Performance with purpose the promise of pepsico

Case: AS CHIEF EXECUTIVE officer of PepsiCo, Indra Nooyi is one of the world’s most powerful business leaders. A native of Chennai, India, Nooyi holds multiple degrees: a bachelor’s degree in physics, chemistry, and mathematics from Madras Christian College; an MBA from the Indian Institute of Management; and a master’s degree in public and private management from Yale University. Before joining PepsiCo in 1994, Nooyi worked for Johnson & Johnson, Boston Consulting Group, Motorola, and ABB. Indra Nooyi has been a regular in Forbes’ Top 20 most powerful women for the past several years. However, she is not your typical Fortune 500 CEO: She is known for walking around the office barefoot and singing—a remnant from her days in an all-girls rock band in high school. It should come as no surprise, therefore, that Nooyi has been shaking things up at PepsiCo, a company with roughly $63 billion in annual revenues, $165 billion in stock market valuation, some 264,000 employees worldwide, and business interests in more than 100 countries. She took the lead role in spinning off Taco Bell, Pizza Hut, and KFC in 1997. Later, she masterminded the acquisitions of Tropicana in 1998 and Quaker Oats, including Gatorade, in 2001. When becoming CEO in 2006, Nooyi declared PepsiCo’s vision to be Performance with Purpose: Performance with Purpose means delivering sustainable growth by investing in a healthier future for people and our planet…. We will continue to build a portfolio of enjoyable and healthier foods and beverages, find innovative ways to reduce the use of energy, water and packaging, and provide a great workplace for our associates…. Because a healthier future for all people and our planet means a more successful future for PepsiCo. This is our promise.2 In particular, Performance with Purpose has three dimensions: 1. Human sustainability. PepsiCo’s strategic intent is to make its product portfolio healthier to combat obesity by reducing sugar, sodium, and saturated fat content in certain key brands. It wants to reduce the salt and fat in its “fun foods” such as Frito-Lay and Doritos brands, and to include healthy choices such as Quaker Oats products and Tropicana fruit juices in its lineup. Nooyi is convinced that if food and beverage companies do not make their products healthier, they will face stricter regulation and lawsuits, as tobacco companies did. Nooyi’s goal is to increase PepsiCo’s revenues from nutritious foods, substantially as detailed in her 2025 Performance with Purpose agenda.3 2. Environmental sustainability. PepsiCo has instituted various initiatives to ensure that its operations don’t harm the natural environment. The page 451 company has programs in place to reduce water and energy use, increase recycling, and promote sustainable agriculture. The goal is to transform PepsiCo into a company with a net-zero impact on the environment. Nooyi believes that young people today will not patronize or want to work for a company that does not have a strategy that also addresses ecological sustainability. 3. The whole person at work. PepsiCo wants to create a corporate culture in which employees do not “just make a living, but also have a life.” Nooyi argues that this type of culture allows employees to unleash both their mental and emotional energies. PepsiCo’s vision of Performance with Purpose acknowledges more than the importance of the corporate social responsibility and stakeholder strategy. Nooyi is convinced that companies have a duty to society to “do better by doing better.” She subscribes to a triple-bottom-line approach to competitive advantage, which considers not only economic but also social and environmental performance. Nooyi declares that the true profits of an enterprise are not just “revenues minus costs” but “revenues minus costs minus costs to society.” Problems such as pollution or the increased cost of health care to combat obesity impose costs on society that companies typically do not bear (externalities). As Nooyi sees it, the time when corporations can just pass on their externalities to society is nearing an end. The external environment in the soft drink industry, however, has become much more challenging.