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Pepsico - the Company Analysis

Essay by   •  April 21, 2018  •  Case Study  •  1,255 Words (6 Pages)  •  400 Views

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The Company Analysis

PEPSICO (Canada)

Oyinkan Odunsi

100610162

MGMT 1209

March 3 2017

Jay Fisher

Table of contents

Table of contents        2

Description of the Company        3

Industry Analysis        4

Mission Statement and core values        5

Swot analysis        6

Informed Analysis        7

References        8

Description of the Company

PepsiCo Inc. is a foremost important food and beverage company that manufactures and distributes its goods in more than 200 countries. PepsiCo, Inc., incorporated on November 13, 1986. The company PepsiCo sells goods not service with brands that include Frito-Lay, Gatorade, Pepsi-Cola, Quaker and Tropicana. PepsiCo products are loved by consumers one billion times a day in more than 200 countries and territories around the world.

PepsiCo main consumers are wholesale distributors, foodservice distributors, grocery stores, convenience stores, mass merchandisers, which mean that the company do not sell straight to consumer. PepsiCo offers financial encouragements to their customers in order to assist in the distribution and promotion of the products.

PepsiCo made more than $66 billion in net revenue. PepsiCo's product range includes a wide range of pleasurable foods and beverages, including 22 products that make more than $1 billion each in estimated annual retail sales. Their gross profit margin improved from 2014 to 2015 and from 2015 to 2016. The table below depicts the overview of PepsiCo profit margin improvement from 2012 to 2016.

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Figure 1- PepsiCo Income Statement


Industry Analysis

PepsiCo is classified as “Packaged Food and Drinks” industry, with major competitors as Kellogg’s and General Mills, also competitor in the drink industry such is Coca-Cola, etc. All this companies targets the same market as PepsiCo.

The economic outlook for PepsiCo Company is promising; this is because over the next five years the company PepsiCo is expecting to grow earnings at an average annual rate of 7.16%. This year, analysts are forecasting earnings increase of 5.42% over last year. (As depicted in Figure 2- Forecast Earnings Growth) PepsiCo has always relied on technology to carry on its operations and satisfy the needs of its large clientele base.

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Figure 2- Forecast Earnings Growth

The external factor influencing contractions and expansions for this company are the changing consumer trends, which gives them the opportunity to expand such as:

  1. Social media growth: the growth of social media is a positive external factor PepsiCo. This offers them with a new way to market their products and raise pubic awareness for it.
  2. Socio-cultural factor: The health issue brought by drinking soft drinks is one of the issues of socio-cultural factor. Since more and more diseases are caused by unhealthy food.
  3. Economic factor: Due to the economic cycle, inflation, changes the demand of Pepsi’s product from the customers.

Mission Statement and core values

The company (PepsiCo) mission is; “To provide delicious and remarkable food and drinks and to be the leading brands for food and beverages. That the food and drink we sell meets the uppermost standards and quality. So, we could bring happiness to your household”.

PepsiCo core values are; To reflect the socially and environmentally responsible company we aspire to be. We are the foundation for every business decision we make.” PepsiCo recognizes our social responsibility to help make a difference in the world by being committed to the environment and focuses on sustainability efforts.

PepsiCo accomplished something big when they saved more than 11 billion liters of water with eco-efficiency improvements. The company PepsiCo began ground-breaking environmental practices, such as cleaning Gatorade bottles with purified air instead of rinsing them with water. The air purification process worked so well, that PepsiCo is spreading the method to its bottling plants worldwide, saving billions of liters of water.

Swot analysis

Strengths(Internal)         

  • Strong brand image
  • Broad product mix
  • Extensive global production network
  • Extensive global distribution network

Weakness(Internal)

  • Low penetration outside the Americas
  • Limited business portfolio
  • Weak marketing to health-conscious consumers

Opportunities(External)

  • Business diversification
  • Market penetration in developing countries
  • Global alliances with complementary businesses

Threats(External)

  • Aggressive competition
  • Healthy lifestyles trend
  • Environmentalism

Figure 3- The SWOT Analysis

The company PepsiCo is one of the most successful global company and has one of the strongest brand image in the market with well known names such as Lays and Tropicana. PepsiCo has the ability to reach various markets, such as “Quaker product” and “Pepsi products”, furthermore PepsiCo also suffers from a few weaknesses (see Figure 3- The SWOT Analysis). PepsiCo gets about 70% of its profits from markets in North America and South America; this is a problem because they could get potential revenues outside of North America. PepsiCo has opportunities for continued global growth such as by buying a firm that is not in the food and beverage industry because if the company could diversify in to other business there could be potential consumer in another way. PepsiCo should create an alliance with opposite business to increase its market presence. The healthy lifestyles trend is a threat against PepsiCo’s products, many of which are unhealthful because of their sugar, salt, or fat content and also, environmentalism threatens the company in how consumers negatively respond to product waste and lifecycle issues.

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