Running head: STRATEGY IMPLEMENTATION 1

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Running head: STRATEGY IMPLEMENTATION 2

Executive summary

Pepsi Company operates in most part of the globe as one of the top beverage companies. This
proposal seeks to highlight the challenges the company has undergone and find the best solution
to make it realize a higher profit margin. These will be explained by examining the Strength,
Weaknesses, Opportunities, and Threat (SWOT). The PepsiCo has a wider market are since its
operation is distributed over a wider area. The operational structure sets its objectives to meet the
set goals.

The company has been able to maintain a good relationship with potential customers has given
them strength in the productions and hence increasing their sales margin. The company has a
good financial turnout, which helped them maintain their strong financial economic status.
According to the human resource, the company has been able to maintain the best environment
for them by motivations, maintaining the good environment, and good culture has inspired them
to work for the betterment of the company. Despite the success of PepsiCo, they undergo some
huddles in the daily running of the business. Among them is low business turn out because of
losing their key customers. This report, therefore, recommends that the company should
strategize the market to meet their potential customers and compete favorably with their
customers.

Introduction

PepsiCo’s main objective is focused on being the best producer of food and beverages in the
world. The company is also committed to delivering the best to its customers and achieving
success in their finance and business in general.

The PepsiCo has been able to sustain its business success by using different methods to measure
and tackle the competitive market. The company needs to develop a better linkage of customers
and suppliers to build the satisfaction of the market. It is also a desire of the company to maintain
a good working environment for their employees. PepsiCo targets to realize a higher profit
margin, which will help them, plan for the long-term investment and widening the market for
their products and hence growth. Therefore, Pepsi Company is committed to realizing business
and financial success while leaving a positive impact on society.
Running head: STRATEGY IMPLEMENTATION 3

PepsiCo SWOT Analysis

Strengths

Large market dominance- apart from the coca cola company, which deal with the same products,
PepsiCo, has dominated larger the market population.

Brand equity- PepsiCo has a distinctive brand for its identification, which is among the best
brands in the World.

Remarkable portfolio of the products- PepsiCo has been ranked as one of the best company in
terms of food and beverage products. PepsiCo has achieved this by maintaining an impressive
portfolio of its brand.

Customer Loyalty- due to its strong marketing strategies and good products, the company has
enabled to keep its customers and maintaining their trust.

Wider market coverage- PepsiCo operates in many countries around the World. In all of the
countries it operates, PepsiCo has been able to put the brand in the best position.

Distribution Networks- there has been an increased demand in the market of Pepsi product. This
has enabled the company to strive to adopt the best market plans.

Company valuation- PepsiCo is one of the most valuable foods and Beverage Company in the
World. Its value is inclusive of the brand, the factories and other assets it owns around the World.

Weaknesses

Product perception- most of the customers in some countries have the perception that the Pepsi
company product is unhealthy.

Competition- PepsiCo faces hard competition with Coca Cola Company. The market struggle has
been so tight until PepsiCo lost some of the potential customers in some countries to Coca Cola
Company. It has been able to tackle this competition by maintaining their product taste and
constant supply.
Running head: STRATEGY IMPLEMENTATION 4

Product diversification- PepsiCo has is specialized in dealing majorly in drinks alone. Therefore,
its diversified competitor might take advantage of it.

Health effects - some customers from some of the countries have a belief that the carbonated
drinks are harmful to their health.in that concern most of them have shifted their taste to non-
carbonated drinks meaning PepsiCo has lost some of its customers.

Opportunities

Community Social Responsibilities- Pepsi Company should participate more in CSR activities.
This will help deal with the negativity that might develop about their product and hence maintain
their market brand.

Research and Development- from their research and development, the PepsiCo has been able to
come up with a healthier product. The company has also made a decision to focus on drinks
product, which they realized to be selling more.

Diversification- Pepsi Company has a good opportunity for its market diversification since it has
a well-developed distribution channel. They have all the resources it needs to deal with other
products.

Threats

Economic growth- due to economic instability that different countries are facing, Pepsi Company
has realized declining in its cost of sales. This declining has declined its profit margin.

Competition- the company is facing stiff competition from other companies majorly the coca
cola that deals in the same product.

Raw material acquisition- it is becoming hard for the company to acquire its main raw material
in this case water due to climate change.
Running head: STRATEGY IMPLEMENTATION 5

Strategic objectives and financial statement

PepsiCo has put in place the strategies that are discussed below:

Organizational culture

PepsiCo has been able to cover a wider market area. This ability to unite the principle of
organizational global reach is because of its resilient organizational culture. Its suppliers
wherever they are in the World are do embrace the organizational culture set by the PepsiCo. The
company also encourages the young population to embrace this culture of ‘making the most of
the moment’. Thu is the s, the PepsiCo that encourages the employees to express their personal
capacity.

Focusing on emerging markets

PepsiCo is very vigilant on the current trend in the market. The company has diversified the
product to curb the market trend for instance currently the company has ventured into the energy
drink market and food products among other products. To increase the profit margin the
company is keeping close research in the market trend to get more product they can produce.

Extensive distinction

PepsiCo also uses differentiation as one of its strategies. Apart from dealing with carbonated
drinks, they have included energy drinks, which are non-carbonated. The company also have
intensified their market research and development.

Cost of leadership

PepsiCo is looking forward to reducing the cost of operation and offer promotional efforts. The
selling prices of the company are maintained at a lower cost because of the stiff competition they
face from the coca cola company.
Running head: STRATEGY IMPLEMENTATION 6

Infrastructural focus

The location of the PepsiCo and their distribution points are located in a strategic location with
good infrastructure to reduce the cost of transportation and the distance between them and their
suppliers.

The PepsiCo has put in place strategic measures that are as explained:

Marketing strategy

The main objective of the marketing strategy is to focus on the strategic actions of PepsiCo
towards the target market that it serves. The company needs to direct its strategic plan to target
the global market. This Company will achieve this by customizing their product to fit their
potential market. They can also achieve this by tapping into new markets or developing new
products.

With the marketing strategy, the company needs to identify both the existing and the new market
that needs to be introduced into the market. Since the PepsiCo deals with a non-alcoholic drink,
it has been noted people who do not drink alcohol are the potential customers.

The new market is a health-conscious market segment and the existing product is a beverage and
non-alcoholic. Therefore marketing to health-conscious market will good use of market
penetration strategy while non-alcoholic customers will make use of development strategy. The
marketing strategy helps Pepsi Company to bring to the market the best product and help to
tackle its competitors well.

Operation strategy

The operation strategy aims at addressing the distribution challenges and operating efficiency.
The company needs to understand the foundational basis for operations strategy will be
appreciated by with best strategic framework. If the operational strategy is related to human
resource, the actions aim at training employees to be flexible enough to adjust their capacity to
avoid difficulties in the processing system. The human resource in every step of production
should be trained to do multiple and diverged works.
Running head: STRATEGY IMPLEMENTATION 7

Financial strategy

Pepsi Company has striven to maintain its leadership standard by minimizing the cost. These
costs relate to operating cost, which would decrease if the expected output is achieved. Also, the
cost of raw materials that are used by the Pepsi Company in the processing of the products. The
large volume of production at the low cost has made PepsiCo enjoy the economies of scale. This
has also been achieved due to the good strategic partnership with the suppliers.

Another feature of reducing cost comes with the sources of financing the business firm. The
business firms are financed by equity or by debt. There are risks that a company using these
sources of finances. The risk of equity that includes the business risk is the risk that would be
operating at a loss. The equity risk is because of higher rates of return required by investors. The
debt financial risk entails the money that cannot be paid on time. This risk is calculated through
the interest rate.

Based on the company’s cash flows, debt-equity ratio and interest coverage ratio the company
maintains a sensible debt level. To lower its overall cost of capital, the company uses debt
financing and increasing the shareowners’ return on equity. The company’s strong capital
position gives it an opportunity to access key financial markets. This enables Pepsi Company to
raise sufficient funds at a relatively low effective cost.

Ethical issues
The PepsiCo payment strategy to their employees is through merits. This payment system is
ethical since every employee is paid as per the service he/she is delivering. Such payment serves
as motivation to employees to work more and hence deliver the best results to the company.
Moreover, the PepsiCo in their structure included employee welfare. The company always
organizes workshops and seminars to address ethical issues and teach the employees on the
current trending issues.
PepsiCo has been selling beverages that are carbonated. Many customers find carbonated drinks
as unsafe for their health due to the reason that the carbonated drink causes obesity complication.
Such complains will affect the sales output of the company negatively.
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Recommendation

To realize more sales, the company needs to conduct more marketing strategies to reach as many
potential customers as possible. In addition, due to the increase in lifestyle in developed
countries, Pepsi Company should concentrate its market more on the developing countries.

The PepsiCo should plan to divert their attention and manufacture the products that do not cause
health complication. If the company concentrate much on carbonated drink, it will lose many of
the customers from the developed nations because of the lifestyle changes. The company should
also manufacture the complement product to the beverage they produce, for instance, the snacks.

Conclusion

Though the PepsiCo is trying to maintain its customers as they attract more all over the globe, it
faces stiff competition from other reputable companies like Coca Cola, which produces the same
product. The company has not been able to diversify its product to non-carbonated drinks, the
reason that has made them lose some customers in developed countries. The company, therefore,
should manufacture non-carbonated drinks and improving customer service.
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References

Rothaermel, F. (2016). Strategic Management: Concepts. New York: McGraw-Hill Education.

Rendtorff, J. D. (2009). Responsibility, ethics, and legitimacy of corporations. Frederiksberg,

Denmark: Copenhagen Business School Press.

Donalson, T. (2019). Ethical Issues in Business. Retrieved from

https://www.karlknapp.com/resources/ethics

G.A, C. (2006). Personnel management theory and practices. Retrieved from

http://www.academia.edu/10943606/Strategic_Resources_Management_A_case_study_of_Coca_Cola_
Company

Suto, M., & Takehara, H. (2016). The link between corporate social performance and financial
performance: empirical evidence from Japanese firms. International Journal Of Corporate
Strategy And Social Responsibility, 1(1), 4. doi: 10.1504/ijcssr.2016.077544

PepsiCo. (2018). Retrieved from https://en.wikipedia.org/wiki/Pepsi_Co