CEO- Greg Bolton COO- Elias Adepoju CFO- Chanae Stout

Table of Contents
Historical Analysis Mission Strategic Objectives Financial Objectives SWOT Analysis Financial Ratios Recommendations

Purpose
y PepsiCo Inc. is a leading global snack and beverage

company. We manufacture, market, and sell a variety of salty, convenient, sweet grain-based, snacks, carbonated and non-carbonated beverages and foods.

Historical Analysis
y y y y y y y y y

Founder Caleb Bradham Current CEO is Indra Nooyi Pepsi Co Inc. established in 1965 in North Carolina Ceo of PepsiCo Inc. Donald M. Kendall During first five years introduced new products such as Doritos and Funyuns Entered Japan and Eastern Europe markets In 1992, expanded beyond carbonated beverages via a agreement with Ocean Spray to distribute single-serving juices Tropicana was acquired in 1998 and PepsiCo merged with the Quaker Oats Company, including Gatorade, in 2001. Implemented a number of acquisitions with Taco Bell in 1978, Kentucky Fried Chicken in 1986 and Pizza Hut in 1977

Mission
y To be the world's premier consumer products company

focused on convenient foods and beverages. We seek to produce healthy financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity.

Values
y PepsiCo Inc. reflects their values by their

commitments y Their committed to

y Sustained Growth y Empowered people y Responsibility and Trust

y PepsiCo Inc. commitment is to deliver sustained

growth, through empowered people, acting with responsibility and trust.

Strategic Objectives
y Strategic acquisitions y Product Reformations y To make snack foods and beverages less unhealthy y By producing (GFY) goodfor-you or (BFY) better-for you products, that would create growth opportunities y Related Diversification y Achieve Synergies y Close Relationships with

distribution allies y International expansion y Maintain Efficient distribution system

y Direct Store Delivery y Broker Warehouse

Strategies
y Realignment of their organization into three new

business units;
y PepsiCo America Foods
y

Includes FLNA ,QFNA and all of their Latin American food and snack business LAF. Includes PBNA and all of our Latin American beverage business Includes all PepsiCo business in the United Kingdom, Europe, Asia, Middle East and Africa.

y PepsiCo America Beverages

y

y PepsiCo International
y

Financial Objectives
y Increase our investment in developing markets, make selective y y y y y

investments to continue growing our global snacks business and accelerate our global R&D initiatives to help secure our future innovation pipeline. Produce $1.2 billion in pre-tax savings over the next three years (Productivity for Growth Initiative) Investing to drive additional growth in key developing markets across the world in both Snacks and Beverages. Targeted marketplace investments to further secure our competitive position in developed Snack markets. Increase our investments in R&D, with particular focus on long-term bets and innovation to sustain our long-term growth. Sustainable Growth

SWOT Analysis
y Strengths y Broad Product line y Great reputation for their products y Increasing market share y 3 different sectors to improve
y Lays Chips y Quaker Oat granola bars

y 40% of company income from

efficiency y US food y US drinks y food and drinks abroad y #1 company in snacks y Doritos

international companies y Emerging markets contribute to 60% of growth of international business y India - will invested over 500 mil over next 3 years y Russia - acquired Lebedyansky juice company for 1.4 billion (800 mil in sales for 2007)

SWOT Analysis contin

y y y y

Weaknesses Lack brand awareness with all products PepsiCo doesn't have all the products under one brand Frito Lay accounts for 1/3 of company sales

y Threats y Weakened economy y Pepsi blamed for pesticide residues in their products
y India

y 1/3 of sales from Frito Lay

y US moving towards consumption of more healthier products

y Lawsuits y Several competitors due to broad product line

SWOT Analysis contin

y Opportunity y Invest in healthier products y Devote more focus to non carbonated healthy drinks y Focus on international presence and recognition y Invest in going green

Gross Profit Margin = Sales Cost of Goods Sold = 39,474 ,000 18,038,000 = 54.3% Sales 39,474,000 Industry Average = 30.10%

average.

Pepsi has 54.3 % of its revenue available to cover its total cost of goods sold expenses and still have the ability to yield a profit. Compare to the industry s average that is excellent because Pepsi is 24.2% more than the industry s

Net Profit Margin = Profit after taxes = 5,658,000= $.1433 Sales 39,474,000 Industry Average = $.028 Pepsi makes .1433 cents in profit after taxes are deducted for every $1 it generates in sales. Compared to the industry s average, Pepsi is doing pretty well.

Current Ratio = Current Assets = 10,151,000= $1.31 Current Liabilities 7,753,000 Industry Average = $1.53 Pepsi has $1.31 in current assets available to pay off $1 in current liabilities it owes. Compare to the industry s average, Pepsi has to improve its current ratio because its .22 cents less than the industry. Pepsi only has .31 after paying off its current liabilities. Quick Ratio = Current Assets Inventory = 10,151,000 - 2,290,000 = $1.01 Current Liabilities 7,753,000 Industry Average = $0.9 Pepsi has $1.01 in current assets without the use of inventory to pay off $1 in current liabilities it owes. Compare to the industry s average, Pepsi is doing kind of okay since it is only .11 ahead of the industry average.

Debt-to-assets Ratio = Total Debt = 17,394,000 = 50.2% (Hovers 20%) Total Assets 34,628,000 Industry Average = 29%(Hovers)
Based on my calculation Pepsi has $.50 in debt to finance $1 in total assets or one can say that Pepsi has 50.2% in debt. In my research, Hovers came up with a leverage ratio of .20 (Pepsi) and .29 (Industry s Average). In using Hovers results, compare to the industry average Pepsi uses less debt to buy its assets.

Debt-to-Equity Ratio = Total Debt = 17,394,000 = 1.004 (Hovers .48) Total Shareholder s Equity 17,325,000 Industry Average = .59 (Hovers)
Based on my calculation, Pepsi has $1.00 of debt for every dollar in equity to meets it financial goals. After researching the industry s average on Hovers online, the industry s average is .59 and Pepsi is .48. Comparing Hovers results among Industry s average and Pepsi, Pepsi debt-to-equity ratio is looking good and I see no need for improvements.

Inventory Ratio = Cost of Goods Sold = 18,038,000 = 7.88 times Inventory 2,290,000 Industry Average = 6.5 Pepsi has the ability to turnover its inventory in sales by 7.88 times in one year. Pepsi has a really good inventory turnover it s able to turnover its inventory 1.38 times faster than the industry s norm.

Total Asset Turnover =

= 39,474,000 = 1.14% Sales Total Assets 34,628,000 Industry Average = 1.1

Pepsi s total asset turnover is 1.14, which basically means that for every dollar in total assets, Pepsi has generated about $1.14 in sales. Compare to the industry s average, Pepsi has a reasonable asset turnover.

Recommendations
y Lay-off about 3300 positions y Savings from Productivity for Growth Initiative is

going to go into North America Beverages y Selected investments will be allocated into key developing markets, and then Snacks in developed markets from marketplace investments and then R&D. y Introduce a wide-variety of Non-carbonated beverages