Week 10

In your own words and using referenced quotes describe what is meant in strategy by “Organizational Purpose” and describe what is meant by “Corporate Social Responsibility”?

Organizational purpose gives the organization its reason for existense . It acts as an guiding force upon which every other decision is rooted.  Organizational purpose may be defined as the initial phase for strategy of an organization .  It sets the tone for your organization to show the reason why it is established . Organizational purpose must consider internal considerations and stakeholders needs and other considerations which include code of ethics . It should consider following aspects which are listed below :

·         Business ethics

·         Stakeholders aspects

·         Corporate Governace

·         Cultural context

Organizational purpose of an organization includes the following types of terms concerned with strategic planning :

·         Quality , cost and product of the organization.

·         Human resource of an organization.

·         Competitive position

·         Ethical code of conduct

·         Structural position

·         Target customers

    

      Corporate Social Resposibility

     “Corporate Social Responsibility (CSR) is the responsibility of an organization for the impacts of its decisions and activities on society, the environment and its own prosperity, known as the “triple bottom line” of people, planet, and profit. Not only do responsible, sustainable and transparent approaches help build brand and reputation, they help strengthen the community and therefore the marketplace. A solid business plan, embedded into the business culture, reflecting organizational values and objectives through strategic CSR application, will help to build a sustainable and profitable future for all.”

      Should organizations focus more on profit and shareholder satisfaction or responsibility and stakeholder satisfaction? Discuss your own thoughts but try to support your ideas with theory or examples.

      For most business organizations the prime objective is to grow bigger and bigger , which can be attained  by maximizing profit and ultimately satisying their shareholders . Almost every business organization is focused on generating profits through maximising their sales and consumption .The primary motive of the business established is to make high amount of profits , to grow in size , to increase their resources and satisfying shareholders and stakeholders .

      In my opinion business organizations should maintain a balance in satisfying their shareholders and stakeholders respectively . The prime objective should be to earn profit as well as providing enough services for stakeholders respectively . Because its practically impossible for any business organization to sustain in the long run if its primary motive is to become responsible towards the environment and satisying their stakeholders . Whereas in theory it is possible if business organization maintain a positive balance in satisying both their shareholders and stakeholders respectively. Some of the huge business organizations of Nepal has implied with this method .

     An example of business organization maintaining good balance between satisying shareholders and stakeholders is NCELL , which is one of the leading telecom industries of Nepal . NCELL believes satisying their stakeholders and being responsible towards societ will do good business for them . They provide their products and services at a very affordable price from time to time .They come out with attractive schemes tempting customers to use their product or service . NCELL is also responsible towards society as they are actively involved in various social activities like donation , charity and society welfare programs as well as they launch city cleaning programs at times  which shows that they are very responsible towards their society.  Some of the schemes provided by NCELL which satisy their stakeholders are as follows :

1)      BUY 1 GET 1 SIM FREE

On April 2012 NCELL introduced its scheme which was focused towards satisying their customers and shareholders . If you buy a sim card you would get an extra sim card free of cost with a balance Rs 50 on it . This scheme was a big hit and it generated a  lot of profit for NCELL as well as satisyied their stakeholders .

2)      CALL AT NIGHT AT 0.50 Paisa

Ncell launched its call at night scheme in October 2011 which provided customers  to make a  call just at 0.50 paisa per minute from 10 pmt till 6 am in the morning .It is also an outstanding example of business organization satisying their stakeholders and making profits for themselves as well.

3)      SURF 3G AT CHEAPEST PRICE

Ncell launched its surf 3g internet in cheapest price , which was approximately 0.1 paisa bytes per second , which was the cheapest mobile internet service in Nepal . This scheme brought  lot of revenue for Ncell and this satisfied lot of their stakeholders as well .

At the beginning we studied the internal and external analysis. There was vivid discussion about the analytical tools used to study the internal as well as the external environment of an organization. Then after , the discussion we viewed the interview of chairman and CEO of PepsiCo Indra Nooyi . Next we were given a taks about case study and analyis of PepsiCo  . We enjoyed the case study and argued about the vision , mission and goals of PepsiCo among our friends . Moreover we also disussed about the corporate social responsibility of PepsiCo,

I answered the following questions:

       What are PepsiCo’s strategic objectives? Why does the firm exist?

   

      Pepsico is more focused on youth consumers , therefore they are more focused on attracting the young consumers. Its objective is to make a revenue of $30 billion by the year of 2020 . The seem to adopt an emergent kind of strategy , moreover try what they feel is the best for the company. As Pepsico is losing its market grasp in USA  , henceforth now they are upto target the Asian market .The population of the Asian market is huge , henceforth this will be a big market for the beverage products .In addition Pepsico is also increase its product line , which means there is going to be a variety of different products in the market hence will increase their portfolio business.

      The main organizational purpose of Pepsico is to best serve the interest of its conusmers . Its aime is to provide consumers quality products at affordable price .Through their advertising they focus on giving education and incentives and strategic acquisition . Moreover the brand is looking towards their product reformation . For instance , PepsiCo is looking at making its food and beverages healthy . It is considering to achieve expansion in an internatinal basis and achieve synergies . In addition it is also looking forward to maintain efficient distrubution system . PepsiCo is focused on empowering employees , sustainable growth and acting with trust and responsibility.

    What are the possible strengths and benefits of the strategy?

     Here are the possible strengths and benefits of the strategy of PepsiCo.

Ø  Empowerement of its employess

Ø  High market share

Ø  Employment opportunities for locals

Ø  Adequate funds

Ø  Top MNC , its business in more than 200 countries

Ø  Resposible towards society

Ø  High healthy and nutritious products

Ø  Product line extension will lead to rise in relative market share .

       What are the possible weaknesses and disadvantages of the strategy?

Ø  Risk factor is high

Ø  Huge competion with Coca-Cola

Ø  Low customer preferences

Ø  Low attractive branding and packaging

Ø  Low market share in comparison with Coca-Cola

Ø  Product failure in product line might be too risky

       Do you think the organization has the right balance between profitability and responsibility?

      Every business organization is established with primary objective of growing bigger and earning large market share and profit . The same trend implies ot PepsiCo .Since its market share declined to 3% per annum in USA , it has targeted the Asian market . The market share will be relatively high in the Asian market

The chairman and CEO of PepsiCo , Indra Nooyi , is a business leader charisma personality and vision . Her main objective is to triple the revenue of the company by the end of 2020 , moreover she desires to make PepsiCo the number one brand in the beverage industry . She is responsible towards her stakeholders , customers and employess . Due to her vivid personality she looks really focused towards achieving the goal and objectives of the company .

References:

      ·  E.H. Bowman and C.E. Helfat, ‘Does corporate strategy matter?’, Strategic management Journal, vol. 22, no.1 (2001), pp.1-14.

      ·   R.P. Rumelt, ‘How much does industry matter?’ Strategic management Journal’, vol. 12, no. 2 (1991), pp. 167-185

      ·   www.msdn.microsoft.com/en/us/library/aa479076.aspx

[MSDN, Accessed on 10^th January, 2013]