2. TABLE OF CONTENTS
I. INTRODUCTION: …………………………………3
Objective of the company……………………………….……4
II. BUDGET PREPARATION PROCESS:
Strategic goals ………………………………………….…..….…5
External factors (PEST analysis)………………...…….….…….5
Internal factors (SWOT analysis)………………………..….…..6
Budget objectives………………………………………….……..8
Budget Committee………………………………..………......….8
Principal Budget Factor (PBF)…………………………………..8
Prepared budget………………………………………………….8
Implementation…………………………………………………..8
III. BUDGET COMMITTEE STRUCTURE ……………..8
Board of Directors………………………………………………..9
Board of Leadership……………………………………………..10
IV. AUTHORIZATION LIMIT ………………………….....10
V. STATEMENT OF INCOME OF PEPSI CO………………………..11
VI. BALANCE SHEET OF PEPSI CO …………………………..12
VII. STATEMENT OF EQUITY OF PEPSI CO………………………...13
VIII.
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IX. REFERENCES:
Citation…………………………………………………………. 14
Book references………………………………………………...14
3. MEMORANDUM
TO: [RECIVER’S NAME]
FROM: AFRAH AYUB [SENDER’S NAME]
SUBJECT: ACCOUNTING ASSIGNMENT
DATE: JUNE 8, 2014
CC: INFORMATICS
I am the Senior Accountant of the company PepsiCo, Inc. It was incorporated in Delaware in
1919 and was reincorporated in North Carolina in 1986. When in this memorandum, I use the
terms “we,” “us,” “our,” “PepsiCo” and the “Company” it means PepsiCo, Inc. and its
incorporated supplement.
We are a well known universal food and beverage company with brands that are
admired and beloved household names all over the world. Through our operations, authorized
bottlers, contract manufacturers and other minor parties, we make, advertise, sell and
distribute a wide variety of convenient and delightful foods and beverages, serving customers
and consumers in more than 200 countries and territories.
Our management monitors a variety of key Pointers to evaluate our business reports
and budgeting positions. These pointers include net capital spending, growth in volume,
advertising and marketing expenses, revenue and organic revenue, growth in administering
profit and market share etc.
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4. I. Objectives of Pepsi Co are: - Performance with Purpose is PepsiCo’s
recognition that the company’s grand slam is inextricably linked to society’s
success. Every year we take the mandatory actions to strengthen our company.
We make significant investments abaft our largest global brands.
Performance with Purpose is our goal to put out sustained market price by
providing a variety of numerous foods and beverages, from treats to healthy
eats, finding innovative ways to knock down our impact on the environment
and lower our costs through energy and water conservation as well as reduce
use of packaging material thus contributing in a safe and inclusive workplace
for our employees universally and respecting, supporting and investing in the
local communities in which we operate. As long as Performance with Purpose
is our guide, I believe we will continue to maintain the long-term, sustainable
growth. In order to do well by our shareholders, we also have to take into
account the needs and concerns of a wide range of stakeholders. If our
financial achievement comes at the expense of the environment, our
consumers or our communities, we will not be viable in the long run.
These are the 22 products offered by our company,
PEPSI CO.
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5. II- Budget Preparation Process: This process consists of 8 steps.
1) Setting of strategic goals: It is the part of long term planning’s in which we
strive to deliver long term financial performances and sustained value of
shareholder, we continue to refine our products, help conserve the universal
supply of water and lastly and most importantly, to create a safe, healthy and
diversified workplace which reflects globally.
2) Consider the external factors of organization: PEST analysis is done when
talking about the external factors of our company. This is an important thing to
do as it handles and gives a good impact to our company.
PEST ANALYSIS
Political factors: Our products are brought to market through direct-store-delivery
(DSD), customer warehouse and distributor networks; we make sure that we maintain
everything accurately and we ensure to use good and simple ingredients in our food
and beverage items such as fresh fruits, juices, corns, rice, vegetable and essential
oils, wheat etc. Our key packaging materials include plastic resins, including
polyethylene terephthalate (PET) and polypropylene resins used for plastic beverage
bottles and film packaging used for snack foods, aluminum used for cans, glass
bottles, closures, cardboard and paperboard cartons. Fuel and natural gas are also
important commodities for us due to their use in our facilities and in the trucks
delivering our products. We employ specialists to secure adequate supplies of many
of these items and have not experienced any significant continuous shortages. Many
of these ingredients, raw materials and commodities are purchased in the open market
Economical factors: Our businesses operate in highly competitive markets. Our
meals and food brands compete on the basis of price, quality, product variety and
distribution. Success in this competitive environment is dependent on effective
promotion of existing products, introduction of new products and the effectiveness of
our advertising campaigns, marketing programs, product packaging, pricing,
increased efficiency in production techniques, new vending equipment.
Social factors: Our businesses are affected by seasonal variations. For instance, our
beverage sales are higher during the warmer months and certain food and dairy sales
are higher in the cooler months. Weekly beverage and snack sales are generally
highest in the third quarter due to seasonal and holiday-related patterns, and generally
lowest in the first quarter. However, taken as a whole, seasonality does not have a
material impact on our consolidated financial results.
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6. Technological factors: We engage in a variety of research and development activities
and continue to invest to accelerate growth in these activities and to jaunt innovation
globally. These activities principally commit in the production, processing and
packaging. Furthermore it embraces the development of new ingredients, products,
improvements in the quality of manufacturing processes, packaging technology,
enrichment in product qualities, safety and integrity, We also made investments to
reduce our impact on the environment, including innovation in our packaging to make
it progressively sustainable, and developed and implemented new technologies to
enhance the quality and value of our current and future products,
3) Consider the internal factors of organization: This is done by the SWOT
analysis as it plays a very good role in finding out all the internal strength and
weakness inside the organization. By this analysis, no factor is being ignored.
SWOT ANALYSIS
Strength: PepsiCo’s portfolio competes in two centralized, related categories: foods
and beverages. Both categories have attractive universal growth expectancy of 5% or
more, and our convenient foods and beverages businesses are fairly steadily balanced.
Furthermore, our categories and goods are notably complementary, sharing the same
customers, consumers and occasions.
In many markets, we compete against numerous district companies and many of our
snack and food brands hold momentous leadership positions in the snack and food
industry worldwide. Having both foods and beverages allows us to discharge and
broadly give away new, convergent nourished food and beverage products thus we
offer delicious food and convenient beverage options for a wide variety of occasions
from morning to evening for instance, our customers might wake up to a breakfast of
Quaker Real Medleys and Trop50, enjoy a Pepsi MAX and Sun Chips for lunch
followed by a Lipton beverage.
Food service consumers also see the blessing of partnering with our company due to
our access to retail partners and the option of securing food service customer inspired
snacks onto the racks in grocery stores. We have cunning capabilities that give us a
leg up on the competition when it comes to knowing and developing what consumers
want to eat and drink throughout the day. To meet the needs of our consumers, our
capabilities position us to develop the finest results. Moreover, our broad portfolio has
been a strong competitive advantage in foodservice.
Weakness: - Our beverage, snack and food brands compete against global, regional,
territorial and private label manufacturers and other value competitors. In many
countries in which we do business, The Coca-Cola Company is our primary beverage
competitor. Other food and beverage competitors encircle, but are not limited to,
ConAgra Foods, Inc., DPSG, Kellogg Company, Kraft Foods Group, Inc.,
International, Inc., Monster Beverage Corporation, Nestlé S.A., Red Bull etc.
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7. However, The Coca-Cola Company has significant carbonated soft drink share
advantage in many markets outside the United States. Our beverage and food brands
compete on the basis of price, quality, product variety and distribution. Success in this
competitive environment is dependent on promotion of existing products, introduction
of new products, advertising campaigns, marketing programs, product packaging,
pricing, production techniques, new vending equipment and advanced technology.
Our business could suffer if we don’t designate stock and sustain proper IT
infrastructure or if our systems get damaged, shutdown due to natural disasters or
hacked as we lay money on the latest information technology, including cloud-based
services.
Opportunities: - We have enrolled into agreements to share assertive information
technology support services and administrative functions such as payroll processing,
finance and accounting functions. We are going on further by refining our food and
beverage portfolio to meet changing consumer needs by developing a broader
portfolio of product choices. We expect that developing and emerging markets will
continue to represent an attractive high growth space for our Company,
We also made investments to incorporate into our operations best practices and
technology to support supportable agriculture and to reduce environment impact. And
also plan to carry forward new ways to manage volatility in the properties due to
extreme weathers due to seasonal changes.
We continue to adapt our advertising and marketing model to harness the power of
social media and develop the efficiency of our sales force which will improve our
analytical capabilities and enhance food safety and quality. Nevertheless, we will
continue to compete effectively in the markets so we continue to invest in developing
and emerging markets and to broaden the range of our product portfolio.
Threats: - We are subject to risks in the normal course of business like income
inequality, competition for natural resources, geopolitical tensions and conflicts will
continue to pose threats to doing business in many countries around the world.
Our ability to procreate, manufacture, distribute and sell products is critical to our
success. Geopolitical and social tensions and battle are expected to promote to pose
risks to doing business in many countries around the world.
Another threat which disturbs us is the extreme warmer temperatures, devious rainfall
patterns, new pests, floods and wildfires as they all threaten the productivity and
availability of agricultural inputs. Less-favorable rating is expected for a few products
due to stubborn changes in the climate which may result in depreciation of money for
un-doubtful products
7
8. 4) Set budget objectives: considering the PEST & SWOT and their edges, we
check whether the objective is attainable. For example whether capital needs to
be raised, from where the capital needs to be allocated how much, and when all
these must be taken into account for the benefit of the company. If the
objective is not attainable a divergent objective must be chosen and the process
is repeated.
5) Set up a budget committee: as we are a very well known and well established
company worldwide, our budget committee is already been setup and selected.
6) Identify Principal Budget Factor (PBF): It is necessary to identify and detect
this PBF initially as it leads to the decision of which budget is prepared first
and foremost, and all other budgets are subsequent to it.
7) The prepared budgets are further deliberated by budget Committee to
minimize all the possible opportunities and losses and to make sure that it will
benefit our company and then a final budget is shortlisted on the agreement of
all departments. The committee head and board of directors will authorize it.
8) Implementing the budget it happens when the declaration of the budgeting
process is exchanged with all the operational levels.
III- Budget Committee Structure
PepsiCo’s Board of Directors: They are responsible for overseeing risk assessment
and mitigation. The Board receives updates on key risks throughout the year. The
Board has delegated oversight of certain categories of risk to designated Board
committees which report to the Board regularly on matters relating to the risks the
committees oversee.
Audit Committee of the Board of Directors: They assess and check the guidelines
policies governing our company’s risk management and oversight processes and
assists the Board’s oversight of financial, compliance and employee safety risks
facing PepsiCo.
8
9. Compensation Committee of the Board: They periodically reconsider our company’s
policies and practices compensation to assess whether such policies and practices
could lead to unnecessary risk-taking behavior.
PepsiCo Risk Committee (PRC): It is comprised of a senior management group which
meets periodically to identify, assess, prioritize and address the strategic, financial,
operating, business, compliance, safety, reputational and other risks.
PepsiCo’s Risk Management Office: Manages the overall risk management process,
providing the ongoing guidance, tools and analytical support to the PRC’s, identifies
and assesses potential risks and facilitates ongoing communication between the
parties, as well as with PepsiCo’s Board of Directors and the Audit Committee of the
Board;
PepsiCo Corporate Audit: This evaluates the ongoing effectiveness of our key
internal controls through periodic audit and review procedures.
PepsiCo’s Compliance & Ethics Department: This leads and coordinates our
compliance policies and practices.
9
10. IV- AUTHORIZATION LIMIT OF PEPSI CO:
Pepsi Co. has been utilizing all the money according to their budgets and they
do not rush to over spent or spent below the required level in order to maintain their
budget reputation and stability of the firm so the conduct is not inhibited in any way
possible. All the costs are planned ahead of time and in a systematic way. Rushing
into getting any deal or investing can cause the company’s image to be questioned and
to maintain the brand image in the global market it is important to keep all the
accounts fair to avoid any inspection threats. PepsiCo expressly disclaims any
warranty of any kind, whether express or implied
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14. 1
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VIII- REFRERENCE:
Citation:
http://www.pepsico.com/Company/Our-History/
http://en.wikipedia.org/wiki/PepsiCo
http://www.tutorsglobe.com/homework-help/cost-accounting/preparation-for-budgetary-
control-7999.aspx
http://saraalgoe.hubpages.com/hub/SWOT-and-PEST-analysis-of-Pepsi-Co
http://www.scribd.com/doc/39879768/Pepsi-co
http://www.pepsico.com/Legal/TermsOfUse
Book:
Bradshaw, John Mel Brooks, Business, Accounting & Finance, Republic of
South Africa, 2007, Reprinted.
Peter Stimpson and Alastair Farquharson, Cambridge International AS and A
level. Business Studies second edition.
Chakraborty, Hrishikesh, Advanced Accountancy, Oxford University Press.
