Challenges and Theories in International Business: A Case Study of PepsiCo

International business

International business
Table of Contents
Introduction...........................................................................................................................................3
Answer 1...............................................................................................................................................3
Answer 2...............................................................................................................................................6
Answer 3...............................................................................................................................................8
Answer 4.............................................................................................................................................10
Conclusion...........................................................................................................................................10
References...........................................................................................................................................11
2

International business
Introduction
The primary motive of this paper is to outline the various issues or challenges that could be
faced by the PepsiCo in near future. PepsiCo is one of biggest brands in food and beverage
companies with having good and strong portfolio over the beverage products. Here is the
discussion that how the company uses international product life cycle and comparative
advantage theory to gain competitive benefits in global market. Furthermore, foreign direct
investment, international financial market and international monetary system in the context of
PepsiCo also have been explained in the paper.
The organization was formulated in 1965 with merger of Pepsi-Cola and Frito Lay. In today’s
era, the organization is considering one of the leading and growing leaders globally (PepsiCo,
2018). It is measured that the company provides ample of opportunities to the people who
lead the business operational widely. The firm provide enormous food and beverage products
to the large number of customers in the marketplace.
Answer 1
Political, legal and cultural issues: It has been found that various political factors affect the
growth and success of the company adversely. The political factors include changes in
regulations and laws, political conditions, and changes in the non-alcoholic industry
environment (Meyer, 2017). All these factors will affect the progress and targets of the
company negatively. Thus, it is difficult for the company to come up, pricing fixing thus, it
would affect the market share of the company in the international market. Changes in laws
and regulations also have adverse impact on the profitability of the firm (Wiist, 2011). The
changing is accounting standards, taxation and ecological laws in domestic jurisdictions. This
will affect the selling price of the food and beverage products negatively. The political
reforms of the firm are also be affected by the trade relations with the firm (Nestle, 2013).
Along with this, ample of legal responsibilities, rules and regulations also affect the image
and growth of PepsiCo adversely. It has been found from the various analysis that Pepsi is a
non-alcoholic beverage and thus it is governed by the FDA.
The socio-cultural issues would also affect the outcomes and revenue of the firm adversely.
The socio-cultural factors include culture, values, customs, beliefs, attributes and behaviour
of the people that put ample of impact on the performance of the company. Thus, socio-
3

International business
cultural issue is one of the biggest issues for the firm (Barbera, 2014). Furthermore, the social
behaviour of the people is also changes thus it has direct impacted on the revenue and success
of PepsiCo. The religious and caste of different people would also affect the efficiency and
effectiveness of the organization. The buying behaviour of the consumers also is a big
challenge for the company. If the consumers change their behaviour and aspects in terms of
purchasing the food and beverage products thus it can affect the growth and sales volume of
the company (David, 2011). Sometimes, the corporation is failed to fulfil the needs,
requirements and demands of the customers due to changing in consumer behaviour.
Furthermore, PepsiCo is unable to make food and beverage products according to the choices
and preferences of the customers therefore it has a great impacted on the goodwill and
effectiveness of the firm. Due to spread of various diseases, the customers become know of
the threats of the carbonated drinks and they also have the issue about salt, sugar and fat
content in these products. People also become aware of the healthy and effective habits and
they are moving towards the traditional food and beverages that is creating a threat for
PepsiCo (Atkins & Bowler, 2016). It is one of the important and effective threats for the
organisation. Along with this, most of the consumers between the ages of 40-55 are generally
worried with nourishment. Thus, it will have great impact on the non-alcoholic beverage
company by rising in demand for healthier food and beverage products. All these socio-
cultural factors affect the financial image of the company adversely.
If the changes are made in the food standard agency then it can have various direct and
indirect impacts on the business operations and activities of the company and the federal
rules, regulations, norms and standards can also put ample of impact on the food and
beverage sector. All these factors will affect the growth rate and revenue of the company
adversely in near future. Hence, the company should make unique and effective policies,
standards and plans to handle and manage the political, legal and cultural issues. It also will
help in competing with competitors in the international market (Farah, 2011).
Economic issues: The main and significant factor is steady and rapid change in the currency
exchange rate that affects the financial position and reputation of PepsiCo. Unemployment
rate also has direct impact on the growth rate of the corporation negatively. GDP rate, global
recession, interest rate and exchange rate would also lead to ample of losses and damages in
the global market. Inflation rate also has an adverse impact on the effectiveness and
efficiency of the organization adversely (Rothaermel, 2015). PepsiCo might face many of the
economic issues in the global expansion with the present slowdown in China as it also affects
4