Mission Statement

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´Our mission is to be the world's premier consumer Products Company focused on convenient foods and beverages´ ³Performance with Purpose´ means delivering sustainable growth by investing in a healthier future for people and our planet´. ³Our vision is to use innovative technology to empower consumers and create new ways for them to engage with our brands´

Introduction:
Purpose:
The purpose of writing this report is to analyze the business model and strategy adopted by Pepsi Company Inc and to understand the opportunities that exist for the company to optimize its network and distribution channels to a greater extent. Special attention would be paid to the strengths, weaknesses, opportunities and threats of the firm and furthermore, recommendations would be provided to help boost the company¶s image and performance.

This shows the willingness of the company strive for the top position in the industry. with a 21 percent share of the carbonated soft drink market worldwide and 29 percent in the United States. Hereafter.S. . The Frito-Lay Company division is by far the world leader in salty snacks.com/company-histories/PepsiCo-Inc-Company-History. and Diet Pepsi among the top ten soft drinks in the U. suppliers. The fact that Pepsi constantly invests in Research and Development of new products other than the main beverage like Lays crisps which helps it to stay ahead of competitors. the PepsiCo is No.2 in sales of carbonated beverages and drinks. the conclusion together with the recommendations would be provided to better the areas in which the company needs improvement.fundinguniverse. This is what makes the business adopt a global strategy. They also find grave importance to offer a soft-drink to the entire global community. Technology factors will then be examined to identify any upgrades in the company¶s information system and distribution network. as well as No. Finally. This ultimately is the business strategy of the company. ten of which generate more than $1 billion annually. the business model and strategy is identified using various resources and research databases. It is the ³Empowered People means consumers have the freedom to act and think in ways we feel will get the job done. To start off. substitute products and customers. both in the production and the human resources in which the company is run daily. PepsiCo's product portfolio includes 16 brands that generate more than $500 million in sales each year. PepsiCo garners about 35 percent of its retail sales outside the United States. 2010). which is environmentally safe and trusted. market. This involves new market entrants. Then Porter¶s competitive forces model and its affect on the firm is analyzed to recognize the competitor action in the market. with Pepsi-Cola brands marketed in about 160 countries http://www. The firm always looks for improvements in everything that it does. Overall. holding a 40 percent market share and an even more staggering 56 percent share of the U. while being consistent with the processes´ that makes company successful.Background Information Pepsi-Cola Company division is the second largest soft drink business in the world. Their main focus is to provide the best possible products to the whole market. 1 in sales of sports drinks and juices like Tropicana and Gatorade which basically rule the market. ³Worldwide. Plan: PepsiCo is thoroughly analyzed and evaluated to clarify its business environment.S.html PepsiCo mission is ³Performance with purpose´ is distinct from other companies (pepsi. Three of its brands--Pepsi-Cola. the value chain of the organization is researched to understand the current value structure and possible issues with its system. market. Mountain Dew.

(http://money. . marketplace. Political Factor: Affects the core value of the environment PepsiCo operating in more than 160 countries around the world faces a number of political and legal issue such as federal and international tax and different policies of various host country governments. socio/cultural and technological factors that affect the PepsiCo. This has led to an efficient system called the ³quadrant framework´ to develop and communicate important core values (within the community. This refers to the political/legal. The quadrant framework mentioned above has been identified as the PEST analysis.Business Model: There are several business models incorporated within the PepsiCo but the Company believes that by´ delivering sustainable growth by investing in a healthier future for people and our planet through good governance´. economic.cnn.htm) . Moreover the sales of Pepsi in developing countries is also picked up.fortune/index. ³the company still needs to struggle to manage the company¶s political. in Pakistan. 1990). For example. currency and cultural risks Economic Factor: Affects the core value aspect of the marketplace Economic growth has been affected drastically in recent times especially after the severe economic crises that hit the western world reduced the sale revenue and profit margins in late 2007 and early 2008. which was once unreachable has presented Pepsi with a vast opportunity to sell their product to over a billion potential consumers.com/2008/02/18/news/companies/morris_nooyi. as china and various south Asian countries showed promising results with better growth in sale revenue compared to previous years. but since then the company has picked up and PepsiCo's international business grew 22% last year. it has created a negative effect on the country because people are concerned about the health effects of the product since the news spread stated it contains pesticides. These external factors influence Pepsi¶s decisions greatly. triple the rate of domestic sales. More over the opening of the Chinese market. They also deter the company¶s business strategy and operation. However. and now contributes 40% of total revenue $39 billion last year. due to political arrangements around the world. environment and workplace) and strategy to its vendors and suppliers (Doyle.

However. "Non-carbs are becoming a bigger and bigger factor there. society and other environmental preservations. For instance. . it can be seen that the business model lacks effort in the social/cultural standpoint.Technological Factor: Affects the core value aspect of the workplace This factor plots the difference of companies that are proactive and reactive.htm . This analysis concludes that Pepsi has been done overwhelmingly well to cater to most of the core values of the organization.businessweek. It also helps with boosting company image such as introducing low calorie and low fat carbonated drink while extending its product line and introducing new environment friendly plastic bottles. effort needs to be made to create more effective strategies in bonding with community. The company enjoys new ingredients to create new variants of its product to its existing clientele. there have been instances where the company has been accused of being unhealthy in the global marketplace.com/globalbiz/content/jul2009/gb2009072_206417. Pepsi falls in to the category of proactive. as Chinese preferred more natural drinks. Since Pepsi is trying to expand its juice business in China. http://www. PepsiCo was viewed as foreign brands and as a mark of unsafe in china due to unnatural ingredients and carbon content in the drink. since it takes the initiative of developing new products. Social/Cultural Factor: Affects the core value aspect of the community Pepsi always strives to have a good brand image by using products for sustainable future growth. Therefore. Therefore the company was forced to change their strategy in china which is predicted to be the biggest source of income for Pepsi.

streamline their manufacturing and distribution systems and react more quickly to changes in the marketplace. It will also make it easier to leverage 'Power of One' opportunities that involve both beverage and food offerings. and for PepsiCo to present one face to retail customers. secondly perusing global strategy has also saved money for the company as there is one universal product which is sold. With approximately 67.com/articles/pepsico_inc-_nooyis_global_vision_19737. Europe. This is because it has a target market ranging from 10 year old to 60 year old and it is known that the interest and . Asia. The strategy has worked well for the company as it was symbolized as sign for constant quality. the company has been perusing the global strategy for more than two decades now. seller and distributor of Pepsi-Cola beverages.html This proves that every strategy incorporated by the company is represented on a global scale.com/PressRelease/PepsiCo-Reaches-Merger-Agreements-with-Pepsi-BottlingGroup-and-PepsiAmericas08042009.000 employees and annual sales of nearly $14 billion.pepsico. According to Nooyi who is president and CEO of PepsiCo world over directed the company's global strategy and led PepsiCo's restructuring. Africa and Australia. unlike other companies which has customize according to regional taste. mainly because of its standing as a global carbonated drink producer.aspx Distribution Strategy The Pepsi Bottling Group. http://www. including the divestiture of its restaurants to meet global demands. is the world's largest manufacturer.industryweek. PBG has operations in the North America. Inc.Business Strategy: Global Strategy Since representing in more than 160 countries worldwide and acclaimed to be one of the finest multinational brands. Ultimately it will put company in a much better position to compete and to grow both now and in the years ahead globally. like they do in there snack business . http://www. Since the company has extensive beverage distribution system in the world it owns majority of its distribution and bottling companies because it will enable them to bring innovative products and packages to market faster.

when they want them and where they want.foxnews. it can be stated that PepsiCo is a very successful firm which has endeavored many obstacles in being one of the most popular and recognized brands in the world. http://www.com/Brands/Pepsi_Cola-Brands. which the company claims to be best technology of which reduces carbon footprint. Thus company decided to become environmentally friendly by bottle made entirely of plant material.ambitions on this particular segment are more similar throughout the world. PepsiCo has claimed that they are looking ahead to anticipate what social communities around the world require.com/scitech/2011/03/15/pepsi-unveils-eco-friendly-bottles/ . Functional-Strategy Pepsi has couple of strategies which they follow to remain ahead of their competitors in the thriving carbonated drink business. The company continues to invest in R&D so it could innovate. This investment is been done to have a sustainable growth for the coming years which is one of mission stated by PepsiCo After analyzing both the business model and the business strategy. http://www. creating new products.pepsico. Pepsi is constantly on the lookout for ways to ensure their consumers get the products they want. This paves the way to bring about a global effort and thereby a global strategy.html Secondly. new flavors and new packages in varying shapes and sizes to meet the growing demand for convenience and healthier choices. Since Pepsi cola which is a strategic business unit of PepsiCo has more than 200 different types of syrups in its operating 160 countries.

new efficiencies and cost deductions to old products are introduced and where factors such as people. Undertaking this analysis would help an organization determine its current and future course. Firstly. 2001). The rise in the technological factor will create many more brands with more and more competition. Prices of Coke and other local brands pose very little competition which is mainly due to organizational factors.Porter¶s Competitive Forces Model: The Porters Five Forces Model is a tool used to gather a general view of the firm. Market share obtained by other competitors should be considered. Secondly. . organization and technology factors are concerned. Traditional Competition: is when competitors in the market come up with new products. analyze the competitors and examine the external environment (Chen.

None the less Pepsi also has its substitutes in the market such as Tropicana juice and Aquafina water to counter other firms in the fierce competition. Secondly. This is due to organizational factors. there is a relatively high barrier to entry.Substitute products and services: This refers to the substitutes the customer can be purchase if the prices of Pepsi are too high. Due to PepsiCo have agreements with distribution franchises all over the world which would make it difficult for new entrants to make such arrangements to enter the market. Lastly Quality. . In the case of the PepsiCo. think it¶s refreshing. As Large number of substitutes such as water. and socio cultural factors. New market entrants/Barriers to Entry: factors that make it difficult for the competition to enter the soft drink market. However. This would reflect an organizational channel as it shows a large network that links organizations from one to another. This is purely due to the personal factors who personalize the beverage. The following factors under the substitute market can be due to organizational. safety and traceability are all guaranteed by the company and its reputation of the product. but loyal consumers who enjoy Pepsi. the greater control it will have over its suppliers. the technological factor can drastically increase the number of substitutes in the market. technological and people oriented factors are Firstly the Supply Chain is effective and efficient and comprises of a large number of distribution channels. coffee and juices are available to consumers. Customers: This force examines if the customers can easily switch into a competitor¶s product which could pose severe threat. availability of other organizations to enter the market. beer. and have a high quality of perception for the product. The supplier analysis depending on the organizational. Pepsi have a long history of heavy advertising and a large scale of loyal customers who continue to use their product. the bargaining power of buyer and customer is low and there are no high volume buyers in this industry which reduces the threat posed to the company significantly Suppliers: The more suppliers that a firm has. speed. This makes it difficult for new soft drink manufacturers to penetrate the market.

The model is categorized into two main components. PEPSI VALUE CHAIN . critical-leverage points where a firm can use information technology most effectively to enhance its competitive position.Value Chain of Pepsi: The value chain specifies activities in the business where competitive strategies can be applied and where information systems are most likely to have a strategic impact (Laudon et al. 2006). The model also identifies specific. namely support activities and primary activities.

Operations: Pepsi¶s main operations consist of company-owned concentrate and carbonated drink production. The supplies that are purchased include materials such as ingredients.Primary Activities: Inbound Logistics: Pepsi has most notable and promising suppliers and the company has strict rules that suppliers have to abide by. If there are problems with a certain supplier. the business value chain becomes more challenging outside of the core operations. Pepsi introduced the ³Supplier Guiding Principles´ which is set of standards that all suppliers must abide by. Methods used to achieve this include developing new products and brands. This is a vital part of their strategy and this works as a system to control the sales and marketing distribution of the company. this works as an automated warehousing system which associates itself with guiding its suppliers effectively. Sales and Marketing: Pepsi¶s aim is to build consumer loyalty and improves the connection with their consumers to retain as one of the top perceived bands in the world. All these operations require computer controlled machining systems which the business does not currently withhold. time would be given to take corrective measures. . packaging and machinery. According to their company. Pepsi has the right to terminate their contract with the supplier to cater the larger objective and that is to serve community. distribution networks. and sales and marketing activities´. Therefore the company continuously makes changes in their products and continues to innovate for the ever changing needs of the buyers all round the world by introducing new products such as Tropicana and Gatorade. In certain instances. In order to maintain management of these operations. Pepsi is seen to address this situation by acquiring the bottling operations throughout the world to reduce the effects at every level by enlarging their comprehension of the complete environmental impact of their business. These include: compliance with laws and standards. laws and regulations. If not. In order to endure satisfactory supplies. some of the main ³environmental impacts of their business occur further along the value chain through system's bottling operations. changing the design of their packaging and designing new advertising campaigns to persuade new customers towards consuming the drink and retain old buyers by extremely efficient marketing and celebrity endorsements.

. Since Pepsi customers range from many locations.C and Pizza hut. order fulfillment.F. As Pepsi has massive distribution system to cater consumers and Fast food Franchise around the world like K.Service: A service refers to the activities that maintain and enhance a product¶s value include customer support. The company strives to perform better by catering to the particular target audience of that country by introducing products which will yield loyalty there. repair services. installation and training. The company use advanced technological equipments to monitor the product delivered on correct destination and customer. transportation and distribution management. Outbound Logistics: There are specific activities that need to be carried out in order to get the finished goods to the customers. the company focuses on providing a tailored service to meet their customers¶ needs. These include warehousing.

people and processes. It also helps to reduce risk by automated future furcating and helps Pepsi become economically viable. Human Resources: As for human resource is concerned ERP offers a complete and integrated set of applications to help the organization effectively manage the company¶s most important asset. The system increases the performance of organizations and ensures efficiency. The data base management system by oracle which facilitates ERP systems to store data and retrieve data is create good information flows between the upper level management and lower level management. focus and a productive workforce. human resource professionals to foresee. Procurement: Pepsi has to maintain large inventory in their warehouses to be able to keep their production flow smoothly. It also helps to reduce cost as well as time. SAP supplier relationship management helps organizations to automate. As for ERP systems Pepsi uses SAP which help to capitalize on their existing data assets. The tools in the Data base system and ERP help managers. simplify and make procure-to-pay processes for goods and services effectively. its employees. . It helps the company to gain optimal control and competitive advantage which maximizes business profitability.Support Activities Administration and Management: The Pepsi Company administration and management techniques have been tightly monitored and very efficient. plan and acquire the best talent as their workforce. It also optimizes corporate systems.

and different hardware. as well as for data backups. . Therefore the top management called for one information system that would cater companywide IT needs and would save 20 to 30 percent or $50 million in only these areas of technology. followed by additional costs for technology maintenance. different distribution software. Efficiency and productivity has increased through the organization PepsiCo started issuing mobile handheld computer units in 1990¶s to its delivery staffs. These measures would further reduce PepsiCo's operating expenses and boost profit margins. they never asked us for input. This enables easy and quick retrieval of data for the senior managers and the mobile employee and also helps the managers assure that the organizational operations are running smoothly. PepsiCo saw its revenues increase by 14 percent annually. Other problems develop when divisions work independently. Delivery staff now made decisions on the spot and uploaded the data to the main data base of PepsiCo but few years later they were able to transmit data instantly using wireless connections this not only changed its whole delivery system but it also revolutionized delivery systems everywhere as many other companies followed its lead. with decisions on changes made centrally once the information had been reported. when managers had cut the business unit costs by 17 to 20 percent. software updates. They were encouraged to make decisions on prices. including duplication of work and the company's inability to bargain successfully for its supplies because of the large size of purchases from one company. Its goal was to give them the power to set pricing and to promote products themselves." In another instance. Top leadership had allowed individual business units to establish their own information technology infrastructures. different financial applications. and technology support. "When they came up with a standard for the data warehouse. According to one unit manager. There are unnecessary expenses in initial investments in different technologies. even though several business units evaluated their warehouse technology and believed that the Teradata database was a far superior product. The divisions use different databases. different human resources systems. and shelf space when a competitor's products created a need. quantities. This was a major changeover from recording delivery information on paper and entering it into computers at the end of the day. Company executives have said that different technology setups in different divisions can be very costly.Technology and its affect on Operations PepsiCo has to overhaul its information technology (IT) infrastructure and install enterprise-wide systems. In 2000 PepsiCo selected an IBM database for a large corporate data warehouse because of long-range relations with the company.

customer relationship management (CRM) and supply chain management tools. The operations in the company require several information systems including database system and processes together with a wide scale distribution network. Quaker Oats and the Pepsi Bottling Group and the main feature is the net weaver system which interconnects all the soft ware¶s used by firm without replacing according to SAP. mobile number and a personalized text message*. It is up to the PepsiCo to decide how to implement or increase performance of some of technologies mentioned above.com/about/success/pepsico. enabling consumers to better connect with PepsiCo brands right at the point of purchase. All these technological factors could influence the organization in many ways. including Frito-Lay. a state-of-the-art networked unit that features full touch screen interactive vending technology. PepsiCo¶s innovative use of telemetry with the Social Vending System also delivers tremendous operational benefits. One of the largest of those divisions. and easily update digital content online. .aspx PepsiCo also recently announced the launch of its Social Vending System. allowing operators to closely manage inventory levels and delivery scheduling remotely.com/stock/2011/04/27/pepsico-introduces-social-vendingsystem%E2%84%A2-the-next-generation-in-interactive-vend-technology/ In 2004 Pepsi adopted My SAP Business Suite in all of its divisions. which is very cost effective and save millions for PepsiCo. Using digital technology. http://www.vpaweb.http://www. including enterprise resource planning (ERP). PepsiCo¶s Social Vending System enables any user to gift a friend by selecting a beverage and entering the recipient¶s name. When the recipient redeems their gift. There¶s also the option to further personalize the gift with a short video recorded right at the machine. they¶re given the option of either thanking the original sender with a gift of their own or paying it forward and gifting a beverage to another friend. SAP said it will be responsible for installing the full range of the flagship SAP product line at Pepsi.dailymarkets. The gift is delivered with a system code and instructions to redeem it at any PepsiCo Social Vending system. SAP said the effort is aimed at unifying all the legacy software systems used in Pepsi's many divisions. enabling them to change messaging and media content as needed.

com/SAP-siphons-Pepsi-away-from-Oracle/2100-1012_35229309. to identify partners that might not be efficient. There is a requirement to increase the automation in the fast changing industry needs. Since the Company pays more attention to the distribution network and management soft ware¶s rather than the production system itself. The proposed idea of obtaining production facility system is to have universal code of carbonated drink production with no variation in quality. More integration with the within manufacturing facility around the globe will enable the manufacturing partners to have the necessary resources and sufficient capacity to produce to the growing and developing markets like Pakistan.S. one suggestion could be made to increase the effectiveness of operations in the organization even further is to: Introduce Enterprise production facility system to allow it to produce in best possible and viable way through using minimum resources.Read more: http://news. However. . However. This will also make sure that right production methods are being used by syrup manufacturers outside USA and are they following the guidelines provided by parent company.html#ixzz1KjBG7k8n Recommendations Pepsi one of the most proactive organization which adopts any new technology to service the needs of its customers has implemented all forms of technology from IBM data base system to SAP ERP.cnet. a more detailed network integrating the partners to the mother company would enable the head office in the U.

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