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  • 1. PepsiCo Sebastian Cummings John Dunn Tim Flory Michelle Hubbell Nellie Echevarria Asia Smith Amanda Sullivan
  • 2. 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
  • 3. 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
  • 4. History 1960’s 1970’s• New Products: Diet Pepsi, • Sales passed $3 billion mark Mountain Dew, Frito’s, Lay • More than one Frito-Lay plant potato chips, Cheetos, Ruffles, opened each year Rold Gold Pretzels, Doritos • First 2-liter bottle and recyclable• Merged with Frito Lay plastic bottles• Introduced red, white and blue • Mountain Dew made it on top 10 packaging selling soft drinks and Pepsi was• Entered Japanese and Eastern number one European Markets • Entered Russian market
  • 5. History 1980’s 1990’s• Sales passed $15 billion mark • Profits exceeded $1 billion entering top 25 of Fortune 500 • Sales hit $20 billion mark• New Products: Tostitos, Caffeine • New Products: Sunchips, Free Pepsi, Slice and Diet Slice, Expansion of Tostado’s and 7Up, Mug Root Beer Cheetos, Aquafina, Wavy Lays• Nutrition Labels • Freshness dating• Largest company in beverage • Low/No Fat products industry • Launch of official website• Available in 150 countries • Purchase of Tropicana
  • 6. Industry•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
  • 7. Mission StatementMissionOur 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.
  • 8. Mission Breakdown1. Customers: provide opportunities for growth and enrichment to the communities in which we operate2. Products or services: focused on convenient foods and beverages3. Markets: to be the worlds premier consumer products company4. 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
  • 9. Revised MissionOur 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 worlds 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
  • 10. InputMatrices
  • 11. External Factor Evaluation Matrix Key External Threats Weight Rating Weighted ScoreOpportunities1. International demand for bottled water has increased 0.12 3 0.362. Large carbonated drink market in Asia and Europe 0.09 2 0.183. 99% of American households have salty snacks in their homes 0.03 4 0.124. Higher demand for salt/fat free foods as well as baked and kettle products 0.07 3 0.215. Worldwide competition requires extensive advertising and promotion 0.03 3 0.096. High demand in US for non-carbonated beverages 0.09 2 0.187. Chip Market has an annual growth rate of 6.35% 0.06 4 0.24Threats1. Downturn of economy results in consumer need for less costly products 0.12 2 0.242. Major competitors have 9% higher market share in China 0.06 2 0.123. Contamination can quickly destroy consumer confidence 0.03 3 0.094. Carbonated drink market has declined 4% in the US 0.09 4 0.365. Major competitor holds largest market share in the US 0.07 2 0.146. Environmental campaign against plastic containers of bottled water impacts sales 0.04 3 0.127. Consumers have had a change in taste 0.1 3 0.3Total 1 2.75
  • 12. Internal Factor Evaluation Matrix Key Internal Threats Weight Rating Weighted ScoreStrengths1. Controlled cost by decreasing cost of goods sold 0.03 3 0.092. New plant uses 22% less water and 38% less energy than other Pepsi factories 0.05 2 0.13. Expanding into global markets and increasing international revenues 0.11 3 0.334. Develop new drinks and snacks for changing taste of consumers and health 0.09 4 0.36concerns5. Projects and alliances around the world 0.03 2 0.066. Expanding products allows bottlers to gain retail shelf space 0.05 4 0.27. 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 0.21Weaknesses1. 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 0.24Total 1 2.88
  • 13. MatchingMatrices
  • 14. SWOT Matrix Strengths 1.)     Controlled cost by decreasing cost of goods sold 2.)    New plant uses 22% less water and 38% less energy than other Pepsi factories 3.)    Expanding into global markets and increasing international revenues 4.)    Develop new drinks and snacks for changing taste of consumers and health concerns 5.)    Projects and alliances around the world 6.)    Expanding products allows bottlers to gain retail shelf space 7.)    More diverse than major competitors 8.)    Savory snack industry leader 9.)    Use all available media to promote productOpportunities 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 kettleproducts5.)    Worldwide competition requires extensive advertising and promotion6.)    High demand in US for non-carbonated beverages7.)    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 US6.)    Environmental campaign against plastic containers of bottled waterimpacts sales7.)    Consumers have had a change in taste
  • 15. Weaknesses 1.)    Net revenues down 2.)    Increase in cost 3.)    Decrease in net income 4.)    ROA dropped 5.)    Inventory turnover decrease 6.)    Long term debt increased 7.)    Constantly have to develop new products to meet demandsOpportunities 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 products5.)    Worldwide competition requires extensive advertising and promotion6.)    High demand in US for non-carbonated beverages7.)    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 confidence4.)    Carbonated drink market has declined 4% in the US5.)    Major competitor holds largest market share in the US6.)    Environmental campaign against plastic containers of bottled water impactssales7.)    Consumers have had a change in taste
  • 16. SPACE Matrix CalculationsFINANCIAL POSITION (FP)Factors Rating Long-term debt obligation 2 Calculations Net income 3 Net revenue 6 Return on investment 2 SP Average: -11/5= -2.2 IP Average: 26/6= 4.33 Inventory turnover 4 Earnings per share 3 CP Average: -14/6= -2.33 FP FP Average: 20/6= 3.33 TOTALS 20INDUSTRY POSITION (IP)Factors Rating Directional Vector Coordinates: X-axis: .33 + (4.33) = 2.00 Growth potential 6 Y-axis: -2.2 + (3.33) = 1.13 Profit potential 5 Financial stability 4 Extent leverage 2 Resource utilization 2 Ease of entry into market 7 TOTALS 26 STABILITY POSITION (SP)Factors Rating Technological changes -3 Price range of competing products -2 Barriers to entry -1 Competitive pressure -3 Price elasticity of demand -2 TOTALS -11COMPETETIVE POSITION (CP)Factors Rating Market share -3 Product quality -2 Product life cycle -3 Customer loyalty -2 Technological know how -3 Control over suppliers/distributors -1 TOTALS -14
  • 17. SPACE Matrix CONSERVATIVE 10 AGGRESSIVE 9 -Backward, forward, horizontal integration -Market penetration, market development, 8 product development -Related and unrelated diversification 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 DEFENSIVE -1 COMPETITIVE -2 -3 -4 -5 -6 -7 -8 -9 -10
  • 18. Boston Consulting Group Matrix Divisions Revenue % Relative Industry *in Millions Revenues Market Share 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 +.15Pepsi American Beverages 10,937 25.2 .75 -.15 UK and Europe 6,435 14.8 .55 +.18Middle East, Africa & Asia 5,575 12.8 .70 +.20 Total 43,251 100 - -
  • 19. Boston Consulting Group Matrix Relative Market Share Position High 1 Medium 0.5 Low 0 High 20 12.8 14.8 28.9 13.6 4.3Medium 0 Stars Question Marks Cash Cows Dogs 25.2 Low -20
  • 20. Internal/External Matrix IFE Total Weighted Scores 4.0 3.0 2.0 1.0 I II III3.0 IV V VI2.0 VII VIII * IX1.0 Hold and Maintain - Market Penetration - Product Development
  • 21. Grand Strategy Matrix Rapid Market Growth Quadrant II Quadrant I 1.Market Development 2.Market Penetration 3.Product Development 4.Forward Integration 5.Backward Integration 6.Horizontal Integration 7.Related DiversificationWeak Competitive Position Quadrant III Quadrant IV * Strong Competitive Position Slow Market Growth
  • 22. DecisionMatrices
  • 23. Data Collection Matrix  SWOT SPACE BCG IE GSM TotalForward Integration            3Backward Integration            3Horizontal Integration            3Market Penetration           5Market Development            4Product Development         5Related Diversification            4Unrelated Diversification            2Retrenchment            2Divestiture            1Liquidation            0
  • 24. QSPM Strategic Alternatives 1 2 Healthy Lifestyle Alliance With Diet Campaign ProgramKey Factors Weight AS TAS AS TAS Opportunities1 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 0.034 Higher demand for salt/fat free foods as well as baked and kettle products 0.07 4 0.28 3 0.215 Worldwide competition requires extensive advertising and promotion 0.03 3 0.09 4 0.126 High demand in US for non-carbonated beverages 0.09 3 0.27 4 0.367 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 0.122 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 0.185 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
  • 25. Strategic Alternatives 1 2 Healthy Lifestyle Alliance With Diet Campaign ProgramKey Factors Weight AS TAS AS TAS Strengths1 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 0.365 Projects and alliances around the world 0.03 --- ---6 Expanding products allows bottlers to gain retail shelf space 0.05 3 0.15 4 0.207 More diverse than major competitors 0.07 4 0.28 3 0.218 Savory snack industry leader 0.09 3 0.27 2 0.189 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 0.102 Decrease in net income 0.12 --- ---3 ROA dropped 0.03 --- ---4 Inventory turnover decrease 0.04 2 0.08 1 0.045 Long term debt increased 0.04 1 0.04 2 0.086 Constantly have to develop new products to meet demands 0.08 3 0.24 4 0.32 Total 1.00
  • 26. Recommendations• Healthy Lifestyle Campaign • New products • New packaging • Partnerships •Schools, offices, etc
  • 27. 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•PepsiCos 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
  • 28. • 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, Russias leading branded food-and-beverage company• Donated $1.5 million towards Japan relief and recovery