Pepsi Company.docx

Running head: STRATEGY IMPLEMENTATION

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Running head: STRATEGY IMPLEMENTATION

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Executive summary Pepsi Company operates in most part of the globe as one of the top beverage companies. This proposal seeks to highlight the challenges the company has undergone and find the best solution to make it realize a higher profit margin. These will be explained by examining the Strength, Weaknesses, Opportunities, and Threat (SWOT). The PepsiCo has a wider market are since its operation is distributed over a wider area. The operational structure sets its objectives to meet the set goals. The company has been able to maintain a good relationship with potential customers has given them strength in the productions and hence increasing their sales margin. The company has a good financial turnout, which helped them maintain their strong financial economic status. According to the human resource, the company has been able to maintain the best environment for them by motivations, maintaining the good environment, and good culture has inspired them to work for the betterment of the company. Despite the success of PepsiCo, they undergo some huddles in the daily running of the business. Among them is low business turn out because of losing their key customers. This report, therefore, recommends that the company should strategize the market to meet their potential customers and compete favorably with their customers. Introduction PepsiCo’s main objective is focused on being the best producer of food and beverages in the world. The company is also committed to delivering the best to its customers and achieving success in their finance and business in general. The PepsiCo has been able to sustain its business success by using different methods to measure and tackle the competitive market. The company needs to develop a better linkage of customers and suppliers to build the satisfaction of the market. It is also a desire of the company to maintain a good working environment for their employees. PepsiCo targets to realize a higher profit margin, which will help them, plan for the long-term investment and widening the market for their products and hence growth. Therefore, Pepsi Company is committed to realizing business and financial success while leaving a positive impact on society.

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PepsiCo SWOT Analysis Strengths Large market dominance- apart from the coca cola company, which deal with the same products, PepsiCo, has dominated larger the market population. Brand equity- PepsiCo has a distinctive brand for its identification, which is among the best brands in the World. Remarkable portfolio of the products- PepsiCo has been ranked as one of the best company in terms of food and beverage products. PepsiCo has achieved this by maintaining an impressive portfolio of its brand. Customer Loyalty- due to its strong marketing strategies and good products, the company has enabled to keep its customers and maintaining their trust. Wider market coverage- PepsiCo operates in many countries around the World. In all of the countries it operates, PepsiCo has been able to put the brand in the best position. Distribution Networks- there has been an increased demand in the market of Pepsi product. This has enabled the company to strive to adopt the best market plans. Company valuation- PepsiCo is one of the most valuable foods and Beverage Company in the World. Its value is inclusive of the brand, the factories and other assets it owns around the World. Weaknesses Product perception- most of the customers in some countries have the perception that the Pepsi company product is unhealthy. Competition- PepsiCo faces hard competition with Coca Cola Company. The market struggle has been so tight until PepsiCo lost some of the potential customers in some countries to Coca Cola Company. It has been able to tackle this competition by maintaining their product taste and constant supply.

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Product diversification- PepsiCo has is specialized in dealing majorly in drinks alone. Therefore, its diversified competitor might take advantage of it. Health effects - some customers from some of the countries have a belief that the carbonated drinks are harmful to their health.in that concern most of them have shifted their taste to noncarbonated drinks meaning PepsiCo has lost some of its customers. Opportunities Community Social Responsibilities- Pepsi Company should participate more in CSR activities. This will help deal with the negativity that might develop about their product and hence maintain their market brand. Research and Development- from their research and development, the PepsiCo has been able to come up with a healthier product. The company has also made a decision to focus on drinks product, which they realized to be selling more. Diversification- Pepsi Company has a good opportunity for its market diversification since it has a well-developed distribution channel. They have all the resources it needs to deal with other products. Threats Economic growth- due to economic instability that different countries are facing, Pepsi Company has realized declining in its cost of sales. This declining has declined its profit margin. Competition- the company is facing stiff competition from other companies majorly the coca cola that deals in the same product. Raw material acquisition- it is becoming hard for the company to acquire its main raw material in this case water due to climate change.

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Strategic objectives and financial statement PepsiCo has put in place the strategies that are discussed below: Organizational culture PepsiCo has been able to cover a wider market area. This ability to unite the principle of organizational global reach is because of its resilient organizational culture. Its suppliers wherever they are in the World are do embrace the organizational culture set by the PepsiCo. The company also encourages the young population to embrace this culture of ‘making the most of the moment’. Thu is the s, the PepsiCo that encourages the employees to express their personal capacity. Focusing on emerging markets PepsiCo is very vigilant on the current trend in the market. The company has diversified the product to curb the market trend for instance currently the company has ventured into the energy drink market and food products among other products. To increase the profit margin the company is keeping close research in the market trend to get more product they can produce. Extensive distinction PepsiCo also uses differentiation as one of its strategies. Apart from dealing with carbonated drinks, they have included energy drinks, which are non-carbonated. The company also have intensified their market research and development.

Cost of leadership PepsiCo is looking forward to reducing the cost of operation and offer promotional efforts. The selling prices of the company are maintained at a lower cost because of the stiff competition they face from the coca cola company.

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Infrastructural focus The location of the PepsiCo and their distribution points are located in a strategic location with good infrastructure to reduce the cost of transportation and the distance between them and their suppliers. The PepsiCo has put in place strategic measures that are as explained: Marketing strategy The main objective of the marketing strategy is to focus on the strategic actions of PepsiCo towards the target market that it serves. The company needs to direct its strategic plan to target the global market. This Company will achieve this by customizing their product to fit their potential market. They can also achieve this by tapping into new markets or developing new products. With the marketing strategy, the company needs to identify both the existing and the new market that needs to be introduced into the market. Since the PepsiCo deals with a non-alcoholic drink, it has been noted people who do not drink alcohol are the potential customers. The new market is a health-conscious market segment and the existing product is a beverage and non-alcoholic. Therefore marketing to health-conscious market will good use of market penetration strategy while non-alcoholic customers will make use of development strategy. The marketing strategy helps Pepsi Company to bring to the market the best product and help to tackle its competitors well.

Operation strategy The operation strategy aims at addressing the distribution challenges and operating efficiency. The company needs to understand the foundational basis for operations strategy will be appreciated by with best strategic framework. If the operational strategy is related to human resource, the actions aim at training employees to be flexible enough to adjust their capacity to avoid difficulties in the processing system. The human resource in every step of production should be trained to do multiple and diverged works.

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Financial strategy Pepsi Company has striven to maintain its leadership standard by minimizing the cost. These costs relate to operating cost, which would decrease if the expected output is achieved. Also, the cost of raw materials that are used by the Pepsi Company in the processing of the products. The large volume of production at the low cost has made PepsiCo enjoy the economies of scale. This has also been achieved due to the good strategic partnership with the suppliers. Another feature of reducing cost comes with the sources of financing the business firm. The business firms are financed by equity or by debt. There are risks that a company using these sources of finances. The risk of equity that includes the business risk is the risk that would be operating at a loss. The equity risk is because of higher rates of return required by investors. The debt financial risk entails the money that cannot be paid on time. This risk is calculated through the interest rate. Based on the company’s cash flows, debt-equity ratio and interest coverage ratio the company maintains a sensible debt level. To lower its overall cost of capital, the company uses debt financing and increasing the shareowners’ return on equity. The company’s strong capital position gives it an opportunity to access key financial markets. This enables Pepsi Company to raise sufficient funds at a relatively low effective cost. Ethical issues The PepsiCo payment strategy to their employees is through merits. This payment system is ethical since every employee is paid as per the service he/she is delivering. Such payment serves as motivation to employees to work more and hence deliver the best results to the company. Moreover, the PepsiCo in their structure included employee welfare. The company always organizes workshops and seminars to address ethical issues and teach the employees on the current trending issues. PepsiCo has been selling beverages that are carbonated. Many customers find carbonated drinks as unsafe for their health due to the reason that the carbonated drink causes obesity complication. Such complains will affect the sales output of the company negatively.

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Recommendation To realize more sales, the company needs to conduct more marketing strategies to reach as many potential customers as possible. In addition, due to the increase in lifestyle in developed countries, Pepsi Company should concentrate its market more on the developing countries. The PepsiCo should plan to divert their attention and manufacture the products that do not cause health complication. If the company concentrate much on carbonated drink, it will lose many of the customers from the developed nations because of the lifestyle changes. The company should also manufacture the complement product to the beverage they produce, for instance, the snacks. Conclusion Though the PepsiCo is trying to maintain its customers as they attract more all over the globe, it faces stiff competition from other reputable companies like Coca Cola, which produces the same product. The company has not been able to diversify its product to non-carbonated drinks, the reason that has made them lose some customers in developed countries. The company, therefore, should manufacture non-carbonated drinks and improving customer service.

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References

Rothaermel, F. (2016). Strategic Management: Concepts. New York: McGraw-Hill Education. Rendtorff, J. D. (2009). Responsibility, ethics, and legitimacy of corporations. Frederiksberg, Denmark: Copenhagen Business School Press.

Donalson, T. (2019). Ethical Issues in Business. Retrieved from https://www.karlknapp.com/resources/ethics G.A, C. (2006). Personnel management theory and practices. Retrieved from http://www.academia.edu/10943606/Strategic_Resources_Management_A_case_study_of_Coca_Cola_ Company

Suto, M., & Takehara, H. (2016). The link between corporate social performance and financial performance: empirical evidence from Japanese firms. International Journal Of Corporate Strategy And Social Responsibility, 1(1), 4. doi: 10.1504/ijcssr.2016.077544 PepsiCo. (2018). Retrieved from https://en.wikipedia.org/wiki/Pepsi_Co