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Pepsi Vanilla 20100206024 The organizational structure of PepsiCo.，Inc. Pepsi adopted a divisional organization. Operations were departmentalized by product, by location and by location. It is organized into three business units, as follows: PepsiCo Americas Foods (PAF), which includes Frito-Lay North America (FLNA), Quaker Foods North America (QFNA) and all of our Latin American food and snack businesses (LAF), including our Sabritas and Gamesa businesses in Mexico; PepsiCo Americas Beverages (PAB), which includes PepsiCo Beverages North America and all of our Latin American beverage businesses; and PepsiCo International (PI), which includes all PepsiCo businesses in the United Kingdom, Europe, Asia, Middle East and Africa. CEO CEO PepsiCo Americas Beverage s CEO PepsiCo America s Foods resident rito-Lay North America President Quaker Foods and Snacks North America President South America Foods President PepsiCola North America DEO PepsiCo Internatio nal President Latin America Beverage s President PepsiCo Asia Pacific President PepsiCo SAMEA Region President PepsiCo Europe Marketing Dept. Marketing Dept. Marketing Dept. Marketing Dept. Marketing Dept. Marketing Dept. Marketi Dept. Production Dept. Production Dept. Production Dept. Production Dept. Production Dept. Production Dept. Production Dept. Product Dept. Finance Dept. Finance Dept. Finance Dept. Finance Dept. Finance Dept. Finance Dept. Finance Dept. Finance D Marketing Dept. SWOT Analysis of the organizational structure of PepsiCo: Strengths (Internal) Opportunities (External) Allows tailoring of strategy to needs of each geographical market Delegates profit/loss responsibility to lowest strategic level Improves functional coordination within target market Takes advantage of economies of local operations Area units make an excellent training ground for higherlevel general managers Frees CEO to handle corporate strategy issues Puts clear profit/loss accountability on shoulders of business-unit managers Low Weaknesses (Internal) Threats (External) May Poses lead to costly duplication of staff functions at corporate and business-unit levels, thus raising administrative overhead costs Poses a problem of what decisions to centralize and what decisions to decentralize business mangers need enough authority to get the job done, but not so much that corporate management loses control of key business-level decisions Business/division autonomy works against achieving coordination of related activities in different business units, thus blocking to some extent the capture of strategic-fit benefits value-to-transport cost ratio Service delivery on-site Closeness to customer for delivery or support Perception of the organization as local Geographical market segments needed Product focused Multiple products for separate customers Short product development and life cycle Minimum efficient scale in functions or outsourcing a problem of how much geographic uniformity headquarters should impose versus how much geographic diversity should be allowed Greater difficulty in maintaining consistent company image/reputation from area to area when area mangers exercise strategic freedom Adds another layer of management to run geographic units Can result in duplication of staff services at headquarters and district levels, creating cost disadvantages Motives of adopting such a structure: 1. To sustain the growth rate and also to develop global senior leadership talent for PepsiCo’s future. 2. This organizational structure will help deliver strong top-line performance and profit growth for the following reasons: • Each sector has significant scale and growth potential, operates across multiple geographies, and is comprised of both developed and developing markets; • This facilitates PepsiCo’s ability to leverage both capabilities and innovation between PepsiCo’s international and North American businesses; • With each sector being of significant scale, more executives will have the opportunity to run large operating businesses and gain global operating experience; • It enables PepsiCo’s to extend the competitive advantages of our very successful Power of One initiatives by making them increasingly global. 3. Investors will receive more granular international performance data, as PepsiCo’s will report volume, revenue and operating profit for six PepsiCo segments, versus four in the previous structure.