Strategic Management Pepsi Essay Example

oat manufacturing experience. In 2001, Quaker became a part of PepsiCo, one of the world's top consumer goods companies.

Tropicana was established in 1947 by Anthony Rossi, who was born in Sicily in 1900 and immigrated to the United States at age 21. Rossi initially sold gift boxes of Florida citrus juice to department stores in New York before relocating to Florida and founding the renowned company. Tropicana is now recognized as the top juice brand in the UK.

PepsiCo competes in the soft drink market dominated by coca cola. To increase sales, PepsiCo changed its soda cans to beer bottles, selling more drinks at lower prices. However, this strategy resulted in Pepsi being labeled as the "poor man's" drink, which did not help its sales. To overcome this, the company developed a new advertising strategy by employing various celebrities to advertise their products.

PepsiCo collaborated with Barney Oldfield, an early car racer and celebrity, as part of their mission to become a top food and beverage provider that satisfies customers and generates financial benefits for investors. They also prioritize creating opportunities for business partners and the communities where they operate. The company's CEO and chairman, Indra Nooyi, envisions "performance with purpose" on a global scale and develops strategies to attain their objectives and aspirations.

To encourage healthier choices, the company needs to revamp its product portfolio, conduct research to meet customer needs, and adopt eco-friendly operational methods.

4. To ensure a positive reputation, it is vital for the company to provide Strategic Analysis training to their employees. This type of analysis involves breaking down the large and complex organization into smaller, more manageable parts for

better comprehension. Strategic analysis encompasses external issues both presently and in the future, impacting the organization as a whole over an extended period of time.

Effective planning of a business involves strategic management, which requires answering three crucial questions: 1. What are the primary goals of the organization? 2. What is the most effective way to achieve these goals? 3. What resources are necessary to achieve these objectives? The environmental scanning aspect of strategic management uses a PEST analysis as a framework for identifying macro environmental factors, including Political, Economical, Social, and Technological influences on an organization.

Regular analysis of the surrounding environment is crucial for a successful planning process, as various political factors can significantly influence the plan's outcome. These factors comprise government intervention in the economy, such as taxation policy and labor and environmental laws, along with political stability. Neglecting certain aspects may lead to an inadequate final result, including modifications to accounting and taxation standards or changes in domestic and foreign environmental regulations. Furthermore, competition from other non-alcoholic market companies can also affect the success of the plan.

The way in which a business operates and the decisions it makes are significantly influenced by economic factors, such as economic growth, interest rates, exchange rates, and inflation rates. Of these factors, the cost of capital is particularly critical as it impacts interest rates and influences a company's growth and expansion. Social factors are equally important with regards to how they affect a company's demand for products; health awareness, population growth rate, age distribution, career attitudes, and emphasis on safety all play an essential role in this regard. As decision-making within a given environment is impacted

by attempts to conform to these social trends, companies must carefully consider both economic and social factors when making strategic decisions.

The rate of technological advancement, technology incentives, automation, and R&D activity are technological factors that impact minimum efficient production levels, outsourcing decisions, and barriers to entry. These factors can also lead to new and innovative products that influence costs and quality. In a SWOT analysis, M. Grant (2002) states that both internal and external factors are crucial for analyzing business strategies. Thus, scanning the internal and external environment is an essential component of the strategic planning process.

SWOT analysis aims to identify the most crucial internal and external factors that can impact a company's achievement of its goals. The internal environment includes strengths and weaknesses, while the external environment encompasses opportunities and threats. A noteworthy strength is the well-established core brand of the company.

Pepsi has established a noteworthy reputation and is amongst the top-selling products in the soft drink industry. Its product range is expansive and boasts of remarkable market position, with constantly rising revenues and growing market share.

The utilization of filtered water, rather than spring water, has substantially enhanced the production, logistics and profit margins of their bottled water sales, leading to noteworthy revenue growth. Additionally, there exists a lack of emotional attachment towards their major brands.

Both Coca Cola company and PepsiCo have the capability to accommodate the preferences of their customers and boast a significant advertising budget. Together, they dedicate an estimated ? 11 million each year towards marketing campaigns and television advertisements.

The introduction of new products in the market resulted in significant growth for both companies. Additionally, PepsiCo's weaknesses include difficulty

in inspiring a vision and direction for a large global company, despite possessing experienced marketing intelligence.

PepsiCo offers a range of products that bear different names and are not identified with the company name. Furthermore, various health concerns have emerged in relation to PepsiCo's products, particularly due to excessive amounts of fat and sugar. These problems have significantly affected the company's reputation and resulted in their decreased status within the food and beverage sector.

The Coca Cola Company had a market valuation of around 67 million, significantly higher than PepsiCo's 22nd place ranking and approximate valuation of 12.5 million. The company could benefit from opportunities such as expanding into the international food market and investing in the non-carbonated drink sector, which is experiencing rapid growth within the industry.

It is evident that more people are opting for healthier food options. However, PepsiCo faces two challenges: intense competition with more established and financially stable companies, and rising commodity prices.

Oil price fluctuations have an impact on production and distribution within various markets and industries. Porter's Five Forces model identifies factors affecting the level of competition in these markets. These forces include the bargaining power of suppliers and buyers.

There are different types of market inputs, which include the bargaining power of suppliers, the threat of new entrants, the threat of substitute products, and the competitive rivalry among existing players. The bargaining power of suppliers pertains to their actual strength as sellers. Usually, suppliers offer commodity products that restrict their impact on the company.

Having adequate equipment is crucial for any business to meet customer demands. If suppliers are unable to provide the necessary equipment, it can result in serious consequences. Suppliers hold

more influence when they are well-organized and have clear priorities.

In a certain organization, there is no alternative and Coca Cola Company is the primary competitor. The price at which the products are sold correlates with the cost of inputs. The bargaining power of buyers, also known as market outputs, is their ability to exert pressure on the company.

Consumers prioritize taste when it comes to soft drinks, and may experience reduced enjoyment if they switch to a less liked brand despite the absence of financial switching costs. The bargaining power of buyers is heightened under two conditions: a) when there are many available products and only a few buyers; and b) when the cost of switching between competing products is low.

The price of products greatly affects buyers, while new entrants into a market can also have a significant impact on a company. The level of threat from new products is influenced by the barriers to entry and exit. Generally, the threat is high when there is a new entry in the market.

PepsiCo's products are not distinguishable from those of competitors and their key technology is not adequately protected, while also being subject to government policies, regulations, and licensing requirements.

PepsiCo faces a risk from substitutes, or how easily customers can switch to other competitors like Coca Cola Company. To mitigate this risk, PepsiCo must prioritize creating high-quality products to maintain customer loyalty.

To prevent its customers from switching to a competitor, PepsiCo could benefit from making some adjustments to its product prices and appearance. One factor to consider is the level of competition among existing players in the market, which can involve aggressive

price competition or competition in areas such as innovation and marketing. High industry rivalry occurs when:

Low customer switching costs, industry growth in food and drink, and high exit barriers create continued competition among rivals.

As stated by S. Chopra and P. Meindl (2006), the ultimate goal of a supply chain is to optimize the total value produced. This is calculated by subtracting the expenses associated with satisfying customer demands from the perceived worth of the end product to said customer.

Within organizations, there are two types of activities: primary and support. Primary activities encompass the entirety of the production process, from inbound logistics to outbound logistics, marketing, and sales, culminating in the delivery of products to the public.

According to the company's website, their efforts are focused on transforming their portfolio to include a healthier range of products while minimizing its environmental impact. In addition, support activities such as managing administrative infrastructure, Human Resource Management (HRM), and technology are also a priority. Strategy formulation pertains to creating long-term plans that consider the management of environmental opportunities and threats in relation to the company's strengths and weaknesses. A continuous process of developing and revising forward-looking strategies that contribute to accomplishing the company's objectives is referred to as strategic management.

Additionally, an analysis of Porter's three generic strategies will be conducted, specifically the Differentiation Strategy. This strategy focuses on marketing factors that set the company apart from its competitors. For this strategy to succeed, the differentiation features must be difficult or costly for competitors to replicate. A testament to this, PepsiCo UK & Ireland has been recognized as one of the top workplaces in the UK by the Great

Place to Work Institute, as noted on their website.

Richard Evans, president of PepsiCo UK & Ireland, expressed the company's dedication to making a positive impact in the competitive global market by valuing the diverse skills and perspectives of their employees. In addition, on May 27, 2010, Walter Todd, Vice President of PepsiCo operations, announced a company-wide campaign aimed at conserving water by extracting it from potatoes. He also urged other companies to prioritize water conservation as an emerging issue, stating that it is often overshadowed by concerns about carbon emissions.

The issue of unpredictability in sourcing key ingredients such as sunflower oil for crisps, orange juice for Tropicana and oats for Quaker Oats is now being addressed by the business, although it was not a widely discussed topic three to five years ago. the company has conducted a risk assessment and contingency planning. PepsiCo has also reduced its water consumption by 45% between 2000-2008 and remains committed to further reductions. Additionally, PepsiCo is renowned for its charitable nature.

In an effort to assist victims of the Haiti disaster in January 2010, PepsiCo contributed ?1 million and provided bottled water, Quaker food products, and Gatorade. The company aims for overall cost leadership by offering lower prices than rivals such as Coca Cola Company to attract a broader customer base. This strategy has helped make PepsiCo one of the biggest corporations in the UK.

The company's reputation improved, resulting in higher profits. To increase revenue, PepsiCo should prioritize constructing new facilities in countries with inexpensive labor. This tactic is attractive for companies when there is significant price competition and buyers are highly sensitive to prices and have low switching costs.

An example of a successful focus strategy at PepsiCo is demonstrated by the success of their top-selling cola brand, Pepsi Max.

Although it has its full flavour, Pepsi Max is sugar-free. Introduced in 1993, it provided consumers with the complete Pepsi taste but without any added sugar. Due to the successful promotion of Pepsi Max and Diet Pepsi, the sales of sugar-free beverages account for nearly half of the overall soft drink sales. For achieving success in business worldwide, implementation strategy plays a significant role. The success of the implementation strategy relies on effective communication. Hence, individuals involved in these projects must communicate well to help the company achieve its goals successfully.

To ensure a successful implementation of a strategy, it is crucial to comprehend its underlying significance. Each company executes their strategy based on their own goals and visions, making the transformation of a basic strategy into a prosperous one quite challenging. PepsiCo's utilization of strategies throughout the years has demonstrated that it has propelled the company to become one of UK's largest corporations. The corporation's objectives and mission guide the customization of their strategy to meet their requirements.

Strategy implementation is a key factor in achieving successful development for any company. The strategy of PepsiCo consists of three parts: organisational leadership, strategic leadership, and direct leadership. To succeed in conquering the market in the years to come, each part must be thoroughly analysed. Corporate governance, according to Cadbury (1992), is responsible for the overall control and direction of companies like PepsiCo. Shareholders play a crucial role in such corporations and their significance will be explored below. Electing the board is one important responsibility of shareholders,

as they are responsible for the long-term health, financial strength, and overall success of the business.

Essentially, the board elected by the shareholders holds responsibility for most matters, except those decided on with the shareholders themselves. As per PepsiCo's website, "PIUK has Board-level responsibility for the environment, with a direct reporting line into our Chief Executive." There are Sustainability Managers present at all manufacturing sites, along with a Central Sustainability team and new Environmental Management Systems. Internal metrics and scorecards have been implemented and there is 100% corporate reporting on energy and water. All British manufacturing sites will be ISO 14001 accredited by the end of 2008. Key environmental metrics are reported to PepsiCo Inc quarterly, with a goal for all 5,500 employees to act as "responsible stewards."

"Conclusion strategy" is a term commonly used to address daily obstacles and goals. While it may be easy for individuals and companies to conceive effective strategies, the challenge lies in persevering with them. The key to achieving corporate objectives is adherence to a well-defined plan. A marketing strategy plays a pivotal role in realizing the company's ambitions and making them a reality.

PepsiCo, an established company with many years of experience, ranks in the top 50 UK companies and in the top 5 in the beverage industry, indicating effective strategic management. The significance of strategic management in all companies, including PepsiCo and the corporate world at large, was highlighted in this report. Through advanced strategic management, PepsiCo could position itself as one of the elite companies in the global market. Reflection: There were variations between this and another assignment.

During my previous assignment, I had

many concerns and a significant amount of studying to do which left me with insufficient time to prepare for the task as I had hoped. Despite receiving a 62% result for the first assignment, there are minimal suggestions that could improve my work, except for analyzing certain details in more depth to achieve a first-class mark of over 70%. For instance, a more specific and comprehensive analysis of Political, Economic, Social, and Technological factors in a PEST analysis could have been beneficial.

Moreover, there could be a more thorough evaluation of both strategy implementation and strategy formulation. It may also be beneficial to provide a revised conclusion that includes the key points of the assignment for a higher grade.