The Swot Analysis Pepsi Commerce Essay Example
The Swot Analysis Pepsi Commerce Essay Example

The Swot Analysis Pepsi Commerce Essay Example

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  • Pages: 11 (2992 words)
  • Published: July 9, 2017
  • Type: Swot Analysis
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Pepsi-Cola, a leading participant in the soft drink sector, has achieved global presence. The company commenced manufacturing operations in 1893 and subsequently underwent a rebranding process on August 28, 1898.

Eventually, in 1961, it was officially identified as Pepsi after being originally introduced as "Brad's Drink". Other options in the market include Coca-Cola, Cola Turka, Big Cola, and RC-Cola. Pepsi is highly preferred in all segments of the market due to its widespread consumption at various locations, events, and during journeys.

Problem Statement

The company has experienced a significant decrease in sales of their product, specifically Pepsi, in recent years. There has also been a decline in demand for this product over time. Business managers have identified several factors contributing to this issue,


including rival products with superior taste, competitor's offerings that provide better value, lower-priced competing products, and competitor companies with stronger strategic planning and development. Consequently, company managers acknowledge the necessity of implementing a strategic management plan to secure funding.

The company evaluated its processes taking into account the following factors:

Market Analysis

In the cold drink market, various participants were involved, including:

  • Distributors
  • Retailers
  • Customers
  • Suppliers and Rivals

The entry of new players into the market can bring both opportunities and threats. This was particularly important for Pepsi, and we will

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examine these factors as barriers to entry from a SWOT perspective.

SWOT Analysis: Pepsi



The primary brand of PepsiCo is Pepsi. In 2008, it ranked as the 26th top brand globally.

The company's total annual gross revenues amount to $15,000 million. In addition to PepsiCo, other popular brands owned by the company include Diet Pepsi, Gatorade, and Mountain Dew. These brands are sold in over 200 countries worldwide. In the US beverage industry, PepsiCo holds a market share of 39%, while in the Snacks industry it holds a share of 26%. These brands significantly contribute to the overall sales revenue.


One aspect of diversification is that each of the top 18 PepsiCo brands generates approximately $1,000 million in annual sales.


The distribution network of Pepsi plants is extensive, delivering their products to warehouses, consumer homes, and retail merchants.


Overdependence on Wal-Mart

PepsiCo heavily relies on Wal-Mart as its largest customer. This reliance causes Pepsi to reduce its prices in order to meet the demands of Wal-Mart's low-cost strategy.

Overdependence on US Markets

Approximately 52% of Pepsi's total revenues come from the US market.

Low Productivity

Pepsi's low productivity is evident by the fact that in 2008 it generated $219,439 per employee, which was significantly lower than its competitors in the market.

PepsiCo is broadening its market reach by acquiring Lebedyansky, the top juice company in Russia, and vwwater in the UK. These acquisitions are part of PepsiCo's strategy to expand its product portfolio within a more competitive global market.

To reduce its dependence on the US market, PepsiCo

is investing $1000 million in China and $500 million in India to strengthen its presence in international markets. Additionally, significant investments are planned for Brazil and Mexico to facilitate further expansion.

Moreover, there is an opportunity for PepsiCo to take advantage of the growing bottled water market in the US. This specific market segment is projected to achieve a volume of $24 billion by 2012.


  • Substantial Decline in Carbonated Drinks Sales

    The overall sales of soft drinks have significantly dropped. While PepsiCo is considering diversification, it anticipates facing the consequences of this decline.

  • Potential Adverse Effects of Government Regulation

    PepsiCo may be adversely affected by state and federal laws that hinder its operations in terms of sales, marketing, and manufacturing.

  • Intense Competition

    Coca-Cola is PepsiCo's main competitor in the market, with Nestle and Marina also being counted as challengers. The fierce competition in the market can impact pricing strategies, marketing, sales, and other promotional tactics implemented by the company. For instance, Coca-Cola has experienced a significant increase in juice sales compared to Pepsi.

Potential Commotion Due to Labor Unrest

Pepsi Co is at risk of facing work stoppages and other labor disputes, such as the one in India in 2008 that led to production halting for about a month. These issues can negatively impact the company's operations.

PEST Analysis: Pepsi

One particular concern revolves around Pepsi's dependence on both external and internal environments for generating revenue from its products and services.

Political Environment: Pepsi

To effectively operate its business, PepsiCo heavily depends on public policies, especially

as it is one of the largest multinational companies globally.

Therefore, it is crucial for the company to actively participate in public policy discussions. The Political Engagement Policy of PepsiCo's division, Citizens Fund (CCF), enables employees to voluntarily contribute to political campaigns at both federal and state levels, as well as support PACs and electoral candidates. This active involvement allows the company to engage in the democratic process.

PepsiCo acknowledges its primary responsibility to take appropriate measures in order to sustain the environment it operates in. This includes considering ecological, social, and economic factors. The company understands the vital role that agriculture plays in its business operations.

Pepsi Co acknowledges the risks arising from the shortage in food supply and various food security threats. The unique social environment at Pepsi Co is highly desirable, where its people are working together for a sustainable future of prosperity. This commitment benefits Pepsi itself, as it provides localized versions of its products by considering the preferences of local communities where the business operates. Technological advancements have helped PepsiCo enhance its production capacity, and therefore, it is fully utilizing new technology.

PepsiCo is receiving essential assistance through IT promotions.

Situation Analysis: Pepsi

To achieve success in meeting customer needs and sustaining profitability, it is imperative for a company to assess internal and external factors within the business environment. The 5Cs offer a comprehensive Situation Analysis for a particular company operating in a specific market.

The text below provides a categorized list of various aspects related to marketing and the product Pepsi. It is divided into three main sections: Company, Confederates, and Customers.


  • Merchandise line
  • Image in the market
  • Technology and Experience
  • Goals
  • Culture


  • Distributors
  • Suppliers
  • Alliances


  • Market size and growing< li >

< ul >
< p >
This information pertains to different aspects of marketing and positioning for Pepsi. It includes:
- Rate of Purchase, seasonal factors: Refers to how quickly the product is being purchased and how it is influenced by seasonal trends.
- Measure purchased at a clip: Indicates how much of the product is bought at one time.
- Trends - how consumer demands and preferences change over time.
- Competitors: Discusses different types of competitors (real or potential, direct or indirect) that Pepsi faces.
- Products: Compares Pepsi's offerings with those of its competitors.
- Positioning: Describes how Pepsi positions itself relative to competitors.- Market Shares: This refers to the percentage of market share that Pepsi holds compared to its competitors.
- Strengths and Failings of rivals: This section discusses the strengths and weaknesses of Pepsi's competitors.
- Climate or Context: This section describes the macro-environmental factors that can affect Pepsi. It includes the political and regulatory environment, economic environment, social/cultural environment, and technological environment.
- 7 P's - Product, Price, Place, Promotion, People, Process, Physical Environment: Pepsi: This section introduces the 7 P's of marketing (Product, Price, Place, Promotion, People, Process,
Physical Environment) and how they help meet marketing objectives for Pepsi.
- Pepsi-Product: This section provides information about the ingredients in Pepsi's cola drink and lists some popular PepsiCo brands such as
Pepsi Twist,
Pepsi Tarik,
Pepsi Samba,
and Mountain Dew.

Coke v/s Pepsi-Product

Pepsi and Coke are the main competitors in the market and compete with a variety of products:



1) Coke introduced a dark colored cola drink which started the competition

with Pepsi's carbonated drink.
1) Pepis also offers a cola version of carbonated drink that competes against Coke.
2) The Coca-Cola company released Vault,a carbonated drink,in June 2005.
Mountain Dew released MDX under their brand in 2005 after a new marketing campaign.The Coca-Cola company produces Sprite, which is a soft drink with a clear lemon-lime flavor.

3) 7 UP and Sprite are rival carbonated lemon drinks.
4) Diet Coca-Cola and Diet Pepsi are sugar-free beverages manufactured by the Coca-Cola Company and PepsiCo respectively.
5) Fanta is a citrus fruit drink owned by The Coca-Cola Company, while Mirinda is a beverage owned by PepsiCo and competes with Fanta.

Monetary Value

Monetary value pertains to the worth of a product in a particular currency. Pricing plays a crucial role in the marketing mix.

Prior to PepsiCo's arrival, Coca-Cola had a monopoly in the cola drink market and established the pricing. However, competition emerged with the introduction of Pepsi. Currently, prices are determined by the competition between Coke and Pepsi. Pepsi exhibits flexibility by occasionally lowering its prices.

This has also led to financial losses for Pepsi because of the associated risks. While lower prices may attract more customers, it also greatly affects production costs, making it challenging to break even. Initially, this was a difficult situation for Pepsi, but its rapid growth has allowed it to recover.


In marketing, place refers to a specific geographic location, industry, or target audience that a company aims to sell its products to. Like Coke, Pepsi has established a worldwide network and has formed partnerships with companies such as Quaker Oats and Lipton.

Advertisements are operated in various areas of the universe.


Promotion includes four subcategories: Personal merchandising, Gross sales Promotion, Promotion and Public

Relations. A promotional strategy can involve: a) Sales Shootouts, b) New product response level, c) Brand Equity Emergence, d) Positioning, e) Competitive revenges, f) Creation of a corporate image. Pepsi and Coke have unique perspectives regarding their promotional activities. The competition began when Pepsi introduced its blind taste challenges. They conducted taste tests at public places like shopping malls, community hubs, etc., allowing people to sample both colas and choose their preferred one, ultimately encouraging people to purchase Pepsi. The following chart provides a comparison between Pepsi and Coke:

People- Pepsi

Pepsi has significantly impacted people's lives by changing their preferences.


Pepsi uses advanced technology to convert inputs into improved carbonated products.

Physical Environment-Pepsi

Pepsi's operations have a significant impact on both the internal and external environment, establishing a strong presence.

The Re-financing Strategic Management Plan

The re-financing strategic management plan is a unique framework for developing, implementing, and evaluating decisions that help an organization achieve its objectives. It includes the following elements:

  • Vision and Mission (the business objectives)
  • Strengths and Weaknesses
  • Opportunities and Threats

Key considerations for strategic planning include:

    Allocation of resources
    Business expansion or retention
    • Business elimination or neutralization

They are individuals who develop plans. They have various job titles, such as CEO, President, owner etc.

Pepsi- Vision Statement

`` PepsiCo 's responsibility is to continuously enhance all aspects of the world in which we operate- environment, social,

economic-creating a better tomorrow than today ''

Pepsi Cola Mission Statement

`` Our mission '' is to increase the value of our shareholders ' investment. We achieve this through sales growth, cost controls, and smart allocation of resources. We believe our commercial success depends on providing quality and value to our consumers and customers.

Our objective is to offer products that are secure, healthy, cost-effective, and eco-friendly while ensuring a fair return for our investors and upholding high standards of honesty.

Types of Strategy

Competitive Advantage: Pepsi

PepsiCo possesses three primary advantages in achieving sustainable growth: powerful and well-liked brands, a demonstrated ability to innovate and create unique products, and efficient go-to-market systems.

Cost Advantage

As the global leader in savory snacks, PepsiCo can combine these snacks with its beverages in the market. This enables PepsiCo to provide distinct product options to retail and foodservice customers.

Market Laterality

It is one of the universe 's most familiar consumer nutrient and drink companies, offering trade names like Frito-Lay, Gatorade, Tropicana and Quaker. The Coke vs. Pepsi struggle raged on for decennaries across the state on supermarket shelves, fast nutrient eating houses and the similar.

New Product Development

Pepsi "As a consumer-focused company, we want to enrich the life styles of our consumers while increasing the local relevancy of the merchandises we make."

We acknowledge the need to understand and appreciate local cultures, customs, forms, and dietary preferences when creating affordable and delicious products for consumers in specific markets. For example, in India, we have developed a whole-grain product to accommodate the fasting tradition during Ramadan. In China, we have introduced jooks, a breakfast option with whole grains and reduced sodium, catering to the nutritional needs of the Chinese diet.

Additionally, in sub-Saharan Africa, we are offering products made from grains as an alternative to those made with plain flour.


Indra Nooyi, Chairman and CEO of PepsiCo, emphasized the benefits of our diverse product portfolio as our food and international divisions performed well while we continued to transform our North American beverage business. To expand in key markets, the company recently announced plans to invest $1 billion over the next four years in China, prioritizing PepsiCo's highest growth market.

In Russia, PepsiCo and The Pepsi Bottling Group, Inc. have announced a program to invest $1 billion over the next three years.

Price Leadership Strategy

This strategy refers to the behavior of a dominant company in an oligopolistic market, where it determines prices and other companies in the market soon follow suit. This typically occurs in a market with limited competition, where only a few producers or sellers are present.

Pepsi- Global Scheme

Pepsi is not just another drink on the vast range of options. Pepsi decided long ago to expand its offerings and operations globally. Pepsi is an American multinational corporation headquartered in Purchase, New York. It is a manufacturing company that distributes beverages and snack foods across 200 countries.

Pepsi-Reengineering Strategy

Reengineering initiatives typically result in a business organization with the following characteristics: 1. Business processes are simplified instead of being made more complex. 2. Job descriptions expand and become multi-dimensional - individuals perform a wider range of tasks.


PepsiCo Inc. is cutting approximately 4,000 employees and reducing pension benefits to increase their income. According to the New York Post, quoted by Reuters on Friday (06.01.2012), the company currently

offers retirement programs and matching contributions to 401(k) retirement savings accounts. PepsiCo claims that eliminating the retirement savings accounts will save the company up to USD75 million. The layoffs, which represent about one percent of the company's payroll, will include a small number of workers at its headquarters.


The reduction of a business hierarchy, particularly in terms of management. This results in a flatter (less layered) organizational structure.

There have been numerous instances of companies restructuring their organization structures in recent years. Many of these companies, including industry leaders, constantly strive to improve all aspects of their business, including their management structure. Some well-known companies that have implemented restructuring include Pepsi-Cola, Hewlett-Packard, Corning, Tenneco, and General Electric, among others.


PepsiCo Inc. is planning a restructuring effort that will result in the elimination of 8,700 jobs. This is being done in order to offset high commodity costs and to increase investment in advertising and marketing in North America. The number of job cuts is lower than what was initially expected.

Approximately 2,000 workers, or 2 percent, out of PepsiCo's 100,000 U.S. employees are at risk of losing their jobs, according to reliable sources. While Mr. Nicolas could not immediately confirm this figure, it is worth noting that the West Loop central offices of Quaker Oats, Gatorade, and Tropicana employ around 1,800 individuals. Additionally, Chicago is home to other PepsiCo teams and its global nutrition group.

Nicolas did not pay attention to specific occupations or individuals until the company informs employees of their position this week.

The Financial Analysis

Pepsi Bottling Group is the world's largest manufacturer, marketer and distributor of Pepsi-Cola beverages. With annual sales of approximately $11

billion, the company's fastest-growing segment is non-carbonated beverages, including the number one brand of bottled water in the U.S., Aquafina, as well as Tropicana juice drinks and Lipton Ice Tea. As part of a 24/7 production operation, the company's Detroit plant ships about 27 million cases per year.

At the works, production starts by unloading empty bottles from trucks using a conveyer and sending them to a depalletizer. At this point, the bottles are rinsed, dried, and transferred to a filling machine. The speed of the filler machines at the works depends on the size of the bottles, ranging from 350 to 1,000 bottles per minute. After leaving the fillers, the bottles proceed to a packaging machine and then to a palletizer. Each pallet is wrapped before being distributed and transported to the warehouse.

Below is a chart that demonstrates the fiscal position of PEPSI Inventory (raw materials) over different years.

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