Crisis Management

After research, there has been one big crisis in PepsiCo's history which is often used as an example of a situation that needed a well layed out crisis management plan in order to maintain the companies reputation.In 1993, a man from Tacoma, Washington claimed he found a syringe inside of his can of Diet Pepsi. While people became worried about the production of the company's products, Pepsi knew that their manufacturing would not allow for such tampering. Pepsi realized that people from outside of the company were inserting these foreign objects in order to receive money from the company and alter Pepsi's image.

In order to avoid damage to the company's name, Pepsi employed a defensive strategy, claiming that the organization was innocent in this situation. A tactic that Pepsi used was to attack the accuser. As Pepsi knew that customers were inserting objects after they had been opened in order to receive settlement money from the organization, Pepsi made it clear that legal actions would be taken against those making false claims. Since there was so much information on the news about this situation, Pepsi knew they needed to comment on the situation even though it was not their fault. If Pepsi did not respond to the crisis, it would become worse as information from outside the organization began to spread.

The second strategy which Pepsi employed was to say there was no crisis. In order to show the safety of their factories and that merchandise could not be tampered, they brought video cameras into the manufacturing room. This served as visual representation that due to Pepsi's bottling process it would be impossible for foreign objects to be entered into the cans or bottles before they had been sealed. Pepsi also released a video of a convenience store surveillance system catching a woman tampering a can of Pepsi. These videos served as actions taken to maintain customer confidence in Pepsi's product in the midst of a crisis.

While this crisis is different from most others since there was no subject and Pepsi had done nothing wrong, it was still very important for Pepsi to take actions in minimizing the rumors. While there was no legitimate crisis, the allegations were able to create a negative sentiment about the organization until PepsiCo was able to show the tampering was not their fault. This situation is a specific example that the perception of a crisis must be dealt with just as an actual crisis is.

Pepsi was able to rebound from this situation by using honesty and open communication with both their customers and employees. This crisis was able to be easily averted due to the fact that Pepsi took action extremely quickly after the claims against the company had been made. PepsiCo's preparedness for crisis situations helped them to maintain their positive image even after terrible allegations were made against them.

After looking through their website I was able to find a document about the variety of crisis that PepsiCo is aware they may be affected by. In their 2008 and 2009 annual reports, Pepsi had a section dedicated to "Our Business Risks". This section discussed various things that could potential create conflict for the organization. Potential crisis that were included on the website include:

1. Change in customer preferences
2. Product contamination or tampering
3. Problems with retailers of Pepsi products or bottling companies
4. Problems top management’s ethics or with retaining them
5. Legal changes
6. Economic instability
7. Lack of resources

Global Communications

Global communications is an important feature for Pepsi Co to focus on as 39% of their revenue is received internationally. As previously mentioned, PepsiCo has four separate divisions as part of their corporate structure. Two of these divisions are completely internationally focus, which include PepsiCo Europe and PepsiCo Asia, Middle East, Africa (AMEA). As Pepsi has been trying to obtain a healthier global image, they have acquired, partnered or purchased share in a variety of global brands which are known for their nutritious products. Associating themselves with prospering and nutritious brands throughout the world helps to provide Pepsi with an excellent global reputation. The healthier brands they have acquired on a national level include

- Lebedyansky, Russia's leading branded juice company
- Sandora, a leading juice company in Ukraine
- V Water, an all‐natural enhanced water in the United Kingdom
- Amacoco, Brazil's largest coconut water company

As PepsiCo is known on such an international level, I was able to find there Worldwide Code of Conduct available in 42 different languages. This indicates that the company is dedicated to transparency within the United States and any other countries which produce or purchase PepsiCo products.

Pepsi is the leading food and beverage company in Europe, in addition to employing 43,000 people within the region. The company began in European expansion of distribution in the 1980s and this market makes up 16% of the company’s global net revenue. Pepsi is present within 45 separate nations in Europe as a distributor of its most known brands including Frito Lay Snacks, Pepsi-Cola beverages, Gatorade sports drinks, Tropicana juices and Quaker foods. While the typical brands are sold in Europe, they have also acquired brands specific to the European culture such as popular juice companies in Russia and Ukraine, which were previously mentioned. Other local brands include Walkers crisps, Copella, Paw Ridge, Snack-a-Jack and Duyvis. Since PepsiCo is extremely dedicated to pleasing the European market, they have recently spent more than 20 million euros in European R&D centre, and 180 million euros in the UK to create new, healthier snacks for that market.

The other international division of Pepsi is similar to the European division in that it sells the traditional brands known in America, while also selling brands localized to the area. The Asia, Middle East and Africa division sells specific brands including Mirinda, Kurkure and Red Rock Deli. PepsiCo owns production and distribution centers in these areas while also producing through alternative means including joint ventures, affiliate programs and licensing. 13% of Pepsi’s worldwide international revenue worldwide comes from this area.

The final component of examining Pepsi's global communications was to view the websites of each country in order to see if there were differences in sites depending on the country. It was interesting to me that the website had extremely simliar layout yet the opening banner ad was different in each country. On the website for America, had an animated image of Brisk, while Italy and China had colorful images explaining Performance for A Purpose. It was clear that the website had very similiar information posted on them, yet the opening images of the sites were catered to the country they were made for.

Investor Relations

Investor Relations is becoming an increasingly important part of all companies as disclosure to investors has become more regulated in recent years. There is a section of the PepsiCo website dedicated entirely to the company's investors. The website provides downloadable versions of all the company's annual reports in order for investors and potential investors to have all of the company's avaliable financial information. The company's corporate profile contains all the basic information about the company which people would like to know of before buying or selling stocks of the organization. The profile includes information about each division of the company which are PepsiCo Americas Beverages (PAB), Frito-Lay North America (FLNA), Quaker Foods North America (QFNA), Latin America Foods (LAF), Europe and Asia, Middle East & Africa. Another way that PepsiCo keeps their investors informed is with a Financial News section of the investor relations page. Having all financial press releases in one location ensures that Pepsi is providing all investors with the same information and is avoiding the practice of insider trading.To increase the ease of obtaining information, PepsiCo has set up an option where investors can request to have any financial updates sent to their email accounts in order to further simplify the process of obtaining information.

The investor section also provided contact information for IR workers at the organization in case people have confusion or questions that need immediate assistance. After any earnings statements are released Pepsi will issue press releases along with having conference calls to discuss the earnings and inform people of any financial changes that have taken place. Making these releases, calls and transcripts avaliable online is one of the many ways that PepsiCo practices transparency and increases the flow of information with investors. Pepsi, along with any other public company, holds annual meetings with people that hold shares within the company. Pepsi's annual meeting will be held on Wednesday May 4th at the Frito-Lay's headquarters. According to the website, shareholders will be able to conduct a vote on executive compensation, approve amendments to the Articles of Incorporation and review the progress of the company throughout the past year. As shareholders have invested money within Pepsi stocks, this meeting will give these shareholders a chance to express their opinions on this organization that they have invested in.

As we have discussed in class, each company is required to submit certain reports to the Securities and Exchange Commission. Pepsi has listed each of the reports in an SEC filings section with sections such as annual reports, mergers & acquisitions, quaterly and proxy filings. This organization will help potential investors find any information that could potential help them in buying or selling stock. The website has an entire section dedicated to the price of their stock at that exact time. Right now one share of Pepsi costs $65.69, with that price fluctuating throughout each day.