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ACME GROUPAhtisham Mughal

M.COM (Accounting & Finance)

University of Central Punjab

2014

Submitted to Sir Salman Aqeel

ACKNOWLEDGEMENT

I am thankful to Almighty ALLAH “most beneficent and the most Merciful” Who made me able to complete my given project successfully and for giving me much cooperation and supporting parents who has given me this opportunity to study here. I would like to thank SIR Salman Aqeel for giving me the confidence and opportunity to prove myself.

Growth, Balance, and a World of Fun

EXECUTIVE OVERVIEW

Strategic management process consists of three stages: strategy formulation, strategy implementation and strategy evaluation. The scope of the project is to discuss the strategies adopted and applied by “Pepsi Cola”, Pakistan and also decide which alternative strategy will benefit the firm most.

Moreover the project also discusses the analysis of competition, market growth and trend, opportunity analysis and strategies for creating competitive advantage adopted by ‘Pepsi Cola’ Pakistan.

Purpose of this project is to study the strategies which Pepsi is adopting for its products. Pepsi International is a world renowned brand. It is a very well organized multinational company, which operates almost all over the world. In Pakistan It also has proved itself to be the No.1 soft drink.

Now a days Pepsi is recognized as Pakistanis National drink. Pepsi’s greatest rival is Coca Cola. Coca Cola has an international recognized brand. Coke’s basic strength is its brand name. But Pepsi with its aggressive marketing planning and quick diversification in creating and promoting new ideas and product packaging, is successfully maintaining at No.1 position in Pakistan.

Executive Summary

Pepsi's greatest rival is Coca Cola. Coca Cola has an international recognized brand. Coke’s

basic strength is its brand name. But Pepsi with its aggressive marketing planning and quick

diversification in creating and promoting new ideas and product packaging, is successfully

maintaining is No.1 position in Pakistan.

Purpose of this project is to study the strategies which Pepsi is doing in Pakistan market for its

product Pepsi cola. Pepsi International is a world renowned brand. It is a very well organized

multinational company, which operates almost all over the world. In Pakistan, It also has proved

itself to be the No.1 soft drink.

Introduction to PepsiCo

PepsiCo serves 200 countries and is a world leader in providing food and

beverage products. Its brands consist of Frito-Lay North America, PepsiCo

Beverages North America, PepsiCo International and Quaker Foods North

America. Some of PepsiCo's brands are over 100 years old, however the

company was only founded in 1965 when Pepsi-Cola merged with Frito-

Lay. PepsiCo then attained Tropicana and Gatorade when they merged

with the Quaker Oats Company. The combined retail sales average about

$92 billion. The company is focused on being the premier producer in supplying the world

with convenient foods. They offer a wide variety a food options as well, including healthy

options.

PepsiCo stands out as a company because of its sustainable advantage. It includes widely

known brands, innovative products, and powerful market skills. The company also tries to

benefit the community. To make themselves a sustainable company, they have put a focus on

the environment and benefiting society with their business. Recently, PepsiCo released

information of their plan to drive sustainable water practices and improve rural water in Africa,

China, India, and Brazil. Public Relations people have great opportunities to improve the

company's reputation because of the size and financial stability of the company. PepsiCo is

extremely well known in the world as a leading source of food and beverage products with

immense revenue. The challenge for the Public Relations people is that if something negative

were to effect PepsiCo it would put a damper on all of the products that the company makes.

Therefore, the PR people would have a lot of crisis management in their hands

History of PepsiCo

PepsiCo's Beginnings

The recipe for Pepsi, the soft drink, was first developed in the 1890s by a New Bern, North Carolina pharmacist and industrialist, Caleb Bradham, who named it "Pepsi-Cola" in 1898. As the cola developed in popularity, he created the Pepsi-Cola Company in 1902 and registered a patent for his recipe in 1903. The Pepsi-Cola Company was first incorporated in the state of Delaware in 1919. The company went bankrupt in 1931 and on June 8 of that year the trademark and syrup recipe was bought by Charles Guth who owned a syrup manufacturing business in Baltimore, Maryland. Guth was also the president of Loft, Incorporated, a leading candy manufacturer and used the company's labs and chemists to reformulate the syrup. He further contracted to stock the soda in Loft's large chain of candy shops and restaurants, which

were known for their soda fountains, used Loft resources to promote Pepsi, and moved the soda company to a location close by Loft's own facilities in New York City. In 1935 the shareholders of Loft sued Guth for his 91% stake of PepsiCo in the landmark Guth v. Loft Inc.. Loft won the suit and on May 29, 1941 formally absorbed Pepsi into Loft, which was then rebranded as Pepsi Cola Company that same year. (Loft restaurants and candy stores were spun off at this time.) In the early 1960s the company product line expanded with the creation of Diet Pepsi and purchase of Mountain Dew.

Separately, the Frito Company and H.W. Lay & Company – two American potato and corn chip snack manufacturers – began working together in 1945 with a licensing agreement allowing H.W. Lay to distribute Fritos in the Southeastern United States. The companies merged to become Frito-Lay, Inc. in 1961.

In 1965, the Pepsi-Cola Company merged with Frito-Lay, Inc. to become PepsiCo, Inc., the company it is known as at present. At the time of its foundation, PepsiCo was incorporated in the state of Delaware and headquartered in Manhattan, New York. The company's headquarters were relocated to its still-current location of Purchase, New York in 1970, and in 1986 PepsiCo was reincorporated in the state of North Carolina.

Products

Operations in domestic and foreign country

We are organized into three business units, as follows:

1. PepsiCo Americas Foods (PAF), which includes Frito-Lay North America (FLNA), Quaker Foods North America (QFNA) and all of our Latin American food and snack businesses (LAF), including our Sabritas and Gamesa businesses in Mexico;

2. PepsiCo Americas Beverages (PAB), which includes PepsiCo Beverages North America and all of our Latin American beverage businesses; and

3. PepsiCo International (PI), which includes all PepsiCo businesses in Europe and all PepsiCo businesses in Asia, Middle East and Africa (AMEA).

Our three business units are comprised of six reportable segments (referred to as divisions), as follows:

FLNA, QFNA, LAF, PAB, Europe, and AMEA.

Frito-Lay North America

Either independently or through contract manufacturers, FLNA makes, markets, sells and distributes branded snack foods. These foods include Lay's potato chips, Doritos tortilla chips, Cheetos cheese flavored snacks, Tostitos tortilla chips, branded dips, Fritos corn chips, Ruffles potato chips, Quaker Chewy granola bars and SunChips multigrain snacks. FLNA branded products are sold to independent distributors and retailers. In addition, FLNA's joint venture with Strauss Group makes, markets, sells and distributes Sabra refrigerated dips.

Quaker Foods North America

Either independently or through contract manufacturers, QFNA makes, markets and sells cereals, rice, pasta and other branded products. QFNA's products include Quaker oatmeal, Aunt Jemima mixes and syrups, Cap'n Crunch cereal, Quaker grits, Life cereal, Rice-A-Roni, Pasta Roni and Near East side dishes. These branded products are sold to independent distributors and retailers.

Latin America Foods

Either independently or through contract manufacturers, LAF makes, markets and sells a number of snack food brands including Gamesa, Doritos, Cheetos, Ruffles, Lay's and Sabritas, as well as many Quaker-brand cereals and snacks. These branded products are sold to independent distributors and retailers.

PepsiCo Americas Beverages

Either independently or through contract manufacturers, PAB makes, markets and sells beverage concentrates, fountain syrups and finished goods, under various beverage brands including Pepsi, Mountain Dew, Gatorade, 7UP (outside the U.S.), Tropicana Pure Premium, Sierra Mist, Mirinda, Mug, Propel, Manzanita Sol, Tropicana juice drinks, SoBe Lifewater, Dole, Amp Energy, Paso de los Toros, Naked juice and Izze. PAB also, either independently or through contract manufacturers, makes, markets and sells ready-to-drink tea, coffee and water products through joint ventures with Unilever (under the Lipton brand name) and Starbucks. In addition, PAB licenses the Aquafina water brand to its bottlers and markets this brand. PAB sells concentrate and finished goods for some of these brands to authorized bottlers, and some of these branded finished goods are sold directly by us to independent distributors and retailers. The bottlers sell our brands as finished goods to independent distributors and retailers. PAB's volume reflects sales to its independent distributors and retailers, as well as the sales of beverages bearing our trademarks that bottlers have reported as sold to independent distributors and retailers. Bottler case sales (BCS) and concentrate shipments and equivalents (CSE) are not necessarily equal during any given period due to seasonality, timing of product launches, product mix, bottler inventory practices and other factors. While our revenues are not based on BCS volume, we believe that BCS is a valuable measure as it quantifies the sell-through of our products at the consumer level.

See also "Acquisition of Common Stock of PBG and PAS" below.

Europe

Either independently or through contract manufacturers, Europe makes, markets and sells a number of leading snack foods including Lay's, Walkers, Doritos, Cheetos and Ruffles, as well as many Quaker-brand cereals and snacks, through consolidated businesses as well as through noncontrolled affiliates. Europe also, either independently or through contract manufacturers, makes, markets and sells beverage concentrates, fountain syrups and finished goods under various beverage brands including Pepsi, 7UP and Tropicana. These brands are sold to authorized bottlers, independent distributors and retailers. In certain markets, however, Europe operates its own bottling plants and distribution facilities. In addition, Europe licenses the Aquafina water brand to certain of its authorized bottlers. Europe also, either independently or through contract manufacturers, makes, markets and sells ready-todrink tea products through an international joint venture with Unilever (under the Lipton brand name).

Europe reports two measures of volume. Snacks volume is reported on a system-wide basis, which includes our own sales and the sales by our noncontrolled affiliates of snacks bearing Company-owned or licensed trademarks. Beverage volume reflects Company-owned or authorized bottler sales of beverages bearing Company-owned or licensed trademarks to independent distributors and retailers (see PepsiCo Americas Beverages above).

See also "Acquisition of Common Stock of PBG and PAS" below.

Asia, Middle East & Africa

AMEA makes, markets and sells a number of leading snack food brands including Lay's, Kurkure, Chipsy, Doritos, Smith's, Cheetos, Red Rock Deli and Ruffles, through consolidated businesses as well as through noncontrolled affiliates. Further, either independently or through contract manufacturers, AMEA makes, markets and sells many Quaker-brand cereals and snacks. AMEA also makes, markets and sells beverage concentrates, fountain syrups and finished goods, under various beverage brands including Pepsi, Mirinda, 7UP and Mountain Dew. These brands are sold to authorized bottlers, independent distributors and retailers. However, in certain markets, AMEA operates its own bottling plants and distribution facilities. In addition, AMEA licenses the Aquafina water brand to certain of its authorized bottlers. AMEA also, either independently or through contract manufacturers, makes, markets and sells ready-to-drink tea products through an international joint venture with Unilever (under the Lipton brand name). AMEA reports two measures of volume

Our Distribution Network

Our products are brought to market through DSD, customer warehouse and foodservice and vending distribution networks. The distribution system used depends on customer needs, product characteristics and local trade practices.

Direct-Store-Delivery

We, our bottlers and our distributors operate DSD systems that deliver snacks and beverages directly to retail stores where the products are merchandised by our employees or our bottlers. DSD enables us to merchandise with maximum visibility and appeal. DSD is especially well-suited to products that are restocked often and respond to in-store promotion and merchandising.

Customer Warehouse

Some of our products are delivered from our manufacturing plants and warehouses to customer warehouses and retail stores. These less costly systems generally work best for products that are less fragile and perishable, have lower turnover, and are less likely to be impulse purchases.

Foodservice and Vending

Our foodservice and vending sales force distributes snacks, foods and beverages to third-party foodservice and vending distributors and operators. Our foodservice and vending sales force also distributes certain beverages through our bottlers. This distribution system supplies our products to restaurants, businesses, schools, stadiums and similar locations.

Challenges faced as an MNE

Demand for our products may be adversely affected by changes in consumer preferences and tastes or if we are unable to innovate or market our products effectively.

Any damage to our reputation could have an adverse effect on our business, financial condition and results of operations.

Our financial performance could be adversely affected if we are unable to grow our business in developing and emerging markets or as a result of unstable political conditions, civil unrest or other developments and risks in the markets where we operate.

Trade consolidation or the loss of any key customer could adversely affect our financial performance.

Changes in the legal and regulatory environment could limit our business activities, increase our operating costs, reduce demand for our products or result in litigation.

If we are not able to build and sustain proper information technology infrastructure, successfully implement our ongoing business transformation initiative or outsource certain functions effectively, our business could suffer.

Unfavorable economic conditions in the countries in which we operate may have an adverse impact on our business results or financial condition.

Fluctuations in foreign exchange rates may have an adverse impact on our business results or financial condition.

Our financial performance could suffer if we are unable to compete effectively. Our operating results may be adversely affected by increased costs, disruption of supply

or shortages of raw materials and other supplies. Disruption of our supply chain could have an adverse impact on our business, financial

condition and results of operations. Climate change, or legal, regulatory or market measures to address climate change, may

negatively affect our business and operations. If we are unable to hire or retain key employees or a highly skilled and diverse

workforce, it could have a negative impact on our business. A portion of our workforce belongs to unions. Failure to successfully renew collective

bargaining agreements, or strikes or work stoppages could cause our business to suffer. Failure to successfully complete or integrate acquisitions and joint ventures into our

existing operations could have an adverse impact on our business, financial condition and results of operations.

Forward-Looking and Cautionary Statements Market Risks Commodity Prices Foreign Exchange Interest Rates Risk Management Framework

PepsiCo and World cup

Pepsi "isn’t going to let Coca-Cola Co. rule" football's World Cup in Brazil, according to Tariq Panja of BLOOMBERG. Coke’s relationship with FIFA is in its fifth decade, yet Pepsi "is planning its biggest-ever" football campaign, featuring Argentine Lionel Messi among its key performers. Pepsi Global CMO Kristin Patrick said, “It’s the first time we’ve rolled out a global football campaign to this magnitude.

Launched on the back of Pepsi SA’s “Play in our World” campaign, the activation took place in stores specifically chosen by Pepsi. Each store activation comprised of 4 hours of live promotion, including sampling, dance off’s and a purpose built ‘kick at goal’ competition with exciting prizes and giveaways for the lucky winners.Each Pepsi activation rig included stage trailers, gazebo’s, plasma TV’s and a multiple sample stations – all of which created a very impressive, eye catching brand presence with the key objective being to invite potential participants and Pepsi customers to come “Play in our World”’ says Winstanley, “Pepsi were extremely happy with the results shown from this exciting campaign”“The activations not only generated great brand awareness for Pepsi but also allowed us to drive sales in a very competitive market segment. An excellent platform for future promotions and activations in the South African market” says Merlin Norman, Marketing manager of Pepsi South Africa.

Corporate Culture

We understand that the success of our business is not just thanks to our products, but our people who are our most important asset. By delivering outstanding business performance, Suntory PepsiCo Vietnam has become a great place to work.

This means providing development opportunities to employees and a well-balanced work life. Alongside being a diverse place to work, Suntory PepsiCo Vietnam also offers generous compensation and benefits packages and excellent working conditions. We work hard to develop the competency of the management teams who in turn, continuously improve the working and business environment. We have established systems to ensure continual career development for our employees and the reward and recognition program is part of our management culture.

Suntory PepsiCo Vietnam empowers all our employees to deliver sustained growth. We promote a good work-life balance (WLB) to help our employees not only fulfill their responsibilities in the company but also spend time with their families. Therefore, they get the support from their family to continuously contribute to the company's business development.

Suntory PepsiCo Vietnam nurtures a work ethic in which business is conducted in line with Vietnamese traditional cultural, moral and social values. Other than our competitive compensation and benefits, this is one of the key factors responsible for attracting talent people.

Besides that, our Values and Code of Conduct play an important role in building a strong corporate culture:

ValuesOur commitment is to deliver sustained growth through empowered people acting with responsibility and building trust. We must always strive to:

Care for our customers, consumers and the world we live in Sell only products we can be proud of Speak with trust and candor Balance short term and long term Win with diversity and inclusion Respect others and succeed together

FACTS ABOUT THE COMPANY

 1. Pepsi is a USA based public company whose stocks are available in New York.2. Mountain Dew, acquired by Pepsi-Cola in 1964, switches its advertising and package graphics room hillbillies to action-oriented scenes.3. The third Mountain Dew slogan appeared in 1973 "Put A Little Yahoo in Your Life."4. In 1977, PepsiCo acquires Pizza Hut; Inc. Pizza Hut was founded in 1958 by Dan and Frank Carney.5. Taco Bell is was acquired by Pepsi. Taco Bell was established in the mid 1960s by Glen Bell.6. In 1968, PepsiCo is listed on the Tokyo stock exchange. Pepsi-Cola acquires Mug Root Beer. PepsiCo purchases Kentucky Fried Chicken (KFC).7. In 1989, PepsiCo acquires Walkers Crisps and Smith Crisps, two of the United Kingdom's leading snack food companies. PepsiCo enters the top 25 of the Fortune 500 ranking.8. In 1988, "Chase", a four-part Pepsi ad featuring Michael Jackson in his first-ever episodic commercial, airs during the Grammy Awards and becomes the most-watched commercial in advertising history.9. In 1990, PepsiCo acquired controlling interest in Gamesa, Mexico's largest cookie company.10. In 1991, Pepsi-Cola forms a joint venture with Unilever to develop and market tea-based drinks.11, In 1994, Pepsi-Cola was the first major soft drink maker to begin producing and distributing its product in Vietnam. PepsiCo and Starbucks form the North American Coffee Partnership to jointly develop ready-to-drink coffee beverages.12. In 1995, Frito-Lay announces plans to buy the 104-year-old snack Cracker Jack. Aquafina bottled water is rolled-out nationally. PepsiCo spins off Kentucky Fried Chicken, Pizza Hut and

Taco Bell as Tricon Global Restaurants, Inc. PepsiCo will introduce Lay's brand potato chips in 20 markets throughout the world.13, In 1998, PepsiCo acquires Tropicana Products from Seagram Company Ltd., the biggest acquisition ever undertaken by PepsiCo. The Pepsi-Cola Company celebrates its 100th anniversary.14, In 2001, PepsiCo merges with The Quaker Oats Company.15, In 2006, Pepsi acquires IZZE Beverage Company. PepsiCo completes the acquisition of Stacy's Pita Chip Co.16, In 2007, PepsiCo and Pepsi Americas jointly acquire Sandora, a leading juice company in Ukraine.17, In 2008, PepsiCo announces plans to invest US $1 billion in China over the next four years as part of the strategy to expand in emerging markets and broaden the portfolio of locally relevant products.18. In 2009, PepsiCo and Calbee Foods Company announce a strategic alliance to make and sell a wide range of food products in Japan.19. In 2011, PepsiCo and Tingyi Holding, one of the major food and beverage companies in China, announce an agreement to form a strategic alliance in China. PepsiCo acquires Mabel, a leading producer of cookies, crackers and snacks in Brazil.20, In 2013, Müller Quaker Dairy, a joint venture between PepsiCo and The Müller Group, open a new state-of-the-art yogurt manufacturing facility in Batavia, New York.

A corporate vision can focus, direct, motivate, unify, and even excite a business into superior performance.

The job of a strategist is to identify a clear vision.JOHN KEANE

VISI N “PepsiCo’s responsibility is to continually improve all aspects of the world in which we operate -

environment, social, economic - creating a better tomorrow than today.”

Pepsi cola international vision is put into action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholder value by making

PepsiCo a truly sustainable company.

A business is not defined by its name, statutes, or Articlesof incorporation. It is defined by the Business mission.

Only a clear mission and purpose of the organization makes Possible clear and realistic

business objectives.PETER DRUCKER

MISSI N STATEMENTOur mission is to be the world’s premier consumer products company focused on convenient foods and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity.

REVIEW OF MISSION STATEMENTTo be a result oriented and profitable Company by consistently improving market share, quality, diversity, availability, presentation, reliability and customer acceptance.To ensure cost consciousness in decision making and operations without compromising the commitment to quality.To set up highly ethical business standards and be a good corporate citizen, contributing towards the development of the national economy and assisting charitable causes.To adopt appropriate safety rules and environment friendly policies.

The idea is to concentrate our strength against our competitor’s relative weakness.

BRUCE HENDERSON

SWOT ANALYSIS OF PEPSI

STRENGHTS:Strong Multinational (Brand Equity)Strong & Vast Distribution ChannelsLack Of Capital ConstraintsRecord Market ShareStrong Brand PortfolioAggressiveness In The Market (Market Leader)Brand Promotion & Sponsorship

WEAKNESS: Targeting Only Young CustomersPolitical FranchisesCentralized Decision MakingDecline In TasteMotivational FactorNot All Products Bear The Company Name

OPPORTUNITY:PepsiCo New Products Can Easily Penetrate In The Market.Noncarbonated Drinks Are The Fastest-Growing IndustryDemand Of Pepsi Is More Than Of CompetitorChanging Social Trends (Fast Foods)Internet Promotion And Ordering ProcessesMay Tie Up or Liaison With Major Showrooms, Computer Centers &Restaurant

If everyone is thinking alike, thensomebody isn’t thinking.

GEORGE PATTON

THREATS:Non-Carbonated Substitutes (The Mango Season)Beverage Industry Is MatureFake Products (Imitators)Competitor’s SchemesStrong Competition With Coca-Cola Company

Good strategy and good implementation are the most trust worthy proof of good

management.JOEL ROSS

External Factor Evaluation (EFE) Matrix

Scoring Method: List The Key External Factor Assign Weight To Each (0 To 1.0)

Weight In Response To Importance Of A Factor For A Particular Industry Sum Of All Weights = 1.0 Assign 1-4 Rating To Each Factor

Firm’s Current Strategies Response To The Factor: How Well Firms Response To These Factors (Effectiveness Of The Firm).

Poor Response 1 Average Response 2 Above Average Response 3 Superior Response 4

Multiply Each Factor’s Weight By Its Rating Produces A Weighted Score

Sum The Weighted Scores For Each Determines The Total Weighted Score For The Organization

Result: Above Average Response 2.77 (Aggressive)

Internal Factor Evaluation (IFE) Matrix

Scoring Method: List Key Internal Factors (Strengths & Weaknesses) Assign Weight To Each (0 To 1.0)

Weight In Response To Importance Of A Factor For A Particular Industry Sum Of All Weights = 1.0 Assign 1-4 Rating To Each Factor

Firm’s Current Strategies Response To The Factor: How Well Firms Response To These Factors (Effectiveness Of The Firm).

Major Weakness 1 Minor Weakness 2 Minor Strength 3 Major Strength 4

Multiply Each Factor’s Weight By Its Rating Produces A Weighted Score

Sum The Weighted Scores For Each Determines The Total Weighted Score For The Organization

Result:Score ≥ 2.5 AggressiveScore ≤ 2.5 Defensive

2.79 (Aggressive)

COMPETITIVE PROFILE MATRIX (CPM)

Scoring Method: List Key Internal And External Critical Success Factors Assign Weight To Each (0 To 1.0)

Weight In Response To Importance Of A Factor For A Particular Industry Sum Of All Weights = 1.0 Assign 1-4 Rating To Each Factor

Firm’s Current Strategies Response To The Factor: How Well Firms Response To These Factors (Effectiveness Of The Firms).

Major Weakness 1 Minor Weakness 2 Minor Strength 3 Major Strength 4

Multiply Each Factor’s Weight By Its Rating Produces A Weighted Score

Sum The Weighted Scores For Each Determines The Total Weighted Score For The Organization

Result: PepsiCo has More Aggressive Policy as compare to other competitors

SWOT Matrix

Strategic management is not a box of tricks or a Bundle of techniques. It is analytical thinking and

Commitment of resources to action. But quantification alone is not

planning. Some of the Most important issues

in strategic management Cannot be quantified

at all. PETER DRUCKER

The Strategic Position And Action Evaluation (SPACE) Matrix

Steps for the preparation of SPACE Matrix: 1. Select a set of variables to relating to financial strength, competitive advantage, environmental

Stability, and industry strength. 2. Assign a numerical value ranging from +1 (worst) to +6 (best) to each of the variables that make

Up the financial strength and industry strength dimensions. Assign a numerical value ranging from - 1 (best) to -6 (worst) to each of the variables that make up the environmental stability and Competitive advantage dimensions.

3. Compute an average score and dividing by the number of variables 4. Plot the average scores in the space matrix. 5. Add the two scores on the x-axis and plot the resultant point on x. Add the two scores on the y-

axis And plot the resultant point on y. Plot the intersection of the new xy point.

6. Draw a directional vector from the origin of the space matrix through the new intersection point. This vector reveals the type of strategies recommended for the organization: aggressive, Competitive, defensive, or conservative.

Competitive Advantage:-Brand Recognition -3 Mean= -2.75Large Market Share -2Wide Distribution Channel -2Customer Loyalty -4 Financial Strength:-Inventory Turnover +5 Mean= +4Return On Asset +4Net Income +3Industrial Strength:-High Industry Growth Rate +5 Mean = +3.75

Profit Potential +3Financial Stability +4 Resource Utilization +3Environmental Stability:-Economic Stability -2 Mean = -2.33Barrier To Entry -2Competitive Pressure -3

CA + IS = +1.0 FS+ES = +1.67

AggressiveBackward, Forward, Horizontal IntegrationMarket PenetrationProduct DevelopmentDiversification (Related or Unrelated)

BCG Matrix

Division Revenue % Revenue Profit Profit % Market ShareMarket Growth

Frito-Lay North America $ 13,224.00 31% $ 3,258.00 38% 1 5.42%

Quaker Foods North America $ 1,884.00 4% $ 628.00 7% 1 -0.95%

Latin America Foods $ 5,703.00 13% $ 904.00 10% 1 -3.26%

PepsiCo Americas Beverages $ 10,116.00 23% $ 2,172.00 25% 0.8 -7.51%

Europe $ 6,727.00 16% $ 932.00 11% 0.4 -2.38%

Asia, Middle East & Africa $ 5,578.00 13% $ 716.00 8% 0.3 8.97%

Total $ 43,232.00 100% $ 8,610.00 100%

Stars

Frito-Lay North America

CashcowsQuaker Foods North AmericaLatin America FoodsPepsiCo Americas Beverages

Question MarkAsia, Middle East & Africa

DogsEurope

Without a strategy the organization is like a ship without a rudder, going around in

circles. It’s like a tramp that hasno place to go to.

JOEL ROSS AND MICHAEL KAMI

The Internal-External (IE) Matrix

This is also an important matrix of matching stage of strategy formulation. It relate to internal (IFE) and external factor evaluation (EFE). The findings form internal and external position and weighted score plot on it. It contains nine cells. Its characteristics is a s follow:

Positions an organization’s various divisions in a nine-cell display. Similar to BCG Matrix except the IE Matrix

Requires more information about the divisions Strategic implications of each matrix are different

Based on two key dimensions The IFE total weighted scores on the x-axis The EFE total weighted scores on the y-axis

Divided into three major regions Grow and build – Cells I, II, or IV Hold and maintain – Cells III, V, or VII Harvest or divest – Cells VI, VIII, or IX

Steps for the development of IE matrix:

Based on two key dimensions IFE and EFE. Plot IFE total weighted scores on the x-axis and the EFE total weighted scores on the y axis On the x-axis of the IE Matrix, an IFE total weighted score of 1.0 to 1.99 represents a weak internal position; a score of 2.0 to 2.99 is considered average; and a score of 3.0 to 4.0 is strong. On the y-axis, an EFE total weighted score of 1.0 to 1.99 is considered low; a score of 2.0 to 2.99 is medium; and a score of 3.0 to 4.0 is high. IE Matrix divided into three major regions.

Grow and build – Cells I, II, or IV Hold and maintain – Cells III, V, or VII Harvest or divest – Cells VI, VIII, or IX

Whether it’s broke or not, fix it__ make it better. Not just products, but the whole

company if necessary.BILL SAPORITO

4Strong

3Average

2Weak

1

High

3

I Invest

IIInvest

III Hold

The EFE Total Weighted Score

Medium

2

IV

Invest

V

Hold

VI

Harvest

Low

1

VII

Hold

VIII

Harvest

IX

Divest

IFE score 2.79

EFE score 2.77

Hold And Maintain:

Market PenetrationProduct Development

The IFE Total Weighted Score

Life is full of lousy options.GENERAL P. X. KELLEY

Grand Strategy Matrix

This is also an important matrix of strategy formulation frame work. Grand strategy matrix it is popular tool for formulating alternative strategies. In this matrix all organization divides into four quadrants. Any organization should be placed in any one of four quadrants. Appropriate strategies for an organization to consider are listed in sequential order of attractiveness in each quadrant of the matrix. It is based two major dimensions

1) Market growth 2) Competitive position

Quadrant 1As above quadrant diagram Pepsi fall in Quadrant I indicate that the firm is in rapid market growth and strong competitive position. PepsiCo can continue concentrating on their current business. However, PepsiCo with excess resources may consider vertical integration .PepsiCo must focus on current market and appropriate to follow market penetration, market development and products development are appropriate strategies.

Market DevelopmentMarket PenetrationProduct Development

Backward, Forward, Horizontal IntegrationRelated/Concentric Diversification

Competing in the market place is like a war. You have

injuries and casualties, and the best strategy wins.JOHN COLLINS

The quantitative strategic planning matrix (QSPM)

The last stage of strategy formulation is decision stage. In this stage it is decided that which way is most Appropriate or which alternative strategy should be select. This stage contains QSPM that is only tool For objective evaluation of alternative strategies. A quantitative method used to collect data and prepare A matrix for strategic planning. It is based on identified internal and external crucial success factors. That is only technique designed to determine the relative attractiveness of feasible alternative action. This technique objectively indicates which alternative strategies are best.The QSPM uses

Input from Stage 1Analyses and matching results from Stage 2Analyses to decide objectively among alternative strategies.

That is, the EFE Matrix, IFE Matrix, and Competitive Profile Matrix that make up Stage 1, coupled with the TOWS Matrix, SPACE Analysis, BCG Matrix, IE Matrix, and Grand Strategy Matrix that make up Stage 2, provide the needed information for setting up the QSPM (Stage 3).

Steps in preparation of QSPM:List of the firm's key external opportunities/threats and internal strengths/weaknesses in the left column of the QSPM. Assign weights to each key external and internal factor Examine the Stage 2 (matching) matrices and identify alternative strategies that the organization should consider implementing Determine the Attractiveness Scores (AS) Compute the Total Attractiveness Scores Compute the Sum Total Attractiveness Score

Limitations Requires intuitive judgments and educated assumptions Only as good as the prerequisite inputs Only strategies within a given set are evaluated relative to each other

Advantages

Sets of strategies considered simultaneously or sequentially Integration of pertinent external and internal factors in the decision making process

QSPM Matrix

Results:

From the above matrix it is concluded that PepsiCo. Should adopt the 2nd strategy that is PepsiCo. May Tie Up Or Liaison With Major Showrooms, & Restaurant and different clubs

Recommendations & Conclusion

From all the above discussion it is concluded that PepsiCo. Should go for market penetration that is to increase its market share through tie up with different restaurants & clubs as well as continue or go with its already adopted strategies such as increase its share through huge advertisement and through sponsoring different events such as PepsiCo. Continuously sponsoring cricket matches at national and international level. From above the score of both strategies are very close to each other so PepsiCo. May also take both of the strategies as well.

Competitive Analysis: Porter’s Five-Forces Model

1. Rivalry among competing firmsHigh-They face very strong competition from Coca-Cola in the beverage market and face strong competition in their snack division from Coca-Cola, Kellogg, Kraft and General Mills (David, 2011). This competition is fought out through advertising, through store shelve space and through various sponsorship opportunities.

2. Potential Entry of new competitorsHigh-PepsiCo faces a high likelihood of potential new competitors. These new competitors can be from new products from their existing competitors such as Coca-Cola competing with PepsiCo’s existing brands or new companies developing new products such as Starbucks cold coffee drinks. As PepsiCo expands into other countries they will face those countries regional food manufactures who already have had developed a market presence there.

3. Potential development of substitute productsHigh-Foods can be substitute most readily for other foods of equal quality costing less, lower quality costing less or a different product altogether. Not only can one food be substituted for another but can be purchased at a different locations. In addition, consumers can simply buy a store brand, have tap water or go without the any substitute altogether.

4. Bargaining power of suppliersLow-The basic food products PepsiCo needs to develop its products from originate at farms, these farms sell to intermediaries who then sell it to food processing facilities. It is these intermediaries, food processing companies and wholesalers who have the most bargaining power in relation to suppliers. However, should some of these farms experience internal or external environmental issues the result could hamper PepsiCo’s supply chain.5. Bargaining power of consumersHigh-Consumers have a high level of bargaining power in relation to food manufactures such as PepsiCo. Shoppers can chose from a variety snacks and beverages from a wide variety of stores from within just a few miles of their home. Consumers can chose what types of food stuffs to buy in a store and they can shop at multiple stores to complete their entire purchase. In addition, shoppers can substitute one food for another, chose products based on price, quality, sale, marketing, its packaging, freshness, shelf life and many other characteristics. Consumers can buy in bulk or they can impulse buy, each determining the profit of the store supplying the snack or beverage and the return on the product for PepsiCo.

Financial Statement Analysis

References

1. http://financials.morningstar.com/ratios/r.html?t=PEP 2. http://en.wikipedia.org/wiki/Porter_five_forces_analysis 3. http://www.docstoc.com/docs/9533938/Pepsi---PowerPoint 4. http://www.strategicmanagementinsight.com/swot-analyses/pepsico-swot-analysis.html 5. http://www.pepsico.com/ 6. http://en.wikipedia.org/wiki/PepsiCo