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Corporate Overview and Financial Performance: PepsiCo, Inc. is one of the most successful consumer products companies in the world, with 2000 revenues of over $20 billion and 125,000 employees. The company consists of: Frito-Lay Company, the largest manufacturer and distributor of snack chips; Pepsi-Cola Company, the second largest soft drink business and Tropicana Products, the largest marketer and producer of branded juice. PepsiCo brands are among the best known and most respected in the world and are available in about 190 countries and territories. In 2000, PepsiCo has a reported net sale of $20,348 and a comparable net sale of $20,144 in comparison to its 1999’s net sales of $20,367 and $18,666 respectively. PepsiCo has increased its comparable net sale of 8% in 2000 while it had an increase of 15% in 1999. This reflects the increasing rate is going slower. On the other hand, PepsiCo’s interest expense declines 39% showing that the company is significantly lower the average debt level. Back to 1999, the report shows that the company’s interest expense dropped 8%, which indicates that the company is performing well in managing its financial strategies. More details about the financial performance of the company will be discussed in the later part of this paper. B. Strategic Posture: 1. Mission: PepsiCo's overall mission is to increase the value of shareholder's investment. They do this through sales growth, cost controls and wise investment of resources. They believe their commercial success depends upon offering quality and value to their consumers and customers; providing products that are safe, wholesome, economically efficient and environmentally sound; and providing a fair return to their investors while adhering to the highest standards of integrity. 2. Objectives:
Concentrate our resources on growing our businesses. to contributions of time. while providing some of the greatest products on earth. • Make every reasonable effort to help qualified M/WBEs to meet company standards. The scope of this support is extensive -. Packaging is important to public health and a critical component of the distribution system that delivers products to consumers and commercial establishments. PepsiCo believes that as a corporate citizen. PepsiCo does not have the major environmental problems of heavy industry. they recycle. Strategies: As a consumer products company. To meet both consumer demand and safeguard the environment. Their strategy is continually fine-tuned to address the opportunities and risks of the global marketplace. . Each business is also committed to responsible use of resources required in manufacturing their products. Their strategy is to concentrate their resources on growing their businesses. talent and funds to programs of national impact. Their biggest environ-mental challenge is packaging generated by their products. reuse and reduce packaging wherever possible. • Respect the privacy of all visitors who access and use the company’s corporate Web site • Treating all customers with respect. Policies: • Employee networks to mentor and support minority & female employees. it has a responsibility to contribute to the quality of life in our communities. The corporation's success reflects their continuing commitment to growth and a focus on those businesses where they can drive their own growth and create opportunities. Each division is responsible for its own giving program. sensitivity and fairness. 3. investing and financing activities. projects and programs. both through internal growth and carefully selected acquisitions.ranging from sponsorship of local programs and support of employee volunteer activities. • Actively and diligently seek out qualified M/WBEs for all possible company requirements. Continually fine-tuned to address the opportunities and risks of the global marketplace. This philosophy is put into action through support of social agencies. 4. both through internal growth and carefully selected acquisitions.PepsiCo’s overriding objective is to increase the value of our shareholders' investment through integrated operating. Company developed its traditional products and expanded into low-fat and no-fat snacks as well as salsas and dips. Corporate giving is focused on giving where PepsiCo employees volunteer.
''Coke's leadership tried to put us out of business. is chairman of the Board and CEO. 56. is Senior Vice President and Treasurer. Reinemund. is also believed to be the chief strategist behind PepsiCo's competition with rival Coca-Cola. She is also known in company circles for her analytical abilities.'' He spun off Pepsi's capitalintensive bottling operations into an independent public company. ''But we did not look for a temporary boost or a short-term gain despite the self-destructive business philosophy by our major competitor. after service as Vice Chairman since 1993. Planning and Strategic Markets for Asea Brown Boveri. Steven S. She joined PepsiCo in 1994 as Senior Vice President. a key component behind her rise. including legal. Enrico. is President and Chief Operating Officer. he has staged some of marketing's most spectacular productions. Mr. He began his career with Pepsi as Senior Operating Officer of Pizza Hut.• We respect individual differences in culture. II. 52. Bridgman. Mr. Taxes. Prior to joining PepsiCo. he was a partner with law firm Winthrop. He spent $3. In his 29 years at PepsiCo (PEP). 45. ethnicity and color. mergers and acquisitions. strategic planning. Nooyi. Enrico was elected as PepsiCo’s CEO in April 1996 and as Chairman of the Board in November 1996. Mr.3 billion to acquire Tropicana. Inc. • Corporate program for training employees how to work and manage in an inclusive environment. PepsiCo is committed to equal opportunity for all employees and applicants. B. Prior to assuming his current position. Bridgman was Senior Vice President and Controller of The Pepsi Bottling Group and he was the Senior Vice President and Controller for Pepsi-Cola North America from 1992 until 1999. advanced technologies and procurement. STRATEGIC MANAGERS A. she was Senior Vice President of Strategy. Indra K. Top Management: . Stimson. Board: Roger A. Matthew M. Peter A. 48. is a Senior Vice President and CFO. Previously. 50. Reinemund was elected President and COO in September 1999. understands that great marketing is pure theater. the leading orange juice brand. Corporate Strategy and Development. who once wanted to be an actor.'' he says flatly. Putnam & Roberts in New York. Taxes. he was Senior Vice President. Prior to joining PepsiCo in 1993 as Vice President. is Senior Vice President and Controller. We've been honed by fire. in addition to her current CFO duties overseeing finance. human resources and corporate communications. Nooyi. Enrico. Mckenna. whose remuneration for fiscal 1999 totaled more than $1 million. information technology. Nooyi is responsible for corporate staff functions.
Thompson. Mexico. Pepsi has stolen 19 points of market share from CocaCola. tapping their connections to drive growth. CEO of Pepsi-Cola International. and where deliveries are often done on threewheel bicycles. One of Enrico's top priorities is to attract more investors into the stock. day by day. Enrico still faces several obstacles in building Pepsi's soda business. Changes in currency exchange rates that would have the largest impact on translating PepsiCo’s international operating profit include Mexican peso. close to Coke's 52%. which PepsiCo is exposed to interest rate. Russia and across Asia Pacific have adversely impacted on PepsiCo’s operations. government actions and other factors. vs. (b)Foreign exchange rate and other international economic conditions: Operating in international markets involve exposure to movements in currency exchange rates.The top one of fifty most talented executives of the company. Once these changes occur. Enrico. inflation. EXTERNAL ENVIRONMENT A. foreign exchange rate and commodity prices. interest rate. volume has risen at a 26% annual clip. Societal Environment: 1. In international markets. more than 700 in the U. . Roger A. which typically affect the economic growth. demonstrates his excellent ability of leadership as representing the company to show the Wall Street that PepsiCo can deliver superior performance quarter after quarter. customer by customer. and Russia. Especially. ''The key thing is not to merely plant flags. where per capita soft drink consumption is seven servings a year. Economic Factor: The key elements taken into consideration are the principal market risks. ''It's to make sure you build a business. Over the past five years. III.. These are specified as : (a)Interest rate on PepsiCo’s debt as well as it short-term investment portfolio: PepsiCo can manage its overall financing strategies in term of balancing investment opportunities and risks. The company is using interest rate and currency swaps to effectively modify the interest rate in order to reduce the overall borrowing costs. bringing Pepsi's share to 47%.S. Canadian dollar and Brazilian real. they will cause PepsiCo to adjust its financing and operating strategies. British pound. the economic turmoil in Russia which accordingly resulted in the devaluation of the ruble in 1998 caused the significant drop in the soft-drink demand. China.'' In India. he builds up his strategy to place his biggest bets on developing markets. macro-economic conditions in Brazil.'' says Peter M. such as India. Pepsi finds the most prominent businessman in each town and gives them exclusive distribution rights. block by block. however. Through years.
and new flavorings enables PepsiCo to provide products that meet changing customer tastes and preferences. In addition. Technological Factor: Development of additives such as sugarless sweeteners. In fact. For Pepsi. Colgate and other universities because it refuses to name the sources of these farm products. sales data helps managers identify regions where certain products are not selling well. and sale sites around the U. two millions people have been forced to work for no pay under brutal conditions to rebuild Burma’s long neglected infrastructure. getting costs out of the distribution pipeline and getting products into the stores less expensively while increasing the availability of sales information. PepsiCo is under the control of the Food and Drug Administration. What PepsiCo did at the time was patronizing the SLORC regime in what they called “rebuild the country’s infrastructure”. PepsiCo did business in Burma (Myanmar) under the brutal SLORC regime. the State Law and Order Restoration Council. According to Jerry Gregoire. 2. PepsiCo must export their products for hard currency because it cannot use Burma's nearly worthless currency to buy imports of supplies for its bottling plants. The company’s operation is affected by federal legislative proposals that address the four objectives: . As the SLORC moved to attract international investment.S. and Canada. Vice President. Sales data also helps Pepsi’s managers make decisions about products before they reach the freshness date and must be pulled from the shelf and discarded. As the result. Information Services. caffeine free products. Political/Legal Factors: (a)The Human Right Issue: Few years ago. For example. 3.” Pepsi NA’s data communication network is an important element in the company’s efforts to address sales and distribution challenges with technology. “The competitive advantage will go to the company that can apply technology to areas such as logistics.(c)Commodity prices that affect the cost of raw materials: PepsiCo is subject to market risk with respect to commodities because its ability to recover increased costs through higher pricing will be limited by the competitive environment in which it is operating. (c)Waste Management and Public Concerns: Growing environmental awareness is leading to increasing legislation. a critical business challenge is ensuring that the distribution processes can deliver the right products to the right place at the right time. and move any excess inventory to areas where those products are in demand. local farmers." The issue addressed is whether these products were made by forced labors. PepsiCo had lost contracts at Harvard. Stanford. (b)FDA Regulation: As a food product manufacturer. For instance. distribution. PepsiCo also said it helps the economy by buying "products such as mung beans. the FDA tests and certifies new ingredients such as high-intensity sweeteners before they are allowed to be used in soft drink production. computerized manufacturing technologies are great contributions to higher efficiency and quality in bottling operations. sesame seeds and rattan from small. the Pepsi NA network transports data help management in controlling inventory. Connecting nearly 330 manufacturing.
market between January and September 1996. Therefore. For example. As the matter of fact. To illustrate. PepsiCo switches to non-cola products such as bottle-water. According to the Beverage Industry. Indonesia and India. other companies such as Coca-Cola and Cadbury Schweppes have to go on the same path. Age and ethnicity are two main characteristics that affect consumer preference for soft drinks and alternative beverages. PepsiCo had a great number of commercials during the super-bowl. In turn. Task Environment: 1. and Cadbury Schweppes spent a total of $469. ready-to-drink tea and sports drinks. some studies show that cola products or soft drink in general may cause kidney stones and other related diseases. PepsiCo. not only PepsiCo is the one who have to spend a tremendous fund on advertising campaigns. In contrast to older consumers. New Entrants: It is important when PepsiCo can identify what costs potential entrants to enter the soft drink industry. Connecticut has already passed a law that regulates packaging to increase its recyclability. 4. However. to create their “big names” in order to deprive the market shares from PepsiCo or Coca-Cola.8% in unit sales.S. where poor road conditions and other infrastructure problems may prevent the effective delivery by trucks. health concerns become more of a factor when choosing a beverage. bottled water gained the market share up to 12.-Minimize the quantity of packaging material entering the nation’s solid waste system -Minimize the consumption of scarce natural resources -Maximize the recycling and reuse of packaging materials -Protect human health and the natural environment from adverse effects associated with the disposal of packaging materials. B. Socio-cultural Factor: Consumers today are not as much joyous to cola products as they were before. The production technologies required for manufacturing soft drinks is widely available for the potential entrants. younger consumers— particularly teens and those in their twenties—have less attention spans for products and are more likely to prefer products that seems to be fun and different .. CocaCola Co. The question is whether PepsiCo can have a competitive advantage . or in other words. competing on a national or global scale requires the ability to manufacture and distribute a well-recognized brand.1 million on media advertising in the U. Another aspect is the distribution challenging in some Asian countries such as China. Will new entrants be able to spend a tremendous amount to advertise themselves. With age. it lost is market share in 2000 as consumers seek for alternative beverages. Although PepsiCo is the number one seller in carbonated beverages.
80% 30.00% 0. soft drink market in 1998 vs.5 32 Millions(2000) 1998 Share 2000 Share 4.4 1. Dr.to overcome these difficulties.80% 1.Pepper & 7UP goes down slightly in 2000 at 14. Existing Companies: The U. market and distribute its products.20 2. One example is the agreement between Ocean Spray Cranberries Inc.3% As discussed in Social-cultural Factor part.060. and PepsiCo.3 11. U. 2.370.9% share.9% 14. Table below shows that the top three firms accounted for 90% of the U.157.1% 0. Coca-Cola Co.50% 1. Competitors may take this advantage to market their products.0% 0.S. The top one is still Coca-Cola with market share of 44% in 2000.40 357 270 254.0% 30.S. Pepper and 7UP brands in 1995.Pepper&7UP Cott National Beverage Royal Crown Monarch Big Red Rank Millions(1998) 1 2 3 4 5 6 7 9 6. consumers’ tastes change over the time. next would be PepsiCo with 30.1 300 214. 3.4% 2. which is the largest juice company in China. 2000.4%.50% 2.Trends: .223. There are some changes on market shares to other companies but the changes are not significant.90 4.491.1% 1. Dr.80% 14. Ocean Spray grants a ten-year license to Huiyuan manufacture. consumers switch to water or fruit juices.8 26.7 43. Long dominated by two companies.6 138.S Soft Drink Market Share in 1998 vs 2000 Gallons Market Volume Company Coca-Cola Co.0 106. the industry saw the emergence of a third significant player when Cadbury Schweppes acquired the Dr.90% 1. and Beijing Huiyuan Beverage Group. Instead of drinking cola products.20% 44.9% 2. then it will be difficult for the new companies who want to distribute their products.473.5 3. PepsiCo Inc. and global soft drink industries are quite concentrated.
Smith’s brand snack foods in Australia. soft drink and juice businesses. Fritos brand corn chips and Cheetos brand cheese-flavored snacks. The industry had a five-year compound annual growth rate (CAGR) of 5. But for the five-year period from 1998-2003.S. IV. sells and distributes salty and sweet snacks. the United Kingdom. Products manufactured and sold in North America include Lay’s and Ruffles brand potato chips. Slice. Mug. ØFrito-Lay International (FLI) Frito-Lay International manufactures. PCNA also manufactures. Australia and South Africa. markets. Fritos brand corn chips. Although colas are the most important soda flavor on the market.The market for soft drink is expected to grow at a slower rate in the next four years. Doritos and Tostitos brand tortilla chips. the CAGR is estimated to drop to about 4%. brands have been introduced internationally such as Lay’s and Ruffles brand potato chips. Sabritas brand snack foods and Alegro and Gamesa brand sweet snacks in Mexico. Products include Walkers brand snack foods in the United Kingdom. INTERNAL ENVIRONMENT Corporate Structure PepsiCo owns its corporate headquarters buildings in Purchase. distribution and sale of . ØPepsi-Cola North America (PCNA) Pepsi-Cola North America manufactures concentrates of brand Pepsi. a variety of branded dips and salsas and Rold Gold brand pretzels. Cheetos brand cheese-flavored snacks.0% between 1993 and 1998. PCNA markets and promotes its brands. according to a series of new global soft drink reports published by Beverage Marketing Corporation. Brazil. Principal international snack markets include Mexico. Each product category is further divided into North America segment—US and Canada—and international segment. markets. sells and distributes salty and sweet snacks. A. Low-fat and no-fat versions of several brands are also manufactured and sold in North America. New York. Spain. Sierra Mist and other brands for sale to franchised bottlers. the Netherlands. Mountain Dew. PCNA also sells syrups to national fountain accounts. Doritos and Tostitos brand tortilla chips. the strongest growth in the industry is in the non-cola segment. The company is engaged in the snack food. markets and distributes ready-to-drink tea and coffee products through joint ventures with Lipton and Starbucks and licenses the processing. (PepsiCo 2000 Annual Report) ØFrito-Lay North America (FLNA) Frito-Lay North America manufactures. Fruitworks. Many of our U.
ØPepsi-Cola International (PCI) Pepsi-Cola International manufactures concentrates of brand Pepsi. has been systematically changed over the past two decades from passivity to aggressiveness in order to avoid stagnation and to adapt to changing competitive threats and the changing economic or social environments. "creative tension" is continually encouraged among departments at Pepsi.Aquafina bottled water. But today. Saudi Arabia. Thailand. Pepsi's marketers now take on Coke directly. Because winning is the key value at Pepsi. •To keep everyone on their toes. for example. the Philippines and Brazil. losing has its penalties. Severe pressure was put on managers to show continual improvement in market share. markets. India. whether outside or inside the company. sells and distributes its juices in the United States and internationally. B. Season’s Best. Spain. the United Kingdom. . ØTropicana Tropicana produces. product volume. The culture of the company now is based on the goal of becoming the number one of soft drinks. In its softdrink operation. •Once the company was content in its number two spot. Mirinda. Principal international markets include Canada. Argentina. PCNA manufactures and sells Dole juice drinks for distribution and sale by Pepsi-Cola bottlers. All Employees know they must win merely to stay in place— and must devastate the competition to get ahead. and profits. Tropicana Twister and Dole brand juices. the United Kingdom and France. Inc. •Managers are pitted against each other to grab more market share. Mountain Dew and other brands internationally for sale to franchised bottlers and companyowned bottlers. Products primarily sold in the United States include Tropicana Pure Premium. to work harder and to wring more profits out of their businesses. 7UP. Principal international markets include Mexico. a new employee at PepsiCo quickly learns that beating the competition. Corporate Culture PepsiCo. PCI operates bottling plants and distribution facilities in various international markets for the production. The staff is kept lean and managers are moved to new jobs constantly. China. PCI markets and promotes its brands internationally. offering Pepsi as a cheaper alternative to Coca-Cola. In addition. Looza and Copella are also available in Europe. Many of these products are distributed and sold in Canada and brands such as Fruvita. asking consumers to compare the taste of the two colas. is the surest path to success. KAS. distribution and sale of company-owned and licensed brands.
etc.54 billion. net sales increased 8% to $4. annual sales grow 8% and exceed $20 billion . This system permits the company to work closely with retail trade locations and to be responsive to their needs. whereby its sales force delivers the products directly from distribution centers to the store shelf.which results in people working longs hours and engaging in political maneuvering just to keep their jobs from being reorganized out from under them. oversee the quality of the products. Marketing: • Pepsi has now beaten Coke in the domestic take-home market. For the 12 weeks ended 3/24/01. principally by company-owned trucks. markets and sells soft drinks and concentrates (Pepsi-Cola. and coordinates selling efforts. Net income also reflects an increased gross profit due to higher effective net pricing. • The company’s products are transported from manufacturing plants to its major distribution centers. snack foods (Frito-Lay) and Tropicana branded juices.45 • Each division boosts Q4 volume. Net income increased 18% ($498 million). Revenues benefited from volume gains across all divisions.10%. and it is mounting a challenge to Coca Cola overseas. Slice.34. manufactures. Even though sales of PepsiCo were going down slightly on the last three years but they still have very high profits on that years.9 compare with industry just only 8.). • PepsiCo has developed the national marketing. On the first quarter of this year net sales advance 8% to over $4. C. it has dominated the Arab Middle East ever since Coke was ousted in 1967. PepsiCo is very strong revenue growth. develop new products and packaging. On the Ratio PepsiCo just only 33% on debt/equity ratio and profit margin is 10. • EPS grows 15% in the 16-week quarter to 38 cents. The company utilizes a direct store delivery system. Finance: PepsiCo. when it granted a bottling franchise in Israel. promotion and advertising programs that support the its many brands and brand image. Mountain Dew. and gains market share for the year • Net sales advance 8% to over $6 billion for the quarter. The company believes this form of distribution allows it to have a marketing advantage and is essential for the proper distribution of products with a short shelf life. Pepsi has been making inroads: Besides monopolizing the Soviet market. Corporate Resources 1.5 billion with earnings per share increasing 17% to $. (PepsiCo 2000 Annual Report) 2. Inc. and 17% for the 52-week year to $1.
Gatorade and Quaker. The DSD systems give the company the ability to merchandise its products for maximum appeal to consumers.• Every division posts double-digit operating profit growth in the quarter. from the tiniest liquor stores to the mightiest club store.5 billion • Operating cash flow grows 33% to $2. annual operating profits advance 13% to $3. These systems reach hundreds of thousands of outlets. whose SoBe line of drinks adds to the Pepsi-Cola portfolio some of the fastest-growing brands in the fastestgrowing segment of the industry. It will add two very powerful brands to its portfolio. • Another example is the planned merger with the Quaker Oats Company. which is expect to complete in the second quarter of 2001. Operations: • Most of the sales are through the company’s own direct store distribution (DSD) systems. and create new opportunities for every PepsiCo division." . The combined enterprise will rank among the world's five largest consumer product companies. • PepsiCo has been adding new platforms for growth. This is without question the biggest step to ensure a bright future of growth for PepsiCo. where they actually take the products to stores and put them on the shelf. • PepsiCo bought $383 million worth of goods and services from minority-owned and womenowned suppliers in the year of 2000. The merger will make PepsiCo an even more effective competitor in the expanding market for convenient foods and beverages." by Latina Style magazine to its list of "The 50 Best Companies for Latinas. • We were named by Fortune magazine to its list of America's "50 Best Companies for Minorities.7 billion • Return on invested capital (ROIC) improves to 23% -." and by Minority MBA magazine to its list of "Ten Top Companies for Minority MBAs." by Hispanic magazine to its list of "The Hundred Companies Providing the Most Opportunities to Hispanics. non-carbonated beverages. The Women's Business Enterprise National Council named the company among America's Top Corporations for Women's Business Enterprise. which strengthen the company’s portfolio and enhance its vitally important innovation capabilities. For example. PepsiCo minority and women business development programs were rated among the top-10 nationally by the National Minority Supplier Development Council.a 250 basis point increase • 2001 outlook for continued double-digit earnings growth 3. in January 2001 the company acquired a majority of the South Beach Beverage Company.
Every day. law. PepsiCo has installed a computer system that links an effective wide area network that allows immediate transmission of customer orders. audit. the Occupational Health and Safety Administration named two more PepsiCo facilities to its top "STAR" status as part of the agency's Voluntary Protection Program. • The outcome has been to integrate with a wide area network.The company encourages conservation. complete customer order data. and it extends to our corporate staff. These materials work very well for the purpose of their use. In exchange. dedication and intellectual horsepower to make the most of them. The company not only has great opportunities. however these materials do not biodegrade easily. schedule deliveries and save man-hours. experience. Key strategic factors are: 1. the people out there serving the customers 365 days a year. 4. All successful applicants share a commitment to PepsiCo's goals and an ability to thrive in a fast-paced. results-oriented environment. 93 million . aluminum. • Pepsi executives are expected to be physically fit as well as mentally alert: Pepsi employees four physical-fitness instructors at its headquarters. accounting. the company offers a highly competitive compensation and benefits package. • The company’s continued growth has created outstanding career opportunities for talented professionals in a variety of specialized fields. 5. Information Systems: • In responding to market demands for efficient 24-hour "order-to-delivery" process for customer orders. and glass as materials for the containers that Pepsi is stored in. Last year. V. Human Resources: • The company has a wealth of talent across the corporation. recycling and energy use programs that promote clean air and water and reduce landfill. The company encourages one-on-one sports as well as interdepartmental competition in such games a soccer and basketball. but the skills. This fact leads to the use of plastics. ANALYSIS OF STRATEGIC FACTORS A. such as information technology. It starts with its exceptional frontline team. tax. transmit accurate. public affairs. it is necessary that a solid and non-porous container be used to store the product. It is an unwritten rule that to get ahead in the company a manager must stay in shape. allowing the company to more efficiently load trucks. treasury. human resources. Recyclability of Containers Due to the liquid nature of Pepsi’s product.
Pepsi can utilize its excellent brand recognition and reputation to invest in and capitalize on growth in this area. The implementation of these resolutions will have a future effect on the cost basis of Pepsi’s product. The benefits of exclusivity agreements give Coca-Cola a major advantage in channel distribution. Pepsi should continue to aggressively acquire Coca Cola market share. it is obvious that alternative drinks will continue to grow. In addition to restaurants. Mission The overall mission of PepsiCo is to increase the value of shareholder's investments. 5. As long as Coca Cola continues to retain a dominant market share. The resolutions call upon management to establish recycling targets and prepare a plan to achieve them by January 1. decline of cola interest The beverage industry is moving towards the alternative drinks sector. Increased use of exclusivity agreements with restaurant chains and college campuses Coca-Cola has a majority of exclusivity with restaurant chains including McDonalds and other major fast food chains. This is achieved through sales growth. 2. and increase it market share against Coca-Cola at the same time. PepsiCo . The funds go to support financially starved school programs that could range from buying new library books to beefing up the computer lab. 3. and (2) making plastic bottles with an average of 25 percent recycled plastic. 2005. In November 2000. rather than recycled. soft drink manufacturers are willing to engage in "cola wars" to win the rights to supply all the machines in a given school in return for a commission. the boards of Pepsi and Coke passed resolutions for future container recycling targets. Coca-Cola’s market dominance The dominance of Coca Cola in the soft drink market has always been considered a major factor for Pepsi management. 4. or very good managers. cost controls and wise investment of resources. The major reason Taco Bell was purchased by Pepsi was to create a new channel for Pepsi to be sold in restaurants. Coca Cola has consistently been able to acquire the “Pepsi Tigers”. B. Excessive work pressure resulting in exodus of Pepsi management The “creative tension” which is constantly being placed on Pepsi management has resulted in a number of management leaving the company for Coca Cola. Although in recent times. Evaluation of the current mission and objectives 1. away from Pepsi. Continued growth to other segments. and a positive environmental impact if the recycling targets are met. There are two goals: (1) achieving an 80 percent national recycling rate for bottles and cans. mainstream beverages have been making a revival.empty soft drink bottles and cans are thrown away.
• Continue to diversify their beverage selection through acquisitions. projects. This policy is implemented through support of social agencies. economically efficient and environmentally sound. it is responsible to contribute to the quality of life in the communities it serves. b. and programs. This may make it harder to keep costs low but will ensure added revenues. and funds. This will enable PepsiCo to combat the decreased interest in cola. Contribute to the quality of life in communities PepsiCo believes that as a corporate citizen. we are making the following recommendations: • Pepsi should focus on increasing sales globally to compete effectively with Coke. As consultants for PepsiCo. They have been beaten badly in some markets. and providing a fair return to their investors while adhering to the highest standards of integrity.believes that their commercial success depends upon offering quality and value to their consumers and customers. Concentration of resources on growth of businesses through internal growth and carefully selected acquisitions PepsiCo has adopted a plan for growth by continually addressing the opportunities and risks associated with the global marketplace. talent. we have chosen to endorse one that fosters continued growth and diversification. Although their over-diversified portfolio has hindered their International Growth. VI. Another reason why Coke has continued to beat Pepsi is through its exclusivity agreements with restaurant chains. • Increase the use of exclusivity agreements to boost their sales in key markets. PepsiCo needs to ensure that they can properly manage all of these acquired companies and should divest those that show limited potential. wholesome. The corporation's success reflects their continuing commitment to growth and a focus on those businesses where they can drive their own growth and create opportunities. providing products that are safe. STRATEGIC ALTERNATIVES AND RECOMMENDED STRATEGY Out of the many strategic alternatives that PepsiCo could choose to follow. Going along with this. and need to focus more on "un-tapped" areas. sports and . The company also supports employee volunteer activities through contributions of time. Each PepsiCo division is responsible for its own giving program with corporate giving focused on supporting employee volunteer activities. Objectives a. 2. these strategies strengthen their overall corporate worth and market presence domestically.
and college campuses. . • Capitalize on their aggressive corporate culture in overseas dealings. More attention in this area will help to battle Coke's dominance. This can help to combat the weakness of their current international strategies.entertainment complexes.