Pepsi Co. Strategy

With the previous merger with the Frito-Lay Company, and acquisitions of Pizza Hut, Taco Bell, and Kentucky Fried Chicken, PepsiCo successfully ventured into different segments in the food services industry, but was also able to create synergies with its soft drink product. PepsiCo also attempted to integrate into trucking transportation and bottle manufacturing in the 1970s.

This case describes the complexity of PepsiCo's competitive position in the Mexican soft-drink market during the late 1990's. Between 1993 and 1996 PepsiCo and Coca-Cola waged a classic cola war in Latin America. The goal for both companies was to gain market share and by the end of 1996, Coca-Cola had clearly won the Latin America cola war. In 1993 PepsiCo enjoyed a 42% market share in Venezuela thanks to the success of its bottling partner, the Cisneros Group but by the end of 1996, PepsiCo held less than 1% of the Venezuelan cola market. Following PepsiCo's anchor bottler in Mexico, Gemex, the case details the strategies employed by PepsiCo's senior management beginning in 1993 to expand its

The Campbell U.S.A., Bakery and Confectionery, and International Grocery divisions were designed to improve communication and share technology between businesses of similar products and geographical areas as well as provide more emphasis on international business. He required new products to exploit strengths, core competencies and organizational capabilities as well as have the potential to achieve his financial objectives. Additionally, he wanted to focus on global marketing of company strength capabilities followed by installation of low-cost corporate business systems to support the SBU’s. Finally, improved asset utilization was required to maximize return to stockholders. Johnson planned to offset divestitures with acquisitions of higher margin businesses with growth potential. This was mainly intended to add brands and infrastructure to support growth of international business.

PepsiCo is one of the largest U.S based food and beverage companies. With a strong heritage. What is now, PepsiCo was first established in the late 1800’s. What started as a small one-man operation has grown into a food and beverage megabrand, with strong competition from both sectors of the food and beverage industry. With fierce competition from companies such as Coca-Cola, Kraft foods and ConAgra, PepsiCo must continue to innovate while providing customers with quality products that are priced competitively to remain relevant.

PepsiCo is the result of a merger between Pepsi-Cola (owners of Pepsi and Mountain Dew beverage brands) and Frito-Lay, Inc. (makers of Cheetos, Rold Gold, Frito, Lays and Ruffles). The company then acquired Doritos, Tostitos, Walker’s, Quaker, Gatorade, Aquafina and Tropicana in an effort to provide healthier choices. PepsiCo once owned KFC, Taco Bell and Pizza Hut restaurants, but sold the chains in 1997. The company segmented its products into three categories: fun-for-you (Doritos), better-for-you (diet sodas) and good-for-you. It also separated its operations into four segments: US Foods; US Beverages;

Pepsi’s acquiring strategy is diversified. First, it merged with Frito-Lay in 1965 and named PepsiCo. The case states the

PepsiCo’s corporate strategy had diversified, in 2008, the company into salty and sweet snacks, soft drinks, orange juice, bottled water, and ready-to-eat drink teas and coffees, purified and functional waters, isotonic beverages, hot and ready-to-eat breakfast cereals, grain-based products, and breakfast condiments. Strategies that kept their brands at the top were tied to new product innovation, close relationships with distribution allies, international expansion, and strategic acquisitions. A new element of PepsiCo’s corporate strategy was product reformulations to make snack

This research paper pinpoints the financial analysis of Pepsi Co, Inc., namely its profitability; liquidity; solvency and operating outcome with respect to its competitors, Coca-Cola Inc., and Dr. Pepper Snapple Group. The upshot of Pepsi’s financial breakdown will assist the soda drink maker to improve its production approach and keep its flagship brand aggressive and competitive.

In 1965, Pepsi Co was created through a merger of two companies Pepsi Cola and Frito Lay by Donald M. Kendall, President and Chief Executive Officer of Pepsi-Cola and Herman W. Lay, Chairman and Chief Executive Officer of Frito-Lay. Pepsi was originally founded in 1898 by Caleb Bradham, a New Bern, North Carolina, druggist, who first formulated Pepsi-Cola. Today, Pepsi is part of a portfolio of drinks that includes carbonated and non-carbonated drinks such as soft drinks, juices and juice drinks, ready-to-drink teas and coffee drinks, isotonic sports drinks, bottled water and enhanced waters. PepsiCo operates in four major fields. These fields include: PepsiCo Americas Beverages, PepsiCo Americas

I selected PepsiCo for my MNC research due to the fact that PepsiCo is a world leader in convenient food and beverages that manufacture, market, distribute and sell a wide variety of beverages, foods and snacks, serving consumers in almost every part of the world. PepsiCo operates under six reportable segments: Frito-Lay North America (FLNA), Quaker Foods North America (QFNA), Latin America Foods (LAF), PepsiCo Americas Beverages (PAB), PepsiCo Europe (Europe) and PepsiCo Asia, Middle East and Africa (AMEA). All of the mentioned segments are registered under one symbol “PEP” whose shares are traded on the New York Stock Exchange, Chicago Stock Exchange and SIX Swiss Exchange. Since 49% of PepsiCo’s operations are outside of the U.S. that generates a significant portion of the company’s net revenue, PepsiCo selected the currency of its foreign subsidiaries in which they generally operate as its functional currency, which is translated into US dollars on the company’s financial statements. I have found that two major players, PepsiCo and Coca-Cola dominate the non-alcoholic beverage industry around the world. There is tremendous competition within a relatively slowing industry and PepsiCo currently controls nearly 21% of the industry with its Frito- Lay segment alone controls 60% of the U.S snack-food market.

Product dependence: PepsiCo products are only present in the food and beverage industry which could prove harmful in the long run (Bhasin, 2017). In order to become a true global leader PepsiCo needs to diversify their business into other product segments (Bhasin, 2017).

We take this opportunity to express our gratitude towards Mr. Sanjay Sharan, Department of Marketing, IBS, Hyderabad. We are indebted to him for the expertise and invaluable guidance we have received while working on this project.

PepsiCo is a company has history, big market share and abundant assets which are other small companies do not have, so PepsiCo can use this power to do something other companies cannot do, such as continue merge and acquire organisations to expand the range of products. PepsiCo has asset to acquire and as a multinational company, it can sell the product in different countries, use the resource more efficiency.

CEO of PepsiCo, Indra Nooyi, indicates that the world is a cycle of unprecedented change, and that all must change (You Tube, 2017). Therefore, restructuring its performances with a purpose provides PepsiCo the opportunity to transform its product portfolio, the planet, and its people. Pepsi implements organizational changes that create a divisional, regional that heightens integration of its global operations structure, which differs from its previous top-down hierarchy structure (Ezz, 2017). The changes enhance how Pepsi generates its products to leverage profitability. These organizational changes, includes focuses that reach its regional market needs, constructing corporate control over its global structure; nonetheless, creates disadvantages, and limits flexibility (Dudovskuiy, 2016). For instance, the single global division limits response time to its Frito-Lay market. According to Dudovskuiy (2016), by division of this single global unit into regional markets, “PepsiCo could enhance its responses to market variations around the world.” Additionally, this provides PepsiCo an opportunity to grow its food brand within the industry, through offers of healthier competitive product line. According to Wharton (2012), “companies can be socially responsible, provide more nutrition and healthier products and still be profitable, but it requires careful management of board and Wall Street expectations.”

Coca Cola and Pepsi are the brands with the highest brand equities. Both, Coca Cola and Pepsi have gone through the highs and lows of their business to reach that position. Coca Cola’s marketing has been changing over time with more and more products being added every day, while Pepsi has implemented several smart marketing strategies to improve its turnover and profits. So, let’s see what were the marketing strategies implemented by Coca Cola and Pepsi.