SECTION B: SCENARIO QUESTIONS (2 QUESTIONS, 70 MARKS) QUESTION 1 (40 MARKS) PepsiCo Performance with Purpose" PepsiCo CEO Indra Nooyi has stood at the helm of the business for seven years and during her tenure has introduced key changes, which have truly shaped the image and direction of the international drinks brand. Early on in her role of chief executive, Nooyi introduced the mantra Performance with Purpose', which would become central to PepsiCo's journey. Here are some lessons from PepsiCo's transformation journey for CEOs seeking to implement a purpose- driven strategy at their own companies. Anchor Your Transformation in a View of the Future In shaping our approach, we decided to start from the outside. I asked a team of senior executives to identify future events that would affect our businesses. They pointed to several megatrends, many of them universal in impact, including changes in the world's demographics, a preoccupation with health and wellness, scarcity of water and other natural resources, constraints created by global climate change, the rise of activism, and a talent market characterized by shortages of key people. After analyzing interactions between the megatrends and drawing a composite of what the future might look like, the team must answer key questions such as: What innovations to the business model will be necessary? What investments does the company need to make? What talent does it need to develop or hire? This process will help CEOs future-proof their companies by developing "future back strategies in contrast to the "current forward" model. Ensure that the Board Is Your Ally We realized early that PwPwould require the support of PepsiCo's board of directors. I created a detailed, multipage document to show the board how the megatrends analysis should shape our strategy and how PwP would future-proof the company. For example, the board heavily scrutinized acquisitions in the treat space and rejected some of them because they would take us backward. Such was the board's commitment. Be Thoughtful About the Language You Use to Communicate Your Transformation 7 A global company must communicate its purpose-driven strategy in a way that everyone everywhere can understand. But it shouldn't underestimate the message. We wanted all stakeholders, especially our employees, to understand that sustainability was critical for the company's future. Model the Necessary New Behaviors with Early Actions Taking bold actions early is critical for showing the organization that the purpose-driven strategy is not just the flavor of the day. Three things will send a clear message: creating high-profile leadership positions and filling many of them with outsiders; overturning decisions that would have made it through in the "old days; and letting some people go. Develop the Capabilities That Advance the Purpose-Driven Strategy To execute PwP, PepsiCo had to build fresh capabilities in several areas, particularly R&D and product development. Historically, PepsiCo's R&D had consisted of people trained in the physical sciences, either food science or food engineering, but the chief scientific officer was hired for vastly different backgroundssuch as molecular biology, physiology, pharmacology, nutrition, and computer modeling and from companies outside the food and beverage industry: businesses such as pharmaceuticals, personal care, beauty care, and oil refineries. Localize the Execution of the Strategy Although a purpose-driven strategy must be common to all countries in which the company operates, each market should have the freedom to tailor the approach to its needs: freedom within a frame. Food and taste preferences are culture-specific, and environmental problems are local. Find Support Outside the Company CEOs cannot execute a purpose-driven strategy without building coalitions of support and finding ways to respond to external critics. CEOs must also figure out how to join forces with other companieseven rivals in their industry. In 2010 PepsiCo and several other leading companies in the food and beverage industry created the Healthy Weight Commitment Foundation. Its members promised to offer consumers low-calorie options and to remove 1.5 trillion calories from their products by 2015. As it turned out, by 2012 they had surpassed that target by more than 400%. Embed Purpose in the Organizational DNA A purpose-driven transformation may start out as the CEO's passion, but it will not survive unless it is embedded in the organizational DNA. That requires several kinds of reinforcement, through communication, resource allocation, goal setting, and recognition and rewards. 8 We set Pwl-related goals for everyone, from senior executives and country heads all the way down to midlevel managers. Those targets were used to evaluate performance and help determine annual bonuses. Even the R&D centers and the market-facing functions had Pwr goals that were linked to performance evaluations and compensation. Required: i) Illustrate the FIVE 5) leadership traits of Indra Nooyi in her efforts to implement the 'purpose- driven strategy. [10 Marks) ii) Explain the FIVE (5) Star Points in strategic leadership of PepsiCo CEO. [15 Marks] iii) Asses the communication network structures at PepsiCo. Explain THREE (3) possible communication networks used at PepsiCo based on characteristics of information interchanged and characteristics of its members. [15 Marks]