Topics: Coca-Cola, PepsiCo, Pepsi Pages: 18 (6455 words) Published: September 22, 2008

Growth, Balance, and a World of Fun

Strategic Management Audit Conducted By:

Ahmad Almajed
Kimberley Hanson
Rehan Nana
Ross Ollom
Marika Pappas

Provided To:

Professor Peter Geoffrey Bowen, PhD

May 16, 2007



Executive Summary

Created in 1965 through the merger of Pepsi-Cola and Frito-Lay, PepsiCo is one of the strongest beverage and convenient food companies in the world. Originally started in 1898, Pepsi Cola became the first branded soft drink in the world. Its brand is available in over 200 countries around the world and generated sales in excess of $92 billion last year. Headquartered in Purchase, New York, PepsiCo is the number two beverage company in the world behind the Coca-Cola Company.

Financially, 2006 was a year of progress with an overall growth of 5.5%, revenue of nearly 36 billion USD and a return on investment of 26%. These numbers are all well above the industry average, with their main competitor still being the Coca-Cola Company. PepsiCo has continued their brand image by appealing to Generation Y and becoming synonymous with music, entertainment and sports. In addition to their financial success, PepsiCo is also dedicated to ethics and social responsibility in the community. They have invested heavily in recycling programs and in developing nations in Africa. PepsiCo even has a sustainability mission that states “PepsiCo’s responsibility is to continually improve all aspects of the world in which we operate- environmental, social, economic- creating a better tomorrow than today.”

They believe that they have the competitive, sustainable advantage in the industry because of three things: big brands, proven innovation and differentiated products, and powerful go-to markets. With their strong brand, socially responsible employees and corporate beliefs and focus on the younger generation, PepsiCo will continue its stance as one of the most powerful companies in the world.

Current Situation

Current Performance

Pepsi Co is a worldwide corporation that has been in existence since the late 19th century when Caleb Bradham, a pharmacist from New Bern, North Carolina first started experimenting with different soft drink concoctions. It was in 1898 that Pepsi Cola first became a branded soft drink and from that point forward their product and the company have grown to be the most recognized brand in the world. This past financial year, Pepsi Co continued it three-year positive growth strategy by maintaining an aggressive presence in the United States and worldwide, boasting healthy profits and market share. The company is broken into four major branches: Frito-lay North America, PepsiCo Beverages North America, PepsiCo International, and Quaker Foods North America. Pepsi Co has one of the largest footholds in each of these markets compared to relative competition, holding the following rankings worldwide: #2 in Carbonated Soft Drinks. #1 in Sports Drink #1 in PET Water Brand (non-jug) #1 in chilled Juices and Juice Drinks #1 Enhanced Water Brand #1 In ready to-Drink Coffee #1 in Ready-to-Drink Teas #1 in Potato Chips #1 in Tortilla Chips #1 in Corn Chips #1 in Extruded Snack #1 Multigrain Snacks #2 in Pretzels #1 in Hot Cereal #1 In Grits #1 Rice Side Dish #1 Brand Pancake Syrup #2 Pancake Mix.

Financially “PepsiCo delivered a very strong 2006: Volume grew 5.5%; net revenue grew 8% to 35,137 in millions; total operating profit increased 9% to 6,439 (in millions); return on investment was 26%; total return to shareholders was 8%; cash flow from operations was 6.1 billion USD, and earnings per share increased 13%.”...
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