Fin/370 Pepsico Essay

Topics: Strategy, Strategic management, Investment Pages: 5 (1555 words) Published: August 30, 2013
Strategic Initiative
Learning Team B:
University of Phoenix
FIN/370
Stephen Beadnell
August 26, 2013

PepsiCo has implemented a very sound strategic initiative plan, by doing so PepsiCo has been able to develop and expand its company even further and will continue to do through the following methods. To ensure a sound strategic plan PepsiCo has implemented a strategic initiative plan will include thorough planning based of factors such as the PepsiCo’s annual report. The initiative will carefully view how the strategic plan affects the organizations financial planning. The plan will monitor how it will affect costs, and sales as well as the risks associated with the plan. Pepsi like many companies needs to grow to continue to make money. This is a broad statement and works the same for every business operating in any market. Pepsi has recognized this need and has come up with a few initiatives to make this happen. Pepsi decided that the best way to make their company stronger was to build up their current brands and make their distribution practices more streamline and economic. Pepsi has dedicated more than $500 million dollars for this purpose and plans to continue to report positive growth because of this initiative. The plan is to increase the marketing in North America and make the already iconic beverages more of a household name. The thinking behind this is that if the products are in the consumers face, they will be more likely to purchase the products Pepsi offers ensuring positive growth for the shareholders. Although Pepsi has decided to back the most known brands, Pepsi will still continue to bring new snacks and beverages to the market because different factors affect the consumption of the already strong branded products. Because upper level management knows that consumer wants and tastes play a large role in how the public buys snacks, Pepsi has committed to make changes to respond to customer wants and changing tastes in different areas. It is a firm’s responsibility to plan for insight initiative strategies to create, implement, and impact the success or failure of the firm. Firms need to keep up with the outside or external impacts that will affect the firm’s financial status. In 2008 many firms plan and created ways to keep a float from the recession, the recovery, and many credit crisis. Financial advisors, executives, and accountants would need to create a strategy to keep customers and motivate individuals to keep buying their products or services. This was the case with PepsiCo that needed to identify and understand the risk that the competition, demand, political, and operations may cause to their inflows and outflows. For 2012 PepsiCo key initiative strategies were to strengthen its food and beverage portfolio and offer and enhance shareholders value (PepsiCo, 2012). To do so the firm decided to increase the spending on the advertising and marketing department to approximately $500 million for 2012 (PepsiCo, 2012). To meet the demand of the firm, PepsiCo has decided to expand the productivity to additional $500 million for the next upcoming three years (PepsiCo, 2012). This will also require more job openings, new equipment, warehouse, sales facilities, and cost to train new employees to follow the organization structure. Expanding its production also takes risk on either losses or increase in net returns. These initiative strategies will affect the financial planning of the firm by increasing assets and liabilities to invest in growth. PepsiCo would need to reduce expenditures by 10% to meet the cost of new innovation planned (PepsiCo, 2012). When the firm meets the profit desired, it would so expect dividend payments to enhance the return of shareholders by a 4% (PepsiCo, 2012).

PepsiCo attempted to strengthen its food and beverage portfolio in 2012 while also trying to enhanced shareholder value. The company increased its marketing budget to $500 million. To keep up with increased...

References: PepsiCo, (2012). Pepsico announces strategic investments to drive growth. Retrieved from http://www.pepsico.com/PressRelease/PepsiCo-Announces-Strategic-Investments-to-Drive-Growth02092012.html
PepsiCo, (2012). Our business risks. Retrieved from http://www.pepsico.com/annual10/financials/mda/our-business-risks.htm.
PepsiCo, (2012). Pepsico announces strategic investments to drive growth. Retrieved from http://www.pepsico.com/PressRelease/PepsiCo-Announces-Strategic-Investments-to-Drive-Growth02092012.html
PepsiCo Announces Strategic Investments to Drive Growth Retrieved from: http://www.pepsico.com/PressRelease/PepsiCo-Announces-Strategic-Investments-to-Drive-Growth02092012.html
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