Environmental Scan Paper

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and Baird (1995/2014), Pepsi’s evaluation of its strategic performance is feedback driven with its performance measurement evaluation modified to conform to local cultures. As part of its management development process, Pepsi requires its senior executives and managers to view a twenty-minute video entitled “Instant Feedback” in order to adopt it as part of their everyday communication (Scheier, et al. 1995/ 2014). According to Pepsi’s “Performance with Purpose” (2014):

Our vision is to deliver top tier financial performance over the long term by integrating sustainability into our business strategy, leaving a positive imprint on society and the environment.

In line with that Pepsi has established 10 strategic goals across its products, environment, and people, wherein it looks to measure results (Performance with Purpose, page 6).

Coke, in 2010, adopted an internal measurement guideline system governed by KORE (Coca-Cola Operating Requirements) which created a system wide measurement program to support its strategic management and planning (Coca-Cola, 2010). This system was intended to provide consistent metrics world-wide to monitor performance and integrate preventive action where necessary, as well as place more rigorous demands on formal management structures. However, Coke is driven by financial results with appropriate lip service paid to global sustainability. As an example, in response to criticism as to sugar content in its soft drinks was to reduce portion size from 20 ounces to 16 ounces; and 12 oz. cans to 8 oz. cans, thus allowing it present these sizes as healthier options.

Effectiveness of Use of Management Guidelines

Both companies use measurement guidelines to analyze their strategic performance. Both point to long term returns for shareholders as validation of their efforts. Both are correct. According to the Motley Fool (2014), many financial analysts view the Pepsi view as more sustainable over the long term. They consider Coke’s emphasis on its iconic carbonated soft drink beverage to be a long term recipe for disaster. Pepsi has nutrition oriented, ever expanding product lines wherein they are the market leader, as well as its Frito Lay products; and they appear to be slowly abandoning the soft drink business. Coke remains committed to soft drinks, while expanding its brands of “nutritious” beverage offerings and energy drinks. Management guidelines used by both Pepsi and Coke are effective; however, the guidelines are used to support differing approaches to the global marketplace.

Conclusion

If the ultimate evaluation of effectiveness is in financial return to investors, according to the Motley Fool (2014), Coke is the clear winner in the short term; however, consumer trends clearly favor Pepsi’s approach and Pepsi is predicted to outperform Coke in the longer term.

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