PepsiCo Organizational Change Caused by Aquafina Water Essay

Total Length: 1760 words ( 6 double-spaced pages)

Total Sources: 5

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Bottled portable water was not a significant product in the beverage industry in the US two decades ago. The industry was dominated and controlled by such giants as Groupe Danone SA’s Evian and Nestle SA’s Perrier. By 2002, the industry was worth $3.5 billion. In 1997, Pepsi made attempts to join the bottled water market. Some of the efforts included buying a spring water company and a shot at selling a brand that was sparkling. However, these efforts did not yield fruit. The management came to the conclusion that the best method to create a successful water brand was to exploit a resource that was already in existence, i.e. the water treatment equipment already at the bottling plant locations. These were being used to purify water for the soft drinks that the company produced (McKay, 2002).

The then Pepsi beverage main CEO along with his team figured out that there was a need for Pepsi to set itself apart by filtering out all it could from tap water. Pepsi figured out that it could transform a resource that was already available into a product with a taste and quality that could stand its market ground against the already popular spring water products including Evian. Large scale bottling of tap water would also allow Pepsi to compete on price basis (McKay, 2002).

The company installed reverse osmosis equipment for filtration worth $3 million, a plant for bottling in Wichita, Kan in 1994. The tap water that had already passed through the filtration process to make soft drinks was pumped through fiber glass membranes, at high pressure so as to remove the smallest mineral particles. Chlorine and other particles were stripped out using carbon filters. Since the water had been cleaned of even particles that destroy bacteria, ozone was added to stop bacteria from multiplying. Pepsi earned profits through licensing the right to use its Aquafina market name to bottlers. These bottlers bought and installed the equipment for filtration (McKay, 2002).

The process of communicating change to employers

The advantage of water is that it is consumed any time. About a third of American households have yet to taste bottled water. In the past, bottled water targeted women and the consumers on the high end, Pepsi intended that Aquafina should be viewed and priced as unisex and mainstream water. At the onset, it was sufficient to just get the Aquafina brand onto the shelves. With time, the company began to increase its marketing campaigns to stave off competition that was growing.

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The advertisement budget by Pepsi increased to $40 million in 2002. Unlike the Coca Cola Company, the cola promoting company with Britney Spears is of the view that advertising soft drinks should be done by soft drink companies. They say that since water is not carbonated, it is so pure that they have no promise to make (McKay, 2002).

Cultural Intelligence: Managing issues to do with culture and associated with organizational change

CQ, cultural intelligence, cultural quotient is a common term used in academic and government circles can be viewed as the capability to work and relate effectively across diverse cultures. Van Dyne, Ang and Koh (2008) say that CQ is a complementary intelligence form that demonstrates being adaptable to cross cultural interactions and diversity; which is different from other intelligence forms including EQ and IQ. CQ focuses on interactions and settings marked with cultural diversity. Thomas and Inkson (2003), point out that people who are culturally intelligent people own three main facets, and knowledge is one of them. They exhibit mindful behavior and adaptiveness. Cultural intelligence involves all these aspects. What the authors are saying is that there is a need for people to be knowledgeable so as to understand the cross cultural points of departure, the mind to understand such situations and the ability to adapt appropriate behavior in cross cultural settings. Thus, people who exhibit the three traits possess a high level of Cultural Quotient (Thomas and Inkson 2003).

The greatest asset that PepsiCo have is people. The company believes in creating a workforce that represents the diverse consumer base it serves. Engagement and diversity is a central to the values of the company and the way it operates as a corporate citizen, globally. Performance entangled with engagement, diversity and purpose is an essential driver of the vision of the company. This approach is critical in creating sustainability as an advantage in the company. PepsiCo comes with a strong legacy in diversity practices. They adopted the approach in the 1940s by being the first to break the color barrier in major conglomerates. They started employing African American Sales people. The company was also the first one to have a woman in its management board. It started multicultural marketing in the 80s. it is clear that PepsiCo is building on their legacy and paving a brighter future….....

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McKay, B. (2002, April 18). Pepsi, Coke Take Opposite Tacks In Bottled Water Marketing Battle. Retrieved December 29, 2017, from

Van Dyne, L., Ang, S., & Koh, C. (2008). Development and validation of the CQS. Handbook of cultural intelligence, 16-40.

People Matters. (2014, April 14). PepsiCo is bubbling with diversity. Retrieved December 29, 2017, from

Thomas, D. C., & Inkson, K. (2003). People skills for global business: Cultural intelligence. San Francisco: Berrett-Koenler.

PepsiCo. (n.d.). Diversity & Engagement. Retrieved December 29, 2017, from

Thompson, A. (2017, February 06). PepsiCo's Organizational Structure Analysis. Retrieved December 29, 2017, from

PepsiCo. (2012). PepsiCo Announces New Global Structure and Leadership to Drive Continued Growth. Retrieved December 29, 2017, from

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