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BYANISH ANTONY

ARTHI .T.S

BANUMATHI

DEVIKA KRISHNAMARK THOMAS

CORPORATE STRATEGY

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Key Success Factors

3 core success factors-

Merger

Acquisition Franchising

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PepsiCo Strategies SuccessMantra-Consumer habits closely

Mirrored in products.

-Move to Good-For-You and Better-For-You products

-To raise revenues from GFU of 10$ Billion to 30 Billion by

next year.

Power Of One

Wanted to give customers a Frito-Lay & Pepsi Beverage

Experience.

Worked with global suppliers on this strategy.

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Shift in Focus

Product Reformulations Related Acquisitions

-Flat Earth, Tropicana, Quaker.

Universal Advertising Campaign. Portfolio Restructuring.

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Value Proposition Change

Applying global knowledge toinnovation.

Science Based innovation.

Widening Scale of Operation.

Eg.Sports Drinks to Sports Nutrition

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Mission

To be the world's premier consumer productscompany focused on convenient foods andbeverages. We seek to produce financial rewardsto investors as we provide opportunities forgrowth and enrichment to our employees, ourbusiness partners and the communities in which

we operate. And in everything we do, we strivefor honesty, fairness and integrity.

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Modified Mission

To emerge as leading consumers products

company focusing on wholesome food and

beverage solutions on a global scale.

Engineering our existence on

enhanced:financial gains to our

Shareholders,Development prospects for

employees,solid value for customers,mutualbenefit for the society and communities in the

course of honest,justifyable operations.

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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.

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Modified Vision

Performance with a purpose of reaching out to the

society at large with the aim of crafting and creating

possible value differences in all realms of life, while

aiming at sustainability.

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Strength

Strong Multinational (Brand Equity)

Strong & Vast Distribution Channels

Aggressiveness In The Market (Market Leader)

Brand Promotion & Sponsorship

Lack Of Capital Constraints

Record Market Share

Strong Brand Portfolio

Weakness

Targeting Only Young Customers

Centralized Decision Making

Decline In Taste

Motivational Factor

Not All Products Bear The Company Name

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OPPORTUNITY

PepsiCo New Products Can Easily Penetrate In The Market.

Noncarbonated Drinks Are The Fastest-Growing Industry

Demand Of Pepsi Is More Than Of Competitor

Changing Social Trends (Fast Foods)

Internet Promotion And Ordering Processes

Non-Carbonated Substitutes

Beverage Industry Is Mature Fake Products (Imitators)

Competitors Schemes

Strong Competition With Coca-Cola Company

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S-O Strategies

1. Company Can Introduce New Product Because

It Have Good Brand Equity, Large Resources

2. By Having Good Distribution Channel Co. Can

Focus Easily Fast Food Restaurants, Clubs.

W-O Strategies

By Introducing new variants in Non-Carbonated

Drinks Pepsi Can Capture Different Age Groups.

S-T Strategies

Because Co. Has Financial Recourses And

Distribution Channel Therefore It Can

concentrate more on Non-Carbonated Drinks.

W-T Strategies

By improving the taste & quality company can

reposition its products can take long term

position on maturity stage.

TOWSMATRIX

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SPACE Matrix

Competitive Advantage

Brand Recognition -3

Large Market Share -2

Wide Distribution Channel -2

Customer Loyalty -4

Mean= -2.75

Financial Strength

Inventory Turnover +5

Return On Asset +4

Net Income +3

Mean= +4

Industrial Strength

High Industry Growth Rate +5

Profit Potential +3

Financial Stability +4

Resource Utilization +3

Mean = +3.75

Environmental Stability

Economic Stability -2

Barrier To Entry -2

Competitive Pressure -3

Mean = -2.33

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CA + IS = + 1.0

FS+ES = + 1.67

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The Quantitative Strategic Planning Matrix

(QSPM)

Enter into newsegment (tender

coconut)

Enter into snack

segment

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From the above matrix it is concluded that PepsiCo. Should adopt the 2nd

strategy that is PepsiCo i.e. to enter into Snack segment.

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Grand Strategy Matrix Market Development Market Penetration

Product Development

Backward, Forward, Horizontal

Integration

Related/Concentric Diversification

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EFE MATRIXOPPORTUNITIES

Demand of Pepsi is more than that of the competitorNew products can penetrate well in the market

Change in trends

Non-carbonated drinks- the fastest growing industry

Internet Promotion

Tie- up with major showrooms, restaurants

Weight Rate T.S

0.12 3.00 0.360.11 3.00 0.33

0.09 3.00 0.27

0.09 3.00 0.27

0.06 1.00 0.06

0.07 2.00 0.14

THREATS Weight Rate T.S

Substitute products

Competition from other companies

Fake products

Competitors schemes

Beverage industry is mature

0.11 3.00 0.330.12 4.00 0.48

0.09 2.00 0.18

0.06 2.00 0.12

0.08 2.00 0.16

1.00 2.7

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IFE MATRIXSTRENGTHS Weight Rate T.S

Strong Brand Equity

Market share Record

Strong Brand Portfolio

Market Leader

Strong Distribution channels

Brand Promotion

Lack Of Capital Constraints

0.10 3.00 0.30

0.12 4.00 0.48

0.08 3.00 0.24

0.10 4.00 0.40

0.07 3.00 0.21

0.06 2.00 0.18

0.07 2.00 0.14

WEAKNESS Weight Rate T.S

Target customers are youngsters

Centralized decision making

Decline in tastePolitical franchises

All products dont bear the Pepsi name

Motivating Factor

0.08 2.00 0.16

0.06 2.00 0.12

0.05 2.00 0.100.09 2.00 0.18

0.07 2.00 0.14

0.05 2.00 0.10

1.00 2.75

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Strong

3

Average

2

Weak

1

High

3

IInvest

IIInvest

III Hold

The EFE Total

Weighted ScoreMedium

2

IVInvest

VHold

VIHarvest

Low

1

VIIHold

VIIIHarvest

IXDivest

The IFE Total Weighted Score

The Internal-External (IE) Matrix

IFE score 2.75

EFE score 2.7

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CRITICAL SUCCESS FACTORS

Competitive Profile Matrix

Weight Rate T.S

Plant Location

Strong Brand Image

Large Marketing Resource Budget

Market share

Product TasteProduction Capacity

Innovation

Control Over Supply Chain

Availability

Advertising

Bottling investmentPersonnel

0.09 2.00 0.18

0.12 4.00 0.48

0.07 2.00 0.14

0.11 3.00 0.33

0.09 3.00 0.270.07 2.00 0.14

0.07 2.00 0.14

0.05 3.00 0.15

0.11 3.00 0.33

0.09 4.00 0.36

0.06 2.00 0.120.07 2.00 0.14

1.00 2.78

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CRITICAL SUCCESS FACTORS Weight Rate T.S

Plant Location

Strong Brand Image

Large Marketing Resource Budget

Market share

Product TasteProduction Capacity

Innovation

Control Over Supply Chain

Availability

Advertising

Bottling investmentPersonnel

0.09 2.00 0.18

0.12 3.00 0.36

0.07 2.00 0.14

0.11 2.00 0.22

0.09 2.00 0.180.07 2.00 0.14

0.07 1.00 0.07

0.05 2.00 0.10

0.11 2.00 0.22

0.09 3.00 0.27

0.06 2.00 0.120.07 2.00 0.14

Competitive Profile Matrix(COKE)

1.00 2.14

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Differentiation

Acquisition

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Long Term Objectives

Become a leader in Carbonated, Non

Carbonated soft drinks and snacks market.

Instead of concentrating more on western

snacks, capture the local snacks market eitherthrough organic of inorganic growth.

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How to Reach there???

Carbonated Soft Drink

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Non Carbonated Drinks

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Non Carbonated Drinks

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Cost

2500 litres of tender coconut water per day

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Snacks

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Financials

2009 2010 2011e 2012e

Sales 43.23 57.84 67.84 79.57

Sales Growth -0.04% 33.79 17.29% 17.29%

COGS+D&A 20.16 26.69 30.53 34.92

COGS Growth -0.81% 32.29 14.39% 14.39%

Gross Income 23.07 31.15 35.37 40.16

GI Growth 0.64% 35.01% 13.54% 13.54%

SG&A Expense 14.99 22.81 26.75 31.38

SG&A Growth -2.95% 52.19% 17.29% 17.29%

Interest Expense 191M 1.01 1.26 1.58Interest Exp Growth -41.95% 427.23% 25% 25%

Pretax Income 7.71 7.5 7.75 8.0

PI Growth 16.05% -2.81% 3.31% 3.31%

Net Income 5.95 6.32 6.53 6.74

Net Income Growth 15.64% 6.79% 3.25% 3.25%

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Ratios

2010

Current P/E Ratio 16.7

5 Year Avg P/E Ratio 18.2

Quick Ratio 0.7Revenue to Asset 0.9

Return on Assets 8.5%

Debt/Equity Ratio 0.93

Interest Coverage Ratio 9.7

Return on Invested Capital 14.1%

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Annual objective

Annual Objective Specific,measurable statements of what an

organization is expected to

achieve in contributing to the

businesss grand strategy.

Qualities of effective Annualobjective

Linkage to Long term annual

objective

Consistency

Measurable

Prioritize

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Annual Objective

Grand strategy is tobecome No.1 inbeverage and snacksindustry

Annual strategy for2012 Market SierraMist in India, Introducetheir tender coconutwater in market.

Annual strategy for2013 AcquireHaldirams

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Procedure for strategic review

Three steps in strategicevaluation

1. Examining the base of firmsstrategy

2. comparing expected and actualresults

3. Taking corrective measures

Criteria for evaluating a strategy

1. Consistency

2.Consonance3. Feasibility

4. Advantage

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Procedure for strategic review

Strategy evaluation could bedone by

1. Reviewing bases ofstrategy Revised IFE, EFE

matrix2. Comparing the firmsperformance

-> over different timeperiods

-> to competitors

-> to industry average

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