A REAL SWOT ANALYSIS

http://mba-posts.blogspot.com/2012/06/porters-five-forces-model-of-coca-cola.html

Let’s take a look at a few of the popular ones:

STEP analysis – the same PEST factors in a different order

SLEPT analysis – the PEST analysis with legal issues separated from the

political factors

PESTLE, PESTEL or PESTER analysis – legal (or regulation change) plus

environmental (or ecological) changes are added. I tend to use PESTER in my

own strategy work because it’s the one I learnt in my MBA training.

STEEPLE – is PEST with legal, ecological and ethical issues added.

STEEPLED analysis – is STEEPLE with demographics pulled out of the social

changes.

SWOT ANALYSIS

What is SWOT Analysis?

A SWOT analysis stands for Strengths, Weaknesses, Opportunities, and Threats

and is a simple and powerful way to analyze your company's present marketing

situation.

The best way to understand SWOT is to look at an actual example: AMT is a

computer store in a medium-sized market in the United States. Lately it has suffered

through a steady business decline caused mainly by increasing competition from

larger office products stores with national brand names. The following is the SWOT

analysis included in its marketing plan.

STRENTH:

Knowledge. Our competitors are retailers, pushing boxes. We know systems,

networks, connectivity, programming, all the VARs, and data management.

Relationship selling. We get to know our customers, one by one. Our direct sales

force maintains a relationship.

History. We've been in our town forever. We have loyalty of customers and vendors.

We are local.

WEAKNESSES:

Costs. The chain stores have better economics. Their per-unit costs of selling are

quite low. They aren't offering what we offer in terms of knowledgeable selling, but

their cost per square foot and per dollar of sales are much lower.

Price and volume. The major stores pushing boxes can afford to sell for less. Their

component costs are less and they have volume buying with the main vendors.

Brand power. Take one look at their full page advertising, in color, in the Sunday

paper. We can't match that. We don't have the national name that flows into national

advertising.

OPPORTUNITIES:

Local area networks. LANs are becoming commonplace in small business, and

even in home offices. Businesses today assume LANs as part of normal office work.

This is an opportunity for us because LANs are much more knowledge and service

intensive than the standard off-the-shelf PC.

The Internet. The increasing opportunities of the Internet offer us another area of

strength in comparison to the box-on-the-shelf major chain stores. Our customers

want more help with the Internet, and we are in a better position to give it to them.

Training. The major stores don't provide training, but as systems become more

complicated, with LAN and Internet usage, training is more in demand. This is

particularly true of our main target markets.

Service. As our target market needs more service, our competitors are less likely

than ever to provide it. Their business model doesn't include service, just selling the

boxes.

THREATS :

The computer as appliance. Volume buying and selling of computers as products

in boxes, supposedly not needing support, training, connectivity services, etc. As

people think of the computer in those terms, they think they need our service

orientation less.

The larger price-oriented store.   When we have huge advertisements of low prices

in the newspaper, our customers think we are not giving them good value.

SWOT analysis is a simple framework for generating strategic alternatives from a

situation analysis. It is applicable to either the corporate level or the business unit

level and frequently appears in marketing plans. SWOT (sometimes referred to as

TOWS) stands for Strengths, Weaknesses, Opportunities, and Threats. The SWOT

framework was described in the late 1960's by Edmund P. Learned, C. Roland

Christiansen, Kenneth Andrews, and William D. Guth in Business Policy, Text and

Cases (Homewood, IL: Irwin, 1969). The General Electric Growth Council used this

form of analysis in the 1980's. Because it concentrates on the issues that potentially

have the most impact, the SWOT analysis is useful when a very limited amount of

time is available to address a complex strategic situation.

The following diagram shows how a SWOT analysis fits into a strategic situation

analysis.

Situation Analysis

/

\

Internal Analysis

External Analysis

/ \

/ \

Strengths Weaknesses

Opportunities Threats

|

SWOT Profile

The internal and external situation analysis can produce a large amount of

information, much of which may not be highly relevant. The SWOT analysis can

serve as an interpretative filter to reduce the information to a manageable quantity of

key issues. The SWOT analysis classifies the internal aspects of the company as

strengths or weaknesses and the external situational factors as opportunities or

threats. Strengths can serve as a foundation for building a competitive advantage,

and weaknesses may hinder it. By understanding these four aspects of its situation,

a firm can better leverage its strengths, correct its weaknesses, capitalize on golden

opportunities, and deter potentially devastating threats.

INTERNAL ANALYSIS:

The internal analysis is a comprehensive evaluation of the internal environment's

potential strengths and weaknesses. Factors should be evaluated across the

organization in areas such as:

Company culture

Company image

Organizational structure

Key staff

Access to natural resources

Position on the experience curve

Operational efficiency

Operational capacity

Brand awareness

Market share

Financial resources

Exclusive contracts

Patents and trade secrets

The SWOT analysis summarizes the internal factors of the firm as a list of strengths

and weaknesses.

EXTERNAL ANALYSIS:

An opportunity is the chance to introduce a new product or service that can generate

superior returns. Opportunities can arise when changes occur in the external

environment. Many of these changes can be perceived as threats to the market

position of existing products and may necessitate a change in product specifications

or the development of new products in order for the firm to remain competitive.

Changes in the external environment may be related to:

Customers

Competitors

Market trends

Suppliers

Partners

Social changes

New technology

Economic environment

Political and regulatory environment

The last four items in the above list are macro-environmental variables, and are

addressed in a PEST analysis. The SWOT analysis summarizes the external

environmental factors as a list of opportunities and threats.

How to Perform a SWOT Analysis?

A SWOT Analysis is an integral part of a marketing plan and can also be part of a

business plan. Knowing what a SWOT Analysis is and how to perform one is very

important.

Conclusion:

SWOT helps a company to set itself for better and for worse. Companies are

inherently insular and inward looking SWOT’s are a means by which a company can

better understand what it does very well and where its shortcomings are. SWOT’s

will help the company size up the competitive landscape and get some insight into

the vagaries of the marketplace.

SWOT analysis has been a framework of choice among many managers for a long

time because of its simplicity and its portrayal of the essence of sound strategy

formulation - matching a firm’s opportunities and threats wit its strengths and

weaknesses. Central to making SWOT analysis effective is accurate internal

analysis – the identification of specific strengths and weaknesses around which

sound strategy can be built.

SWOT ANALYSIS OF PEPSI-CO

The following table shows the internal and external factors affecting the market

opportunities for PepsiCo. This SWOT analysis also shows PepsiCo's internal

strengths such as their experienced management team, a competitive product line, a

global marketing realm, and the continuous efforts by their research and

development to research trends in the industry and to be creative in exploiting those

trends. Some possible opportunities noted in the SWOT analysis are the growing

markets for specialized ethnic foods and healthier food products. Another opportunity

is that the income of consumers is high enabling them to be less price sensitive, and

convenience is becoming ever more important not only to the United States but to

many countries around the world.

Although PepsiCo has much strength, a few weaknesses lie in the fact that the

company is so large and could possibly lose focus or have internal conflict problems.

A few of the threats PepsiCo must stay aware of are the ease of reliability of its

product line, the almost pure competition in pricing for its products, and the

quickness of technological advances causing existing products to be no longer the

most advanced.

Internal Factors

Strengths

Weaknesses

Management

Experienced, broad base of interests and knowledge

Large size may lead to conflicting interests

Product Line

Unique, tastes good, competitive price, and convenient

New one calorie products have no existing customer base, generic brands can make

similar drinks - cheaper

Marketing

Diverse, and global awareness

May lose focus, may not be segmented enough

Personnel

International, diverse positions

Possible conflicts due to so many people, possible trouble staying focused

Finance

High sales revenue, high sale growth, large capital base

High expenses, may have trouble balancing cash-flows of such a large operation

Manufacturing

Low costs and liabilities due to outsourcing of bottling

Lose control and quality standards

Research & Development

Continuous efforts to research trends an reinforce creativity

May concentrate too much on existing products, intra-preneuralship may not be

welcomed

External Factors

Opportunities

Threats

Consumer/Social

Huge market in the healthy products and growing market for specialized foods for

ethnic groups

More expensive products than Coke, such a high price may limit lower income

families from buying a Pepsi product

Competitive

Distinctive name, product and packaging in with regards to its markets

Not entirely patentable, constant replicability by competitors

Technological

Internet promotion such as banner ads and keywords can increase their sales, and

more computerized manufacturing and ordering processes can increase their

efficiency

Computer breakdowns, viruses and hackers can reduce efficiency, and must

constantly update products or other competitors will be more advanced

Economic

Consumer income is high, more tend to eat out, convenience is important to U.S.

Very elastic demand, almost pure competition

Legal/Regulatory

High U.S. Food & Drug Administration standards eliminate overnight competitors

SWOT ANALYSIS OF PEPSI IN PAKISTAN

STRENTH

1. Company Image:

It also is a reputable org. and is well known all over the world. Perception of

producing a high quality product.

2. Quality Conscious:

They maintain a high quality as Pepsi Cola International collect sample from its

different production facilities and send them for lab test in Tokyo.

3. Good Relation with Franchise:

Throughout its history it has a good relation with franchisers working in different

areas of the world where they have the production facilities.

4. Production Capacity:

It has the highest production capacity i.e. 60,000 cases per day is not only in

Pakistan but also in South Asia.

5. Market Share:

It has a highest market share i.e. 62% in Pakistan and leading a far step head from

its competitors.

6. Large No. of diversity businesses:

This is also its main strength as it ahs diversity in many businesses such as

i. Pepsi beverages

ii. Pepsi foods

iii. Pepsi Restaurants.

7. High Tech Culture:

The whole culture and business operating environment at Pepsi-Cola-West Asia has

quick access to a centralized database an they use computers as business tools for

analysis and quick decision making.

8. Sponsorships:

They mainly use celebrities in their advertising campaigning like Imran Khan, Wasim

Akram, and Waqar Younas etc. Also sponsor social activates programs like music

etc.

WEAKNESS

1. Decline in taste:

During the last years, it was published in Financial post that there has been big

complaints from the customers with regard to the bad taste that they experienced

during the span of six months.

2. Political Franchises:

Such as in Pakistan, Hamayun Ahkhtar is its franchisee who has a strong political

support from a political party which is in opposition. In; their era in government less

taxes are imposed on them but relation increases as they come in opposition. So the

selection is not appropriate as this thing is harmful to their image as well as the

strategies.

3. Short term Approach:

They have a lack of emphasis on this in their advertising such as currently when they

losses the bid for official drink in the 96 cricket world cup. They started a campaign in

which they highlight the factor such as “nothing official about it”.

4. Weak Distribution:

They lack behind in catering the rural areas and just concentrating in the urban

areas.

5. Low consumer knowledge:

Unable to maximize local consumer knowledge.

6. Lack of soft drink:

Lack of soft drink “know-how” as a result of diversified business units and generalist

managers

OPPORTUNITIES

1. Increase Population:

As almost in all over the world growth rate is increasing which in turn increases the

demand of products and necessities and especially in Asia the market is growing at

a faster rate as compare to other continents. So they have to attract new entrants.

2. Changing social trend:

As in all over the world people are rushing towards fast food and beverage because

of life which has become much faster, it provide the company a favor to capture this

fast moving market with its take away product.

3. Diversification:

They may enter in garments business in order to promote their brand mane, by

making sports cloths fro players which represent their name by wearing their clothes.

4. Distribution of snack foods:

Opportunity to distribute Pepsi snack foods in the future.

THREATS

1. Imitators:

They also have a problem of imitators as receives complaints from customers that

they find take product in disguised of Pepsi’s product.

2. Government Regulation:

They face problem if government employ taxes on them which force them to raise

the price of their product.

3. Corporation’s shortage problem:

Again this is also a serious threat from it suppliers as if supplier is unhappy with the

company. He may reduce the supply and exploit the company. This action will surely

affect the production process.

4. Non-carbonated substitutes:

Non-carbonated substitutes, such as juices and tea brands are maintaining a strong

foothold in the market.

5. Political instability:

The big threat to Pepsi in Pakistan is Political instability and civil unrest.

6. Threat of labor strikes:

External threat of labor strikes and power outages in Pakistan.

SWOT MATRIX (TOWS MATRIX)

What is a SWOT Matrix (TOWS Matrix)?

The SWOT Matrix illustrates how management can match the opportunity by facing

your institution with its own strength and weekness to yield four sets of possible

strategic alternatives. The SWOT Matrix framework lends itself to brainstorming to

create alternative strategies that you might not otherwise consider.

How to Perform a SWOT Matrix (TOWS Matrix)?

A firm should not necessarily pursue the more lucrative opportunities. Rather, it may

have a better chance at developing a competitive advantage by identifying a fit

between the firm's strengths and upcoming opportunities. In some cases, the firm

can overcome a weakness in order to prepare itself to pursue a compelling

opportunity.

To develop strategies that take into account the SWOT profile, a matrix of these

factors can be constructed. The SWOT matrix (also known as a TOWS Matrix) is

shown below:

SWOT / TOWS Matrix

Strengths

Weaknesses

Opportunities

S-O strategies

W-O strategies

Threats

S-T strategies

W-T strategies

Basically four main strategies are proposed:

S-O strategies pursue opportunities that are a good fit to the companies’

strengths. These strategies are based on institutional strengths to take

advantage of market opportunities.

W-O strategies overcome weaknesses to pursue opportunities. These

strategies are based on overcoming institutional weaknesses to take advantage

of market opportunities.

S-T strategies identify ways that the firm can use its strengths to reduce its

vulnerability to external threats. These strategies are based on institutional

strengths to avoid market threats.

W-T strategies establish a defensive plan to prevent the firm's weaknesses

from making it highly susceptible to external threats. These strategies are based

on overcoming/minimizing institutional weaknesses to avoid market threats.

TOWS MATRIX OF PEPSI

We have discussed SWOT analysis of Pepsi-Co in our previous topic now here we

are going to discuss the TOWS Matrix of Pepsi-Co, keeping in mind its SWOT

analysis. Following is the detailed analysis of Pepsi-Cola TOWS matrix:

‘WT’ ANALYSIS

One weakness that Pepsi posses is that it has very strong taste it really feels

that something highly toxic going inside the body, where as the same product of

the coke is not much strong.

They also have a problem of imitators as receives complaints from customers

that they find take product in disguised of Pepsi’s product. During the last years,

it was published in financial post that there has been big complaints from the

customers with regard to the bad taste that they experienced during the span of

six months. If they soon pay no attention towards that this will create a big

problem for them.

Large size may lead to conflicting interests.

New one calorie products have no existing customer base; generic brands can

make similar drinks – cheaper. It is also big threat for any company people may

like or dislike new launching product.

Such as in Pakistan, Hamayun Ahkhtar is its franchisee who has a strong

political support from a political party which is in opposition. In; their era in

government less taxes are imposed on them but relation increases as they

come in opposition. So the selection is not appropriate as this thing is harmful to

their image as well as the strategies. So this may become a big threat for the

Pepsi.

‘WO’ ANALYSIS

They have a lack of emphasis on this in their advertising such as currently when

they losses the bid for official drink in the 96 cricket world cup. They started a

campaign in which they highlight the factor such as “nothing official about it”. If

they don’t focus on sudden changing’s in their advertising then they can convert

this weakness into opportunity.

They lack behind in catering the rural areas and just concentrating in the urban

areas. They should try to increase their distributions and also focus on capturing

rural areas; this will become a big opportunity for them.

The other big weakness on Pepsi is that they don’t pay any attention towards

garments. They may enter in garments business in order to promote their brand

name, by making sports cloths fro players which represent their name by

wearing their clothes. That must increase the customer and income of the Pepsi.

High expenses may have trouble balancing cash-flows of such a large

operation. The staff may show dishonesty. They should try to pay much

attention towards their cash flow, and audit there statements on regular basis.

‘ST’ ANALYSIS

In many countries Pepsi had more expensive products than Coke; such a high

price may limit a lower income family from buying a Pepsi product, therefore

which is a big threat for Pepsi that may Pepsi have to face in the future.

In foreign countries Pepsi have many branches with different flavors as compare

to Pakistan, which has only 2 or 3 Pepsi products. Non-carbonated substitutes,

such as juices and tea brands are maintaining a strong foothold in the market.

Pepsi has a big threat from COKE, which are its main competitor from about 100

years.

Pepsi is a foreign company therefore they have a big threat every time on them

of Political instability and civil unrest.

The whole culture and business operating environment at Pepsi-Cola-West Asia

has quick access to a centralized database and they use computers as business

tools for analysis and quick decision making. Computer breakdowns, viruses

and hackers can reduce efficiency, and must constantly update products or

other competitors will be more advanced.

Continuous efforts to research trends an reinforce creativity, if they fail in their

efforts then there is a big threat for the company. The competitors may get

benefit by their plans.

‘SO’ ANALYSIS

The whole culture and business operating environment at Pepsi-Cola-West Asia

has quick access to a centralized database and they use computers as business

tools for analysis and quick decision making. Internet promotion such as banner

ads and keywords can increase their sales, and more computerized

manufacturing and ordering processes can increase their efficiency and that will

become such a big opportunity for Pepsi.

It has the highest production capacity i.e. 60,000 cases per day is not only in

Pakistan but also in South Asia. Established network of 45 distributors each

supplying 1,100 retailers. High per capita soft drink consumption – average of

22 servings compared to 5 for Pakistan. At will become such a big opportunity.

Due to large production the product of Pepsi is always available in the market

and that will become useful to attract taste lovers customers.

Large No. of diversity businesses is also its main strength as it ahs diversity in

many businesses such as Pepsi beverages, Pepsi foods, Pepsi Restaurants,

and due to large number of diversity they can capture more customer, therefore

it will become such a big opportunity for Pepsi.

Pepsi is also a reputable organization, and is well known all over the world.

Perception of producing a high quality product and strength can become a big

opportunity for Pepsi if they use it in well arranged manner, such as advertising

more and also by conducting concerts to attract more customers.

They maintain a high quality as Pepsi Cola International collect sample from its

different production facilities and send them for lab test in Tokyo, if they show

test reports on label of there products this will also attract customers.

They mainly use celebrities in their advertising campaigning like Imran Khan,

Wasim Akram, and Waqar Younas etc. Also sponsor social activates

programmed like music etc. this will become such a big opportunity to build such

a large number of customers. So we can say that it is one of the big strength

that may become a big opportunity for Pepsi.

Internal analysis is the process of evaluating an organizations strength and weaknesses.

It is important to conduct an internal analysis to find the strengths and weaknesses of

the company. This paper presents an internal analysis of the PepsiCo Company.

Strengths

One of the greatest strengths for PepsiCo is its brand. PepsiCo is one of the companies

with the largest brand recognition in the world (PepsiCo, 2010). The brand name Pepsi is

known in virtually every country in the world. The strong brand presence makes it easier

for the company to market its products around the world. Under the Pepsi company

brand, PepsiCo has numerous other product brands. All these brands have rode on the

success of the company brand and have found it easy to sell since the company brand in

largely accepted in the market. The popularity of PepsiCo corporate brand has also made

it easier for the company to introduce new products in the market. All PepsiCo has to do

in order to make a new product success is to attach it with the company’s corporate

brand which has already attained a significant level of brand loyalty in the beverage

market.

Another key strong point for PepsiCo is a large distribution network. One of the core

elements that define an organization’s success is the organization’s ability to take it

product near the consumer (PepsiCo, 2010). PepsiCo has managed to do this through

establishment of a massive distribution network. PepsiCo runs bottling units in diverse

geographical region which enables the company to produce its products near the

consumers. This reduces the cost of transportation and storage.

In addition, PepsiCo has established relationship with small and mega retailers who sell PepsiCo products to the final consumers. Forming partnership with large retailers such as Wal- Mart has enabled the company to expand its reach to the market. Similarly, partnership with small retail business has enabled the company to take it products to even the remotest parts of the world. Apart from retail chains, PepsiCo has also teamed up with fast food restaurants around the world which have also provided the company with a wide network of outlets (PepsiCo, 2010).

Competitive Advantage

The beverage industry is one of the most competitive industries in the world because it is

filled by numerous products competing against each other. In order to remain in

business, any company needs features that gives it an edge over it competitors (Olsen,

2011). One of the PepsiCo’s competitive advantages is its innovative lines of products.

PepsiCo has been on fore front in the development of innovative beverage products for

different segments of the market. Core has over 20 lines of products with each targeted

to different groups of people. The ability of the company to come up with new and

innovative products has enabled the company to change as consumer’s needs evolve

and thereby remain relevant in the market.

Another competitive advantage of PepsiCo is the ability to respond quickly to market

opportunity and threats. PepsiCo innovativeness gives it the ability to respond quickly to

changes in the market. The company convenient size also gives it the ability to move

quickly. The company is neither to small like most of its competitors neither is to large

like its main competitor, Coca Cola. The relatively large size of the organization gives the

organization access to resources that also make it easier for the company to move

quickly.

Internal Weaknesses

One of the internal weaknesses found in PepsiCo is the company’s reliant on franchised

bottling company to distribute its products (PepsiCo, 2010). This strategy has seen the

company create very powerful bottlers that it cannot exert control over. Sometimes, the

franchises oppose introduction of new products by PepsiCo while other refuse to

manufacture some of the products. Sometimes, the franchises develop their own product

lines that are not part of the PepsiCo’s brands. The franchise system has also limited the

ability of the company to expand its operations (PepsiCo, 2010). Unlike Coca Cola, which

is able to invest in its bottling companies, PepsiCo cannot invest in its bottling companies

since it does not own them. This has hindered the growth and expansion of the company

since most of the individual investors have limited capacity to make such investments.

Lesson Learnt from the Module

Every organization has its strong and weak point and the only way to succeed is by

understanding these points (Schermerhorn, 2010). This knowledge enables an

organization to build on its strengths and improve on its weaknesses thereby becoming

more competitive in the market. Internal analysis is the process used by organization to

evaluate its strength and weaknesses. Competitive advantage refers to aspects that are

unique to an organization and which give the organization an edge over the others

(Olsen, 2011). This implies that, in order for competitive advantage to work for a

company, it must be very difficult for the company to imitate.

References

Olsen E. (2011). Competitive Advantage: Building a Lasting Organization. February 22,

2012. Retrieved

from http://homebusiness.about.com/od/growing/a/comp_advantage.htm

PepsiCo (2010). PepsiCo 2010 Annual Report. February 22, 2012. Retrieved

fro

mhttp://www.pepsico.com/Download/PepsiCo_Annual_Report_2010_Full_Annual_R

eport.pdf

Schermerhorn J. (2010). Management. USA. John Wiley and Son

There are many companies the world over, that conduct PESTLE

analysis on their brands in order to ascertain strategies for the future or

else to understand the market before launching them. It is a fundamental

tool of market planning and strategizing that must be carried out to

comprehend market trends and the systematic risks involved.

PESTLE analysis gives you an overview of the whole situation your

business might be in. Precisely, it is a bird’s eye view of the stimulus and

the scenarios that surround your trade and you business.

PESTLE, is an acronym in which each letter denotes certain factors for

the study. These factors affect the market in many ways and alter the

way strategies are thought of and made. P stands for political factors,

while E stands for economic ones. S has to do with social factors in a

country whereas T sums up all the technological aspects of the market. L

denotes legalities of the environment and E accounts for the

environmental aspects and its influence upon the nature of the trade

you’re in.

Almost every major and minor organization tries to conduct this analysis,

but with regards PESTLE analysis example, I would cite an example of

a real life case study in which PepsiCo, a beverage giant carried out

the PESTLE analysis over its brands.

PESTLE ANALYSIS BY PEPSICO.

PepsiCo is the largest selling beverage the world over, of course after its

arch rival Coca Cola. It accounts for a 37% share of the global beverage

market, and therefore they need to understand each and every country’s

market in order to stay in line with their PESTLE situations.

Pepsi is a big brand, currently holds the 23rd place in the Interbrands

report of the World’s Leading Brands. Their advertisements feature

major celebrities and athletes like David Beckham, Robbie Williams,

Britney Spears, and Michael Jackson etc.

Their market reach is also very diverse, as they’re present in almost

every country from the US to New Zealand. Their PESTLE analysis is

given below:

Political:

Pepsi is a non-alcoholic beverage and is therefore regulated by the FDA

(Food and Drug Administration). So, they’re supposed to maintain a firm

standard of the laws set out by the FDA with consistency. Also, many

different markets across the world have different set of regulations that

are either relaxed or are either stringent. There is competitive pricing by

Pepsi’s competitors and that is one factor that Pepsi has to keep in mind

at all times. The political scenario also matters greatly as there can be

some civil unrest in certain markets or due to inflation the sales of the

product can fall. Most importantly, cross border situations are starkly

different therefore Pepsi has to stay in line with all those policies and

changes so that they can adapt to all those changes accordingly.

Economic:

As the recent economic downturn has plagued the economy, companies

had to restructure their sales and marketing campaigns greatly. Also,

with diminishing profits they had to undergo downsizing internally and

re-think upon how to penetrate the market. Economic conditions have the

highest influence on a business, regardless of what trade it is in. Though,

in Pepsi’s favor, the economic downturn that started in 2008 resulted in

increased sales of its beverages mainly as people were being laid off from

jobs, they were spending time with friends and family or at home.

Social:

Social factors greatly impact Pepsi, as it’s a non-alcoholic beverage it has

to remain in line with the strict and stark differences of cultures the

world over. Also, Pepsi has to communicate its image as a global brand

so that the people can associate it with themselves as something that

connects the world together. Usually, the social implications are seen in

marketing campaigns for example certain countries have religious

festivals, so Pepsi has to keep in line with all those festivals in order to

understand the psyche of their market and how they can cash upon the

opportunity.

Technological:

With the advent of the new age in technology, companies have

completely integrated themselves with all the recent changes that have

taken place. To mention a recent trend that has greatly picked up and

something that almost every business is turning toward is Social Media.

The social media explosion has allowed for increasingly interactive

engagement with the consumers with real time results so Pepsi has to

stay ahead of all the developments that take place with keeping in view

how the youth of today utilizes technology for their benefit and how can

Pepsi reach them in order to keep on increasing brand recall and brand

engagement.

Legal:

There can be many legal implications upon the beverage industry. I

would cite one very famous incident took place in India, where Pepsi was

accused of using contaminated water, given a lab test that was done

upon the water flowing into the Pepsi factory that was located nearby an

industrial estate. A massive recall was issued for the products from

shelves and then the product was tested costing the company many

billions of dollars upon the tests as India is a very major market.

Environmental:

These factors can affect Pepsi, but not immensely alter its trade and

profit generation as these factors affect agri-businesses much more

directly.

PepsiCo has followed a differentiation strategy at the business level due to the

following reasons

The wide portfolio of products including carbonated beverages

and snack foods help it reach out to a vast demography among

the customer base. The assortment of choices enables various

customers to meet their refreshment demands through PepsiCo

products of their preference.

PepsiCo is a global company with operations in several countries.

In order to obtain a share of wallet of consumers in different

regions, it must provide products that are tuned to the tastes and

preferences, prevalent in those local regions. This also explains

the rationale behind having variety of products so that buyers

perceive value for money through their preferred brands.

PepsiCo operates in a duopoly market competing with Coke only.

It need not adopt a cost leadership strategy as both the cola

majors take price signals from each other and adjust markup

prices accordingly, to retain market share and revenue. There has

rarely been an all-out price war between the two which would

have ultimately bled both to huge losses. This allows both players

to compete on the basis of differentiated products targeted at a

wider and more diverse customer base

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Pepsi Co Swot

PepsiCo

SWOT Analysis

Strengths

• Established name and good reputation

• Wide range of products (Diversification)

• Vast distribution channel and easy availability

Weaknesses

• Competitors such as Coca Cola have more market share

• Targets only young customers on promotions

• Overdependence on Wal-Mart

• Overdependence on US markets

• Low productivity

• Image damage due to product recall

Opportunities

• New product can easily penetrate in the market

• Internet promotion and ordering processes

• Broadening of product base

• International expansion

• Growing savoury snack and bottled water market in US

Threats

• Tough rivalry from competitors

• Rising costs in raw materials and travel expenses

• Substitutes (decline in carbonated drink sales)

• Potential negative impact of government regulations

• Potential disruption due to labour unrest

PESTLE Analysis

Political

• Raw material prices becoming worrying

• Land acquisition for new factories

• Government focusing on stricter water pollution norms

• Supposed to maintain firm standard laws set by the FDA

• Competitive pricing

Economic

• New opportunities in other countries

• Fuel price

• Availability of labour

• Economic downturn

Social

• Replenishing water

• Partnership with farmers

• Solid waste management program

• Impact on youngsters

• Different cultures

• Communicate as a global brand

Technological

• Operates in almost all countries

• Newer and more attractive designs

• Newer and better manufacture

• Social media

Legal

• Cross border policies

• Standards and regulations

• Health and safety

Environmental

• CSR

PepsiCo Mission and Vision

http://www.pepsico.com/Company/Our-Mission-and-Vision.html

Our Mission and Vision

At PepsiCo, we believe being a responsible corporate citizen is not only the right thing to do, but the right thing to do for our business.

Our Mission

Our mission is to be the world's premier consumer products company focused on convenient foods and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the

communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity.

Our Vision

"PepsiCo's responsibility is to continually improve all aspects of the world in which we operate - environment, social, economic - creating a better tomorrow than today."

Our vision is put into action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholder value by making PepsiCo a truly sustainable company.

Performance with Purpose

At PepsiCo, we're committed to achieving business and financial success while leaving a positive imprint on society - delivering what we call Performance with Purpose.

Our approach to superior financial performance is straightforward - drive shareholder value. By addressing social and environmental issues, we also deliver on our purpose agenda, which consists of human, environmental, and talent sustainability.

2. Company Analysis: External Analysis PEST Analysis: The Pest Analysis

identifies the political, economical, social a technological influences on an

organization. Political influences: - The production distribution and use of

many of PepsiCo productPepsi Marketing Paper

Goals and HistoryPepsiCo, Inc., with corporate headquarters in Purchase, New York, is one of the most successful

companies in the world, with annual revenues of over $20 billion and about ...

are subject to various federal laws, such as the Food, Drug and Cosmetic

Act, the Occupational Safety and Health Act ad the Americans with

Disabilities. - The businesses are also subject to state, local and foreign

laws. - The international businesses are subject to the Government stability

in the countries where PepsiCo is trying get into (underdeveloped markets).

- The federal, state, local and foreign environmental laws and regulations. -

The businesses are also subject to de taxation policy inThe Pepsi-Cola Story

Summer of 1898, a young pharmacist Caleb Bradham looking for ways to attract people to his pharmacy invented the

beverage now known around the world as Pepsi-Cola. After the first ...

each country they are operating. - They also have to comply with federal,

state, local and foreign environmental laws and regulations. Economic

influences: - The companies are subject to the harvest of the raw material

that they use in their snack foods, soft drink and juice, like corn, oranges,

grapefruit, vegetables, potatoes, etc. - Because of they rely on trucks to

move and distribute many of their products, fuel is also an important

subject, so they are subject to thePepsi Cola Marketing Mix

Pepsi Cola Marketing Mix Pepsi Co., one of today s leading soft drink companies, has not only revolutionized the soft

drink industry with its creative marketing techniques and unforgettable taste, ...

fuel prize fluctuation, and to possible fuel crisis. - Operating in International

Markets involves exposure to volatile movements in foreign exchange

rates. The economic impact of foreign exchange rates movements on them

is complex because such changes are often linked to variability in real

growth, inflation, interest rates, governmental actions and other factors. -

PepsiCo is also subject to other economical factors like money supply,

energy availability and cost, business cycles, etc. Sociocultural influences: -

PepsiCo and moreover Pepsi isInternational Business - Coca Cola Entering The Indian Market

Introduction To give a short introduction to the circumstances affecting this case of Pepsi & Coca Cola it has to be said

that in general it is not just simple ...

subject to the lifestyle changes, because of it bases her advertising

campaigns in a concrete kind of people with an special lifestyle, it is for that

PepsiCo has to pay a special attention on the lifestyle changes. -

Particularly in the United States Pepsi drinkers are very defined, there is a

kind of people who drinks Pepsi another kind who drinks Coca-Cola, it is for

that they have to pay attention to the social mobility for not losing a

possibleMarketing Mix Of Pepsi-Cola

Today’s PepsiCo, Inc. was found in 1965 through the merger of Pepsi Co and Frito-Lay, the world’s largest

manufacturer and distributor of snack chips. In 1998, it acquired Tropicana, the ...

market. - Taking into account that PepsiCo is trying to introduce itself in

underdeveloped markets, they have to be careful with the possible

problems with the governments of this countries, and with the problems

could rise from PepsiCo act with the people of this countries. Technological

influences: - PepsiCo is subject to new techniques of manufacturing, for

their three business sectors, snack food, juices and soft drinks. - It has to

pay attention to the new distribution techniques. - AndFrito-Lay Tostistos

Frito-Lay’sTostitos In 1932, Elmer Doolin, who was in the icecream business, bought a recipe for corn chips from a

Mexican man who was eager to leave the states and ...

they have to fix their attention in the competence developed, to know about

the new products.

Porter’s Diamond: The Porter’s Diamond Analysis tries to explain the

Competitive Advantage of Nations. There are four attributes of a nation

comprise Porter’s Diamond of national advantage, they are:

Factor Conditions: The basic factor conditions are natural resources,

climate, location, the more advanced factor conditions are skilled labour,

infrastructure and technology. There are some of these factors that can be

obtained by any companyFrito-Lay Tostistos

Frito-Lay’sTostitos In 1932, Elmer Doolin, who was in the icecream business, bought a recipe for corn chips from a

Mexican man who was eager to leave the states and return ...

(like unskilled labour and raw materials) and, hence, do not generate

sustained competitive advantage. Even though, we have to take into

account that specialized factors involve a heavy and sustained investment,

we have to know that if we are able to achieve them, we could generate a

competitive advantage. Some of the factor conditions PepsiCo has to take

into account, in each country where they want to introduce are -

Unemployment. - Interest rate. (Short term, long term). - LabourFrito-Lay Tostistos

In 1932, Elmer Doolin, who was in the ice-cream business, bought a recipe for corn chips from a Mexican man who was

eager to leave the states and return home. ...

legislation.

Demand Conditions: We have to know that the nature of a country

demand makes PepsiCo dependent on them. For example if in one country

exists a sophisticated demand, these customers pressure firms to be

competitive. Is for that, firms that face a sophisticate domestic market are

likely to sell superior products because the market demands high quality

and a close proximity to such customers enable the firm to better

understand the needs of the customers, in the same wayFinancial Analysis

Created by EDGAR Online, Inc. COCA COLA CO Income Statement2 Period End: Dec 31, 1999 Date Filed: Mar 9,

2000 Values in this worksheet are ...

it is easier spread their firms in the global market. Some of the demand

conditions PepsiCo has to take into account en the countries where they

want to introduce are: - Expectation of customers. - GNP & RPI. -

Competitive research (trends) - And with competitors are established in the

country. Related and Supporting Industries: For any company it is really

important the Related and Supporting Industry. Knowing who are the range

of suppliers, and the related industries, is necessaryGun Control

Warren Cooksey 10/11/01 Starbucks Coffee Given the evaluation, Starbucks appears to be pursuing its goals

aggressively. The company has taken on the globe in such markets as Asia and ...

for deciding where we have to place our company. In some cases the

concentration of related and supporting industries provoke the

concentration of the similar industries in the same areas. Some advantages

and disadvantages of locating close to your rival may be: Some

advantages to locating close to your rivals may be: o Potential technology

knowledge spillovers, o An association of a region on the part of

consumers with a product and high quality and therefore some market

power,Coke Extract

Australia Blocks Bid By Coke to Purchase Cadbury Beverages The Coca-Cola Company has come under recent fire in

most of its international markets. The Chairman Douglas Ivester has made a ...

or o An association of a region on the part of applicable labour force. Some

disadvantages to locating close to your rivals are: o Potential poaching of

your employees by rival companies and o Obvious increase in competition

possibly decreasing mark-ups.

Firm Strategy, Structure & Rivalry: Concerning to the strategy and the

structure of the firm, they would be conditioned by the tradition of the

country. There are different management styles in each country, and

besidesSoft Drink Industry Case Study

Soft Drink Industry Case Study Table of Contents Introduction 3 Description ...

they vary depending on the industry. PepsiCo has to study the different

styles of management, for acting in the best way in each country, adapting

its strategy and its structure as far as possible. As far as possible the

rivalry, in general is better the national than the international. In the case of

PepsiCo (Pepsi) ;for them it is more advisable that when they are

introducing in a new market, its main rival (Coca-Cola) not be positioned or

at leastCeo Pay

1 November 1999 CEO Compensation The lead story in the March 31, 1997 issue of The Wall Street Journal was an in

depth study of the life of a seventy-three ...

it is not to absolute leader of the market. Five Forces We do the same

analysis for the three different markets of PepsiCo: the soft drink market,

the snacks market and the chilled orange juice market. We treated the

three markets as a the same industry, with some exceptions as the

competence The threat of entry Established brands with a lot of experience

in the market that a have a good channel of distribution. The brands deliver

the products

Pizza Hut In Brazil

Pizza Hut in Brazil Starting a business in a new country requires a lot of research. It is important to understand that

country's political and economic system as well as ...

directly to the supermarket, this means that is necessary a big company

structure (lorries, warehouses, producing plants, etc.) to arrive at retailers

and supermarkets, all of this requires a big investment of money. Suppliers

Well looks that at first sight, suppliers are not a problem because it�s easy

to find potatoes, corn and oil suppliers. The problem that we find here is the

possibility of variability of prices in the raw materials caused for example by

a bad year ofPhilosophy - Coca Cola

Objective 1: the origin, relevence, and methodology of the social sciences by analyzing philosophy.Drink Coke and be

niceCoca-Cola s CEO espouses a gentler business planWilliam J. HolsteinUS NEWS 6/9/97 The ...

harvesting, or there is another petrol crisis. Also in some countries that

have not petrol normally fuel petrol is more expensive and the fuel

suppliers have an oligopoly of the market. Buyers Considering that buyers

are the final consumers, we can say that in this markets the consumers get

used at one kind of taste, and they have this products for the importance of

the brand, it�s a marketing issue as well. Substitutes In these three

markets is quite difficultHas General Electric Conquered The Business Cycle

Has General Electric conquered the business cycle? According to the companies past three financial statements it

appeared as if they have indeed done so. Looking at GE's 1996 Annual ...

to find substitutes. More than substitutes we can talk more of fashion,

trends, or costumer�s tastes. Suddenly people stop has orange juice for

breakfast and take more milk or coffee in mornings. It�s quite difficult to

find a substitute for these products because normally the people get used

at one kind of taste of cola for example, then is very difficult to try to adapt

the public to a new cola. Competitive Rivalry Well these three markets are

really fullCoke - Pepsi Management Report

In the late years of the 19th century, a new industry was getting born. An industry that was to become established as a

major player in the market later in ...

of rivalry. First there is the Cola market where Coca-Cola owns an

incredible 51% market share, followed far away Pepsi with a 21% of market

share, is very difficult to penetrate in this market. Then there is the Snack

market where Lays have the 40% of market share, the second most

important brand is Procter &Gamble (P&G), in this market the shares are

more distributed, but still being two majors competitors that have most of

the market. An atCoke Vs Pepsi

Mounting competition between Coca-Cola (Coke) and Pepsi Cola (Pepsi) had a very long standing in the American

history. Both cola have thus made themselves a household name in the global ...

the last we have the