By Kerry - PepsiCo Inc.: Globalization

Some material prices might be coming down, but the last year's worth of hikes are sure to have a lasting effect on how many manufacturers run their business. Beverage and snack food maker PepsiCo Inc., for one, has seen its soda sales decline in the United States, as costs for potatoes, corn and other commodities have led to its own price increases.

As a result, the IW 50 Best Manufacturer has made a couple of significant investments over the last few months that it hopes will help boost business outside the U.S. and bulk up its resources in other parts of the world. Most recently, the company decided to make a $500 investment to expand its operation in India.

Over the next three years, PepsiCo plans to increase manufacturing capacity, marketing and research and development in India with the goal of tripling revenue in the South Asian nation in the next five years, CEO Indra Nooyi told Bloomberg.

"We have sustained double-digit growth both in volume and revenue and become the fourth-largest consumer products company in India," Nooyi said. "We are making important gains in market share."

PepsiCo and its partners have invested $700 million so far in India since the company started operations in 1989. The company directly employs 4,000 people and provides indirect jobs to 60,000. The new investment will add another 50,000 new direct and indirect jobs, according to Nooyi.

Back in August, Bloomberg reported that PepsiCo made similar plans for Brazil, where it said it will invest $300 million to open at least three new food production plants between 2009 and 2012. The new plants will be located in Bahia, Brasilia, along with a third in the northern part of the country. A fourth facility was said to be under consideration.

Finally, this summer also saw Pepsi stake a claim in the Russian juice market. In August, PepsiCo and the Pepsi Bottling Group paid $1.4 billion for a 75% holding in JSC Lebedyansky, which is reported to be the world's sixth-largest juice manufacturer and the largest in Russia.

"We're looking forward to building Lebedyansky's portfolio of strong, popular brands in one of the world's fastest-growing juice markets," said Michael White, PepsiCo International CEO and vice chairman of PepsiCo. "It's yet another way we're transforming our product lineup to include more beverages and foods that address the growing consumer interest in health and wellness."

PepsiCo's own financial health was last reported in July, showing strong second-quarter operating results that included 14% net revenue and 12% growth in operating profit. Its Frito-Lay brands enabled 2% volume growth in spite of net price increases, while revenue and operating profit grew 4% for its Quaker Foods division. Flooding temporarily shut down its Cedar Rapids, Iowa-based Quaker manufacturing facility in July, but full production levels were expected to return by mid-August.

According to Nooyi, the strength and breadth of the company's global portfolio and geographic footprint delivered another quarter of solid results. "PepsiCo continued to drive growth across its worldwide snacks and beverage businesses primarily through strong product innovation, well-executed pricing actions and focus on expense control and productivity," she said.

PepsiCo's third quarter 2008 earnings conference call will be webcast live over the internet on Oct. 14, at 11 a.m. ET.

http://www.industryweek.com/articles/pepsico_inc-_globalization_next_17392.aspx?Page=1

This shows how Pepsi.Co has expanded throughout different countries, how much it has invested in these countries, the number of employees it has and how much turnover it has made. 

Global Branding Versus Local Marketing

An interesting blog and post about how globalisation and global branding is depleting local marketing.




Global Branding Versus Local Marketing

Martin Lindstrom  |  November 23, 2000   |  1 comments

Day by day, global branding is becoming a bigger challenge. Why? Because it's no longer possible to isolate a brand and its reputation.

You might think you've created an excellent strategy for your brand in one local market, only to realize that the rest of the world has access to that same local communication. This exposure destroys any possibility of separating your local branding strategy from your global branding strategy.

This unavoidable exposure of your local brand-building strategy in the international arena is part of the growing difficulties that attend global brand building. Related to this complication are the internal issues that arise. For example, how can corporations handle the local and global mix in their marketing departments? Is every local marketing department now obsolete? Can local marketing be taken over by a single department of centralized marketing functions?

Such issues are the result of the speed and spread of communications. The Internet has enabled every consumer to access every piece of communication in the world. Good old concepts like running test markets have been dramatically altered because of the increasing proximity among markets. True separation among markets has disappeared.

When Coca-Cola selected Australia as the test market for the first non-Coca-Cola drink it had launched in years, most of the world watched the experiment, and almost as many people participated in the experiment from outside the test market. This might very well have been the strategy's intention. However, if the objective was to test a new product in a local market, the strategy clearly failed.

Global communication is more or less forcing brand builders around the world to adjust their approaches. They're having to forego the strategy that provides local marketing teams with full autonomy. So, how should we handle the brand challenge?

First of all, the local brand is not dead. But some of the activities that are used to promote it are now obsolete. I would separate local brand-building activities from global brand-building activities on the promotional side, as McDonald's has done. Ronald McDonald is the key in-store promotional figure. Very seldom do you see him on television commercials and, when you do, you see him publicizing in-store promotions.

Ronald, very cleverly, has become McDonald's point of differentiation in each market. He celebrates Christmas in Northern Europe and the Chinese New Year in Hong Kong. He promotes McDonald's wine in France and McDonald's Filet-o-Fish in Australia. But he never appears in globally accessible media. McDonald's' global messages come through television commercials. The corporation produces local adaptations of these, too. But you can see McDonald's local twists are substantially stronger in the in-store promotions than on television.

The purpose of global brand management is to conceive of and control a brand's global direction, and this is done by defining and communicating the brand's core values. The execution of this communication lies in devising and consistently applying a specific style, tone, and image.

The role of local brand management is to refine the communication of the brand's core values by adjusting their execution to communicate meaningfully with each local market. If a local event like the Chinese New Year is taking place, it's the local brand-builder's task to ensure the brand leveraging on it. Local brand building depends on an acute awareness of local trends; it's all about leveraging knowledge that the international marketing department has no access to or sympathy with.

The global marketing department is the strategic group. The local team is the tactical group. Both need to work hand in hand.

Sound easy? Give it a go, and you'll realize that it isn't. But hopefully, I've helped explain this fairly complex reality. Now it's your turn to execute it.

Post from http://www.clickz.com/clickz/column/1695787/global-branding-versus-local-marketing

Phillip Booth representing the richman's think tank, the IEA...

"Prof Philip Booth is editorial and programme director at the Institute of Economic Affairs"
I have been investigating interesting comments on his which can be read here.Personally, the top comment sums up the situation for me perfectly. I've highlighted my favourite line!
However, the second comment raises some interesting points about the CAP, although I do not agree with the users opinion on Fairtrade being a 'noisy and visible campaign' when in actual fact Fairtrade attempts to raise awareness for the CAP and the people behind Fairtrade openly oppose it (source). Just goes to show, don't believe everything you read on the internet! Especially because people like hondaboy2001 and pragmatist can pop up at any occasion and talk bollocks. Comments can be viewed below.

"DivineSophi's comment says it all for me. We hear the same arguments over and over again from the idealogues opposed to Fairtrade apparently because it upsets their view of the world informed by a set of narrowly defined economic 'laws'. Yet in the meantime millions and millions of people are acting together, inspired by those like Sophie who have set out to change things throuigh action rather than talk. Fairtrade may not save the world, but it does do good and is a reminder that people do not always act in their self interest and that solidarity and empathy are still powerful motivators for human behaviour. Why do these people find that so upsetting? Are they saying that the majority of british shoppers who think that Fairtrade is a good idea (based simply on the principle that people should get a fair deal for their hard work) are all wrong, or deluded or unable to think for themselves? And for those who go on about EU subsidies, CAP etc, well it isn't an 'either - or' situation and if they bothered to visit the Fairtrade Foundation website they may be suprised to find that the Foundation is running a campaign right now to raise awareness of the impact of EU and US subsidies on poor cotton farmers in West Africa and is working hard to get these trade distorting subsidy regimes changed. More than the IEA is doing as far as I can see?"

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"One of the unfortunate by-products of noisy and visible campaigns like Fair Trade is that they deflect attention from much more important issues - in this case the crushing protectionism of the EU and the USA, in particular, which denies economic opportunities to hundreds of millions of poor farmers.

Whilst most consumers are aware of what the Fair Trade symbol stands for - at least in the abstract - they do not understand what the CAP is and what impact it has on poor farrmers. Yet the CAP is responsible for keeping over 400 million Africans in abject poverty and will undoubtedly be viewed by future historians as one of the most heartless, ruinous and destructive policies ever created.

The CAP is effectively an enormous fence thrown up around Europe to prevent farmers in poor countries from selling their agricultural produce to us. Inside the fence, we tax European citizens more to fund subsidies to uneconomic farms all over Europe, which then produce food at multiples of the prevailing World price. Thus not only do we pay more in tax but we also pay more in the shops for our food than we should.

But the real impact is on the poor overseas. In many African countries, for example, the only sector they can compete in is agriculture and by taking that possibility away from them we deny them the possibility to grow their economies. At the same time we pressure them to open their own markets to our manufactured goods and specialist services which they cannot produce economically themselves.

To call this an uneven playing field is a massive understatement. It is a villainous policy with no moral justification whatsoever.

The Fair Trade lobbyists bang their drum loudly enough that no other voices can be heard. The 'crowding out' effect is dramatic. Consumers get to salve their consciences by buying fair trade bananas when in fact what they should be doing is voting into power politicians who are opposed to the CAP and will fight to open Europe's markets to imported food.

In the final analysis it is all about results, surely? What can the Fair Trade campaign hope to achieve, even in its most wildly optimistic forecasts? A 1% improvement in living standards in poor countries?

Scrapping the CAP would lift hundreds of millions out of poverty and in a very short space of time yet no action is taken because everyone is looking the wrong way. The Fair Trade lobby should recognise that they themselves are part of the problem."

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"Trouble is, if you look into it, you find it's only the 'rich' farmers who can afford to join up!

Also, the money does not go to the poor worker, but rather to the landowner.

Really, there's nothing fair about Fair Trade!"  - hondaboy2001

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"Thank you for expressing a view that I have long held. Unfortunately, too many people, doubtless well meaning people, have jumped on the "fair trade" bandwaggon without proper thought to its consequences. They get a warm glow of virtue from buying "fair trade" goods but don't grasp that they are distorting the market. However, it gives the chattering class something to talk about at dinner other than the alleged joys of organic food." - pragmatist

By Kerry - Globalisation - Third World, bad points

Globalisation is affecting all over the World. The West, which is also known as the first country, is losing jobs to the third world. This is because major companies are exploiting people, in places like Africa, for cheap labor. Crops such as Cocoa also grows really well in these countries and the large corporations know they can get away with paying next to nothing to the farmers that keep their companies afloat. The third world people are also being forced to work in sweat shops so that people in wealthier countries can buy cheap clothes that wear easily and are thrown away just as easily as they are bought, this way people go and buy more clothes from the same shop and this is how places like Primark etc make their money.  The workers are losing out because they have no other option then to work for places like this or risk living with no food or shelter because there is nothing else out there for them. There can be positive effects of Globalisation happening linking with third world companies. It makes goods cheaper, but this makes labor cheaper and means worked aren’t being paid a high enough wage to live properly. 

Follow on post

a similar article from BBC news highlighting controversies around Fairtrade can be found here.

The Guardian Fairtrade article

Although the article itself is quite good, what I;ve found to be most interesting is the comments posted by Guardian readers which can be seen below the article here. How legitamate these facts are I do not know, however, I believe that it is definitely worth investigating the claims put forward by these users.

Janet Daley on Fair Trade

"It transpires that a very small number of farmers are getting a subsidised fixed price for their produce under Fairtrade franchises and that this is at the expense of most other farmers in their regions, who are actually worse off as a result. But even more serious, the Fairtrade operation helps to keep poor countries and undeveloped economies exactly that - poor and undeveloped." - Janet Daley (25/02/2008), Telegraph newspaper