Luận văn thạc sĩ UEH dealing with low intrinsic motivation of functional employees in pepsico foods

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

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Hoang Thi Thanh Lam

DEALING WITH LOW INTRINSIC

MOTIVATION OF FUNCTIONAL EMPLOYEES IN

PEPSICO FOODS VIETNAM COMPANY.

ID: 22140025

MASTER OF BUSINESS ADMINISTRATION

SUPERVISOR: DR. NGUYEN PHONG NGUYEN

Ho Chi Minh City - 2016

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1

Executive summary

Vietnam has recently been regarded as a prospective destination of foreign

investment presented with its high-speed development, especially for Fast Moving

Consumer Goods (FMCG). As one of the leading producers in the FMCG market, PepsiCo

Foods Vietnam Co., Ltd (PepsiCo) is following towards the development of the industry and

improving its execution to gain higher performance results. However, there are potentially

existing problems in the company which may reduce the competition edge of organization

and harm to its culture. This research was commissioned to examine what problem in

PepsiCo, the causes leading to problem are and to suggest the validated solutions to deal

with problem, which are in line with company’s policy and resources.

Method of the analysis is combination between theory-informed and validated data,

collected through interview and survey to identify and confirm existence of the problem as

well as causes and alternative solutions.

From the general diagnosis of potential problem at PepsiCo, findings suggest the

existence of low intrinsic motivation of functional employees as the main problem. Problem

scope to work is including Finance, Planning, Human Resources, Procurement and Legal

Department. Low intrinsic motivation is analyzed in terms of its existence, antecedents,

consequences, and solutions are proposed to tackle such a problem. Finally, this report

indicates organization of actions to deal with problem in the lead time of one year and

limited budget approved by the company.

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Recommendations discussed focus on two main causes of low intrinsic motivation of

functional employees in PepsiCo, which are job characteristic and lack of verbal recognition

and rewards. The report also investigated three accordant solutions:

- Re-assessing and launching detail job description

- Offering functional employees extracurricular sub-task to develop their

interpersonal skills

- Improving verbally recognition and rewards activities.

Total estimated cost to implement these 3 solutions is approximately 234mil VND,

which is in line with company’s approved budget of 250 mil VND while benefit brought is

453 mil VND. Annual net saving is calculated as 219 mil VND.

Since there is finiteness of time and resources constrain, limitation of the research

exist such as the current company conditions data did not provide enough information and

only sample of interviews are performed. However, the report provides diversified and

validated data in conjunction with theory to propose meaningful suggestion for PepsiCo to

strengthen its personnel resources and organization behaviors.

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List of tables and graphs:

Table 1: PepsiCo Organization Health Survey condition (Pepsico, 2015) - page 11

Table 2: PepsiCo Organization Health Survey result 2016 (PepsiCo) - page 12

Table 3: Summary of interview result – Potential problems - page 19

Table 4: Summary of problem existence interview - page 29

Table 5: Cost – benefit of alternative solutions – page 50

Graph 1: PepsiCo new POM (PepsiCo) - page 5

Graph 2: Fast Moving Consumer Goods dynamic (Total 6 cities) (Nielsen, 2016) -

page 6

Graph 3: Growth of Beverage, Food and Milk based product (Nielsen, 2016) - page

7

Graph 4: Causes – effect map - page 39

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Table of content

Executive Summary .................................................................................................... 1

1. Problem identification............................................................................................. 5

1.1. Problem conceptualization ................................................................................ 5

1.1.1. Company overview..................................................................................... 5

1.1.2. Business overview ...................................................................................... 7

1.1.3. Symptoms................................................................................................... 8

1.2. Problem identification ..................................................................................... 14

1.3. Problem definition ........................................................................................... 23

1.4. Justify problem in term of existence................................................................ 26

1.5. Justify problem in term of importance ............................................................ 30

1.6. Potential causes................................................................................................ 34

1.7. Causes validation............................................................................................. 38

2. Solutions................................................................................................................ 40

2.1. Proposal of Solutions....................................................................................... 41

2.2. Evaluation of solutions.................................................................................... 44

3. Organizations of actions........................................................................................ 50

Conclusion................................................................................................................. 54

References................................................................................................................. 55

Appendices

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1. Problem identification

1.1. Problem conceptualization

1.1.1. Company overview

Established through the merger of Pepsi-Cola (1890s) and Frito-Lay (1961) in 1965,

PepsiCo is a global food and beverage leader with twenty two mega brands, whose annual

retail revenue is more than $1 billion for each. The group’s mission is clear that to provide

consumers around the world diversified range of foods and beverages to satisfy their

demand to enjoy, from healthy products to for - fun ones. PepsiCo's people are united by

commitment “Performance with Purpose” to provide a wide range of products, which

included both fun and healthy characteristics to consumers, respect the environment people

are living in and commit to hold a great working place for associates.

PepsiCo Foods Vietnam Ltd. (PepsiCo), who has operated in Vietnam for 9 years,

became one of the leading food manufacturers in the country with main brand “Poca” and

300 employees throughout the country. The local company inherited the morale and mission

from PepsiCo Group to deliver sustained value by providing diversified products portfolio

and taking the role to protect environment. Understanding that the success of the business

also thanks to the contribution of people in the company, PepsiCo has developed its working

environment based on talent sustainability criteria, clear vision and strong business ambition

toward future.

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In order to be well – prepared for globalization and localization process, PepsiCo has

changed the structure to new PepsiCo Operating Model (POM). In which, the organization

has been arranged into vertical multi-layer chart rather than horizontal in the past. In that

new POM, every operational department will be managed through one concept and direction

from global, sector, region, commercial unit to market unit while General Manager will take

the lead role as managing local operating concept. Therefore, in the new POM, the active

involvement of employees in company operation is the most important factor.

Graph 1: PepsiCo new POM (PepsiCo, 2016)

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1.1.2. Business overview

In 2016, Vietnam has been rated as top 3 destination of investment together with

China and Indonesia, where foreign investors tend to expand their operations. In addition,

Vietnam is one of Top 5 Optimistic Countries in the world and our consumer confidence

index (CCI) was in Top 10 globally for six consecutive quarters since quarter 4 of 2014 as

report of Nielsen.

1 However, drought and fish crisis recently has hurt the agriculture and

thus GDP growth by achieving growth rate of 5.5% in the first half of 2016, lower by 0.8%

versus 2015 as Trading Economic 20162

researched. Fast-moving consumer goods are

dynamic market but it is recorded that the nominal growth rate was decreased in Quarter 1

of 2016 after the strong recovery in quarter 4 of 2015.

Graph 2: Fast Moving Consumer Goods dynamic (Total 6 cities) (Nielsen, 2016)

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