Swot Analysis: Pepsi

organise Analysis PepsiCo Diversification strategy in 2008 Name Course Instructor Name Date PepsiCo Diversification Strategy in 2008 PepsiCo account PepsiCo is the second Brobdingnagianst sting and beverage troupe in the world. Established in 1965 when Pepsi-Cola and Frito- secular sh areholders merged their salty sharpness icon and soft imbibe giant. With revenues of $500 million with popular brands such as Pepsi-Cola, Mountain Dew, Fritos, Lays, Cheetos, and Ruffles, they befool achieved growth and long-term value in its operational activities by creating competitive advantages through radical product innovation and acquisitions.Its portfolio has grown year after year with its acquisition of Tropicana in 1998, two largest bottlers (Pepsi Bottling classify/PepsiAmericas) in 2010 and Wimm-Bill-Dann (dairy products) in 2011, and the merger with Quaker Oats in 2001. Profits generating $39. 5 billion in shed light on revenues in 2007 prima(p) to 19 products each generating $1 billion in worldwide retail revenues in 2010. Some of the most popular inclusions suck up been Quaker Oats, Gatorade G2, Tiger Woods signature sports drinks, Capn Crunch cereal, Aquafina, and Aunt Jamima pancake mix.In keeping up with consumer health and wellness concerns of reducing alter fats, cholesterol, trans fats, and simple carbohydrates, PepsiCo created better-for-you and good-for-you products under the Power of One alliance strategy which heightened on increasing customers angle of dip to purchase more than one PepsiCo product during each visit. A quite ingenious innovation SWOT Analysis Strengths Branding Diversification Distribution Weaknesses Overdependence on Snacks & Non-carbonated drinks Large Size Low ProductivityOpportunities widen of Product Base International Expansion Growing Snacks of new flavors and Bottled Water food marketplace in U. S. Threats decline in quality in Carbonated Drink Sales Potential Negative Impact of governing Regulations thick contention Potential Disruption Strengths Branding PepsiCos top brand is its most recognized brand in the world, Pepsi, fol belittleded by its 155 varieties of Frito-Lay, PepsiCo beverages, Tropicana, Gatorade, and Quaker Oats brands.Most PepsiCo brands reached number one or two positions in their various(prenominal) categories and has 24 other orbiculate and local anesthetic brands with annual retail sales ranging from $250 million to $1 billion, including Sobe, Naked, angstrom Energy, repulse Zero, Sabritas, Gamesa, Lebedyansky, Aunt Jemima and Rice? A? Roni . (PepsiCo website) In2008, Frito-Lay was the top selling chip brand in the U. S. and Propel Fitness Water was the leading brand of functional water In 2007 it was Gatorade, propel, and Aquafina with a 76 percent market share.Three initiatives leading the industry were convenience, a growing awareness of nutritional content of snack foods, and indulgent snacking. (Gamble & Thompson, 2012, pg. 426) The strength of these brands is evident in PepsiCos presence in 200 countries and proven in its 2007 net revenues of $39. 5 billion globally and annualized revenues of $60 billion in 2010. (PepsiCo website) The company has the largest market share in the US beverage at 39%, and snack food market at 25%.Such brand dominance insures loyalty and repetitive sales. Diversification PepsiCos diversification non only integrates snacks (chips), ready-to-drink teas, juice drinks, flavored/bottled water, as well as breakfast cereals, cakes and cake mixes, but its brands are catered to its worldwide franchise such Crujitos corn snacks, Fruko beverages, and Crueslic cereal sold in the UK, Europe, Asia, Middle East, and Africa.All the various products sum a multi-channel distribution system, and its 300,000 team of professionals that thrive on collaboration and respect were led by collar CEOs (Enrico, Reinemund, Nooyi) all of which served to insulate PepsiCo position as the worlds second largest food and bevera ge assembly line. (PepsiCo website) Distribution The company delivers its products through direct-store-delivery (DSD) from manufacturing plants and warehouses to customer warehouses and foodservice and vending distribution networks to retail stores. PepsiCo website) These delivery options allow upper limit visibility and appeal (DSD), costs savings for fragile/perishables with lower turnover (customer warehouse), and the use of third caller distribution services (foodservice/vending) to schools, stadiums and restaurants reducing stock-outs. All are based on customer involves, product characteristics, and local trade practices. (PepsiCo website) WeaknessesOverdependence on Snacks and Non-carbonated drinks PepsiCo failed to focus on its main brand, Pepsi. Although sales of carbonated drinks was considerable his, it was carried by its non-carbonated which increased revenues 5 percent consequently, carbonated revenues dropped 3 percent the same year, 2007. The company focused on more healthy products by trying to develop new sweeteners and acquiring Izze lightly carbonated glitter fruit drinks in 2007. It failed to strengthen its position in the U.S. to out beat Coca-Cola and lagged 10 percent in 2007 bumping PepsiCo to the number two position of nonalcoholic beverage producer. (Gamble & Thompson, 2012, pg. 430) Large Size Despite its international presence, 48 percent of its revenues originate in the US. (Gamble & Thompson, 2012, pg. 431) This leaves PepsiCo vulnerable to the impact of ever-changing economic conditions. Large US customers could run PepsiCos lack of bargaining power and negatively impact revenues. Acquisition of Pizza Hut, Taco Bell, and KFC ab initio proved beneficial but continued growth in snack food and beverage acquisitions deemed its strategic-fit returnss existing between restaurants and its core beverage and snacks were difficult to capture. Benefits were offset by fast-food industries fierce price competition and low bread m argins. (Gamble & Thompson, 2012, pg. 423) Its value chain consists of 230 plants, 3,600 distribution systems, and 120,000 service routes around the world. (Gamble & Thompson, 2012, pg. 436) Low Productivity Low profit margins on PepsiCos international business demanded the need for a new organizational structure leading to the 2008 realignment creating a three division structure under one roof with six reporting segments Frito-Lay unification America, Quaker Foods North America, Latin American Foods, PepsiCo Americas Beverages, United Kingdom & Europe, and Middle East, Africa & Asia. (Gamble & Thompson, 2012, pg. 36) In an article from the Dow Jones & go with, go out 21 November 2012, it reports a disappointing year for Pepsi and the speculation that PepsiCo may be reconsidering its refusal to create separate global snacks and beverage companies. (Proquest) Opportunities Broadening of Product Base PepsiCo seized opportunity of potential weaknesses by acquiring Mexicos larges t Pepsi bottler, Pepsi-Gemex SA de CV, for $1. 26 billion capitalizing Mexicos number one producer of purified water. (Gamble & Thompson, 2012, pg. 34) In addition, the two largest bottlers (Pepsi Bottling Group/PepsiAmericas) in 2010 and Wimm-Bill-Dann (dairy products) in 2011, and the merger with Quaker Oats in 2001. It continues to broaden its product base by introducing what consumers want most healthier snacks and drinks, convenient snack size portions, and introducing multiple flavors to the needs of various cultures. These initiatives will enable PepsiCo to adjust to the changing lifestyles of its consumers and appeal to its international customer base.International Expansion PepsiCo is focused on expanding Gatorade into 15 additional countries, Tropicana into 20 new markets, and Lipton into five international markets in 2012. (Gamble & Thompson, 2012, pg. 434) Its expansion into international markets and a lessening its dependence on US sales in addition to the company pl ans on major capital initiatives in mainland China will increase their global customer base. Growing Snacks of new flavors and Bottled Water market in US Products such as Aquafina, and Propel are well established products and in a position to call on the carpet the upward crest.PepsiCo products such as, Doritos tortilla chips, Cheetos cheese flavored snacks, Tostitos tortilla chips, Ruffles potato chips, Sun Chips multigrain snacks, Rold Gold pretzels, benefit from a growing gamey snack markets.. Threats Decline in Carbonated Drink Sales Soft drink sales have decline by as much as 2 percent from 2005 to 2007 due to a health conscience society. Fruit beverages went down slightly and others stayed relatively the same. The future state of the parsimony and additional ferocity on health could drive these numbers in the negative direction.Potential Negative Impact of Government Regulations Manufacturing, marketing, and distribution of food products may be altered as a result of st ate, federal or local dictates. In 2000, PepsiCo experienced FTC setbacks due to concerns over the merger of Gatorade and that it might give the company similarly much leverage in negotiations with convenience stores. The FTC stipulated that PepsiCo could not jointly distribute Gatorade with soft drinks for 10 years. (Gamble & Thompson, 2012, pg. 423) This could have set them so far ahead of their number one competitor to stay number one. theres also been talk about the ingredient, acryl amide, suggesting it could cause cancer if consumed in significant amounts in rats. If the company has to comply with a related regulation or add warning labels, it could have negative impacts. Intense Competition The Coca-Cola Company is PepsiCos primary competitors. Intense competition may influence pricing, advertising, sales publicity initiatives undertaken by PepsiCo. Potential Disruption The economy is unstable and people are cutting back on spending.Although people want to eat and drink he althier products, the costs to eat healthier is more costly so the changes to make healthier snacks need to stay reasonable. Another potential threat are the generic wine brands most stores sell that appeal to the penny pincher during hard times. Alternatives Smaller packaging PepsiCo could expound on do smaller portions to all their products that have high sale rates. Selling in bulk at cheaper prices is some other option for the residential and business arena.Advertisements Promote their products through effective marketing strategies. Utilize internet, facebook and other resources that knock against thousands at one time but isnt expensive. Do funny advertisements like the Super scene of action ones more often. These are things people remember and talk about for long periods. Intense Competition The Coca-Cola Company is PepsiCos primary competitors. Intense competition may influence pricing, advertising, sales promotion initiatives undertaken by PepsiCo. The economy is unstable and people are cutting back on spending.Although people want to eat and drink healthier products, the costs to eat healthier is more expensive so the changes to make healthier snacks need to stay reasonable. Another potential threat are the generic brands most stores sell that appeal to the penny pincher during hard times Potential Disruption Due to Labor Unrest Outsource jobs to other countries to benefit their needs but provide job opportunities to people in the U. S. This provides added growth at home and overseas while not jeopardizing at home support.Assessment PepsiCo has held their own for decades and have grown into the global market becoming diverse in the snack industry, carbonated and non-carbonated drinks, and incorporating new seasonings and spices to appeal to the local nationals. Pepsi has a large loyal group of customers that they need to stay attuned to and ensure they offer incentives for being so loyal. Offering discounts is a great way to not only ke ep customers, but it helps gain new customers. Overall, Pepsi has achieved success and stayed in the running.Although they were bumped down to number two, it seems as though the take great care in addressing lessons learned and are not fast to make a rash decision as they Dow recently reported that I mentioned above. They have cross-communication and rotate managers to keep them fresh on new initiatives and this puts fresh eyes on the fleck to better capture new ideas and identify potential shortfalls. PepsiCo commitment is to deliver sustained growth. They offer a wide variety to meet the needs and preferences to satisfy fun to contributing to healthier lifestyles.It has a solidness foundation and is only going to progress back to the number one position in the future. I think it needs to continue what its doing but not over extend themselves to where they lose focus on what started them in the first place, their number one product, the Pepsi. Which happens to be my favorite soda References PepsiCo, (n. d. ). PepsiCo. Retrieved from http//www. pepsico. com/ on declination 12, 2012 PepsiCo, (n. d. ). PepsiCo. Retrieved from http//www. pepsico. om/Download/PepsiCo_Quick_Facts. pdf on December 12, 2012 Bary, A. , (2011). Dont Rule Out a Pepsi Breakup Yet. Barrons, 91(47), 20. Retrieved from http//proquest. umi. com/pqdweb? index=0&did=2526832001&SrchMode=1&sid=9&Fmt=3&VInst=PROD&VType=PQD& RQT=309&VName=PQD&TS=1323732097&clientId=74379 on December 12, 2011, (Proquest Document ID 2526832001). Gamble, J. E. , & Thompson, A. A. , (2011). Essentials of Strategic Management The Quest for belligerent Advantage. (2nd ed. ). New York McGraw-Hill