Definition of the Issue
The PepsiCo-2005 case study has several issues revolving it. It has the internal issue that PepsiCo has not been able to consistently meet its growth goal of 15+ percent annual increase in earnings for the last 10 years. Its external issues consist of its products as reaching maturity stage industry wise and its divisions, except Frito-Lay North America (FLNA), fail to rank highest in its respective market segments. Division wise, the company holds a large share of each respective market, but over-all the company sustains a flat growth rate and fails to meet its growth goal. In respect to this, it can be seen that the real issue in this case is the need of a strategy to sustain a compound annual growth rate (CAGR) in earnings per share of 15 percent per year. This paper aims to develop a three-year strategic plan for PEPSICO that can best ensure this growth through this decade. II. Objectives
The paper’s objectives include designing of alternatives that may aid its development for a sound strategy in response to the issue through a quantitative analysis. The paper would also include an analysis of each alternative. From the generated alternatives, the paper would focus on one that would seem to best apply to the given circumstances. The paper also includes a potential problem analysis to aid in strengthening the strategy’s defenses and enables the company to predict and anticipate future issues. III. S.W.O.T. Analysis
PepsiCo has several strengths that enabled them to be the third-largest food and beverage company in the world. The first strength is being a diversified company. This allowed them to earn more, and in times when a particular division fails to gain a substantial amount of revenue, it can be balanced by the other strong divisions of the firm. Having a large market share due to diversification is also advantageous to the company since when its PepsiCo Beverages North America (PBNA) division decreased its market share, the revenues continued to go up. Secondly, having a well-built distribution channel is also a great strength, since it is important that your customers have easy access to your product in order for it to turn into sales. Another strength is the company’s ability to respond quickly to emerging trends and issues such as health and environmental issues and the development of the “PEPSI Generation”. Lastly, the company’s strong strategy of penetrating the international market is also a strength and they did this by focusing more on the emerging markets. Weaknesses
The main weakness that can be seen in PepsiCo is its focus. Due to its diversified products, it tends to have divided concentration on each division (unlike Coke and Kellogg’s wherein they focus on one product line). This weakness tends to lead to less market shares of each division. Opportunities
One of the opportunities that can be quickly seen is the company’s efforts in penetrating the emerging markets of PepsiCo International (PI). Instead of focusing in already developed markets, PI has focused on emerging markets such as China, India, Eastern Europe, and Russia. Doing so gives the company a better grip on an opportunity to grow and increase market share than by competing with Coca-Cola on already matured markets. One strategy of PepsiCo is introducing a Pepsi Generation theme for the product, they aim to appeal to the younger generation and make them lifelong Pepsi drinkers. We see opportunities in this area since the possibilities of designing new trends are endless. This lets them appeal to long-time drinkers as well as sway new ones. PepsiCo also sees the opportunity in surfacing issues like, health and environmental, and by quickly responding to these concerns at hand, they appeal to the consumers first before any other company does and this may also lead to greater market share. They have opportunities in this area since they have the company has the capability...
Please join StudyMode to read the full document