Swot Analysis: Pepsi

SWOT depth psychology PepsiCo diversification Strategy in 2008 Name Course Instructor Name watch PepsiCo diversification Strategy in 2008 PepsiCo History PepsiCo is the second largest sting and crapulence federation in the world. Established in 1965 when Pepsi-Cola and Frito-Lay shareholders merged their salty pungency icon and soft drink giant. With revenues of $500 million with popular steels much(prenominal) as Pepsi-Cola, Mountain Dew, Fritos, Lays, Cheetos, and Ruffles, they have achieved harvest- plate and long-term honour in its operational activities by creating competitive advantages through new harvestion innovation and acquisitions.Its portfolio has grown year after year with its acquisition of Tropicana in 1998, two largest bottlers (Pepsi Bottling convocation/PepsiAmericas) in 2010 and Wimm-Bill-Dann (dairy harvests) in 2011, and the merger with acquaintance Oats in 2001. Profits generating $39. 5 one thousand thousand in net revenues in 2007 spark advan ce to 19 products each generating $1 billion in world wide-cut distribute revenues in 2010. Some of the most popular inclusions have been Quaker Oats, Gatorade G2, tiger Woods signature sports drinks, Capn Crunch cereal, Aquafina, and Aunt Jamima flannel cake mix.In keeping up with consumer health and easilyness concerns of reducing double-dyed(a) 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 pore on increasing nodes tendency to purchase more than bingle PepsiCo product during each visit. A quite ingenious innovation SWOT Analysis Strengths Branding Diversification Distribution Weaknesses Overdependence on Snacks & Non-carbonated drinks openhanded Size unkept ProductivityOpportunities Broadening of Product anchor International Expansion come upment Snacks of new flavors and Bottled Water market in U. S. Threats wane in carbonate Drink Sales strength Nega tive Impact of Government Regulations yearning Competition capableness Disruption Strengths Branding PepsiCos top brand is its most recognized brand in the world, Pepsi, followed by its 155 varieties of Frito-Lay, PepsiCo deglutitions, Tropicana, Gatorade, and Quaker Oats brands.Most PepsiCo brands reached form one or two positions in their single categories and has 24 other global and topical anesthetic anaesthetic brands with annual retail gross gross sales ranging from $250 million to $1 billion, including Sobe, Naked, AMP Energy, Propel 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 fittingness Water was the leading brand of functional water In 2007 it was Gatorade, propel, and Aquafina with a 76 share 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 effectivity of these brands is evident in PepsiCos presence in 200 countries and turn up 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 not 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 international claim such Crujitos corn snacks, Fruko beverages, and Crueslic cereal sold in the UK, Europe, Asia, Middle East, and Africa. solely the various products plus a multi-channel dissemination system, and its 300,000 team of professionals that thrive on collaboration and respect were led by three CEOs (Enrico, Reinemund, Nooyi) all of which served to ins ulate PepsiCo position as the worlds second largest food and beverage air. (PepsiCo website) Distribution The company delivers its products through direct-store-delivery (DSD) from manufacturing plants and warehouses to customer warehouses and food gain and vending distribution networks to retail stores. PepsiCo website) These delivery options allow maximum visibility and appeal (DSD), be savings for fragile/perishables with lower turnover (customer warehouse), and the use of third party distribution services (foodservice/vending) to schools, stadiums and restaurants reducing stock-outs. All are based on customer necessitate, 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 change magnitude revenues 5 percent consequently, carbonated revenues drop ped 3 percent the same year, 2007. The company rivet on more healthy products by trying to develop new sweeteners and acquiring Izze lightly carbonated sparkling 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 changing economic conditions. Large US customers could tip PepsiCos lack of bargaining power and negatively impact revenues. attainment of Pizza Hut, Taco Bell, and KFC initially proved beneficial but move growth in snack food and beverage acquisitions deemed its strategic-fit take ins existing betwixt restaurants and its core beverage and snacks were difficult to capture. Benefits were offset by fast-food ind ustries fierce price competition and low profit margins. (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 social structure leading to the 2008 realignment creating a three division structure under one roof with six reporting segments Frito-Lay North 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 & Company, date 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 largest 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 redress 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 dep endence on US sales in addition to the company plans on study capital initiatives in 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 ride the upward crest.PepsiCo products such as, Doritos tortilla chips, Cheetos cheese flavored snacks, Tostitos tortilla chips, Ruffles potato chips, solarise Chips multigrain snacks, Rold Gold pretzels, benefit from a growing savory 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 overthrow slightly and others stick abouted relatively the same. The future state of the miserliness and additional fury on health could drive these numbers in the negative direction.Potential Negative Impact of Government Regulations Manufacturing, marketing, and distribution of fo od products may be altered as a result of state, federal or local dictates. In 2000, PepsiCo experienced FTC set abides due to concerns over the merger of Gatorade and that it might saltation the company too 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 crabby person 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. intensive Competition The Coca-Cola Company is PepsiCos primary competitors. Intense competition may influence pricing, advertising, sales packaging initiatives undertaken by PepsiCo. Potential Disruption The economy is unstable and nation are cutting bandaging on spending.Although people want to eat and drink fitter products, the cost to eat fitter is more expensive so the changes to beget healthy 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 making smaller portions to all their products that have high sale rates. sell in bulk at cheaper prices is another option for the residential and business arena.Advertisements Promote their products through effective marketing strategies. Utilize internet, facebook and other resources that do thousands at one time but isnt expensive. Do humourous advertisements like the Super Bowl ones more often. These are things people withdraw 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 abroad while not jeopardizing at home support.Assessment PepsiCo has held their own for decades and have grown into the global market fit 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 check up on they offer incentives for being so loyal. Offering di scounts is a wide right smart to not only keep customers, but it helps gain new customers. Overall, Pepsi has achieved mastery 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 undecomposed on new initiatives and this puts fresh eyes on the situation to better capture new ideas and chance upon 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 solid 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 stomach 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 strategical Management The Quest for Competitive Advantage. (2nd ed. ). New York McGraw-Hill