Discussion
The organizations consider the strategic direction as the roadmap of the organization in which the objectives of the organization would be accomplished from time to time. The strategic management of the organization would also include the strategic vision which has evolved over the past few years (Peppard and Ward 2016). The strategic direction of the company is needed for achieving higher revenue generation of the company. The strategic vision should include the 360-degree complete vision of the company so that there is gain of the maximum value. The organization selected for the purpose of study is PepsiCo Inc., which is a multinational food, beverage and snack corporation headquartered in America.
The task 1 would focus on the strategic direction of the company followed in the past few years while the task 2 would focus on the in –depth analysis of the industry in which it operates. The task 3 would focus on the mission as well as vision statements while the task 4 describes the probable strategies of the company. The last task would evaluate the different resource implications of the recommendations.
1.PepsiCo is considered as the second largest player in the global beverage and food industry, which offers a wide array of services. The generic business strategy of the company focuses on the diverse range of varied products (Zhou and Wan 2017). The generic competitive strategy of the company is based on the competition faced by the company. Pepsi has formulated enormous growth strategies by responding to the global beverage and food market industry.
The company has strived to achieve growth strategies with the help of mergers as well as acquisitions. The mergers as well as acquisitions of gaining the expertise as well as competencies have led to reduced costs of overheads as well as achieving the organic growth. The company has included important acquisitions such as dairy and juice businesses namely Lucky Snacks/Mabel cookies in Brazil, Wimm-Bill-Dann in Russia, Dilexis cookies in Russia and others (Xie and Lee 2015). There are 22 brands of the company at present and the individual brands have generated increased revenue sales. The company has also engaged in forming strategic alliances in a global domain. The company also focuses on the emerging markets and this has been supported by the phenomenal growth of the company in the sale of snacks in Pakistan and China (in the year 2015). It has also witnessed phenomenal growth in the e-commerce business in the year 2015. Another strategic direction of the company has focused on the development of a rich organizational culture. PepsiCo CEO is believed to be an unconventional leader who is empathetic about her employees.
The current strategic direction of PepsiCo revolves around the inorganic growth, which has gone through its share of challenges as well as opportunities. It has aggressive returns and it always likes to reward its shareholders. The company decision making activity is decentralized and it has faced strong competition from the existing markets (Borner Brunetti and Weder 2016). The company continues to reward the shareholders and is committed to cost reduction and efficiency. Indra Nooyi of Pepsi has paid lot of attention to the enhancement of the user experience and has made strategies accordingly. All the minute details of the products are being taken care of starting from the taste of the brand to the packaging and the function of the brand.
PESTEL Analysis
The strategic thinking of the company has evolved over the last 5 years and this has been done by taking into consideration the current market conditions of the company. The market demands and customer preferences have been taken into consideration for undertaking the strategic directions of the firm.
2.PepsiCo operates in the Beverages Food processing industry, which is a global industry that has millions of customers all around the world. There are different subcategories in this industry such as carbonated water.
The company is operating in the global beverages food processing industry. The PESTEL analysis of the industry is done as follows-
The global beverages industry is affected by the political factors. The government stability in USA as well as all over the world is matter of concern for the company. The beverage industry is characterized by the effects of bureaucracy, corruption, trade unions, market lobbying and others. There has been enhanced political stability in different economies, which can be used as an opportunity for expanding their business and others (Reboredo and Rivera-Castro 2014). There has been improved inter-governmental cooperation in different economies of the world, which can be used as a source of opportunity for the company. United States is a politically stable economy where there is inter-government coordination meant for global expansion.
The performance of PepsiCo is closely linked with the economic factors such as unemployment and inflation. There have been significant rises in the prices of the raw materials in the recent years, which has led to an increase in the prices of the raw materials. There have been significant changes in the current as well as prospective customers of Pepsi that affects the overall functioning of the business. In the recent years, there has been strong value of USD which has directly affected the profit generation motives of the company (Peters et al. 2016). There has been decline of 3 percent in the total sales of the company, which is influenced by the strong value of dollar.
The global customers have shifted to a healthier lifestyle in which they are opting for healthy foods (Nelson 2017). They do not prefer unhealthy foods including the junk foods and carbonated soft drinks. The busy lifestyles of people have also forced people to depend more on the soft drinks. The more discriminatory attitudes regarding the product quality is an opportunity of the company (Jeston and Nelis 2014). However, an increasing number of the health-conscious consumers are considered as a threat to the company. This can also be taken as an opportunity.
The technological factors have an effect on the smooth functioning of the firm. The moderate R& D investment in the food as well as beverage sector can be considered as an opportunity for the company. The increasing automation in the business can be viewed as the opportunity for increasing the process efficiencies (Hemphill and Banerjee 2015). The improvement of the knowledge management system is also essential for enhancing business options.
The environmental process such as waste disposal, complex expectations and climate change measures are important considerations for smooth functioning of the business.
SWOT Analysis
The regulation of GMO ingredients, health and different food safety regulations are important for functioning of Pepsi (Hemphill and Banerjee 2015). The moderate rate of regulatory change is an opportunity for Pepsi. The different market legal conditions have different effects on the business functioning of the company.
The SWOT analysis of the company provides interesting insights for the beverage processing industry.
There is a large and growing market of has the beverage industry and it has huge market in the global place. There been an increasing trend of the global consumer need and this has been fostered by greater flavors as well as better packaging (Pomeranz Munsell and Harris 2013). The industry expects the non-alcoholic beverage sector would be gaining the market share. This industry does require the support of the talented as well as skilled team.
There is often negative claim in the beverage industry that the soft drinks are not optimal for consuming due to their improper constituents (Mishra 2015). There is narrow range of materials used for the manufacturing purpose, which has often sparked protests.
There are several opportunities in the beverage processing sector such as replacement of the alcoholic drinks, replacement of tea and innovative packaging materials. There is an increase in the health-conscious customers, which should be tapped well by the company.
There are certain heath issues of the customers, which have been increasingly reported by the consumers. The recent updates on the worms in soft drink have started worldwide protests (Eshleman and Guo 2014). There is issue with the environmental concerns, which are increasingly affected by the manufacturing of the soft drink beverages.
The global business success of Pepsi can be attributed to the efficient formulation of business strategies. The Porter’s five forces would help in the effective delivery of the business strategies that would help in the understanding of the different levels of competition within the beverage processing industry (Markman Gianiodis and Panagopoulos 2016).
The bargaining power of Pepsi suppliers includes the different level of negotiation powers of the suppliers who supply different raw products of Pepsi such as corn, juice concentrates, orange juice, pineapple, apple juices and others. The company gets their raw materials from a wide variety of suppliers in which individual bargaining power of suppliers is low so that there are unique products that are supplied (Scrinis 2016). There is high importance level to each of the suppliers so that there are more important factors.
There is a high level of competitive rivalry between Pepsi and its close competitors. The beverage, food and the snack industry is highly competitive and there are major brands in the market such as Coca Cola, Monster Beverage Corporation and others (Heimeshoff and Klein 2014). Coca Cola enjoys a leadership position in the market with a market share of around 48.7 percent.
There are considerable substitute products of PepsiCo in the market. There are substitute products of Pepsi such as coffee, tea, health drinks, and chocolates flavored drinks (Kranz 2016). The customers can make healthier choices and can start opting for these substitutes instead. There are no associated costs of the consumers who would like to shift from one product to another.
The bargaining power of the buyers is low and they do not give major pressure on the business process of Pepsi. The market of Pepsi is not limited to specific areas and they spread to the global marketplace (Boone and Kurtz 2013). This makes the bargaining power of the customers weak as the company has a large number of global consumers.
The threat of the new entrants is moderate for Pepsi. This is because of the fact that Pepsi cannot be created overnight and there is involvement of a large number of investment as well as efforts to build a business empire like Pepsi (Kranz 2016). The new entrants would be having a difficult time in creating the brand image as well as gain customer loyalty. The number of direct competitors of Pepsi is limited and Coca Cola is considered as the sole competitor.
Pepsi has always ensured that they make their business robust enough so that it can withstand the different kinds of risks as well as opportunities in the long run. The “Forum for the Future” identified the business strategies of the company so that there is a set of global practices are developed so they can meet the changing market expectations (Draper 2013). This project identified the major changes in the strategic directions of the company and alters the performance so that the change in market needs can be entertained (Cummings and Worley 2014). Pepsi intended to make more resilient as well as profitable so that the company objectives can be achieved. The company has formulated innovative technologies so that it would be helpful in the achievement of the company’s mission. The end result of this strategy was to gain suitable new strategies for the sustainability of environment, business and health wellness.
3.The mission and vision statements of PepsiCo are aligned to the changing demands of the market. Pepsi is considered as the second biggest beverage and food firm of the world and hence it makes sure that the business is aligned with the vision of the company (Pepsico.com. 2017). The market condition focuses on the diversification of the company as per the product mix and markets are considered. The corporate mission is responsible for identification of the identification of the actions that would help the organization to achieve the vision (Pepsico.com. 2017).
The vision statement of the company focuses on the delivery of the top financial performance by the integration of the sustainability policy in the business strategy (Pepsico.com 2017). This would leave a positive imprint on the society and the environment. This vision statement is based on the fact that the performance should be customized towards the achieving specific business purpose. Some of the highlighted points of the vision statement of PepsiCo revolves around- sustainability, top financial performance and the corporate social responsibility (Pepsico.com 2017). The market demands that there is an increase in the corporate as well as brand image of the company, which can be brought in through the use of sustainability component in the vision statement. The corporate social responsibility is important for the overall organizational development (Pepsico.com 2017). This factor is also responsible for amicable relationships with the stakeholders.
The mission statement of the company concentrates on providing the customers with affordable, delicious and convenient foods as well as beverages (Pepsico.com 2017). These food offerings would be providing a wide variety of wholesome breakfasts to the evening treats (Pepsico.com 2017). The company aims to provide foods as well as snacks for every occasion and every part of the day (Pepsico.com 2017). The mission statement of the company is concerned with the commitment of investment on the people and communities in which they are operating in order to receive optimal growth (Pepsico.com 2017). The primary constituents in the mission statement of PepsiCo concentrate on the- consumers all over the world, delicious healthy/ fun foods, convenience and affordability (Pepsico.com 2017). The mission statement is aligned to the consumers of the company and the product characteristics. The mission statement shows that the company targets the customers all over the world and products of Pepsi appeal to a global audience (Pepsico.com 2017). The company’s products appeal to a wide range of consumers that are located in different parts of the world. The mission statement also identifies the different kinds of products offered by the company. The affordability criteria of the mission statement of Pepsi emphasizes on the fact that the company pays utmost importance to the pricing mechanisms by providing affordable products to the customers, which they can buy easily.
The strategic capabilities of the company include both tangible resources as well as intangible resources. The tangible resources of the company include the financial resources which are needed to support the aggressive marketing campaigns and the different levels of social activities (Pepsico.com 2017). The organizational structure of the company was revived recently so that there can be different levels of operational ties with the various civic authorities. The company has state of the art manufacturing units in different parts of the world. Apart from these, they also have strategic capabilities in bottling units and manufacturing plants in various parts of the world. The technological resources of the company are a result of the highly efficient research and development teams that aim to increase the operational efficiency. The intangible resources are considered as the various human resources, innovation resources and the different reputational resources (Pepsico.com 2017).
The different capabilities of the firm are varied and are utilized by the company to the fullest extent. The company has robust technology or manufacturing platforms which includes science for food, beverages, nutrition and the different levels of packaging of the food products (Pepsico.com 2017). The divisions of Pepsi use the best practice knowledge platforms and efficient digital intervention. There is cross fertilization of the different divisions that helps in the creation of the new product. It has high level of consumer loyalty and consumer good will that is an end product of the highly focused portfolio. The brand has more than 15 sub brands that generate more than $1 billion in the annual sales. Pepsi is also successful in entering into successful joint ventures with other reputed names such as Lipton and Starbucks (Pepsico.com 2017). It also has got global footprint in more than 200 countries that is inclusive of the bottling plants. It has its presence in not only in North America, but also in UK, Mexico and Middle East. In India, the company has acquired more than 45 % of the market share in the carbonated soft drinks industry.
4.Pepsi is a global brand which has its presence all over the world. However, it should also adopt suitable strategies to protect its core business formula. The premises of the business strategy should be entertained by the fulfilling a number of business premises.
- More importance should be given to diversificationaspects of the business where it would develop more value-added products apart from the carbonated soft drinks. There should be more diversification of the business units so that there is nurturing of the success of the business units. The strategy should be well constructed so that they would support the competitive advantage. However, the diversification process should be planned with more budget allocation so that the diversification process can be implemented well.
- PepsiCo should take wise decisions regarding the mergers and acquisitionsof the company. It is important for continuing the good business prospects in future. There can be mergers as well as acquisitions in snack companies, bottling and beverage divisions so that the company can generate good business relations. The brand would not have to depend on other brands, which would increase their autonomy. There would be large number of money which has been spent on the advertising campaigns. The mergers and acquisitions would help in the better utilization of funds.
- PepsiCo should engage in better coordination as well as dependence on the Wal-Mart. There is great possibility than Walmart can demand greater prices, which would lead to reduced profit margins of the company.
- PepsiCo should make wise pricing decisions so that they match with the prices of the competitors. There should be better positioning of the company in the minds of the consumers.
- Pepsi should strive to enhance the brand image of the company, which has been hampered by several wrong incidents in the past. The brand should try to regain the confidence of the people so that the customers try to trust them once again.
- Pepsi should try to find more growth opportunities for the company and try to identify potential market segments for pushing the products of the brand. This would be beneficial for the company in not only promoting their own soft drink beverage product but also promote their food divisions. It should take into account the changing customer preferences and launch customized products accordingly. It should also try to find out the emerging markets that may give sufficient sales opportunities for the company.
5.Pepsi should take care of the resource implications of the above recommendations and plan its resources accordingly. The company should try to focus more on the diversification. This would require talented manpower who would advise the company to choose new business ventures. There should be adequate budget allocations that would satisfy the launch of the new products in the market. The company should take into account the various strategies of the competitors so that they can get wise ideas from them. There is also the need of testing the new products before they are launched in the market.
The mergers and acquisitions job would require financial analysts who would help the company to gain its fullest potential. They would advise the companies regarding the probable lucrative options in entering into mergers. The human resource personnel would also play a major role in understanding the market dynamics and design strategies accordingly. It is also important to hire people who can do market analytics in a detailed manner.
The public relations skill of Pepsi should be up to the mark so that the market so that the possible business relations can be measured well. The business acumen of Walmart should be measured against the probable gains of the company, that would be profitable for the company in the long run.
An efficient marketing team is needed who would help in the enhancing of the brand image of the company by devising extensive promotional campaigns. A moderate amount of budget would be necessary for implementing the advertisement campaigns which would help in the achievement of the organizational goals. It can also use top celebrities to feature in the advertisement that would increase the brand value of the company. It would also help in reducing the negative image of the brand.
There is requirement of the business development executives of the firm who would try to find out new business opportunities for the firm. This would be possible through the use of internal stakeholders as well as external ones.
Conclusion
The strategic management of a company is one of the most important functions for business success. Pepsi has good strategic management and this report has evaluated the more in-depth versions of the management. The industry in which the company operates has been evaluated well along with suitable tools such as PESTEL analysis and Porter’s five forces. The level of competitive advantage has also been formulated along with detailed analysis. The alignment of the company’s mission/vision with the strategic capabilities of the firm are defined. A complete set of recommendations has been provided which satisfies the strategic management capabilities of the firm. The last section of the report discusses about the resource implications for the different strategies recommended.
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