Strategic Influences on PepsiCo: A Comprehensive Analysis (MGT604)

This report provides a comprehensive analysis of the strategic influences affecting PepsiCo, a leading food and beverage company. It examines three key areas: PepsiCo's response to changing consumer preferences and the need for change management strategies; the company's environmental impact and adherence to stakeholder theory; and the role of strategic alliances in driving profitability. The report utilizes Porter's Five Forces to assess the competitive landscape and discusses the strategic implications of these influences. It highlights the importance of adapting to market trends, managing stakeholder interests, and forming effective partnerships. The report concludes with strategic recommendations for PepsiCo, emphasizing the need to balance brand image, profitability, and sustainable practices.

Strategic Management

Executive Summary
The purpose of the paper is to analyze three strategic influences that affect the position of the
company PepsiCo in the business environment. PepsiCo is world renowned organization present
food and beverages sector that faces several issues in the environment due to its position in the
market. Further, it should be noted that the company should make use of Kotter eight step model
to change the position of the business because of changing needs of the customers. Further, they
should also take care of the interest of the stakeholders by managing the sustainable
environmental activities. Lastly, they should form strategic alliance to increase the profitability
as well.

Contents
Introduction......................................................................................................................................1
Aim..................................................................................................................................................1
Discussion........................................................................................................................................2
Three Strategic Influences...........................................................................................................2
Strategic Influences affecting PepsiCo............................................................................................3
Porter 5 Five Forces.....................................................................................................................3
Practice of Strategy and Strategic Implication................................................................................4
Strategic Course of Action and Strategic Goals..........................................................................5
Conclusion.......................................................................................................................................6
Recommendation.............................................................................................................................7
References........................................................................................................................................8

Introduction
The objective of the paper is to guide the reader regarding the information about the
company PepsiCo. The company PepsiCo is a leading food and beverage company present in the
international market. The company is placed in more than 200 countries and provide several
products like chips, dairy based products, rice, coffee, tea, bottled water etc. The company was
inaugurated in the year 1898 and is headquartered in New York. The organization works with
more than 274000 people worldwide to provide products and services to its customers in the
business environment. The purpose of the paper is to highlight three diverse strategic influences
for the company and how they influence the working of the company. The strategic influencing
might affect the state of the company in both positive as well as negative ways. Three news
articles have been sorted for the company from several categories so as to analyse its implication
on the productivity of the company. More details about the report are discussed below:
Aim
The objective of the report is enlightening the reader regarding the three strategic factors
that affects the position of the company. These strategic influences affect the working of the
company in diverse ways. These factors develop the conditions of the company to perform more
effectively in the external environment. Three strategic influences for the company PepsiCo are
discussed below.
Discussion
Three Strategic Influences
 A leopard like PepsiCo cannot change its spots
The company PepsiCo likes to position themselves as the market leader in the food and
beverages industry. Also with this, they also prefer becoming a leader in case of corporate social
responsibility segment (Jones, Comfort, & Hillier, 2016). This idea of the business focuses on
the long-time core products of the company. It can be seen that in recent years, the company has
started to focus on better and healthy products offered by them in the business environment like

oats, yogurt drinks, hummus etc. This strategy of the company makes sense when the data of
obesity in people has been looked after (The Guardian, 2019). Change in focus for the company
is important otherwise people will only look at PepsiCo a company that serve sugary drink
Pepsi-Cola in the external market. The sales of Diet Coke increased and bagged second position
in the sales of the company after Pepsi that states that the company is also changing with the
changing preference of people in the external market. The company recently assured the
investors that the company would focus more on the marketing activities of Doritos, Lays,
Cheetos and Tostitos so as to capture higher market share in the environment. Further, along
with the marketing activities of the above mentioned products, the company will now focus on
cross-branding of several products like Ruffles Max potato chips along with the zero calories
Pepsi Max soda. All these activities of the company question the ‘Performance with Purpose’
segment of the company (PepsiCo, 2019).
 Pepsico, and other two companies accused of complicity in illegal rainforest destruction
This article states that the company PepsiCo with other two companies has been accused of
destructing the Sumatra’s last tract of rainforest that is shared by several animals present in the
ecosystem. Plantations built on the deforested land have been allegedly used to supply palm oil
to the customers in the environment (The Guardian, 2019). Profit making activities of the
companies have started to affect the wildlife present in the ecosystem. Thus, it can be said that
such activities of the company are against their corporate social responsibility (Clapp, & Scrinis,
2017). Considering the environmental issues, it is important for such well-established companies
to start focusing on the environment upgradation activities so that other small scale and middle
scale companies can also follow them. The government stated that if the regulatory will not take
appropriate actions to stop such activities of PepsiCo and other companies then the animals like
elephants, rhinos, orang-utans and tigers will not have any place to live. The aspect talks about
the environmental factor of PEST analysis that affect the position of the company (Landry,
Bernardi, & Bosco, 2016).
 Pepsi Co joins a growing crew on P&O Cruises
Cruising is the fastest growing segment present in Australian as well as New Zealand tourism
sector. This sector of the country has several opportunities for the companies present in the food

and beverage sector. PepsiCo Australia and New Zealand is the company that booming in the
environment and taking advantage of such growing industries present in the business
environment. The company is present in the food and beverage segment so they can easily line
up with the cruising companies so as to increase its sales in the environment. The company
initiating cruise services in the environment need to provide snakes and soft drinks to the people
traveling in the cruise (Richards, Thomas, Randle, & Pettigrew, 2015). Thus, it should be noted
that this type of tie-up could progressively benefit the company as it can increase its sales in the
business environment and promote the brand as well.
Strategic Influences affecting PepsiCo
Porter 5 Five Forces
Bargaining Power of Buyer: there is low bargaining power vested in hands of buyer because the
company is the market leader that makes use of similar pricing strategy in the environment.
Differentiated products of PepsiCo reduce competence of buyers.
Bargaining Power of Supplier: there is moderate power vested in the hands of buyer as the
powerful suppliers can reduce the level of profitability of the company. Powerful supplier in
consumer goods sector holds the power to negotiate.
Industry Rivalry: There is high degree of customer rivalry in the environment as presence of
several companies like Coca Cola etc. are continuously trying to attract customers of PepsiCo.
Threat of Substitution: there is high degree of threat of substitution in the environment as the
customers have started to shift their focus from aerated drinks and packed drinks to fresh fruits
and healthy drinks as well. Thus, it is an influencing factor that is affecting the position of the
company.
Threat of New Entrants: there is high degree of threat of new entrants in the market as the
number of consumers in the industry is increasing and the company is unable to compete with
budding competitors as well. There are low entry and exit barriers as well.

Practice of Strategy and Strategic Implication
The three strategic influences mentioned above relates to three concepts of strategy
prevailing in the country. The first influence of PepsiCo and its spot explains about the change
management strategies of the company. Initially, the business used to serve the products that
were unhealthy in the environment. Aerated drinks and chips products were sold in the market
due to demand of the customer (Altuntas, & Turker, 2015). However, with the increasing level of
obesity in the market, the company requires to focus on selling the healthy goods rather than the
unhealthy goods in the business environment. The company PepsiCo needs to make use of
change management strategic practices in the business environment so as to attract the right type
of people in the environment and manage effective sales as well (Omalaja, & Eruola, 2011).
Further, talking about the strategic implication of the strategic influence is that if the company
will not change their business structure according to the changing environment then they will
lose their competence as well. The strategic influence explain the strategic changes that the
business needs to operate according the changing environment. Market trend and fluctuations is
one of the most crucial aspects the affect the growth of the companies in the external
environment (Lock, and Seele, 2016).
Secondly, it should be noted that another article stated details about the stakeholder
theory of the company. Stakeholder theory of the company refers to the responsibility of the
company against the nature and the community that provides several benefits to them in respect
of the resources shared by them. This theory talks about the activities that the business should
conduct in order to satisfy the society and the community by limiting the use of natural resources
and finding better alternatives as well. Every organization makes use of several resources in the
business environment that helps them to continue their business functions effectively. However,
the business should not exploit the nature and perform certain actions to make the environment
stable and provide benefits to the society as well. Whereas, the company PepsiCo in the given
case is performing certain actions that are against their stakeholders (Richards, Thomas, Randle,
& Pettigrew, 2015). So, the business should implement the practice of strategy that provide
sustainable activities to the environment and at the same time increase the interest of
stakeholders as well. The strategic implication of this action of the company is extremely bad for
the company and its brand identity as well, as this type of action can ruin the brand image of the

company and reduce the satisfaction level of the stakeholders as well. Attaining profitability is
not the only objective of a business but there are several other aspects for which the company
needs to define strategy and work on them (Kleinman, Kuei, & Lee, 2017).
Talking about the third strategic influence that is collaboration and partnership activities
of the company, it should be noted that strategic influence holds the power to affect the state of
company in both positive and negative ways. If the business collaborates with wrong
organization or industry that is working against the motive of the company, then it can reduce the
competence of the company. In addition, it should be noted that many times, companies fail to
work in partnerships due to conflict of interest (Venkataraman, & Summers, 2017). However, if
the partnership activities works fine then it can definite bring growth and success in the external
environment. Thus, the company PepsiCo should make use of partnership and collaboration
strategy in the business environment so as to align together and achieve the objectives of the
company altogether. This strategic practice will help the company to expand their scope of
business and increase the level of sales as well. However, the strategic implication of the given
case can reduce the competence of the business and it can provide losses to the company as well
(Hickman, & Silva, 2018).
Strategic Course of Action and Strategic Goals
The strategic goal statement for the company PepsiCo is that they should not indulge in
any activity that reduces its brand image and profitability in the environment. Instead the
business should focus on the increasing brand value of business by satisfying the stakeholders in
the market.
Below mentioned is the strategic course of action for the company PepsiCo:
 Business should initially conduct situational analysis of the company so as to analyse the
internal as well as external environment faced by the organization.
 After analysing the environment, the business should then focus on analysing the
strategic with the help of which the business can capture opportunities present in the
market (Atwood, 2018). This strategic course of action will help the business identify the
options available to them.

 After looking for options, the business should then look for the interest of stakeholders
affected by the decision of management. The company should not performance actions
that dissatisfy the stakeholders in the business environment.
 Lastly, after evaluating the strategic option, the business should the implement the change
management strategies in the external environment. This type of activity helps the
business in effectively organizing the strategy and incorporating them in the business
without facing resistance issues as well.
 Thus, it should be noted that in this way, a formal strategic course of action will help the
organization to attain profitability in the environment by making appropriate use of
resources as well (Eades, & Thornhill, 2017).
 The company should also make use of Kotter eight step change management so as to
manage the strategic influences affecting the position of the company.
Conclusion
Thus, in the limelight of above mentioned event, the fact should be noted that the report
highlights the details about the company PepsiCo and its actions in the external environment.
The report details three strategic factors and its strategic implication on the profitability of the
business as well. Three aspects on which the paper focuses are profit-making activities of
company, CSR activities and business alignment of PepsiCo. This strategic aspects are important
for the business and they can significantly affect the productivity of the company in the external
environment. Thus, it should be noted that it is important for the business to focus on such
aspects and maintain the growth of the company while focusing on recommendations given.
Recommendation
Below mentioned are the recommendations for the company PepsiCo that they should use
to grow in the external competitive business environment:
Maintain CSR activities: The Company should focus on developing the CSR activities in such a
way that the productivity of the company is increased while the environment is sustainable as
well. Along with the promotion of main products of the company, the business should also focus
on Performance with Purpose segment of the business. They should stop performing actions that

harm the nature and the society as well. In this way, the business will gain trust of customers in
the market.
Enhance the Coalition: The Company should form relationship with several companies present
in diverse industries. They should enhance their relationship in the international market. The
company should align its actions with several cruise companies and look for profitability as well
(Hickman, & Silva, 2018).
Keep the stakeholders informed: Lastly, the company should perform all such activities in the
environment while informing investors about their future actions. In this way, they will focus on
productivity as well as CSR activities of the company as well. This activity will also increase the
satisfaction of the investors in the business functions of PepsiCo.

References
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