White elephant definition

Any investment that nobody wants because it will

most likely end up being unprofitable. An
unprofitable investment, property or business that is
so expensive to operate and maintain that it is
extremely difficult to actually make a profit. An item
whose cost of upkeep is not in line with how useful
or valuable the item is.

increased from 24% in 2006 to 35% in 2012 (Annual

Report, 2012) through mergers and acquisitions as
discussed above, as well as, on the basis of
formation of direct subsidiaries. Moreover, PepsiCo
CEO
Indra
Nooyi
has
publicly
expressed
commitments to further increase the level of
presence of the company in emerging markets.

Strategic planning can be defined as the process of

determining an organisations primary objectives
and adopting courses of action that will achieve
these objectives (Boone and Kurtz, 2013, p.39) and
it plays a critical role in ensuring long-term growth
of a business entity.

Fourth, focus
on
organisational
culture.
Organisational culture can be defined as the
collection of words, actions, thoughts, and stuff
that clarifies and reinforces what a company truly
values and the nature of organisational culture
directly impacts its performance in short-term and
long-term perspectives.

PepsiCo mission statement has been worded by CEO

Indra Nooyi as Performance with Purpose and this
principle is closely integrated with the strategic
direction chosen for the company.
The most prominent aspects of PepsiCo strategy
forwarded by Ms Nooyi are based on the following
seven principles.
First, international market expansion strategy
through mergers and acquisitions. Mergers and
acquisitions can offer the advantages of gaining
access to competencies and infrastructure, reducing
direct costs and overheads and achieving organic
growth.
Recently, PepsiCo has engaged in important
mergers and acquisitions such as acquisition of juice
and diary businesses Lebedyansky and Wimm-BillDann in Russia, Lucky snacks and Mabel cookies in
Brazil, and Dilexis cookies in Argentina.
Second, formation of strategic alliances in
global scale. Specifically, strategic partnerships
have been formed with Tingyi in China in order to
claim a share in growing beverage market in China.
Moreover, formation of a joint-venture with Tata in
India to enhance drinking water manufacturing
capabilities, and initiation of strategic partnership
with Almarai in Saudi Arabia can be mentioned to
illustrate PepsiCos adoption of strategic alliances as
an integral part of the corporate strategy.
Important strategic alliances are formed by PepsiCo
at home markets as well. Specifically, by forming a
strategic alliance with Starbucks a global coffee
house chain, PepsiCo has been able to claim its
share from increasing energy drink market segment.
Third, focus on emerging markets. The share of
net revenues from developing and emerging
markets such as China, India, and Russia have been

PepsiCo CEO Indra Nooyi is widely believed to be an

unconventional corporate leader for a good reason.
It has been noted that shes been known to walk
the halls at Pepsi barefoot, sometimes even singing
along the way (Sheetz-Runkle, 2010, p.112) and
this fact communicates her willingness to embrace
her differences with positive implications on
employee morale and organisational culture.
The same message is effectively communicated to
organisational stakeholders and integrated into
Pepsi Brand as well in a way that the brand
marketing message is associated with making the
most of the moment, and embracing own
individuality.
Being listed among the top 25 Worlds Best
Multinational Workplaces by the Great Place to
Work Institute in 2012 can be interpreted as an
indication of effective working culture within
PepsiCo.
Fifth, developing and promoting the idea of
One PepsiCo. Specifically, Indra Nooyi has been
striving to increase the level of association of
individual brands with PepsiCo company values and
philosophy through promoting the idea of One
PepsiCo. This is meant to be facilitated through
sharing
supply-chain
management
and
infrastructure, operational costs for many brands
within PepsiCo portfolio have been decreased.
Sixth, innovation in marketing initiatives. A
wide range of innovative marketing initiatives
developed by PepsiCo marketing team include Do
Us a Flavor campaign that involved consumers in
17 countries submitting flavour ideas, development
of Lipton Brisk Star Wars game application for
mobile phones, and using celebrity endorsement in
an innovative manner by attracting a popular singer

amongst Pepsi brand target customer segment

Beyonce Knowles.
Importantly, cross-cultural differences in various
markets are taken into account when developing
and delivering PepsiCo marketing messages. For
example, the marketing tagline of Live for Now
associated with Pepsi brand has been modified as
Yalla Now and Oh Yes Abhi for Middle East and
Indian markets respectively taking into account
cross-cultural differences associated with these
markets.
Seventh, focus on increasing core organic
revenue. Core organic revenue can be explained as
a type of revenue that is achieved through
increasing the volume of production and sales.
PepsiCo core organic revenues were increased by
5% during 2012 (Annual Report, 2012) and the
company strategic level management is committed
to further increase the levels of core organic
revenues
through
maintaining
high
quality
standards and applying effective marketing strategy.

Moreover, organic revenues can be further

increased by concentrating on core competencies of
the business. It can be specified that a competence
is an attribute or collection of attributes possessed
by all or most of the companies in an industry
(Campbell et al., 2012, p.34).

High Inflation Rate

Exchange rate gains or losses related to foreign
currency transactions are recognized as transaction
gains or losses in our income statement as incurred.
We may enter into derivatives, primarily forward
contracts with terms of no more than two years, to
manage our exposure to foreign currency
transaction risk. Our foreign currency derivatives
had a total face value of $2.3 billion as of December
31, 2011 and $1.7 billion as of December 25, 2010.
At the end of 2011, we estimate that an unfavorable
10% change in the exchange rates would have
decreased our net unrealized gains by $105 million.
For foreign currency derivatives that do not qualify
for hedge accounting treatment, all losses and gains
were offset by changes in the underlying hedged
items, resulting in no net material impact on
earningas.