STRATEGIC MANAGEMENT

REPORT
ON
PEPSICO INDIA

Submitted By:
Akanksha Gupta
MBA- Agriculture and Food Business
A1403114009
Amity Institute of Organic Agriculture

COMPANY PROFILE
Business definition, Vision, Mission and Objectives
MISSION
As one of the largest food and beverage companies, in the world (3), our mission is to
provide consumers (1) around the world with delicious, affordable, convenient and
complementary foods and beverages (2) from wholesome breakfasts to healthy and fun
daytime snacks and beverages to evening treats. We are committed to investing in our people
(9) , our company and the communities where we operate to help position the company for
long-term, sustainable growth (5).
1. Customers
2. Product Services
3. Markets
5. Survival Growth profit
9. Employees
VISION

At PepsiCo, we're committed to achieving business and financial success while

leaving a positive imprint on society delivering what we call Performance with
Purpose.

In practice, Performance with Purpose means providing a wide range of foods and
beverages from treats to healthy eats; finding innovative ways to minimize our impact
on the environment and reduce our operating costs; providing a safe and inclusive
workplace for our employees globally; and respecting, supporting and investing in the
local communities where we operate.

Three elements have been covered:

Significantly stretch
Inspire
Unite
BRANDS
Foods
PepsiCos foods division Frito-Lay is the leader in the branded salty snack market. All its
products are free of trans-fat and MSG. It manufactures Lays potato chips, Cheetos
extruded snacks, Uncle Chipps and traditional snacks under the Kurkure and Lehar brands.

The companys high-fibre breakfast cereal, Quaker Oats increase the number of healthy
choices available to consumers.

Cheetos

Kurkure

Lays

Lehar Namkeen

Quaker Oats
Beverages

PepsiCo Indias expansive portfolio includes iconic refreshment beverages Pepsi,

7UP, Nimbooz, Mirinda, Slice and Mountain Dew, in addition to low-calorie
options such as Diet Pepsi, hydrating and nutritional beverages such as Aquafina
drinking water, isotonic sports drink Gatorade and fruit juices such as Tropicana and
Tropicana 100%.

7UP

Aquafina

Duke's

Gatorade

Mirinda

Mountain Dew

Nimbooz

Pepsi

Slice

Tropicana

Uncle Chipps

Indra Krishnamurthy Nooyi , who was ranked No. 11 in Fortunes list of the most
powerful women in business, joined the company in 1994and was named CEO in
2001. She was born in India and has done her education in India . She has been
the chief executive of PepsiCo since 2006. During her time, healthier snacks have
been marketed and the company is striving for a net-zero impact on the

environment. This focus on healthier foods and lifestyles is part of Nooyis

"Performance With Purpose" philosophy.

WORLDS HEADQUARTERS
PepsiCo World Headquarters is located in Purchase at New York.

A. Business history (current location, age, size, growth rates etc.) have a
look at the past decade.
PEPSICO IN INDIA

PepsiCo and its partners have invested more than US$ 700 million in India - building
businesses, which today provide direct or indirect employment to more than 150,000
people.

PepsiCo entered Indias hot beverages category in2003 through a tie-up with
Hindustan Lever Ltd.,a leader in hot beverages and owner of the Lipton brand. To
produce its beverages, PepsiCo has 37 bottling plants in India, including 17 companyowned plants and 20 owned by franchisee partners.

FritoLay India is one of the market leaders in the Indian snack foods segment and has
other brands like Cheetos (potato wafers), Quaker Oats and Aliva low fat baked
biscuits. The Lays potato chips, however, dominates the other brands.

Frito-Lay, the snack food division of PepsiCo India, is contemplating export of

indigenously-developed products Kurkure and Aliva to markets such as the US and
UK. Kurkure, a cheeto-like snack is already exported to Pakistan. Aliva, a cracker
launched last year, is yet to be exported.

The flavor concentrates used to make soft drinks are produced at a separate state-ofthe-art plant at Channo in the Sangrur district of Punjab and supplied all across South
Asia.

PepsiCo has invested heavily in building local production facilities and transferring
agro technology to the country. The company also undertakes contract farming across
the country to source raw materials for its products.

WORKING METHODOLOGY
PepsiCo is organized in three business units, as follows:

PepsiCo Americas Foods (PAF) which includes Frito- Lay North America, Quaker
Foods North America and all of our Latin American food and snack businesses (LAF).
PepsiCo Americas Beverages (PAB) which includes PepsiCo Beverages North
America and all of our Latin America beverage businesses.
PepsiCo International (PI) which includes all PepsiCo businesses in the United
Kingdom, Europe, Asia, the Middle East and Africa.

PepsiCos three businesses units were comprised of six reportable segments, as follows:
1. Frito- Lay North America (FLNA)
FLNAs most significant properties include its headquarters building and a research
facility in Plano, Tex., both of which are owned.
FLNA also owns or leases approximately 40 food manufacturing and processing
plants and approximately 1,750 warehouses, distribution centers and offices.
FLNA also utilizes approximately 55 plants and production processing facilities that
are owned or leased by contract manufacturers or co-packers.
2. Quaker Foods North America (QFNA)
QFNA owns a plant in Cedar Rapids, Iowa, which is its most significant property.
QFNA also owns or leases five plants and production processing facilities in North
America.
QFNA utilizes approximately 25 manufacturing plants, production processing
facilities and distribution centers that are owned or leased by our contract
manufacturers or co-packers.

3. Latin America Foods (LAF)

LAFs most significant properties include a food plant in Celaya, Mexico, and three
snacks plants in the Mexican cities which are owned.
LAF also owns or leases approximately 50 food manufacturing and processing plants
and approximately 660 warehouses, distribution centers and offices.
LAF also utilizes one plant facility that is owned by a contract manufacturer.
4. PepsiCo Americas Beverages (PAB)
PAB also owns or leases approximately 40 plants and production processing facilities
and approximately 50 warehouses, distribution centers, and offices.
In addition, authorized bottlers in which they have an ownership interest own or lease
approximately 65 bottling plants.

PAB also utilizes approximately 70 plants and production processing facilities and
approximately 60 warehouses and distribution centers that are owned or leased by
contract manufacturers or co-packers.

5. United Kingdom and Europe

Europes most significant properties are its snack manufacturing and processing plants
located in U.K., each of which are owned.
Europe also owns or leases approximately 35 plants and approximately 320
warehouses, distribution centers and offices.
In addition, authorized bottlers in which they have an ownership interest own or lease
seven plants and approximately 30 distribution centers.
Europe also utilizes approximately one plant and production processing facility and
approximately two distribution centers that are owned or leased by contract
manufacturers.
6. Asia, Middle East & Africa (AMEA)
AMEAs most significant properties are its beverage plant located in Shenzhen, China,
and its snack manufacturing and processing plant located in Tingalpa, Australia, each
of which are owned.
AMEA also owns or leases approximately 100 plants and approximately 1,100
warehouses, distribution centers and offices. In addition, authorized bottlers in which
they have an ownership interest own or lease approximately 25 plants and 120
distribution centers.
AMEA also utilizes two plants and production processing facilities that are owned or
leased by contract manufacturers.

B. Statement of management goals: what is top management trying to

accomplish?
As they look 2015 and beyond, they remain focused on positioning PepsiCo for long- term
sustainable growth while continuing to deliver strong financial results.

C. What are management concerns, issues and problems?

Their business strategies are designed to address key challenges facing their company,
including:

Uncertain macroeconomic conditions, including geopolitical, economic and social

instability
Evolving consumer tastes and preferences including continued consumer focus on
nutritious products

Changes in customer channels including the growth of e- commerce

Resource scarcity
They believe that many of these challenges create new growth opportunities for the
company. Like continued consumer focus on health and wellness and changes in
consumer and distribution channels will provide them with new opportunities to
expand their product offerings and interact with their customers and consumers.
In order to address these challenges and capitalize on these opportunities, they intend
to do the following:
Strengthen their presence around the world
Continue to broaden the range of our product portfolio, including expanding
their offerings of more nutritious products.
Continue to adopt to changing customer channels
Continue to focus on productivity
Continue to embrace sustainable business practices across their supply chain
Build and retain top talent
Deliver on the promise of Performance with Purpose

UNDERSTANDING OF THE PROBLEM

A. INDUSTRY ANALYSIS (It has to focus on the specific problems)

1. Five forces analysis
2. Industry driving forces
3. Make a conclusion from the five forces concerning expected average
industry profitability.
4. What are key success factors for any company in this industry? (Through
Internal and External Factor Analysis)
B. COMPETITIVE ANALYSIS (Relate it specifically to your central
strategic issue)
1. What is the current strategy of the firm? ( Create a Strategic groups and
work CPM matrix )
2. What are the strengths in the firm to pursue the strategy? Weaknesses?
Identify how these strengths and weaknesses fit with the industry key
success factors?
3. What are the opportunities in the marketplace relevant to the company?
To what external threats is the company vulnerable with its current
strengths and weaknesses? What are the industry key success factors to
pursue these opportunities? What key success factors are suggested by the
threats?
4. Is there unique competitive advantage possessed by this firm?
5. What is the key problem that this firm must solve in order to achieve a
sustainable competitive advantage?

INDUSTRY ANALYSIS
External Environment
Potters Five Forces Model

Porters Five force model for PepsiCo

Threat of New Entrants

Indian Government encourage foreign

investors
Make in India program
Ease of access to distribution channel

Bargaining power of
suppliers

Many suppliers
Low switching cost
Suppliers of bottling
and packing holds
no power

Bargaining power of customers

Intra Industry Rivalry

Coca- Cola
Barrier to exit is high

Threat of substitutes

Substantial product
differentiation
Substitutes like water, fresh
juices, tea, beer etc.
Growing trends of healthy
beverages

High population
Big market
Many options for
buyers
Affordable prices as
compared to products
like energy drinks
Hot climatic condition
encourages buying
Lower switching cost

PESTLE ANALYSIS
Political Factors
PepsiCo is non alcoholic beverage and has to follow regulated by FDA with consistency.
Also, it deals in different markets and every market has its own policies and procedures that
are either stringent or either relaxed. Specially cross border situations are very different and
Pepsi has to adapt to these changes accordingly.
PepsiCos competitors use competitive pricing strategy and Pepsi has to always keep this
in mind.
PepsiCo has to also deal with governments focus on stricter water pollution norms and
land aquisition for new factories in different countries.
Economic Factors
Usually whenever there is an economic downturn faced by the economy, companies sales
are badly affected and they have to restructure their strategies.. Also, with falling profits
companies sometimes have to undergo downsizing. Economic scenario has a great influence
on any business. But the economic in 2008 was in Pepsis favor. It resulted in increased sales
of its beverages as people were jobless and were sitting at home, spending more time with
family and friends.
Also, fuel prices greatly affect PepsiC0s transport costs as there is a lot of distribution
involved.
Availability of labor is another very important economic factor .In some countries the
labor is quite expensive and if its cheap then sometimes labor is not well trained.
Social Factors
Social factors greatly affects Pepsi, as its a non-alcoholic beverage that deals worldwide it
has keep in mind stark and strict differences of cultures the world wide. Mostly, the social
implications are seen in advertising campaigns like some countries have religious festivals, so
Pepsi has to keep in line with all these festivals and design advertising campaign accordingly
to cash upon the opportunity to the fullest.
Technological Factors
With the technologies coming in, companies have changed their strategies and operations
accordingly. A recent trend that has been seen and something that almost every company is
inclining toward is Social Media.
Environmental Factors
Also the solid waste management program affects the operations at PepsiCo. PepsiCo has to
be extra careful when it comes to waste disposable in order to maintain its image of a socially
responsible firm.

Also, PepsiCo introduced plastic bottles and cans and came up with innovative and newer
designs.

ETOP ANALYSIS
Helps to identify Opportunities- Threats
To consolidate and strengthen organizations position
Helps in formulating appropriate strategy

THREAT MATRIX

High
IMPACT

Major
Threats

Low

Moderate Threats

Moderate

Minor Threats

Threats

High

Low

PROBABILITY OF OCCURRENCE

OPPORTUNITY MATRIX

Very attractive

High

Moderately
attractive

IMPACT
Moderately

Low

attractive

Less attractive

High

Low

PROBABILITY OF OCCURRENCE

COMPETITIVE ANALYSIS
Competitor Analysis Components
1. Future Objectives
How do our goals compare with our competitors goals?
2. Current strategy
How are we currently competing?
Does the strategies support changes in the competitive structure?
3. Assumptions
4. Capabilities
All of these give the response:
What will our competitors do in the future?
Where do we hold an advantage over our competitors?
How will this change our relationship with our competitors?

PepsiCos CompetitionThe beverage, food and snack products of PepsiCo are in highly competitive
industries and markets and compete against products of international beverage,
food and snack companies that operate in multiple geographies, as well as
regional, local and private label manufacturers and other value competitors.
The Coca- Cola Company is the primary beverage competitor. Other
beverage, food and snack competitors include Kellogg Company, Kraft
Foods Group Inc., Mondelez International, Monster Beverage
Corporation, Nestle S.A., Red Bull GmbH and Synders- Lance Inc.
The beverage, food and snack products compete primarily on the basis of
brand recognition, taste, price, quality, product variety, distribution,
advertising, marketing and promotional activity, packaging, convenience,
service and the ability to anticipate and respond to consumer trends.

THE COMPETITIVE PROFILE MATRIX

CPM identifies a firms major competitors.
Success in this competitive environment is dependent on:

Effective promotion of existing products

Introduction of new products
Effectiveness of PepsiCos advertising campaigns
Marketing programs
Product packaging
Pricing
Increased efficiency in production techniques
New vending and dispensing equipment
Brand and trademark development and protection

Strength of the brands, innovation and marketing, coupled with the quality
of PepsiCos products and flexibility of the distribution network, allows
PepsiCo to compete effectively.

The identified Critical Success Factors for PepsiCo are:

Internal Environment
Internal Analyses Outcomes

Unique resources, capabilities and competencies (required for

sustainable competitive advantage.)

Components of Internal Analysis leading to Competitive Advantage and

Strategic CompetitivenessStrategic
Competitiveness

Competitive
Advantage

Discovering Core
Competencies

Core
Competenci
es
Capabilities

Four criteria of
sustainable
Advantages

Value Chain
Analysis

Resources

Outsource

Tangible
Intangib
le

Valuable
Rarity
Costly to imitate
Non- substitutability

Resources

Are the source of a firms capabilities

Cover a spectrum of individual, social and organizational phenomenon
Are a firms assets

Capabilities-

Represent the capacity to deploy the resources that have been purposely
integrated to achieve a desired end state.
Based on human capital
Core CompetenciesResources and capabilities that are the sources of a firms competitive
advantage.
Activities that a firm performs itself

IFE MATRIX
S No.
1.
2.
3.
4.
5.
6.

7.
8.
9.
10.
11.
12.

Business
Strengths
Market
Share
Share
Growth
Product
quality
Brand
Reputation
Distribution
network
Promotional
effectivenes
s
Productive
capacity
Productive
efficiency
Unit costs

Weight

Rating

0.100

Weighted
Score
0.2

0.150

0.3

0.100

0.4

0.100

0.4

0.050

0.15

0.150

0.3

0.025

0.1

0.025

0.075

0.050

0.15

Material
supplies
R
&
D
Performance
Managerial
Personnel

0.050

0.25

0.050

0.2

0.150

0.75

1.000

3.275

SWOT ANALYSIS
STRENGTHS

Product diversity
Extensive distribution channel
CSR
Competency in mergers and
acquisitions
22 brands earning more than $ 1
billion a year
Successful marketing and
advertising campaigns
Complementary product sales
Proactive and progressive

WEAKNESSES

Low pricing
Questionable practices
Weak brand awareness
Too low net profit margin

OPPORTUNITIES

Growing beverages and

snacks consumption in
emerging markets
Increasing demand for
healthy food and beverages
Further expansion through
acquisition
Bottled water consumption
growth
Savory snacks consumption
growth

THREATS

Changes in consumer tastes

Water scarcity
Decreasing gross profit
margin

STRATEGY IMPLICATIONS OF ATTRACTIVENESS/

STRENGTH MATRIX
BCG MATRIX
Shows the product portfolio analysis of the PepsiCo using BCG Matrix analysis.
Accordingly, PepsiCo is consisted of 5 major brands: Gatorade, Quaker, Pepsi
products, Frito-Lay and Tropicana. As mentioned the assessment has been based on
each products provided by the company. With this, it shows that the products that
belong to the question mark are Gatorade and also Tropicana. Because of the
emergence of different healthy drinks and beverages in the global market, the market
share of Tropicana and Gatorade are being threatened. Although these brands have
already established in the marketplace, the company still needs to have an effective
marketing approach to increase the sale of these brands or brands. Accordingly,
question mark category means that these products have a low share of a possible high
growth market and may become a star product because of the positive response of the
customers.
As can be seen in the figure, the services that fall in star category are is the pay-is
Pepsi brands. The star category shows the products with a high share of a gradual
growth of market and these products have a tendency to produce high amount of
profits. The next category that can be seen in the figure is the cash cows. Herein, the
products are considered to have a high share of a slow growth market ( 2005). With
regards to the PepsiCo, services that can be considered in the cash cows are the
Quaker. Lastly, it can be seen that Tropicana, Gatorade and Frito-Lay are products that
can be considered in the dogs category.

ANALYSIS OF CURRENT STRATEGIES

Make a clear statement of your strategic perspective. Analyze there corporate
strategies followed over the past decade, how it lays foundation for
theirGeneric strategies and its integration with functional strategies,
Do its portfolio analysis to create a relative structure for strategy,
For example:
1. Who is the customer?
2. What is the product you are trying to sell?
3. What scope of activities will you be performing?
4. Where (geographically) will the company be if they select this alternative
(national? regional? local?)?
5. Strategic and financial objectives;
6. Quantified performance target that directly measures the strategic
alternative;
7. Timetable for accomplishment.
8. What are the strengths in the firm to pursue the strategy? Weaknesses? How
do these fit with the industry key success factors?
9. What are the opportunities in the marketplace pursued by the strategy? To
what external threats is the company vulnerable with this alternative
strategy? What industry key success factors are suggested by these
opportunities and threats?
10. What is the unique competitive advantage that will be possessed by this
firm if it successfully pursues this alternative or follows your
recommendation(s)?
11. How likely is this approach to succeed? What are the downsides?

CORPORATE STRATEGY

Strategic planning can be defined as the process of determining an organisations

primary objectives and adopting courses of action that will achieve these objectives
and it plays a critical role in ensuring long-term growth of a business entity.

PepsiCo mission statement has been worded by CEO Indra Nooyi as Performance
with Purpose and this principle is closely integrated with the strategic direction
chosen for the company.

The most prominent aspects of PepsiCo strategy forwarded by Ms Nooyi are based on
the following seven principles.

First, international market expansion strategy through mergers and acquisitions.

Mergers and acquisitions can offer the advantages of gaining access to competencies
and infrastructure, reducing direct costs and overheads and achieving organic growth.

Recently, PepsiCo has engaged in important mergers and acquisitions such as acquisition
of juice and diary businesses Lebedyansky and Wimm-Bill-Dann in Russia, Lucky snacks
and Mabel cookies in Brazil, and Dilexis cookies in Argentina.
Second, formation of strategic alliances in global scale. Specifically, strategic
partnerships have been formed with Tingyi in China in order to claim a share in
growing beverage market in China. Moreover, formation of a joint-venture with Tata
in India to enhance drinking water manufacturing capabilities, and initiation of
strategic partnership with Almarai in Saudi Arabia can be mentioned to illustrate
PepsiCos adoption of strategic alliances as an integral part of the corporate strategy.
Important strategic alliances are formed by PepsiCo at home markets as well.
Specifically, by forming a strategic alliance with Starbucks a global coffee house chain,
PepsiCo has been able to claim its share from increasing energy drink market segment.
Third, focus on emerging markets. The share of net revenues from developing and
emerging markets such as China, India, and Russia have been increased from 24% in
2006 to 35% in 2012 (Annual Report, 2012) through mergers and acquisitions as well
as, on the basis of formation of direct subsidiaries. Moreover, PepsiCo CEO Indra
Nooyi has publicly expressed commitments to further increase the level of presence of
the company in emerging markets.
Fourth, focus on organisational culture. Organisational culture can be defined as
the collection of words, actions, thoughts, and stuff that clarifies and reinforces
what a company truly values and the nature of organisational culture directly
impacts its performance in short-term and long-term perspectives.
PepsiCo CEO Indra Nooyi is widely believed to be an unconventional corporate
leader for a good reason. It has been noted that shes been known to walk the halls at
Pepsi barefoot, sometimes even singing along the way and this fact communicates

her willingness to embrace her differences with positive implications on employee

morale and organisational culture.
The same message is effectively communicated to organisational stakeholders and
integrated into Pepsi Brand as well in a way that the brand marketing message is
associated with making the most of the moment, and embracing own individuality.
Being listed among the top 25 Worlds Best Multinational Workplaces by the Great
Place to Work Institute in 2012 can be interpreted as an indication of effective
working culture within PepsiCo.
Fifth, developing and promoting the idea of One PepsiCo. Specifically, Indra Nooyi
has been striving to increase the level of association of individual brands with
PepsiCo company values and philosophy through promoting the idea of One PepsiCo.
This is meant to be facilitated through sharing supply-chain management and
infrastructure, operational costs for many brands within PepsiCo portfolio have been
decreased.
Sixth, innovation in marketing initiatives. A wide range of innovative marketing
initiatives developed by PepsiCo marketing team include Do Us a Flavor campaign
that involved consumers in 17 countries submitting flavour ideas, development of
Lipton Brisk Star Wars game application for mobile phones, and using celebrity
endorsement in an innovative manner by attracting a popular singer amongst Pepsi
brand target customer segment.
Importantly, cross-cultural differences in various markets are taken into account when
developing and delivering PepsiCo marketing messages. For example, the marketing tagline
of Live for Now associated with Pepsi brand has been modified as Yalla Now and Oh
Yes Abhi for Middle East and Indian markets respectively taking into account cross-cultural
differences associated with these markets.

Seventh, focus on increasing core organic revenue. Core organic revenue can be
explained as a type of revenue that is achieved through increasing the volume of
production and sales. PepsiCo core organic revenues were increased by 5% during
2012 (Annual Report, 2012) and the company strategic level management is
committed to further increase the levels of core organic revenues through maintaining
high quality standards and applying effective marketing strategy.

Moreover, organic revenues can be further increased by concentrating on core

competencies of the business. It can be specified that a competence is an attribute or
collection of attributes possessed by all or most of the companies in an industry.

FUTURE GROWTH AND PROSPECTS

PepsiCo announced that its targeted investment of Rs. 33000 crores in India by 2020. This
investment will further strengthen PepsiCos position as one of Indias leading food and
beverage companies. Strategic initiative will fund investments in innovation manufacturing,
selling and go-to-market infrastructure and agriculture.

RECOMMENDATIONS AND IMPLEMENTATION

A. What is your final recommendation? State it or re-state it clearly. Briefly
summarize your strongest arguments(with evidences).Recommend specific
strategies and long-term objectives. Compare your recommendations to
actual strategies planned by the company.
Specify how your recommendations can be implemented and what results you
can expect. Present a timetable or agenda for action.
Recommend procedures for strategy review and evaluation.
B. What must the business do to implement your recommendation? Be very
specific for each functional and administrative area: the top managers (and
I) must understand exactly what needs to be done. For example:
1. Building an organization capable of executing the strategy. Discuss
hiring and recruiting (and/or layoffs), training, and organizational
structure (including reporting relationships, new business units to be
formed, old business units to be eliminated).
2. Establishing a strategy-supportive budget. On what sources of funds
will you draw? Where will you invest resources? Discuss
expenditures that must be made to make the strategy work, such as
advertising and marketing, facilities and equipment, research and
development, etc.
3. Installing internal administrative support systems. Discuss policies
and procedures, information systems for monitoring and control,
project schedules, inventory systems, computer applications,
reporting systems, etc.
4. Discuss rewards and incentives (such as pay, bonuses, awards, etc.)
that are to be tightly linked to objectives and strategy.
5. Shaping the corporate culture to fit the strategy. Discuss nature of
communications, workplace values and ethic, work environment, and
relationships to be encouraged.
6. Exercising strategic leadership. What can managers do to shape the work culture and keep
the organization on track?