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The Pepsi Information Technology Struggle

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There has been a considerable increase in the IT-related expenditure of organisations – there has been a high correlation between competition and technology since 1990. In a concentrated marketplace, there are only certain companies which have resulted in the majority of market share. Competitive forces have ensured that organisations have to look forward to newer avenues to bolster their bottom lines – their offerings are similar as they cater to a highly informed and empowered clientele. The relation between the performance of companies and the nature of competition as influenced by IT can be seen through a study done across three different parameters; industry concentration, turbulence and performance spread.

IT usage eventually will help a company to use its resources better and thus pass on the benefits faster to its clients. However, it will not be exclusive, industry rivals will eventually follow up, resulting in an ultimate increase in concentration. Thus an enterprise needs to follow a charted approach – it should first put in place a consistent technological platform. Secondly, it must incorporate better work practices. Finally, it should be able to spread the business innovations through the chosen platform.

IT acts as an agent of change in these circumstances – it helps in the formulation of better ideas to run businesses, as it spares up resources for alternative uses, and delivers the ideas. There are two prominent barriers which the top management face and must overcome en route to becoming an IT-friendly company – autonomy and fragmentation. Regional and functional heads are often given a headway in choosing their own IT system – this results in a cobweb of systems, which conflict in purpose and fail to resolve the purpose of saving money and streamline systems in the long run.

In Pepsi’ s case, the problem can be traced back to 1986, when the delivery staff was issued mobile handheld computer units with the aim of giving them the power to set pricing and to promote products themselves.

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