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PepsiCo Global Strategy Analysis

Module: International Strategy (IST)

T2 2023/2024

Student Name: Saif Al Mamari

Student No:

Prof. Aadil AlSaadi

Date: DD/MM/YYYY

Contents
Abstract:...................................................................................................................................................1
Introduction:.............................................................................................................................................1
Global Strategy Analysis of PepsiCo:......................................................................................................2
Ansoff Growth Matrix:............................................................................................................................4

Abstract:
This assignment consists of a detailed exploration done on various strategies, practices and

business decisions that were adopted by a company in their endeavour in becoming a global
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icon of a company. We are going to focus on the PepsiCo organization as an example in this

assignment. PepsiCo was selected given to the fact that the company is one of the oldest

companies in its core industry and also has one of the largest markets in the food industry.

The following sections shed light on the various aspects of the company and will give better

understanding of the various strategies used by the company, foundational elements of vision,

mission and core values which steer the company operations. The corresponding macro and

micro economic analysis are also have been discussed in detail that reveal insights into global

industry with the use of various tools like Porter’s Five Forces, PESTEL, etc. The financial

performance of the company and the corresponding metrics with the possible reasons for the

growth have also been explored that mirrors the company.

Introduction:
PepsiCo is a multinational company and one of the iconic brands in food and beverages

industry. PepsiCo products are enjoyed by consumers more than one billion times a day in

more than 200 countries and territories around the world (PepsiCo website, 2024). Founded

in 1965 through the merger of Pepsi-Cola and Frito-Lay, PepsiCo has since evolved into

multinational enterprise with the portfolio of iconic brands.

The company’s mission is to “create more smiles with every sip and every bite” (PepsiCo,

2022, para 1). PepsiCo intends to create value for its customers by making sure that its food

and beverages are appetizing and meet its consumers’ needs in the market. The vision of the

company is to “be the global leader inconvenient foods and beverages by winning with

purpose” (PepsiCo,2022, para 2). In this statement, the organization’s purpose is to be the

principal company globally. In addition, the corporation provides the means of achieving the

goal by winning the purpose. Core values statement: “PepsiCo is committed to delivering

sustained growth through empowered people acting responsibly and building trust.”
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(PepsiCo,2022, para 2). PepsiCo believes that its employees are the reason for its success;

therefore, it strives to create a work environment of inclusivity and collaboration that

empowers individuals to pursue their passions. As such, PepsiCo works hard to ensure its

workers feel valued and respected by providing safe working conditions and enriching career

experiences.

PepsiCo generated more than $91 billion in net revenue in 2023, driven by a complementary

beverage and convenient foods portfolio that includes Lay's, Doritos, Cheetos, Gatorade,

Pepsi-Cola, Mountain Dew, Quaker and SodaStream. PepsiCo's product portfolio includes a

wide range of enjoyable foods and beverages, including many brands. (PepsiCo website,

2024).

Global Strategy Analysis of PepsiCo:

PepsiCo with its origination in United States has been growing and spreading to other parts of

the world adopting different strategies or mixture of strategies in order succeed. The food

industry historically has been a premise of cutting edge competition and with a minimal profit

margin owing to the high costs in the supply chain of the commodities and the capital cost of

the machinery as well as the warehousing requirements. In order to sustain the business in

this type of industry, also to grow the business it is imperative to capture new markets and

grow the market share, this drive is what makes PepsiCo enter into different countries to

capture markets and grow there. Exporting can be an option in the start to enter a new market,

but it cannot be a sustainable owing to higher cost of freight that in turn increases the price of

the products and this decreases the appeal for the products in the market as they may be

alternative options for fraction of the price. Also, higher price tag on a product may result in

the consumers feeling the product a luxury item rather than for normal consumption. The

affordability is a key factor for the food products as their consumption and appeal depends on
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them. These reasons drive a company like PepsiCo to venture into the market by entering it

directly instead of exporting their products.

The various strategies used by PepsiCo are direct investment model, where the company

invests into the new market and opens up a manufacturing entity to make and supply their

products to consumers. This strategy is capital intensive but yields higher profit margin as the

company is directly involved the whole process and is sole owner of the revenue it generates.

Then there is the contract model, this is very close to the export model used by any company

the only difference being that there is an involvement of the company in the decision making

of the marketing. This model eliminates most of the capital requirement and also reduces the

risk of losses for the company but this model yield very less profits in the form of royalties

and also carries the risk of the franchisee to break the contract that may result in loss of

contract.

The other strategy is equity model, this is the model that is used by PepsiCo in the country of

Oman. Following this model PepsiCo tied up with a local player namely Oman Refreshments

Co, this joint venturing model helped PepsiCo to enter into Oman market and as well grow.

In this strategy, the investment is from both the entities and the operation inside the boundary

is handled majorly by the local player. In this strategy the local marketing, supply chain

management, manufacturing responsibilities, etc. are mainly handled by the local entity and

PepsiCo provides the required base material, assistance in manufacturing technology,

marketing help, etc. are handled. This strategy has been very successful for PepsiCo in Oman

this can be seen in their financial performance and the brand image that Pepsi has created in

the Oman market. The Oman Refreshments Co has reported around 96.75 million OMR in

sales in the year 2023 and a growth in sales of about 2 percent compared to the previous year

sales (MarketScreener, 2024).

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Ansoff Growth Matrix:

Ansoff Growth Matrix analysis is one of a great tool in order to analyse the strategies of a

company and also can be used as rubric for the same. The below diagram shows the same

which can also be seen as a mirror of the points discussed above in this section.

Fig 1 Ansoff Growth Matrix