Overview of the Company
PepsiCo is one of the largest manufacturers of carbonated beverages, which started a long time ago. Caleb Bradham, the company’s founder, sought to create a drink similar to the already well-selling Coca-Cola. Pharmaceutical preparation and technology allowed for that very syrup and its unique flavor, thus launching a strong competitor for Coca-Cola. The brand’s recognition stems not only from fierce competition with Coke suppliers but also from an active corporate stance and snack sales. Unlike its main adversary, PepsiCo simultaneously wins consumers’ attention in two directions, developing its brand and increasing its audience.
PepsiCo is a brand whose name is associated with many bright events – for example, soccer, where both drinks and snacks of the company are actively sold. Sales depend not only on the high quality of the beverage but also on how successful business strategies are implemented in the company’s operations. The organization has created a unique culture, vision, and mission, the main goals of which combine to attract an audience and gain their attention and trust. The company’s sales and direct profits are enormous: just over $7.5 billion by the end of 2021 (PepsiCo, 2022). This success is due to PepsiCo’s ability to confront limitations and continually realize opportunities through its strengths.
Vision & Mission
A company’s vision and mission are some indicators that directly indicate what a business can represent. They are part of ethics and create a corporate culture that is part of the face of the company in the international trade arena. The vision of companies is the basis they promote as the reason they organize their business. For PepsiCo, its vision states:
“PepsiCo Positive (pep+)… is our end-to-end strategic transformation that puts sustainability and human capital at the center of how we will create value and growth by operating within planetary boundaries and inspiring positive change for planet and people” (PepsiCo, 2023b).
Corporate governance in recent years has brought to the forefront the question of how much a company can claim ethical success. If an organization takes responsibility when ethics, employee rights, or other violations occur, it regains its status and is no longer as despised by the consumer (Rezaee & Fogarty, 2019). PepsiCo does a great job of this because it always tries to be open about its mission and values. The company’s management believes that corporate governance is affected by one’s ability to adjust operations to external business conditions.
Among the advantages of the company’s mission, it should be noted that the separated division into blocks: for consumers, planet, business, and others. For example, for its consumers, PepsiCo states: “By creating joyful moments through our delicious and nourishing products and unique brand experiences” (PepsiCo, 2023b). Moreover, PepsiCo offers the following for its shareholders: “By delivering sustainable top-tier TSR and embracing best-in-class corporate governance” (PepsiCo, 2023b). Based on this, PepsiCo has pronounced strengths in organizing its corporate goals and missions.
The suggested solution to address issues in the fields of corporate governance, business sustainability, and ethics is to capitalize on the market value of a can of Pepsi by working on the company’s image. The best strategy, in this case, would be to mention the green agenda and concern for the environment and society in its vision. This is one of the main reasons why PepsiCo is willing to take responsibility for the low-pollution organization (PepsiCo, 2021a). In the context of global warming, the company can prove the comprehensiveness of its perception of the environment and get ahead of the competition.
Goals in Business
The goals of any company, and PepsiCo is no exception, form the basis of business as they determine their potential development in the future. PepsiCo defines its goals as a movement towards high financial results using the integration of sustainable development into business strategy. Goals are interspersed with the mission, so PepsiCo’s long-term overarching goal is to align how they present its product with how they want to work with consumers. Integrating sustainability at PepsiCo involves reducing greenhouse gas emissions throughout the supply and creation chain. The company first plans to reach 40%, aiming for zero in the future (PepsiCo, 2021a). In addition, the company’s goal is to provide the consumer with a quality product and appeal to customers’ opinions to match their expectations and the finished product.
SWOT Analysis
SWOT analysis is a way to establish what potential resources a company can introduce from the external environment to reduce its risks, increase its strengths and realize its potential. PepsiCo, like any other company, has opportunities to develop further and reduce the effect of its weaknesses on the business. Although the company is generally viewed as highly efficient and productive, all parameters (financial, managerial, sustainability, and ethical) should be considered to understand PepsiCo’s position in the market.
Strengths
PepsiCo’s financial strengths are related to its stability and constant high turnover, which allows for high profits. The revenue dynamics can be seen in table 1 based on Annual reports for 2020-2021 years (PepsiCo, 2021b; PepsiCo, 2022).
Table 1. Revenue dynamics for 2019-2021.
The company has permanent assets and is traded on the NASDAQ and SIX Swiss Exchange. In addition, many investors allow the company to promote profitable deals and identify trends in trading successfully. Through the efforts of financial advisors and investors, the company joins other brands or sells its brands to get an investment package for future technologies. The investment package in 2020 was $11.6 billion; in 2021, the net cash spent on invective was only $3.3 billion (PepsiCo, 2022). In 2020, the company acquired Pioneer Foods, which is why such investment costs were incurred. Timely investment should be an essential part of a company’s business strategy. The company owns about 20 brands, following a unified marketing strategy.
PepsiCo’s managerial strengths are associated with an established supply chain and the creation of value for its products. High globalization has led the company to spread everywhere and created pathways to deliver the product directly to the store. The board of directors established highly organized logistics operations. The latter allows PepsiCo to deliver the product to the consumer on time, working effectively with retailers and bargaining on favorable terms (Johari et al., 2022). In addition, internal and external audits determine the potential in the speed of product creation and implementation of marketing strategies. For example, it may revolve around organizing the Super Bowl and building a dialogue with young people. PepsiCo also has one of the most recognizable brands and is successfully pushing it further.
PepsiCo’s strengths related to sustainability are expressed in its ability to integrate green technologies into its business goals. The company is committed to reducing greenhouse gas emissions and increasing the possible recycling of plastic bottles (PepsiCo, 2021a). In addition, the company is focused on increasing water efficiency and plans to increase it to 25 percent by 2025, up from 18 percent in 2021 (PepsiCo, 2023c). PepsiCo introduced a goal of positive agriculture in 2021 and plans to fully integrate regenerative farming on 7 million acres in 2030 (PepsiCo, 2023c). The company regularly sponsors quality-of-life improvements in its supply chains and strives to provide ingredients from sustainable sources.
Finally, PepsiCo’s ethical strengths come from its policies on both its personnel and trading partners. The company has its code of ethics and ways of dealing with corruption, breaking laws, and unfair practices. In addition, PepsiCo 2022 was recognized as one of the most ethical companies in the world: the decision was based on the monitoring service, protection of rights, and a high degree of accountability (PepsiCo, 2023a). The company has provided online ethics code training in a small format since 2021.
Weakness
The financial weaknesses of PepsiCo are difficult to discern because of its apparent commercial success. Nevertheless, paying attention to the company’s markets is necessary: by spreading everywhere, the organization misses consumers from large markets. In addition, PepsiCo is losing stock levels in 2023 compared to the fourth quarter of 2022 (Lucas, 2023). Demand for the company’s products has declined despite solid buying power, potentially due to marketing deficiencies.
The lack of marketing strategies may be part of PepsiCo’s managerial weaknesses. The organization is much more active in promoting products that have been on the market for a long time and pays less attention to marketing new products. In addition, several unsuccessful advertising campaigns and inappropriate support for political activism suggest a lack of knowledge about managing the communication processes with audiences. A critical weakness is that PepsiCo does not offer snacks and carbonated beverage alternatives. The lack of healthy foods/drinks is a weakness in the context of the rise of eating disorders.
The weaknesses related to sustainability for PepsiCo are related to the fact that it took them quite a long time before they achieved good green performance. Using plastic bottles and non-recyclable packaging raises questions for most consumers, so if PepsiCo does not meet its green goals, its profits will drop significantly. Plastic pollution from PepsiCo’s product manufacturing is still too high, Reuters states as of 2020 (Brock, 2020). Despite well-organized goals and a clear plan, the company is not achieving them as it claims to.
Finally, PepsiCo’s ethical weaknesses, involving unethical advertising and pay-for-performance incidents, should be noted. Some PepsiCo products (such as Uncle Ben’s) appear quite racist and raise questions about why the company does not eliminate its image in the context of Black Lives Matter. Several years ago, the company failed to support wellness initiatives and used unscrupulous ingredient suppliers. In addition, although the company claims to compete ethically, its clashes with Coca-Cola are not always so.
Opportunities
Financial opportunities for PepsiCo involve launching new products different from their typical profile. Many brands support the company, but integrating new types will boost profits. For example, the introduction of energy drinks (as Coca-Cola did in 2022) and alcohol products. The organization can also expand partnerships and increase the number of sponsors and investors through negotiations and market research (Johari et al., 2022). According to financial reports, PepsiCo is already doing this, but development will always be a plus (PepsiCo, 2021b; PepsiCo, 2022). Innovation can be a great way to increase competitiveness and reach new levels of quality.
PepsiCo’s management capabilities have to do with expanding how it communicates with customers and suppliers. Leveraging all the resources to digitize the business will allow PepsiCo to take its organization to the next level and manage it based on trusted analytical IT tools with the help of regulators. Digital channels can simplify the supply chain and reduce associated risks, thereby increasing the speed of sales and their quality and optimizing the buying and selling process as a whole.
PepsiCo outlines opportunities related to sustainability in its vision and ECG goals. Switching to low-sugar, low-calorie products for reduced emissions is a good plan for the company. PepsiCo can bring its sustainability to the international arena if they establish cooperation with green investment campaigns. In addition, PepsiCo should increasingly move away from non-recyclable plastic and use new technologies in production.
Finally, PepsiCo’s ethical opportunities relate to the development of corporate social responsibility. The company has a relatively strong current policy, and if it continues to work in this direction, its net profits will increase. PepsiCo can also influence the consumer: for example, by sponsoring health campaigns, researching the green market, and launching campaigns to support different population groups. In the context of the direct link between weight gain and blood glucose gain with soft drink consumption, PepsiCo should ensure they protect themselves and support health goals (González-Morales et al., 2020). After researching the political and social environment, the company can carefully spread the message of equality with its drinks: advertisements on the products themselves and transfer a percentage of sales to social funds.
Threats
PepsiCo’s financial threats are related to a general decline in buying power due to high inflation in many niche markets. The company also has to fear a financial crisis and a depreciation of its shares because of the high competition with similar giants such as Coca-Cola or Nestle. As part of the threat from the market, PepsiCo can expect their products to be abandoned, and as a consequence, we would need to cut workplaces. Threats can be leveled by analyzing Form K-10 and comparing annual profits.
On the management side, PepsiCo should be wary of new supply chain trends and increased scrutiny of the business by Chinese investors. Overseas markets may be volatile, as suppliers to other companies have previously carved out a niche and maintained it through cheap labor (Johari et al., 2022). In addition, PepsiCo should consider that product individualism compared to Coca-Cola’s family direction creates a disadvantage. The competitive advantage is exacerbated, and PepsiCo can expect a lack of opportunity in new collaborations and product openings.
Threats to sustainability may be most pronounced for PepsiCo as green companies scrutinize manufacturers for sustainability. The company can expect product demand to fall because the working and production conditions they create are not in line with the green agenda. In addition, this could lead to a drop in the top ethical companies. PepsiCo should also be aware that its goals may not be met, in which case its popularity would drop significantly.
Threats related to ethics for PepsiCo are related to the potential for corruption schemes and networks within the company. An unfair attitude toward working together with violations of transactions by partners puts the company in a vulnerable position. The company must also accept that carbonated beverages and snacks are not part of a healthy diet (Tahmassebi & BaniHani, 2020). With the focus of many countries on combating unhealthy habits and eating disorders, PepsiCo can expect their business to no longer be needed due to the unethical nature of continuing to trade in a health-risk environment.
Recommendations
Based on the findings of the SWOT analysis, several important statements can be made about PepsiCo’s financial, managerial, sustainability, and ethical position. The company’s financial performance is relatively stable, despite the presence of competition and the threat of a decline in consumer power. The company can increase profits if it develops ways to develop new products other than carbonated beverages and snacks. In assessing PepsiCo’s management, there is a high level of efficiency, a well-established supply chain, and plenty of opportunities to improve quality. The company can strengthen its management with structural reorganization of operations in niche markets and technology integration to optimize supply chain and distribution.
PepsiCo’s profile is striking when it comes to sustainability because it combines many rational and achievable ideas. Investors have to look at PepsiCo because it actively supports green goals and sponsors campaigns for resource renewal, zero waste, and low-footprint production. The threats will not be as significant for the company if it continues to support such initiatives and achieves its goals. This also applies to ethics, as PepsiCo’s code of ethics is strong and packed with complex issues.
The code deals with equality, equal pay and opportunity in the company, and anti-corruption, so PepsiCo’s challenge is to prove its applicability. A few cases in the past can weaken the company, so its task is to avoid them and not to stray from improving ethics. Consequently, PepsiCo is a strong player in the soft drink arena, successfully developing its strengths, minimizing the effects of weaknesses and threats, and seeking to realize its opportunities.
References
Brock, J. (2020). Set, miss, repeat: Big brands and plastic recycling targets. Reuters. Web.
González-Morales, R., Canto-Osorio, F., Stern, D., Sánchez-Romero, L. M., Torres-Ibarra, L., Hernández-López, R., Rivera-Paredez, B., Vidaña-Pérez, D., Ramírez-Palacios, P., Salmerón, J., Popkin, B. M., & Barrientos-Gutiérrez, T. (2020). Soft drink intake is associated with weight gain, regardless of physical activity levels: The health workers cohort study. The International Journal of Behavioral Nutrition and Physical Activity, 17(1), 60. Web.
Johari, J., Tan, E. M., Jin Sohaimi, S. N., Tan, J. Y., Alsallal, F. Y., Supilit, S., & Alfarhan, D. (2022). That’s what I like: A study of consumer behavior on purchase intention towards Pepsi. International Journal of Accounting & Finance in Asia Pacific, 5(3), 1-16. Web.
Lucas, A. (2023). PepsiCo earnings beat expectations as price hikes boost snack and beverage sales. CNBC. Web.
PepsiCo. (2021a). Our ESG approach. PepsiCo. Web.
PepsiCo. (2021b). PepsiCo annual report 2020. PepsCo, Inc. Web.
PepsiCo. (2022). PepsiCo annual report 2021. PepsCo, Inc. Web.
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PepsiCo. (2023b). Mission & vision. PepsiCo. Web.
PepsiCo. (2023c). Goals & progress. PepsiCo. Web.
Rezaee, Z., & Fogarty, T. (2019). Business sustainability, corporate governance, and organizational ethics. John Wiley & Sons.
Tahmassebi, J. F., & BaniHani, A. (2020). Impact of soft drinks to health and economy: A critical review. European Archives of Paediatric Dentistry: Official Journal of the European Academy of Paediatric Dentistry, 21(1), 109–117. Web.