Benchmarking Process for PepsiCo
Discuss About The Industries In Industrialized In Developing.
Benchmarking is a process which is used for comparing one business’ processes and performances on the basis of standards set up by the industry with the other companies. Project management uses benchmarking in terms of planning, selection and delivery of projects. Mainly benchmarking is done on the basis of quality of products, time taken and cost incurred. Outcomes are originated on the basis of comparison made amongst the other companies of the same industry. In this report, PepsiCo’s benchmarking process will be discussed in relation with identification of their market position. Its primary competitor is Coca-Cola and process of best practice benchmarking is done by analysing best firm’s processes and performances from the same industry and from other industries under which same sort of companies exists and compares the result obtained with the selected company. PepsiCo Inc. is beverage, food and snack manufacturing company. Its headquarters are situated in Purchase, New York. Benchmarking is done for evaluating the position of the company in the industry in comparison with the best firms of the industry (Cooper, Silberstein, Tam, Ramakrishnan & Sears, 2010).
It has been observed that PepsiCo Inc. has developed its effective position in its home country but apart from this, they do not have attained much success and growth in other parts as compared to its primary competitor. In this terms, benchmark measures, analysis of benchmarking for PepsiCo, benefits for setting benchmarks, etc. will be conducted in this report. In the last part of the report, recommendations will be given with relevance with improving the process of benchmarking adopted by the organization so as to attain better and expected outcomes.
Benchmark is the criteria on which performance of organizations are being measured by comparing its performance with other companies of the same industry. Best practice benchmarking and process benchmarking are processes which are used by management which showcases the VEMR strategic management. Under this process, one company’s performances are being compared with the best practice companies’ processes. Primary purpose of performing this functionality is to evaluate the difference amongst the companies on various basis set up by the management. With the help of this procedure, organization determines the areas in which scope of improvement exists. Organization could adapt best practices in terms of improving its performance as well as to make the organizational performance as per the criteria and standards set up in the industry on the basis of best practices. This process seems one-off event but for continuous improvements in the organization, it is necessary to conduct benchmarking process on rapid basis. PepsiCo Inc. has also adopted the benchmarking strategy in order to improve their practices so that they can beat its primary competitor in the international market (Zhu, 2014).
PepsiCo Inc. is a multinational beverage and fast food item manufacturing company. Their major areas of interests are manufacturing, distribution and promotion of their products in the international market as well as marketing under which market research and other types of activities are being executed (McCrory, Jung, Peters & Jaramillo, 2013). From this perceptive, it can be evaluated that PepsiCo Inc. needs to follow benchmarks in every area with the objective of maintaining and improving its market image. Thus, the criteria for selection of benchmarks for every department are unique and different. In terms of PepsiCo, criteria chosen for selecting the appropriate benchmarks are quality of their products; best practices defined and set up by the whole industry, customer satisfaction, prices of the product, etc. (Gaieski, Edwards, Kallan & Carr, 2013). This will help the organization to enhance its brand value as well as customer satisfaction which will ultimately affect their overall performance and position in the international market. While selecting the benchmarks, appropriate methodology is required to be followed as below:
Analysis of PepsiCo’s Market Position
Identification of problem areas: As benchmarking could be applied in any area or in any business process, thus, it is required to apply appropriate research technique in order to determine the problems which need to be overcome. These techniques could be formal or informal communication methods with employees, customers, suppliers, etc. This will provide an idea to the company in relation with the scope of improvement is required to cope up with the benchmarks (Sharma, Teret & Brownell, 2010).
Identify the competitor’s processes: Primary competitor for PepsiCo Inc. is Coca-Cola, thus, it is necessary to analyse the difference between the processes of Coca-Cola and PepsiCo so that gap could be analysed. This could be done through consulting customers, employees, suppliers, etc. (Saygin, Worrell, Patel & Gielen, 2011).
Survey: This is another crucial and effective technique which will help the PepsiCo to determine their tastes, preferences, etc. Difference between the expectations of customers and the expectations fulfilled by the company will also be identified with this technique (Ronit & Jensen, 2014).
Implementation of advanced business practices: From the above analysis and identification techniques, organization will be able to determine all the gaps between their practices in comparison with the competitors’ practices as well as with the customer’s excitations. Hence, it will be an easy task for PepsiCo to develop and implement new and advanced measures so that benchmarks set up the management in terms of attaining competitive advantage as well as to enhance its performance in the international market (Bracken & Church, 2013).
The above chart describes the progress of PepsiCo Inc. (PEP) in comparison to its primary competitor i.e. Coca-Cola (KO). PEP has adopted effective and advanced measures in recent years in order to enhance its performance and the effectiveness of those measures could be observed from the above graph.
Management of PepsiCo has developed certain goals and objectives in order to uplift their performance, market share and customer base in rest parts of the globe apart from America. In relation to this, organization is concerned towards the development of its effective image along with an effective position in the target market. In comparison to Coca-Cola’s position, revenues, earnings, customer base and market share, etc., PepsiCo is bit backwards, thus, they have adopted appropriate measures for setting effective benchmarks in order to attain its desired goals and objectives along with developing an effective position in comparison to its competitor (Venkataraman, Summers & Summers, 2013).
There are certain types of benchmarking processes which could be implemented. Benchmarking is of two types i.e. internal and external. Internal benchmarking is implemented to analyse the difference between the performances of departments of the organization while external benchmarking process is implemented with the view to analyse the gap between the performances of the organization in comparison to its primary competitors. In this scenario, PepsiCo has implemented external benchmarking process and it has basically three types of benchmarking processes i.e. performance benchmarking, process benchmarking and strategic benchmarking (Moss Kanter, Khurana, Lal & Baldwin, 2012).
Process Benchmarking: In this process, organization focuses on observing the business processes with the objective of identifying the best practices adopted by the benchmark firms. This may include analysis of cost efficiency techniques, strategies implemented to back office premises, etc. (Adeoye & Elegunde, 2012).
Benefits of Setting Benchmarks
Performance Benchmarking: In this type of process of benchmarking, one organization identifies its market position with the help of comparing its products and services with the target and competitive firms. PepsiCo will use this type of process in terms of analysing the gap between the qualities of their beverages from the quality of quality of Coca-Cola’s products.
Strategic Benchmarking: This process identifies the strategies used by firms to compete with each other (Cuganesan, Guthrie & Ward, 2010).
With the help of best practices in food and beverage industry, food safety issues could be minimised and better bottom line could be produced effectively. In food and beverage manufacturing industry, best practices are considered as the benchmarks for determining the performance of organizations involved in this industry. Following are certain best practices for food and beverage manufacturing industry:
- Strategies should be adopted so that consumer satisfaction could be increased along with the development of effective customer relationship.
- Do not copy competitor’s strategies for attaining desired goals and objectives.
- All food safety considerations and standards needs to be followed. Crucial regulatory standard are described by FDA, USDA, ISO, etc. which helps the companies to produce safe and effective food items and beverage products.
- Every quality aspect should be considered seriously in terms of increasing the quality of the products.
- Feedbacks and reviews shared by customers should be considered and appropriate measures needs to be taken so as to resolve their issues on immediate basis.
- Smart workforce is the key best practice strategy.
While evaluating the PepsiCo Inc.’s performance with these measures, it was observed that the organization is performing in an effective manner. Major issue faced by the organization is lack of trust over its product’s quality. This is because, organization has faced certain challenges regarding their quality of products in past. In order to develop an effective trust level amongst the potential customers, it is required to adopted appropriate benchmarks so that best practices defined by the regulatory could be matched up. Best practices include every aspect which is required to uplift organizational performance such as technological advancements, quality measures, etc. (Nestle, 2013).
PepsiCo is required to adopt certain crucial and effective measures in terms of filling the gap analysed between the best practices and their functionalities. Application of the benchmarks discussed above will help the organization to uplift performance in terms of the best practices which will ultimately affect the overall performance of organization.
Organizational management has also decided to adopt effective communication strategies within the workplace so that benchmarks adopted could easily be conveyed to every department of the organization. This will help the organization to work together on the same path with the objective to establish an effective position in the global market along with gaining adequate competitive advantage in the market.
Conclusion
From the aforesaid information, it can be concluded that PepsiCo Inc. has planned to expand its market along with uplifting its market share in the international market in comparison to its primary competitor i.e. Coca-Cola. Primary objective of performing these types of activities is to develop brand loyalty amongst the target audience. In relation to these objectives, organizational management decided to analyse the benchmarks set up by the industries as well as best practices performed by its primary competitors. With the help of this analysis, organization has evaluated the measures through which the same sort of practices could be adopted and implemented within the workplace in terms of improving its performance. In relation to identify appropriate benchmarks for the organization, criteria for selection, best practice management and its primary competitor i.e. Coca-Cola’s strategies have been evaluated so as to attain competitive advantage in the global market.
References
Adeoye, A. O., & Elegunde, A. F. (2012). Impacts of external business environment on organisational performance in the food and beverage industry in Nigeria. British Journal of Arts and Social Sciences, 6(2), 194-201.
Bracken, D. W., & Church, A. H. (2013). The” new” performance management paradigm: capitalizing on the unrealized potential of 360 degree feedback. People and Strategy, 36(2), 34.
Cooper, B. F., Silberstein, A., Tam, E., Ramakrishnan, R., & Sears, R. (2010). Benchmarking cloud serving systems with YCSB. In Proceedings of the 1st ACM symposium on Cloud computing (pp. 143-154). ACM.
Cuganesan, S., Guthrie, J., & Ward, L. (2010). Examining CSR disclosure strategies within the Australian food and beverage industry. In Accounting Forum (Vol. 34, No. 3-4, pp. 169-183). Elsevier.
Gaieski, D. F., Edwards, J. M., Kallan, M. J., & Carr, B. G. (2013). Benchmarking the incidence and mortality of severe sepsis in the United States. Critical care medicine, 41(5), 1167-1174.
McCrory, C. C., Jung, S., Peters, J. C., & Jaramillo, T. F. (2013). Benchmarking heterogeneouperformance in the international market an Chemical Society, 135(45), 16977-16987.
Moss Kanter, R., Khurana, R., Lal, R., & Baldwin, E. (2012). PepsiCo, performance with purpose, achieving the right global balance.
Nestle, M. (2013). Food politics: How the food industry influences nutrition and health (Vol. 3). Univ of California Press.
Ronit, K., & Jensen, J. D. (2014). Obesity and industry self-regulation of food and beverage marketing: a literature review. European journal of clinical nutrition, 68(7), 753.
Saygin, D., Worrell, E., Patel, M. K., & Gielen, D. J. (2011). Benchmarking the energy use of energy-intensive industries in industrialized and in developing countries. Energy, 36(11), 6661-6673.
Sharma, L. L., Teret, S. P., & Brownell, K. D. (2010). The food industry and self-regulation: standards to promote success and to avoid public health failures. American Journal of Public Health, 100(2), 240-246.
Venkataraman, S., Summers, M., & Venkataraman, S. (2017). PepsiCo: The Challenge of Growth through Innovation. Darden Business Publishing Cases, 1-22.
Zhu, J. (2014). Quantitative models for performance evaluation and benchmarking: data envelopment analysis with spreadsheets (Vol. 213). Springer.
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