Week 10 Journal

Week 10

1)      In your own words and using referenced quotes describe what is meant in strategy by ‘Organizational Purpose’ and describe what is meant by “Corporate Social Responsibility”.

2)      Should organizations focus more on profit and shareholder satisfaction or responsibility and stakeholder satisfaction? Discuss your own thoughts but try to support your ideas with theory or examples.

3)      Write about your experiences with today’s case study. What answers did you give to the questions? What did you think of CEO?

  

Answers

1)      Organisational purpose strategy focuses on how the organization needs to change over a period time in order to be able to deliver the strategy of the enterprise and an actionable plan of how to make the transformation. This requires both the thinking and analysis to compare current state to desired state and define the gap, and the execution capabilities to make the requisite changes happen. From organizational purpose strategy, vision and mission facilitates the essential foundation for making strategic choice. The mission, vision and organization purpose describe what the organization needs to be consider for the long term and short term organizational goals, objectives and success.

The key strategic consideration in organizational purpose strategy includes:

a)      Organizational design

b)      Organizational competitiveness

c)      Organizational culture

d)     Talent management practices

e)      Capability requirements

In addition to above mention points the organizational purpose strategy consists of organizational beliefs, business definition and organizational values.   An organizational belief insists the strategists to explore the ideas and assumptions of the organization. The business definition explains about where the firm operates. It tells you to operate in those markets in which a firm has a competitive advantage. An organizational value explores the important factors that a firm should hold.

  Corporate Social Responsibility (CSR)

A company`s sense of responsibility towards the community and environment both ecological and social in which it operates is known as corporate social responsibility. According to the World Business Council for Sustainable Development “Corporate Social Responsibility is the commitment by organizations to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as the local community and society at large”.

 Corporate Social Responsibility (CSR) has emerged as a significant theme in the global business community and is gradually becoming a mainstream activity. But questions has arise does the share holders and other stake holder of company gradually accepts it.

The growing emphasis on corporate responsibility is affecting the relationship between companies and their various stakeholders, such as investors, customers, vendors, suppliers, employees, communities and governments.

At current most of the renowned organization uses the CSR as a benchmarking strategy. Benchmarking strategy not only helps to compete with their rivals but also help to gain competitive advantage.  Only implementing corporate social responsibility is not enough it should also be managed carefully over the period along with the business of company.

2)      In my view, I think any organization should give more priority to the responsibility and stakeholder’s satisfaction. It is common that every organization ultimate goals is to earn more profit. But for earning profit only shareholders fund is not enough, the cooperation and decisions among the stakeholders is must. Stake holders in the organizations include customers, vendors, suppliers, employees, communities and governments. We are mankind and have adopted to change with time, same apply to the organization. Organization should change with time and this helps in grabbing opportunity and eliminates threats.

Let`s see one example, If any organization just focuses on shareholders wealth maximization then this will decline the chance of getting involved with society, failed to learn people attitudes and behavior, will be outdated in the society and with their unique preferences, relations with stakeholders might get affected and finally the main purpose “earning profit and maximizing share holders wealth” will be collapsed. In other hand let`s see if the company focuses on the responsibility and stakeholders satisfaction. Responsibilities define the task and are separated among the employees through different department. When responsibilities are done sincerely by the employee then the company can engage with society, they can innoviate new products by which they can satisfy customers and ultimately by satisfying customer they can gain competitive advantage and make huge profit. So any organization should focus on their employee’s welfare.  A business firm can only be developed when their employees are happy as they are the pillars of an organization. To make sure the employee are happy the company should provide benefits and perks regularly.

Customers and suppliers are important stakeholders to the organization. Without customer we cannot do business, they should be treated like a god and should serve in their best interest. Suppliers provide all the raw materials and equipments and business cannot be run without these things. So organization should also make them happy.

With all these things organization can build a good platform of business and enormous profit can be made. So, satisfying stakeholders and focusing on responsibility should be more focused than satisfying shareholders and earning profit.

3)  The case study we did today was about the PepsiCo. PepsiCo incorporation is an American multinational food and beverage corporation with interests in the manufacturing, marketing and distribution of grain-based snack foods, beverages, and other products. We watched the video interview of Indra Nooyi. She is the CEO and chairman of company. The case study was interesting and focused on the rivalry between Coca- Cola and Pepsi Co, the effort and strategy Pepsi Co. has implemented to regain the market share and the mission, vision and goal of Pepsi Co.

Case study questions and answers.

a)      What are PepsiCo’s strategic objectives? Why does the firm exist?

The strategic objective of Pepsi Co. seems to regain the market share and increase the revenue by increasing the sales of nutritious products. According to Indra Nooyi, the company is targeting to triple the revenue of nutritious products, to $30 billion by 2020.  This shows PepsiCo strategy seems to be emergent. Due to the declining market share in America, they are targeting Asian countries as the new markets for beverage products and also the company is trying to increase the product line increasing the portfolio in business.

The firm exists to serve its main organizational purpose which is to provide quality products and services within reasonable price than competitors. By serving this they earn revenue and satisfy the interest of shareholders and stakeholders.

b)      What are the possible strengths and benefits of the strategy?

The possible benefits and strength of the Pepsi Co. strategy are:

·         Increase in market share

·         Employment empowerment

·         Increasing product line

·         Increase in marketing sector

·         Employment opportunity to local

·         Huge accumulated fund

·         Innovation to nutritious foods and beverages 

c)      What are the possible weakness and disadvantages of the strategy?

The possible weaknesses of strategy are:

·         Low preferences from customer

·         Packaging is not attractive

·         Not the number one player in beverage industry

·         Market share smaller than Coca-Cola

·         High risk

·          Chances of failure in product line.

·         Shareholders dissatisfaction.

d)   Do you think the organization has the right balance between profitability and responsibility?

Though the company has launched products called “GOOD FOR YOU” which is promoted as a healthier product and implement the Refresh Project which helped numerous homeless shelters and orphanages, I think they can make more contribution to save the environment from pollution and promise to support the environmental rules and after only there will be the balances between profitability and responsibility.

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References

·     Robert Kaplan and David Norton (3^rd Edition, 2000). The Strategy- Focused Organization. Harvard Business School Press.

·      Kenneth Amaeshi, Paul Nnodim, Osuji Onyeka (1^st Edition, 2012).  Corporate Social Responsibility, Entrepreneurship and Innoviation.  Routledge Publisher.