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A REAL SWOT ANALYSIS
http://mba-posts.blogspot.com/2012/06/porters-five-forces-model-of-coca-cola.html
Let’s take a look at a few of the popular ones:
STEP analysis – the same PEST factors in a different order
SLEPT analysis – the PEST analysis with legal issues separated from the
political factors
PESTLE, PESTEL or PESTER analysis – legal (or regulation change) plus
environmental (or ecological) changes are added. I tend to use PESTER in my
own strategy work because it’s the one I learnt in my MBA training.
STEEPLE – is PEST with legal, ecological and ethical issues added.
STEEPLED analysis – is STEEPLE with demographics pulled out of the social
changes.
SWOT ANALYSIS
What is SWOT Analysis?
A SWOT analysis stands for Strengths, Weaknesses, Opportunities, and Threats
and is a simple and powerful way to analyze your company's present marketing
situation.
The best way to understand SWOT is to look at an actual example: AMT is a
computer store in a medium-sized market in the United States. Lately it has suffered
through a steady business decline caused mainly by increasing competition from
larger office products stores with national brand names. The following is the SWOT
analysis included in its marketing plan.
STRENTH:
Knowledge. Our competitors are retailers, pushing boxes. We know systems,
networks, connectivity, programming, all the VARs, and data management.
Relationship selling. We get to know our customers, one by one. Our direct sales
force maintains a relationship.
History. We've been in our town forever. We have loyalty of customers and vendors.
We are local.
WEAKNESSES:
Costs. The chain stores have better economics. Their per-unit costs of selling are
quite low. They aren't offering what we offer in terms of knowledgeable selling, but
their cost per square foot and per dollar of sales are much lower.
Price and volume. The major stores pushing boxes can afford to sell for less. Their
component costs are less and they have volume buying with the main vendors.
Brand power. Take one look at their full page advertising, in color, in the Sunday
paper. We can't match that. We don't have the national name that flows into national
advertising.
OPPORTUNITIES:
Local area networks. LANs are becoming commonplace in small business, and
even in home offices. Businesses today assume LANs as part of normal office work.
This is an opportunity for us because LANs are much more knowledge and service
intensive than the standard off-the-shelf PC.
The Internet. The increasing opportunities of the Internet offer us another area of
strength in comparison to the box-on-the-shelf major chain stores. Our customers
want more help with the Internet, and we are in a better position to give it to them.
Training. The major stores don't provide training, but as systems become more
complicated, with LAN and Internet usage, training is more in demand. This is
particularly true of our main target markets.
Service. As our target market needs more service, our competitors are less likely
than ever to provide it. Their business model doesn't include service, just selling the
boxes.
THREATS :
The computer as appliance. Volume buying and selling of computers as products
in boxes, supposedly not needing support, training, connectivity services, etc. As
people think of the computer in those terms, they think they need our service
orientation less.
The larger price-oriented store. When we have huge advertisements of low prices
in the newspaper, our customers think we are not giving them good value.
SWOT analysis is a simple framework for generating strategic alternatives from a
situation analysis. It is applicable to either the corporate level or the business unit
level and frequently appears in marketing plans. SWOT (sometimes referred to as
TOWS) stands for Strengths, Weaknesses, Opportunities, and Threats. The SWOT
framework was described in the late 1960's by Edmund P. Learned, C. Roland
Christiansen, Kenneth Andrews, and William D. Guth in Business Policy, Text and
Cases (Homewood, IL: Irwin, 1969). The General Electric Growth Council used this
form of analysis in the 1980's. Because it concentrates on the issues that potentially
have the most impact, the SWOT analysis is useful when a very limited amount of
time is available to address a complex strategic situation.
The following diagram shows how a SWOT analysis fits into a strategic situation
analysis.
Situation Analysis
/
\
Internal Analysis
External Analysis
/ \
/ \
Strengths Weaknesses
Opportunities Threats
|
SWOT Profile
The internal and external situation analysis can produce a large amount of
information, much of which may not be highly relevant. The SWOT analysis can
serve as an interpretative filter to reduce the information to a manageable quantity of
key issues. The SWOT analysis classifies the internal aspects of the company as
strengths or weaknesses and the external situational factors as opportunities or
threats. Strengths can serve as a foundation for building a competitive advantage,
and weaknesses may hinder it. By understanding these four aspects of its situation,
a firm can better leverage its strengths, correct its weaknesses, capitalize on golden
opportunities, and deter potentially devastating threats.
INTERNAL ANALYSIS:
The internal analysis is a comprehensive evaluation of the internal environment's
potential strengths and weaknesses. Factors should be evaluated across the
organization in areas such as:
Company culture
Company image
Organizational structure
Key staff
Access to natural resources
Position on the experience curve
Operational efficiency
Operational capacity
Brand awareness
Market share
Financial resources
Exclusive contracts
Patents and trade secrets
The SWOT analysis summarizes the internal factors of the firm as a list of strengths
and weaknesses.
EXTERNAL ANALYSIS:
An opportunity is the chance to introduce a new product or service that can generate
superior returns. Opportunities can arise when changes occur in the external
environment. Many of these changes can be perceived as threats to the market
position of existing products and may necessitate a change in product specifications
or the development of new products in order for the firm to remain competitive.
Changes in the external environment may be related to:
Customers
Competitors
Market trends
Suppliers
Partners
Social changes
New technology
Economic environment
Political and regulatory environment
The last four items in the above list are macro-environmental variables, and are
addressed in a PEST analysis. The SWOT analysis summarizes the external
environmental factors as a list of opportunities and threats.
How to Perform a SWOT Analysis?
A SWOT Analysis is an integral part of a marketing plan and can also be part of a
business plan. Knowing what a SWOT Analysis is and how to perform one is very
important.
Conclusion:
SWOT helps a company to set itself for better and for worse. Companies are
inherently insular and inward looking SWOT’s are a means by which a company can
better understand what it does very well and where its shortcomings are. SWOT’s
will help the company size up the competitive landscape and get some insight into
the vagaries of the marketplace.
SWOT analysis has been a framework of choice among many managers for a long
time because of its simplicity and its portrayal of the essence of sound strategy
formulation - matching a firm’s opportunities and threats wit its strengths and
weaknesses. Central to making SWOT analysis effective is accurate internal
analysis – the identification of specific strengths and weaknesses around which
sound strategy can be built.
SWOT ANALYSIS OF PEPSI-CO
The following table shows the internal and external factors affecting the market
opportunities for PepsiCo. This SWOT analysis also shows PepsiCo's internal
strengths such as their experienced management team, a competitive product line, a
global marketing realm, and the continuous efforts by their research and
development to research trends in the industry and to be creative in exploiting those
trends. Some possible opportunities noted in the SWOT analysis are the growing
markets for specialized ethnic foods and healthier food products. Another opportunity
is that the income of consumers is high enabling them to be less price sensitive, and
convenience is becoming ever more important not only to the United States but to
many countries around the world.
Although PepsiCo has much strength, a few weaknesses lie in the fact that the
company is so large and could possibly lose focus or have internal conflict problems.
A few of the threats PepsiCo must stay aware of are the ease of reliability of its
product line, the almost pure competition in pricing for its products, and the
quickness of technological advances causing existing products to be no longer the
most advanced.
Internal Factors
Strengths
Weaknesses
Management
Experienced, broad base of interests and knowledge
Large size may lead to conflicting interests
Product Line
Unique, tastes good, competitive price, and convenient
New one calorie products have no existing customer base, generic brands can make
similar drinks - cheaper
Marketing
Diverse, and global awareness
May lose focus, may not be segmented enough
Personnel
International, diverse positions
Possible conflicts due to so many people, possible trouble staying focused
Finance
High sales revenue, high sale growth, large capital base
High expenses, may have trouble balancing cash-flows of such a large operation
Manufacturing
Low costs and liabilities due to outsourcing of bottling
Lose control and quality standards
Research & Development
Continuous efforts to research trends an reinforce creativity
May concentrate too much on existing products, intra-preneuralship may not be
welcomed
External Factors
Opportunities
Threats
Consumer/Social
Huge market in the healthy products and growing market for specialized foods for
ethnic groups
More expensive products than Coke, such a high price may limit lower income
families from buying a Pepsi product
Competitive
Distinctive name, product and packaging in with regards to its markets
Not entirely patentable, constant replicability by competitors
Technological
Internet promotion such as banner ads and keywords can increase their sales, and
more computerized manufacturing and ordering processes can increase their
efficiency
Computer breakdowns, viruses and hackers can reduce efficiency, and must
constantly update products or other competitors will be more advanced
Economic
Consumer income is high, more tend to eat out, convenience is important to U.S.
Very elastic demand, almost pure competition
Legal/Regulatory
High U.S. Food & Drug Administration standards eliminate overnight competitors
SWOT ANALYSIS OF PEPSI IN PAKISTAN
STRENTH
1. Company Image:
It also is a reputable org. and is well known all over the world. Perception of
producing a high quality product.
2. Quality Conscious:
They maintain a high quality as Pepsi Cola International collect sample from its
different production facilities and send them for lab test in Tokyo.
3. Good Relation with Franchise:
Throughout its history it has a good relation with franchisers working in different
areas of the world where they have the production facilities.
4. Production Capacity:
It has the highest production capacity i.e. 60,000 cases per day is not only in
Pakistan but also in South Asia.
5. Market Share:
It has a highest market share i.e. 62% in Pakistan and leading a far step head from
its competitors.
6. Large No. of diversity businesses:
This is also its main strength as it ahs diversity in many businesses such as
i. Pepsi beverages
ii. Pepsi foods
iii. Pepsi Restaurants.
7. High Tech Culture:
The whole culture and business operating environment at Pepsi-Cola-West Asia has
quick access to a centralized database an they use computers as business tools for
analysis and quick decision making.
8. Sponsorships:
They mainly use celebrities in their advertising campaigning like Imran Khan, Wasim
Akram, and Waqar Younas etc. Also sponsor social activates programs like music
etc.
WEAKNESS
1. Decline in taste:
During the last years, it was published in Financial post that there has been big
complaints from the customers with regard to the bad taste that they experienced
during the span of six months.
2. Political Franchises:
Such as in Pakistan, Hamayun Ahkhtar is its franchisee who has a strong political
support from a political party which is in opposition. In; their era in government less
taxes are imposed on them but relation increases as they come in opposition. So the
selection is not appropriate as this thing is harmful to their image as well as the
strategies.
3. Short term Approach:
They have a lack of emphasis on this in their advertising such as currently when they
losses the bid for official drink in the 96 cricket world cup. They started a campaign in
which they highlight the factor such as “nothing official about it”.
4. Weak Distribution:
They lack behind in catering the rural areas and just concentrating in the urban
areas.
5. Low consumer knowledge:
Unable to maximize local consumer knowledge.
6. Lack of soft drink:
Lack of soft drink “know-how” as a result of diversified business units and generalist
managers
OPPORTUNITIES
1. Increase Population:
As almost in all over the world growth rate is increasing which in turn increases the
demand of products and necessities and especially in Asia the market is growing at
a faster rate as compare to other continents. So they have to attract new entrants.
2. Changing social trend:
As in all over the world people are rushing towards fast food and beverage because
of life which has become much faster, it provide the company a favor to capture this
fast moving market with its take away product.
3. Diversification:
They may enter in garments business in order to promote their brand mane, by
making sports cloths fro players which represent their name by wearing their clothes.
4. Distribution of snack foods:
Opportunity to distribute Pepsi snack foods in the future.
THREATS
1. Imitators:
They also have a problem of imitators as receives complaints from customers that
they find take product in disguised of Pepsi’s product.
2. Government Regulation:
They face problem if government employ taxes on them which force them to raise
the price of their product.
3. Corporation’s shortage problem:
Again this is also a serious threat from it suppliers as if supplier is unhappy with the
company. He may reduce the supply and exploit the company. This action will surely
affect the production process.
4. Non-carbonated substitutes:
Non-carbonated substitutes, such as juices and tea brands are maintaining a strong
foothold in the market.
5. Political instability:
The big threat to Pepsi in Pakistan is Political instability and civil unrest.
6. Threat of labor strikes:
External threat of labor strikes and power outages in Pakistan.
SWOT MATRIX (TOWS MATRIX)
What is a SWOT Matrix (TOWS Matrix)?
The SWOT Matrix illustrates how management can match the opportunity by facing
your institution with its own strength and weekness to yield four sets of possible
strategic alternatives. The SWOT Matrix framework lends itself to brainstorming to
create alternative strategies that you might not otherwise consider.
How to Perform a SWOT Matrix (TOWS Matrix)?
A firm should not necessarily pursue the more lucrative opportunities. Rather, it may
have a better chance at developing a competitive advantage by identifying a fit
between the firm's strengths and upcoming opportunities. In some cases, the firm
can overcome a weakness in order to prepare itself to pursue a compelling
opportunity.
To develop strategies that take into account the SWOT profile, a matrix of these
factors can be constructed. The SWOT matrix (also known as a TOWS Matrix) is
shown below:
SWOT / TOWS Matrix
Strengths
Weaknesses
Opportunities
S-O strategies
W-O strategies
Threats
S-T strategies
W-T strategies
Basically four main strategies are proposed:
S-O strategies pursue opportunities that are a good fit to the companies’
strengths. These strategies are based on institutional strengths to take
advantage of market opportunities.
W-O strategies overcome weaknesses to pursue opportunities. These
strategies are based on overcoming institutional weaknesses to take advantage
of market opportunities.
S-T strategies identify ways that the firm can use its strengths to reduce its
vulnerability to external threats. These strategies are based on institutional
strengths to avoid market threats.
W-T strategies establish a defensive plan to prevent the firm's weaknesses
from making it highly susceptible to external threats. These strategies are based
on overcoming/minimizing institutional weaknesses to avoid market threats.
TOWS MATRIX OF PEPSI
We have discussed SWOT analysis of Pepsi-Co in our previous topic now here we
are going to discuss the TOWS Matrix of Pepsi-Co, keeping in mind its SWOT
analysis. Following is the detailed analysis of Pepsi-Cola TOWS matrix:
‘WT’ ANALYSIS
One weakness that Pepsi posses is that it has very strong taste it really feels
that something highly toxic going inside the body, where as the same product of
the coke is not much strong.
They also have a problem of imitators as receives complaints from customers
that they find take product in disguised of Pepsi’s product. During the last years,
it was published in financial post that there has been big complaints from the
customers with regard to the bad taste that they experienced during the span of
six months. If they soon pay no attention towards that this will create a big
problem for them.
Large size may lead to conflicting interests.
New one calorie products have no existing customer base; generic brands can
make similar drinks – cheaper. It is also big threat for any company people may
like or dislike new launching product.
Such as in Pakistan, Hamayun Ahkhtar is its franchisee who has a strong
political support from a political party which is in opposition. In; their era in
government less taxes are imposed on them but relation increases as they
come in opposition. So the selection is not appropriate as this thing is harmful to
their image as well as the strategies. So this may become a big threat for the
Pepsi.
‘WO’ ANALYSIS
They have a lack of emphasis on this in their advertising such as currently when
they losses the bid for official drink in the 96 cricket world cup. They started a
campaign in which they highlight the factor such as “nothing official about it”. If
they don’t focus on sudden changing’s in their advertising then they can convert
this weakness into opportunity.
They lack behind in catering the rural areas and just concentrating in the urban
areas. They should try to increase their distributions and also focus on capturing
rural areas; this will become a big opportunity for them.
The other big weakness on Pepsi is that they don’t pay any attention towards
garments. They may enter in garments business in order to promote their brand
name, by making sports cloths fro players which represent their name by
wearing their clothes. That must increase the customer and income of the Pepsi.
High expenses may have trouble balancing cash-flows of such a large
operation. The staff may show dishonesty. They should try to pay much
attention towards their cash flow, and audit there statements on regular basis.
‘ST’ ANALYSIS
In many countries Pepsi had more expensive products than Coke; such a high
price may limit a lower income family from buying a Pepsi product, therefore
which is a big threat for Pepsi that may Pepsi have to face in the future.
In foreign countries Pepsi have many branches with different flavors as compare
to Pakistan, which has only 2 or 3 Pepsi products. Non-carbonated substitutes,
such as juices and tea brands are maintaining a strong foothold in the market.
Pepsi has a big threat from COKE, which are its main competitor from about 100
years.
Pepsi is a foreign company therefore they have a big threat every time on them
of Political instability and civil unrest.
The whole culture and business operating environment at Pepsi-Cola-West Asia
has quick access to a centralized database and they use computers as business
tools for analysis and quick decision making. Computer breakdowns, viruses
and hackers can reduce efficiency, and must constantly update products or
other competitors will be more advanced.
Continuous efforts to research trends an reinforce creativity, if they fail in their
efforts then there is a big threat for the company. The competitors may get
benefit by their plans.
‘SO’ ANALYSIS
The whole culture and business operating environment at Pepsi-Cola-West Asia
has quick access to a centralized database and they use computers as business
tools for analysis and quick decision making. Internet promotion such as banner
ads and keywords can increase their sales, and more computerized
manufacturing and ordering processes can increase their efficiency and that will
become such a big opportunity for Pepsi.
It has the highest production capacity i.e. 60,000 cases per day is not only in
Pakistan but also in South Asia. Established network of 45 distributors each
supplying 1,100 retailers. High per capita soft drink consumption – average of
22 servings compared to 5 for Pakistan. At will become such a big opportunity.
Due to large production the product of Pepsi is always available in the market
and that will become useful to attract taste lovers customers.
Large No. of diversity businesses is also its main strength as it ahs diversity in
many businesses such as Pepsi beverages, Pepsi foods, Pepsi Restaurants,
and due to large number of diversity they can capture more customer, therefore
it will become such a big opportunity for Pepsi.
Pepsi is also a reputable organization, and is well known all over the world.
Perception of producing a high quality product and strength can become a big
opportunity for Pepsi if they use it in well arranged manner, such as advertising
more and also by conducting concerts to attract more customers.
They maintain a high quality as Pepsi Cola International collect sample from its
different production facilities and send them for lab test in Tokyo, if they show
test reports on label of there products this will also attract customers.
They mainly use celebrities in their advertising campaigning like Imran Khan,
Wasim Akram, and Waqar Younas etc. Also sponsor social activates
programmed like music etc. this will become such a big opportunity to build such
a large number of customers. So we can say that it is one of the big strength
that may become a big opportunity for Pepsi.
Internal analysis is the process of evaluating an organizations strength and weaknesses.
It is important to conduct an internal analysis to find the strengths and weaknesses of
the company. This paper presents an internal analysis of the PepsiCo Company.
Strengths
One of the greatest strengths for PepsiCo is its brand. PepsiCo is one of the companies
with the largest brand recognition in the world (PepsiCo, 2010). The brand name Pepsi is
known in virtually every country in the world. The strong brand presence makes it easier
for the company to market its products around the world. Under the Pepsi company
brand, PepsiCo has numerous other product brands. All these brands have rode on the
success of the company brand and have found it easy to sell since the company brand in
largely accepted in the market. The popularity of PepsiCo corporate brand has also made
it easier for the company to introduce new products in the market. All PepsiCo has to do
in order to make a new product success is to attach it with the company’s corporate
brand which has already attained a significant level of brand loyalty in the beverage
market.
Another key strong point for PepsiCo is a large distribution network. One of the core
elements that define an organization’s success is the organization’s ability to take it
product near the consumer (PepsiCo, 2010). PepsiCo has managed to do this through
establishment of a massive distribution network. PepsiCo runs bottling units in diverse
geographical region which enables the company to produce its products near the
consumers. This reduces the cost of transportation and storage.
In addition, PepsiCo has established relationship with small and mega retailers who sell PepsiCo products to the final consumers. Forming partnership with large retailers such as Wal- Mart has enabled the company to expand its reach to the market. Similarly, partnership with small retail business has enabled the company to take it products to even the remotest parts of the world. Apart from retail chains, PepsiCo has also teamed up with fast food restaurants around the world which have also provided the company with a wide network of outlets (PepsiCo, 2010).
Competitive Advantage
The beverage industry is one of the most competitive industries in the world because it is
filled by numerous products competing against each other. In order to remain in
business, any company needs features that gives it an edge over it competitors (Olsen,
2011). One of the PepsiCo’s competitive advantages is its innovative lines of products.
PepsiCo has been on fore front in the development of innovative beverage products for
different segments of the market. Core has over 20 lines of products with each targeted
to different groups of people. The ability of the company to come up with new and
innovative products has enabled the company to change as consumer’s needs evolve
and thereby remain relevant in the market.
Another competitive advantage of PepsiCo is the ability to respond quickly to market
opportunity and threats. PepsiCo innovativeness gives it the ability to respond quickly to
changes in the market. The company convenient size also gives it the ability to move
quickly. The company is neither to small like most of its competitors neither is to large
like its main competitor, Coca Cola. The relatively large size of the organization gives the
organization access to resources that also make it easier for the company to move
quickly.
Internal Weaknesses
One of the internal weaknesses found in PepsiCo is the company’s reliant on franchised
bottling company to distribute its products (PepsiCo, 2010). This strategy has seen the
company create very powerful bottlers that it cannot exert control over. Sometimes, the
franchises oppose introduction of new products by PepsiCo while other refuse to
manufacture some of the products. Sometimes, the franchises develop their own product
lines that are not part of the PepsiCo’s brands. The franchise system has also limited the
ability of the company to expand its operations (PepsiCo, 2010). Unlike Coca Cola, which
is able to invest in its bottling companies, PepsiCo cannot invest in its bottling companies
since it does not own them. This has hindered the growth and expansion of the company
since most of the individual investors have limited capacity to make such investments.
Lesson Learnt from the Module
Every organization has its strong and weak point and the only way to succeed is by
understanding these points (Schermerhorn, 2010). This knowledge enables an
organization to build on its strengths and improve on its weaknesses thereby becoming
more competitive in the market. Internal analysis is the process used by organization to
evaluate its strength and weaknesses. Competitive advantage refers to aspects that are
unique to an organization and which give the organization an edge over the others
(Olsen, 2011). This implies that, in order for competitive advantage to work for a
company, it must be very difficult for the company to imitate.
References
Olsen E. (2011). Competitive Advantage: Building a Lasting Organization. February 22,
2012. Retrieved
from http://homebusiness.about.com/od/growing/a/comp_advantage.htm
PepsiCo (2010). PepsiCo 2010 Annual Report. February 22, 2012. Retrieved
fro
mhttp://www.pepsico.com/Download/PepsiCo_Annual_Report_2010_Full_Annual_R
eport.pdf
Schermerhorn J. (2010). Management. USA. John Wiley and Son
There are many companies the world over, that conduct PESTLE
analysis on their brands in order to ascertain strategies for the future or
else to understand the market before launching them. It is a fundamental
tool of market planning and strategizing that must be carried out to
comprehend market trends and the systematic risks involved.
PESTLE analysis gives you an overview of the whole situation your
business might be in. Precisely, it is a bird’s eye view of the stimulus and
the scenarios that surround your trade and you business.
PESTLE, is an acronym in which each letter denotes certain factors for
the study. These factors affect the market in many ways and alter the
way strategies are thought of and made. P stands for political factors,
while E stands for economic ones. S has to do with social factors in a
country whereas T sums up all the technological aspects of the market. L
denotes legalities of the environment and E accounts for the
environmental aspects and its influence upon the nature of the trade
you’re in.
Almost every major and minor organization tries to conduct this analysis,
but with regards PESTLE analysis example, I would cite an example of
a real life case study in which PepsiCo, a beverage giant carried out
the PESTLE analysis over its brands.
PESTLE ANALYSIS BY PEPSICO.
PepsiCo is the largest selling beverage the world over, of course after its
arch rival Coca Cola. It accounts for a 37% share of the global beverage
market, and therefore they need to understand each and every country’s
market in order to stay in line with their PESTLE situations.
Pepsi is a big brand, currently holds the 23rd place in the Interbrands
report of the World’s Leading Brands. Their advertisements feature
major celebrities and athletes like David Beckham, Robbie Williams,
Britney Spears, and Michael Jackson etc.
Their market reach is also very diverse, as they’re present in almost
every country from the US to New Zealand. Their PESTLE analysis is
given below:
Political:
Pepsi is a non-alcoholic beverage and is therefore regulated by the FDA
(Food and Drug Administration). So, they’re supposed to maintain a firm
standard of the laws set out by the FDA with consistency. Also, many
different markets across the world have different set of regulations that
are either relaxed or are either stringent. There is competitive pricing by
Pepsi’s competitors and that is one factor that Pepsi has to keep in mind
at all times. The political scenario also matters greatly as there can be
some civil unrest in certain markets or due to inflation the sales of the
product can fall. Most importantly, cross border situations are starkly
different therefore Pepsi has to stay in line with all those policies and
changes so that they can adapt to all those changes accordingly.
Economic:
As the recent economic downturn has plagued the economy, companies
had to restructure their sales and marketing campaigns greatly. Also,
with diminishing profits they had to undergo downsizing internally and
re-think upon how to penetrate the market. Economic conditions have the
highest influence on a business, regardless of what trade it is in. Though,
in Pepsi’s favor, the economic downturn that started in 2008 resulted in
increased sales of its beverages mainly as people were being laid off from
jobs, they were spending time with friends and family or at home.
Social:
Social factors greatly impact Pepsi, as it’s a non-alcoholic beverage it has
to remain in line with the strict and stark differences of cultures the
world over. Also, Pepsi has to communicate its image as a global brand
so that the people can associate it with themselves as something that
connects the world together. Usually, the social implications are seen in
marketing campaigns for example certain countries have religious
festivals, so Pepsi has to keep in line with all those festivals in order to
understand the psyche of their market and how they can cash upon the
opportunity.
Technological:
With the advent of the new age in technology, companies have
completely integrated themselves with all the recent changes that have
taken place. To mention a recent trend that has greatly picked up and
something that almost every business is turning toward is Social Media.
The social media explosion has allowed for increasingly interactive
engagement with the consumers with real time results so Pepsi has to
stay ahead of all the developments that take place with keeping in view
how the youth of today utilizes technology for their benefit and how can
Pepsi reach them in order to keep on increasing brand recall and brand
engagement.
Legal:
There can be many legal implications upon the beverage industry. I
would cite one very famous incident took place in India, where Pepsi was
accused of using contaminated water, given a lab test that was done
upon the water flowing into the Pepsi factory that was located nearby an
industrial estate. A massive recall was issued for the products from
shelves and then the product was tested costing the company many
billions of dollars upon the tests as India is a very major market.
Environmental:
These factors can affect Pepsi, but not immensely alter its trade and
profit generation as these factors affect agri-businesses much more
directly.
PepsiCo has followed a differentiation strategy at the business level due to the
following reasons
The wide portfolio of products including carbonated beverages
and snack foods help it reach out to a vast demography among
the customer base. The assortment of choices enables various
customers to meet their refreshment demands through PepsiCo
products of their preference.
PepsiCo is a global company with operations in several countries.
In order to obtain a share of wallet of consumers in different
regions, it must provide products that are tuned to the tastes and
preferences, prevalent in those local regions. This also explains
the rationale behind having variety of products so that buyers
perceive value for money through their preferred brands.
PepsiCo operates in a duopoly market competing with Coke only.
It need not adopt a cost leadership strategy as both the cola
majors take price signals from each other and adjust markup
prices accordingly, to retain market share and revenue. There has
rarely been an all-out price war between the two which would
have ultimately bled both to huge losses. This allows both players
to compete on the basis of differentiated products targeted at a
wider and more diverse customer base
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Pepsi Co Swot
PepsiCo
SWOT Analysis
Strengths
• Established name and good reputation
• Wide range of products (Diversification)
• Vast distribution channel and easy availability
Weaknesses
• Competitors such as Coca Cola have more market share
• Targets only young customers on promotions
• Overdependence on Wal-Mart
• Overdependence on US markets
• Low productivity
• Image damage due to product recall
Opportunities
• New product can easily penetrate in the market
• Internet promotion and ordering processes
• Broadening of product base
• International expansion
• Growing savoury snack and bottled water market in US
Threats
• Tough rivalry from competitors
• Rising costs in raw materials and travel expenses
• Substitutes (decline in carbonated drink sales)
• Potential negative impact of government regulations
• Potential disruption due to labour unrest
PESTLE Analysis
Political
• Raw material prices becoming worrying
• Land acquisition for new factories
• Government focusing on stricter water pollution norms
• Supposed to maintain firm standard laws set by the FDA
• Competitive pricing
Economic
• New opportunities in other countries
• Fuel price
• Availability of labour
• Economic downturn
Social
• Replenishing water
• Partnership with farmers
• Solid waste management program
• Impact on youngsters
• Different cultures
• Communicate as a global brand
Technological
• Operates in almost all countries
• Newer and more attractive designs
• Newer and better manufacture
• Social media
Legal
• Cross border policies
• Standards and regulations
• Health and safety
Environmental
• CSR
PepsiCo Mission and Vision
http://www.pepsico.com/Company/Our-Mission-and-Vision.html
Our Mission and Vision
At PepsiCo, we believe being a responsible corporate citizen is not only the right thing to do, but the right thing to do for our business.
Our Mission
Our mission is to be the world's premier consumer products company focused on convenient foods and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the
communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity.
Our Vision
"PepsiCo's responsibility is to continually improve all aspects of the world in which we operate - environment, social, economic - creating a better tomorrow than today."
Our vision is put into action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholder value by making PepsiCo a truly sustainable company.
Performance with Purpose
At PepsiCo, we're committed to achieving business and financial success while leaving a positive imprint on society - delivering what we call Performance with Purpose.
Our approach to superior financial performance is straightforward - drive shareholder value. By addressing social and environmental issues, we also deliver on our purpose agenda, which consists of human, environmental, and talent sustainability.
2. Company Analysis: External Analysis PEST Analysis: The Pest Analysis
identifies the political, economical, social a technological influences on an
organization. Political influences: - The production distribution and use of
many of PepsiCo productPepsi Marketing Paper
Goals and HistoryPepsiCo, Inc., with corporate headquarters in Purchase, New York, is one of the most successful
companies in the world, with annual revenues of over $20 billion and about ...
are subject to various federal laws, such as the Food, Drug and Cosmetic
Act, the Occupational Safety and Health Act ad the Americans with
Disabilities. - The businesses are also subject to state, local and foreign
laws. - The international businesses are subject to the Government stability
in the countries where PepsiCo is trying get into (underdeveloped markets).
- The federal, state, local and foreign environmental laws and regulations. -
The businesses are also subject to de taxation policy inThe Pepsi-Cola Story
Summer of 1898, a young pharmacist Caleb Bradham looking for ways to attract people to his pharmacy invented the
beverage now known around the world as Pepsi-Cola. After the first ...
each country they are operating. - They also have to comply with federal,
state, local and foreign environmental laws and regulations. Economic
influences: - The companies are subject to the harvest of the raw material
that they use in their snack foods, soft drink and juice, like corn, oranges,
grapefruit, vegetables, potatoes, etc. - Because of they rely on trucks to
move and distribute many of their products, fuel is also an important
subject, so they are subject to thePepsi Cola Marketing Mix
Pepsi Cola Marketing Mix Pepsi Co., one of today s leading soft drink companies, has not only revolutionized the soft
drink industry with its creative marketing techniques and unforgettable taste, ...
fuel prize fluctuation, and to possible fuel crisis. - Operating in International
Markets involves exposure to volatile movements in foreign exchange
rates. The economic impact of foreign exchange rates movements on them
is complex because such changes are often linked to variability in real
growth, inflation, interest rates, governmental actions and other factors. -
PepsiCo is also subject to other economical factors like money supply,
energy availability and cost, business cycles, etc. Sociocultural influences: -
PepsiCo and moreover Pepsi isInternational Business - Coca Cola Entering The Indian Market
Introduction To give a short introduction to the circumstances affecting this case of Pepsi & Coca Cola it has to be said
that in general it is not just simple ...
subject to the lifestyle changes, because of it bases her advertising
campaigns in a concrete kind of people with an special lifestyle, it is for that
PepsiCo has to pay a special attention on the lifestyle changes. -
Particularly in the United States Pepsi drinkers are very defined, there is a
kind of people who drinks Pepsi another kind who drinks Coca-Cola, it is for
that they have to pay attention to the social mobility for not losing a
possibleMarketing Mix Of Pepsi-Cola
Today’s PepsiCo, Inc. was found in 1965 through the merger of Pepsi Co and Frito-Lay, the world’s largest
manufacturer and distributor of snack chips. In 1998, it acquired Tropicana, the ...
market. - Taking into account that PepsiCo is trying to introduce itself in
underdeveloped markets, they have to be careful with the possible
problems with the governments of this countries, and with the problems
could rise from PepsiCo act with the people of this countries. Technological
influences: - PepsiCo is subject to new techniques of manufacturing, for
their three business sectors, snack food, juices and soft drinks. - It has to
pay attention to the new distribution techniques. - AndFrito-Lay Tostistos
Frito-Lay’sTostitos In 1932, Elmer Doolin, who was in the icecream business, bought a recipe for corn chips from a
Mexican man who was eager to leave the states and ...
they have to fix their attention in the competence developed, to know about
the new products.
Porter’s Diamond: The Porter’s Diamond Analysis tries to explain the
Competitive Advantage of Nations. There are four attributes of a nation
comprise Porter’s Diamond of national advantage, they are:
Factor Conditions: The basic factor conditions are natural resources,
climate, location, the more advanced factor conditions are skilled labour,
infrastructure and technology. There are some of these factors that can be
obtained by any companyFrito-Lay Tostistos
Frito-Lay’sTostitos In 1932, Elmer Doolin, who was in the icecream business, bought a recipe for corn chips from a
Mexican man who was eager to leave the states and return ...
(like unskilled labour and raw materials) and, hence, do not generate
sustained competitive advantage. Even though, we have to take into
account that specialized factors involve a heavy and sustained investment,
we have to know that if we are able to achieve them, we could generate a
competitive advantage. Some of the factor conditions PepsiCo has to take
into account, in each country where they want to introduce are -
Unemployment. - Interest rate. (Short term, long term). - LabourFrito-Lay Tostistos
In 1932, Elmer Doolin, who was in the ice-cream business, bought a recipe for corn chips from a Mexican man who was
eager to leave the states and return home. ...
legislation.
Demand Conditions: We have to know that the nature of a country
demand makes PepsiCo dependent on them. For example if in one country
exists a sophisticated demand, these customers pressure firms to be
competitive. Is for that, firms that face a sophisticate domestic market are
likely to sell superior products because the market demands high quality
and a close proximity to such customers enable the firm to better
understand the needs of the customers, in the same wayFinancial Analysis
Created by EDGAR Online, Inc. COCA COLA CO Income Statement2 Period End: Dec 31, 1999 Date Filed: Mar 9,
2000 Values in this worksheet are ...
it is easier spread their firms in the global market. Some of the demand
conditions PepsiCo has to take into account en the countries where they
want to introduce are: - Expectation of customers. - GNP & RPI. -
Competitive research (trends) - And with competitors are established in the
country. Related and Supporting Industries: For any company it is really
important the Related and Supporting Industry. Knowing who are the range
of suppliers, and the related industries, is necessaryGun Control
Warren Cooksey 10/11/01 Starbucks Coffee Given the evaluation, Starbucks appears to be pursuing its goals
aggressively. The company has taken on the globe in such markets as Asia and ...
for deciding where we have to place our company. In some cases the
concentration of related and supporting industries provoke the
concentration of the similar industries in the same areas. Some advantages
and disadvantages of locating close to your rival may be: Some
advantages to locating close to your rivals may be: o Potential technology
knowledge spillovers, o An association of a region on the part of
consumers with a product and high quality and therefore some market
power,Coke Extract
Australia Blocks Bid By Coke to Purchase Cadbury Beverages The Coca-Cola Company has come under recent fire in
most of its international markets. The Chairman Douglas Ivester has made a ...
or o An association of a region on the part of applicable labour force. Some
disadvantages to locating close to your rivals are: o Potential poaching of
your employees by rival companies and o Obvious increase in competition
possibly decreasing mark-ups.
Firm Strategy, Structure & Rivalry: Concerning to the strategy and the
structure of the firm, they would be conditioned by the tradition of the
country. There are different management styles in each country, and
besidesSoft Drink Industry Case Study
Soft Drink Industry Case Study Table of Contents Introduction 3 Description ...
they vary depending on the industry. PepsiCo has to study the different
styles of management, for acting in the best way in each country, adapting
its strategy and its structure as far as possible. As far as possible the
rivalry, in general is better the national than the international. In the case of
PepsiCo (Pepsi) ;for them it is more advisable that when they are
introducing in a new market, its main rival (Coca-Cola) not be positioned or
at leastCeo Pay
1 November 1999 CEO Compensation The lead story in the March 31, 1997 issue of The Wall Street Journal was an in
depth study of the life of a seventy-three ...
it is not to absolute leader of the market. Five Forces We do the same
analysis for the three different markets of PepsiCo: the soft drink market,
the snacks market and the chilled orange juice market. We treated the
three markets as a the same industry, with some exceptions as the
competence The threat of entry Established brands with a lot of experience
in the market that a have a good channel of distribution. The brands deliver
the products
Pizza Hut In Brazil
Pizza Hut in Brazil Starting a business in a new country requires a lot of research. It is important to understand that
country's political and economic system as well as ...
directly to the supermarket, this means that is necessary a big company
structure (lorries, warehouses, producing plants, etc.) to arrive at retailers
and supermarkets, all of this requires a big investment of money. Suppliers
Well looks that at first sight, suppliers are not a problem because it�s easy
to find potatoes, corn and oil suppliers. The problem that we find here is the
possibility of variability of prices in the raw materials caused for example by
a bad year ofPhilosophy - Coca Cola
Objective 1: the origin, relevence, and methodology of the social sciences by analyzing philosophy.Drink Coke and be
niceCoca-Cola s CEO espouses a gentler business planWilliam J. HolsteinUS NEWS 6/9/97 The ...
harvesting, or there is another petrol crisis. Also in some countries that
have not petrol normally fuel petrol is more expensive and the fuel
suppliers have an oligopoly of the market. Buyers Considering that buyers
are the final consumers, we can say that in this markets the consumers get
used at one kind of taste, and they have this products for the importance of
the brand, it�s a marketing issue as well. Substitutes In these three
markets is quite difficultHas General Electric Conquered The Business Cycle
Has General Electric conquered the business cycle? According to the companies past three financial statements it
appeared as if they have indeed done so. Looking at GE's 1996 Annual ...
to find substitutes. More than substitutes we can talk more of fashion,
trends, or costumer�s tastes. Suddenly people stop has orange juice for
breakfast and take more milk or coffee in mornings. It�s quite difficult to
find a substitute for these products because normally the people get used
at one kind of taste of cola for example, then is very difficult to try to adapt
the public to a new cola. Competitive Rivalry Well these three markets are
really fullCoke - Pepsi Management Report
In the late years of the 19th century, a new industry was getting born. An industry that was to become established as a
major player in the market later in ...
of rivalry. First there is the Cola market where Coca-Cola owns an
incredible 51% market share, followed far away Pepsi with a 21% of market
share, is very difficult to penetrate in this market. Then there is the Snack
market where Lays have the 40% of market share, the second most
important brand is Procter &Gamble (P&G), in this market the shares are
more distributed, but still being two majors competitors that have most of
the market. An atCoke Vs Pepsi
Mounting competition between Coca-Cola (Coke) and Pepsi Cola (Pepsi) had a very long standing in the American
history. Both cola have thus made themselves a household name in the global ...
the last we have the