Managing Operations: PepsiCo CEO's Operational Functions Report

This report examines the operational functions of the CEO at PepsiCo, focusing on the responsibilities and authority of a newly appointed CEO. It provides an overview of the company, its products, and operational activities, including the production processes for goods and services like beverages and...Read More

Running Head: Managing Operation
Operational Function of the CEO
Name of the Student
Name of the University
Author’s Note

1OPERATIONAL FUNCTION OF CEO
EXECUTIVE SUMMARY
The report is based on the company called PepsiCo. The reason for this assignment is to
discuss the factors related to the origination. The aim of the report is to discuss about the
operational function of the company which is a responsibility and authority of the newly
appointed CEO. Organizational process is handled by the appointed person and caters to improve
and enhance the function of the customer by taking up the responsibility of the service sector and
manufacturing unit.

2OPERATIONAL FUNCTION OF CEO
Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................4
Chosen company......................................................................................................................4
Overview of the company............................................................................................................4
Overview of operational activities...............................................................................................4
Goods and Services Company Operates..................................................................................4
Production process of that good or service..............................................................................5
Key performance objectives of operations..............................................................................6
Overview of the supply chain network....................................................................................6
The operations function collaborates with other business functions...........................................7
Core challenges that the operations function faces........................................................................11
Competition and demand in the market.................................................................................11
Identify an improvement........................................................................................................11
Expected challenges for implementation...............................................................................12
Conclusion.....................................................................................................................................13
Reference.......................................................................................................................................14

3OPERATIONAL FUNCTION OF CEO
Introduction
The following assignment is focusing on the introduction of a new CEO in the
organization. The aim of the report is to discuss about the operational function of the company
which is a responsibility and authority of the newly appointed CEO. The role of the manager in
this assignment is to incorporate the function of the company. A CEO of a company is obliged to
a duty who makes the major decision and manages the overall operation and looks after the
resources of the company. Organizational process is handled by the appointed person and caters
to improve and enhance the function of the customer by taking up the responsibility of the
service sector and manufacturing unit. As a manager it is the responsibility to evaluate the
function based on decision of the overall strategy of the company. Therefore it is important the
address the CEO about the aspect of the organisation.1
1 Kaur, Preetinder. "Contract farming of potatoes: a case study of PEPSICO plant." International Journal of
Scientific and Research Publications 4, no. 6 (2014): 1-4.

4OPERATIONAL FUNCTION OF CEO
Discussion
Chosen company:
PepsiCo
Overview of the company
PepsiCo is an international brand that cater to multinational foods, beverages and snacks.
The company has its headquarters in Harrison, New York in the hamlet of Purchase. The
company was founded by Caleb Bradham. The organization functions in the area of marketing,
distribution and manufacturing of food products. It came into existence in the year 1965 with the
merger of Pepsi-Cola Company.2 As the years had passed the Pepsi manufacturing company has
expanded its market and operates with Tropicana Products, Quaker Oats and Gatorade.
Overview of operational activities
Goods and Services Company Operates
The company caters to a wide variety of products and based on 2015 report, PepsiCo’s
product line caters to fifteen types product ranging from beverages and food products3. In the
total product it is estimated that, the beverage manufactured come to forty seven percent and the
2 Meinrenken, Christoph J., Beth C. Sauerhaft, Anthony N. Garvan, and Klaus S. Lackner. "Combining Life Cycle
Assessment with Data Science to Inform Portfolio‐Level Value‐Chain Engineering: A Case Study at PepsiCo Inc."
Journal of industrial ecology 18, no. 5 (2014): 641-651.
3 Pronk, Annette A., Romke Wustman, Anton J. Haverkort, Lubbert van den Brink, S. R. M. Janssens, and
M. A. Schoutsen. Annual report topsector potato India and Ethiopia 2014. No. 620. Applied Plant Research
& Plant Research International, part of Wageningen UR, Business Unit Agrosystems Research/Arable
Farming, Multifunctional Agriculture and Field Production of Vegetables, 2015.

5OPERATIONAL FUNCTION OF CEO
food product lies under fifty three percent of the total manufacturing unit. The product line of
PepsiCo is discussed are: Pepsi, Diet Pepsi, 7 Up, Doritos, Brisk, Quaker Foods, Cheetos,
Mirinda, Ruffles, Tropicana, Gatorade, Pepsi Max, Starbucks and many more.
Operational management of PepsiCo can be defined as the forecasting, controlling,
planning and scheduling all the activities that caters to the transforming the organizational input
into complete good and services. Operational Management focuses on the products that are
available to be produced and meet the customers need in an estimate cost-effective manner. It
aims at controlling an effective planning technique in the organization and looks after the
manufacturing unit through the application of concept as engineering, production management,
quality management, management system and accounting. The operational unit focus its
attention on the management process that includes the production and distribution of the
products. The process includes the functioning of creation and distribution of the product in
different parts of the region and world. 4
Production process of that good or service
Production process of PepsiCo can be defined as the combination of various material
inputs and immaterial inputs in order to create something in case of output. The aim and function
of PepsiCo is under the department of functions of production. It is responsible in catering to the
functioning area where the raw materials are transformed into finished products through a series
of production process5. As a role of a manager it has the authority and responsibility of the
4 Wong, Christina WY. "Leveraging environmental information integration to enable environmental
management capability and performance." Journal of Supply Chain Management 49, no. 2 (2013): 114-
136.
5 David, Fred R., and Forest R. David. Strategic management: Concepts and cases: A competitive advantage
approach. Pearson, 2013.

6OPERATIONAL FUNCTION OF CEO
manager to make sure that the raw materials are provided and are converted into finished goods
effectively.
Key performance objectives of operations
The key objective of PepsiCo is to protect the water supplies.6 The criteria of the
company’s condition is clean water as it becomes an essential part of the production as well as
catering to the requirement of meet the food production. The company first adopted the potential
to save clean water and use it efficiently. The second objective of the company is to meet the
targeted goals of sustained value of shareholders and financial performance. As one of the
leading companies, it had targeted in setting two strategies: firstly the strategy of cost reduction
which results in management promotional strategies in offering discount on purchase. Secondly
the innovative strategy of creating unique products and healthy snacks such potato chips with
less fat content.
Overview of the supply chain network
The supply chain management of the company is determined to focus in maximizing the
value of production it generates on a daily basis. The concept of supply chain management is to
distinguish between the final value of the product and the cost it incurs at the time of fulfilling
the customer demand. The supply chain at PepsiCo determines the location and the capability of
production, products to be manufactured, transportation, warehousing facility and storage. As the
manager of the organisation it can be said that the supply chain should be well maintained and it
6 Muzumdar, Prathamesh. "A Study of Business Process: Case Study Approach to PepsiCo." Available at
SSRN 2392611 (2014).

7OPERATIONAL FUNCTION OF CEO
is an important aspect to make strong decision in where the production plant can be well suited.
PepsiCo has assured that the production process is mechanized for efficiency.7
The operations function collaborates with other business functions
The operational function comprises to bring together the raw material with the production
process to create the product meeting the customer needs. It also shares idea across the company
which implies towards the improvement and achieve the cost saving analysis. Operational
function is important for the company because it is the foundation of the business management.
It describe how the orgnaisation is designed and can cater to towards the function of human
resource, sales and marketing and financial management. The focus of the operational
management is to look after the facility of managing the quality of the product and create
service.Human Resource- operative function is aligned with human resource of the PepsiCo
Company and cater to improve the efficiency and customer service. The operative function is the
human resource are related to specified activities of the management8. It looks after the function
of development of the organization, employment, compensation and relation with the staff. All
these functions are interrelated as they perform in conjunction with the different level of
management. When the right person or candidate is hired in the company the efficiency of the
functioning increases. PepsiCo is one of the largest beverage and food industry and comprises of
the principal business that is:
7 Mehdi, Mokhalles M. "Sports Sponsorship Development Company: Image and Creating Competitive
Advantage." Ushus-Journal of Business Management 12, no. 4 (2013): 83-99.
8 Meena, Kavita, and Sita Vanka. "Diversity Management and Human Resource Development: A Study of
Indian Organizations." Pacific Business Review International 5, no. 7 (2013): 45-51.

8OPERATIONAL FUNCTION OF CEO
 Gatorade sports drink
 Tropicana juice
 Quaker Foods
 Pepsi-Cola Beverage
 Frito- Lay’s Snacks
As a result the time is saved in training the employee when there is the presence of old
employees with more experience. The designing of human resource planning will count of the
presence and future recruitment and the preparation of the action plan that specifies the existence
of human resource. 9
Sales and Marketing- the sales and marketing division of PepsiCo often realize the sales
in the larger section of the operative function. Putting more emphasis on the sales the company
looks forward towards catering its product and maintain its product line. The responsibility and
understanding under the division of the unit is maintained and equipped to handle the areas of
sales. If a proper sales strategy is maintained and resources are maximized to boost up the profit
and sales. It is two individual unit that the organisation has its expertized formula to pursue a
classical marketing strategy10. It is the responsibility of the sale manager of PepsiCo to handle
9 Bracken, David W., and Allan H. Church. "The" new" performance management paradigm: capitalizing on
the unrealized potential of 360 degree feedback." People and Strategy 36, no. 2 (2013): 34.
10 Malhotra, Shilpy. "A study on marketing fast moving consumer goods (FMCG)." Intenational Journal of
Innovative Research and Development Vol 3 (1) (2014): 1-2.

9OPERATIONAL FUNCTION OF CEO
the marketing duties as a part of its authority and responsibility. Therefore, it will enhance the
efficiency of the employee and the relationship with its customers.
The marketing strategy of the PepsiCo under the urban and rural region is still developing
in different region. The different model of distribution of the product is available to the
consumer. In many countries the marketing and sales are done through direct store delivery
network through the source of direct store delivery network who are considered to be
independent bottlers and distributors.
The brand equity marketing strategy of PepsiCo is designed in a very systematic manner
where the bright logo in blue and white attracts the attention of many customers in the market11.
It has a strategy of targeting the young audience so the advertisement of its brand is done on the
basis of the targeted market. The advertisements targets the young audience specifically the pre-
teen and the teens and emphasizes on the sports, music and fun.
PepsiCo took serious association and worked by maintaining the interest in the target
market. The organisation evolved itself by sponsoring in the sports events like cricket, football,
in musical concert and many more events. The endorsement of the brand was done by the
celebrity stars like Britney Spears, ray Charles and many more with a strategy to involve the
consumers by following the favorite star.12
The marketing and sale of the brand has remained brand loyal to its customers and
achieved the top position in serving beverages and soda brands. It has a larger force of strong and
11 Michaelidou, Nina, Nina Reynolds, Luke Greenacre, Louise M. Hassan, George Christodoulides, John W.
Cadogan, and Cleopatra Veloutsou. "Consumer-based brand equity measurement: lessons learned from an
international study." International Marketing Review (2015).
12 1. Wedel, Michel, and P. K. Kannan. "Marketing analytics for data-rich environments." Journal of Marketing
80, no. 6 (2016): 97-121.

10OPERATIONAL FUNCTION OF CEO
loyal customer that is positioned against the competitive brand. It has helped in an efficient
manner in catering its services to the customer. The idea of introducing emoji in the Pepsi bottles
was a unique execution which was favored by all.
Financial management- financial management can be termed as the activity which is
concerned with planning and control of the financial resources. The planning part of the
company PepsiCo is crucial because forecasting of meeting a number of customers previewing
of the last year and creating a financial budget. Financial department of the organization caters
towards acquiring and utilizing the fund which stand as necessity in operating the efficient
management. The lifeblood of this organization are it revenue which is acquired to run the
business smoothly. The importance of the financial management I required because all the cot
incurred are involved in the unit cost per production for which the customer has to pay the price.
The price of a single unit of a product from PepsiCo constitute its price of raw material,
production cost, manufacturing cost, transportation charges and tax. The business concerned
must maintain adequate amount of accounts for their smooth functioning of the concerned
business. The business is maintained carefully in the financial ground as it is significant to attain
effective management of finance. The funds play a major role in financial management which
involves the source at minimal cost.13
The financial ratio of long term running organisation is calculated on the basis of the
financial position and the performance of the company is done on various ratios. The ratio
calculation is composed of current ratio, return on fixed assets, and price and earnings ratio for
13 Špička, Jindřich, and Stanislava Rolanovna Kontsevaya. "Differences of Financial Management Strategy
of Central European and Russian Milk Processors." AGRIS on-line Papers in Economics and Informatics 8,
no. 665-2016-45109 (2016): 89-102.

11OPERATIONAL FUNCTION OF CEO
investment valuation. The customer needs are met in an efficient manner where the cost of the
product are kept in a reasonable range. The cost of each unit of product maintains a minimum
amount of profit catering to customers need.
Core challenges that the operations function faces
Competition and demand in the market
The competition in the market against the brand has many competing rival, where Red
bull and Dr. Pepper Snapple are the leading competitors14. The Coca-Cola Company is the
primary competitor on the basis beverage. The demands of the product in the market are high on
the beverage and snacks product line. Many of the product in the product line holds a significant
position in the leadership style in the industry worldwide. The cause of high demand in the
market is use to the attribute of price, quality, wide scope of variety and distribution facility.
Successive promotion is dependent on the effective promotional strategy that introduces the
product and the effectiveness in the advertisement campaign.
Identify an improvement
The company is not always in the verge of reaching the top level but also faces different
challenges in the running of its marketing function15. The area analyzed in the field of
improvement is on the business portfolio and is weak in marketing towards health-conscious
14 Ahmad, Nur Syakirah, Rosidah Musa, and Mior Harris Mior Harun. "The impact of social media content
marketing (SMCM) towards brand health." Procedia Economics and Finance 37 (2016): 331-336
15 GalbRaith, Jay R. "Organizational design challenges resulting from big data." Journal of Organization
Design 3, no. 1 (2014): 2-13.

12OPERATIONAL FUNCTION OF CEO
consumers. The product line must diversify its brand in innovation of the beverage which
constitute of the soft-drinks that are of less sugar content. PepsiCo has to improve in the ground
of low fat content food and it is examined with the study of SWOT analysis and the weakness
that it addressed should work on the growth strategy. It acts as a weakness because the
organisation vulnerability stands as a risk in the market of food and beverage.
Expected challenges for implementation.
The expected challenges that the company can face while implementing the challenges is
limiting its product in the line of beverage and manufacturing the low content fat drinks. It is
expected that the consumers would switch their consuming from the normal drink to the low
content fat because according to the analysis the consumers prefer to switch their consumption
habit into low carbohydrate16. During the innovation of new product line, North America has
faced a decline of two percent of sales and eighteen percent on operating profit shortfall.
The challenges can still arise in the fall of market share and losses can arise due to new
production of products. It has the possibility of working well in the market as well as it can hit its
forecast planning technique and reach its goal.
16 16. Gardezi, Syed Shujaa Safdar, Nasir Shafiq, Muhd Fadhil Nuruddin, Syed Ahmad Farhan, and Usman
Aminu Umar. "Challenges for implementation of building information modeling (BIM) in Malaysian construction
industry." In Applied Mechanics and Materials, vol. 567, pp. 559-564. Trans Tech Publications, 2014.

13OPERATIONAL FUNCTION OF CEO
Conclusion
It can be concluded by mentioning that as the manager of the company it is the duty and
responsibility to highlight all the key functioning operative areas to the new CEO of the
organisation. The strategies implemented can be a source of information for the company to
renew its innovative idea and work on the new technique. The overall development of the
company is crucial as it is one of the largest selling beverage and Food Company.

14OPERATIONAL FUNCTION OF CEO
Reference
Ahmad, Nur Syakirah, Rosidah Musa, and Mior Harris Mior Harun. "The impact of social media
content marketing (SMCM) towards brand health." Procedia Economics and Finance 37 (2016):
331-336.
Bracken, David W., and Allan H. Church. "The" new" performance management paradigm:
capitalizing on the unrealized potential of 360 degree feedback." People and Strategy 36, no. 2
(2013): 34.
David, Fred R., and Forest R. David. Strategic management: Concepts and cases: A competitive
advantage approach. Pearson, 2013.
GalbRaith, Jay R. "Organizational design challenges resulting from big data." Journal of
Organization Design 3, no. 1 (2014): 2-13.
Gardezi, Syed Shujaa Safdar, Nasir Shafiq, Muhd Fadhil Nuruddin, Syed Ahmad Farhan, and
Usman Aminu Umar. "Challenges for implementation of building information modeling (BIM)
in Malaysian construction industry." In Applied Mechanics and Materials, vol. 567, pp. 559-564.
Trans Tech Publications, 2014.
Kaur, Preetinder. "Contract farming of potatoes: a case study of PEPSICO plant." International
Journal of Scientific and Research Publications 4, no. 6 (2014): 1-4.
Malhotra, Shilpy. "A study on marketing fast moving consumer goods (FMCG)." Intenational
Journal of Innovative Research and Development Vol 3 (1) (2014): 1-2.

15OPERATIONAL FUNCTION OF CEO
Meena, Kavita, and Sita Vanka. "Diversity Management and Human Resource Development: A
Study of Indian Organizations." Pacific Business Review International 5, no. 7 (2013): 45-51.
Mehdi, Mokhalles M. "Sports Sponsorship Development Company: Image and Creating
Competitive Advantage." Ushus-Journal of Business Management 12, no. 4 (2013): 83-99.
Meinrenken, Christoph J., Beth C. Sauerhaft, Anthony N. Garvan, and Klaus S. Lackner.
"Combining Life Cycle Assessment with Data Science to Inform Portfolio‐Level Value‐Chain
Engineering: A Case Study at PepsiCo Inc." Journal of industrial ecology 18, no. 5 (2014): 641-
651.
Michaelidou, Nina, Nina Reynolds, Luke Greenacre, Louise M. Hassan, George Christodoulides,
John W. Cadogan, and Cleopatra Veloutsou. "Consumer-based brand equity measurement:
lessons learned from an international study." International Marketing Review (2015).
Muzumdar, Prathamesh. "A Study of Business Process: Case Study Approach to PepsiCo."
Available at SSRN 2392611 (2014).
Pronk, Annette A., Romke Wustman, Anton J. Haverkort, Lubbert van den Brink, S. R. M.
Janssens, and M. A. Schoutsen. Annual report topsector potato India and Ethiopia 2014. No. 620.
Applied Plant Research & Plant Research International, part of Wageningen UR, Business Unit
Agrosystems Research/Arable Farming, Multifunctional Agriculture and Field Production of
Vegetables, 2015.
Špička, Jindřich, and Stanislava Rolanovna Kontsevaya. "Differences of Financial Management
Strategy of Central European and Russian Milk Processors." AGRIS on-line Papers in
Economics and Informatics 8, no. 665-2016-45109 (2016): 89-102.

16OPERATIONAL FUNCTION OF CEO
Wedel, Michel, and P. K. Kannan. "Marketing analytics for data-rich environments." Journal of
Marketing 80, no. 6 (2016): 97-121.
Wong, Christina WY. "Leveraging environmental information integration to enable
environmental management capability and performance." Journal of Supply Chain Management
49, no. 2 (2013): 114-136.