PROJECT REPORT

Submitted by: Omar Ahmad (037)

Submitted to: Ms. Mahwash Hussain

Date: 12 JUNE 2020

TABLE OF CONTENTS

1- DESCRIPTION………………………………………………………………… 3
2- INDUSTRY PROFILE………………………..…………………………………… 4
3- COMPANY PROFILE……………………………………………………………… 4
4- MISSION AND VISION ANALYSIS………………………………………………… 5
 5- SWOT ANALYSIS…………………………………………………………………. 6
6- PORTERS FIVE FORCES MODEL…………………………………………………. 8
7- EFE ANALYSIS………………………………………………………………… …………. 10
8- IFE ANALYSIS………………………………………………………… 13
9- CPM ANALYSIS………………………………………………………………………….. 16
10- SWOT MATRIX……………………………….…………………………………………. 18
11- SPACE MATRIX………………………………………………………………………… 20
12- BCG MATRIX…………………………………………………………………………. 22
13- INTERNAL AND EXTERNAL MATRIX……………………………………….. 24
14- GRAND STRATEGY MATRIX…………………………………………………….. 25
15- QUANTITAVE STRATEGIC PLANNIG MATRIX…………………………………26
16-CONCLUSION……………………………………………………………………………… 28
17- REFRENCES………………………………………………………………………………… 29

Acknowledgements:

First of all I would like to thank ALLAH the Almighty who blessed us with the cognitive abilities and the
ability to comprehend, understand and analyze complex things.
I would also like to extend our gratitude to our teacher Ms. Mahwish Hussain who was a source of
inspiration and knowledge throughout this semester and who helped us greatly in understanding the
different concepts related to Strategic Management.
EXECUTIVE SUMMARY:

So in this project will be discussing about the Pepsi Cola Corporation by using the strategic management
in order to understand how this firm is implementing, formulating, and evaluating their objectives to
reach their end goal. We will also be discussing about how we will be analyzing the competition, market
trend and growth, opportunity analysis and strategies for creating competitive advantage by Pepsi Cola in
its industry.

The purpose of doing this project is to analyses and study the strategic management by which Pepsi is
operating their organization in the whole market for its products.

In order to analyze Pepsi Cola Corporation, we will be doing the following processes.

So first we will be analyzing PepsiCo’s SWOT, then IFE and EFE that are aggressive, responses as well as
strong competitive position compared to its competitors, Coca Cola and Gourmet Cola and also indicated
that Coca Cola is the market leader and then comes the PepsiCo

Then we will be analyzing the Space Matrix, TOW Matrix, and then the Grand Matrix that also have an
aggressive, responses which helps the businesses identifies and alternates the strategies available in
order to choose which one is the most benefit strategy for them to implement.

And in the last we will be discussing about Quantitative Strategic Planning Matrix (QSPM) that will help us
concluding the internal factor evaluation, external factor evaluation, and Space to choose the strategy
that works best for PepsiCo.

3. Industry Profile:

The food and beverages industry consists of all companies which are involved in processing raw food
materials, packaging, and distributing them. These includes fresh, prepared foods as well as packaged
foods, and alcoholic as well as nonalcoholic beverages. Any product which is meant to be eaten by
human or meant for human consumption, aside from pharmaceuticals, passes through this industry.
The food and beverage industry can be divided into two major segments. Those two segments are
production as well as distribution of edible goods. The production process includes the processing of
meats and cheeses as well as the creating of soft drinks, alcoholic beverages, packaged foods, and other
modified forms of foods. The production segment of this industry usually excludes foods that were
directly produced via farming and other forms of agriculture. Distribution process involves transporting
the finished food product into the hands of consumers. This industry is much more focused on
technology and mechanical manipulation of raw foods to create more value for the consumer’s food
products as compared to the agricultural industry. Under our definition of these industries, grocery
stores have to be excluded as they are considered a retail store. Distribution includes companies that
ship food to retail outlets so they can reach consumers.
Due to the recent economic meltdown, consumers are looking to avoid wasting the maximum amount
money as possible. One major way that buyers do so is by purchasing more generic foods and making
their own meals. This can be causing food processing companies to become more innovative to decrease
the price of products sold, attract more customers, and increase profit margins. The massive amount of
obesity within the world contains a major effect on the food and beverage industry. There has been a rise
in demand for health foods and more informative nutritional labeling. Both of those trends have caused
companies to release lower calorie foods and to higher control how their brand is viewed. Companies
want to be viewed as a healthy brand and are promoting activities, like youth sports, that show this
healthy image. There is also mention of a tax on foods known to guide to obesity so as to curb
consumers’ usage of them. Rising costs of things of production are a serious factor to the current industry
likewise. Since commodity prices went up within the past year, food companies have had to extend
prices of the ultimate product likewise. With the economic collapse, this affected them two-fold, as
consumers were less likely to need or maybe have the money to pay the upper prices. Fortunately,
commodity costs are decreasing within the previous few months, which forecasts a lower final price for
the products during this industry is to return. The industry also should accommodate their reputation, as
there are incidents of unsafe food being released within the past. These outbreaks have two major
potential consequences: loss of consumer confidence and increased regulation. Already, research has
shown that buyers don't trust their food suppliers the maximum amount as they won’t to and nearly half
them have switched brands within the past year, either to avoid wasting money or because they believe
the new food are safer. Government control of the food process has increased with the passage of time
and new laws are imposed as well.

4. Company profile:

PepsiCo, Inc. engages within the manufacture, marketing, distribution and sale of beverages, food, and
snacks. PepsiCo is a beverage and food company with a complementary portfolio of many well-known
brands, which includes Frito-Lay, Gatorade, Pepsi-Cola, Quaker, and Tropicana. It mainly operates under
these subsequent business segments: Quaker Foods North America; Frito-Lay North America; North
America Beverages; Latin America; Europe Sub-Saharan Africa; and Asia, Mideast, and geographic region.
The Frito-Lay North America occupies the market segment, which mainly covers, distribution and selling
snack foods under the Lay's, Doritos, Cheetos, Tostitos, Fritos, Ruffles, and Santitas brands. While the
Quaker Foods North America segment covers the selling of products which mainy includes cereals, rice,
and pasta under the Quaker, Aunt Jemima, Quaker Chewy, Cap'n Crunch, Life, and Rice-A-Roni brands of
Pepsi. The North America Beverages segment of PepsiCo is mostly selling the products under the names
of beverage concentrates, fountain syrups, and finished goods and selling under various beverage brands
like Pepsi, Gatorade, Mountain Dew, Diet Pepsi, Aquafina, Diet Mountain Dew, Tropicana Pure Premium,
Sierra Mist, and Mug. While the geographical area segment is usually covering the segments of beverage,
food, and snack businesses in geographical area region. The Europe geographical area segment is mostly
covering segments of food, beverages and snack goods in Europe and geographical area regions. The
Asia, Mideast, and geographic region segment is selling and offering the chips products under the Lay's,
Kurkure, Chipsy, Doritos, Cheetos, and Crunchy brands. This corporate giant was founded by Donald M.
Kendall, Sr. and Herman W. Lay in 1965 and is headquartered in Purchase, NY.
5. Mission and Vision Statement Analysis of Pepsi:

The purpose that businesses exist is not just to sell their products and earn profits. They're also here to
create a positive contribution to the society and help it grow. Most of the large brands have elaborate
mission and vision statements that expand as companies grow. These statements are important, and
even important is their alignment with strategy. They're like a yardsticks to measure the corporate’s
decisions and performance. And to know if the company is going to be able to reach where it had started
for. Without a vision for the long term it might be impossible for business brands to know if they're on
the correct course. Pepsi is a global brand operating within the food and beverages industry. It is known
for its brand image, large product portfolio as well as for its global presence. The brand’s target market is
mostly made up of the young generation. However, Pepsi’s focus is additionally on accountability in
business. As per its mission and vision statements there's a purpose behind its performance.

5.1. PepsiCo’s Vision Statement:

PepsiCo’s vision statement is “to excel in the financial department in long term by integrating
sustainability into our business strategy, leaving a positive impact on society and also on the
environment.” PepsiCo adds that this vision statement is made on the thought of “Performance with
Purpose.” And supporting these considerations, PepsiCo’s vision statement has the subsequent main
points:

 Top financial performance

 Sustainability
 Corporate social responsibility

PepsiCo emphasizes high financial performance is one of the aims included in its vision statement. This
factor could be a basic business expectation. Also, the vision statement indicates that PepsiCo integrates
sustainability in business activities. Sustainability enhances corporate and brand image. Also, PepsiCo’s
vision statement includes corporate social responsibility. This factor could be a major influence on the
company’s policies and methods on organizational development, especially with respect to its impact on
stakeholders. All of those points of the vision statement motivate PepsiCo to realize high performance.

5.2. PepsiCo’s Mission Statement:

PepsiCo’s mission statement is “we are providing our consumers from all over the world with good taste,
reasonable price, convenient and complementary foods and beverages from wholesome breakfasts to
healthy and fun daytime snacks and beverages to evening treats.” This mission statement highlights the
PepsiCo’s desire to satisfy their customers. Also in the mission statement, PepsiCo also states, “We are
committed to investing in our people, our company and therefore the communities where we operate to
assist position the corporate for long-term, sustainable growth.” The important points of PepsiCo’s
mission statement are as follows:

 Consumers round the world

 Delicious, healthy and fun products
 Affordability
 Convenience
PepsiCo’s mission statement focuses on consumers and products characteristics. For instance, the
mission statement shows that the Company wants to targets consumers worldwide. This suggests that
PepsiCo aims to produce products that appeal to a large number of population despite differences in
backgrounds, cultures, and other variables. The mission statement also defines the basic characteristics
of PepsiCo’s products that they want to show the consumers they are good for their health. The point on
affordability shows the PepsiCo’s approach to pricing. Moreover, based on the mission statement’s
convenience point, PepsiCo makes its products easily accessible for its consumers, implying that the
firm’s market strategy.

6. SWOT Analysis PepsiCo Inc.:

6.1. Strengths:

 Distribution and Reach: PepsiCo Inc. incorporates a sizable amount of outlets in almost every state,
supported by a powerful distribution network that make sure that its products are available easily to
an oversized number of consumers in an exceedingly timely manner.
 Cost Structure: PepsiCo Inc.’s low cost structure helps it produce at a cost which is equal to coffee
and sell its products at a reasonable price, making it affordable for its customers.
 Dealer Community: PepsiCo Inc. incorporates a strong relationship with its dealers that not only
provide them with supplies but also target promoting the company's products and training.
 Financial Position: PepsiCo Inc. incorporates a strong financial position with consecutive profits
within the past 5 years, along with accumulated profit reserves that may be accustomed finance
future capital expenditures.
 Has an oversized asset base, which provides it with better solvency.
 Social Media: PepsiCo Inc. incorporates a strong presence on social media with tons of followers
on the three most famous social media platforms: Facebook, Twitter and Instagram.

6.2. Weakness:

 Research and Development: Although PepsiCo Inc. is spending more than the average research
and development expenditure within the industry standards , it is still spending way less than a
few players within the industry that are gaining significant advantage as a result of their
innovative products.

 High Day Sales Inventory: The average amount of time it takes for products to be bought or
purchased and sold are higher than the industry average, which in turn builds up on inventory
adding unnecessary costs to the business.

 Rented Property: A significant proportion of the property that PepsiCo Inc. owns is not owned by
them and is rented. So they have to pay large amounts of rent on these adding to its costs.
  Low current ratio: The current ratio that shows us the company’s ability to meet its short term
financial obligations, is lower than the industry average. This could mean that the company could
be facing liquidity problems in the future.

6.3. Opportunities:

 Internet: The number of internet users all over the world are increasing day by day. This means that
there is an opportunity for the company to expand their presence online; by using the internet to
interact with its customers.
 E-commerce: There has been a new trend and a spike or growth in sales of the e-commerce
industry. This means that a lot of people are now using internet to purchases online. PepsiCo Inc.
can earn revenue by opening their online stores and making sales of their products through these.
 The growth in average consumer spending in the economy is likely to increase consumption for
PepsiCo Inc.’s products.
 Technological developments: Technology comes with number of benefits among many
departments of a business. Operations can be also be automated to reduce costs. Technology
enables better data to be collected on their customers and helps improve on marketing efforts.

6.4. Threats:

 Technological developments by the competitors: New technological developments or

advancements by a few competitors within the industry pose a threat to as customer attracted to this
new technology can be lost to competitors, which leads to decreasing PepsiCo Inc.’s overall market
share.
 Suppliers: The bargaining power of suppliers has increased over the years since the number of
suppliers is decreasing. This means that it could result in the costs of inputs increase for PepsiCo
Inc.
 New entrants: There have been many new players that have entered the market and are gaining
market share rapidly by gaining existing companies’ market share. This is a threat to PepsiCo Inc.
as it can lose its customers to these new entrants.
 The fluctuating and ever-changing interest rates in the country do not provide a stable financial and
economic environment for the company.
 Exchange Rate: The exchange rate keeps fluctuating and changing and this affects a company like
PepsiCo Inc. that has sales abroad or internationally, while its suppliers are local.

7. PepsiCo Five Forces Analysis (Porter’s Model):

This theory is based or backed from the concept that that there are 5 forces that determine the
attractiveness and competitive intensity of a market. Michael Porter developed this analysis of five forces
model to determine the most significant for that influenced the firm. Porter’s five forces helps us to
identify where the power lies in a business area. Strategic analysts often porters model to understand
whether the new products or services are profitable for the company and can also be used to identify
weakness and strengths of the company.
PepsiCo’s success in the global market can be attributed to its business capabilities, especially by
overcoming the problems or challenges they have faced shown by the analysis. For PepsiCo to maintain
its position in the market as the second biggest food and Beverage Company behind the Coca Cola, they
have to address the problem identified by the porter five forces model.
Due to the global nature of the business, PepsiCo is facing varying number of external factors in the
industry environment. However the corresponding five forces are summarized as follows, with the
indicators of their strengths/intensities of the forces on PepsiCo:
1. Competitive rivalry or having a competition (strong force)
2. Bargaining power of customers or buyers (strong force)
3. Bargaining power of their suppliers (weak force)
4. Threat of substitutes or substitution by another entrant (strong force)
5. Threat of new entrants or new entry of a company (moderate force)

7.1. Competitive rivalry with COKE (strong force):

Since Coca-Cola Company is one of the biggest competitors of PepsiCo’s. However we can say that this
component of five forces model shows that there are also other factors that can influence the level of
completive rivalry. The following are the some of the notable factors that are creating strong
competition.

 High aggressiveness of firms (strong force)

 Low switching costs (strong force)
 High number of firms (moderate force)

Since most of the firms in the food and beverage industry are very aggressive as they are constantly
innovating their product and marketing to reach the maximum amount of people. The Competitive rivalry
is also increased or strengthened because consumers have the choice can easily shift from one provider
to another (low switching costs for the customer). Also the PepsiCo is also competing with many other
small firms and medium ones so this competitiveness is most pressing concern of the company .

7.2. Bargaining Power of PepsiCo’s buyers or customers (Strong Force):

Since consumers are one of the top priorities in the PepsiCo mission statement. So the effects of the
consumers on the firms industry are determined in this component. The external factors that lead to the
strong bargaining power of PepsiCo’s customers or buyers are following

 Low switching costs for the consumers (strong force)

 Consumers having high access to product information (strong force)
 For having the high availability of substitutes (strong force)

Since it is very easy for the consumer to literally shift from one firm’s product to another. This further
strengthens the customers’ ability to having an influence PepsiCo. In addition to that, customers are
having very thorough information for them to make easily choices for them and purchase anyone’s
product. Also, substitutes are another reason for the buyers to stay away from PepsiCo products. Based
on this component or information of the Five Forces analysis, PepsiCo have to make sure or must ensure
customer satisfaction to maximize its revenues.

7.3 Bargaining Power of PepsiCo’s Suppliers (Weak Force):

PepsiCo must have to maintain profitable relationships with suppliers. This component of the Five Forces
analysis gives us the information that covers the impact of suppliers on the company’s industry
environment. The weak bargaining power of PepsiCo’s suppliers can be attributed on the following
external factors:

 High overall supply for the PepsiCo (weak force)

 Low forward integration of suppliers which limits their control (weak force)
 Another option is the number of individual suppliers (moderate force)

Since the overall supply is high and increases PepsiCo’s options in acquiring raw materials, thereby
reducing or limit the bargaining power of their suppliers. This power is also weakened or limited because
of the less or low forward integration, which limits suppliers’ control of PepsiCo’s supply chain. Hence
these external factors weaken suppliers’ influence on the company even though some of them are not
very small and are moderately sized or large firms. This component of the Five Forces analysis proves that
suppliers’ bargaining power are a low priority for PepsiCo.

7.4. Threat of Substitutes or Substitution (Strong Force):

Since the PepsiCo’s knows that their products could be substituted, based on consumer preferences and
other factors. The influence of the substitution on the firm’s business and industry environment are
analyzed in this component of the Five Forces analysis. The following external factors are responsible to
the strong threat of substitutes against PepsiCo:

 High performance by the substitutes (strong force)

 Low switching costs for consumers (strong force)
 High availability of substitutes for customer (strong force)

Many of the substitutes to the PepsiCo’s products are good quality and satisfactory. For example,
consumers have the option to easily enjoy real fruit juices and brewed coffee products instead of drinking
Pepsi carbonated drinks or Tropicana products. In addition to that, PepsiCo consumers can easily shift to
these alternatives, which are generally easily affordable. Also, since most of these alternatives are easily
and widely available in grocery stores and other local providers. Based on this information by the
component of the Five Forces analysis, these external factors make the strong threat of substitution a
priority and pressing issue facing PepsiCo.
7.5. Threat of New Entrants or New Entry (Moderate Force):

PepsiCo have to and must remain strong despite the fact that there is possibility of new firms competing
against it. This component of the Five Forces analysis covers the influence of new entrants or new firms
in the market of the food and beverage industry environment. The external factors that maintain the
moderate threat of new firms against PepsiCo are as follows:

 Low switching costs for consumers (strong force)

 Moderate customer loyalty for the PepsiCo brand (moderate force)
 High cost for the new entrant for their brand development (weak force)

New firms are a threat PepsiCo because consumer’s having the choice can easily shift from one company
to another (low switching costs). However, through moderate customer loyalty by the consumers for the
brand, PepsiCo has a corresponding level of protection from new entrants. Also, the high cost of brand
development for the new entrant makes it difficult for new entrants or competitors to directly compete
against PepsiCo, which has one of the strongest brands in the industry. This component of the Five Forces
analysis, determine that these are the external factors make the threat of new entrants a secondary
concern for PepsiCo’s management.

8. THE EXTERNAL FACTOR EVALUATION (EFE) MATRIX :

EFE Matrix can be used also by organizations and companies. EFE Matrix is used for summarizing and
evaluating cultural, demographic, environmental, cultural, political, governmental and competitive
information. So we can say that this tool is used to or is the matrix for finding external opportunities and
threats.

8.1. External Opportunity:

 The first external opportunity for Pepsi is to spend in snacks and beverages industry like lays
product. PepsiCo has made investments in many Asian countries like China, India as well as
Europe so that they can increase their market share as these countries are among the fastest markets
in the world. If PepsiCo is successful in their endeavors it will result in increasing its revenue and
global market share all over the world. With this, the company have to rely less on USA market
will be able to rely less on United States market.

 Secondly, the company will also acquire companies in which they see potential to increase profit
e.g. Pepsi recently reacquired ownership of two largest bottlers. Pepsi Bottling Group (PBG) and
PepsiAmericas (PAS). Non-carbonated products are making up-to 40 % Pepsi Co volume as
 compared to 13 percent 10 years ago. PBG and PAS only distribute round about 75 percent of
Pepsi drinks in the United States. In addition, to this PepsiCo also acquired companies with
potential for becoming a brand like Quaker to also compete in the breakfast cereal market.

 Thirdly, they also promote companies through sponsoring. Nowadays, people are usually very
interested in musical groups as well as cultural shows and providing opportunity to increase sales
through them. For example in Pakistan Pepsi battle of the bands. Furthermore, many reality shows
also are demanding for healthy foods and fighting obesity. Which increased the demand for healthy
food as well as beverages. PepsiCo has an opportunity to expand its product range with beverages
and snacks having low amount of sugar.

 Fourthly, launching products in market with price less than the competitors. In the current situation,
PepsiCo are assuming that the product usage in the target market which consisting of young
generation is increasing day by day. Therefore, it is important for the company to price their
products to ensure that their product is marketable as well as affordable. For example, the prices for
are $4.00 per fl.oz of Pepsi can. In comparison to coke $4.33 per fl.oz which is slightly higher. This
ensure the company also entering rural areas.

8.2. External Threat:

 First of all, the external threat that can be identified is the change in customer life style and pattern.
The economic successes in developing as well as developed countries resulted in considerable
improvements in public’s quality of life. Customers are demanding for more high quality products
to serve their needs. Customers are one of the stakeholders who can easily decide the external
movement of the company which affect the company financial position as they are buyers of the
company. PepsiCo must adapt with the modern lifestyle as they are doing business in traditional
way such as providing options for online purchase.
 Secondly, PepsiCo are facing fierce competition from coke brand which is having the largest
market share. Coke has 47 percent share as compared to Pepsi 44 percent. Coke is the brand known
all around the world being the largest producer as well as distributor of the colas in the world.
PepsiCo are facing decreasing gross profit and net profit margins during the recession of 2008
while Coke was less effected and continued to expand.
 Thirdly, the changes in consumer taste can be external threat to companies like Pepsi Co. In these
days, the consumers around the world are becoming more and more health conscious and reducing
their consumption of carbonated drinks. It is a well-known fact that carbonated drinks contains
large amount of sugar, calories as well as fats. Customers are getting more conscious about their
 eating habits and overall general health. So they are leaning towards sugar free, caffeine fee and
energy directed.
 Last but not least, another external threat for Pepsi Co is the problem of water becoming scarcer.
Nowadays, water is becoming scarcer all round the world and which results in increasing in cost as
well as criticism for Pepsi for using large amount of water for their production. Pepsi Co are highly
dependent on supplies for clean water tom prevent infectivity. Working together with Water.Org,
PepsiCo Foundation commits to accelerating access to safe water in area where these necessities
are not present.

KEY EXTERNAL FACTORS WEIGHT RATING WEIGHTED

SCORE
OPPORTUNITY
1 Growing beverages and snacks consumption in 0.18 4 0.72
emerging markets
2 The company will acquire companies with potential 0.10 2 0.20
to increase profit
3 Promote products through sponsoring 0.15 3 0.45

4 Launching product in market for lower price than the 0.15 3 0.45
competitor

THREAT
5 Change in customer lifestyle and pattern 0.15 4 0.60
6 PepsiCo fierce competition from Coca-Cola 0.08 2 0.16
7 Changes in consumer tastes 0.11 3 0.33
8 The problem of water scarcity 0.08 2 0.16
TOTAL 1.00 3.07

Result:

THE WEIGHTED SCORE OF 3.07 TELLS US THAT THEY ARE SOING AN EXCELLENT JOB OF CAPITALIZNG ON
OPPORTUNITIES AS WELL AS TRIYNG TO OVER-COMING THE THREATS.

9. THE INTERNAL FACTORS EVALUATION (IFE) MATRIX:

 The IFE matrix is a summary step for conducting an internal analysis or audit for the organization. This
tool which is formulated to summarize and evaluate the major strengths and weaknesses for the
functional areas of the running business. It can also be used to identify and evaluate relationships among
these areas of the businesses.

9.1. Internal strength:

 One of the strengths of the Pepsi can found in its strong brand equity. PepsiCo has a strong brand
name in the world and also it is well known all around the world. The PepsiCo Company is one of
the biggest global brands in terms of revenue value which is estimated to be around $43251 million
in the year of 2008. Also it has a very good reputation in almost all the countries which include
Japan, China, India, Europe, Mexico etc. For this reason it has a very strong position
internationally

 Next internal factor is that PepsiCo has very competent marketing department which has 40
slogans and also they are sponsoring different events to attract more new customers. The company
also believes in that the image of good relation with the franchise market which is sharing large
number of diversity businesses and are also being socially responsible are important. Also PepsiCo
has a very broad distribution network of beverages through different channels. PepsiCo marketing
strategy is also highly dependent on making catchy slogans which can stuck in customers mind.
For example in the year 2009, the slogan Pepsi developed was “Every Generation refreshes the
World”. Besides that PepsiCo is also sponsoring events, musical concerts and walks which are
specially targeting young generation.

 Moreover, PepsiCo has the largest part of the market share after Coca-Cola is another strong plus
point of the company It gives the company a competitive advantage in the market place. PepsiCo
financial data is very good as its revenues are increasing from $35 billion in 2006 to over $43
billion dollars in 2008. Besides that according to Euro monitor International stated that PepsiCo is
planning and making a strategy to overtake Coke in China in which the Coke is currently holding
47.3 percent market share as compared to Pepsi which has 44.5 percent share. PepsiCo also has a
very large market share since it is targeting mostly young customers or have a very young target
audience and there customer’s tend to be more loyal.

 Lastly the internal strength of the PepsiCo is that it is always innovating. The company has a wide
diversity of many smaller brands through which they are able to offer a large product range which
 consists of beverages as well as high quality snacks to gain customer loyalty. PepsiCo also have the
advantage of having high bargaining power on their suppliers.. PepsiCo is always innovating new
food products and buying or acquiring companies such as Quaker oats, Gatorade and Doritos chips
etc. because of their own Research and Development department. PepsiCo has also try to innovate
the sports and energy drinks as it is showing the largest growth in the demand.

9.2. Internal weakness:

 First of all, one of their weakness is that their production is very expensive. This is due to the fact
that thy need to constantly develop new products due to the ever-changing needs and demands of
the customers. According to their income statement in the year of 2009 their cost for sales has been
increased from 41.3 % to 43.3% and their net income decreased from $ 5.6 billion to $5.1 billion
Also, in order to create more products the company has to borrow a lot of money from the financial
institutions .PepsiCo long term debt has also increased from $4.203 billion in 2007 to $7.5 billion
in 2008.

 Another internal weakness of the PepsiCo is that in terms of profitability is lies on the second place
behind Coca-Cola in the international market. PepsiCo doesn’t offer any type of discount or
incentive to its retailers. Since the market share of the Coal cola is higher than the Pepsi and Coke
brand is also more recognizable brand in the world, as the largest distributor and producer of the
ark colas in whole world. During the monetary crisis of 2008 the Coca Cola Company continues to
expand which according to financial position that Coca-Cola has a very strong cash position as
compared to Pepsi because of its high debt.
 Another internal weakness of PepsiCo is that they are usually over dependent on the Walmart
Unfortunately, PepsiCo revenues of more than 13 percent are coming from Walmart chains and
stores. Since Walmart has a buying power of significance which means that they can easily have
the final say on the prices which leaves the PepsiCo with very little margins. They can lose 13
percent of their revenues and their competitive advantage they loses the Walmart. So we can say
that they are too dependent on the USA market. This is the weaknesses they need to overcome
since the factors like inflation will also affect them if they are not independent

 Lastly the PepsiCo Company is also facing the consequences of some negative publicity. Since
there are very doubtful parties which are accusing PepsiCo is using and selling tap water. Since the
company is placing views of mountains on the water bottle labels which is they are trying to
suggest that they are using spring water from the mountains. So the public is claiming that
 company is trying to deceive the people that the water is from spring water from the mountains.
They are also been criticized for using pesticides in the water with higher amount of pesticides than
allowed. Due to this PepsiCo is facing brand failure in certain products. Since it is damaging their
name and it is a big problem for them and can effect customer loyalty towards the brand.

KEY INTERNAL FACTORS WEIGHT RATING WEIGHTED

SCORE
STRENGTH
1 Having a strong brand equity. 0.14 4 0.56
2 Capturing largest market share after Coca Cola 0.07 3 0.21
3 Strong advertising and marketing department which 0.10 4 0.40
is sponsoring many events.

4 Company which is always innovating. 0.19 4 0.76

WEAKNESS
1 PepsiCo production is expensive as the company is 0.17 2 0.34
always innovating and making new products to meet
the changing customer’s demands.
2 PepsiCo is usually always behind the Coca cola in 0.17 2 0.34
market share as well as revenues.
3 They are over dependent on Wal-Mart. 0.10 1 0.10
4 They are facing a negative publicity. 0.06 1 0.06
TOTAL 1.00 2.77

Result:

Thus from the IFE matrix we can understand that PepsiCo has a strong internal position. There strategies
are taking advantage effectively of the existing strengths while also try to minimize its weaknesses.

10. Competitive Profile Matrix:

A competitive profile matrix (CPM) categorizes a firm’s main rivals and its particular
Strengths and weaknesses with respect to a design firm’s strategic position. In CPM, a corporation
assess itself as well as its rivals by giving rating and weights to the critical/key success factors. It then
recognizes or know where the firm stands in strategic competitive place with its major competitors. A
firm which obtains higher or more weighted points would have the stronger competitive place than
 its rivals. We’ll be using weighted scoring system for the development of CPM. A number of the
important steps involved within the construction of CPM are given below.

 In the first column, list down all the key success factors of PepsiCo (usually from 6 to 10).

 In the second column, assign weights to each factor ranging from 0.0 (not important) to1 (most
important). Greater weights should be assigned to those factors which have greater influence on the
organizational performance. The sum of all weights must equal 1.

 Now assign points to each factor ranging from 1 to 4 for all the firms in analysis. Here, rating 1 is
representing major weakness, rating 2 represents minor weakness. Similarly, rating 3 implies minor
strength whereas rating 4 represents major strength. So we can say it means that weakness must
have to receive 1 or 2 rating while strength should get 3 or 4 rating.

 So we can calculate weighted score by multiplying each factor’s score by its rating.

 In the last step find the total weighted score of all the firms by adding the weighted scores for each
variable.

The competitiveness of a corporation will be monitored or assessed on the idea of its general strength
rating. If there is dissimilarity among firm’s overall rating and the points of lower rated rivals are larger
than the firm has it means greater net competitive advantage. Alternatively, if the dissimilarity among a
firm’s overall rating and the points of higher-rated rivals are larger than it means the firm has net
competitive advantage.

PepsiCo Coca-Cola Dr Pepper

Snapple
Group
Critical Success Weight Rating Weighted Rating Weighted Rating Weighted
Factors score score score
Advertising 0.12 4 4 0.48 3 0.36
0.48
Price 0.11 3 3 0.33 2 0.22
Competitiveness. 0.03
Product diversity 0.1 4 0.4 4 0.4 3 0.3
Market Share 0.1 3 0.3 4 0.4 2 0.2
Company Image 0.12 3 4 0.48 3 0.36
0.36
Customer Loyalty. 0.12 4 4 0.48 3 0.36
0.48
Financial Position 0.09 3 3 0.27 2 0.18
 0.27
Sales distribution 0.08 2 4 0.32 4 0.32
0.16
Product quality. 0.09 4 4 0.36 3 0.27
0.36
Global Expansion 0.07 3 4 0.28 3 0.21
0.21

Total 1.00 3.35 3.8 2.78

Result:

In the above matrix, it demonstrates that PepsiCo is runner-up with 3.35 points and has the second
largest market share. Coke is the market leader and dominates its rivals with highest points of 3.8.
Dr. Pepper is the weakest rival among other three with the score of 2.78. This Matrix also shows
that Coca-Cola is strong in all the aspects of rivalry than our company PepsiCo and has strong
position in the market place than PepsiCo.

11. SWOT Matrix:

SWOT analysis lists down the strengths, weaknesses, opportunities and threats to any organization, but
does not tell management exactly what can be done by these. To overcome this limitation and help
develop strategies that are applicable, an advanced SWOT analysis or TOWS matrix is used. In this they
lists down the Strengths-Opportunities (SO) strategies that involve using strengths to take advantage of
opportunities. It lists the Strengths-Threats (ST) strategies that involve using strengths to fight of
potential threats. It involves the Weaknesses-Opportunities strategies that involve converting
weaknesses to their strengths by using opportunities. Lastly, Weakness-Threats (WT) strategies involve
overcoming weaknesses to avoid potential threats.

11.1. Strengths:
  PepsiCo Inc. has a very Strong Distribution network with a large amount of outlets.

 Its structure is low cost, which provides it with an edge over the competition.

 It has a strong financial position with profits in the positive reported in the past few years. It also
has a strong asset base.

 It has labor force which is skilled, qualified, innovative and diversified.

 It has a strong presence on social media with huge number of followers.

11.2. Weaknesses:

 A high proportion of property in use is now owned and is on rent, and rental charges need to be
paid.

 Low amounts of spending or funding on research and development as compared to the

competition.

 It has a high employee turnover rate, employee having low motivation and working morale.

 It is also facing liquidity problems with low quick ratio; the level of current assets is less than
current liabilities. Another problem they are facing is cash flow.

11.3. Opportunities:

 Internet users are increasing day by day around the world. With the increase in the internet usage
E commerce industry is also growing rapidly.

 Social media users are also increasing worldwide.

 Average household income is increasing and so is the consumer spending. Inflation in the
economy is also expected to be remain low.

 Since there is a growth in environmentally friendly products and services. Government is also
offering subsidies on these.

 Interest rates are being low, which means there is an investment opportunity for large projects.

11.4. SO Strategies:
  Increase their marketing efforts to attract consumers to spend (S1, S3, O3).

 Using its presence on social media for the purpose of marketing and to attract customer towards
its website (S5, O2, O3).

 Develop the products which are environmentally friendly through innovation, at keeping their
cost low so that they could be sold at a low price (S2, S4, O4).

 Market their products at low prices by offering consumer discounts. This would help increase sales in
volumes and is also feasible due to low inflation and cost (S2, O3).

11.5. WO Strategies

 Finance the ownership of the property through low interest rate to increase the proportion of
property which is owned to rented property (W1, O5).

 Increase payrolls, provide incentive packages and benefits to their employees to reduce the rate
of turnover and improve work morale. This could be manageable as costs are low currently. (W3,
O3)

11.6. Threats:

 There is a threat of new entrants coming into the market.

 The exchange rate has been decreased or devalued.

 Also due to the rise in fuel in recent years making inputs expensive.

 Competition within the industry is increasing due to the new entrants.

 More substitute products are available for consumer.

11.7. ST Strategies:

 Using a strong distribution network to reach out to customers before competitors and also to
fight off new entrants into the market (S1, T1).

 Use its strong financial position wisely to start investing in intellectual property rights. This would
help them compete with increasing competition in the market (S3, T4).

 Use its resources and innovative teams to find cheaper alternatives to fuel so that these could be
used, thereby reducing costs their costs (S4, O3).
11.8. WT Strategies:

 To increase spending on research and development to enable PepsiCo Inc. to better compete with
competitors (W2, T4).

 Provide incentives, increase engagement, or provide a better work environment to retain talent
and to decrease turnover rate. This will ensure that employees don’t leave and join their
competitors (W3, T4).

12. Space Matrix:

The Strategic Position and Action Evaluation (SPACE) Matrix is one of the tools of strategic management
for the purpose of analyzing the company and its environment in order to formulate the strategies. It
consists of four-quadrants which are used to specify whether an aggressive, defensive competitive or
conservative strategies is mostly suitable for a given organization, company or business.
Competitive position:

Brand Recognition -3 Mean= -2.75

Large Market Share -2
Wide Distribution Channel -2
Customer Loyalty -4
Financial position:
Inventory Turnover +5 Mean= +4
Return on Asset +4
Net Income +3
Industrial position:
High Industry Growth Rate +5 Mean = +3.75
Profit Potential +3
Financial Stability +4
Resource Utilization +3
Stability position:
Economic Stability -2 Mean = -2.33
Barrier to Entry -2
Competitive Pressure -3


CP+IP= +1.0


FP+SP = +1.67

Result:

The SPACE Matrix tells us that PepsiCo should continue to pursue their aggressive strategy. Since
company has a strong competitive position in the market also with a rapid growth. PepsiCo needs to use
its internal strengths to develop a strategy for market penetration and market development strategy.
This can also include product development, integration with other companies, and acquisition of
competitor.

13. BCG matrix of PepsiCo:

Conglomerate like PepsiCo is not easy to manage since it has many different segments and each of them
compete in a different industry. That’s why each segment of the company usually requires a special
attention from the upper level management for the strategic planning.
Let’s suppose what will happens if the top level management decides to implement same strategy for
every segment? The answer is simple it will fail since every segment requires a different and unique
strategic plan according to their share in the respective markets.

In order to solve the above dilemma many different tools are available for the management to formulate
strategies which are unique. One of the tools is BCG matrix. This frame work was designed by the Boston
consulting group which is a private consulting agency. This frame work is four dimensional which depicts
the multiple according to its relative market share and sale growth. It consists of four components
namely, Dogs, Cash Cows, Stars and Question marks.
13.1. Question Mark:

So according to the BCG matrix Question marks are representing those segments which are usually
operating in high sales growth industry and are capturing a low percentage of market share. So we can
say that Quaker Foods North America (QFNA) is the segment of PepsiCo which is falling into the category
of Question Marks. This segment is particular responsible for manufacturing, distributing and selling
breakfast bars and cereal. QNFA was having a share of revenue of 3.56% of their total revenue and their
market share was also low round about 1.02%. PepsiCo have to increase the share of QNFA by using
horizontal integration and bring back the segment into the fold of stars.

13.2. Stars:

These are the segments which are operating an competing in high sales growth industry and are having a
relatively high market share are usually fall into the category of Stars. Fortunately for the PepsiCo
Company they have many Star segments since it is the largest beverage and food processing corporation.
North America Beverages (NAB), Europe Africa and Latin America are the segments of the company
which are Stars. NAB segment manufacture soft drinks and bottled water with different brand names. For
example Aquafina, Mountain Dew and Sierra mist. In the year of 2015 NAB generated 33% of the total
revenue of the corporation which was $20.6 billion and was having a market share of 10%.

13.3. Cash Cows:

Cash Cows are usually referring to those segments which are having a high market share and are
operating in low industry sales growth rate. Frito-Lay North America (FLNA) segment can also be included
into the category of Cash Cow. This segment has witnessed growth in the revenue as compared to
previous years despite the declining of industry sales growth rate. 22% of total revenue was generated by
FLNA. This segment usually deals in snacks and their prominent products are as follows; Tostitos tortilla
chips, branded dips, Lay’s potato chips, , Cheetos , Ruffles potato, Fritos corn chips, Ruffles potato chips.
FLNA can be considered as the back bone of the company since these segments will be able to keep on
generating revenues for the company for a long time.

13.4. Dogs:

Dogs are the segments which are considered to be futile segments of the company. These segments are
embracing the category of having relatively low market share as well as low sales growth industry.
Fortunately for the PepsiCo none of the segments can be included in this category of segment. However
we can say that, seasonal and experimental products like Pepsi Real Sugar can be included.
14. IE Matrix:

The Internal-External (IE) matrix is a strategic management tool used in order to analyze the strategic
position and working conditions of a firm. The Internal External Matrix is primarily focused on analyzing
the internal and external business factors which are combined into one suggestive model. This should
also be noted that IE matrix is a continuation of the EFE and IFE matrix models.

This IE matrix can be divided into three different categories that have different strategy implications.
Cells I, II, and III suggests us the strategy of growth and build. This means using of tactical and aggressive
strategies. Your company strategies should be focused on market development, product development.
From the operational point of view or perspective, a backward integration, forward integration, and
horizontal integration should also be considered.
Cells IV, V, and VI suggests us the hold and maintain strategy. In this case, the tactical strategies should
be focusing on market penetration and product development.
Cells VII, VIII, and IX are symbolized with the harvest or exit strategy. If the costs for rejuvenating the
business are less, then it should be attempted to revitalize the business. In other cases, aggressive cost
management is a good way to play the end game.

Result:

Since our EFE sore is 3.07 and IFE score is 2.77 it means that we should the company should grow and
build its position. And use aggressive and intensive strategies. And focus on penetrating the market, and
product development.
15. GRAND STRATEGY MATRIX of PepsiCo:

RESULT:

According to the figure PepsiCo comes in the first quadrant. The company must focusing on their current
market and can achieve growth by adopting marketing penetration strategies and product development.
Since the company has abundant amount of resources and competitive advantage over their competitors
so it can achieve growth by adopting the backward and forward integration strategies. PepsiCo can also
adopt the related diversification strategy to reduce its risk with broad portfolio of products or product
line. PepsiCo can also afford to take benefits of external opportunities in many areas. It can being
aggressive by taking risk when necessary.

16. QSPM OF PEPSICO:

Increasing the Introducing the

Key Internal Factors Weight advertisement / energy drinks
 Marketing Budget

Strengths AS TAS AS TAS

1: Strong Brand 0.09 2 0.18 2 0.18
2: Strong marketing and advertising of 0.07 2 0.14 4 0.28
products around globe

3: Products availability 0.08 --- --- --- ---

4: Profits and revenues 0.08 1 0.08 --- ---

5: Market share 0.07 --- --- --- ---

6: Working Environment 0.05 --- --- --- ---

7: Having a wide variety of products 0.05 --- --- --- ---

8: Earning per share 0.02 --- --- --- ---

Weaknesses

1: High debts 0.07 --- --- --- ---

2: Health Issues 0.08 --- --- 2 0.16

3: Facing issue of low sales in some products 0.09 --- --- --- ---

4: Negative impact on brand image due to 0.10 --- --- 1 0.10

product recall

5: Lacking the product focus 0.05 --- --- --- ---

6: Operating expense is high 0.10 2 0.2 2 0.2

SUBTOTAL 1.00 0.6 0.92

 Increasing the Introducing the
Key External Factors Weight advertisement / energy drinks
Marketing Budget
Opportunities AS TAS AS TAS
1: Easily penetrate the markets 0.09 --- --- 4 0.36

2: Operate in the fastest growing industry 0.10 --- --- 2 0.3

(noncarbonated drinks)

3: Social trends are changing (healthy foods) 0.10 --- --- 3 0.3

4: Media promotion and vending machines 0.10 4 0.4 2 0.2

5: Having Partnerships with well-known

brands 0.07 --- --- --- ---

6:More sport tournaments are being held 0.09 3 0.27 2 0.18

worldwide

Threats

1: Facing Strong competition in every division 0.10 --- --- --- ---

2: Growth of energy drinks in carbonated 0.08 --- --- 2 0.16

drinks sector

3: Mature industry 0.10 --- --- --- ---

4: A few Frito Lay products resulted in 0.07 --- --- --- ---

abdominal cramps in consumers

5:Aggresive top management strategy by 0.10 --- --- --- ---

competitor
 SUB TOTAL 1.00 0.67 1.5

SUM TOTAL ATTRACTIVENESS SCORE 1.27 2.42

Result:

According to the QSPM,), we have the choice of two alternative strategies for the company and after
analyzing the total attractiveness of two alternatives, we come to the conclusion that the introduction of
new product line strategy is more attractive and suitable for the company.

17. CONCLUSION:

The PepsiCo is a company that is very effective in maintaining the loyalty to their customers, while also
working on the consecutive growth the ultimate goals to maximize their profits. PepsiCo could also be
doing a good business with the marketing techniques. Furthermore, Pepsi can easily improve its products
to meet the demands of more consumers, especially in the market which are unexploited. The strategic
management group and marketing strategy could also work on diversifying customer segmentations to
satisfy more races, age groups, cultures, and people that are in less developed areas. Since every
company is always trying to improve their business day by day to keep up with the changes of customers’
expectations and demands, but the Pepsi Cola Company is getting close to Coca Cola. The success of
PepsiCo is continuing to be grow as they always put their customers is on the top in their priorities.

18. REFRENCES:

http://www.marketingteacher.com/pepsi-swot/
https://finance.yahoo.com/q/ae?s=PEP+Analyst+Estimates
http://www.reuters.com/article/2010/01/19/idUS116177+19-Jan-2010+BW20100119
http://www.authorstream.com/Presentation/crystalmcmahan-1865748-powerpoint-project-
pepsico/
http://www.pepsico.com/Investors/Stock-Information
http://www.strategicmanagementinsight.com/products/swot-analyses/coca-cola-swot-
analysis.html
http://balancedscorecard.org/Resources/Strategic-Planning-Basics