PepsiCo’s organizational structure has been reformed several times to address changing global market conditions. The company’s current organizational structure reflects the business aims of global expansion and leadership. These aims highlight PepsiCo’s mission and vision statements. PepsiCo’s strategies are also manifested in how its organizational structure supports international growth. A firm’s organizational structure defines the system and design of business components, and how these components interact to fulfill the firm’s mission and vision. In PepsiCo’s case, the organizational structure enables control over the expansive reach of the company around the world, considering significant differences among market conditions.
PepsiCo’s organizational structure’s characteristics are based on the company’s approach to maximize its control of the business while continuing to grow internationally.
Features of PepsiCo’s Organizational Structure
PepsiCo originally had a hierarchical organizational structure in its early years. However, after a number of key mergers and acquisitions, along with global expansion, the company has changed its organizational structure accordingly. The following are the main characteristics of PepsiCo’s organizational structure:
- Market divisions
- Functional corporate groups/offices
- Global hierarchy
Market Divisions. The most prominent feature of PepsiCo’s organizational structure is its market divisions. These divisions are based on two variables: business and geography. In terms of business, PepsiCo’s maintains one global division for Frito-Lay and another global division for Quaker Foods. In terms of geography, the company has divisions for the Americas, Europe, and other regions. The following are the market division in PepsiCo’s organizational structure:
- PepsiCo Americas Beverages
- Quaker Foods
- Latin America Foods
- PepsiCo Europe
- PepsiCo Asia, Middle East & Africa
Functional Corporate Groups/Offices. This characteristic of PepsiCo’s organizational structure refers to basic business functions. The company has global or corporate offices for these functions. PepsiCo’s objective in having functional groups is to ensure corporate control and rapid implementation of policies and strategies. An Executive Vice President or Senior Vice President heads each of these groups. The following are the main functional corporate groups/offices at PepsiCo:
- Global Categories and Operations
- Global Research and Development
- Human Resources
- Government Affairs and Legal
- Talent Management, Training and Development
Global Hierarchy. PepsiCo’s organizational structure also features a hierarchy that spans the global organization. A hierarchy typically supports monitoring, control and governance at the global/corporate level. PepsiCo has maintained considerable hierarchy for top-down communications, monitoring and control. This characteristic of the organizational structure also provides a means through which PepsiCo minimizes deviations from its policies and strategies.
PepsiCo’s Organizational Structure Advantages & Disadvantages
The primary advantage of PepsiCo’s organizational structure is the ability to focus on regional market needs. This is possible through market divisions. The organizational structure also has the advantage of supporting PepsiCo’s global corporate control. However, PepsiCo experiences the disadvantage of the limits of its organizational structure in terms of flexibility. For example, the company has a single global division for Frito-Lay. This characteristic reduces PepsiCo’s ability to respond to market variations and changes in its Frito-Lay business. Thus, a possible improvement is to divide such single global divisions into regional market divisions, so that PepsiCo could enhance its responses to market variations around the world.
- Global Divisions – PepsiCo.
- Leadership – PepsiCo.
- Liao, C., Chuang, S. H., & To, P. L. (2011). How knowledge management mediates the relationship between environment and organizational structure. Journal of Business Research, 64(7), 728-736.
- Marengo, L., & Pasquali, C. (2012). How to get what you want when you do not know what you want: A model of incentives, organizational structure, and learning. Organization Science, 23(5), 1298-1310.
- Martin, R., Muûls, M., de Preux, L. B., & Wagner, U. J. (2012). Anatomy of a paradox: Management practices, organizational structure and energy efficiency. Journal of Environmental Economics and Management, 63(2), 208-223.
- Menguc, B., & Auh, S. (2010). Development and return on execution of product innovation capabilities: The role of organizational structure. Industrial marketing management, 39(5), 820-831.
- PepsiCo Inc. 2014 Annual Report.
- Tang, F., Mu, J., & MacLachlan, D. L. (2010). Disseminative capacity, organizational structure and knowledge transfer. Expert Systems with Applications, 37(2), 1586-1593.
- Willem, A., & Buelens, M. (2009). Knowledge sharing in inter-unit cooperative episodes: The impact of organizational structure dimensions. International Journal of Information Management, 29(2), 151-160.