PepsiCo is the second biggest company in the global food and

beverage industry. To keep this position, PepsiCos strategic

decision-making processes must account for the issues outlined in

this PESTEL/PESTLE analysis. The PESTEL/PESTLE analysis
model is a strategic management tool that identifies the various
external factors relevant to firms, based on the conditions of their
remote or macro-environment. In PepsiCos case, these factors
determine the companys growth path. The global market presents
challenges that threaten PepsiCo while creating opportunities for
improvement. Thus, strategies and reforms based on the elements
of the PESTEL/PESTLE analysis model can boost PepsiCos longterm growth.
PepsiCos long-term growth trajectory is partly dependent
on how the company addresses the major issues identified
in this PESTEL/PESTLE analysis. PepsiCo must develop
strategies that enhance its abilities to withstand the
external factors in its remote or macro-environment.

Political Factors Affecting PepsiCos

Business
Governments are external factors that impose requirements on
PepsiCo. This element of the PESTEL/PESTLE analysis considers
the effects of governmental action on companies remote or macroenvironment. PepsiCo must address the following political factors:
1.
2.

Political stability in major economies (opportunity)

Improved intergovernmental cooperation
(opportunity)
3.
Government initiatives against carbonated drinks
(threat)
Major economies like the United States and Canada are politically
stable, thereby presenting growth opportunities for PepsiCo. In
addition, the trend of intergovernmental cooperation improves

opportunities for global expansion. However, government initiatives

against sweetened carbonated drinks are a threat that could reduce
PepsiCos revenues from affected segments. In this element of the
PESTEL/PESTLE analysis, PepsiCo must consider changing its
products to overcome the identified threat about carbonated drinks.

Economic Factors Important to PepsiCo

PepsiCos performance is directly linked to the economy. The
influence of economic conditions on the remote or macroenvironment of businesses is covered in this element of the
PESTEL/PESTLE analysis. The political external factors that relate
to PepsiCo are as follows:
1.

Economic stability of most major markets

(opportunity)
2.
Rapid growth of developing economies (opportunity)
3.
Slowdown of the Chinese economy (threat)
PepsiCo has opportunities for growth and expansion based on the
economic stability of developed countries like the United States, as
well as the high growth rates of developing economies, such as
those in Asia. However, the current slowdown of the Chinese
economy threatens PepsiCos potential international growth,
considering that China is among the biggest economies in the
world. This element of the PESTEL/PESTLE analysis shows that
PepsiCo must ensure market diversification to achieve stable
international growth.

Social/Sociocultural Factors Influencing

PepsiCos Business Environment
Many of PepsiCos consumers follow sociocultural trends. This
element of the PESTEL/PESTLE analysis identifies the impact of
social conditions and changes on companies remote or macro-

environment. The following are notable sociocultural external

factors relevant to PepsiCos business:
1.
2.
3.

Higher health consciousness (threat & opportunity)

Increasing busy lifestyles (opportunity)
More discriminating attitudes about product quality
(opportunity)

Higher health consciousness is a threat to PepsiCo because of

concerns about the sugar, salt, and fat content of its products.
However, this external factor also presents the opportunity for the
company to improve its products to address such concerns.
PepsiCo can also take advantage of the busy lifestyles of
consumers, especially in urbanized and industrializing markets
around the world. People with these lifestyles are more likely to
purchase ready-to-eat food products like those of PepsiCo. The
company has the opportunity to continue enhancing product quality
to maximize revenues, with regard to consumers increasingly
discriminating attitudes about product quality. Based on this
element of the PESTEL/PESTLE analysis, PepsiCo must align its
products and marketing strategies to changes in consumer
behaviors.

Technological Factors in PepsiCos

Business
PepsiCos business is partly dependent on technologies. The link
between technological change and companies remote/macroenvironment is examined in this element of the PESTEL/PESTLE
analysis. The technological external factors significant to PepsiCo
are as follows:
1.

Moderate R&D investments in the food and beverage

industry (opportunity)

2.

Improving knowledge management systems

(opportunity)
3.
Increasing automation in business (opportunity)
Based on moderate research and development (R&D) investments
in the industry, PepsiCo can boost its own R&D investments to
improve its competency in this business aspect. Also, PepsiCo can
exploit the benefits of knowledge management systems to support
its various business processes, such as product innovation and
strategic decision-making. In addition, an increase in the number of
automated processes in the company can enhance business
performance. This element of the PESTEL/PESTLE analysis
indicates that PepsiCo must include new technologies as tools to
improve business competitiveness.

Ecological/Environmental Factors
PepsiCos supply chain and brand image are linked to
environmental concerns. This element of the PESTEL/PESTLE
analysis considers the ecological trends and issues that affect
consumers, employees, and companies remote or macroenvironment. The following ecological external factors are
significant to PepsiCo:
1.
2.

High focus on business sustainability (opportunity)

More complex expectations and standards on waste
disposal (opportunity)
3.
Climate change (threat & opportunity)
Consumers are now pushing companies like PepsiCo to improve
their sustainability standing. In relation, PepsiCo can improve its
waste disposal strategies, such as recycling, to gain more support
from customers. On the other hand, climate change poses a threat
to PepsiCos supply chain. However, the company can further
diversify its global supply chain to minimize risk exposure to climate
change. Based on this element of the PESTEL/PESTLE analysis,

PepsiCo must improve its environmental impact to attract and

retain customers, and to stabilize its supply chain.

Legal Factors in PepsiCos Industry

PepsiCo and its competitors are subject to legal requirements.
Such requirements and regulations are evaluated in this element of
the PESTEL/PESTLE analysis in terms of their effect on the
industrys remote or macro-environment. The legal external factors
relevant to PepsiCos business are as follows:
1.
2.
3.

Regulation on GMO ingredients (opportunity)

Health and product safety regulations (opportunity)
Moderate rate of regulatory change (opportunity)

Genetically modified organisms (GMOs) are now increasingly

regulated worldwide, particularly in Europe. PepsiCo has the
opportunity to reduce its use of GMO ingredients to satisfy these
regulations. Similarly, the company can improve products to
address regulations about product safety and health effects. The
moderate rate of regulatory change gives opportunity for PepsiCo
to grow with the expectation that its current strategic decisions will
satisfy regulatory requirements in the long term. In this element of
the PESTEL/PESTLE analysis, it is shown that PepsiCo can focus
on product innovation to comply with regulations.

PepsiCos PESTEL/PESTLE Analysis

Recommendations
PepsiCo remains one of the strongest companies in the food and
beverage industry. This PESTEL/PESTLE analysis indicates that
the company has many opportunities and a number of threats
regarding its growth and international expansion. The following are
some of the key points that PepsiCo must address based on the
results of the analysis:

1.
2.

Expansion in developing economies

Product innovation to address concerns on quality
and health effects
3.
Business sustainability
4.
Supply chain diversification

5.Social

6. It was found upon analysis that social factors

impact Pepsi greatly.
7. I believe the main reason is that Pepsi is a nonalcoholic beverage, which has to maintain the strict
and stark differences in cultures around the globe.
Pepsi must communicate its image as a global
brand in order to change peoples perception. The
company expects consumers to be able to think of
the drink as something that connects the
world together.
8. Most often, the social implications are visible
in marketing campaigns. A good example would
be

featuring

religious

festivals

in

TVC

ads.

Therefore, Pepsi has to keep in line with all of those

festivals if the team wants to understand the
essence of their market. Analyzing the social factor
would help cash upon the opportunity.

9.Technological
10.

As the technology is advancing with passing

time, big and small companies feel the pressure to

completely integrate themselves with the recent
changes. Social Media is a very recent yet viral
trend

that

every

business

is

turning

toward. The social media blast has increased

interactive engagement with the customers and

offers real time results too.
11.

So, Pepsi has to make attempts to stay ahead

of all such developments. It is essential to give

importance to how todays youth is utilizing
technology for their benefit and how Pepsi can
reach

them

to

continue

increasing

brand

engagement and brand recall.

12.

Economic

13.

As you are aware, the economic downturn

plagued the economy and companies had to

completely restructure their marketing and sales
campaigns. The reduced profits led them to
downsize internally and reconsider about how they
should penetrate the market.
14.

I think economic conditions influence the

business most, regardless of what kind of business

it is. I would say in Pepsis favor that when the
economic downturn started in 2008, it resulted
in increased sales for the company. This is
because people started spending more time with
friends and family, or at home, when they got laid
off from jobs.

15.

Ecological

16.

Ecological factors might affect Pepsi, but it

will not have any immense toll on its trade and

profit

generation.

Ecological

factors

affect agricultural businesses more directly.

17.

Political

usually

18.

As I mentioned previously, Pepsi is a non-

alcoholic beverage and so the FDA regulates it.

Pepsi is expected to maintain a firm standard of
the laws that the FDA sets with consistency. Many
different markets across the world follow different
set of regulations, which are either relaxed or
severe.
19.

Pepsis competitors like Coca-Cola presents

competitive pricing and this is a factor, which the

firm should keep in mind all the time. The political
scenario is very important because there can be
certain civil disturbance in some markets. Another
reason could be fall in sales due to inflation. The
most important element of all is that cross-border
situations

are

extremely

different.

As

result, Pepsi has to stay in line with all

changes and policies in order to adapt to them
accordingly.
PESTLE ANALYSIS BY PEPSICO.
PepsiCo is the largest selling beverage the world over, of
course after its arch rival Coca Cola. It accounts for a 37%
share of the global beverage market, and therefore they need
to understand each and every countrys market in order to
stay in line with their PESTLE situations. Pepsi is a big
brand, currently holds the 23rd place in the Interbrands
report of the Worlds Leading Brands. Their advertisements
feature major celebrities and athletes like David Beckham,
Robbie Williams, Britney Spears, etc. Their market reach is
also very diverse, as theyre present in almost every country
from the US to New Zealand. Their PESTLE analysis is
given below: Political: Pepsi is a non-alcoholic beverage
and is therefore regulated by the FDA. So, theyre supposed

to maintain a firm standard of the laws set out by the FDA

with consistency. Also, many different markets across the
world have different set of regulations that are either
relaxed or are either stringent. There is competitive pricing
by Pepsis competitors and that is one factor that Pepsi has
to keep in mind at all times. The political scenario also
matters greatly as there can be some civil unrest in certain
markets or due to inflation the sales of the product can fall.
Most importantly, cross border situations are starkly
different therefore Pepsi has to stay in line with all those
policies and changes so that they can adapt to all those
changes accordingly.Economic: As the recent economic
downturn has plagued the economy, companies had to
restructure their sales and marketing campaigns greatly.
Also, with diminishing profits they had to undergo
downsizing internally and re-think upon how to penetrate
the market. Economic conditions have the highest influence
on a business, regardless of what trade it is in. Though, in
Pepsis favor, the economic downturn that started in 2008
resulted in increased sales of its beverages mainly as people
were being laid off from jobs, they were spending time with
friends and family or at home. Social: Social factors
greatly impact Pepsi, as its a non-alcoholic beverage it has
to remain in line with the strict and stark differences of
cultures the world over. Also, Pepsi has to communicate its
image as a global brand so that the people can associate it
with themselves as something that connects the world
together. Usually, the social implications are seen in
marketing campaigns for example certain countries have
religious festivals, so Pepsi has to keep in line with all those
festivals in order to understand the psyche of their market
and how they can cash upon the
opportunity. Technological: With the advent of the new
age in technology, companies have completely integrated
themselves with all the recent changes that have taken
place. To mention a recent trend that has greatly picked up
and something that almost every business is turning toward

is Social Media. The social media explosion has allowed for

increasingly interactive engagement with the consumers
with real time results so Pepsi has to stay ahead of all the
developments that take place with keeping in view how the
youth of today utilizes technology for their benefit and how
can Pepsi reach them in order to keep on increasing brand
recall and brand engagement.

Legal: There can be many legal implications upon the

beverage industry. I would cite one very famous incident
took place in India, where Pepsi was accused of using
contaminated water, given a lab test that was done upon the
water flowing into the Pepsi factory that was located nearby
an industrial estate. A massive recall was issued for the
products from shelves and then the product was tested
costing the company many billions of dollars upon the tests
as India is a very major market. Environmental: These
factors can affect Pepsi, but not immensely alter its trade
and profit generation as these factors affect agri-businesses
much more directly. You can also try doing the same
analysis for different companies as well!!

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