PepsiCo Cross Cultural Management Case Study

PepsiCo Cross Cultural Management

Executive Summary

As PepsiCo operates in about two hundred countries and territories, a proper training plan is necessary to meet all the possible challenges and opportunities associated with managing across cultures. It should include the following components:

  • designing effective learning strategy to manage short- and long-term professional development;
  • understanding the ways, in which various cultures work, their unique features and methods of successful work under these conditions;
  • designing efficient strategies for interacting with employees from other cultures that might work with information in unusual way or treat their duties and roles differently;
  • understanding the needs of different stakeholders in the company and organizational processes, which are essential for reaching desired goals.

Trainings do not require any extra personnel and can be performed by specialists of PepsiCo Universities. As for associated costs, they are not expected because the following trainings will be part of professional development.

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Introduction

PepsiCo, Inc. is a global company that works across a significant number of cultures, so it developed a specific strategy towards arising opportunities and challenges. The aim of this paper is to prepare the executive summary that would contain a training plan, associated costs and necessary human resources. Besides, it will discuss what key concepts the organization is using to manage across cultures. Another component of the research is studying the impact of cultural identity on PepsiCo. Human resource management is also influenced by cultural peculiarities, so the company’s policy in this area will also be analyzed. Finally, the ways of overcoming cross-cultural barriers will be offered. In particular, the role of language, education and training will be determined.

Critical Concepts in Management across Cultures

To achieve high productivity, global managers need to understand how to interact with their colleagues and companies around the world (Steers, Sanchez-Runde, & Nardon, 2010). PepsiCo, as a global company, also needs to deal with numerous challenges. First, PepsiCo works on designing an effective learning strategy to manage a short- and long-term professional development for its managers because working on the global level requires continuous learning and improvement due to the constant changes. The following process consists of two steps. The first step is a research of new trends towards managerial roles. Then managers try to create a learning model, which would help in the development process (Harris, Moran, & Moran, 2004).  Second, global managers, including managers of PepsiCo, face the challenge of understanding the ways, in which various cultures work, their unique features and methods of successful work under these conditions (Steers, Sanchez-Runde, & Nardon, 2010). For example, global managers need to know the things that are allowed and prohibited in each culture. In particular, PepsiCo’s managers paid specific attention to the customs that deal with work of females in the Middle East. If they had not studied this aspect, they would not have achieved an inclusion and diversity in their offices there. Besides, they would have problems with local communities because rules concerning female work are quite strict there. There are also minor peculiarities that the company is supposed to consider. For example, French and German citizens address to the European Union as ‘we’, whereas British address to it as ‘they’. However, they all are the members of this organization. Working in Russia, PepsiCo needs to be ready to have problems with state authorities caused by competitors that paid public officials for that (Steers, Sanchez-Runde, & Nardon, 2010). The third challenge is designing efficient strategies for interacting with employees from other cultures that might work with information in unusual way or treat their duties and roles differently. For instance, Koreans traditionally need to sit at their desks at the workplace. If they do not do this, it means they do not work (Steers, Sanchez-Runde, & Nardon, 2010). However, employees from other cultures would consider this rule strange. The fourth challenge is realizing the needs of different stakeholders in the company and the process that takes place there, which is essential for reaching the desired goals (Steers, Sanchez-Runde, & Nardon, 2010). Stakeholders may include workers, investors, customers, partners, and governments. For example, PepsiCo’s managers developed an understanding of the culture of the Middle East and tailored to specific working conditions for women working there. Cultures of Western Europe focus on supporting the equal rights of people with different sexual orientation. PepsiCo has responded to this need, too. In 2012, it was awarded a perfect 100/100 on its corporate equality index for LGBT efforts by Human Rights Campaign (PepsiCo).

Cultural Identity

            Cultural identity has a significant impact on PepsiCo. In particular, the company has different image and positioning across cultures because it tries to respect cultural identity of each country, where it operates. For example, it refers to considering individual needs of all the cultures. To achieve this, PepsiCo’s managers make a careful research before entering the market and offer services that are interesting for every particular culture. The company values its customers, so it tries to determine needs of customers faster than the rest of competitors and then develop the ways of satisfying these needs delivering qualitative beverages (PepsiCo).

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Human Resources

PepsiCo operates in more than two hundred countries and territories, so it stands for diversity and inclusion when managing its human resources (PepsiCo). Moreover, these two aspects are believed to be fundamental components of the company’s success. In particular, provision of an inclusive workplace culture that appreciates various approaches allows PepsiCo to create staff engagement as well as encourages originality and innovation. One of the examples of inclusion of human resources is the Company’s policy in the Middle East. Thus, PepsiCo developed specific programs to promote women there. Today, female employees have workplaces that respect local traditions. It is especially important for women in Saudi Arabia, where only about five percent of females work. It is the lowest rate in the world (PepsiCo). Such negative statistics is caused by local customs and unwillingness of companies to find the ways of overcoming the issues to give women the possibility to work and advance. As for PepsiCo, it has twenty five females employed in 2011 and 2012. They work in the management as well as in the front-line positions (PepsiCo).

Apart from that, promoting inclusion and diversity, PepsiCo stands for equality (PepsiCo). The company operates on the territories with different laws and regulations but it tries to follow all of them because it is the way to demonstrate respect to the variety and abilities of all people from all the cultures. For PepsiCo, a variety includes such unique characteristics as personality, color, race, religion, gender, lifestyle, age, nationality, disability, sexual orientation, thought processes, ethnicity, marital status, veteran status, work experience, etc.

Therefore, PepsiCo is a global company, which operates in different countries and hires people from various cultures. It has a respectful policy towards its employees. This allows the company to provide inclusion and diversity, which is essential for high productivity of its staff (Bonache, Trullen, & Sanchez, 2012). The organization respects local customs, laws, and regulations, particularly towards women in the Middle East; but at the same time, it has corporates values, which are common for all the divisions.

Overcoming Cross Cultural Barriers (Language, Education, and Training)

To overcome cross-cultural barriers, the company provides education and training to its employees. PepsiCo University includes five universities, such as Finance University, Global Procurement University, Global R&D University, and HR University (PepsiCo). Significant advantage of the following professional development is that employees from different cultures may interact, share their visions, and get to know much information about each other. In the future, it will help them to work together without any cross-cultural barriers. The common language of the company is English, but PepsiCo also values other languages. For example, during conducting an Organizational Health Survey, it had to prepare survey translations into forty eight languages (PepsiCo, n.d.). Such language policy permits employees to communicate with each other forgetting about potential cross-cultural barriers.

Conclusion

PepsiCo is a global company that has a respectful attitude to other cultures trying to satisfy their individual needs, so it looks differently around the world, which I saw clearly even prior the research. After making the following study, I learned that PepsiCo’s policy is based on two aspects, such as inclusion and diversity. It means that the organization respects unique characteristics of each employee. An inclusive workplace allows increasing creativity and engagement of the staff. Diversity helps to get a better understanding of buyers. Language policy and continuous professional development helped PepsiCo to deal with cross-cultural barriers within the organization as well as develop better understanding of customer needs. To reach an effective use of opportunities and challenges associated with managing across the cultures, it is necessary to design a training plan. This plan should include recommendations for dealing with major challenges that global managers have to deal with. Besides, it is necessary to calculate associated costs and determine human resources that would conduct training. Overall, I believe that PepsiCo effectively manages across cultures, which is proved by its high sales and numerous offices around the world. Such success among customers and staff means that the company managed to determine and satisfy their individual cultural needs.

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References

Bonache, J., Trullen, J., & Sanchez, J. (2012). Managing cross-cultural differences: testing human resource models in Latin America. Journal of Business Research, 65(12), 1773-1781.
Harris, P. R., Moran, R. T., & Moran, S. V. (2004). Managing cultural differences,sixth edition: global leadership strategies for the 21st century. Oxford: Butterworth Heinemann/ Elsevier.
PepsiCo. (n.d.). Diversity & inclusion. Retrieved from http://www.pepsico.com/Purpose/Talent-Sustainability/Diversity-and-Inclusion
Steers, R. M., Sanchez-Runde, C. J., & Nardon, L. (2010). Management across cultures: Challenges and strategies. New York, NY: Cambridge University Press.

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