PepsiCo, Inc.

(stylized as PEPSICO) is an American multinational food, snack

and beverage corporation headquartered in Purchase, New York. PepsiCo has
interests in the manufacturing, marketing and distribution of grain-based snack
foods, beverages and other products. PepsiCo was formed in 1965 with the merger of
the Pepsi-Cola Company and Frito-Lay Inc. PepsiCo has since expanded from its
namesake product Pepsi to a broader range of food and beverage brands, the largest
of which have included an acquisition of Tropicana Products in 1998 and the Quaker
Oats Company in 2001, which added the Gatorade brand to its portfolio.

The Pepsi logo circle with the top half is red,the bottom half is blue,and a wavy white
line runs though the centre.the red,ehite and blue colors have always represented the
Amercian Flag.But there are more secrets in this logo then just shapes and clor of the
flag.The new special design represent magical secrets such as the earths magnetic
filed.Phytagoras geodynamics,the theory of relatively,and the golden ratio.

SWOT analysis as a tool for strategy development, we talked about internal factors
(strengths and weaknesses) and external factors (opportunities and threats) that can
have an impact on business.
Strengths

1.
2.
3.
4.
5.

Comprehensive product portfolio with more than 100 brands serving nearly
every niche in the beverage, food and snack industries
Brand recognition and reputation
Focus on innovation and customer- oriented products
One of the largest and the most efficiently used advertising budgets among
beverage and food companies
Strong distribution network, which enables partnerships with some of the
largest beverage brands
Weaknesses

1.
2.

Overdependence on income from Walmart stores and other retailers

Overdependence on sales from U.S. market
Opportunities

1.
2.
3.

easily

Growing alcoholic beverage industry

Expansion of ready-to-drink coffee market in U.S.
Growing RTD tea market with many smaller brands that can be acquired

Threats
1.

Concerns over obesity and potentially dangerous substances may reduce

demand for some of the companys products
2.
Poor quality water and its scarcity could negatively impact PepsiCos
production costs and capacity
3.
Increased competition in beverage, food and snack industries could hurt
PepsiCos business
4.
The rising U.S. dollar exchange rate

Strengths
1. Comprehensive product portfolio with more than 100 brands
serving nearly every niche in the beverage, food and snack
industries.
Commencing operations in 1965, PepsiCo has become the second largest
food and beverage company in the world today. The company earned
US$63.056 billion in 2015, second only to Nestl S.A.. PepsiCo was able to
achieve this via strengthening its product portfolio and offering as many
different beverages and foods as possible.
he company sells around 100 different brands, of which 22 have each
generated more than US$1 billion dollars in 2015.[1] In addition, more than 10
brands have generated between US$500 million and US$1 billion in revenue.

Figure 1. Brand portfolio by worlds largest food and beverage companies

Source :Company Official Website.

Source:Company Financial Report .

PepsiCos brand portfolio is highly diversified and only The Coca-Cola Company has
more brands in the beverage, food and snack industries. No competitor has as many
high earning brands as PepsiCo.
1.PepsiCo is better equipped to satisfy the needs of its customers with its wide variety
of successful products.
2. For example, Lays can be replaced with Doritos, Cheetos, Ruffles, Tostitos or
Fritos, so if one product doesnt satisfy a consumers needs, PepsiCo can offer many
more choices.
3.T herefore, changes in customer tastes do not affect the company as severely as
they would other companies.

2. Brand recognition and reputation.

1.PepsiCo owns and markets some of the most recognizable global brands, including
Pepsi, Tropicana, Gatorade, Mountain Dew, Aquafina, Lays, Doritos, Cheetos and
many other popular brands. According to Interbran and Forbes..
2.The Pepsi brand is respectively the 24th and 29th most valuable brand in the
world, worth US$19 billion in both rankings lists. Forbes also identified Frito-Lay as
the 38th most valuable brand in the world, worth US$13.1 billion.
3.Except for Coca-Cola and Sprite, no other non-alcoholic beverage brand besides
Pepsi has been recognized as being one of the top 100 most valuable brands in the
world.

Source: From Internet.

Weaknesses
1. PepsiCo is highly dependent on domestic market in the USA and 56 per cent
of total revenues were generated in the USA. As it is illustrated in Figure 1
below, revenues generated from Mexico, Russia and Brazil accounted to only 6
per cent, 4 per cent and 2 per cent of the total revenue respectively, despite the
immense sizes of these markets. These figures can also be interpreted as weak
PepsiCo presence in these strategic markets.

{ Revenue distribution in international markets}

2. Overdependence on large supermarkets in general and Wal-Mart in particular

is PepsiCos considerable weakness. In 2015, sales to Wal-Mart Stores,
including Sams Club, represented approximately 13 per cent of companys net
revenue. PepsiCos five retail customers represent approximately 32 per cent
of its 2015 net revenue in North America, with Wal-Mart (including Sams)
representing approximately 18 per cent.

Uses Of SWOT Analysis

Another advantage of a SWOT analysis is that it concentrates on the most important
factors affecting your business. Using a SWOT, you can:

understand your business better

address weaknesses

determine threats
capitalise on opportunities

take advantage of your strengths

develop business goals and strategies for achieving them.

PEST Analysis
Introduction and Definition
1.PEST analysis is a framework that helps ascertain aspects of various external
factors (political, economic, sociological, and technological, or PEST) that can mean
opportunities or threats for a business concern.
2.The main difference between a SWOT analysis and a PEST analysis is that while
SWOT identifies the overall feasibility of a business proposition or idea at a point in
time, a PEST analysis evaluates the market a company hopes to enter.
3.Although the quality of leadership and extent of financial resources decide a
companys future, the macro-environmental milieu represented by the PEST factors
also greatly influence its prospects.
The most important aspect of these factors is that a company or business has no
control over them and can only manage them as best as it can. This is why it has to
evolve strategies to counter these factors, and this is where an analysis of the factors
helps.

PEST analysis template

How exactly do PEST factors impact a business ?

Image Credit: creately.com

PEST analysis of PepsiCo-

Introduction

PepsiCo, the largest beverage company in the world, accounts for about 40 percent of
the beverage market globally.
It operates in 150 countries, including India. Using a PEST analysis, let us see what
changes in PepsiCos external environment (PEST factors) in these countries might
affect the expectations of its global results.

Political factors

Governments may changes their tax policies and tax rates, which would affect
profits.

Governments could bring in stricter capital transfer laws and labour laws,
which would affect its resource and employee management, respectively.

Civil unrest and political instability exist in some countries, which may
unsettle its expansion plans.

Economic factors

Although the economies of many countries are showing signs of recovery, the
threats of recession continue, which would affect consumer spending.

Rapid fluctuations in currency rates have influenced the prices of raw

materials, which would force the company to review its sourcing plans.

Social factors

Consumer awareness about the impact of carbonated drinks is increasing,

which would affect sales.

Healthy lifestyles are gaining popularity, which, again, would affect sales.

Technological factors

Technological innovations have been made in beverage manufacturing, which

would help maintain product quality.

Internet-enabled technology has benefited manufacturing, which would

facilitate smooth processes.

Uses of PEST analysis

Why is PEST analysis used and how is it helpful?

A company may have all the information it requires about the quality of its
infrastructure, the extent of funds, and the employee talent available to it, but it may
not be fully aware of the external environment in which it is to operate or launch a
new project.
A PEST analysis helps it to study all these factors and evolve a strategy to take
advantage of, or to overcome, these factors.
A PEST analysis helps in decision-making and timing. For example, a company can,
through a PEST analysis, find out the factors both in favour of and detrimental to the
launch of a project, and decide on the timing of launch.

PepsiCo Porters Five Forces AnalysisPorters Five Forces analytical framework developed by Michael Porter (1979) focus
upon five separate forces that shape the overall intensity of competition in the
industry. These forces are represented in-

PepsiCo Porters Five Forces

Bargaining power of PepsiCo suppliers is insignificant. The main
ingredients used by PepsiCo to produce its beverages, food and snacks include apple,
orange and pineapple juice and other juice concentrates, aspartame, corn, corn
sweeteners, flavorings, flour, grapefruit and other fruits, oats, oranges, potatoes, raw
milk, rice, seasonings, sucralose, sugar, vegetable and essential oils, and wheat .
PepsiCo purchases from a large number of suppliers and the bargaining power of
each individual supplier is low due to the lack of uniqueness of products supplied.
Furthermore, high level of importance for each supplier to have business with
PepsiCo and PepsiCos ability to switch suppliers can be specified as important
factors that reduce PepsiCo supplier bargaining power.

Rivalry among existing firms is highly intensive. Beverage, food and snack
manufacturing industry is highly competitive. The major brands competing with
PepsiCo include but are not limited to The Coca Cole Company, DPSG, Kellogg
Company, The Kraft Heinz Company, Mondelez International Inc., Monster
Beverage Corporation, Nestl S.A., Red Bull GmbH and Snyders-Lance, Inc.
The Coca Cola Company is PepsiCos primary competitor and the US market share of
these two brands amount to 20 per cent and 24 per cent respectively. On the global
scale, on the other hand, Coca-Cola has a leadership position with a market share of
about 48.6 per cent compared to PepsiCos market share of 20.5 per cent

Market share of carbonated beverages worldwide as of 2015

Threat of substitute products for PepsiCo is significant.

The range substitutes for PepsiCos beverage products include tea, coffee, tap
water and a wide range of other drinks and beverages. Nuts, chocolate and various
foods represent substitute products for PepsiCos snack and food product category. It
is important to note that the majority of substitutes of PepsiCo food, snacks and
beverages are healthier choices from the nutritional point of view and this fact
further increases the threat of substitute products for PepsiCo. Moreover, there is no
cost for consumers to switch to substitute products and it can be argued that buyers
propensity to substitute may be increasing due to their increasing awareness about
negative health implications of carbonated drinks and salty snacks and food.

ABC analysis
The ABC analysis (or Selective Inventory Control) is an inventory
categorization technique. ABC analysis divides an inventory into three categories- "A
items" with very tight control and accurate records, "B items" with less tightly
controlled and good records, and "C items" with the simplest controls possible and
minimal records.

The ABC analysis provides a mechanism for identifying items that will have a
significant impact on overall inventory cost,[1] while also providing a mechanism for
identifying different categories of stock that will require different management and
controls.
'A' items are very important for an organization. Because of the high value of these 'A'
items, frequent value analysis is required. In addition to that, an organization needs
to choose an appropriate order pattern (e.g. Just- in- time) to avoid excess capacity.
'B' items are important, but of course less important than 'A' items and more
important than 'C' items. Therefore, 'B' items are intergroup items. 'C' items are
marginally important.
ABC ANALYSIS CATEGORIES.There are no fixed threshold for each class, different proportion can be applied based
on objective and criteria. ABC Analysis is in that the 'A' items will typically account
for a large proportion of the overall value but a small percentage of number of items.
Example of ABC class are

A items 20% of the items accounts for 70% of the annual consumption
value of the items.

B items - 30% of the items accounts for 25% of the annual consumption
value of the items.

C items - 50% of the items accounts for 5% of the annual consumption value
of the items.

Another recommended breakdown of ABC classes:

1. "A" approximately 10% of items or 66.6% of value
2. "B" approximately 20% of items or 23.3% of value
3. "C" approximately 70% of items or 10.1% of value