More than a decade ago Coca-Cola and Pepsi-Cola set the standard for a fierce, competitive, industrywide rivalry. Each company purchased huge swaths of time to “hawk” their beverages. It made for entertaining television, boosted the coffers of broadcast networks, and provided a nice living for advertising executives. PepsiCo’s tag line for this activity was, “Take the Pepsi Challenge.” Coca Cola lost the challenge but won the cola war. Time passed and each multinational company evolved differently. PepsiCo diversified beyond beverages into other foods like snacks (Frito-Lay) and breakfast food (Quaker Co.) and divested itself of fast-food restaurants (Pizza Hut, Kentucky Fried Chicken, and Taco Bell).
PepsiCo is a company that thrives on challenges, or at the very least it does not shy away from them.
When Vice President Richard Nixon was showing Soviet Premier Nikita Krushchev around the America National Figureion in Moscow, they stopped at the Pepsi Cola kiosk. An enterprising young PepsiCo executive, Donald Kendall, seized the photo opportunity and thrust a cup of Pepsi Cola into the Soviet leader’s hands. It was great PR and lead to a big opportunity for PepsiCo. Pepsi Cola in 1974 became the first western consumer product produced and sold in the USSR. Mr. Kendall went on to become a CEO of PepsiCo.
The 107 million viewers of the 2010 Super Bowl saw many engaging and entertaining commercials.
There were some who believed the advertising competition outrivaled the football engagement; however, the 2010 viewers did not see any ads for Pepsi Cola. Rather than spend $20 million dollars for a few 30-second spots, PepsiCo decided to give the money away. It engaged in “cause marketing.” Under the banner of “Refresh Everything,” the Pepsi Refresh campaign asked the public to vote online for charities and community groups to receive substantial contributions from PepsiCo. It worked. People participated enthusiastically—
it is always fun to give away someone else’s money—and the campaign attracted a “ton” of publicity.
PepsiCo challenged its customers and its rivals—and won.
Indra Nooyi, PepsiCo’s CEO, wants her company to be “seen as one of the defining companies of the first half of the 21st century, a model of how to conduct business in the modern world.” What makes this a challenge is the nutritional dichotomy in PepsiCo’s stable of foods. It has Frito-Lay snacks as well as its eponymous soft drink at one end of the nutritional spectrum and Quaker Oats cereal at the other end. It will not be easy selling one end of the spectrum without affecting sales at the other end. A Pepsi with a bowl of cereal, for example, is not a nutritionist’s ideal and therefore could be a real challenge to implement.
PepsiCo’s 2009 revenue from international markets was 48 percent while Coca Cola’s was 74 percent.
However, PepsiCo is betting that its special relationships in Russia will lead to greater long-term profits. In 2008 PepsiCo purchased Russia’s largest juice maker, Lebedyansky, for $2 billion, and in 2010 it purchased Wimm-Bill-Dann juice and dairy group for $5.4 billion. Wimm-Bill-Dann introduced yogurt to the Russian market. Apparently as Russians emulated western-style tastes, yogurt sales skyrocketed. PepsiCo admitted that the WBD purchase was its largest-ever international acquisition and that it was part of its strategic plan to build a $30 billion nutrition business.
The challenge did not stop with those purchases. With WBD PepsiCo will compete with the other large dairy goods company in Russia, Unimilk. Unimilk is controlled by Groupe Danone SA, a French company and is number three in juice sales and number one in baby food in Russia. For PepsiCo to acquire WBD, Danone had to sell its 18 percent share on the open market to acquire money to purchase Unimilk. In case you were wondering about Coca Cola, in 2005 it bought juice-maker Multon Co. for $500 million. Challenges seem to follow PepsiCo.    

QUESTIONS
1. Which approach to leadership seems most nearly to fit Donald Kendall? Indra Nooyi?

2. How would you describe the style of each leader?

3. Do any of the contemporary perspectives seem applicable to either of them?