Internal And Environmental Analysis Of Pepsico Business Strategies

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Abstract

PepsiCo is engaged in a low cost strategy to differentiate by taking advantage of economies of scale through mass production of its products and by changing its products through taste and marketing.

In this report, PepsiCo’s business strategy and company was analyzed, based on internal analysis and environmental analysis in the first section of the mission.

It was emphasized that PepsiCo adopts a cost-driven strategy, a broad differentiation at the business level, and adoption of the company’s diversification strategy. Some of the recommendations and suggestions have been developed for PepsiCo to maintain its competitive advantage in the market within the strategies adopted.

Introduction

Pepsi is one of the leading brands of snacks and beverages with 22 iconic brands in its portfolio. It is constantly innovating its marketing strategy and products to create faster growth worldwide. As competition intensifies in the soda industry, each brand has to invest a lot in marketing. Product innovation has also become a key to increasing brand popularity and competitiveness. Pepsi added more healthy and nutritious options to its range of products. Apart from that, they invest heavily in marketing, research and development.

Today, Pepsi and its products are recognized worldwide for their sales in more than 200 countries. Its investments in digital technology have begun to bear fruit and the remarkable financial results for 2018 have been the result of PepsiCo’s efforts over the past five years. Now, the soda giant focuses on CSR and sustainability to maintain a great image and reputation.

Corporate Strategy

The most appropriate strategic direction is determined by Ansoff’s matrix analysis in this section.

Market Penetration

PepsiCo focuses on developing an effective business strategy to ensure market penetration in different regions of the world. To ensure the development of an effective marketing penetration strategy, PepsiCo focuses on product proliferation. Through product deployment, the organization offers different types of products to accelerate business revenue growth. PepsiCo was able to increase its market share by extending its production lines, resulting in increased operating revenues and revenues. In 2016, the organization was able to increase the level of financial profitability by earning nearly US $ 63 billion. Due to the effectiveness of the product spread strategy, the organization was able to offer a range of products ranging from food to drinks. Apart from Pepsi, other products such as Lays, Mountain Dew, Diet Pepsi and others have gained popularity among product users.

Taking into account the increasing level of health awareness among customers, PepsiCo introduced Diet Pepsi to improve sales performance. In addition, the organization has been able to increase and update the existing product range. PepsiCo was able to facilitate the attraction of new customers as well as customers of competitors. The strategy of increasing access to and promotion of existing PepsiCo products has helped improve sales performance. In these ways, the Foundation has been able to ensure the effective implementation of marketing penetration in different continents, such as Asia, Latin America and so on.

New product / Service Development

PepsiCo has been able to increase business profitability by focusing on product development. No product can be developed if innovation is not given the utmost importance. Innovation can be ensured by giving importance to R & D activities. Improving product quality was given utmost importance. PepsiCo has been able to increase its strength by improving the quality of food and beverage products. The role of organizational leadership cannot be denied when it comes to improving the quality of service and products. The continued focus on quality and innovation helped PepsiCo maintain its market share in the market leading to improved business profitability. In addition, the Organization has been able to increase the level of effectiveness of business activities through adjustments in the current range of its products.

Diversification

The diversification strategy helped PepsiCo increase its market share around the world. In the United States and India, products such as Tropicana, Mountain Dew etc. have gained popularity among consumers, facilitating the increase in sales. As a result, the organization has been able to complete a strong achievement for its competitors such as Coca Cola, Kellogg, and Con Agra and so on. M & A efficiency has paved the way for PepsiCo to earn billions and billions of business revenues, improving business performance. The role of aggressive campaigns can be noted in this regard because they have played a prominent role in increasing the effectiveness of their promotional activities

Market Development

This includes the production of a new class of goods that complement the existing portfolio, in order to penetrate a new but linked market. PepsiCo’s diversified portfolio is as follows: 1) Fun for you, which includes soft drinks and snacks; 2) Best for you, which contains low calorie versions of its products; and 3) good for you, their health products. Diversification involves the entry into a new industry that lacks significant similarities with the company’s current markets. PepsiCo generally avoids dangerous adventures in unknown areas, and can instead take advantage of its brand strength to continue growth within the beverage and snack industry. However, PepsiCo offers some exotic commodities such as combining coffee with Pepsi, and some vegetables.

Corporate Level Strategy

PepsiCo is recommended to adopt a corporate strategy for related diversification. Cola and snack foods will lead to synergies in corporate activities. While beverages can be produced in large quantities in bottling plants, separate manufacturing facilities for light foods will be needed. Raw materials will be purchased through different methods. The components of the cola are water, sugar, chemicals and plastic or glass bottles and can be obtained freely or from institutional suppliers such as sugar mills, bottlers and so on. Inputs for light foods from cultivated vegetables will be through contractual farming. PepsiCo has a Broad range of products offered by. They make everything from Pepsi Cola to Lye chips. PepsiCo has more than $ 20 billion under its umbrella. Why do they keep a Broad range of products? PepsiCo maintains a corporate-level corporate growth strategy to reap the benefits of economies of scale and enjoy the benefits of product differentiation by using cross selling and increasing market bargaining power.

Most PepsiCo marks are divided into one of two categories: snacks or drinks. All these brands are linked in terms of being low cost consumers and packaged for people to buy. Because PepsiCo has many brands, they are able to take advantage of economies of scale when producing their products. Instead of multiple companies producing different brands in separate locations, Pepsi is able to increase the utilization rates of all its facilities. This reduces overall costs. In addition, PepsiCo can take advantage of the product differentiation they enjoy by promoting less-known products to customers of their most famous brands. This PepsiCo cross sale allows for nearly all of its snack customers’ needs. Finally, a Broad range of PepsiCo brands allow them to enjoy more bargaining power in the market. With both suppliers and vendors, PepsiCo can use its size to its advantage when negotiating contracts. This gives them an advantage in many respects.

Business Level Strategy

The overall strategy of the company (based on the Porter model) defines the basic strategy used to maintain competitive advantage. On the other hand, PepsiCo’s aggressive growth strategies are in response to the evolving global food and beverage market conditions. Intensive growth strategies define how companies support their growth. PepsiCo’s success is an indicator of the suitability of these strategic trends, particularly how the overall strategy supports competitiveness.

PepsiCo General Strategy (Porter Model)

PepsiCo applies different general competitive strategies, taking into account a Broad range of company products. However, the main general strategies that contribute to PepsiCo’s competitive advantage are as follows:

Cost Leadership

Broad differentiation

PepsiCo uses cost leadership as a basic general competitiveness strategy. This overall strategy focuses on cost reduction as a way to improve PepsiCo’s financial performance and overall competitiveness. For example, to compete with Coca-Cola products, PepsiCo offers low prices based on low operating costs. The company also offers special promotions at discounted prices. PepsiCo, on the other hand, uses broad differentiation as a general competitive strategy. This overall strategy provides a competitive edge for businesses by attracting consumers to some of the unique features of the company’s products.

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For example, PepsiCo’s Lay chips are marketed as a healthy snack product due to low saturated fat. The strategic objective of the CST strategy is to automate production processes to reduce PepsiCo’s operating costs. In relation to PepsiCo’s overall strategic objective of broad differentiation is to create products to address concerns about its health effects.

PepsiCo Intense Strategies (Intensive Growth Strategies)

Market penetration

PepsiCo applies market penetration as an essential growth strategy. This intensive strategy supports business growth through increased sales, as is the case with a larger market share. For example, PepsiCo uses strong marketing to attract more consumers. The strategic objective of this aggressive growth strategy is to reduce costs and prices to attract more consumers despite the market saturation. As such, PepsiCo’s overall cost-competitiveness strategy supports this aggressive growth strategy.

Product Development

PepsiCo’s strategy for secondary intensive growth is product development. This intensive strategy requires new products to attract more consumers. For example, PepsiCo continues to develop products or different forms of current products, such as low calorie alternatives, low salt, or low saturated fat for its food and beverage products. The strategic objective of this aggressive growth strategy is to increase R & D investments in product innovation. PepsiCo’s broad-based competitiveness strategy supports this intensive strategy by offering unique or new products to attract more consumers and business development.

Market Development

PepsiCo applies market development as an aggressive growth support strategy; it is based on business growth through its ability to capture new market segments or markets. For example, PepsiCo continues to expand its distribution network to reach the last remaining markets or sectors, especially in developing regions. However, the development of the market is simply a strategy for intensive growth support because PepsiCo already has a significant presence in all regional markets around the world. The strategic objective of this intensive strategy is to expand PepsiCo’s supply chain to support the growth of its distribution network. PepsiCo was able to lead the cost through the overall cost competitiveness strategy by effectively using this aggressive growth strategy by reducing cost, despite the additional investments used to expand into new markets or market segments.

Distribution Channels

In addition to implementing low cost leadership and differentiation strategy, PepsiCo’s competitive advantage is the distribution channels used by the company. PepsiCo offers free refrigerators and low-priced restaurants for Pepsi storage, and when consumers come to eat, PepsiCo will benefit from selling. Besides this, PepsiCo owns fast food chains such as Taco Bell, KFC and Pizza Hut, and there also maintains products, which provides great access to consumers and thus is a competitive advantage of the company.

Evaluation of Strategy

Pepsi is a global brand that sells in more than 200 countries and has a wide range of products. Many brands in her portfolio are multi-million dollar brands earning more than $ 1 billion a year. However, being global and successful in a highly competitive industry environment requires focusing on many things. Apart from strong business and marketing strategy, it also requires several sources of competitive advantage. In Pepsi’s case, the brand recently focused on reviewing its strategy to suit the rapidly changing market dynamics. The brand spends more on digital technology and product innovation to find faster growth.

Marketing is a particular area of concentration because of the increasing competition in the soft drinks industry. Apart from Coca-Cola, there are many big and small brands, soft drinks and healthy drinks that increase competitive pressures in the soda industry. In such an environment in which the growing health awareness of the new generation seriously changes the pattern of demand and leads to growth in demand for health products, product innovation has become more important than ever in maintaining competitiveness and generating better growth.

In recent years, Pepsi has added many new products to its portfolio with a particular focus on health products. Apart from zero calories and low-calorie versions of current products, environmentally friendly juice drinks and energy drinks are also prominent in their portfolio. Growth also requires a strong focus on R & D, which is an essential part of PepsiCo’s business strategy. Pepsi also spends heavily on advertising and promotions. The main sources of Pepsi’s competitive advantage are: brand image / equity, global presence, diversified product portfolio, customer loyalty, marketing capabilities, and competitive pricing strategy.

While many of these sources have created a sustainable competitive edge for the brand, many of them also have a temporary competitive advantage that can be further enhanced through product innovation and customer orientation. Apart from these things, human resources management is also an important area that requires a great focus in the twenty-first century to achieve a sustainable competitive advantage. PepsiCo has developed intelligent policies and invested in the growth and career development of its employees.

PepsiCo’s sustainable, coupled with the actions they take to update their brands across the entire beverage category, believe that this changing treatment of the game will enable them to accelerate their growth and improve their profitability. Are still looking at the important areas of global beverage growth, especially in emerging markets or in emerging groups. They will therefore invest in attractive opportunities and concentration in the geographic regions and categories where they are the next or next leader and where the competitive game remains wide open.

PepsiCo Acceptance: Concentrating Resources on Corporate Growth through Internal Growth and Well-Taken Acquisitions; PepsiCo has adopted a growth plan by addressing the opportunities and risks associated with the global marketplace. The company’s success reflects their continued commitment to growth and a focus on those companies where they can drive their growth and create opportunities. Contribute to the quality of life in societies. PepsiCo believes that the company is responsible for contributing to improving the quality of life in the communities it serves. This policy is implemented through the support of social agencies, projects and programs. The company also supports volunteer activities through time, talent and money contributions. Each section of PepsiCo is responsible for its own tender program, with companies focusing on supporting volunteer activities for employees.

PepsiCo Feasibility: PepsiCo is one of the largest consumer products companies in the world. In fact, it is one of the largest companies in the world. PepsiCo focuses on several strategic initiatives that it believes will drive growth and ensure the company’s success. When thinking about changing the mission and goals, it is important to consider the impact of this change on the company’s long-term strategies. PepsiCo’s annual revenue for 2018 was $ 64.661 billion, an increase of 1.79% over 2017 and 3.05 over 2016. This means that the company does not really need a major adjustment to its strategic plans.

Conclusion and Suggestions

PepsiCo must continue its aggressive growth strategy, using focused diversification wherever possible for growth in emerging market sectors and also to achieve significant expansion in international markets. Should focus on the sharp expansion of the Pepsi brand at the international level, aiming to dominate the market in soft drinks on the international scene.

PepsiCo has to increase international growth and profits by changing its organizational structure in a way that focuses on markets other than North America, and enables the company to ensure profitable new acquisitions quickly. PepsiCo must retain its strong focus on innovation and continue to invest heavily in research and development, in order to maintain the forefront in this competitive industry.

A strong diversification strategy is a key force for PepsiCo; the company must continue in this direction, but it must also seek out companies that can offer them excellent strategic advantage in order to gain competencies in the value chain. PepsiCo should seek to increase R & D spending, acquisitions of companies that fit its portfolio, and pay higher dividends to shareholders, thus having a positive impact on the share price of the company.

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