PepsiCo's Strategic Management

This assignment delves into PepsiCo's strategic management practices. It examines their approach to mergers and acquisitions, highlighting key decisions that shaped the company's growth. A comprehensive SWOT analysis is presented, outlining the company's strengths, weaknesses, opportunities, and threats. The analysis further explores PepsiCo's competitive landscape, particularly its rivalry with Coca-Cola, and discusses strategies for navigating industry challenges.

Running head: STRATEGIC MANAGEMENT
Strategic Management
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Author Note

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1.
The PepsiCo Company was founded by Caleb Bradham in the year of 1898
(Pepsico.com. 2018). The company achieves success with the strategy of merger and acquisition
strategy(Venkataraman, Summers & Venkataraman, 2017). In simple words, the company
merged with Frito-Lay to extend its operations to foodservice business. Accordingly, it also
acquired Pizza Hut, Taco Bell and KFC all around late 1970’s. It is however trying to become a
brand that acquires and extends it business to almost in both the beverages and food industries.
By extending in both the industries to broaden its target market and enter into new market
segmentation with potentiality in growth such as offering drinks with food in KFC will increase
consumption of Pepsi drinks. It also increased its distributors by merging with other
organization. The company PepsiCo also focuses on the quality of its product to make its
customer satisfy, this can be pointed as differentiation strategy.It also invested its lot of capital in
the marketing strategy to attract mass number of customers.
2.
The PepsiCo started in 1898 by Caleb Bradham from its beginning was flourishing with
success and expanding by acquiring its operation in the food, beverages and nutrition industry.
The case study elaborates PepsiCo’s modern history where by acquisition and divestments the
company has emerged out to be one of the successful and main rivals of Coca Cola Company in
the beverage industry. It also devoted its interestin food service business where it merged with
KFC, Pizza Hut and Taco Bell. Later it extended its portfolio by concentrating on juice, energy
drinks and bottled water brands. The company had its production on a large scale which helped it
to integrate its supply chain and its distribution to increase its revenue growth. The company

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focused towards joint venture by offering beverages and snacks at a time to its consumers.
PepsiCo tried to market natural products as such introducing less sugar drinks and non-cola
drinks. The company went into partnership with various other companies to enter directly into
the new market. However, the health factor became a challenge for the company as most of the
consumers started avoiding carbonate drinks. In addition, the company did not have a proper
market research before marketing a product which led it to fall many a times in the market
against its rival. There was no such one strategy used by the company which led to face
difficulties.
3.
SWOT analysis
Strength
 Eco-friendly programs: the company is focusing towards producing bottles made of
plastic of plants only and introducing climate friendly vending machines in US.
 Tie-ups: Hooking up with the concert and music show help PepsiCo to recall its brand in
the mind of its customers. In addition, they also sponsor music awards and events to
stand with the brand and create identity distinctly.
 Clear target audience: PepsiCo clearly targets the youths and the young age group
through its ads and events, social media.
 Successful leadership: under the leadership of CEO IndraNooyi the company progressed
and reached to success. She focused on the beverages that fulfilled the needs of the
customers concern related to health and wellness. Anyhow, PepsiCo had managed to stay
second in the complete soft drinks and the carbonate industry.

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Weakness
 Product dependence: PepsiCo is only present in the food and beverage industry which is a
weakness for the company. As its presence in these two industries can extinct its
carbonate drinks identity.
 Marketing strategy failure: This is one of the main weakness the company has faced
during its operation. It launches or changes the packaging or any factor related to
marketing without a proper research plan and feedback. For example, in 2009 PepsiCo
redesigned Tropicana juices packaging which reduced its sales. However, it its packages
to regain the customer loyalty (Balakrishnan, 2015).
Opportunity
 Health options: PepsiCo can use health factor to gain competitive advantage from other
organization.With increasing health consciousness among people threat as well
opportunity arises too. If PepsiCo researches and change its drinks towards healthy drinks
which will attract more customers (Wan, 2015).
 Expanding globally: The Company is expanding on a global basis by merging with other
companies to gain easy entry and potential customers, without creating brand identity.
 Market served: PepsiCo serves its interest in almost 3 different sectors, namely
beverages, nutritious and food industry which brings upon many opportunities for the
company and increase in sales too.
Threats

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 Competition: The beverage industry or food industry, each of the industry has its own
rivals to compete with PepsiCo. One of the main competitors of PepsiCo is Coca Cola
(Renz & Vogel, 2016).
 Health factor: With times, consumers are becoming aware of the fact that health is
important, which even the government is realizing and trying to promote awareness
among the public which is becoming a threat factor for the company (Aaron & Siegel,
2017).
 New markets: new markets can be one of the biggest challenges that the company
PepsiCo can face. It can be seen from above that one of it opportunity are expanding and
entering into new markets which can bring threats like the local competitors, taste and
preferences of the natives residing there.
The company should focus to market its strategy according to the market segmentation
and with proper market research and along with it should promote its drinks with the offering of
foods and snacks so that the consumers who are unknown of the taste can be aware of Pepsi
drinks. PepsiCo has its one of the main competitor as Coca Cola, instead PepsiCo has to
concentrate on its distribution and good relation with its suppliers which will help to maintain a
smooth working relation and in turn the production will be processed with less conflict. This can
turn customers to be an active part of PepsiCo and prevent from switching brands quickly. The
company should also focus towards making betterment in the health drinks and launching new
recipes related to health drinks.
Now a day’s people are more conscious about their health and even the government is
imposing several plans to promote health concept among the citizens. In the same way if the
company also focuses on making health drinks it can benefit the firm and bring competitive

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advantage. The company is expanding globally which means it is getting its operation control on
a larger base which will benefit the company to earn more profits and attract huge number of
consumers in return to increase sales. It also includes entering into new markets among new
consumers which can benefit the company in a wider base. If the company brings out health
drinks it will affect the amount of consumers that will be brought up on a new context. In the
end, entering into new industries will enhance the company terms of positioning in the market.

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Reference
Aaron, D. G., & Siegel, M. B. (2017). Sponsorship of national health organizations by two major
soda companies. American journal of preventive medicine, 52(1), 20-30.
Balakrishnan, M. S. (2015). PepsiCo MEA: the role of packaging in brand activation. Emerald
Emerging Markets Case Studies, 5(3), 1-12.
Pepsico.com. (2018). The Search for Hidden Figures. [online] Available at:
http://www.pepsico.com/ [Accessed 12 Mar. 2018].
Renz, F., & Vogel, J. (2016). Analysis of The Coca-Cola Company.
Venkataraman, S., Summers, M., & Venkataraman, S. (2017). PepsiCo: The Challenge of
Growth through Innovation. Darden Business Publishing Cases, 1-22.
Wan, S. (2015). Chinese Herbal tea brand positioning Strategy: Case study: WONG LO KAT
Herbal Tea.