PepsiCo

Supervisor: Miss Asma Awan

Submitted by: Bakhtawer Shabbir
Roll number: BE-33
MBEcon 4th semester
Session: 2018-2020
PEPSICO BUSINESS REPORT
Table of content

Abstract
Introduction
Literature review
Methodology
Mission& vision
Analysis
Conclusion
References

ACKNOWLEDGEMENT:
 I am the student of master in MBEcon. I have to do
research work on the PEPSICO for the purpose of final project.

Firstly, I would like to express my gratitude to the

almighty Allah for giving me the strength and knowledge to complete this
project with in due time successfully.

After that I am thankful to my special teacher “MAM

ASMA AWAN”. And thanks to the department of economics MBEcon
program, faulty of department and vice principal of Punjab University
who gave me the golden opportunity to do this wonderful project on the
topic of “PEPSICO” which is also helpful to do a lot of researches and
through this project I know so many new things.

Finally I am also thankful to my parents, family and

friends who also helped me to complete my project with in limited time. I
am making this project not only to obtaining the marks but to also increase
my knowledge.

THANKS AGAIN TO ALL WHO HELPED ME

ABSTRACT:
 This study is relates to the market strategies of Pepsi
Company which are implemented by the company to stabilize the business.

Pepsi- cola is carbonate beverage which is produced

and manufacture by PepsiCo.it is sold in retailor store, restaurants and
vending machine. The drink was made in since 1890’s by pharmacist Caleb
brad ham in New Bern, North Carolina. On 1903 June 16 the brand was
trademarked.in this year they produced many variety over the year since
1903,including diet Pepsi, crystal Pepsi, Pepsi twist, Pepsi max , Pepsi
samba, Pepsi blue, Pepsi gold, Pepsi holiday spice, Pepsi jazz, Pepsi

X(available in Finland and brazil).Pepsi ice cucumber in japan etc.

This company is well known company which is loved by its

customers. We are discussing some of the facts of this company which
includes SWOT, PEST, BCG MATRIX, PORTER FIVE FORCE and ratio
analysis.

So the business and financial strategies can save the company

from its operations to be ended and to retain the feasible number of sales
such as “RC” a prominent manufacture of beverages was run out from the
market because they were not aware of world business trends and their
self-competitiveness becomes challenge for them.
 Resultantly we can say that this report is comprehensive
overview of PepsiCo beverages market in relation to other markets.

We are gathering information from secondary source, such like

PepsiCo website, academia research engine, internet etc.

INTRODUCTION:

The proprietor of the Pepsi is Caleb Bradham, who is basically

a pharmacist and drug store owner in New Bern North CAROLINA in the
USA in 1890.then it is introduced by “brad drink”. After that it was changed
into the “PepsiCo” on 28 august 1898.

He was starting with the past experiment to create the new

refreshing drinks for the customer. Then he was launched a new drink
experiment with some special juices and syrups. Then he introduced his
drink with the name of pepsi-cola in 1902. And then it has the trademarked
on 1903 June 16.

Caleb bradham was purchased the name “pep kola” from a

local competitor and changed into Pepsi cola. “Pepsi cola” is modified from
the “Episcopal” an outsized the quantity of bradham’s drugstore. He and his
customers thought the name sounded well or that drink had some
reasonably “pep” in it and also was a carbonated drink.

So they provide it the name “Pepsi”. Initially Pepsi was curing

the stomach pain; they believe that coined the name Pepsi from either the
condition of dyspepsia. Pepsi was made with carbonate water, kola nuts,
sugar, vanilla, rare oil. And whatever include ingredient.
 CALEB BRADHAM incorporates his company in1919 with
Delaware. His company experienced the many years of success leading up
to the world war1.during war the rationing of sugar is falling down and
company faces the financial crises in 1923. After that he declared bankrupt
and returned to the running pharmacies in the North Carolina

On 8 June, 1923, CRAVEN Holding Corporation was

purchased the company trade mark and secret recipe. After that ROY
MEGARGEL purchased the company trademark, name, business and
goodwill from the CRAVEN HOLDING in association with CHARLES GUTH
in 1931. ROY MEGARGEL is known as Wall Street broker.

Guth was the president of “loft incorporated” compgy8any

which was established in the island city of New York. Guth used the loft
incorporated company’s labs and chemist to reformulate the Pepsi syrup
recipe.

After that Guth used his position in company and replaced

coca cola with the pepsi-cola in his restaurants and shops. He used the
different resources to promote the Pepsi cola. After that pepsi-cola
expanded its product lines and create the Diet Pepsi and after some time
purchased the mountain dew. In 1965 the pepsi-cola company was merged
in Frito-Lay, Inc. and introduced with the new name PepsiCo, Inc.

PepsiCo was incorporated in the state of Delaware and its

headquarter is exit in the city of Manhattan of New York. Then in 1970 the
company’s headquarters was relocated in New York .after that the
company was reincorporated in the state of north Carolina in 1986.after 39
years of success company moved its shares from new york to Nasdaq on
20 December, 2017.
LITRATURE REVIEW:

In the reality, physiological factors are influenced on the

sales of the goods and services of the brand. As results believes and
mental attitude are required hence they effect the buying behavior of
customers. (black well 2001)

Kotler says that cultural factors life experience sub cultures

and geographical areas influence the market f MNC’s like PepsiCo and
coca cola. (Kotler 2005, black well 2001)

In the article (Hogg, Solomon ET all) explains the age group

impacts the behavior and trend of towards buying any product. The cold
drinks and snacks that are manufactured by the PepsiCo are liked by the
teenagers and children rather than the old age people. (Solomon, Hogg
and askegaard)

The customer buying market is influenced by age, gender,

income, education level and tastes the reasons that why people buy such
things is deeply rooted in their minds and marketing tactics of bigger
brands like PepsiCo and coca cola (arm strong 2005)

Brand awareness in a region allows customer to identify with

the brand product. So the good awareness of the description of product
allows the sales to increase to the significant level. (Aaker 2008)

METHODOLOGY:
 The information of this report is taken out from the multiple resources,
which are all listed in reference list of this report. Data is collected from the
publications, websites, different news like, business recorder and Jung
newspaper and these resources are proved valuable. This report is not a
comprehensive report but provide a broad overview of this topic.

MISSION:

Create more smiles and happiness with the every sip and every bite.

FOR OUR CUSTUMER:

By creating the possible partner to provide the innovation and
improving the level of growth.

 FOR OUR CONSUMER:

 We create the joyful movements from our delicious products
and unique experience.

 FOR OUR ASSOCIATES AND COMMUNITIES:

We are creating the useful opportunity to work and gain

skills and produce successful careers.

 FOR OUR PLANET:

We consume natural resources and forecasting a
reasonable planet for our children.

VISION:

PepsiCo’s vision is to be the leader in convenient foods and liquid

refreshments by winning with the purpose.

This is reflects to our ambition to win the feasibility in the market

place and achieve the top line growth. Whilst keeping our commitment to
do the good for our communities. PepsiCo was founded in 1965 and
foundation makes the growth and prosperity for new era. To achieve the
vision we have a new set of aspirations: to become the faster stronger and
better.

ANALYSIS:

Our project is based on SWOT, porter five forces, PEST, BGC and ratio
analysis.

1) SWOT ANALYSIS:

In Swot analysis we discussed about the strengths, weakness,

opportunities and threat
STRENGTHS:

The strength shows the internal and external powers of the

company. These are the following strength of the PepsiCo.

 Brand strength:
Pepsi provide the very good distribution for more than 200
countries.

 Capital:
Pepsi has the huge amount of capital. This capital is more
useful in business for different purposes.

 Strong leadership:

Pepsi has the best leading skills in foods and beverages.

 Customer loyalty:

Pepsi has an extraordinary loyal customer base. All of its drinks

have an iconic taste that is the reason the customers do not
shift to another brand.

 Clear audience:

Pepsi has target to the children and youngsters through their

commercial ads.
WEAKNESS:

 Competition:

Coca-Cola is the big

competitor of PepsiCo in the categories
of the soft drinks. The customers which
are not loyal quickly moved to the other
brand.

 Product perceived as unhealthy:

Mostly the drinks that are provided by the PepsiCo are not
good for the health.

 Product dependence:

PepsiCo is only deal in the food and drinks which is not

good in the longer run.

 Failed product:

Most of the failed products like “crystal Pepsi” makes a

bad impact on its goodwill.

 Value addition:

Pepsi is only focused on youngsters on advertisement

but coca cola is focused on everyone.
OPPORTUNITIES:

o Healthy option:

They should focus on the health and use the health

conscious drinks. The diet Pepsi which is provided by them is the
good step.

o Research and development:

The new production of its “stevia” and “Pepsi next” can

prove a big source of success.

o Flavors:

Pepsi has the big opportunity to provide the large number

of flavors through that PepsiCo can stay in market of longer time
period.
 o Corporate social responsibility:

Pepsi can perform more CSR activities to handle the

negative remarks that can hurt the company’s image.

THREATS:

Competitors:

Coca-Cola, Kraft food, mondelze and nestle are the

big competitors of PepsiCo.

Economic slowdown:
 Due to the cash crunch in the country the PepsiCo
has the low level of sales. Inflation and deflation are the other threats
of it.

Government norms:

Different government rules are the big threats of the

PepsiCo. Different political conditions are composed by the
government to the public.

Health factors:

This company provides the unhealthy products

which are not taking by the health conscious consumers that is the big
threat of the PepsiCo.

2) PORTER FIVE FORCES ANALYSIS:

Porter five forces analysis is developed by Michael porter. This model

is determining the significant external factors that affect the firms.
PepsiCo’s business progress is linked with its capabilities. So, the
overall of these factors and correlation with five forces are
summarized as follow: with the measurement of their strengths of
their forces on PepsiCo.
  Competition
 Threat of new entry
 Threat of substitution
 Bargaining power of buyer
 Bargaining power of customer or supplier

Competition:
In market every firm has its competitors. With the
reference of PepsiCo the coca cola is the big competitor. Coca-Cola
Company provides the low cost beverages to its customers so the
customers can easily move to other brands. In this high aggressiveness of
firms and low switching cost have strong force and number of firms having
moderate force.
Threat of new entry:
In the market the PepsiCo has the big
threat of new entries that can effects the PepsiCo goodwill. With the
reference of the five porter analysis the low switching cost has the strong
force, customer’s loyalty has the moderate force and the high cost of brand
development has the weak force.

Threat of substitute:
PepsiCo has the big threat of its substitutes
which can affect its sales. With the point of five porter analyses the high
performance and high availability of substitutes has the strong force.

Bargaining power of buyer:

In PepsiCo’s mission statement the
consumer are the main priorities. In this component of five force analysis
the effect of customer’s behavior is determined on the firm’s environment.
In this the high access of product information and availability of substitutes
having the strong force.

Bargaining power of supplier or customer:

PepsiCo has the profitable relationship with
their suppliers. This factor covers the impact of suppliers on the company’s
industry development. In this factor high overall supply and low forward
integration of supplier has the weak force and moderate size of individual
suppliers has the moderate force.
3) PEST ANALYSIS OF PEPSICO:

In PEST analysis we discussed the political, economic, technical and social

factors of PepsiCo.

Political factor:
This component of PEST analysis takes the effects of
governmental actions on the company’s environment. Government is also
the external factor that implements the decision on the company.
Government restricts the PepsiCo to use the fewer amounts of carbonates.
Labor union may also influence the company’s income.
Economical factor:
PepsiCo’s performance is linked with the economy.
In this element of PEST analysis we discuss the impact of economy
conditions on the environment of PepsiCo. PepsiCo has the opportunity to
develop and expand the business with the economic stability. PepsiCo’s
international sales may be influenced by the low prices of the competitor’s
product.

Social factor:
Most of the PepsiCo’s customers use the sociocultural
trends.in this factor we discuss the impact of social conditions and changes
on the company’s environment. Most of its drinks like: pepsi-cola have the
negative impact on the customer’s health. However, the consumers are
health conscious today and stay away from the cola drinks. Every
consumer has the different income so the PepsiCo made its drinks in
reasonable price which can be purchased by every consumer.

Technical factor:
In this factor of PEST analysis we examined the link
between the technological changes and PepsiCo’s environment. Company
has the opportunity to increase the automation in business. PepsiCo has
the opportunity to improve the knowledge management system and to
moderate the research and management investments in food and
beverages industry.
4) ANALYSIS OF BCG MATRIX:

The BCG matrix is used by the businesses to classified their business into
four categories like: dogs, Cash cows, star and question mark. It is also
known as growth share matrix.
  Cash cow product:

Cash cow products are that products which have the low
growth market with high share price. These products require the very
low investment to sustain the leadership and are profitable in the market.

 Star product:

Stars products are that which have the high growth market
with high market price. Simply companies are interested to invest in that
project. These projects make the high profitable values in market. By this
investment companies make the high reputation in the market.
 Dog product:

Dogs are that product which have lower share market

price and which have the very few chances of growing in the market.
The investment strategies of this project are very thoughtful by the
management because it does not give any profit to the organization.

 Question mark product:

Question mark products are that which have the high

growth market with a low market share. In this the small market shares
are taken by the organization to take the future outlook. The investment
decision of this project is very risk full.
FINANCIAL RATIO ANALYSIS:

Financial ratios of PepsiCo can be calculated according to its liquidity,

solvency, short term activity and its long term activity.

LIQUIDITY RATIOS:
It includes the current, liquidity and cash ratio.

Current ratio:
The current ratio of the PepsiCo tells us that how much its current assets are able to
pay its current liabilities,

Current ratio can be calculated by its dividing ratio between current assets and current
liabilities.
FORMULA:
Current ratio = current asset / current liabilities

TABLE:

By showing the table we can easily elaborate the current ratio of PepsiCo from 2016 -
2019

Selected financial data is (US$ in millions)

2015 2016 2017 2018 2019

Current 23031 27089 31027 21893 17645

assets
Current 17578 21135 20502 22138 20461
liabilities
Current 1.31 1.28 1.51 0.99 0.86
ratio

INTERPRETATION:
In the above data we have discussed about the current ratio
analysis of different years.

In 2015 the current ratio of PepsiCo was 1.31 that was good for its
reputation means company’s current assets are more than to pay its current liabilities. In
2016 the current ratio of company was 1.28 that means company was in favorable
position. In the next year 2017 company goes to the progress and exceeds its ratio from
1.28 to 1.51 that was good for its position.

But in 2018 and 2019 company was going down that means its currents assets are not
able to pay its current liabilities that was not good for its position.
GRAPH:

CURRENT RATIO
1.6
1.4
1.2
R 1
A
T 0.8 CURRENT RATIO
I
O 0.6
S
0.4
0.2
0
2015 2016 2017 2018 2019
YEARS

INTERPRETATION:
The above graph shows the current ratio of PepsiCo. In this graph
we can see that in 2017 the company’s current ratio is most favorable as compare to
the previous and next years. That means in this year the company’s capacity is good as
compare to the other years.

Quick ratio:
The quick ratio is the indicator of the PepsiCo’s short term liquidity
position in the market. Quick ratio measures the company’s ability to meet its short term
obligations with its most liquid assets. The quick ratio is also called the acid-test ratio.

Quick asset includes all the short term securities like cash, bill receivable and restricted
cash etc.
FORMULA:

Quick ratio = quick assets / current liabilities

Quick assets = cash in hand+ short term investment+ debtors+ B/R

TABLE:

Selected financial data is (US$ in millions)

2015 2016 2017 2018 2019

Quick 18446 22819 26534 18132 13560
assets
Current 17578 21135 20502 22138 20461
liabilities
Quick ratio 1.05 1.08 1.29 0.82 0.66

INTERPRETATION:
In the above data we have discussed about the PepsiCo’s ratio
between its quick assets and current liabilities which tells us how much company is able
to pay its short term obligations by its current short term assets.

In the above table the company’s performance is good. In 2015

the quick asset ratio is 1.05. In 2016and it makes progress in 2017 and goes 1.08 to
1.29 that is favorable for the company. But after that company’s position goes down that
means its quick assets are not enough to pay its current liabilities in 2018 and 2019.and
that was not good for the company’s position.

GRAPH:
 quick ratio
1.4

1.2

1
r 0.8
a
quick ratio
t 0.6
i
o
0.4

0.2

0
2015 2016 2017 2018 2019
years

INTERPRETATION:
The above graph shows the years are on the below side and ratios
are on the vertical side. By analyzing these ratios and graph we can say that in 2017 the
PepsiCo position is good as compare to the other years that means in this year
company is more stable to pay its current liabilities that is beneficial for the company’s
position.

SHORT TERM ACTIVITY RATIOS:

 Short term activity ratios are that which are done within
one year. Inventory turnover, debtor’s turnover and creditor’s turnover are included in
this. In this ratio analysis we have discussed only to the inventory turnover ratio.

Inventory turnover ratio:

Inventory turnover is the measurement of number of
times that a company’s inventory is sold or consumed with in time period such as a
year. This ratio is calculated to see the inventory comparison with its sales.

Inventory turns, merchandise turnover, stock turn, turns and

stock turnover are the other names of inventory turnover ratio.

It can be calculated dividing by its cost of goods sold to its average inventory.

FORMULA:

Inventory turnover = cost of goods sold / average inventory

Average inventory = opening inventory + closing inventory / 2

TABLE:

Selected financial data is (US$ in millions)

2015 2016 2017 2018 2019

Cost of 28384 28209 28785 29381 30132
goods sold
Average 2720 2723 2947 3128 3338
turnover
Inventory 10.44 10.36 9.77 9.39 9.38
turnover

INTERPRETATION:

In the above table the data is shown from 2015 to 2019. In 2015 its turnover
is high that means company has sold or replaced its stock/inventors during a specific
time period is in the high ratio.in 2016 its ratio is decreased goes to 10.36 from 10.44
that shows how many time a company can repeats its stock with in a year.

In 2017, 2018 1nd 2019 the company’s position rapidly goes down that were
unfavorable for PepsiCo.in 2019 its turnover goes down from 9.39 to 9.38 which effects
the company’s name and its goodwill.

GRAPH:

Inventory turnover ratio

10.6
10.4
10.2
10
r
a 9.8
t Inventory turnover ratio
i 9.6
o 9.4
s
9.2
9
8.8
2015 2016 2017 2018 2019
years
INTERPRETATION:
In the above table no. of years are on the x axis and inventory
turnover ratios are on the y axis. This graph shows that in 2015 the company is on the
highest position but during the year time company goes to the down and its ratio is
decreased day by day that is not good for its reputation.

EFFECT OF COVID-19 ON
PEPSICO BUSINESS

Coronavirus (COVID 19) is fastly spread around the

world. Due to that virus every business is badly affected. As well as PepsiCo is also
effected virus is greatly effected on its sales.

On the peak of virus every person is avoided from the cold drinks
and food beverages and prefer to the home made products which is badly affect the
company’s sales.

However, a report shows that during the lockdown people stocked

up snacks like Cheetos, Tostitos, oatmeal etc. in their homes. But every business is
badly affected. With the analysis of the quarterly survey the company’s net revenue is
declined by 3% to $ 15.95 billion and its net income is goes down around 20% to 1.65
billion.

On the other hand, the online sales of potato chips and tortilla chips are
raised with the ratio of 93.5% and 101.2% according to the analysis of six months
report. This effect is the beneficial for the PepsiCo Company.
RECOMMENDATION:

First of all PepsiCo should expand its growth by implementing

the new terms and conditions. Company should provide the opportunities by improving
those areas that are on the top level of the business.

The PepsiCo needs to expand its global market shares by

reaching the world wide countries. Company needs to improve its packing and make its
packing more colorful which attracts to the consumers.

Company should introduce its products into the local areas and
make the progress in the under developing countries. Company should provide the
different bonus and incentives to its employees these things are beneficial to motivate
their employees.

At the last I recommend that company should follow that strategy

which is implemented by it in 2017. According to the analysis of financial ratios I found
that in 2017 the company is on the peak so we should adopt that polices which are
implemented during in that year.
CONCLUSION:

In conclusion, PepsiCo is the one of the most leading

food company in the world. PepsiCo is introduced by its soft drinks and snacks over the
world. PepsiCo has the true vision and mission according to its work.

The PepsiCo is well known for its quality of products. It

makes the products according to the taste and demand of the consumers. And supply
the products according to the areas.

Its strengths, weakness, threats and opportunities are

according to its work and its position into the market. The financial ratio analysis
explains its current position, its debts position and equity position into market.

Overall PepsiCo has the huge revenue as well as the big

footprint in the food market. The good strategies are implemented by the management
of PepsiCo. However, there are some areas to improve in it.
REFRENCES:

https://www.scribd.com/doc/15005409/report-on-pepsico

https://vdocuments.mx/amp/a-project-report-on -pepsi-fbkc.html

https://www.studeersnel.nl/nl/documents/erasmus-universiteit-ritterdam/marketing -
research/werkstukessay/paper-essay-Pepsi-proposal/94177/view

Black well 2001.

Solomon, Hogg and askegaard

13104203- BBA.pdf

www.scribd.com

en.m.wikipedia.org

PepsiCo terms and conditions.pk

Financial-highlights-of-last five years of PepsiCo