CHAPTER 1

Executive Summary

PepsiCo, Inc., incorporated in 1919, manufactures, markets and sells soft

drinks and concentrates, and snack foods. PepsiCo and its divisions and
subsidiaries operate in three business segments: Worldwide Snacks, Worldwide
Beverages and Quaker Foods North America (QFNA). The Company's snack
food business is comprised of two business units: Frito-Lay North America
(FLNA) and Frito-Lay International (FLI). The Company's beverage business is
comprised of three business units: Pepsi-Cola North America (PCNA),
Gatorade/Tropicana North America (GTNA) and PepsiCo Beverages
International (PBI). On August 2, 2001, the Company completed a merger
transaction with The Quaker Oats Company (Quaker) whereby Quaker became a
wholly owned subsidiary of PepsiCo.
 Company Background

Pepsi was created by chemist named Caleb Bradham. He was inspired to

experiment with various products and ingredients to create a suitable summer drink
that became highly sought after way back in the summer of 1898 (The Pepsi Cola
Story, 2005). It was this summer inspiration that later evolved into what we now
know as Pepsi Cola. The company was launched officially in the year 1902. The
beginning of Pepsi Cola was in the back room of his pharmacy, but recognizing its
potential, Caleb soon started bottling the product so that people all over can enjoy it.
As the years passed, Caleb started franchising the bottling of the drink to different
people in different locations. Soon Pepsi Cola was being sold in 24 states across the
United States. When World War I broke out, the company went bankrupt and Caleb
had to sell the trademark to a stock broker from North Carolina. But he too could not
revive the business. It was the candy manufacturer, Charles G. Guth, who bought it
from the previous owner and revived it into the global brand it is today. Its marketing
plan started even when the company was in the hands of Caleb and grew with the
company. It was during World War II that the company adopted the red white and
blue emblem to depict patriotic America. The colour code still exists today though the
emblem has evolved many times.

It was after 65 years after the sale of its first cola that PepsiCo started its
diversification into other foods and beverages. Now the company not only sells
Pepsi, its main brand, but also other items like Quaker Oats, Aquafina, Tropicana,
Mountain Dew and Lays. It also had alliance with companies like Starbucks and
Lipton to come out with special coffee and tea.
 Pepsi’s Vision Statement

PepsiCo’s executive leadership embarked on a journey to develop a vision

statement which they think best suits their organization. The vision statement is as
follows.

“Be the global leader in convenient foods and beverages by winning with a
purpose.”

To advance this vision, the company plans on becoming FASTER, STRONGER,

and BETTER.

Become global leader in convenient foods and beverages

The organization believes that the food industry is an ever going industry as long as
humans are alive. Hence, investments in the development of the industry keep the
organization at the forefront. A key to long term success.

Winning with purpose

The company believes that winning with purpose translates to giving the best
performance to execute your goal and purpose. Pepsico believes that its past
success is a mirror of its ambition, which has lead to the growth of the company. The
vision is to keep this ambition alive so that the company is propelled into new heights
of success internationally.
Faster
PepsiCo plans on becoming more faster in business by focusing on customers and
increasing investment for growth and market share.

Stronger
The company plans on becoming stronger by building on its capabilities and
enhancing its company culture. PepsiCo plans on developing its core capabilities
that will better facilitate customer needs, hence strengthening the brand.

Better
The organization plans on becoming better by integrating their vision into their
business plan. Furthermore, PepsiCo plans to give back to society and the people so
that they can successfully create an everlasting impact of the Company on the
Planet.

Pepsi’s Mission Statement

Pepsi’s mission statement is as follows:

“Create more smiles with every sip and every bite.”

PepsiCo has divided its mission statement into five categories which are analyzed
down below:

For consumer
The company plans on creating smiles for its customers, which are estimated to be
about one billion a day by providing them with delicious and unique products.

For customers
PepsiCo tries to bring smiles for its customers by being the best business partner.
Delivering products of unique and premium quality, which not only benefits the
company but also benefits the business enterprise the customers who buy PepsiCo
products in bulks.
For acquaintances and society
The organization brings smiles for its acquaintances and society by creating job
opportunities. Also, giving people chances to learn valuable skills, which will help
them build successful careers.

PepsiCo all promotes diversity by making its workplace inclusive to everyone.

Through such steps, the organization tries to give back to society by making the lives
of the people living in it better.

For Shareholders
PepsiCo brings smiles for its shareholders by delivering suitable Total Shareholder
Return (TSR) and also running the business based on best corporate and ethical
governance.

For the world

The Company brings smiles to the world by playing its part in protecting the non-
renewable resources and helping to conserve the eco-system so that it is more
sustainable for the generation to come.

Pepsi’s Core Values

PepsiCo’s values are the reflection of their stand on social and environmental issues,
and what the company wants to be known for. The statement that sheds light on the
values of the company is as follows

“PepsiCo is committed to delivering sustained growth through empowered

people acting responsibly and building trust.”

For analysis, the statement can be broken down into three parts.

Sustained Growth
PepsiCo expects its employees to have a vision of sustained growth. It’s a skill that
harnesses other skills such as innovation, ambition, and determination.

PepsiCo believes that one of the critical keys to long term success is to have a long
term plan. And the employees must have the vision and value of sustained growth,
not just for themselves but for the company as well.

Empowered People
PepsiCo is an organization that believes in giving freedom and autonomy to its
employees, given that they work within the organization’s governance.

In order to survive at PepsiCo, employee empowerment is a critical skill. The

company values people who can get the job done correctly with minimum guidance.
Responsibility and Trust
PepsiCo expects its employees to be responsible and trustworthy. The company
believes that these two core values are of the utmost importance leading to the
growth of the country.

All employees are expected to execute all activities responsibly, keeping in mind the
company policy and general rules and regulations. It builds the company’s trust in
them.

Products & Services: Pepsi | Mountain Dew | Lay’s potato chips | Gatorade |
Tropicana beverages | 7 Up | Doritos tortilla chips | Quaker foods and snacks |
Cheetos | Mirinda | Ruffles potato chips | Aquafina bottled water | Tostitos tortilla
chips | Mist Twist | Fritos corn chips | Walkers potato crisps

Our PepsiCo Global Code of Conduct (our “Code”) is our roadmap for doing
business the right way. Put simply, you do business the right way when you act
ethically and consis- tently with our Code, our policies and the law. Our Code is at
the center of everything we do.

Pepsi’s Market Strategy

PepsiCo uses a very simple marketing strategy that not only cuts down its cost of
advertising and marketing but also makes the branding of its products much easier.
PepsiCo has “ONE STRATEGY.”

For each one of its product, it has one message worldwide. Since most of its
products are generic food and drinks; hence, the downfalls of this strategy are
minimal compared to its advantages. In every country that the company operates in,
it sells the same product with the same advertising and marketing.

This strategy not only helps in cutting down the costs but also makes the brand
easily recognizable internationally. Although this strategy has backfired with some
products that are not generic such as US tomato soup and the company did suffer
the losses, but the cons outweigh the pros. The revenue generated through it and
money saved by it is much greater than occasional losses suffered due to it.

Pepsi’s Product Strategy

The strategy is that the result of securing many local market share would be a
considerable chunk of the market share of the country as a whole. PepsiCo plans on
saving money through holistic cost management and then investing that back into its
products so that the funds can be indirectly reinvested back into the marketplace.

Moreover, to sell product of top quality, the company is very in tune with the needs
and demands of its consumers and customers.
 CHAPTER 2
PepsiCo is the second largest food and beverage company in the world. The
company manufactures then markets and sells a variety of salty, sweet and grain-
based snacks, carbonated and non-carbonated beverages PepsiCo seeks to get
growth and long-term worth in its operational activities by creating competitive
advantages by new product innovation. In the year 2006, PepsiCo acquired Izze
Beverage Company Naked Juice and StacysPita Chip Company in the United
States, Star Foods in Poland, and Bluebird Foodsin New Zealand. It has extended its
presence in the non carbonated drinks as well as snacks. The company’s volume
grew by 5.5% in 2006 compared with 2005. For the year 2011, the company plans to
expand its market share by further acquisition and joint ventures.

SWOT ANALYSIS:

Strengths:

Outstanding Reputation.

Broader Product line-creates synergy beyond the board.

Large charge less bank note flow- New Acquisition

Great brands, able distribution, avant-garde capabilities

Global market baton in bite foods & non-carbonated beverages.

PepsiCo sells three articles by the aforementioned administration channel.

Huge Advertising Budget.

Able Marketing Intelligence.

Research & Development.

Diverse and global awareness.

Make same drinks – cheaper.

Weaknesses:

Difficult to affect Vision and Direction for Large Global Company.

Non Uniform Company name for some PepsiCo products.

PepsiCo Lags baton Coca-cola in the all-embracing market – Highly Elastic Demand.

Big Health Issues for Pepsi Drink – Fat and Sugar.

Falling Behind in All-embracing Markets, namely Russia, Venezuela, and South
America.

Health Issue in the Indian market with baptizes – independent pesticides.

Large size may lead to conflicting interests

Possible conflicts due to so many people, possible trouble staying focused

Lose control and quality standards

Opportunities:

Expanding Food Division in the all-embracing market.

Investment into added non carbonated articles in the US market and regional.

Avant-garde Customized articles technology

Concentration on advantageous another articles as per the barter needs.

Huge market in the healthy products and growing market for unique foods for ethnic
groups.

Distinctive name, product and packaging in with regards to its markets.

Internet promotion such as banner ads and keywords can increase their sales, and
more computerized manufacturing and ordering processes can increase their
efficiency.

Threats:

Bottled Baptize Market Faces Competition.

Comply with All-embracing & Domestic Standards.

Environmental affair PET Bottles

Continuously increases in the amount of awkward oil and raw materials- affects the
amount of accomplished products

Terrorism-Anti-American Advocates.

Computer breakdowns, viruses and hackers can reduce efficiency and effectiveness,
and must constantly update products or other competitors will be more advanced.

Not entirely patentable, constant reliability by competitors.

Strong Competition and Potential Health Issues Free Trade.

PEST ANALYSIS:

A PEST analysis is one of them that are merely a framework that make categories
environmental influences as political, economic, social and technological forces.

Political:

PepsiCo products are subject to various laws especially federal laws.

Land acquisition for new factories.

Govt. focusing on stricter water pollution norms.

Raw Material prices, a great worry.

Economical:

New opportunities in other countries.

Fuel price changes.

Availability of labor.

Have a global economic perspective.

Social:

Replenishing of water.

Partnership with farmers.

Solid waste management program.

Impact on youngsters.

Technological:

Operates in almost all the countries.

Introduction of new cans and plastic bottles.

Newer and attractive Designs.

State-of-the-Art plants.

Strategic analysis:

Pepsi-Cola drinks were invented in 1898 and grew up by following the Coca- Cola
marketing, product, and distribution strategies. Like Coca-Cola it also advertised as
heavily as finances permitted, and was distributed and divided by soda fountains and
franchised bottlers.

Evaluating Pepsi’s marketing strategies it became clear that Pepsi has made several
right choices. With the existence of Coke, Pepsi can never put down claim to true
originality. It is not the new thing so; Pepsi took advantage of their late entrance into
the market by more lessening their product prices. Before entering in to the
international market, it first familiarized its customers with its product systematically
in its home base. By the time Pepsi was ready to enter in to the international market
and it had a good grasp of what its target audience really is.

Pepsi’s marketing strategies, from past to present included:

Enhancing their distribution system

Knowing the environment of the foreign market and finding the things their target
buyers had in common

Adding new innovations and products while improving the old products

Imaginative advertising

Use of advanced technology

Assertive promotions

Trendy and socially-aware campaigns

Alliances with major corporations and expands into other industries such as
restaurants.

Reaction about the Company

The Pepsi-Cola is currently a strong worldwide leader company in the food and
beverage industry. Overthrow its growth, it has stayed true to its mission and
objectives, while becoming a share force within the United States as well as in other
countries. Known buy out the world for quality products and customer care, Pepsi Co
should make no major strategic changes to its plan. The current marketing strategy
adopted by PepsiCo Inc. is definitely one that caters to its global standing. Since
Pepsi came out at a time when Coke or Coca Cola already had a head start in the
market, its market strategy and business plan began with differentiation – an attempt
to establish its product as one that is unique in taste and quality. This approach was
successful to a great extend and Pepsi was able to establish itself in the US markets.
Later the plan shifted to comparative marketing and later to diversification.

With strong management and unique vision, PepsiCo, Inc., is not only a leader in the
beverage and snack industry, it is one of the most successful companies in the
world. Much of the company's success comes from the fact that it consistently stays
in touch with changing trends and lifestyles, and gives consumers the tastes and
conveniences they desire.

Over one hundred years after the first Pepsi was bottled, PepsiCo now offers thirty-
two different kinds of carbonated and noncarbonated drinks with Pepsi-Cola
beverages sold in 170 countries around the globe. It also produces thirty different
kinds of snack foods and twenty-one cereals and other grain-related foods through
out the world.