Pepsi Co Strategic Analysis

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CASE STUDY: PEPSICO. -2005

PEPSICO’S INTRODUCTION

PepsiCo is best known for Pepsi, the world’s second most popular soft drink after coca cola classic.Pepsi co is the international food and beverage company with sales of $29.3 billion and net income of $4.0 billion in 2004. Pepsi has 153000 employees and markets more than 500 varieties of food and beverage products in more than 200 countries.Pepsi started in 1960 to being the world’s third largest food and beverage company in world, behind only nestle and Kraft foods.

MISSION STATEMENT

“To be the world’s premium consumer products company focused on convenience foods and beverages”.

VISION STATEMENT

"PepsiCo's responsibility is to continually improve all aspects of the world in which we operate - environment, social, economic - creating a better tomorrow than today."

HISTORY

Pepsi is a carbonated soft drink that is popular the world over. First made in the 1890s, by pharmacist Caleb Bradham in New Bern, North Carolina, the soft drink has wooed millions of people with its flavor. Have you always wondered how your favorite drink Pepsi came into being? This soft drink, which has been running popular since years together, has a long and interesting history of its own. It is produced and manufactured by the reputed company PepsiCo. Such is the popularity of the drink that over the years, many of its variants have come into the market. We bring you the detailed history of Pepsi in the lines below.

❖ Pepsi made its first appearance in the world in 1890s. Pharmacist CalrbBradham of New Bern, North California, as a cure for indigestion.

❖ The product got its trademark on June 16, 1903. Bradham shifted the bottling of the drink from his drugstore to a rented warehouse in the year 1903. Since then, the product has never looked back.

❖ In the year 1931, due to the disastrous effect of World War I, there was sudden fluctuation in the price of sugar, which led Pepsi-Cola Company into bankruptcy.

❖ In 1931, Pepsi Cola was bought by the Loft Candy Company Loft president, Charles G. Guth who reformulated the popular soft drink.

❖ Pepsi cola fortunes reached to the lowest point when in 1933 cocacola refused an opportunity to buy it.

❖ In 1933, 12-ounce bottles of the soft drink were re-introduced, which were originally priced at 10 cents each. This found fewer sales for itself and then the producers thought of bringing the rate down to 5 cents. This brought a boost to the company, which it badly required at this point of time.

❖ In 1941, just before the entry of US in to World War II, Loft candy merges with its Pepsi- cola subsidiary and changed it name to the Pepsi cola company.

❖ After this Pepsistarted diversification through acquisition of pizzahut (1977), Taco Bell (1978), KFC (1986), and Hot ‘N’Now (1990). Pepsi co was less successful with its attempts at unrelated diversification. It acquired NORTH American Van Lines in 1968 and Wilson Sporting Goods in 1970 and sold both of them in 1975.

❖ From 1975 to 1983, Pepsi co conducted its highly successful “Pepsi challenge” a blind taste test between coca cola and Pepsi in which most participants expressed their preference for Pepsi.

❖ Despite being making several of acquisitions and divesture over past 10 years company is not been able to consistently achieve the 15+ percent annual increase in earning.

❖ In 1997, PepsiCo divested its restaurant operations by spinning them off to shareholder as a new company: TriCon Global Restaurants.

❖ Many of PepsiCo's brand names are more than 100-years-old, but the corporation is relatively young.PepsiCo was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. Tropicana was acquired in1998 in $3.3 billion and PepsiCo merged with The Quaker Oats Company, including Gatorade, in 2001.

INTERNAL ISSUES

o Organizational structure

PepsiCo owns its corporate headquarters buildings in Purchase, New York. The company is...
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