Pepsi Refresh Project Risk Management Scenario
Scenario Background
Company:
- Pepsi
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Pepsi’s Product Portfolio
- Fun for you
- Better for you
- Good for you
Pepsi’s Target Markets
- Millennial
- Generation X
- Baby Boomer
Internal Environment
- Board of Directors
- Risk management director at board level
- Multiple levels of corporate management
- Chief risk officer at corporate management level
- Multiple divisions
- Multiple management levels within divisions
- Executive risk manager at divisional level
- Wholly owned subsidiaries
- Multiple divisions within subsidiaries
- Multiple management levels within divisions
External Environment
- Bottling companies
- Distributors
- Point of sale locations
- Community relations
- Strategic alliances
- Competitors
Risk Environment
- Appetite
- High degree of risk acceptance for marketing programs
- High degree of risk acceptance related to return on investment timeline
- Moderate degree of risk acceptance for distinction between lines on product portfolio
- Low degree of risk acceptance regarding company reputation
- Tolerance
- High tolerance for risks related to relations with bottlers and distributors
- Moderate tolerance for community relations
- Low tolerance for risks related to brand image
- Threshold
- Defined by risk policies and procedures at the corporate and division levels
Scenario
Pepsi has concluded that continuing the Pepsi Refresh Program will, in fact, be profitable in the medium-term and is worth the investment outlined in the board’s subcommittee report. The board has directed the company executives to execute a pilot that will roll out the redesigned program for a period of 1 year. After 1 year, the board will analyze the results and make a determination on continuing, tweaking, or halting altogether the program.
The initial plan was to reduce focus on social media and focus more on traditional and sports marketing vehicles; however, the board received an industry report that shows companies are realizing increased revenue through increases in earned media value, and companies increase earned media value by combining traditional marketing vehicles with social media. Pepsi will increase focus on this one area during this 1-year pilot. The chief executive officer (CEO) assigned a program manager to implement the redesigned Pepsi Refresh Program and a project manager to focus on the combination of traditional marketing vehicles and social media.
The project manager assembled a project team with a project risk management professional (RMP) to manage project risks. The RMP will develop a project risk management plan that will integrate with the program risk management plan of the pilot program. The risk management plan will define procedures to identify risks throughout the phases of the project. The plan will lay out the major categories of risks associated with the project, how each category will affect the project’s stakeholders, and how stakeholders will be engaged in the risk management process.
The risk management framework, detailed in the strategic plan, will serve as the foundation for the risk management plan employing corporate and division policies and procedures to manage risks to the project schedule, budget, and scope. The RMP will detail the risks to organizational assets and outline the environmental factors that the program and project managers should consider as they plan, execute, and monitor the project. Risk impacts and probability scales must show alignment with the organization’s risk appetite and tolerance and must set thresholds used to manage monitoring and response strategies. These strategies must allow for responses leveraging both external factors and relationships and internal corporate and divisional resources.