Case 3 Strategic Choices for PepsiCo

Executive Summary

This report offers a detailed analysis of PepsiCo’s company. PepsiCo is one of the leading beverage and food manufacturing today across the globe with more than 63 billion net value as per the fiscal year 2017. The company’s products are sold in more than 200 nations globally. The company started back in 1965 through a merger amid Pepsi and Cola as well as Frito-Lay. The company offers a global collection of reputable and various brands. While the company’s competitive positioning in the market is authoritative, it is prone to different forces in the industry which are subjected to economic, cultural and social changes. The beverage and food industry is characterized by rapid changes ranging from consumer preferences, taste, health awareness and globalization. Most of the companies have already taken strategic measures to guard their competitiveness.  This report, therefore, establishes the main business approaches that are applied by PepsiCo and offer an in-depth written analysis of its strategy concerning the associated strengths, weaknesses, opportunities, and threats.

 

 

 

 

 

 

 

 

 

Introduction

            PepsiCo is one of the largest and favorite foods and Beverage Corporation. PepsiCo produces over 22 brands such as Pepsi, Tropicana, Miranda, and Naked and so on which are then distributed across the globe in all the two hundred countries that it has penetrated (PepsiCo, 2017). Courtesy of the global distribution network that people across the globe consume over one million of the company’s products on a daily basis. The success of the company can mainly be linked to the fact that the products are mainly sold by retailers which makes it easy for the consumers to gain access conveniently. Segmentation is a crucial marketing strategy that has assisted the brand indirectly targeting the most potential customers with their differentiated products. The company was ranked 41 in 2017 under the most prominent 500 companies across the globe by fortune (PepsiCo, 2017). Thus, despite the success, it is evident that the company needs to be strategically positioned in the market to achieve sustainable competitive positioning in the market that is dominated by well-established and resourceful firms.

PepsiCo’s Porter Strategy

            Based on PepsiCo’s products variety, the company utilizes different generic approaches. However, the primary strategies that have played a part in its competitive positioning in the market are cost leadership and broad differentiation (Ferguson, 2017). In that, the company mainly utilizes cost leadership as its leading generic approach which has been an essential tool for its global expansion. In other words, the company provides low-cost products when equated to the competitors an aspect that attracts most of the consumers. The approach also focuses on the reduction of cost as the means of enhancing the company’s financial performance and general competitiveness. For instance, in its competition against Coca-Cola beverages, the company provides products that are affordable with the least pricing that is mainly guided by its low operating expenses (Ferguson, 2017). To sustain its strategy, the company has to account for its expenses which ensure that the operating expenses are minimized while avoiding any form of losses. The firm additionally has unique promotional services with discounted offers. The aspect in most cases attract the consumers who are cautious of the prices more than the associated quality. Besides PepsiCo relies on broad differentiation as its back up generic approach for competition. In that to survive in the highly competitive industry differentiating the products is a necessity. The approach allows the firm to drive traffic through the provision of products with unique compositions. For example, its Lay chips are promoted as healthy smack based on its low levels of fats. The aspect, therefore, attracts a different segment which is health conscious in everything they take (Ferguson, 2017). The objective of focusing on the differentiation approach is to assert on the company’s innovativeness through addressing the consumers concerns for health defects among fast foods and beverages.

PepsiCo’s strengths

            Brand recognition, diversification, and reliable distribution network are the main strengths of PepsiCo. The company own one of the most popular products across the globe and is ranked 29 for being one of the most known and valuable brands globally with a net of sixty-three billion (PepsiCo, 2017). Over the decades of its operations, the company has changed its products designs slightly which has enabled it to retain its recognition. The company also owns one of the biggest distribution network globally with over 700 manufacturing facilities worldwide.

            Concerning its marketing promotions, the company has adopted different strategies such as packaging and awareness campaigns with the intention of fostering its brand recognition and increasing convenience to all the consumers. The goal is to offer, quality affordability and convenience as the additional values. The company is ranked among the best in marketing through advertisements. The objectives are mainly accomplished via the creation and implementation of distinct advertising approaches in diverse regions (Ferguson, 2017). Most of its awareness campaigns are made when launching new products such as the healthy products which have proved to be very successful in increasing sales over time.

The company has a positive alignment concerning its generic strategy along the identified strengths. In that, the company has successfully used its marketing strengths in the creation of a positive attitude in the public’s mind and the related products usually generate a unique encounter that helps in market development. The perception has, in turn, offered its products higher value when equated to those of the competitors. The fact that it offers more products variety offers it a competitive strength.

PepsiCo’s Weaknesses

            PepsiCo’s weaknesses are over-diversification and low marketing, especially when compared to its main competitor Coca-Cola. The weaknesses have resulted in its rather weak revenue gain over the years. The company is well known for its diverse products which are beyond those of the competitors (Rao, Rao & Sivaramakrishna, 2008). This aspect is, however, its weakness since it hinders its strategic focus since all its resources are distributed across the variety. The company is not therefore able to concentrate and market its products. There is a necessity to lower its diversification. The company has invested less in marketing an aspect that affects sales given that the consumers are less aware of all that the company provides. With its limited resources it is, therefore, unable to meet the strategic objectives for competitiveness.

Even though the company has attempted to address this issues through innovation by focusing on the healthy products, this is not enough. In other words, the company has not responded adequately in aligning its generic strategy with the respective weaknesses. The company’s sales seem to be decreasing for the absence of attractive designs (Ferguson, 2017). In that focusing on healthier products is not enough about the necessity to address the existing needs in the market. The portfolio is too broad for the company, and it is therefore recommended that the company invest more in marketing to increase its brand recognition and competitive position.

PepsiCo’s Opportunities

            The company has several opportunities such as expansion to the emerging markets as well as capitalizing on the manufacturing of healthy products. There is an increasing demand for the healthy products and the consumers current prefer to consume products with less sugar that fits the natural category (Rao, Rao & Sivaramakrishna, 2008). By capturing the segment then the company will be able to overcome the existing challenges in the market. The company has over the years tried to capture the opportunities by establishing itself in more countries while producing healthier options. The company is recognized as one of the leading healthier brands within the beverage market.

            Thus, the company has a positive alignment with its generic approach along the opportunities. The company has recognized its ability to dominate in the healthier products market as a whole and utilized its distribution network to grow the option. The company has efficiently provided unique and healthier options to all its consumers which demonstrates its general ability to capitalize on the expanding market.

PepsiCo’s Threats

The main threats are competition, need to differentiate more and changing preferences from the consumers. The company is currently facing a significant threat to the increasing obsession to adopt the healthy options. In the past, the company was able to offer the products diversely based on taste, but the diversification appears to be threatening its stability. In that even though the healthier focus is a good strategy for competitiveness, it is without a doubt that the company has abandoned its focus on healthy and creative products. There is still a large market that is in need of the healthy options something that the company might neglect. The industry is also dominated by the most extensive and reputable companies such as Coca-Cola which have a significant market share in the industry (Ferguson, 2017). With the intensification of competition, the stability of the company is determined by its ability to adapt to the changes.

The diversification of the company shows that it has a proper alignment with its generic strategy. In that, over the years the company has been taking important measure in ensuring that it guards itself against the competitive threat. However, it is recommended that the company should create a balance as it seems to be leaning more on the production of the healthier products and this might lead to neglecting all the other consumers.

Pepsico Leverages Its Strengths and Shores up Its Weaknesses

            PepsiCo is a socially responsible company that seeks to enhance the socio-economic wellness in all the communities that it works with. The company, for instance, has taken measures with reference to bottling in the quest of lowering the rate of environmental destruction that is caused from its intense use of water and disposals (Rao, Rao & Sivaramakrishna, 2008). In that, the company plays a significant role in helping in the treatment of water, and its wastes are disposed of attractively. The approach is useful for the company in the development of reliable connections with its consumers while taking care of the surrounding as a means of valuing the people. The company has been successful in addressing the issue of obesity given that its primary focus lies in the production of the healthy alternatives. While it can be argued that the market for those that need healthy products is increasing it is apparent that the production of other products is also valuable since the market is as big.

How Pepsico’s Vision and Mission Has Changed/ Reconfirmed

            The mission of the company is to grow into the leader of convenient beverages and foods while generating financial gains for the investors and offering development opportunities for the respective staffs. The vision is to continue in its responsibility through creating a better future. The strategic analysis has thus reconfirmed the statements for the company (Hill & Jones, 2008). In that, through its diversification and expansion, it has managed to become a convenient and reputable brand. Through the measures it has taken to conserve the environment it is evident that it attempts to create a better future in this context. I would not recommend any changes in the company’s vision and mission instead the company should aim at taking a strategic focus.

Conclusion

            In summing up, it is evident that PepsiCo has been able to guard its strategic focus over the years despite the intensity of the existing competition in the industry. The differentiation and low-cost approach are effective strategies in attracting more consumers while retaining the existing ones. In that consumers are becoming highly sensitive to prices and there is a need to offer products at the least prices. In the industry, the company can only survive through differentiating its products by offering unique products an aspect that the company has managed to achieve success over the years.

 

 

 

 

References

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Ferguson, E. (2017). PepsiCo’s Generic and Intensive Growth Strategies. Panmore Institute.        Retrieved from: http://panmore.com/pepsico-generic-strategy-intensive-growth-strategies

Hill, C. W. L., & Jones, G. R. (2008). Strategic management: An integrated approach. Boston: Houghton Mifflin.

PepsiCo. (2017). About PepsiCo. Retrieved from: http://www.pepsico.com/About

Rao, C. A., Rao, B. P., & Sivaramakrishna, K. (2008). Strategic management and business policy: Texts and cases. New Delhi, India: Excel.