INDUSTRY ANALYSIS

Executive Summary
Purpose of this study is to analyze Pepsi Cola Products
Philippines INC in Philippine industry. It s a very well
organized multinational company, which operates
almost all over the world.
This report provides an analysis and evaluation of
Pepsi Cola Products Philippines INC. This method of
analysis includes MOST analysis, Source of Audit
Technique, PESTLE analysis, Porter’s five forces model,
and SWOT analysis.
Introduction
Osmond Vitez defines Industry Analysis is a
business function completed by business owners
and other individuals to assess the current
business environment.
This analysis helps businesses understand various
economic pieces of the marketplace and how
these various pieces may be used to gain a
competitive advantage.
This analysis is included in the entrepreneur’s
business plan that outlines specific elements of
economic marketplace. Elements may include the
number of competitors, availability of substitute
goods, target markets and demographic groups or
various other pieces of essential business
information. This information is commonly used to
secure external financing from banks or lenders
fro starting a new business venture.
 Industry analysis features include a review of
the economic and political underpinnings of the
business environment and it may conducted
using Michael Porter’s five forces model.
Company Background
Pepsi-Cola Products Philippines, Inc. (PIP) was
incorporated and registered with the Securities and
Exchange Commission (SEC) on March 8, 1989 primarily
to engage in manufacturing, sale and distribution of
carbonated soft drinks and non-carbonated beverages,
and confectionery products to retail, wholesale,
restaurants and bar trades. On August 27, 2014, the SEC
approved the amendment of PIP’s primary purpose to
also engage in the manufacturing, sale and distribution
of snacks, food and food products.
Pepsi-Cola Products Philippines Inc. (PCPPI) is the exclusive
manufacturer of PepsiCo beverages and snacks in the
Philippines, with a relationship spanning 70 years. PCPPI is a
listed company in the Philippine Stock Exchange (PSE: PIP)
with Lotte Corporation, a holding company of Lotte Chilsung
Beverage—one of the biggest beverage companies in South
Korea, as the lead shareholder co-managing with PepsiCo.
PCPPI manufactures and sells well-known food and beverage
brands: Pepsi-Cola, Mountain Dew, 7-Up, Mirinda, Mug,
Gatorade, Tropicana, Lipton, Sting, Premier, Milkis, Aquafina,
and Cheetos. It has established 14 operations across the
country, serving more than 700,000 outlets and providing
employment through its extensive distribution network.
 PCPPI is committed to create a positive
impact on society with programs focused on
environmental sustainability, nation-building,
and inclusive development.
MOST
Analysis
 Mission and Vision
We are the beverage company of choice - preferred by
consumers, trade partners, investors and employees
of the Philippines. As such, we continuously delight
them by offering quality beverages at best value, for
every drinking occasion.
 
We are a happy team in our workplace as we
build a sustainable and profitable business,
providing healthy financial rewards to our
shareholders and opportunities for growth
and enrichment to our business partners,
employees and the communities where we
operate.
 
Objectives
 
 Strategies
Pepsi-Cola Products Philippines, Inc. strong performance
was driven by the successful implementation of their
strategic moves which include effectively preserving and
defending their market share in carbonated soft drinks
lines – cola and non-cola and aggressively tapping the
bright growth prospects of the non-carbonated beverages
product lines, using the fast expanding health and wealth
sector as their growth factor.
Tactics
 
 Culture and Values

A PCPPI employee has the Passion to succeed,

Excels in what he does, Professional in all his
dealings, prioritizes Service, and treasures his
Integrity and that of the Company.
Source Audit Technique
 Financial
Pepsi-Cola Products Philippines, Inc was incorporated as a
stock corporation in the Philippines on March 8, 199 with a
corporate life of 50 years, primarily to engage in
manufacturing, sales and distribution at wholesale and
retail of carbonated soft-drinks, non-carbonated beverages,
food and food products, snacks and confectionery products
to retail, wholesale, restaurants and bar trades.
PCPPI has a divisional structure model headed
by their Chairman of the Board and CEO Hwang
Chung and Partha Chakrabarti as President.

This divisional structure is appropriate to PCPPI

management to find some synergy among
divisional activities through the use of
committees and horizontal linkages.
 Human Resources

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 The Board of Directors and Management of
Pepsi-Cola Products Philippines, Inc. together
with its resilient employees , commit
themselves to the principles and best of good
governance and acknowledge that through its
Manual on Corporate Governance 2017 the
attainment of our corporate goals be made
possible.
 The principles of good corporate governance in the entire
organization. Corporate governance herein refers to the framework
of rules, systems and processes of the Corporation that governs the
performance by the Board and Management of their respective
duties and responsibilities to stockholders and other stakeholders
which include, among others, customers, employees, suppliers,
financiers, the Government, and the community in which the
Corporation operates. The Board and Management, employees and
stockholders, believe that stronger corporate governance is a
necessary component of what constitutes sound strategic business
management and will therefore undertake every effort necessary to
create awareness within the organization as soon as possible.
 KNOW-HOW
PCPPI takes pride in the establishment of
support systems and processes to ensure the
development of its employees through
learning and skills trainings facilitated by
qualified and competent teachers and
professionals.
• March 25, 2005
• Provide continuing education
to PCPPI Employees focusing
on the key function areas of
MAKE-SELL-DELIVER
• Enhance basic day-to-day
capability of front-line
Employees, especially Sales
Employees
• Enhance managerial and leadership abilities of
managers and employees with potential
• Instill Company values and Culture in all
Employees
• Maintain a pool of certified educators,
mentors and trainers from PCPPI, PI and
recognized educational establishments and
learning centers.
PESTLE Analysis
ose requirements on PepsiCo. This element of the PESTEL/PESTLE analysis considers the effects of governmental action on companies’ remote or macro-environment. PepsiCo m
rtunity)
opportunity)
drinks (threat)

Political
Governments are external factors that impose requirements on
PepsiCo. This element of the PESTEL/PESTLE analysis considers
the effects of governmental action on companies’ remote or
macro-environment. PepsiCo must address the following political
factors:
 
•Political stability in major economies (opportunity)
•Improved intergovernmental cooperation (opportunity)
•Government initiatives against carbonated drinks (threat)
.
Economic
PepsiCo’s performance is directly linked to the economy.
The influence of economic conditions on the remote or macro-
environment of businesses is covered in this element of the
PESTEL/PESTLE analysis. The political external factors that
relate to PepsiCo are as follows:
 
• Economic stability of most major markets (opportunity)
• Rapid growth of developing economies (opportunity)
• Slowdown of the Philippine economy (threat)
 Social
Many of PepsiCo’s consumers follow sociocultural trends. This
element of the PESTEL/PESTLE analysis identifies the impact of social
conditions and changes on companies’ remote or macro-environment.
The following are notable sociocultural external factors relevant to
PepsiCo’s business:
 
• Higher health consciousness (threat & opportunity)
• Increasing busy lifestyles (opportunity)
• More discriminating attitudes about product quality (opportunity)
Technological
PepsiCo’s business is partly dependent on technologies. The link
between technological change and companies’ remote/macro-
environment is examined in this element of the PESTEL/PESTLE
analysis. The technological external factors significant to PepsiCo are as
follows:
 
• Moderate R&D investments in the food and beverage industry
(opportunity)
• Improving knowledge management systems (opportunity)
• Increasing automation in business (opportunity)
 Legal
PepsiCo and its competitors are subject to legal requirements.
Such requirements and regulations are evaluated in this element
of the PESTEL/PESTLE analysis in terms of their effect on the
industry’s remote or macro-environment. The legal external
factors relevant to PepsiCo’s business are as follows:
 
• Regulation on GMO ingredients (opportunity)
• Health and product safety regulations (opportunity)
• Moderate rate of regulatory change (opportunity)
Environmental
PepsiCo’s supply chain and brand image are linked to
environmental concerns. This element of the PESTEL/PESTLE
analysis considers the ecological trends and issues that affect
consumers, employees, and companies’ remote or macro-
environment. The following ecological external factors are
significant to PepsiCo:
• High focus on business sustainability (opportunity)
• More complex expectations and standards on waste disposal
(opportunity)
• Climate change (threat & opportunity)
Power
FIVE
Forces
Model
INDUSTRY RIVALRY
PCCPI faces strong competition form Coca-Cola FEMSA. From
the beginning the market leader in the 80’s, Cola-Cola has
reversed the market share by the Philippine industry with
market share of 0% against Pepsi-Cola’s 30%. Factors in the
competitive atmosphere of PCPPI include @advertising and
marketing programs that create brand a, pack/price
promotions, new product development, distribution and
availability, packaging and customer goodwill (PCPPI SEC
Report, 2017).”
BARGAINING POWER OF BUYERS
Consumers are among the top priorities in PepsiCo’s mission
statement. The effects of customers on the firm’s industry
environment are determined in this component of the Five Forces
analysis. The external factors that lead to the strong bargaining
power of PepsiCo’s consumers/buyers are as follows:
 
• Low switching costs (strong force)
• High access to product information (strong force)
• High availability of substitutes (strong force)
BARGAINING POWER OF SUPPLIER
Suppliers do not have strong or significant influence in
PCPPI because the raw materials used by PCPPI are not
that unique, and the cost of switching suppliers is low.
Likewise, the suppliers themselves vie for business with
PCPPI. Proof is the strong opposition of sugar planters
against the import of high fructose corn syrup (HFCS),
which will decrease the level of sugar used by the firm.
BARRIERS TO ENTRY
Although PCPPI products can be easily substituted with
other products, the threat of new entrants into the market
remains low due to high cost of brand development that
PCPPI has already achieved (Smithson, 2017). The capital
requirements needed to match PCPPI’s economies of scale
is extremely high. Significant barriers to entry include
large investments in plants, research and development
required, extensive distribution channels, and goodwill.
THREAT OF SUBSTITUTES
In addition to the intensive rivalry in the “cola wars,” PCPPI’s
beverage products can be easily substituted with drinks such as
coffee, tea, milk tea, among a multitude of other beverages. Its
food products can be easily substituted with other brands. It
also faces strong substitution from healthier food options. The
consumer market is gaining more information about the
products they consume and are therefore more discerning.
There are low costs for substituting PCPPI products.
SWOT
Strengths

Large market share Huge distribution network
Acquisitions and alliances Strong market position

Customer loyalty Strong brand portfolio

Purchasing economies of Strong growth in revenues

scale and profits
Worldwide brand recognition
Strengths
• can be described as among the leading company
worldwide
• the company holds large market share and has
allied with South Korea’s number one beverage
company, the Lotte Chilsung Beverage Corporation
• continuous customer loyalty and strong brand
portfolio
• PCPPI continues to increase their distribution
network and market location.
Weaknesses
Business concentration

Smaller market share than Coca-cola

Inability to substantially product differentiate

Hard to compete with Coca-cola – strong brand

identity and customer loyalty
Weaknesses
• The company cannot claim of being in the top
most of the beverage company due to their rival
Coca-Cola

• Coca-Cola has greater market share worldwide

and also has a strong brand identity and same
customer loyalty to its market
Opportunity
Growing bottled water market
Establishing of new branches in the
country
Promoting a cleaner environment
Reducing costs for the company
Generating income for farmers
Growing population in the Philippines
Adapting to market trend
Opportunities
• Plant expansion in different locations of the country
• Reducing cost can also be expected thru some ways such
as building Biomass Facilities for Renewable Energy
• With the growing population, the company may also be
able to extend to other products such as Bottled Water
and sees opportunities of making health drinks and be an
advantage for them to be a socially responsible producer.
Threats
Sluggish growth of carbonated
beverages

High oil prices

High level of competition with main rival, Pepsi will

lose market share if rivals adapt to market trends
faster
Threats
• There might be a decline or slow increase of
demands for carbonated beverages
• Continuous oil price hike, this entails an
increase in shipping and handling cost.
• If the company will not grab the present
opportunities their rivals might be far ahead to
them and probably will gain more market share
Implication of Industry Analysis
The researchers conclude that the Pepsi-Cola
Products Philippines Inc. performs a great job in
manufacturing, selling and distributing their
products. Although at present, they still cannot
out overpower their number one rival, Coca-
Cola Co., they foresee in the future that their
goal to beat them will be possible. Confident of
having greater investments from foreign big
investors, the company may be able to increase
its production and engaged in other types of
products.
Implications of Industry Analysis

Furthermore, the researchers conclude that there

are lots of opportunities coming for the company. If
the company will focus more on taking actions to use
this opportunities, probably the company will have
more solutions than having problems.
Implications of Industry Analysis
Lastly, knowing the internal and external
environment of the company, the researchers have
assessed those factors in which the company should
focus more and those which they should attend to as
soon as possible. Having a systematic evaluation and
controlling will give the company their vision of being
in the top among the beverage companies not just
nationally but also worldwide.
References

•http://panmore.com/pepsico-five-forces-analysis-
porters-model
•https://
www.academia.edu/33133064/Strategic_Management_
Paper_Pepsi-Cola_Products_Philippines_Inc
• https://
pepsiphilippines.com/corporate-governance/corporate-g
overnance
•https://pepsiphilippines.com/who-we-are/who-we-are
•https://pepsiphilippines.com/PDF-PCPPI-SEC-17Q-Pepsi-
Thank You!