The PepsiCo Firm’s Strategic Planning

Topics: Pepsi, Strategic Planning Words: 1421 Pages: 5

Introduction

In this contemporary environment, a strategic plan plays an integral role in the effective performance of an organization. It uses the current situation in the business environment to define the future (Jayawarna & Dissanayake, 2019). PepsiCo is among organizations that need strategic planning to increase its productivity in the market (Sehrawat, 2019). The SWOT analysis matrix has revealed that the corporation’s strengths are its strong brand, committed workforce, strong corporate social responsibility and many more. On the other hand, some of the weaknesses and threats identified are the increasing perception that carbonated drinks are unhealthy for consumers. In terms of competition, the main rival to PepsiCo is Coca Cola. Based on this, the corporation should strive to use the strengths and opportunities to eliminate the weaknesses and threats. Therefore, PepsiCo should consider growing organically to ensure that its products are healthy and meet consumers’ needs.

The Analysis of the Current Vision and Mission

PepsiCo’s mission and statement indicate its determination to significantly impact its target market, through its differentiated products. The company’s mission is to “create more smiles with every sip and every bite” (PepsiCo, 2022, para 1). PepsiCo intends to create value for its customers by making sure that its food and beverages are appetizing and meet its consumers’ needs in the market. The vision of the company is to “be the global leader in convenient foods and beverages by winning with purpose” (PepsiCo, 2022, para 2). In this statement, the organization’s purpose is to be the principal company globally. In addition, the corporation provides the means of achieving the goal by winning the purpose. Therefore, the statements provide the general concept of a company that intends to grow and remain consistent in consumer satisfaction.

The Proposal for an Updated Vision and Mission

Table 1: Vision and Mission Statement

	Vision statement	Mission statement
Current	“To be the global leader in convenient foods and beverages by winning with purpose” (PepsiCo, 2022, para 2).	“To create more smiles with every sip and every bite” (PepsiCo, 2022, para 1).
Updated	To become the global leader by providing products that promote the health and wellbeing of consumers and engaging in sustainable practices.	To make a positive contribution to people around the globe and offer customers the brand they trust.

External Factor Evaluation Matrix

Table 2: EFE Matrix

Key external factors	Weight	Rating	Score
Threats
Intense competition in the industry.	0.30	3	0.10
Economic slowdown reducing consumers’ ability to purchase the products.	0.10	2	0.30
Increasing health consciousness.	0.20	2	0.20
Shifts in demographics (Jallow, 2021).	0.10	1	0.15
Total	0.60		0.65
Opportunities
Expand its operations in emerging markets.	0.07	2	0.25
Take advantage of increasing internet users.	0.23	3	0.16
Healthy options (Jallow, 2021).	0.10	3	0.75
Total	0.40		1.16
Grand total	1.0		1.81

Porter’s 5-Forces Analysis

Table 3: Porter’s Five Forces

The five forces	Measures	Explanation
Rivalry Among Existing Competitors	High	The market is dominated by a few large corporations. Coca-Cola is the biggest opponent, and the competitor also offers a large range of beverage items under its name. Coca-Cola and Pepsi are the most recognized carbonated drinks.
Bargaining power of buyers	High	There are several substitute products available on the market. As a result, the customer has a wide range of products to choose from in the market. Customers in the beverage sector are price sensitive, as the corporation cannot charge a high price because they have a large selection of products. As there are numerous similar drinks in the same market, the consumer can move to another product or another company’s product (Schlegelmilch, 2022).
The threat of new entrants	Low	The new entrants to the industry pose a low threat to PepsiCo. Firstly, the barriers to entry are remarkably high. Secondly, there is high initial and operational cost, a major challenge for newcomers in the industry. Thirdly, few multinational corporations own the largest share of the market share.
Bargaining power of suppliers	Low	The bargaining power of suppliers poses a low threat to PepsiCo. Firstly, there are numerous vendors to supply in the market ready to supply raw materials. Secondly, since there are many alternative suppliers, the cost of switching is low. Thirdly, PepsiCo and other players can integrate suppliers.
Threat of substitute	High	There are numerous beverages and soda products available on the market. In the same market, many companies offer the same products. Apart from Coca-Cola as the main rival, PepsiCo also has other product lines, which means they have other competitors (Schlegelmilch, 2022).

Internal Factor Evaluation Matrix

Table 4: IFE Matrix

Key internal factors	Weight	Rating	Score
Strengths
The organization has a strong brand.	0.28	4	0.35
Strong global presence.	0.09	4	0.29
Strong and committed leadership.	0.05	3	0.28
Product diversification.	0.07	4	0.25
Skilled and competent workforce (Jallow, 2021).	0.08	3	0.22
Total	0.57		1.39
Weaknesses
Products are viewed as unhealthy.	0.20	1	0.19
Failure to meet the demand of the market.	0.11	2	0.12
Over-reliance on food and beverages.	0.09	1	0.10
Adverse impacts of failed products (Jallow, 2021).	0.03	1	0.09
Total	0.43		0.50
Grand Total	1.00		1.89

SWOT Matrix

Table 4: SWOT Analysis

Strengths	Weaknesses
PepsiCo owns some of the most recognized brands in the world. The corporation has strong leadership to ensure that it achieves strategic goals. The corporation has a strong brand presence. It operates in more than 200 nations across the globe (PepsiCo, 2022). The organization uses an effective marketing strategy to attract more customers. Strong Corporate Social Responsibility, especially through its foundation (Jallow, 2021).	Over-reliance on carbonated drinks and packaged foods limits its ability to develop other products. The products are viewed as unhealthy by consumers. Some of the failed products of the organization, such as Crystal Pepsi. The failure of the corporation to meet the demands of consumers in the market (Jallow, 2021).
Opportunities	Threats
It should consider expanding its operations in emerging markets. Take advantage of increasing internet users. There is an increasing need for healthy options.	There is high competition in the sector. Economic slowdown, which adversely impacts consumers’ ability to purchase the products. There is an increasing health consciousness among consumers in the market. Shifts in demographics threaten its profitability and sustainability (Jallow, 2021).

BCG Matrix

Table 6: BCG

Market Growth Rate	Relative Market Share
		High	Low
	High	(Stars) Pepsi, Aquafina, Tropicana and Gatorade	(Question Marks) Diet Pepsi and 7up Nimbooz
	Low	(Cash Cow) Frito Lays	(Dogs)

Analysis

BCG matrix comprises four components: Dogs, Cash Cows, Stars, and Question marks. Cash Cows represents products with high market share and low market growth rate (Czinkota et al., 2021). Frito lays is a brand that dominates the US market share but has low growth in the global market (PepsiCo, 2022). Stars are products has a high market share in a high growth sector. PepsiCo brands that falls in this segment are Pepsi, Aquafina, Tropicana and Gatorade. However, Pepsi might shift from the stars to dogs due to intense competition from Coca Cola and increasing preference for healthy drinks. The Question Mark quadrant represents products that are still in the development stage (Czinkota et al., 2021). Brands in this segment are Diet Pepsi and 7up because they have failed to attract consumers’ attention in the market. Finally, dogs are products viewed to have the potential to grow but have failed.

Strategic Direction Choice and Rationalization

PepsiCo should consider growing organically to address some of the issues that reduce the growth of its brands in the market. The corporation is currently a market leader in the food and beverage sector. It has remained true to its mission and vision to become a dominant force in the market. However, the issues that impede the growth of the PepsiCo brand are the increasing demand for healthy products and the failure of some of its brands. This is an indication that the solution lies within the company. The corporation’s leaders should focus on research and development to introduce healthy products for consumers. After developing its products, the company should enter emerging markets to expand its market share on a global scale.

Conclusion

PepsiCo is among the dominant brands in the food and beverage industry due to its quality products. Drawing from the SWOT analysis, the company has the capability to perform effectively in the market. For example, it has a strong brand, committed employees, effective marketing strategies and many more. However, some of the issues that affect the corporation’s growth are the changing demographics, economic decline, and increasing demand for healthy products. As a solution, the company should ensure that its products meet consumers’ changing demands.

References

Czinkota, M. R., Kotabe, M., Vrontis, D., & Shams, S. M. (2021). Marketing management. Springer, Cham.

Jallow, D. (2021). A strategic case study on PepsiCo. Available at SSRN 3828353.

Jayawarna, S., & Dissanayake, R. (2019). Strategic planning and organization performance: A review on conceptual and practice perspectives. Archives of Business Research, 7(6), 155-163. Web.

PepsiCo. (2022). Mission and Vision. PepsiCo, Inc. Official Website. Web.

Schlegelmilch, B. B. (2022). Global Marketing Strategy. Springer, Cham.

Sehrawat, S. (2019). PepsiCo’s sustainable strategies, Journal of Management, 6(2), 2019, pp. 81–83. Web.