Design Poster

The background of this poster comes from Fairtrade offical website. The blue color shows a beautiful, quiet, rational, peaceful and clean. Using this font for the words of FairTrade to express the traditional handcraft. All products in the basket come from Fairtrade shop in Holmfirth. The purpose of design poster is to not only promote fair trade but also  help holmfirth shop to promote its products.

To Study Global Supply Chain Management

Global supply chain management: PepsiCo case

 

1. Introduction

As people known, international distribution channels link manufactures and final international consumers. Internationally, distribution channels vary significantly from one country to another and from one market to another (Christopher, 1998). For most markets, consumer product channels of distribution tend to be longer than industrial product channels. Beyond this general trait, however, channel characteristics differ worldwide. Especially in America, there are many more levels of distribution for consumer products than in most other counties, at the same time, for most industrial goods, the large trading companies will adopt the strategy in dealing directly with retailers. In most emerging markets and low-income countries, the “direct to store” delivery strategy marketing is rapidly becoming a popular channel of distribution.

 

Since 1898, PepsiCo Beverage Company was available in the United State, after a lot of business restructuring; now PepsiCo has been the main beverage industry in America. With the global turnover of $27 billion in 2003, operating profits of $5.8 billion, as well as the company have 140000 employees around the world.

 

Pepsi cola is a flagship product commonly associated in the product of PepsiCo. As a considerable part of PepsiCo revenue stream, PepsiCo has significant income actually came from a lot of other products and departments such as Pepsi cola beverage in North America. Pepsi has been the main market share of the Coca-Cola and Pepsi. They have become a legend as the competitor in the business of the marketing strategy. However, due to a series of strategic acquisitions and as a company in the international market, Pepsi finally get more market share in the overall market and the performance of the beverage industry. Pepsi profits grew by 18% last year, to $4.2 billion and operating income of $29.3 billion, increased by 8.5%, coke's earnings growth of 11.5%, revenue rose 4.4% to $22 billion for 2004" (steiner, 2005, crime). It can be said that Pepsi has lost the battle, but won the war with its main rival Coca-Cola. Pepsi has done this as a snack food and beverage companies, business in more than 200 countries around the world, more than 143000 employees, international and domestic more than $4 billion in revenue (Pepsi Company, in 2004, and pages). Increasingly, Pepsi cola, as in most other large multinational companies have done, is relying on overseas expansion to promote its future growth and profitability.

 

2. Evaluation of PepsiCo’s overall distribution strategy

PepsiCo’s strategic sights are set on international expansion. Steiner points out that Pepsi International became Pepsi’s largest division in 2004, and this trend is likely to continue (2005, para.3). Although the United States and more broadly, North America, is the world’s largest snack market, its growth is relatively flat (Flannery, 2004, para.4). These two strategic observations certainly lend much credence to an outward focusing strategy of growth and expansion. In fact, this appears to be the driving force behind PepsiCo’s overall strategic plan: international expansion. Even more specifically, PepsiCo seems intent on establishing dominance in the two main markets of China and India: “China is a generous prize” said PepsiCo Asia President. With the opening up of China in the pate ten years, there is a kind of foreign product’s intrinsic need (Flannery, 2004, para5). The global strategic orientation is reflected in the opportunities available on the market, which is an easy access to many countries. Such as PepsiCo, that is well-funded and has the research and marketing capabilities to manage a unified market entry campaign.

 

In response to changing the market conditions, PepsiCo’s channel management conducted a series of changes. Before the channel turn the trend of change, Pepsi had done through with the dealers network, which coverage’s across the country, in this way, the dealers responsible for the supply of the entire retail terminal. Modern channel operations often need the distributor to do business with the manufacturer directly, as well some dealers also provides supporting sales and service (M. & David, 2000). On one hand, due to there are a number of dealers, the overlapping coverage is narrow, and even will result in channeling goods, and out of control for the price. In this context, PepsiCo in the world especially in China was forced to re-examine their channel strategy. On the other hand, through innovation and reformation, Pepsi has broken the original channel pattern; they make the hypermarkets, supermarkets, convenience stores and other modern path separate from the traditional distribution channel. As the important customer, by the modern channels, the key account will directly responsible for delivery by the Pepsi. All the rest of the customers could be classified to the traditional pathway, however, as the traditional channels, the dealer is still responsible for the delivery (Cooper et al., 1997).

 

In particular, the “Direct to store” delivery model could be understood that Direct-to-store distribution concentrates all the benefits of operating and sourcing and logistics in a relatively low cost country. It also takes advantage of the speed provided by the DC bypass strategies based on cross-docking flows (Douglas & Martha, 2000). Compared to the traditional distribution, adapting the direct-to-store does reduce total supply chain cost by cutting down product total storage, handling and transportation and improve the speed to market. As for this model adopted, the PepsiCo Company will achieve significant benefits. First of all; the continuous work flow of product from the original vendor to the final customer, do not with the storage or processing in distribution centers or warehouses. This vastly reduces total order-cycle time. Secondly, reduce end-to-end inventory carrying costs: as a result of less production storage and production moving faster and directly from the original vendor to the final customer. After that, reduces cargo damage and loss: by eliminating multiple “touch” points and cargo loading and unloading. Fourthly, as a result of improving distribution efficiencies, supply chain cost per unit and inventory holding cost will be reduced and lower than through traditional distribution (Douglas & Martha, 2000). At Last, growing business with lower infrastructure cost is helpful; for example, decreasing the need to expand current distribution network while expanding to some new markets. Therefore, this strategy adopted by the PepsiCo was undoubtedly a successful decision in the company operation.

 

3. Discussion about how PepsiCo handles relationships with its suppliers

Obviously, in order to have a truly successful supply chain, people need to have a good relationship with the company’s partners and suppliers. In order to ensure that the key factor is not to only understand your order, but also make sure that your company’s philosophy is similar to your suppliers (Davenport, 1993). Both parties understand and agree with the expected success, which is critical to the company of beverage. If the company is planning to 15%, your suppliers have the ability to grow in the development of the company. Unless people have the key suppliers of high-level relationship, where people certainly do not know these suppliers will be with you in the future. Finally, people will want to replace the key suppliers when the company is in a growth mode.

 

When making the analyses of how the PepsiCo handle relationships with its suppliers, it is clear to know that the company with their own characteristics. There are a few helpful hints to handle relationships with their own suppliers, the PepsiCo Company set clear expectations, therefore, the company and the suppliers know where they stand. Most of their strategies will include the following measures. Firstly, they will share the growth goals with their own suppliers. PepsiCo adapts the purposes to have the synchronous development with suppliers and build up the psylosophy of the common goal. Secondly, set expectations with suppliers. It is necessary to make the achieve targets for the suppliers, PepsiCo lead the trend of the times of dealing with its suppliers. However, those exceptions should be measured on a regular basis. Under the circumstances, PepsiCo company will choose the relatively on an appropriate way. Thirdly, PepsiCo will always communicate the results of those measurements to their suppliers. This point is especially valuable for the future development of the company. Communication is the key factor in the relationship of the different companies, whereas, as for this point we could learn many experiences from the PepsiCo company.

 

As for the methods adopted by PepsiCo Company in the operation of the company, the benefits of the above measures, they will chose to use this relationship to increase its efficiency in the supply chain. It is obvious that when the company chooses the method, as superior competitive advantage, companies should implement a “closed-loop “supply chain management system that coordinates with its ERP system. In a closed-loop, the ERP system includes tactical and strategic planning tools, operational data (customer orders and inventory movement) brought together into an awfully-integrated environment (Douglas & Paul, 1996). This environment must also be able to adapt to adjust the ever-changing as the PepsiCo have done, it is certain to improve the efficiency of the supply chain. On the other hand, the company will get the benefits of the different innovation measures. In a word, we should communicate with suppliers and learn the experience of what PepsiCo have done in the operation of the company.

 

Effective supply chain management realizes that different products and different companies require different supply chain strategies (Bechtel & Jayaram, 1997). Generally speaking, there are two kinds of products: innovative and functional. Fully understood which kind of product you carry (maybe even a mix of the two) will provide the appropriate direction in managing the supply chain. Innovative products are new products or those products with short lifecycles and often tend to have highly demand which may be unpredictable (Tom, 1993). Responsive supply chains which quite meet the needs of customers will result in the success of the operation. Functional products, which are products that are familiar to customers in their industry and tend to have varies stable demand and long life cycles. As consequences of profit margin pressures, these products call for efficient supply chains which are concerned with meeting customer demand at the lowest cost. PepsiCo aimed to minimize inventory throughout the chain, short lead times (without increasing cost), and low-cost suppliers (Tom, 1993).

 

4. Personal view of how well PepsiCo deals with fluctuations in demand and supply within its supply chain

With the fluctuations in demand and the supply retailers, commercial partners will use all sorts of raw material and other supplies in the daily business (Richard, 1997). Main ingredients of Pepsi, they used to include apple, pineapple, orange juice and other kind of fruit juice concentrate, aspartame, corn, corn sweetener, flour, spices, grapefruit and other fruits, potatoes, vegetables, raw milk, rice, oats, sugar and essential oils and wheat.

 

PepsiCo’s main packaging materials, including the plastic resin, polyethylene terephthalate (PET) and polypropylene resin for plastic bottles and film packaging used for snacks, use glass bottles, aluminum cans and closures, cardboard and cardboard cartons. Fuel and natural gas are also essential goods for people as a result of its use in our facilities and truck in our products. The laws, regulations or market measures to tackle climate change, which will adversely affect the business and operations. PepsiCo are exposed to the market risk caused by the adverse changes in commodity; adverse economic conditions may have an adverse effect on the business results and financial performance (Michael et al., 2005). Such as the climate change, or laws, regulations or measures’ fluctuations will urge the PepsiCo Company adopt measures to tackle the change of the fluctuations, which may negatively affect our business and operations.

 

As we know, some of these supplies and raw materials are sourced from abroad, and some are available format limited number of suppliers or are in very little supply when seasonal demand is at its peak time (Douglas et al., 1996). In addition, we will chose to use derivatives to hedge price risk prediction to purchase of some raw materials, fuels and energy. When we make the determine that these derivatives are not in conformity with the hedge accounting, the PepsiCo company will pay much attention in the net income at any time due to the changes of supply prices.

 

PepsiCo has done well in the fluctuation of the demand and supply of the supply chain; it will result in the disruption of the supply chain which could have an unfavorable influence on the business, such as financial condition and operations results. The capabilities, suppliers and third party business partners, including contract manufactures, independent bottling plans as well as the joint venture partner are the key to the success of the PepsiCo Company. It is necessary to emphasis the defacement and the destruction of the manufacture will reduce the cost bonus in transportation, distribution and the raw materials in the fabrication and sales of the product (Martha & Lisa, 1993). Failed to take adequate measures to mitigate possible or potential impact of such events, or effective management if they occur, these events may affect the whole business, as well as the need for additional resources to renew our supply chain.

 

5. Conclusion

Since most of PepsiCo’s growth is already projected to originate from international markets in the years ahead, PepsiCo should develop a 5 year growth plan for the Asia Pacific Rim spearheaded by the China market. Considering PepsiCo already has a mammoth presence in China: “PepsiCo has since invested more than $1 billion in 40 joint ventures, some state connected, a few of them troubled. Today China is among the five fastest-growing markets for Pepsi” (Flannery, 2004, para.6); by maximizing this market presence, PepsiCo could use this momentum to capitalize on markets currently underperforming around the Asia Pacific Rim.

 

This strategy is further enhanced by several leading international events scheduled to take place in China in the coming years: the 2008 Summer Olympics and the 2010 World Expo.  By increasing its profile in China and throughout the region, PepsiCo would be well-positioned to capitalize on its increased brand equity and marketing cache to re-launch its product lineup in the all-important North American market.  PepsiCo’s recent strong financial performances, illustrated below, have given it the resources requisite to introduce such an expansive regional and country marketing campaign.

 

Form the above analysis; we could know that the operation experience of PepsiCo in the supply chain is the foremost innovation in the beverage industry. It is clear to get that the supply chain-wide initiative can help develop the distribution of short shelf- life products to an extent that would provide quick pay back of the capital investment. The key set out lies the technology in recyclable transport containers and develop a process through the technology in the supply china strategy. In a word, PepsiCo has done as a model in the modern beverage industry.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reference list

Books:

Christopher, M.G. (1998), Logistics and Supply Chain Management; strategies for reducing costs and improving services, London: Pitman Publishing

 

Chopra, S. and P. Meindl (2001), Supply Chain Management, Prentice Hall

 

Davenport, T.H. (1993), Process Innovation; reengineering work through information technology, Harvard Business School Press

 

Hoekstra, Sjoerd J. and Jac H.J.M. Romme (1992) Integral logistic structures: developing customer oriented goods flow, London: McGraw Hill.

 

Journals:

Barratt, M. and A. Oliveira, Exploring the experiences of collaborative planning initiatives,  International Journal of Physical Distribution & Logistics Management, Vol. 31 No. 4, 2001, pp. 266-289.

 

Bechtel, C., Jayaram, J. (1997), Supply Chain Management: a strategic perspective, International Journal of Logistics Management, Vol. 8, No. 1, pp. 15-33

 

Cooper, M.C., Lambert, D.M., Pagh, J.D. (1997), Supply Chain Management: more than a new name for logistics, International Journal of Logistics Management, 8, 1, 1-13

 

Hoek, Remko van, Alan Harisson (2003) The Smart car and smart logistics, in: Cases in Operations Management, Robert Johnston et al., third edition, Pearson Education, pp. 316-326

 

Richard, M., (1997) “Quantifying the bullwhip effect in supply chains”, Journal of operation management, Vol 15, Iuuse2

 

Christian B., Jayanth J., (1997) "Supply Chain Management: A Strategic Perspective", International Journal of Logistics Management, Vol. 8 Issue 1, pp.15 - 34.

 

Martha C. Cooper, Lisa M. Ellram, (1993) "Characteristics of Supply Chain Management and the Implications for Purchasing and Logistics Strategy", International Journal of Logistics Management, Vol. 4 Issue 2, pp.13 - 24

 

Tom, D., (1993). “Effective Supply Chain management” Sloan Management Review

 

Douglas J. Thomas, Paul M. Griffin, (1996) “Coordinated supply chain management”, European Journal of Operational Research, Vol 94, Issue 1, pp 1–15.

 

Douglas M Lambert, Martha C Cooper, (2000) “Issues in Supply Chain Management” Industrial Marketing Management, Vol 29, Issue 1, pp65–83.

 

M. Eric Johnson, David F. (2000) A FRAMEWORK FOR TEACHING SUPPLY CHAIN MANAGEMENT, Production and Operations Management, Vol 9, Issue 1, pages 2–18

 

Douglas M. Lambert, Margaret A. Emmelhainz, John T. Gardner, (1996) "Developing and Implementing Supply Chain Partnerships", International Journal of Logistics Management, Vol. 7 Issue 2, pp.1 – 18

 

Michael Tracey, Jeen-Su Lim, Mark A. Vonderembse, (2005) "The impact of supply-chain management capabilities on business performance", Supply Chain Management: An International Journal, Vol. 10 Issue 3, pp. 179 - 191

 

To Study the Relationship between Cultural and Linguistic Competence

Infusing Cultural and Linguistic Competence into International Business

 

Cultural difference among countries plays a crucial role in international business. Understanding culture differences, improving intercultural competence are highly critical to the success of companies engaged in international business (Hoopes and David, 1983). This report sets out to summarize three stages of business relationship development with Romanian local firms, and then the report arms to analysis the cultural and linguistic requirements of cooperating with Romanian firms in order to ensure establishing and maintaining long term and stable business relationship.

 

Culture is a combination of various elements, such as social structure, values, beliefs, behaviors, languages, customs and attitudes, which distinguishes one society from another (Charles and Hill, 2002). On one aspect, culture of a country determines the rules and strategies of firms how to operate in this country. On the other aspect, it determines how the international personals communicate and interact with the local business partners (Javidan, 2006).

 

The business relationship development with Romanian local firms can be divided into three stages, which are enhancing mutual understanding of given culture and companies, conduct effective business negotiation and transaction, establish long term business partnership. The first stage aims to familiar with the overall information of local culture, acquire production competence and qualification information of the target firms through further research and open communication with the identified firms. The target of the second stage is to build mutual trust partnership. Finally, in the third stage, the objective of mutual benefits of the company and local partner will be realized. In each stage, there are some key factors that affect the business relationship development.

 

In the first stage, the key factor is open communication. Relationship is the basis of international business. Therefore, open communication is the best way to get overall profile and understanding of each other in order to build mutual trust before business negotiation. The second stage, successful negotiation and transaction, to a great extent, depend on well building social bonds and connections in Romania. Building social bonds in Romanian can be divided into two parts: building cooperate ties with local firms, building social bonds with local governments. On one hand, before negotiation and transaction, it is particularly beneficial to development relationships with the target local firms in Romania. Business is always personal that interpersonal relationship with the senior executives and personals of local firms always determines the process and achievements of negotiation and transaction. On the other hand, the social bonds with local governments determine the policies and strategies to the success of cooperation relationship with local firms. In many countries, including Romania, the governance is always bureaucratic (Cleaveland, 1979). As a result, establishing friendly and stable ties with local governments can avoid miring in a lot of red tape. In the third, business relationship establishment, the critical factor is maintaining partnership loyalty and identity. Based on mutual benefits, respect and trustfulness, the company and the local business partner will recognize the values and culture of each other. Cultural identity and adaptation is the key to long term partnership in international business (Swift, 2008)

 

In order to establish and maintain long term business partnership with the Romanian local firms, the company and its personals should have a cultural and linguistic competence.

 

Primarily, abundant knowledge and deep understanding of the social characteristics and structure of Romanian are the basic requirements. The overall social framework determines the roles of individuals in the society, the stratification of the society, and individual’s mobility within the society (Dan and Brain, 2000). It is extremely essential to understand the regional, racial, political, economic and idea difference between Romanian and home countries. Therefore, the international personals should respect the local laws, attitudes, and customs in order to build well interpersonal relationships before conducting business cooperation (Helen, 1994).

 

Second, improving linguistic competence is particularly beneficial to international business. Language served as one of the most powerful tools and bridges of communication, always determines the process and results in conducting business negotiation and transactions with local firms (Kanter and Mand, 1994). It requires the personals who are involved in the international business should have bilingual and even multilingual competence (Erramilli, 1996). In Romania, the first language is Romanian, which used by 91% of the population. Secondly are Hungarian and German. The foreign languages used by most people are French and English. Therefore, the personals should improve their multilingual ability in order to ensure successful development of international business (Avrahan, 2000).

 

Besides, the personals should not only need linguistic competence, but also need to strengthen their cross-cultural communication skills. When conducting business negotiation and transaction with people from different cultures or different countries, we need to communicate with them to build mutual respect and trust. In Romania, people are always appeared to be shy and reserved, and they are tough negotiators and indirect communicators; thus it is extremely essential to international business participants to remain patient and build some flexibility when in business negotiation and transaction (Avrahan, 2000).

 

Furthermore, during the international business negotiation and transaction, maintaining proper business etiquette is required to all the international business participants (Annad and Delio, 1997). In a given culture, the business etiquette always reflects personals’ values and attitudes to the local culture. These values and attitudes encompass the behaviors, feelings, ideas, time, age, education and status (Bridgewater and Egan, 2002). Therefore, the international business participants are required to learn and adapt this Romanian business etiquette.

 

For the reason of cultural differences, cultural conflicts are ubiquitous in international business relationship establishing and maintaining (Michael, 1994). Facing with the challenge of cultural difference, the international business participants should strengthen their cultural adaption ability and multilingual competence in order to promote the development of international business. 
References:

Books:

1. Bridgewater S. and Egan C., (2002), International Marketing Relationships. Palgrave, Basingstoke.

2. Cleaveland A. A., Craven J. and Danfelser M., (1979), Universals of Culture, Centre for Global Perspectives in Education, New York.

3. Charles W. L and Hill, (2002), International Business, New York, McGraw-Hill Press.

4. Dan M. and Brain T., (2000), International Business, 2^nd edition, New York, Oxford University Press.

5. Helen D., (1994), International Management: Managing Across Borders and Cultures, USA, HarperCollins College Publishers

6. Hoopes and David S, (1983), Global Guide to International Business, USA, Davids 7. Michael L., (1994), International Trade: Regional and Global Issues, USA, ST. Martin’s Press.

8. Swift J. S., (2008), Foreign Language Competence and International Business: A Cultural Approach, Cambridge Academic Ltd, Cambridge.

 

Journals:

1. Annad J. and Delio A., (1997), “Location Specificity and the Transferability of Downstream Assets to Foreign Subsidiaries”, Journal of International Business Studies, Vol 28(3), pp579-603

2. Avrahan S., (2000), “Determinants of Entry Strategies of U.S. Companies into Russia, the Czech Republic, Hungary, Poland, and Romania.” Thunderbird International Business Review, Vol. 42 (6), pp. 651-676

3. Erramilli M. K, (1996), “Nationality and Subsidiary Ownership Patterns in Multinational Corporations”, Journal of International Business Studies, Vol 27(2), pp225-248

4.  Javidan, M., House, R.J., Dorfman, P.W., Hanges, P.J. and Sully de Luque, M. (2006), “Conceptualizing and Measuring Cultures and Their Consequences: a Comparative Review of GLOBE’s and Hofstede’s Approaches”, Journal of International Business Studies, Vol. 37 (6), pp. 897-914

5.  Kanter R and Mand Corn R. I, (1994), “Do Cultural Differences Make a Business Difference? Contextual Factors Affecting Cross-cultural Relationship Success” Journal of Management Development, Vol. 13 (2), pp. 5-23

The experience of buying Fairtrade goods

More and more pays attention along with the people to own state of health，enables organic products is a trend to develop. Organic products can not only reduce health risks but also  protect the natural environment.  According to the environmental report, organic farming protects the planet by holding 1.5 tons of CO2 in the soil each year per acre. In addition, farmers use organic and Fairtrade cotton as a way to help them become ecoonomically independent and rebuild their communities. By avoiding harmful chemical pesticides and fertilisers, and using natural pesticides like neem, they can also protect their health and their environment that is why I bought this organic cotton garment. Its look good and feel good.

To buy Fairtrade product not only can help poor communities but also can protect environment.

Reflection of Project of Fair Trade

I benefited enormously from an investigation of Fair Trade, and provided an even deeper level of knowledge and skills during the period of time.

After this study, not only to deepen the understanding of fair trade, but also can learn in order to practice and share to others. Before that, I have no much understanding of fair trade, but since Stephen Sheard and Geraldine Clark who are directors of Fair Trade, gave us a presentation for discussing products,merchandising,marketing research and collaboration ,let me further understand fair trade through this opportunity. Moreover they offered an opportunity to visit the Fair Trade shop in Holmfirth in order to let us deeply know a social enterprise operation and company facing difficulties.

There are two major aims for this project as follow:

To explore the general public awareness of fair trade and the experience to buy fair trade products

To assist the company to promote fair trade and its product

 

 

Through this work, I feel the promotion of fair trade is not an easy thing. Because even if the public understanding of fair trade, but they don't know much and also they have doubt such as Fair Trade certifiers. Therefore, I only can try my best to introduce the detail of what Fair Trade is and its product to my friends. I am very happy to do this because it can help to Fair Trade producers. Furthermore, I understand that a fair trade product from the design, management, production, transportation and retail will be detailed account. After this project, even to the supermarket shopping, I have to pay attention to whether the goods have signs of Fair Trade, and the Fair Trade products are my first choice for buying.