Environmental Analysis: Pepsiamericas

Environmental Analysis Paper

MBA580

University of Phoenix

Introduction

PepsiAmericas needed to analyze the forces and trends that could impact the company in the next three to five years. The leadership team opted to benchmark companies or other industries to identify any opportunities or threats and this investigation reveals the results. “The operating environment also called the competitive or task environment comprises factors in the competitive situation that affect a firm’s success in acquiring needed resources or in profitably marketing its goods and services. Among the most important of these factors are the firm’s competitive position, the composition of its customers, its reputation among suppliers and creditors, and its ability to attract capable employees. The operating environment is typically much more subject to the firm’s influence or control than the remote environment. Thus, firms can be much more proactive (as opposed to reactive) in dealing with the operating environment than in dealing with the remote environment” (Pearce & Robinson, 2004, p. 29).

Within the operating environment, is a nature of labor market force that directly relates to PepsiAmericas. PepsiAmericas is a manufacturing company that employs several unionized labor workers. Several studies and forecasts have been released solidifying that unionized labor is decreasing steadily and by 2010 they will almost be nonexistent. The company’s human resources department decided to conduct environmental scanning to verify these conclusions and to identify alternatives to reverse union density. The Journal of Labor Research identified the main issues affecting the unions and what changes can be made to reverse the projected outcomes. The challenge affecting unions are budgeting, human capital, and performance. The recession has caused the budget to vanish while other expenses increase. The human capital is a challenge because the “baby boomers” are reaching retirement age and this will cause the experienced workforce numbers drastically to decrease. And lastly, performance is an issue because the number of cases regarding waste, fraud, and abuse are steadily increasing.

The three challenges have direct implications for the fate of public sector labor-management relations and unionism. First, related budget and performance problems will create growing pressure to reduce personnel, cap compensation, contract out government services, and privatize certain functions, e.g., air traffic control. They will also lead to rising pressures to consolidate government units, e.g., municipalities, and reorganize departments and agencies to gain additional efficiencies and savings. These consolidations and reorganizations will magnify the adverse personnel effects of budget cutbacks.

Second, given the needs to reduce costs, improve performance, and effectively allocate personnel to maximize skill utilization, strong pressures emerge to promote managerial flexibility, reduce headcount, and make pay increments contingent on improved performance or productivity. Collective bargaining agreements that limit managerial flexibility provoke increased management opposition and intensify resistance to the extension of public sector unionization, as witnessed in recent congressional debates over the Transportation Security Agency and the Department of Homeland Security, both of which allow agency heads to limit union rights even among pre-existing bargaining units.

Finally, these forces combined are bound to precipitate increased tensions between labor and management. Contract negotiations will become more difficult as management attempts to control wage and salary costs plus exploding health care expenses. Political confrontations will intensify as proposals to contract out and privatize continue to unfold. Increasing pressures to perform or raise productivity, combined with continued reductions in personnel and limited financial incentives, will undoubtedly lead to more workplace tensions. (“Journal of Labor Research”, 2003).

According to Pearce & Robinson, the remote environment comprises factors that originate beyond, and usually irrespective of, any single firm’s operating situation: (1) economic, (2) social, (3) political, (4) technological, and (5) ecological factors. That environment presents firms with opportunities, threats, and constraints, but rarely does a single firm exert any meaningful reciprocal influence. The social factors that affect a firm involve the beliefs, values, attitudes, opinions, and lifestyles of person in the firm’s external environment,