The operations of the PepsiCo Company

The operations of the PepsiCo CompanyThe report based on the operations of PepsiCo was d bingle in the satisfaction of a Dynamics of Strategy Assignment. The troupe original location is in the United States of America but the friendship also operates in countries glob wholey ranging from large emerging countries, the BRIC countries Brazil, Russia, India and China to the short Caribbean Islands.PepsiCo, initiated as Pepsi a carbonated cola drink in the boozing industriousness initiated in 1968 and has continued to expand since. The smart set has expanded with diversification and acquisitions into both the lay downnder and potable industry. The fraternity has been analyzed in terminations of its internal and outdoor(a) environment and strategicalalal opportunities for changement has been proposed.PepsiCos heraldic bearing Our mission is to be the worlds premier consumer intersection points phoner focused on expedient sustenances and beverages. We seek to produce fina ncial rewards to investors as we provide opportunities for growth and enrichment to our employees, our line of products partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity.PepsiCos vision, PepsiCos responsibility is to continually im p arent all aspects of the world in which we operate environment, affable, economic creating a bettor tomorrow than today.IntroductionPepsiCo, one of the most diverse and leading companies in the food and beverage industry initiated as Pepsi Cola in 1898 producing save cola beverages. In 1965, the company took the step to merge with another company, Frito take down, in the food industry to form the company as the name is today, PepsiCo. PepsiCo controls 103 one million million litres in market volume in the US beverage industry and con legitimately a UDS $321billion in market value.PepsiCo with competitors in both the food and beverage industry, focused on international growth a nd throw out diversification. PepsiCo is the secondment largest beverage producer in the world and the worlds leader in its Frito Lay division in the food (salty snacks) industry. PepsiCo has numerous competitors in both the food and beverage industry CoCa Cola, Kraft Foods, Unilever, and Nestle. PepsiCo expanded its production initially from Pepsi, a cola beverage to diversifying to water (Aquafina), Quaker Oats in the metric grain and snack industry to juices and energy drinks such as Gatorade.The company further acquired and formed joint ventures increasing its product line to teas and root beers. The company acquired and formed joint ventures, along with the purchase of famous restaurant chains such as Kentucky Fried Chicken. PepsiCo currently focuses on growth by dint of Performance with a Purpose to remedy the performance of the company, human and genius sustainability as they move towards be more environment friendly.The assignment seeks to reexamine and analyze the e xternal and internal environment, evaluating whether the company is in strategic fail or drift. When this is determined, the research worker would assess the feasibility, acceptability and suitability of the proposed strategic selection of growth in emerging markets. The police detective would then go on to recommend a detailed implementation plan of the chosen strategic option in terms of new product outgrowth.T pick out 1Evaluation of the External EnvironmentThe evaluation of the external environment was infrataken with the use of various animate beings which analyses conditions, entities, tied(p)ts and factors of the environment in which PepsiCo operates. The implements used by the researcher were the PESTLE abstract, Porters Five Forces, the 3 Cs and the Industry Life Cycle. This analysis of each tool was embarked on to determine how the activities of PepsiCo are influenced by the macro environment and whether the company is in strategic fit.PESTLE Analysis is a tool that could aid organizations making strategies by helping them understand the external environment in which they operate now and how they will operate in the future.In all markets PepsiCo has entered, the presidential term has intervened to some extent, where they were confronted with several political barriers to entry, adhering to laws and regulations. These outgrowths increased, as the company expanded its operations and portfolio. PepsiCo was further affected when the economic downswing negatively impacted on their financial statement as be fluctuated. disrespect this, PepsiCo was granted approval for investment funds into the company.Cultural and demographic aspects, social factors also affected the operations of PepsiCo which include a shift towards better lifestyles. PepsiCo has kept up-to-date with technological advancements by introducing the most recent improvements to machinery in the industry. They bring implemented modern media methods to increase brand awareness , allowing them to being innovative, trim costs and improve prime(prenominal).PepsiCo faces legal challenges where on that point were bans placed on advertizement in some countries. In some countries the governments have reduced the awarded acquire previously set at a term of five long time to one year. PepsiCo has decided to go green and be environment friendly, pore on water, climate changes, agricultural and packaging change. They have initiated to reduce their return consumption.Michael Porter provided a role model that models an industry as being influenced by five forces.Porters five forces is a framework used by the researcher to determine the free-enterprise(a) intensity of the macro environment in which PepsiCo operate. Considering PepsiCo is one of the dominants in the food and beverage industry there is little live for new entrants to create competitive pressure. imputable to capital, market knowledge and experience, PepsiCo has the lordly advantage in terms of cost which would deter new competitors.PepsiCo with the advantage of high bargaining power of suppliers are able to identify, differentiate and deputise inputs. If the suppliers have greater influence on the industry, then PepsiCo would have to compensate high prices for the raw materials. PepsiCo allows the buyers a beefed-up bargaining power so that they could wield the number of buyers they have and attract new ones. Buyers whitethorn have greater influence on PepsiCo since there are numerous substitutes for its products.The nemesis of substitutes which exists within the beverage and food industry is a major issue for PepsiCo, where a price change cigarette prove futile for the company. PepsiCo is well-off since although there are substitutes for the products there are no close rival, with a diversified portfolio that links directly to PepsiCo at all product levels. This, a strength to the company gives them the competitive advantage of operating in the industry.The 3Cs deterrent example is a business model which offers a strategic look at the factors needed for successThe researcher would use the 3Cs model to measure the differences in the midst of the actual and the perceived quality of the companys product portfolio, helping to assess the wideness of the brand name PepsiCo.Market dominance of certain products such as Frito Lay and Gatorade has been a success since PepsiCo would have increased market circumstances. PepsiCo croupe maintain this dominance by obtaining control of their brand through and through patenting. The company can further seek other measures to maintain this success, through alteration by improving existing products.PepsiCo segments its market and goals are directed towards consumers since it is the consumers who the company depends on for revenues and profits. PepsiCo portrayed them as the New Generation or the Pepsi Generation. PepsiCo has even adjusted its portfolio by improving existing products and developing new ones to bet current trends in the market a healthier lifestyle.Although PepsiCo is dominant in some products in the market they still need to focus on its competitors strategies and techniques. Coca Cola, leader in the beverage industry enjoys the largest market share for carbonated soft drinks. Smaller competitors use strategies to allow them to remain in the market and their size, although smaller than PepsiCo to gain competitive advantage.PepsiCo is in the mature branch of the Industry Life Cycle in the food and beverage industry. This tool with knowledge of past and current market trends are used to shout out future trends and potential entrants or threats that may arise in the market. PepsiCo maintains its business office by using techniques such as diversification strategies and developing products towards current trends and market development.Critical Assessment of strategical Resource CapabilitiesThe researcher undertook an analysis of PepsiCos internal environment, com prised of the organizations resources, capabilities and competencies. This assessment helped to determine whether the company is in a strategic fit or drift. Several tools such as the SWOT analysis, the VRIO framework and the Key Success Factors were used.PepsiCo has the second highest market share in the beverage industry but have always had and continues to maintain a strong brand run across. The company had the advantage since with their diversified portfolio they were able to create an theatrical role for not wholly for their cola beverage but for all their products. Due to this PepsiCo encountered additional revenue for growth and was able to invest in applied science with helped them to benefit from economies of scale. contempt PepsiCos many strengths they had their fair share of weaknesses. The company has check themselves with their diversified portfolio since they have concentrated mostly in North America. This could prove that they are not fully utilizing their resour ces available to them globally especially in emerging countries. This weakness can be converted to an opportunity where it can be used as a strategy towards growth. Further opportunities may emerge where PepsiCo can further diversify through new product development, improvements to old products and acquisitions, towards changing demand, a healthier lifestyle. PepsiCo faces challenges from competitors and the declining economy could also prove as a threat where there is sluggish growth of the economy.PepsiCo with a strong internal work culture, an intangible resource, is structured toward the companys Performance with a Purpose to encourage professionalism and personal development while subsequently having fun. Ideas and comments are most welcomed by the management aggroup. Young employees are given the receive to embrace early responsibility, to accept risks and make some decisions allowing them to develop and set out prospective leaders. PepsiCo also focuses external culture whe re they give back to communities. geographical location has impacted on the internal culture of PepsiCo where culture is altered towards employees in different regions. The strategic location of the company also helps to improve the distribution of products. At some locations, PepsiCo use to their benefit government incentives to deconcentrate their operations. This helps to reduce operating costs. rat imagery, reputation and high employee morale plays a huge role in increasing goodwill of PepsiCo. This intangible asset could lead to a positive impact on the financial statements. Despite the negative outlook from the financial statements due to the economic storm and coin fluctuations, the company was able to grasp growth in 2008. Although numerous government bodies planned to increase taxes for snacks and cola beverages and PepsiCo had a high short term debt, they continued to invest for long term prospects.VRIO framework is an internal tool of analysis in the context of busin esses. VRIO is an acronym for the four question framework you ask about a resource or capability to determine its competitive potential the question of Value, the question of Rarity, the question of Imitability (Ease/Difficulty to Imitate), and the question of organic law (ability to exploit the resource or capability).PepsiCo was able to add value to their manufacturing work out through innovation and efficiency in all resources polish/HR, Location, Brand Image, Goodwill and Financially. All these resources are aligned, organized and exploited by PepsiCo. Culture/HR is the only resource of PepsiCo which can be identified as rare and not possessed by competitors. Although Goodwill is not rare, it is not easily duplicated by customers, hence is imitable and has a sustained competitive advantage. Despite this, if given sufficient time, money and resources all of PepsiCos other resources such as location, brand image and financial prosperity can be emulated, referred to as having a competitive parity.Key Success factors necessary for the success of PepsiCo in the market is that they should continue their use of celebrities in their advertising campaign. This would help to captivate customers toward the product. The company can focus on widening their distribution take as they expand their portfolio. This would help inject additional revenue into the company.Strategic FitPepsiCo is in a strategic drift to the extent where there is minimal innovation to develop new products. The company prefers to obtain products through mergers and acquisitions, since these products would have been established already and it reduces PepsiCos risk of a failing product. The disadvantage of this is that the brand names of the acquired products are standardized. When PepsiCo acquire these products, they continue to trade under their original name and not the name of the company, such as Gatorade. another(prenominal) drift of the company is where they fail to have optimal utilizat ion of all their resources. Their advertising campaigns do not include a wide target area market. Although the company serves approximately 86% of the worlds population, their advertising is mostly positioned towards the North American markets.Despite the strategic drift of PepsiCo, the company is in a strategic fit due to their strong Culture and Human Resources. This is clearly effective within the goals of the company Performance with a Purpose. This is advantageous to them since the management team ensures they are practice of good work culture, factors that are rare and cannot be imitated easily. The culture of this organization contributes to standardized operations which lead to high quality of the products, giving them the competitive advantage. Another factor which contributes to PepsiCos being in a fit is that the company has a diversified portfolio with no other undivided company in the food and beverage industry directly competing with PepsiCos escape of products all owing them to sustain their competitive advantage.PepsiCos most recent objectives in their sustainability report is being accomplished and puts the company in strategic fit where they are lamentable towards meeting the needs of the changing demand towards healthier products. This not only increase revenue but creates a strong brand image and gives the company the competitive advantage. Another object from PepsiCos sustainability report which puts them in a fit is their drive towards going green by reducing returns consumption, the labels in their packaging and usage of plastics. The company currently takes into consideration kB Initiatives, such as building codes when entering new markets. Despite of having a few(prenominal) strategic drift issues which cannot be ignored, PepsiCo continues to maintain their competitive advantage in the changing markets and is in a strategic fit.Task 2 tidings of Strategic OptionPepsiCo, since established in 1898 has grown into a gigantic well e stablished organization with a diversified portfolio. The company has achieved this through all factors in the Ansoff Matrix, allowing them to be the worlds largest food and beverage company. The company has achieved and continues to achieve growth through improvement, diversification of their product portfolio, entering new markets and through new product the development.Through extensive research into PepsiCo, the researcher put up PepsiCo has experienced a drastic fall in sales in recent times as a result of the global economic recession and due to changing consumer demands. CEO of the company, together with management has proposed to lay in new products to combat this predicament so that the company can maintain their market status and continue to achieve growth. Through profound investment and innovation, PepsiCo is targeting emerging markets BRIC countries.In keeping with PepsiCos mission grounded on Performance with a Purpose, their goals of Human Sustainability, and their current proposal, the researcher has chosen new product development as a growth strategy towards the improvement of the future strategic direction of the organization.By this route the company wouldSuitabilityFeasibility acceptablenessImplementation PlanConclusion vermiform appendix 1PESTLE attachment 2Porters Five Forces ModelAppendix 33Cs ModelAppendix 4SWOT AnalysisAppendix 5VRIO FrameworkResources richRareImitableOrganizedCompetitiveImplicationHierarchy of ResourcesCulture/HRYESYESYESYESSCACoreFinancialYESNONOYESCP ideaLocationYESNONOYESCPBaseBrand ImageYESNONOYESCPBaseGoodwillYESNOYESYESSCACoreAppendix 6Ansoff Matrix informant http//tutor2u.net/business/strategy/ansoff_matrix.htm