CHAPTER 4 CONTINGENCY LEADERSHIP THEORIES 109 OPENING CASE Appicaton PepsiCo has
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Question
CHAPTER 4 CONTINGENCY LEADERSHIP THEORIES 109 OPENING CASE Appicaton PepsiCo has four major global business units PepsiCo Companies But Pepsi has lost some market share to Coca- Amenicas Beverages (PAB) spans carbonated soft drinks Cola Critics say Nooyi put too much focus on healthy foods Pepsi Mountain Dew), juices and juice drinks (Tropicana, In response, Peps is fghting back in the cola war with its frst Naked Juice), ready-to-drink teas and coffees (Lipton, new ad campaign in three years' Can PepsiCo every win Starbucks, Tazo), sports drinks (Gatorade). and bottled the cola war and outsell Coke? Some investors would ike waters (Aquafina Propel 17ZZE). PepsiCo Americas Foods is PepiCo to split into two companies, separating food and the provider of many of the most popuiar food and snacks beverages Can Nooyi keep PepsiCo together throughout North and Latin Amverica Its portfolio of busi Quaker Foods (cereal, granula bars) North America. . What does climbing the corporate ladder to CEO and Latin American food and stack businesses, including Sabritas and Gamesa brandpco Europe includes all beverage, food, and snack hus inE Afica PepsCo Asa, M dde to, ond tica aMEA) nd des 2 What do colleagues say about Indra Nooys al beverage, food, and stk bss in these areas of PepsiCo have to do with contingency leader- ship? What life, educational, and job experiences Europe and Southqualified Indra Nooyi for her job as CEO? leadership-is it task or relationship, does she d CEO of PepsiCo, andhave a life outside of PepsiCo, and does she have Indra K. Nooyi is chn an she is consistently ranked at or near the top of the Fortune 50 Most Powerful Women st Nooyi is a different kind of not just because she is aindan woman. She says her approach boils down to "Performance with Purpose." the goal of providing sustained financial performance through human sustainability environmental sustainability and talent sustainability She was one of the first executives to reaize that the health and green movements were not just fads. and she demanded true innovation any future career plans 3. Which continuum leadership style does Indra Nooyi tend to use in making acquisitions at PepsiCo? Nooyi tend to use at PepsiCo? Nooyi tend to use at PepsiCo? 4. Which path-goal leadership styles does Indra 5. Which normative leadership styles does Indra By the numbers, PepsiCo has done well under CEO Nooyi Its stock price hit an all-time high in 2013.PepsiCo s ranked in the top 50 (43rd and on the Fortune 5 56 bilion in profts and it is any of these questions/ Youll find an- and Indra Nooyi Coca-Cola is 57th) on the wers to these questions about PepsiCo 00 Largest US Corporations list, with more than throughout the chapter ired company's Web site at www.pepsico com. Coca-Cola is 4th) of the Fortune World's Most Admi State the major difference between behavioral and contingency leadership theories, Outcomeand explain the behavioral contribution to contingency theories. Contingency Leadership Theories and Models Both the trait and behavioral leadership theories were attempts to find the one best lead ership style in all situations. By the late 1960s, it became apparent that there is no one best leadership style in all situations. Thus, contingency leadership theory became the third major leadership paradigm (Chapter ), and the leadership styles used in its models are based on the behavioral leadership theories. Leadership is typically understood as taking place in a situation,' so leaders need to change their behavior to meet the situational characteristics,10 which is calledExplanation / Answer
1. Contingency theory and leadership basically talk about the correct way of dealing with an appropriate situation. Nooyi was the apt person to take the leadership of Pepsico for the following reasons :
Nooyis leadership and experiences fit well with contingency leadership theory where her leadership style was task oriented and the current situation maximized her performance.
2. The colleagues of Nooyi say the following things about her:
3. Nooyi follows the style of presenting her problem statement, inviting solutions and making the final decision. She has a team which looks into acquisition targets and takes active recommendations from them. But she has the final authority and say on every big acquisition . This continuum leadership style is #5.
4. Nooyi uses the following the path- goal leadership style at Pepsico :
5. Nooyi consults people before arriving at a solution. She has the final say as she is the CEO. But she also delegates lot of decision making to the chain of command. This style of functioning is a classic case of normative leadership style where delegation, facilitation ,consultation and decision, play an important role