Emerging Global Markets
Internal Environment
Millions of people fall every year after consuming unsafe food. The globalization of food production trade has significantly complicated issues related to food safety. High quality and safe foods get produced in the right quality and quantity when all the parties involved in the production chain, starting from the farmer to the producer and the consumer, observe safe food handling. Climate change will present adverse impacts on PepsiCo’s value chain in two main ways: flooding of agricultural yield and the impact of ever-rising temperatures and dwindling freshwater supply (Simmons, 2017).
Mission
The company aims at creating a fun and enjoyable experience for the customers by serving their tasty and health-giving products. Also, the company aims at providing consumers with unique brand experiences. PepsiCo aims at being the best partner, be on the lead in game-changing innovations, and delivering unmatched growth levels in the food industry. For the communities and associates, the company aims at creating meaningful opportunities for them to acquire new skills and achieve successful careers and by creating a not only diverse but also an inclusive working environment. For the planet, the company aims at conserving nature’s precious resources by promoting a world that is sustainable for future generations. Additionally, PepsiCo seeks to embrace the best of all corporate governance and to provide a sustainable top-tier TSR (Simmons, 2017).
Vision
The vision of the company reflects on the ambition to win a sustainable market and accelerate the company’s top-line growth while keeping the company’s commitment to doing good for the communities and the planet. The vision lays its basis on the progress made by PepsiCo since it was established in 1965 and setting a new and firm foundation for the latest period of growth and prosperity. The company has developed a new set of aspirations: to Become Faster, Better, and Stronger to help them achieve this vision.
Business model
As the third leading consumer foods company in the world, PepsiCo manufactures and distributes both food and beverage products to over 200 countries. In the 2018 fiscal year, the internal operations generated 43% of the company’s overall revenue, while the US business generated 57%. The employs over 260,00 workers globally. PepsiCo food portfolio constitutes of flavored snacks, dairy-based products, pasta, chips, and cereals. The company’s beverage consists of light drinks such as sodas, fresh bottled water, caffeine drinks such as tea and coffee, freshly blended juices, and energy drinks. The company boasts of a strong brand portfolio by owning various popular brands such as Pepsi, Cheetos, Lays, Aquafina, Mountain Dew, Doritos, Tropicana, and Quaker. About 22 of PepsiCo’s brands earned over $1 billion separately annual retail sales.
The company has made an extension model of their business with a commanding presence in the beverages and junk food categories (Lapersonne, 2013). Despite the decline in soda beverage volume, the company’s firm grip in the snack food market share has given PepsiCo an edge over Coca-Cola, its main rival. The company’s food business earned 54 percent of the $64.7 billion revenue, while beverages accounted for 46% (Lapersonne, 2013).
Healthier Choices
The company places all its attention on improving its portfolio by focusing on health and wellbeing. The growth of consumers’ aversion to salty snacks and sugary beverages is driving innovation for the production of healthier products. “In the year 2008, per serving, around 44% of PepsiCo beverage portfolio was under 100 calories. The company’s 2025 goal is to make sure that over 67% of its products have added sugar per 12-ounce serving to be under 100 calories” (Miller, 2018).
Besides, PepsiCo is cutting down salt levels in the food products manufactured by the company. By 2025, the company aims to have a minimum of 74% of its food portfolio, for each calorie to be having less than 1.2 milligrams level of sodium. The company also wants to ensure that at least 75% of the food portfolio, for 100 calories, to have not more than 1.1 grams of saturated fat (Miller, 2018).
Leveraging Dominant Position
As the second-biggest nonalcoholic beverage maker within the United States, PepsiCo’s dominant position offers it favorable relationships with global retailers, who provide the company with good-sized shelf space. The provided space allows PepsiCo to affect customer purchasing styles and increases complimentary meals and beverage sales. Furthermore, PepsiCo’s and Coca-Cola’s extensive distribution offers them an aggressive side over different nonalcoholic beverage makers (Lapersonne, 2013).
In 2018, PepsiCo’s pinnacle five retail clients earned 33% of the company’s North American revenue. Notably, among the significant earners, Walmart accounted for 19% of PepsiCo’s sales that took place in North America. PepsiCo is currently working hard on expanding its sales through e-trade channels and cellular applications. Additional customers are making use of virtual channels for online purchasing of products from PepsiCo linked retail shops. “The corporation expects an e-trade retail income of about $2 billion in 2019. PepsiCo continues to invest in its production and cross-to-market abilities to develop inside the converting consumer and retail landscapes” (Zhang, 2019).
Competitive advantages
Market Penetration
The company, PepsiCo, makes use of marketplace penetration as its primary intensive growth strategy. The applied broad approach supports the growth of the business through improved sales, consisting of a more significant marketplace share. For instance, PepsiCo makes use of aggressive advertising and marketing to draw extra customers. The main objective attributed to the approach is to limit charges to entice potential and more significant customers despite the market getting saturated. Hence, PepsiCo’s widely used aggressive strategy of cost management for growth (Zhang, 2019).
Product Development
Another primary intensive growth method used by PepsiCo is the product development strategy. The great process calls for the creation of new products to attract and bring more buyers. For instance, PepsiCo keeps developing merchandise and variations of current products, such as reduced-salt, low-saturated-fat, or low-calorie products of its meals and beverage merchandise. The aim of this intensive strategy is meant to promote R&D investments for innovative ideas. PepsiCo’s familiar aggressive strategy of extensive differentiation helps this thorough method by supplying new and unfamiliar products to attract extra purchasers and develop the commercial enterprise (Hsuan, Skjøtt-Larsen, Kinra, and Kotzab, 2015).
Market Development
The approach is used by PepsiCo to promote market improvement as it supports intensive growth methods. The intensive process helps commercial enterprise growth by taking pictures of market segments or niches. For instance, PepsiCo keeps amplifying its distribution community to reach the closing markets or sectors, particularly in developing areas. However, marketplace development is also helping a broad growth approach because PepsiCo already boasts of a sizable presence in all nearby markets and internationally. A strategic goal for this approach is to broaden PepsiCo’s delivery chain to support the increase of the company’s distribution community (Zhang, 2019). The cost management competitive strategy gives PepsiCo the chance to efficiently use this extensive growth strategy via fee minimization regardless of extra investments used for enlargement to new markets (Lapersonne, 2013).
Value chain
PepsiCo is among the most significant players in global foods and beverage enterprises. The corporation gives a diverse array of merchandise. PepsiCo’s standard competitive approach usually primarily based on the company’s desire or need to cope with pressure from its largest rivals, mainly the Coca-Cola Company (Hsuan, Skjøtt-Larsen, Kinra and Kotzab, 2015). PepsiCo’s popular strategy that gets based on a model by Porter elaborates on the basic approach used to keep aggressive gain (Zhang, 2019).
On the other hand, PepsiCo’s intensive increase techniques are a reaction to the ever-changing conditions taking place in food and beverage markets all over the world. Intensive growth techniques define how firms help their growth. PepsiCo’s widely wide-spread method for competitive advantage is equivalent to its intensive process to ensure long-term growth and sustainability in the global market (Zhang, 2019). PepsiCo’s intensive growth techniques enable the enterprise to efficiently use its standard approach to keep a sturdy, aggressive advantage (Cuervo-Cazurra, Mudambi, Pedersen, and Piscitello, 2017). PepsiCo’s success shows the effectiveness of these strategic guidelines, in particular, how the universal strategy supports its global competitiveness (Lapersonne, 2013).
PepsiCo’s Porter’s Model (Generic Strategy)
PepsiCo applies various prevalent competitive techniques, considering the organization’s big selection of products. Nonetheless, the main strategic methods that play a vital role in the company’s aggressive gain are broad differentiation and cost leadership.
PepsiCo makes use of cost leadership as its primary generic aggressive strategy. The approach, though typical, makes a specialty of value minimization as an approach to enhance not only PepsiCo’s financial overall performance but also its competitiveness (Palevich, 2012). To compete for head-in-head with Coca-Cola products, PepsiCo offers its products at a lower price that are influenced by low costs of operations and production (Zhang, 2019). Once in a while, the company also makes use of specialized and enticing promotional offers that have discounted prices. Also, the company utilizes its significant market share as an aggressive strategy. The approach handles the company with an upper hand by attracting customers using a few attractive features or traits in the products offered. The objectives of the price leadership universal method are to automate manufacturing techniques to decrease PepsiCo’s working expenses (Palevich, 2012).
Systematic challenge
Implementing solutions to deal with climate alternate is essential to the future of the organization, customers, consumers, and the planet. The company has a robust task in lowering greenhouse fuel (GHG) emissions based on the risks this presents to climate. Climate trade may want to produce a change in grade and quantities of raw materials acquired directly from the farms to ger used for our products. Additionally, it is responsible for coming up with weather changing patterns that affect how the production centers and delivery chains conduct all their operations and have an effect on the provision and availability of clean water (Simmons, 2017).
PepsiCo has recognized weather change as an enterprise chance through the company’s Integrated Risk Management Framework. The manner through which the company identifies prioritizes, assesses, and manages the factors dealing with impacts of the company’s operations on the environment get stipulated in the framework. The long-time adverse effects on climate get monitored by PepsiCo’s Board of Directors, Risk Committee, and the Public Policy and Sustainability Committee (Simmons, 2017). The company is running towards know-how risks related to climate and chances using the scenario analysis. The company has also invited and attracted external stakeholders on the issue of climate change to come with sustainable approaches in countering global warming.
PepsiCo involves nongovernmental organizations and other stakeholders in promoting ideas and approaches that counter and minimize global warming and pollution. Also, the company is a partner member of the U.S. Climate Action Partnership and has signed the American Business Act on Climate Pledge, and offers assistance to the Paris Climate Agreement. In efforts to conserve the environment, the company is among the founding members of the Climate Leadership Council. The council is an international policy-based organization that brings together environmental, companies, and opinion leaders in promoting a particular carbon footprint framework as an equitable climate answer (Simmons, 2017).
References
Cuervo-Cazurra, A., Mudambi, R., Pedersen, T., and Piscitello, L., 2017. Research Methodology in Global Strategy Research. Global Strategy Journal, 7(3), pp.233-240.
Hsuan, J., Skjøtt-Larsen, T., Kinra, A. and Kotzab, H., 2015. Managing The Global Supply Chain. Frederiksberg: CBS Press.
Lapersonne, A., 2013. Managing Multiple Sources of Competitive Advantage in a Complex Competitive Environment. Future Studies Research Journal: Trends and Strategies, 5(2), pp.221-251.
Miller, B., 2018. [online] Bizjournals.com. Available at: <https://www.bizjournals.com/newyork/news/2018/08/20/pepsico-buys-sodastream.html> [Accessed 9 April 2020].
Palevich, R., 2012. The Lean Sustainable Supply Chain. Upper Saddle River, N.J: FT Press.
Simmons, N., 2017. The Climate Change Concern For Pepsico – Technology And Operations Management. [online] Digital.hbs.edu. Available at: <https://digital.hbs.edu/platform-rctom/submission/the-climate-change-concern-for-pepsico/>
Zhang, Z., 2019. Risk Analysis of Two Leader Drink Company: PepsiCo and Coca-Cola. Asian Business Research, 4(3), p.42.