PepsiCo Strategic Insights: Objectives & Business Maxim Strategies

Michael Tampellini, Jessica Horney, Leanne Eilola, Billy Cohen Prof. Townsend MKTG Strategy February 18, 2015 Homework #1 – PepsiCo Case Exercise #1A Step 1: The nine maxims are very relevant when it comes to implementing business strategies. Objectives closely resemble mission statements and visions. They are very important and used widely among the business world. A company needs to know where it wants to be before it can get there. Just as military knows what it wants to accomplish and why. Being on the offensive as a military insists of exploiting an opportunity against a foe. Doing so takes risk but may yield high reward. Many times that is followed by a concentrated power. A company too must take risks and exploit certain areas for growth such as PepsiCo growing the international market for carbonated beverages. Their mass consisted of spending $600 million in advertising. Economy of force coincides the minimum combat power to secondary efforts. For a business, that covers how little is needed to achieve their goals and potentially including a backup plan. Maneuvering for a business could include taking over a certain segment of the market to expose the competition and increase profits. The unity of command is seen in every business and military. Like a general, the CEO is responsible for the entire unit and its operation. But another aspect is the security

in not letting vital information divulge that can give the competition an advantage over you. Using the business’ strategy one would hope for the element of surprise to strike the competition at an unexpected time. Overall, the plans and goals of the organization must be clearly defined. Through a concise and organized effort the business should hopefully succeed. Step 2: 1) Objective 2) Unity of Command 3) Offensive 4) Maneuver 5) Mass 6) Simplicity 7) Security 8) Economy of Force 9) Surprise Step 3: I believe that the most important element toward success is having a clear and understood objective. Doing so gives you the ability to easier make decisions. Having a person in charge to make those decisions is also vital. You can’t have an effective business or organization without a leader who believes in the objective. I think to be very successful an organization needs to have an opportunity to exploit.

Without that it becomes very arduous to succeed in any industry or military. If a business has a unique opportunity to exploit, then it can put its other competition in a disadvantageous position. But I think in order to do so one must concentrate a good portion of its resources to a specific setting. Security is obviously very important but without an objective and plan, what does a business have to lose. Thus, why I ranked it lower on my scale. Allocating minimal power to other initiatives is important but not as important as the main objective. Lastly, the element of surprise is great to have. But I think with people who analyze industries and markets it has become easier for some companies to predict what other competition may do.

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Exercise #1B Strengths: 1) Achieved 5% organic revenue growth in the quarter 2) One of the top brands in the world. Ranks 26 th amongst top 100 global brands. 3) Returned $6.5 billion to shareholders in 2012 through $3.2 in share repurchases and $3.3 billion in dividends 4) 20 percent reduction in net capital spending to 4% of 2012 net revenue 5) Operating cash flow was $7.4 billion in 2012. Cash flow from operations was $8.5 billion 6) Emerging market revenue grew 9% in the quarter. 7) Current assets increased $2 billion to $6.297 8) Each of its top 18 brands generate sales over $1 billion. 9) Current liabilities decreased from $6.25 to $4.8 10) Weaknesses: 1) Increased marketing expenses to 5.7% of net revenue. 2) Sales to Wal-Mart represent 12% of total net revenue. 3) 52% of its revenues originate in the US. 4) Increased total liabilities to $52 billion from $51. 5) Revenue per employee was $219, 439, which was lower than its competitors. 6) Threats : 1) Decline in carbonated drink sales. Soft drink sales declined as much as 2.7% in 2012. 2) 3) Intense competition from Coca-Cola, Nestle and Kraft Foods. 4)

Opportunities : 1) As of 2014, it was making a $1 billion investment in china. 2) $500 million investment in India to expose int’l markets. 3) Positioned well to capitalize on the bottle water market estimated at $24 million. 4) Snack market expected to grow worldwide 5) The company expects a 7% EPS growth.

MKTG HW #1

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