PepsiCo

Sebastian CummingsJohn Dunn

Tim FloryMichelle HubbellNellie Echevarria

Asia SmithAmanda Sullivan

Introduction

• Headquarters located in Harrison, New York

• 5 Brands (Frito Lay, Pepsi, Tropicana, Quaker, Gatorade)

• Products can be found in almost 200 countries

• 19 products generate over $1 billion in sales

• Product mix: 63% food and 37% beverages

• Main competitor is Coca Cola

History of PepsiCo

• Caleb Bradham invented the drink Pepsi in New Bern, North Carolina in 1898

• Patented in 1902• Incorporated in 1919 in Delaware• Pepsi was purchased by Loft Candy in 1933.

– Bottle size increased to 12 ounces compared to 6 ounces – The low cost differentiation strategy was successful, allowing the company to expand in

the cola industry.

http://www.youtube.com/watch?v=mpXw2sbNg6Q

History

1960’s

• New Products: Diet Pepsi, Mountain Dew, Frito’s, Lay potato chips, Cheetos, Ruffles, Rold Gold Pretzels, Doritos

• Merged with Frito Lay• Introduced red, white and blue

packaging• Entered Japanese and Eastern

European Markets

1970’s

• Sales passed $3 billion mark• More than one Frito-Lay plant

opened each year• First 2-liter bottle and recyclable

plastic bottles• Mountain Dew made it on top 10

selling soft drinks and Pepsi was number one

• Entered Russian market

History

1980’s

• Sales passed $15 billion mark entering top 25 of Fortune 500

• New Products: Tostitos, Caffeine Free Pepsi, Slice and Diet Slice, 7Up, Mug Root Beer

• Nutrition Labels• Largest company in beverage

industry • Available in 150 countries

1990’s

• Profits exceeded $1 billion• Sales hit $20 billion mark• New Products: Sunchips,

Expansion of Tostado’s and Cheetos, Aquafina, Wavy Lays

• Freshness dating• Low/No Fat products• Launch of official website• Purchase of Tropicana

•Who are the major competitors of PepsiCo?

•International market vs. US Market net revenue

•What are the some of the brands that competitor sell?

•Marketing and advertising strategies used by competitors

Industry

Mission Statement

MissionOur mission is to be the world’s premier consumer products company (3) focused on convenient

foods and beverages (2). We seek to produce financial rewards to our investors (5) as we provide opportunities for growth and enrichment to our employees (9), our business partners, and the community in which we operate (1) (8). And in everything we do, we strive for honesty, fairness, and integrity (6).

VisionPepsiCo’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 stewardships, activities to benefit society, and a commitment to build shareholder value by making PepsiCo a truly sustainable company.

Mission Breakdown

1. Customers: provide opportunities for growth and enrichment to the communities in which we operate

2. Products or services: focused on convenient foods and beverages3. Markets: to be the world's premier consumer products company 4. Technology: 5. Concern for Survival, Growth, and Profitability: seek to produce financial rewards

to our investors6. Philosophy: In everything we do, we strive or honesty ,fairness, and integrity7. Self-Concept: 8. Concern for Public Image: Seek to produce financial rewards to our investors as

we provide opportunities for growth and enrichment to our employees, our business partners, and the communities in which we operate.

9. Concern for Employees: provide opportunities for growth and enrichment to our employees

Revised Mission

Our mission is to be the world’s premier consumer products company (3) focused on convenient foods and beverages (2) while addressing social and environmental issues (7). We seek to produce financial rewards to our investors (5) as we provide opportunities for growth and enrichment to our employees (9), our business partners, and the communities in which we operate (1) (8). And in everything we do, we strive for honesty, fairness, and integrity (6) while protecting Earth’s natural resources through innovation and more efficient use of land, energy, water, and packaging in our operations (4) .

Revised Mission Statement Breakdown

• Customers: provide opportunities for growth and enrichment to the communities in which we operate

• Products or services: focused on convenient foods and beverages• Markets: to be the world's premier consumer products company • Technology: protecting Earth’s natural resources through innovation and more efficient use

of land energy water and packaging in our operations. • Concern for Survival, Growth, and Profitability: seek to produce financial rewards to our

investors• Philosophy: in everything we do, we strive or honesty ,fairness, and integrity• Self-Concept: addressing social and environmental issues• Concern for Public Image: seek to produce financial rewards to our investors as we provide

opportunities for growth and enrichment to our employees, our business partners, and the communities in which we operate.

• Concern for Employees: provide opportunities for growth and enrichment to our employees

Input Matrices

External Factor Evaluation MatrixKey External Threats Weight Rating Weighted Score

Opportunities 1. International demand for bottled water has increased 0.12 3 0.36

2. Large carbonated drink market in Asia and Europe 0.09 2 0.18

3. 99% of American households have salty snacks in their homes 0.03 4 0.12

4. Higher demand for salt/fat free foods as well as baked and kettle products 0.07 3 0.21

5. Worldwide competition requires extensive advertising and promotion 0.03 3 0.09

6. High demand in US for non-carbonated beverages 0.09 2 0.18

7. Chip Market has an annual growth rate of 6.35% 0.06 4 0.24

Threats 1. Downturn of economy results in consumer need for less costly products 0.12 2 0.24

2. Major competitors have 9% higher market share in China 0.06 2 0.12 3. Contamination can quickly destroy consumer confidence 0.03 3 0.09

4. Carbonated drink market has declined 4% in the US 0.09 4 0.36

5. Major competitor holds largest market share in the US 0.07 2 0.14

6. Environmental campaign against plastic containers of bottled water impacts sales 0.04 3 0.12

7. Consumers have had a change in taste 0.1 3 0.3

Total 1 2.75

Internal Factor Evaluation Matrix

Key Internal Threats Weight Rating Weighted Score

Strengths 1. Controlled cost by decreasing cost of goods sold 0.03 3 0.09

2. New plant uses 22% less water and 38% less energy than other Pepsi factories 0.05 2 0.1

3. Expanding into global markets and increasing international revenues 0.11 3 0.33

4. Develop new drinks and snacks for changing taste of consumers and health concerns

0.09 4 0.36

5. Projects and alliances around the world 0.03 2 0.06

6. Expanding products allows bottlers to gain retail shelf space 0.05 4 0.2

7. More diverse than major competitors 0.07 4 0.288. Savory snack industry leader 0.09 4 0.369. Use all available media to promote product 0.07 3 0.21

Weaknesses 1. Increase in cost 0.1 2 0.22. Decrease in net income 0.12 2 0.243. ROA dropped 0.03 1 0.094. Inventory turnover decrease 0.04 2 0.085. Long term debt increased 0.04 1 0.046. Constantly have to develop new products to meet demands 0.08 3 0.24

Total 1 2.88

Matching Matrices

SWOT MatrixStrengths1.)    Controlled cost by decreasing cost of goods sold2.)    New plant uses 22% less water and 38% less energy than other Pepsi factories3.)    Expanding into global markets and increasing international revenues4.)    Develop new drinks and snacks for changing taste of consumers and health concerns5.)    Projects and alliances around the world6.)    Expanding products allows bottlers to gain retail shelf space7.)    More diverse than major competitors

8.)    Savory snack industry leader9.)    Use all available media to promote product

Opportunities SO Strategies1.)    International demand for bottled water has increased New Commercial/FB or Twitter promotion (O5, S9)2.)    Large carbonated drink market in Asia and Europe New healthier salty snack (O3, O4, O7, S8) 3.)    99% of American households have salty snacks in their homes Priority to Chinese market (O2, O1, S3)4.)    Higher demand for salt/fat free foods as well as baked and kettle products 5.)    Worldwide competition requires extensive advertising and promotion 6.)    High demand in US for non-carbonated beverages 7.)    Chip Market has an annual growth rate of 6.35% Threats ST Strategies1.)    Downturn of economy results in consumer need for less costly products Lower Prices (T1, S8)2.)    Major competitors have 9% higher market share in China New healtier drink (T7, S4)3.)    Contamination can quickly destroy consumer confidence Enviormentally friendly bottles (T6, S5)4.)    Carbonated drink market has declined 4% in the US Focus marketing in Chine on culture (T2, S3)5.)    Major competitor holds largest market share in the US 6.)    Environmental campaign against plastic containers of bottled water impacts sales 7.)    Consumers have had a change in taste

Weaknesses1.)    Net revenues down2.)    Increase in cost3.)    Decrease in net income4.)    ROA dropped

5.)    Inventory turnover decrease6.)    Long term debt increased7.)    Constantly have to develop new products to meet demands

Opportunities WO Strategies1.)    International demand for bottled water has increased Expand chip market to maximize growth (O7, W1)2.)    Large carbonated drink market in Asia and Europe More attention to non carbonated and less salty snacks

(O6, O4, W7)3.)    99% of American households have salty snacks in their homes Joint venture in Asian drinks (O2, W3)4.)    Higher demand for salt/fat free foods as well as baked and kettle products 5.)    Worldwide competition requires extensive advertising and promotion 6.)    High demand in US for non-carbonated beverages 7.)    Chip Market has an annual growth rate of 6.35% Threats WT Strategies1.)    Downturn of economy results in consumer need for less costly products Market research to find tastes for new products (T7,

W7)2.)    Major competitors have 9% higher market share in China Lower prices, promote specific products of smaller

portions (T1, W4, W5)3.)    Contamination can quickly destroy consumer confidence 4.)    Carbonated drink market has declined 4% in the US 5.)    Major competitor holds largest market share in the US 6.)    Environmental campaign against plastic containers of bottled water impacts sales 7.)    Consumers have had a change in taste

FINANCIAL POSITION (FP)Factors Rating

Long-term debt obligation 2Net income 3Net revenue 6Return on investment 2Inventory turnover 4Earnings per share 3 TOTALS 20

INDUSTRY POSITION (IP)Factors Rating

Growth potential 6Profit potential 5Financial stability 4Extent leverage 2Resource utilization 2Ease of entry into market 7

TOTALS 26 STABILITY POSITION (SP)Factors Rating

Technological changes -3Price range of competing products -2Barriers to entry -1Competitive pressure -3Price elasticity of demand -2 TOTALS -11

COMPETETIVE POSITION (CP)Factors Rating

Market share -3Product quality -2Product life cycle -3Customer loyalty -2Technological know how -3Control over suppliers/distributors -1

TOTALS -14

Calculations

SP Average: -11/5= -2.2 IP Average: 26/6= 4.33

CP Average: -14/6= -2.33 FP FP Average: 20/6= 3.33

Directional Vector Coordinates: X-axis: .33 + (4.33) = 2.00 Y-axis: -2.2 + (3.33) = 1.13

SPACE Matrix Calculations

10

9

8

7

6

5

4

3

2

1-10 -9 -8 -7 -6 -5 -4 -3 -2 -1 .

1 2 3 4 5 6 7 8 9 10

-1

-2

-3

-4

-5

-6

-7

-8

-9

-10

AGGRESSIVE

-Backward, forward, horizontal integration-Market penetration, market development, product development-Related and unrelated diversification

CONSERVATIVE

DEFENSIVE COMPETITIVE

SPACE Matrix

Boston Consulting Group Matrix

Divisions Revenue*in Millions

% Revenues

Relative Market Share

Industry Market Sale

Frito-Lay 12,507 28.9 .90 +.04

Quaker Foods 1,902 4.3 .85 +.01

Latin American Foods 5,895 13.6 .65 +.15

Pepsi American Beverages 10,937 25.2 .75 -.15

UK and Europe 6,435 14.8 .55 +.18

Middle East, Africa & Asia 5,575 12.8 .70 +.20

Total 43,251 100 - -

Boston Consulting Group Matrix

High 1 Medium 0.5 Low 0

Relative Market Share Position

High 20

Medium 0

Low -20

14.8

28.9

12.8

25.2

13.6

4.3Stars Question Marks

DogsCash Cows

IFE Total Weighted Scores

I II III

IV V

*VI

VII VIII IX

3.0

2.0

1.0

4.0 3.0 2.0 1.0

Internal/External Matrix

Hold and Maintain- Market Penetration- Product Development

Grand Strategy Matrix

Quadrant II Quadrant I1.Market Development2.Market Penetration3.Product Development4.Forward Integration5.Backward Integration6.Horizontal Integration7.Related Diversification

Quadrant III Quadrant IV*

Rapid Market Growth

Strong Competitive Position

Slow Market Growth

Weak Competitive Position

Decision Matrices

SWOT SPACE BCG IE GSM Total

Forward Integration 3

Backward Integration 3

Horizontal Integration 3

Market Penetration 5

Market Development 4

Product Development 5

Related Diversification 4

Unrelated Diversification 2

Retrenchment 2

Divestiture 1

Liquidation 0

Data Collection Matrix

Strategic Alternatives1 2

Healthy Lifestyle Campaign

Alliance With Diet Program

Key Factors Weight AS TAS AS TASOpportunities

1 International demand for bottled water has increased 0.12 --- ---

2 Large carbonated drink market in Asia and Europe 0.09 --- ---

3 99% of American households have salty snacks in their homes 0.03 2 0.06 1 0.03

4 Higher demand for salt/fat free foods as well as baked and kettle products 0.07 4 0.28 3 0.21

5 Worldwide competition requires extensive advertising and promotion 0.03 3 0.09 4 0.12

6 High demand in US for non-carbonated beverages 0.09 3 0.27 4 0.36

7 Chip Market has an annual growth rate of 6.35% 0.06 1 0.06 2 0.12

Threats1 Downturn of economy results in consumer need for less costly products 0.12 2 0.24 1 0.12

2 Major competitors have 9% higher market share in China 0.06 --- ---

3 Contamination can quickly destroy consumer confidence 0.03 --- ---

4 Carbonated drink market has declined 4% in the US 0.09 3 0.27 2 0.18

5 Major competitor holds largest market share in the US 0.07 --- ---

6 Environmental campaign against plastic containers of bottled water impacts sales

0.04 --- ---

7 Consumers have had a change in taste 0.1 3 0.30 2 0.20

1.00

QSPM

Strategic Alternatives

1 2

Healthy Lifestyle Campaign

Alliance With Diet Program

Key Factors Weight AS TAS AS TASStrengths

1 Controlled cost by decreasing cost of goods sold 0.03 --- ---

2 New plant uses 22% less water and 38% less energy than other Pepsi factories

0.05 --- ---

3 Expanding into global markets and increasing international revenues 0.11 --- ---

4 Develop new drinks and snacks for changing taste of consumers and health concerns

0.09 3 0.27 4 0.36

5 Projects and alliances around the world 0.03 --- ---

6 Expanding products allows bottlers to gain retail shelf space 0.05 3 0.15 4 0.20

7 More diverse than major competitors 0.07 4 0.28 3 0.21

8 Savory snack industry leader 0.09 3 0.27 2 0.18

9 Use all available media to promote product 0.07 4 0.28 3 0.21

Weaknesses1 Increase in cost 0.10 2 0.2 1 0.10

2 Decrease in net income 0.12 --- ---

3 ROA dropped 0.03 --- ---

4 Inventory turnover decrease 0.04 2 0.08 1 0.04

5 Long term debt increased 0.04 1 0.04 2 0.08

6 Constantly have to develop new products to meet demands 0.08 3 0.24 4 0.32

Total 1.00

Recommendations

• Healthy Lifestyle Campaign

• New products

• New packaging

• Partnerships

•Schools, offices, etc

Epilogue

•Received several awards:•“Respect Award” from Gay, Lesbian and Straight Education Network•“Best Companies for Multi-Cultural Women” list by Working Mother magazine•Listed in the top 20 'Ideal Employer MBA Ranking' in Fortune magazine

•Paired with CBS to launch first-ever video player packaged in a print ad•Kicked off partnership with the NFL•Major League Baseball multi-year sponsorship

•New York Mets and New York Yankees

•PepsiCo's Doritos and Pepsi Max issued an ad contest•$5 Million in Prizes and air time during Super Bowl XLV•YouTube - DORITOS® - Pug Attack -- Crash the Super Bowl 2011 Finalist

•Partner of the new Meadowlands Stadium•Home of the New York Jets and New York Giants

•Burger King Corporation signed multi-year agreement with PepsiCo •Exclusive soft drink supplier in more than 1,000 restaurants

•Latin America and Caribbean region

• Social Vending System – Debut at National Automatic Merchandising Association’s One Show in Chicago, April

27-29

• Acquired approximately 66% of the outstanding shares of Wimm-Bill-Dann Foods OJSC, Russia's leading branded food-and-beverage company

• Donated $1.5 million towards Japan relief and recovery