The SWOT Analysis: Pepsi

The SWOT Analysis PepsiPEPSI is an international player in the soft drink market and operation across the world. In 1893, PepsiCo started its manufacturing in 1893. It got a new name as Pepsi-Cola on August 28, 1898. Then in 1961, it was ultimately named as Pepsi. Initially it was marketed as Brads Drink. The substitutes available in the alike market are as follows1) Coca-Cola2) Cola Turka3) Big Cola4) RC-ColaIn every segment of the engineer market, Pepsi is richlyly favorable. Due to its wise spread substance abuse at homes, ceremonies and during travels, it has been chosen for this project.Problem argumentIn these days, focal point at the social club has observed a signifi give the bouncet delay in the gross sales of their merchandise, Pepsi in this case. The demand for the particular has also dec line of business organisationd with succession. These business managers have proposed different factors affecting this problem. For instance1) A relatively good taste of Rival Products2) Improved measure of Competitors Products3) Low scathe Rival Product4) BetterPremeditated exploitation of Rival CompaniesConsequently Company Managers have comprehended the need of RE-FINANCING strategic MANAGEMENT PLAN.It evaluated the troupe processes on the succeeding(a)s fatorsSWOT abbreviation gent5 Cs (company/collaborators/customers/climate/competitors)4/7 Ps-product,price,place,promotion, community,process,physical environs.Market AnalysisIn the cold drink market, some of the players wereDistributersRetailersCustomersSuppliers and CompetitorsWith the entrance of other players into the market, there can have threats or benefits. In the case of Pepsi, this was of a significant value. We will analysis these factors as entrance to barriers on the SWOT basis.SWOT ANALYSISPEPSIStrengths brandThe premier brand of PepsiCo is Pepsi. In 2008, it got ranked at the 26th position out of 100 top brands of the world.The value of annual sales is $15000 million new(prenominal ) brands of the company include Diet Pepsi, Gatorade hoi polloi Dew and have the presence in over 200 countries.In the US beverage industry, it has a market part of 39% and 26% in the Snacks Industry.A large proportion of the sales is accumulated through these brands.DiversificationThe diversification includes the aspect that each top 18 brands of PepsiCo generates approximately $ jet million of annual sales.DistributionThe wider distribution network of Pepsi works such that the construct product is delivered to warehouses, then to customers ware houses and then to retailers.WeaknessesOverdependence on Wal-MartPepsiCos largest customer is Wal-Mart. Wal-Mart operates through low price themes which indirectly put pressures on Pepsi to lower down its prices in accordance with its biggest customers.Overdependence on USMarketsThe US market generates around-+ 52% of Pepsis total revenues.Low ProductivityLow productivity is evident from the fact that in 2008, the revenue that it generat ed was $219,439 per employee. It was significantly lower than its rivals in the market.OpportunitiesExpansion of Product traveling bagPepsiCo is pursuing to cope with one of its major(ip) weakness enslavement on US markets by getting Russias topJuice Company, Lebedyansky, and vw weewee in the UK. In this way, it would be able to accession its product base in a more competitive market.International ExpansionCurrently PepsiCo is expanding by making investment in China ($1000 million) and India ($500 million). This points out towards the fact that it is trying to growing its international base and lower its dependency on the US market. The future plans include expansions in brazil and Mexico through huge investments.Growing Savory Snack and Bottled Water Market in USThere is a huge potential for PEPSICO to capitalize on the expanding bottle water market which is expected to have a $24 billion volume by 2012.ThreatsSharp Decrease in the Sales of change DrinksThe sales of soft drink s have decreased significantly.Though PepsiCois experiencing diversification but it projected that it would be facing the impact of this decrease.Possible Negative Influence of Government polityPepsiCo can be negatively affected as the state and central laws would hinder its operations in marketing, sales and manufacturing.Powerful CompetitionThe one major competitor of PepsiCo in the market is Coca-Cola. Nestle and Marina is also counted as its rivals. The intensive, edge to edge competition in the market can affect pricing policies, marketing, sales and other promotion strategies put forward by the company. For instant the sales of juice has significantly increased for Coca-Cola as compared to Pepsi.Potential Commotion Due to compass UnrestPepsi Co is susceptible to strikes and other labor disputes. For example, a strike in India in 2008 had prevented the manufacturing for al closely a month. These can exacerbate problems for the company.PEST ANALYSIS PEPSIA particular business is dependent on an environment to get its revenues for the goods and services that it provides. These environments can both be external or internal. governmental Environment PepsiTo run a successful business, PepsiCo is dependent on the public policy as it is one of the largest multi nation companies in the world. Thus an active participation is substantive for the company towards the deliberations of public policy.Political Involvement PolicyCitizens Fund (CCF) is the respective entity of PepsiCo that gets voluntary employee assistances to make political campaign contributions to Federal and state political parties, PACs and electoral candidates.These actively help the company to take part in the democratic process in the country.Economic Environment PepsiThe Primary responsibility of the company, PepsiCo, is to take the indispensable measures to preserve the sustainability of the environment in which it works for instance ecological environment, social and economic.Pepsi Co is aware of the critical role that agriculture plays towards different aspects of the business operations.Pepsi Co also recognizes the dangers emerging out of the shortage in food supply and the respective food security threats.Social Environment PepsiThe unique social environment at Pepsi Co is very desirable where its people are working together for a sustainable present of prosperity. This, in turn, would be beneficial for Pepsi itself.Its name is to provide the localize versions of its products by keeping in mind the preferences of the local communities in which the business is operating.Technological Environment PepsiTechnological advancements have helped PepsiCo to enhance its proceeds capacity. Therefore it is making full use of the new technology. PepsiCo is getting a key help through advancements in IT.Situation Analysis PepsiIt is very incumbent for a company to satisfy the needs of its customers while maintaining the profitability through sales. This can be achieved if co mpany keeps track of all the internal and external factors in that environment.5Cs provide the Situation Analysis for a particular firm operating in a particular market.These are as followsCompanyProduct lineImage in the marketTechnology and ExperienceGoalsCultureCollaboratorsDistributersSuppliersCoalitionsCustomersMarket size and growthMarket SegmentsRetail channel-where does the consumer actually purchase the product?Consumer schooling Sources-where does the customer obtain information about the product?Rate of Purchase, seasonal factorsQuantity purchased at a timeTrends-how consumer needs and preferences change over timeCompetitorsReal or PotentialDirect or IndirectProductsPositioningMarket SharesStrengths and Weaknesses of competitorsClimate or ContextThe climate or macro-environmental factors arePolitical and Regulatory Environment Which specific policies affect the companyEconomic Environment business cycle, inflation rate, interest rates, and other topicsSocial/Cultural Envi ronment Trends and fashions in a particular societyTechnological Environment The relationship between demand and the impact of technology7 Ps -Product,Price,Place,Promotion,People,Process, Physical Environment Pepsi7 Ps are called Marketing Mix and help in meeting marketing objectives for a company.Pepsi-ProductThe smoke drink includes the ingredients such as carbonated water, high fructose corn syrup, sugar, colorings, phosphoric acid, caffeine, citric Acid and natural flavors.Following are the popular brands of PepsiCoPepsi Twist, Pepsi Tarik, Pepsi Samba, Mountain Dew, etc. turn v/s Pepsi-ProductPepsi and Coke are the major rivals in the market and compete against a verity of products in the marketCOKEPEPSI1) The dark colored Cola drink initiated the disceptation with Pepsis carbonated drink1) Pepsi too has a cola version of carbonated drink which competes against the coke2) Vaultwas released by the Coca-Cola company in June 2005. It is a carbonated drink.2) Mountain Dew MDXis the version released under Mountain Dew in 2005 after a new marketing campaign3) Spriteis a clear lemon- time flavored soft drink manufactured by the coca-cola company.3) 7 UP is a lemon carbonated drink competing with Sprite4) Diet Coca-Colais a sugar free soft drink produced and distributed by the Coca-Cola Company4) Diet Pepsiis a low-calorie carbonated cola.5) Fantais a soft drink citrus brand owned by The Coca-Cola Company.5)Mirindais soft drink brand owned by PepsiCo and it competes with FantaTable Coke v/s PEPSIPricePrice is the monetary value of a good in a particular currency. price is the major portion of the marketing mix. Before the entrance of PepsiCo in the market, Coke was the only player in the market nd it directed the price of the cola drink. The competition emerged after the entrance of Pepsi. Now the price is determined on the basis of competition between Coke and Pepsi. Pepsi portrays a flexible attitude and attenuate downs its prices at times. This has also incurred some loses for Pepsi due to the risks attached. Though the lowered prices would attract more customers, it also badly affects the production cost which becomes difficult to cover. This was an early cast situation for Pepsi but now it has recovered due to the rapid growth that it is making.PlaceIn marketing, is a geographic location, an industry, a group of people to who company wants to sell its products. Pepsi like Coke has its network all over the world. Pepsi has joined forces with companies like Quaker Oats,Lipton etc. It runs ads in different localities of the world.PromotionPromotion encompasses 4-subcategories advertPersonal sellingSales PromotionPublicity and Public RelationsA promotional strategy can includea) Sales Shootoutsb) New product receptionc) Brand Equity Emergenced) Positioninge) Competitive retaliationsf) Creation of a corporate imagePepsi and Coke have a special lieu regarding their promotional activities.The rivalry was initiated when Pepsi started its blind taste challenges. It took the method of a taste test at public places like shopping malls, community centric hubs etc. By letting people taste both the colas, they asked the people to select the preferred one so that people would buy Pepsi.The following chart provides a comparison between Pepsi and CokeFigure Price ComparisonPeople- PepsiPepsi has deeply affected the lives of people by changing their preferences.Process-PepsiProcess involves the transformation of inputs into outputs. With the latest technology, pepsi has helped people to get a much better carbonated product.Physical Environment-PepsiThe internal and external environment has been affected by the operations of Pepsi and it holds a well-established position for that.THE RE-FINANCING STRATEGIC MANAGEMENT PLANIt is the particular strategy of framing, executing and gauging decisions that allow an physical composition to meet its objectives.The making and designing of a strategy includes the followingVision and Mission(the target of the business)Strength and WeaknessOpportunities and threatsThe contemplations for top strategy devising areAllocation of resourcesBusiness to enter or retainBusiness to divest or wasteJoint ventures or mergersWhether to expand or notMoving into foreign marketsTrying to avoid take overHRM and StrategyStrategists are individuals who are most responsible for the success or failure of an organization. They are individuals who form strategies. They have various job titles, such as CEO, President, owner etc.Pepsi- Vision StatementPepsiCos responsibility is to continually improve all aspects of the world in which we operate- environment, social, economic-creating a better tomorrow than todayPepsi Cola Mission StatementOur mission is to increase the value of our shareholders investment. We do this through sales growth, cost controls, and wise investment resources. We believe our commercial success depends upon offering quality and value to our consumers and customers . Providing products that are safe, substantialsome,economically good and environmentally sound, and providing a fair return to our investors while adhering to the highest standards of integrity.Types of StrategyCompetitive Advantage PepsiBy taking our competitive strengths, and investing in them to create longer-term value to sustain growth. PepsiCo has 3 key advantagesbig, muscular brandsthe proven ability to innovate and create differentiated products , andPowerful go-to-market systems.Cost AdvantageIt is the global leader in savory snacks, and those snacks can be paired with its beverages in the marketplace. Those pairings will enable PepsiCo to provide unique offerings to retail and foodservice customers.Market DominanceIt is one of the worlds most familiar consumer food and beverage companies, offering brands like Frito-Lay, Gatorade, Tropicana and Quaker. The Coke vs. Pepsi conflict raged on for decades across the country on supermarket shelves, fast food restaurants and th e like.New Product DevelopmentPepsi As a consumer-focused company, we want to enrich the lifestyles of our consumers while increasing the local relevance of the products we make. We recognize the need to understand and respect local cultures, rituals, patterns and intake gaps when developing delicious-tasting convenient and affordable products for consumers in that market. For example, in India, we have introduced a whole-grain product for breaking the fast around the observance of Ramadan. In China, we have introduced congee (with whole grains and reduced sodium) as a locally relevant breakfast offering to add nutritional value to the Chinese diet, and were introducing products made from grains in sub-Saharan Africa as a change from those made with plain flour.Contraction/DiversificationIndraNooyi, PepsiCo Chairman and Chief Executive Officer, said, Our results this quarter reinforce the advantages of our balanced portfolio, as our food and international businesses delivered solid performance while we continued the transformation of our North American beverage business.As part of its strategy to grow in key markets, the company recently announced plans to invest $1 billion over the next four years in China, PepsiCos highest priority growth market. And, in Russia, PepsiCo along with its furnish The Pepsi Bottling Group, Inc. announced a plan to invest $1 billion over the next three years.Price Leadership StrategyAn observation made of oligopolistic business behavior in which one company, usually the dominant competitor among several, leads the way in determining prices, the others soon following. The context is a state of limited competition, in which a market is shared by a small number of producers or sellers.Pepsi- Global StrategyIt is not just another beverage on the vast shelf of choices. Pepsi made a decision years ago to diversify its offering and branch into the global arena. Pepsi is an American multinational corporation headquartered in Purchase, Ne w York. It is a manufacturing company distributing beverages and snack foods across 200 countries.Pepsi-Reengineering StrategyReengineering initiatives typically lead to a business organization with these characteristics1. Business processes are change rather than being made more complex.2. Job descriptions expand and become multi-dimensional people perform a broader range of tasks.DownsizingPepsiCo Inc. is considering cutting approximately 4,000 employees and bring down pension contributions in order to increase their income.Citing a source, reported the New York Post, quoted by Reuters on Friday (06.01.2012), currently the company offers hideaway plans and matching contributions to 401 thousand retirement savings account.One of these large companies believes that by offering both of these are an act that is more generous.Pepsi-party claims when 401 thousand by eliminating the retirement savings account that will moreover the company up to USD75 million. The layoffs, accountin g for approximately one percent more than the payroll company, will include a small number of workers at its headquarters.DelayeringTo lessen the size of a business hierarchy, especially in terms of a reduction in management. This creates a flatter(less layered) organizational structure.There have been numerous cases of companies delayering their organization structures over the past few years. Many of these companies include industry leaders rarely satisfied with their past success, continually searching to improve all facets of their business, including their management structure. Recent examples of well-known companies that have delayered include Pepsi-Cola, Hewlett-Packard, Corning, Tenneco, and General Electric, to name only a few.RESTRUCTURINGPepsiCo Inc. plans to cut 8,700 jobs in a restructuring as it seeks to offset high goodness costs and increases investment in advertising and marketing in North America.Its a lower figure than sources had expected. Of PepsiCos 100,000 U .S. workers, about 2,000, or 2 percent, are on the chopping block, say knowledgeable sources, a figure Mr. Nicolas couldnt immediately confirm. Some 1,800 people work at the West Loop headquarters of Quaker Oats, Gatorade and Tropicana. Other PepsiCo teams asset its global nutrition group also are in Chicago. Mr. Nicolas declined to comment on specific jobs or people before the company notifies workers of their status this week.The monetary AnalysisPepsi Bottling Group is the worlds largest manufacturer, seller and distributor of Pepsi-Cola beverages. With annual sales of nearly $11 billion, the companys fastest growing segment is non-carbonated beverages, including the number one brand of bottled water in the U.S., Aquafina, as well as Tropicana juice drinks and Lipton Ice Tea. As part of a 24/7 production operation, the companys Detroit plant ships about 27 million cases per year.Production at the plant begins as empty bottles are unloaded from trucks via conveyor and transporte d to a depaletteizer. From there, they are, rinsed, dried and sent to a filling appliance (filler speeds at the plant vary based on bottle size, ranging from 350 to 1,000 bottles per minute). The bottles leave the fillers and make their way to a packaging machine, and then to a palletizer. Each pallet is wrapped for distribution and moved to the warehouse for shipping.We can show the statement of financial position of PEPSI Inventory (raw materials) in different years in the following chart.Figure Financial Position of PEPSI Inventory (raw materials)