Case Study Analysis of PepsiCo: PESTEL and Porter's Five Forces

This case study analyzes PepsiCo, examining its strategic challenges through PESTEL and Porter's Five Forces frameworks. The analysis considers political, economic, social, technological, environmental, and legal factors, as well as the competitive environment. Key problems identified include the rise of health consciousness among consumers and the dominance of Coca-Cola. Solutions proposed, based on Indra Nooyi's strategies, involve the 'Performance with Purpose' approach, integration of the company's segments, diversification of products, enhanced advertisement strategies, and increased corporate social responsibility activities. The study recommends diversification into healthier products, improved marketing to compete with Coca-Cola, and engagement in CSR initiatives to address global issues and appeal to consumers. The case study is supported by references from various sources, including industry publications and academic research.

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CASE STUDY ANALYSIS OF PEPSICO
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1CASE STUDY ANALYSIS OF PEPSICO
PESTEL Analysis
A PESTEL analysis of the PepsiCo Company examining the political, economic,
social technological, environmental and legal factors shows the following aspects:
 Political Factors – These include the political stability and governmental laws
pertaining to the maintenance of health and safety standards present in different
countries of the Company’s operations.
 Economic Factors – These include the growth of economies in the various countries
where the Company operates. Higher economic stability provides opportunities for
PepsiCo.
 Social Factors – These include the health and environmental consciousness among
the customers along with their tastes and preferences regarding the products
manufactured by PepsiCo (Nielsen).
 Technological Factors – These include the investments made by the Company in the
field of research and development to improve its competency in the market and cater
to the preferences and requirements of the customers.
 Environmental Factors – These include the focus of the Company on sustainability
of business activities so that they may not be harmful to the society or the
environment.
 Legal Factors – These include the regulations present in various countries regarding
the health and safety of the products manufactured by PepsiCo.
Porter’s 5 Forces
The framework of five forces formulated by Porter provides an analysis of the
competitive environment of an organization. The examination of these elements further aids
the organization to identify its opportunities and threats in the market, thereby helping it to

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ensure a competitive advantage. The following observations can be drawn from the analysis
of the five forces acting upon PepsiCo Inc.:
 Threat of New Entrants – PepsiCo faces huge threat of new entrants due to the rapid
expansion of the scope of the food and beverage industry.
 Threat of Substitutes – Huge threat is faced by PepsiCo in this aspect due to the
growing preferences of the customers towards healthier alternatives of the products
produced by the Company.
 Bargaining Power of the Suppliers – PepsiCo faces low threat in this aspect because
of high overall supply systems in the food and beverage industry.
 Bargaining Power of Customers – PepsiCo faces high threat in this aspect because
of the customer’s access to product information and changing trends of consumption
patterns towards healthier substitutes (Animashaun).
 Competitive Rivalry – PepsiCo faces high threat in this aspect because of the
presence of major brands like Coca-Cola in the market (Fortune.com).
Problem
The problems identified in the case study include the rise of challenges in the external
environment of PepsiCo. The food and beverage industry has been facing losses in recent
times due to the rising health consciousness among the customers and their preferences
towards mineral or Vitamin water. The beverage industry has also seen the dominance of
Coca-Cola as a major competitor of PepsiCo for which many critics have suggested the
separation of the organization into two units.
Solutions
The solutions identified by Indra Nooyi for the above mentioned problems can be
stated as the following:

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 Strategy of Performance with Purpose – This strategy incorporates the scopes of
environmental sustainability, human sustainability and the whole person at work for
the employees.
 Integration of the Company – Indra Nooyi focused on the integration of the two
segments of the Company, one producing snack and the other producing beverages.
Such integration, as opposed to the view of the critics, would help the Company
obtain optimum profitability.
Recommendations
 Diversification of products – To meet the changing preferences of the customers, the
Company can engage in the diversification of its product range into healthier products
like Vitamin water or low sugar beverages.
 Advertisement strategies – To obtain a competitive advantage on Coca-Cola,
PepsiCo can develop its marketing strategies through advertisements to reach a wider
base of consumers globally (Adage.com).
 Corporate Social Responsibility activities – Engaging in activities for Corporate
Social Responsibility to appeal to the customers and remain responsible and aware
towards global issues like climate change and pollution.

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References
Adage.com. "The Cola Wars Are Back: Pepsi Pledges To Go 'Toe-To-Toe' With Coke."
Adage.com. N.p., 2019. Web. 13 Sept. 2019.
Animashaun, Olatoye Saheed. An investigation of project management at PepsiCo Company.
Diss. Тернопільський національний технічний університет ім. Івана Пулюя, 2017.
Fortune.com. "Coke Vs. Pepsi: The Biggest Soda Rivalry In History Is In Full Swing Again."
Fortune. N.p., 2019. Web. 13 Sept. 2019.
Nielsen, Karin Elisa. "Health beneficial consumer products—status and trends." Developing
Food Products for Consumers with Specific Dietary Needs. Woodhead Publishing, 2016. 15-
42.