Table of Contents

Executive
summary...........................................................................................................03

Introduction......................................................................................................................
........04

Exhibit 1: We are performance with

purpose.........................................................................05

Exhibit
2...................................................................................................................................06

Operational Implication of IS in different

departments...........................................................07

Suply Chain
Management...................................................... .................................................08

Human Resources
Management..........................................................................................08
Accounting and Finance
Efficiencies.......................................................................................08

Management Implication of IS in PepsiCo

hierarchy.............................................................09

Need for

Leadership::....................................................................................................11

Recommendation........................................: .................................................................1

Conclusions:..................................................................................................................1

Reference &
Bibliography: ............................................................................................18
 PepsiCo

Executive summary:

We sit on the edge of a cliff, where radical new technology is rinsing up to us with a

force so powerful that it will transform our landscape. The rules of commerce are

shifting rapidly, with explosive new business models taking shape by the minute.

Almost every day we are astounded by the latest innovations in communications,

computers, and biotech. Technology is behind key transitions in the very foundations

of our society. In a networked global marketplace, companies must embrace the

reality of rapid change and interconnectedness and corporate strategy must holistically

consider the complex factors shaping the landscape. That was why; Strategic

Information technology has such an important role when it comes to the global

success. If PepsiCo wasnt able to build and sustain proper information technology

infrastructure, and successfully implement their ongoing business transformation

initiative or outsource certain functions effectively their business could suffer. They

depend on information technology as an enabler to improve the effectiveness of the

operations and to interface with the customers, as well as to maintain financial

accuracy and efficiency. If PepsiCo do not allocate and effectively manage the

resources necessary to build and sustain the proper technology infrastructure, they

could be subject to transaction errors, processing inefficiencies, the loss of customers,

business disruptions, or the loss of or damage to intellectual property through security

breach. Therefore, its important for PepsiCo to have a holistic Strategic Information

Technology In order to gain the competitive advantage.

Introduction:

Although most organizations have long regarded their stores of data as one of their

most valuable corporate assets, how this data was managed and maintained varies

enormously. Originally, data was used to help achieve operational goals, run the

business and help identify the future direction and success of the company. However,

new government regulations and guidelines are a key driving force in how and why

data is being retained, as they are now requiring organizations to retain and control

information for very long periods of time. So today there is two additional objectives

IT managers are trying to satisfy: to store vast quantities of data, for the lowest

possible cost; and to meet the new regulatory requirements for data retention and

protection. I will try to analyze this report in three separate sections which is

essentially the questions related to PepsiCos Corporate decision making, Its

competitive advantage and finally what would I suggest as an information

management consultant of PepsiCo to Make it more profitable organization. PepsiCo

International, with sales of billions; Frito-Lay North America, its munchies division,

and Quaker Foods North America, (also known as QTG for Quaker

Foods/Tropicana/Gatorade). It has computer systems networks in more than 700

offices worldwide which is a very big challenge to foster. Before going into further

discussion lets take a quick look at the market position and the brands of PepsiCo.

Exhibit 1: We are performance with purpose (Annual Report, 2008)

Exhibit 2: We are performance with purpose (Annual Report, 2008)

The entire report is compiled based on the assumption and the secondary data that

suggested PepsiCo is struggling to integrate its MIS in order to generate synergy in

the organization. PepsiCo was facing essentially three distinctive problem related to

their decision making, core competencies and their financial viability to compete in

the industry benchmark. The companys competitive strategy can be characterized as

a hybrid strategy (Johnson and Scholes 2002), where the low cost base (cost

leadership), reinvested in low price, is merged with differentiation based on quality,

reliability, flexibility, innovation and sustainable value creation for all key

stakeholders. Porter and Miller (1985) assert that management of information systems

can no longer be the sole province of the functions such as accounting and record

keeping, focused on cost control and reduction. The use of advanced information

systems in value chain activities allows companies to enhance competitive

differentiation as well as attain cost leadership and consequently gain sustainable

competitive advantage. In other words, the ability to pursue cost reduction and

differentiation simultaneously should be a criterion for IS utilization. IS must have the

potential to be a strategic weapon in at least one of the following: (1) gaining

competitive advantage; (2) improving productivity and performance; (3) enabling new

ways of managing and organizing; (4) developing new businesses. These views

suggest that the utilization of IS in strategic and managerial activities is more

important than their use in operational contexts (Soo, 2002). PepsiCos main problem

lies in the corporate decision making pattern regarding Information system that, they

have been practicing in the organizations.

Operational Implication of IS in different departments:

The implication of integrated of MIS varies according to the nature of business and

the capacity of the company. A company mast remembers investing in IT can be

expensive and require intensive training and development. The company such as

PepsiCo is massive and has the financial and technical resources to invest in any kind

of IS upgrade to improve efficiency of the business.

Supply Chain Management:

The existing supply chain of PepsiCo involves taking order through different

intermediaries and forecast what the demand would be and what raw materials should

be allocated in consignment. It also involves set out order date, delivery arrangement,

warehouse booking, and finally predating the demand to eliminate wastage. There are

companies who have totally automated supply chain management approach and they

can forecast their order to the approximately correct quantity. Fully automated supply

chain is a big challenge as it involves combining all the stakeholders and put them as

part of a system may be software where everyone has an input to enter and the

software will determine the correct projected quantity of order. The bottom line is

PepsiCo can adapt or design their own the fully automated supply chain management

system and eliminate wastage and everyone in the company can keep track of what

happening to the future forecast as all the employees associated to supply chain will

take part to determine and make automated supply chain system a success (Chen,

2004)

Human Resource Management:

Another major department that can take the advantage of integrated information

system is human Resource Management. Although, PepsiCo already using online

recruitment system and sorting the application to select the appropriate candidates

they can also integrate some crucial functions of HRM to apply information system

on Human resource management. PepsiCo is not actively practicing electronic

employee appraisal system where employees can do the self and peered appraisal

electronically. This ensures the entire appraisal that is being conducted is solely not

partial. They can also identify future leaders and choose people those deserve reward

and promotions.
Employee Relations:

Another aspect that of integrated information system is that communication between

employees becomes so easier. PepsiCo has offices across the world and branches in

major cities. I am quite sure they have LAN and WAN network that help to

communicate employees when necessary. Using the same network they could launch

personalize office messenger which will allow communication between different level

of management hierarchy and will reduce communication gap. Imagine having a good

idea or suggestion which require authorization from someone who is important and

busy and dont have time to physically see the employees at grassroots and they could

actually communicate their ideas by speaking to the right person from his/her desk.

Its possible for PepsiCo to launch such software and develop grater employee

relations in the company.

Accounting and Finance Efficiencies:

The accounting and finance department can be benefits from the integrated

information system in the organization. Both, accounting and finance needs crucial

financial information from different departments to prepare budget, balance sheet,

annual report which can be accumulated from enterprise resource planning software.

Although, PepsiCo may have such system in place but I doubt they would have

applications like SAP to assist them to help making accounting and financial decision.

SAP is a world renowned enterprise resource planning software that helps companies

across to make business decisions and future forecasts which also specialize in

accounting and finance. So, I believe implementing such strategy can help PepsiCo to

achieve integrated information system objectives.

Management Implication of IS in PepsiCo hierarchy:

If we take look at the traditional pyramid of PepsiCo management hierarchy it easy to

presume that, they have the three layer of management structure. As we are all aware

of the fact that, top level management is the most powerful and have the optimum

influence when it comes to integrated information system strategy. Sadly, most

companies dont have the leadership to invest on IS development portfolios or any

investment that can make the whole business a lot more efficient. PepsiCo didnt have

any CIO (Chief Information officer) till the year 2008 which is quite surprising for a

company like PepsiCo as they have thousands of branches worldwide. Naturally, its

no wonder that many of the portfolios struggled in the last decade as the integration

system was not there. If the CIO is not available in the top management its difficult

for the IT officers to convince the functionality of the certain projects to the board

members as many of them would not be aware of the introduction of new enterprise

resource planning software and what kind of efficiencies those can bring to the

company. With the help of a CIO the most complex system can be explained and

demonstrated at the most simplest manner which can help the most armature person

with the knowledge of technology to see the potential of a particular project

(Clampitt, 2005).

Communication:

Communication is the key in any level of management no matter whatever structure

they intend to follow. PepsiCo usually follow vertical structure where management is

pyramid and communication comes from the top to bottom rather than both ways.

With the help of IS the communication gap can be eliminated if they introduce virtual

communication messenger that will allow everyone in the company to communicate

whenever they want. They obviously need to conduct training to introduce the new

application to the employees but it will worth it as everyone will have the opportunity

to speak out and suggest new ideas. In a way this will do the job of empowerment and

delegation which is good for employee motivation.

Decision Making:

Another important implication would be to be able to make decision by taking inputs

from the enterprise resource planning software which will help to make qualitative

decision. Accounting and financial decision can be difficult to forecast sometimes

which can be eliminated by the help of enterprise resource planning software. It will

also be beneficial for the mid level management to communicate between top and

bottom level management as mid level is the busiest employees in the management

hierarchy. So its easier for everyone to do their job efficiently. PepsiCo can follow

the same philosophy and of management where they can apply the same techniques to

integrate the management and technology to bring efficiency in the organization.

Innovation:

Innovation is the key for any company if they want to be successful. For a massive

company like PepsiCo its not easy to bring the best ideas as they deal with thousands

of employees and branches spread all over the world which is a big challenge.

PepsiCo dont have the mechanism to bring the best ideas from the grassroots which

can turn out to be the competitive advantage for the employees (Bhaskar, 2003).

There can be a mechanism which should be in place where all the employees can

participate and suggest through messenger or enterprise resource planning software to

the top level management to draw their attention about the best possible ideas. This
can change the entire idea of how PepsiCo operates and manage their business by

integrating information system in all layer of management.

Need for Leadership:

According to the PepsiCo annual report they didnt have any CIO (Chief Information

Officer) since 2000 which is shocking since they have made such huge investments

on IT. Its one thing not to have any IT objectives laid out for a company a whole

different scenario to invest without knowing what the impact might be. Which means

all these time PepsiCos major upgrade decisions made by the person who was in

charge of the particular SBUs regardless of his/her background of specialty. The CIO

is conversant with the strategic goals of the business and the alternative ways that the

company can meet them. Armed with this knowledge, the CIO can partner with the

operating managers to create more powerful ways to do business utilizing new IT

capabilities. The CIO can go far beyond rank-ordering managers' requests, and in

many cases actually take the lead in redefining the business. This requires, first and

foremost, that the CIO deeply understand the business, far beyond the day-to-day

operations as currently conducted. Therefore, Leadership is critical to the success of

PepsiCo to achieve the competitive advantage over its rivals.

Management Philosophy:

The management philosophy of PepsiCo should be diverse and knowledge based. We

have three levels of management executive, middle and operational. Since PepsiCo is

struggling to unify its integration strategy for a while, its not a good idea to propose

diversified strategy in the executive level. The reason I am suggesting such strategy
because PepsiCo has around 15 SBUs all over the world and each SBU is unique in

terms of business operations. Therefore, when comes to make a decision about the any

IT investment each SBU will have its own Demand which is quite natural. So, when it

comes to decision making the management will look into facts like whether the

technology is affordable, feasible, efficient, durable, user friendly, flexible and so

forth. If these features are not present in a particular portfolio then as a CIO I would

suggest looking into different alternatives. However, I would suggest diversity and

knowledge sharing approach in middle and operational level. The reason is middle

and operational level has to encounter with different experience where adaptability is

necessary so this is quite natural for global giants who are successfully technology

driven. Proposed diversified and knowledge sharing management structure is

organized around knowledge-based teams of knowledge workers, but further extends

this concept to include larger knowledge groups to transform an organization into a

knowledge-based organization. If an organization's functional structure can be

successfully transformed, then this enables the maximization of competitive

advantage realized through knowledge management initiatives, more specifically

through knowledge sharing. (Zuckerman, 2005) Upper level management, who are

responsible for organizational change are the primary audience, though the principals

described may be implemented through a more grass roots approach by lower level

management.

Recommendation:

1. Intended IS Strategy:

"Strategy is the direction and scope of an organisation over the long-term: which

achieves advantage for the organisation through its configuration of resources within
a challenging environment, to meet the needs of markets and to fulfil stakeholder

expectations". (Johnson, 2007)

Simply having an IT strategy to take advantage of the transportation of information

globally is not enough. The IT strategy must be closely aligned with the overall

business strategy of the company and one way to envision the business entities that

will benefit most from an integrated global IT management are global business

drivers. I think if PepsiCo wants to see itself survive in the future they need to follow

diversified strategy. Which means according to my logic each business units should

deploy their own setups. It is a long term solution because each business units of

PepsiCo is different and their supply chain is different from each other which make it

impossible for PepsiCo to unify their information system. So, rather than having a

vulnerable Information system its better to have an autonomous system to serve its

purpose. For long term survival its important to have steady operation which is not

subject to disturbance. If PepsiCo can adapt the diversity approach it might turn into

one of their competitive advantages. IT can facilitate a global strategy ( transnational

strategy) but that it should not be the global strategy or even lead the global strategy.

Transnational strategy is a management approach in which an organization integrates

its global business activities through close cooperation and interdependence among its

headquarters, operations, and international subsidiaries, and its use of appropriate

global information technologies (Zwass, 1998). The global IT strategy should only be

a part of a shared global business vision and global strategy. Even though these

common global IT systems may be initially opposed by country managers, failure to

capture these integration opportunities can lead to lost efficiency, loss of market share,

and dissatisfied global customers. Nevertheless, a successful strategy emerges when

the company is ready to go for the best practice approach in the industry which
ensures the commitment of the employees towards success. Therefore, to be

competitive and profit oriented a good well integrated strategy is necessary.

2. Planning and Efficiency: As an Information system consultant for PepsiCo I

think they need to Plan for information systems, as for any other system,

begins with the identification of needs. Such planning for information systems

is much like strategic planning in management. Objectives, priorities, and

authorization for information systems projects need to be formalized. The

systems development plan should identify specific projects slated for the

future, priorities for each project and for resources, general procedures, and

constraints for each application area. The plan must be specific enough to

enable understanding of each application and to know where it stands in the

order of development. Also the plan should be flexible so that priorities can be

adjusted if necessary. (King, 1995) In his recent article has argued that

strategic capability architecture a flexible and continuously improving

infrastructure of organizational capabilities is the primary basis for a

company's sustainable competitive advantage. He has emphasized the need for

continuously updating and improving the strategic capabilities architecture.

PepsiCo has made series of bad investment in technology triggered by bad

management decision and lack of knowledge or expertise. In order for it to be

successful the supply chain management which is linked with IT has to be

well organized. A supply chain is a network of business units that enables the

collection of raw material, its transformation into products and the delivery of

these products to consumers through a distribution system. The aim of supply

 chain management (SCM) is to manage these activities so that products go

through the business network in the shortest time and at the lowest costs

possible (Lee, 1995). Effective supply chain management demands

comprehensive information systems that allows to synchronize plans with our

customers and suppliers, collaborate in real time both inside and outside our

enterprise, execute plans, adapt to a dynamic environment, and measure

performance to objectives. PepsiCo can offer a range of internet-enabled

software that facilitates all stages of supply chain management, from planning

through execution. Which will streamline everything from the earliest sales

forecasts to customers acknowledgements of orders received? It can also

model complex supply chain scenarios, factoring in all relevant costs and all

potential supply and demand constraints. It has to easily extend supply chain

business processes beyond a companys four walls, making it possible to

adjust to unforeseen events in real time which will be their core

competitiveness. PepsiCo also can eliminate shared service cost by 100% if

they go for diversified approach which will make the total business more

efficient.

3. Integration and Distribution: Todays new market realities are driving the

move from technology-oriented solutions towards business-driven solutions

that enable enterprises to react to new opportunities with speed and agility

while enhancing customer experience and retention. Business Integration has

become the power behind enterprise success enabling the simplification,

automation, and optimization of business processes (chilanti, 2007). Even

though PepsiCo should attempt to align their global business and IT strategies,
they cannot completely ignore local variations out of hand. Important

business unit and cultural differences must be taken into consideration.

Furthermore, I could not agree more with the idea that the entire analysis

project must have high-level leadership in order to be as successful as

possible.

One of the major problem that PepsiCo have had is related to their distribution

Logistic technique which is referred as the power of one which was

introduced by Roger Enrico when he was PepsiCo CEO Long back. PepsiCo

maintains separate distribution systems for its divisions, even though they

deliver their products to the supermarkets and convenience stores in the

United States using same method which is not feasible in todays business

environment. Whereas, other MNCs are eliminating separate sales and

marketing teams and, in some cases, separate supply chains associated with

each business unit. The objective is to make all divisions act together as a

single company. PepsiCo could practice few standards like Six Sigma, lean

manufacturing, and total quality management. These are just a few of the

programs companies are implementing to increase profitability and eliminate

waste. When integrated under the umbrella of operational excellence and

applied across the organization, however, a new way of doing business

emerges once that produces higher yields, reduces waste, improves quality and

increases customer satisfaction.

I would suggest in future they would need to introduce SAP oriented

application in various departments to make the business functions more

 efficient. Most multinational companies are using SAP applications to

compete with other companies. Therefore, it would be fair to say PepsiCo can

introduce SAP in the company and they do have the resources for it.

Conclusions:

Information technology has a huge role to play when it comes to sustainable

competitive advantage. Investing in Information technology would be a critical

success factor for organization that needs to be looked at if PepsiCo want to be

successful in future. PepsiCo has to take all the necessary points into consideration

before they make any investment decision. A holistic approach has to be followed if

they want to make any progress in formulating and implementing integrated

management information system strategy. All points I have suggest are take into

consideration, there is very little chance that PepsiCo will make a decision which has

no future. If the decision are aligned with Pepsis vision and aligned with IT strategy

then they will be more profitable. The role of CIO has got significant importance

when it comes to see the future and choosing the right option for the right SBUs. So

appointing the right person and going for appropriate portfolio can lead to profitability

in long term. In addition to that, management philosophy, Strategy, efficiency and

integration is very critical to the success of PepsiCo. Information-based enterprises

like PepsiCo must be planned in an integrated way whereby all stages of the life cycle

are engaged to bring about agility, quality, and productivity. This integration is similar

in nature to the integration of product life cycle for an enterprise. The existing

methodologies, however, tend to support information planning as an island separated

from the wealth of the enterprises information resources. A needed new approach

would tap into these resources which capture and characterize the enterprise to allow
for integration of the planning stage with information systems development stages and

support a shortened and adaptive cycle.