Introduction:

PEPSICO

Donald M. Kendall of Pepsi-Cola and Herman W. Lay of Frito-Lay founded PepsiCo,

Inc. through the merger of both companies in 1965 Caleb Bradham, who was a N.C.
pharmacist, created the Pepsi-Cola company itself during the 1890s The Frito-Lay, Inc.
was formed during 1961 through a merger of the Frito Company and the H. W. Lay
Company .Herman Lay is the chairman of the Board of Directors of the newly created
PepsiCo company while Donald M. Kendall is president and chief executive officer The
new company has 19,000 employees and sales of over 500 million dollars per year
.Some of the products of the Pepsi-Cola Company are Pepsi-Cola which was developed
in 1898, Diet Pepsi developed in 1964 and Mountain Dew, created in 1948

Mission Statement Analysis:

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 The PepsiCo mission statement talks about their
products, being food products, which are easy to eat including consumer beverages.
The PepsiCo mission statement also talks about the companys concern for its financial
stability, its concern about the enrichment of its employees and its concern for how it
operates its business. The statement shows concern about how the company will
operate, with integrity and honesty. The PepsiCo mission statement also shows concern
about its business partners and the public, operating with fairness and integrity.

The Internal Matrix:

Internal Matrix for PepsiCo
Key Internal Factors
Key
Strengths

Weighte
Weight Rating d
Score

Adjust costs downward in economic

climate

0.11

0.33

The unification of bottling plants

0.12

0.48

Diversified product line including snacks,

juice
0.1

0.40

Expanding into other countries

0.09

0.27

Company is run by experienced

management

0.08

0.32

team
Key
Weaknesses
1

Adjust costs downward in economic

climate

0.11

0.33

Increase healthy foods divisions

0.11

0.33

Expand research and development

0.09

0.27

Expand marketing to web related media

outlets

0.08

0.32

Reduce long term debt

0.11

0.22

Total

3.79

The average total weighted score for PepsiCo is 3.79, which is above average for
companies in the consumer food category. This is to be expected since they are
number two in market share with the Coca-Cola company number one. The two have
battled for market share for many years, but also combined dominate this industry.
PepsiCo had a diversified product line from carbonated beverages, non-carbonated

teas, sports drinks, fruit juices as well as snacks like potato chips, baked snacks and
various healthy snack products.

External Matrix:
External PepsiCo Matrix
Key External Factors
Weighte
Weight Rating d

Opportunities

Score
1

Increase in carbonated soft drink usage

in Asia

0.12

0.36

0.12

0.36

0.09

0.36

0.08

0.16

Gain shelf space through product synergy 0.09

0.27

Carbonated soft drink market in decline

0.12

0.36

Industry operates unchanged

0.09

0.18

Campaign against bottle water affecting

usage

0.09

0.18

Kellogg and Nabiscos growing snack

divisions

0.10

0.20

and Europe
2

Increased demand for sports drinks and

flavored
waters

Expand into Brazil through its current

acquisition
of Amacoco Nordeste Ltda

Expand low cost line to compete against

house
brands

5
Threats

Extensive marketing needed driving

marketing

0.10

0.20

costs up
Total

2.63

The average total weighted score is 2.63

PepsiCos total weighted score is 2.63, which is slightly above average for
companies in the consumer beverage and snack industry

The Competitive Factor Evaluations Matrix:

PepsiC
o

Coca-Cola

Nabisco

Critical Success
Factors

Weight

Rating

Score

Rating

Score Rating

Score

Brand recognition

0.14

0.56

0.70

0.42

Product Quality

0.13

0.52

0.52

0.52

Price
Competitiveness's

0.12

0.36

0.36

0.36

Management

0.12

0.36

0.36

0.36

Financial Position

0.13

0.39

0.52

0.39

Customer Loyalty

0.11

0.33

0.44

0.33

Global Expansion

0.12

0.36

0.48

0.36

Market Share

0.13

0.39

0.52

0.39

Total

1.00

3.27

3.90

3.13

The Competitive Factor Evaluations Matrix shows that PepsiCo is out competing
Nabisco but not its chief rival Coca-Cola. PepsiCo produces high quality brand name
products that compete on price with Coca-Cola.

SWOT Matrix:

SWOT
Strengths S

Weaknesses W

1. Brand Recognition
2. The unification of bottling
plants
3. Diversified product line
including

1. Adjust costs downward in

snacks, juice
4. Expanding into other
countries
5. Company is run by
experienced

3. Expand research and

management team

related media outlets

economic climate
2. Increase healthy foods
divisions

development
4. Expand marketing to web
5. Reduce long term debt

Opportunities O

SO Strategies

1. Increase in carbonated soft

drink
Increase variety of sports or
healthy type snacks aligned
usage in Asia and Europe
with
2. Increased demand for
sports
flavored waters. (S3,O2)
Use Brazilian bottler to
drinks and flavored waters
expand into
3. Expand into Brazil through Brazil and other regions in
its
South
current acquisition of
Amacoco
America. (S4,O3)
Nordeste Ltda
4. Expand low cost line to
compete
against house brands
5. Gain shelf space through
product
synergy

Increase brand name low cost

line
for bargain shoppers. (S1,O4)

WO Strategies

Create carbonated health

waters.
(W2,O2)
Develop new low cost snacks
and
beverages. (W3,O4)
Expand global sale to offset
long
term debt. (W5,O1)

Threats T
1 Carbonated soft drink
. market in
decline
2 Industry operates
. unchanged
3 Campaign against bottle
. water
affecting usage
4 Kellogg and Nabiscos
. growing
snack divisions
5 Extensive marketing
. needed

ST Strategies
Experiment with other types
of
beverage containers based
on
regional market. (S4,T2)
Develop powdered drinks.
(S4,T3)
Management signing
strategic
partnerships with smaller
snack
companies. (S5,T5)

WT Strategies
Increase marketing of colas
on
alternate media outlets.
(W4,T1)
Restructure company by
paying
down debts. (W5,T2)
Redesign water bottles for
less
plastic, or develop
biodegradable
bottles. (W3,T3).

driving marketing costs up

PepsiCos SWOT matrix shows that they have room to create new types of
products and packages for those products that will expand their market and reduce
their costs. They can use these new products and packages as they expand into
other countries while regionalizing those products to the areas which they serve.
They must reduce their total long term debt and can do this through decreasing the
amount of packaging they use in their products while reducing their fixed costs. The
case shows that PepsiCo is already reducing fixed costs, however reducing package
costs can only help them at this time.

Space Matrix:
Financial Position

Ratings

Leverage

Liquidity

Working capital

Cash flow

3
10

Industry Position

Growth potential

Profit potential

Financial stability

Resource utilization

2
11

Stability Position
Technological changes

-1

Price range of competing products

-3

Competitive Pressure

-4

Price elasticity of demand

-4
-12

Competitive Position
Market Share

-2

Product quality

-1

Customer loyalty

-3

Product lifecycle

-2
-8

Conclusions:
FP Average = 10/4 = 2.5
IP Average = 11/4 = 2.75
SP Average = -12/4 = -3
CP Average = -8/4 = -2
Space Matrix Coordinates:
X-axis: CP+IP or (-2 +
2.75) = .75 Y-axis: FP+SP
or (2.5 + -3) = -.5

Competitive:

Intensive strategies
Integration

Quntitative strategic planning matrix:

Altenate
No.01
Mkt
Penetration
Strengths
1.Adjust costs downward
in economic climate
2.The unification of

Weig
ht

Alternate No.02
Mkt Development

AS

TAS

AS

TAS

0.33

0.44

0.48

0.36

0.2

0.4

0.36

0.27

0.32

0.16

0.33

0.44

0.22

0.11

0.27

0.09

0.16

0.32

0.33

0.44

0.48

0.36

0.36

0.48

0.18

0.27

0.08

0.16

0.11

bottling plants
3.Diversified product line

0.12

including snacks, juice

4.Expanding into other

0.1

countries
5.Company is run by

0.09

experienced
management team

0.08

Weakness
1.Adjust costs downward
in economic climate
2.Increase healthy foods

0.11

divisions
3.Expand research and

0.11

development
4.Expand marketing to

0.09

web related media

outlets

0.08

5.Reduce long term debt

0.11

opportunities

1:00

1.Increase in carbonated
soft drink usage in Asia
and Europe
2.Increased demand for

0.12

sports drinks and

flavored waters
3.Expand into Brazil

0.12
0.09

through its current

acquisition of Amacoco
Nordeste Ltda
4.Expand low cost line to
compete against house
brands

0.08