investment to
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politics in Australia. ICSID Review-Foreign Investment Law Journal, 30(2), pp.465-480.
Meyer, K. and Peng, M.W., 2016. International business. Cengage Learning.
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Pepsico.com (2019), About, Available at: https://www.pepsico.com/about/about-the-
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