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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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