2.

1Primary Activities
The primary value chain activities of PepsiCo are directly involved in producing and
selling the product to targeted customers. Analysis of primary value chain activities can
improve the performance of PepsiCo as explained below.

2.1.1 Inbound Logistics

It is important to develop strong relationships with suppliers as their support is necessary
to receive, store and distribute the product. Without analysing the in-bound logistics,
PepsiCo can face various challenges in product development phases. Analysis of
in-bound logistics requires a company to focus on every aspect of transformation from
raw material to finished product. Some examples of inbound logistics are retrieving raw
material, storing the inputs and internally distributing the raw material and components to
start production.

2.1.2 Operations
The importance of analysing operational activities raises when raw material arrives, and
PepsiCo is ready to process the raw material into the end product and launch it in the
market. Some examples of operational activities are machining, packing, assembling
and testing. Equipment repair and maintenance also falls into this category.

It includes both- manufacturing and service operations. Analysis of operational activities

is important for improving productivity, maximising the efficiency and ensuring the
competitive success of PepsiCo. The increased productivity can help PepsiCo to
achieve consistent economic growth, increase profitability and set a powerful basis for
competitive advantage.

2.1.3 Outbound Logistics

Outbound logistics include the activities that deliver the product to the customer by
passing through different intermediaries. Some outbound logistics activities are material
handling, warehousing, scheduling, order processing, transporting and delivering to the
destination. PepsiCo can analyse and optimise the outbound logistics to explore
competitive advantage sources and achieve its business growth objectives.

Because, when outbound activities are timely managed with optimal costs and product
delivery processes put a minimum negative effect on the quality, it maximises the
customer satisfaction and increases growth opportunities for the firm. PepsiCo should
pay specific importance to its outbound value chain activities when its offered products
are perishable and require quick delivery to the end customer.

2.1.4 Marketing and Sales

At this stage, PepsiCo will highlight the benefits and differentiation points of offered
products to persuade the customers that its offering is better than competitors. Only
producing a high quality product at affordable costs and distinctive features cannot
create value until PepsiCo invests on the marketing and sales activities. The sales
agents and marketers play an important role here.
Some examples of PepsiCo's marketing and sales activities are- sales force, advertising,
promotional activities, pricing, channel selection, quoting and building relations with
channel members. The company can use the marketing funnel approach to structure its
marketing and sales activities. The marketing strategies can either be push or pull in
nature, depending on the PepsiCo’s business objectives, brand image, competitive
dynamics and current standing in the market.
Effective and wisely integrated marketing activities can develop the brand equity of
PepsiCo and help it stand out from the competition. However, PepsiCo must avoid
making false commitments about product features that cannot be fulfilled by the
production department. It indicates the need to ensure coordination between different
value chain activities.
2.1.5 Services
The pre-sale and post-sale services offered by the PepsiCo will play an important role in
developing customer loyalty. The modern customers consider post-sale services as
important as marketing and promotional activities. The power of negative e-WOM due to
poor support service cannot be undermined in the current technologically advanced era.
The company must analyse its support activities to avoid damaging brand reputation,
and instead use it as a tool to spread positive word of mouth due to quick, timely and
efficient support services.

2.2 Secondary Activities

The support activities play an important role in coordinating and facilitating the primary
value chain activities. PepsiCo can also benefit from analysis of its support activities as
explained below.
2.2.1 Firm infrastructure
The firm infrastructure denotes a range of activities, such as- quality management, legal
matters handling, accounting, financing, planning and strategic management. Effective
infrastructure management can allow PepsiCo to optimise the value of the whole value
chain. PepsiCo can control the infrastructure activities (or commonly called overhead
costs) to strengthen the competitive positioning in the market.
2.2.2 Human resource management
PepsiCo can analyse human resource management by evaluating different HR aspects,
including- recruiting, selecting, training, rewarding, performance management and other
personnel management activities. The effective HR management can allow PepsiCo to
reduce competitive pressure based on motivation, commitment and skills of its
workforce. The company can also achieve its cost minimisation objectives by analysing
hiring and training costs with their relative return. The heavy dependence of PepsiCo on
employees' talent will increase the importance of this value chain support activity.
2.2.3 Technology development
In a modern, technological advanced era, almost all value chain activities depend on
technological support. The technological integration in production, distribution, marketing
and human resource activities requires PepsiCo to realise the importance of technology
development. It can be divided into product and process technological development
activities. Some examples are- automation software, technology-supported customer
service, product design research and data analytics. The research and development
department of PepsiCo is classified in this category.
2.2.4 Procurement
The procurement in value chain denotes the processes involved in purchasing the inputs
that may range from equipment, machinery, raw material, supplies, raw material and
other items necessary for producing the finished product. Due to its linkage with multiple
value chain activities, PepsiCo should carefully consider its procurement activities to
optimise the inbound, operational and outbound value chain.
As mentioned above, the application of Porter Value Chain model depends on
understanding the importance of all activities. After understanding the relative
importance of identified value chain activities, PepsiCo should highlight areas where
value can be added, cost efficiency can be achieved, differentiation basis can be set, or
processes can be optimised.