Introduction:

PepsiCo Inc. is an American multinational food and beverage corporation

headquartered in Purchase, New York, United States, with interests in the
manufacturing, marketing and distribution of grain-based snack foods, beverages,
and other products. PepsiCo was formed in 1965 with the merger of the Pepsi-Cola
Company and Frito-Lay, Inc. PepsiCo has since expanded from its namesake
product Pepsi to a broader range of food and beverage brands, the largest of which
includes an acquisition of Tropicana in 1998 and a merger with Quaker Oats in
2001, which added the Gatorade brand to its portfolio.

As of January 26, 2012, 22 of PepsiCo's brands generated retail sales of more than
$1 billion apiece, and the company's products were distributed across more than
200 countries, resulting in annual net revenues of $43.3 billion. Based on net
revenue, PepsiCo is the second largest food and beverage business in the world.
Within North America, PepsiCo is the largest food and beverage business by net
revenue.
Indra Krishnamurthy Nooyi has been the chief executive of PepsiCo since 2006.
The company's beverage distribution and bottling is conducted by PepsiCo as well
as by licensed bottlers in certain regions. Approximately 274,000 employees
generated 66.415 billion in revenue as of 2013

Pest Analysis:
1. Political and Legal Forces
Pepsico operates in different countries such as United States, Europe, Africa, and Asia. Thus, it
must consider the legal and labor forces of the countries in which it operates. It has to make a
good policy and have a good internal control about its operations and employees incentives in
order to be compliance with the law. The things that Pepsico should consider are tax laws, labor
union, and environmental law. It should operate in accordance to the laws in the country to have
a good corporate compliance and governance.

2. Economic Forces
Economic factors have some significant impact on Pepsicos business. If the income level per
capita of the people increases, it will have a positive effect on the consumption of its products.
Meanwhile, if there is inflation, it will have a negative effect on Pepsico as peoples purchasing
power decrease, they will consume less.

3. Social, Demographic, Cultural and Environmental Forces

The healthier lifestyle of the people promotes different patterns of consumption. This could be
either a threat or new opportunity for Pepsico products. Pepsico can support sports events in
order to give a message to the people that Pepsico concerns about the health of the people.
Besides that, the requirements of different age groups are different. Pepsico should target that age
group that consumes the soft drink or snacks. For products like Pepsi, and Lays, it should target
young generation, while for the healthy meal like Quaker Oats, it should target adults. Pepsico
should also consider the education level within the country for making its strategy since
education has direct impact promotion and marketing. It should make marketing/promotional
campaigns that can make people aware of its brands and products according to the countrys
education level. In addition, Pepsico should also consider about the natural environment factors
in operating the business as a form of contribution and responsibility to the community.

4. Technological Forces
Given how capital-intensive the food/beverage industry is, it is imperative for Pepsico to stay
ahead of the curve in terms of the most advanced technological breakthroughs, as the company
requires highly mechanized assembly lines designed both for long production runs and
flexibility. The growing technology gives new opportunity for Pepsico to have new ways for
Pepsico marketing strategy. The proliferation of Internet users also opens up further market
opportunities for Pepsico to market its products.

2. Porters Five Forces Model:

1. Rivalry Among Existing Competitors: VERY HIGH

High diversification from the competitor like Coca cola.

Few strong companies have a control over the market.
In the present, the main competitor is Coca-Cola wand the competitor also provides a
wide range of beverage products under its brand. Both Coca-Cola and Pepsi are the
predominant carbonated beverages and commit heavily to sponsoring outdoor festivals
and activities.

2. Bargaining Power of Buyers: HIGH

There are many substitute products in the market; therefore, customer has large varieties
of product.
The customer in the beverage market is price sensitive, as company cannot charge high
price because they have many choice of product.
The consumer can switch to other product or other company product as there are many
same kind of drink in the same market.

3. Threat of Substitute: HIGH

There are many kinds of energy drink and soda products in the market.
Many companies provide similar product in the same market.
Not only coca cola is the main competitor but PepsiCo also have other product line,
which means that they also have other competitors.

4. Threats of New Entrants: LOW

Entry barriers are relatively low for beverage industry as there is already various number
of the company in the market.
Few multinational groups own the largest part of the market share.
There is high initial cost, therefore, few company want to enter this market.

5. Bargaining Power of Suppliers: LOW

Dependence on raw materials, however, there are a lot of suppliers available in

the market.
The main ingredients for soft drink include carbonated water, phosphoric acid, sweetener,
and caffeine. The suppliers are not concentrated or differentiated.
Any supplier would not want to lose a huge customer like PepsiCo.

SWOT Analysis:
Strengths:
Weaknesses
Opportunities;
Threats

EFE Matrix:
EFE PespsiCo
Key External Factors

Weigh Rating
t

Wtd
Score

1. Bottled water consumption growth

0.15

0.30

2. Increasing demand for fast food

along with beverages

0.15

0.30

3. Further expansion through

acquisitions
4. Increasing media promotion

0.05

0.15

0.05

0.10

5. Growing beverages and snacks

consumption
Key External Factors

0.10

0.30

Opportunities

Weigh Rating
t

Wtd
Score

1. Strong competition in every division

0.15

0.30

2. Growth of energy drinks in

carbonated drinks sector

0.05

0.05

3. Changes in consumer tastes

0.10

0.20

4. Water scarcity

0.05

0.05

5. Aggressive top management

strategy by competitor

0.15

0.15

Total

1.0

Threats

1.9

CPM Matrix:

PepsiCo

Coca Cola

CSFs (contd)

Wt

Rating

Wtd
Score

Rating

Wtd
Score

Advertisement

0.15

0.60

0.60

Market Share

0.10

0.30

0.40

Customer loyalty

0.20

0.60

0.60

Price competitive

0.10

0.30

0.30

Expansion

0.15

0.45

0.60

Brand Image

0.15

0.60

0.60

Financial Position

0.15

0.45

0.60

Total

1.00

3.3

3.7

IFE Matrix:
IFE PepsiCo
Key Internal Factors

Weig
ht

Rating Wtd
Scor
e

1. Product diversity

0.10

0.30

2. Extensive distribution channel

0.15

0.45

3. Successful marketing and

advertising campaigns
4. Market share

0.15

0.45

0.05

0.10

5. Competency in mergers and

acquisitions
Key internal Factors

0.05

0.15

Strengths

Weigh Rating
t

Wtd
Score

1. Health Issues

0.10

0.20

2. Much weaker brand awareness and

market share in the world beverage
market compared to Coca-Cola
3. Low pricing

0.15

0.30

0.05

0.10

4. Low sales in some products

0.15

0.30

5. Lack of product focus

0.10

0.20

Weaknesses

Total

1.00

2.55

SWOT Matrix:
Strengths S

Opportunities O

New products
penetration
Fastest growing
industry
Social trends
Media promotions
Partnerships
Sport tournaments

Threats T

Strong competitions
Carbonated drinks
sector growth
Mature beverage
industry
Health issues
Aggressive strategy

Strong brand
Strong marketing
and advertising
Products
availability
Revenue and
Profits
Market share
Competent
workforce
Wide variety of
products

Weaknesses W
Health issues

Low sales in some

products
Negative impact due
to product recall
Product focus
High operating
expense

SO Strategies

WO Strategies

1.Increase marketing and

advertising to penetrate
new products in the
market)

1. Extend R&D section to

handle products health issues
to walk with social trends.

2. Promote investments
in the company with
existing promising
feedback

2. Sampling in events to
capture customers by
offering better taste and
quality.

ST Strategies

WT Strategies

1. Sufficient financial
resources can help
company to develop more
in carbonated and noncarbonated drinks sector.

1. By improving the taste

and quality, company can
reposition its products in a
long term position.

2. Overcome main
competitors by applying

2. Develop healthy energy

drinks for youth for customer
retention.

conducted by
competitor

aggressive strategies in
other sectors.

BCG Matrix
High
Low

High
Stars
(Frito Lays)
Cash Cows
(Pepsi Cola)

Low
Question Marks
(Aquafina)
Dogs

Analysis:
1. Aquafina : Low market share, low growth chances
2. Frito-Lay : High market share, high growth chances
3. Pepsi-Cola : High market share, low growth chances

SPACE MATRIX:
Internal Strategic Position
Competitive Advantage (CA)
Market Share
Product Quality
Brand Image
Customer Service
Customer Loyalty
Manufacturing Expenses

External Strategic Position

-2
-1
-2
-2
-2
-1

Industry Strength (IS)

Growth Potential
Resource Utilization
Financing Access
Technological Knowledge
Barriers to Entry
Industry Profits

Average:

-1.7 Average
Total X Axis Score = 2.3
Financial Strength (FS)
Environmental Stability (ES)
ROE
5 Competitive Pressure
Revenue Increase
3 Competing Product Price
Liquidity
4 Demand Variability
EPS
4 Inflation Rates
Cash Flows
4 Technological Change
Efficiency Ratios
5 Price Elasticity of Demand
Average:

4.2 Average:
Total Y Axis Score = 2.0

4
5
5
4
3
3
4
-3
-3
-2
-2
-1
-2
-2.2

Suggested Strategy Type: