operations would be done; and critical appraised of the
impact of social, environmental, ethical, legal and governance issues on the
organisation would be examined.
assessed the extent to which the organization is managing tensions between
corporate responsibilities and maximizing shareholder value, the assignment
would be concluded in such a way critical thinking and original thought would
Critical Analysis of PepsiCo
PepsiCo is an
American Multinational company specializing on manufacturing marketing, and
distribution of grain based snack, foods, beverages and other products formed
in 1965 with the merger of the Pepsi cola company and FritoLay, Inc., PepsiCo
has since expanded from its namesake product Pepsi to a broader range of food
and beverages brands. According to PepsiCo Annual Report (2016), the company is
a leading global food and beverage company with a complementary portfolio of
enjoyable brands, including Frito-lay, Gatorade, Pepsi cola, Quaker, Tropicana,
Pepsi, Mountain Dew, Sierra Mist, WBD, Role Gold, Dontos, and Cheetos etc.
Report (2016) declares that the company’s brands generated retail sales of more
than $62.799 billion as 0.4% decrease our that of 2015, and the company
products were distributed across more 200 countries with 264, 000 employees all
our the globe through its standard operators, authorized bottlers, contract
manufacturers and other third parties.
Pepsi cola, as one of the beverages produced by the PepsiCo,
has gone above and beyond the original beverages to incorporate a wide variety
of brands. In US, some of the most well-known brands include Mountain Dew,
Sierra Mist, IZZE and Aquafina beverage. However, the growth of soft drinks has
been decreased because of a new wave of health consciousness that swept the
nation. In view of this, it is required of PepsiCo to innovate so as to produce
or acquire healthier brands that appeals to the masses and some of the drinks
are: Muscle Milk, Honest Tea, and Vitamin Water (Kaplan, 2010).
the third most popular selling drink under popular selling drink under PepsiCo
after acquiring it from Quaker Oats Co. in 2001. Despite Gatorade’s success,
the product faces the lack of appeal for the younger generation which therefore
makes PepsiCo spend the largest amount of money in its history to create a new
Gatorade campaign and line up called “G Series”. The G series has two major purposes
in revitalizing the Gatorade brand: It seeks to demonstrate that Gatorade can
be used for more than hydration and Nutrient replacement, and it is targeted in
one towards teens.
offered products mainly for all types of customers, but there are situations
where products are specifically made for certain customers. The company sees
teenagers as the prime market for the G series with the belief that people
first become Gatorade fans at that age (Elliot, 2008). With this marketing
strategy, PepsiCo hopes to effectively target two distinct markets.
Critical Analysis of PepsiCo’s Environment
analyzing the environment of the company, both internal and external factors
would be examined. The internal analysis encompasses SWOT analysis and the
external analysis includes PESTLE and Porter’s five force model. Under the SWOT analysis, both internal and
external strategic factors would be considered.
SWOT ANALYSIS OF PEPSICO
analysis framework identifies the strengths and opportunism that the business
and opportunities that the business can tap to address its weaknesses and
threats. As a global company, PepsiCo must see to the issues shown in this SWOT
analysis to reduce barriers to its global performance. Therefore, SWOT analysis
enhances the position of a company to grow and reach the top position in the
global food and beverage industry (Piercy, 1989).
SWOT analysis presents major challenges in the area of competitions changing
consumer behaviour, and product development.
PepsiCo’s Strengths (Internal Strategic factors).
According to PepsiCo 2014 annual report, PepsiCo’s continued
global growth and prominence reflects the company’s strengths. This component
of the SWOT analysis framework outlines internal strategic factors that enable
firms to fulfill their business goals (Leigh, 2006). The most significant
strengths of PepsiCo are in examined in the following areas.
successful global company, PepsiCo has comprehensive product portfolio with
more than 100 brands serving nearly ever niche in the beverage, good and snack
industries. Having commenced operations in 1965, PepsiCo become the second
largest food and beverage company earned US$62.799 billion in 2016 consequent
upon strengthening its product portfolio and offering as many different
beverages and foods as possible (PepsiCo Annual Reports, 2016).
brand portfolio is highly diversified. No competitor has as many high earning
brands as PepsiCo. They each rely on a few main products to each the major
revenue which makes them very vulnerable to any changes in their core products’
better equipped to satisfy the needs of its customers with its under variety of
successful products. The company offers different type of beverage of shack and
its brands can be often be substituted for each other. For instance, lays can
be substituted for Doritos, Cheetos, Ruffles, Fritos or Tostito. PepsiCo can
offer many more choices if one product doesn’t not satisfy a consumer’s needs.
Truly, changes in consumer tastes do not affect the company as severely as they
would other companies.
has strength in the area of brand recognition and reputation. PepsiCo ours and
markets some of the most recognizable global brands, including Pepsi,
Tropicana, Gatorade, Mountain Dew and many other popular brand. According to PepsiCo
Inc. (2015), the Pepsi brand is the 22nd and 30th most
valuable brand in the world, worth US$18.2 billion respectively. No other
non-alcoholic beverage brand besides Pepsi which has been recognized as being
one of the top 100 most valuable brands in the world, except for Coca-Cola and
extensive global production and distribution network are strengths that support
the company’s international growth and expansion strategies. In view of SWOT
analysis, PepsiCo’s strengths are sufficient to support its global growth
strategy (PepsiCo Inc., 2012).
PepsiCo’s weaknesses (Internal Strategic Factors).
is faced with a number of weaknesses acting as barriers to internal growth. The
internal strategic factors that limit organizational development are considered
in this component of the SWOT analysis framework. The PepsiCo’s main weaknesses
are low penetration outside the Americas, limited business port-folio, and weak
marketing to health-conscious consumers (Morris, 2008).
derives about 70% of its revenue from North America and South America markets.
Impliedly, this weakness indicates that the company has not yet maximized
potential revenues outside the Americas. In addition, PepsiCo operates
primarily in the food and beverages industry. This is a weakness in that it
maximizes the company’s vulnerability to risks in the food and beverages
industry. This is a weakness in that it maximizes the company’s vulnerability
to risks in the food and beverage market. Also, PepsiCo fails in effectively
market many of its products to health-conscious consumers. This aspect of the
SWOT analysis signifies weaknesses that PepsiCo must handle through changes in
its growth strategy.
PepsiCo’s Opportunity (External Strategic Factors)
arise consequent upon environmental factors and changes. Changes in the
economic environment, such as a new Finance Act, might create opportunities for
the introduction of new savings, such as ISAS, (ABE, 2008).
opportunities for continued and sustained global growth. In view of the
component of the SWOT analysis framework, external factors that promote options
for business improvement are identified. The areas in much PepsiCo’s
opportunities are obvious are business diversification, Market penetration in
developing countries and global alliances on the complementary business
the opportunities to diversity its business in that it acquired a complementary
firm that is not in the food and beverage industry. For instance, PepsiCo broke
into the bottle of water in 1997. Other principal PepsiCo acquisitions included
taco Bell and Pizza Hut Inc. (From which they were later spun off the company
1997); 7up international in 1986, and Tropicana products in 1998. Pepsi has
also profited through corporate partnerships, such as a joint venture with the
Thomas J. Lipton Company in 1991 and a partnership with Starbucks in 1994 and a
partnership with Starbucks in 1994 to develop coffee drinks (Cooper, 1997).
opportunity is for PepsiCo to increase its penetration in developing countries
to generate more revenues from markets outside the Americas. Also, PepsiCo has
opportunities in creating alliances with complement any business to increase
its market presence. Therefore, based on this aspect of the SWOT analysis, PepsiCo
has significant opportunities to strengthen its business resilience (PepsiCo
Threats facing PepsiCo (External Strategic Factors)
also the result of changes in the environment increases in interest rates
(which may have to come sooner rather than later) and a downturn in the economy
force banks to make increased provision for bad debts, threatening
profitability and capital adequacy. (ABE, 2008). PepsiCo experiences threats
which are aggressive competition, healthy lifestyles trend and
environmentalism. These threats which are external strategic factors could reduce
business performances which are seriously considered in the aspect of the SWOT analysis.
completion is a major threat against the company. The Coca-Cola company has
historically been considered as PepsiCo’s primary competitor in the beverage
market (Pyke, 2010), and in December 2005, PepsiCo surpassed the Coca-Cola
company in market value for the first time in 112 years since both companies
begin to compete. The Coca-Cola held a higher market share in carbonated soft
drink sales within the US (PepsiCo Annual Report, 2009).
threat experienced by the PepsiCo is the healthy lifestyles trend which his
against the company’s products, many of which are seen as unhealthful due to
their salt, sugar, or fat content.
environmentalism threatens the company as the way consumers negatively respond
to product waste and life cycle issues. Therefore, this component of the SWOT
analysis shows that the company must reform its strategies to overcome threats
to business undertakings (Jackson, 2003).