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Analysis on strategies adopted by: ´PEPSIµ
Nilesh Singh - 07 Singhnilesh.email@example.com
Rustomjee Business School PG2011
rbs@gmail.Switiching is easy Threat of new entrants Easy to enter . very general unspecialized goods that can be found locally and internationally very easily. Suppliers in food and beverage are on weaker side. When there are lots of competitors customers can easily switch to another product. So switching suppliers is very easy. However if one product is superior and maybe even a little addictive then customers may demand that product and their power will be less.Beacuse of immense competition buyers has the advantage Nilesh Singh . This makes profit margins incredibly thin.com Rustomjee Business School PG2011 .The input required in this industry is commodities which is unspecialized. Bargaining power of Buyers Medium . y y y y Porter s five forces Chart Bargaining Power of Supplier Low . Things like this can give a specific product in an industry a competitive edge over the competition. So naturally when barriers to entry are low there will be a lot of competitors. One is by being low cost and the other is by being high quality.Porter s five forces analysis y Food and beverage industries are saturated which means that the barriers to entry are low.Profit margins are very thin so competing .Threat of new entrants is high in the industry but survival is very hard.Pricing and quality are the two concern . .hard to compete . Substitutes would also be high around the board for food and beverage industry.Many suppliers availavle locally as well as in international market. This is because they are supplying commodities. There are usually only two ways to compete in these industries.07 Singhnilesh. Especially when the industry can only compete on price and quality rather than differentiation. . .
state.PEST Analysis Political Influence y The production distribution and use of many of PepsiCo product are subject to various Indian laws.com Rustomjee Business School PG2011 . fuel is also an important subject. local and foreign laws. they have to be careful with the possible problems with the governments of this countries. Drug and Cosmetic Act. business cycle and fuel crises in that economy. juices and soft drinks. it is for that they have to pay attention to the social mobility for not losing a possible market. etc.07 Singhnilesh. to know about the new products. Nilesh Singh .rbs@gmail. Sociocultural influences y PepsiCo and moreover Pepsi is subject to the lifestyle changes. y y Technological influences y y PepsiCo is subject to new techniques of manufacturing. snack food. because of it bases is in its advertising campaigns which is based on concrete kind of people with an special lifestyle. Because of they rely on trucks to move and distribute many of their products. The Indian. and with the problems could rise from PepsiCo act with the people of this countries. y y Economic influences y y y The companies are subject to the harvest of the raw material that they use in their snack foods. PepsiCo is also subject to other factors such as rising fluctuation in the market. The businesses are also subject to de taxation policy in each country they are operating. it is for that PepsiCo has to pay a special attention on the lifestyle changes. so they are subject to the fuel prizes prevailing in that economy. there is a kind of people who drinks Pepsi another kind who drinks Coca-Cola. Particularly in the United States Pepsi drinkers are much defined. state. It has to pay attention to the new distribution techniques. and they have to fix their attention in the competence developed. Taking into account that PepsiCo is trying to introduce itself in underdeveloped markets. like corn. the Occupational Safety and Health Act. vegetables. They also have to comply with Indian. for their three business sectors. oranges. local and foreign environmental laws and regulations. The international businesses are subject to the Government stability in the countries where PepsiCo is trying get into (underdeveloped markets). soft drink and juice. The various businesses of Pepsi are also subject to state. such as the Food. money supply. grapefruit. local and foreign environmental laws and regulations. potatoes.
Core Competency Product integration and Innovation The first core competency is their product integration and innovation. Gatorade. Pepsi s strength lies in its branding and marketing. This uniqueness in advertising and branding has given it a competitive advantage over its competitors. . and still they are backing up its core competencies in different possible way. Apart from these. and Frappuccino. Through integration.Merger combined more than carbonated and noncarbonated drinks. . . Oye Bubbly and Youngistan created a huge impact on its Target group. PepsiCo and Quaker Oats. such as corn chips and potato chips. This allows them to promote their products and services more efficiently while being able to reach a much broader group of individuals. Pepsi had always come up with the unique ad campaign s focusing towards its target market. several factors mentioned below have been PepsiCo strength over the years. while creating a more diverse product line.com Rustomjee Business School PG2011 .07 Singhnilesh. .Not all PepsiCo products bear the company name. Nilesh Singh . . Some of Pepsi successful Ad campaigns like Yeh dil maange more .Number 1 maker of snacks. they are able to eliminate potential competitors. PepsiCo is able to enhance their product line by carrying fruit drinks. .Merger combined two strong companies.Savings resulting from economies of scale.rbs@gmail. Pepsi target audience is mostly teens and young adults and their advertising reflects this in every possible manner.Company does more than just soft drinks. Branding & Marketing Secondly.
Although there are numerous substitutes and alternatives. Entrants are forced to spend a lot to overcome existing customer loyalties. Nilesh Singh . Major forces affecting the industry are economies of scale and barrier to entry. In the soft drink industry the entry of new competitors depends on the barriers to entry that are present. plastic and glass bottles in the India. distribution and advertising are a must to compete with the industry leaders like coca cola and Pepsi. especially at a time when the economy is slumping. There are many suppliers of sugar and ingredients for soft drinks because they are commodity items.Industry analysis Growth PepsiCo is in the Food & Beverages market. the savory snack and soft drink industry is going to be a large part of our economy for many more decades. This is a high barrier to enter.07 Singhnilesh. The brand name can have differences. This industry is saturated with huge no of players operating in it. Industry analysts are projecting that the soft drink industry will grow by almost 4% over the next five years. In the soft drink industry establishing firms have brand identification and customer loyalties.rbs@gmail. Major sources of barriers: Economies of scale limit the entry by forcing the entrant to come at a large scale. and plastic and glass bottles. Companies need to know these factors if they intend to operate with a competitive advantage in this industry.com Rustomjee Business School PG2011 . There are also many suppliers of cans. Production. aluminum cans. Taking these aspects in consideration I will say that the rivalry is very high is this market. The capital requirements within this industry are very high. Supplier concentration is low due to the fact that the main ingredients are sugar. and also the reaction from existing competitors that the entrant can expect. the lower the costs. water. they will have to produce more to lower the cost. The more you produce. Few companies wants to decline its unit costs of their product.
Mexico and Latin America. "What business are we going to be in? What business should we abandon? What types of portfolio businesses should we hold?" Therefore a large corporation like Pepsi each quarter evaluates their portfolio businesses (whether it is in beverages. Business level PepsiCo engages in a low-cost-differentiation strategy by taking advantage of economies of scale through mass production of its products and by differing their products through taste and marketing.rbs@gmail. Therefore talent sustainability is their main motto. Middle East and Africa along with the Americas Foods and Americas Beverages sectors. snacks or fast food). After the acquisition PepsiCo witnessed the growth of 14% in fiscal year 2001.07 Singhnilesh.Levels of strategies Functional Level As a company PepsiCo has tremendous opportunities and to capitalize on them PepsiCo depends on talent of its associates and executive leadership. Corporate Level Corporate level strategy revolves around asking. Through this investment in people they help them in succeeding and developing the skill that are required to move ahead and to sustain PepsiCo long term growth. To accelerate it more PepsiCo created sectors for PepsiCo Europe and PepsiCo Asia. To accelerate global growth PepsiCo restructured its food and beverages business in America so that it will include other region such as Canada. The large product portfolio and distribution channels of Quaker helped PepsiCo to add more to its economies of scale. PepsiCo was US centric three years ago and it had a western Push model of business.com Rustomjee Business School PG2011 . This helped in leading a new path of innovation and product development. Nilesh Singh . The acquisition of Quaker oats in last August 2000 was a smart move of PepsiCo which enabled the synergies between both the companies. they decide to either cut activity in one or increase focus in one. After viewing the performance of each.
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