final ppt stm

8/10/2019 Final Ppt Stm

1/30


2/30

PepsiCo 2009Case Notes Prepared by: EMAN QUTUB &

QAZI AMAD UD DINCase Author: John & Sherry Ross


3/30

Outline

Companys History

Vision

Mission

Competitive Profile Matrix

IFE & EFE Matrix

SWOT Analysis

SWOT Matrix

SPACE Matrix

Grand Strategy Matrix

The IE Matrix

QSP Matrix

BCG Matrix

Recommendation: Suggested Strategy


4/30

Company History:

world's top consumer product

companies

21 percent market share

PepsiCo's product portfolio includes 16 brands that

generate more than $500 million in sales each year

The Frito-Lay Company division is by far the world

leader in salty snacks


5/30

Vision Statement

PepsiCos responsibility is to continuallyimprove all aspects of the world in which weoperate environment, social, economic creating a better tomorrow than today. Ourvision is put into action through programsand a focus on environmental stewardship,activities to benefit society, and acommitment to build shareholder value by

making PepsiCo a truly sustainablecompany.


6/30

Vision Statement (Proposed)

To become the leading producer and marketer of

food and beverage products in the world


7/30

Mission Statement

Our mission is to be the worlds premier

consumer products company focused onconvenient foods and beverages. We seek toproduce financial rewards to investors as weprovide opportunities for growth andenrichment to our employees, our businesspartners and the communities in which weoperate. And in everything we do, we strivefor honesty, fairness and integrity.


8/30

1. Customer2. Products or service3. Markets4. Technology5. Concern for su

growth6. Philosophy

7. Self-concept8. Concern for public 9. Concern for emplo

Mission Statement (Proposed)

To be the worlds (3) premier consumer products company

focused on convenient foods and beverages (2). We strive for

healthy financial rewards to investors (5) as we provide

opportunities for growth and enrichment to our employees

(9), business partners, and the communities (8) in which we

operate. We have outstanding technological (4) and marketing

(7) systems to continually innovate and create differentiated

products for our customers (1) worldwide. And in everything

we do, we strive for honesty, fairness, and integrity (6).


9/30


10/30

Opportunities

1. Increase in international market demand for

colas, chips and breakfast foods

2. In 2013, the United States savory snacks

market is forecast to have a value of US$28

billion, an increase of 27.8 percent since 2008

and the compound annual growth rate of the

market in the period 20082013 is predicted

to be 5 percent

3. Purchase smaller, successful developers of

competing products

4. Healthy food snack is on the rise as

consumers are shifting to healthy food

5. Teens are less conscious of health issues and

still like sweet drinks


11/30

THREATS

1. Regulation FDA, Clean Water Act, etc.

2. Foreign exchange rates in current economy

3. Raw materials supplies clean water

4. Changes in consumer taste5. Health issues more consumers are shifting

to healthy food

6. Consumers switching to lower cost house

brands for both snacks and beverages

7. Substitute products other snacks, water,

tap water, ready-to-drink, sports drinks, etc.

8. Decrease in U.S. cola market

9. Reduction in buying power of large retailers

10.Strong direct (Coke) and indirect (Kraft)

competition

E t l F t E l ti (EFE) M t i


12/30

External Factor Evaluation (EFE) Matrix

Key External Factors Weight Rating Weighted

Score

Opportunities

1. Increase in international market demand forcolas, chips and breakfast foods

0.08 4 0.32

2. In 2013, the United States savory snacks marketis forecast to have a value of US$28 billion, anincrease of 27.8 percent since 2008 and thecompound annual growth rate of the market inthe period 2008-2013 is predicted to be 5percent

0.08 3 0.24

3. Purchase smaller, successful developers ofcompeting products

0.06 3 0.18

4. Healthy food snack is on the rise as consumersare shifting to healthy food

0.08 3 0.24

5. Teens are less conscious of health issues and stilllike sweet drinks

0.08 3 0.24

Threats

1. Regulation - FDA. Clean Water Act, etc. 0.06 1 0.06

2. Foreign exchange rates in current economy 0.05 2 0.1

3.

Raw materials supplies - clean water 0.07 2 0.14


13/30

1. Changes in consumer taste 0.09 2 0

2. Health issues more consumers are shifting tohealthy food

0.08 2 0

3.

Consumers switching to lower cost house brandsfor both snacks and beverages

0.04 2 0

4. Substitute products other snacks, water, tapwater, ready-to-drink, sports drinks, etc.

0.07 3 0

5. Decrease in U.S. cola market 0.06 2 0

6. Reduction in buying power of large retailers 0.04 2 0

7. Strong direct (Coke) and indirect (Kraft)competition

0.06 3 0

Total 1.00 2

I t l A dit


14/30

Internal Audit

Strengths

1. Name recognition both domestically and

internationally

2. Stronger than industry average in price to cash

flow ratio

3. Strong marketing and promotion advertising

campaigns

4. Reliable and established distribution channel

management

5. Has diverse business units which reduces overall

business risks

6. Recent reorganization

7. Owns more bottling companies than 10 years ago

8. Sales increased by approximately US$3.5 billion

from 2007 to 2008

9. Increase in net profit for the last consecutive years


15/30

Weaknesses

1. Short term liability of US$369 due in 2009

2. Increasing long term debt by US$3.6 billion

from 2007 to 2008

3. Increase in other liabilities by US$2.3 billion

from 2007 to 2008

4. Decline in carbonated beverages from 2006 to

2008

5. Recent acquisition of companies could cost the

company additional acquisition cost along withsome internal negative synergies

Internal Factor Evaluation (IFE) Matrix


16/30

Internal Factor Evaluation (IFE) Matrix

Key Internal Factors Weight Rating Weighted

Score

Strengths

1.

Name recognition both domestically andinternationally

0.09 4 0.36

2.

Stronger than industry average in price tocash flow ratio

0.06 4 0.24

3.

Strong marketing and promotion advertisingcampaigns

0.08 4 0.32

4.

Reliable and established distribution channelmanagement

0.07 3 0.21

5. Has diverse business units which reducesoverall business risks

0.08 4 0.32

6.

Recent reorganization 0.08 4 0.32

7.

Owns more bottling companies than 10 yearsago

0.07 4 0.28

8.

Sales increased by approximately US$3.5

billion from 2007 to 2008

0.07 4 0.28

9.

Increase in net profit for the last consecutive

years

0.06 3 0.18


17/30

Weaknesses

1.

Short term liability of US$369 due in 2009 0.07 1 0.0

2. Increasing long term debt by US$3.6 billion

from 2007 to 2008

0.09 1 0.0

3.

Increase in other liabilities by US$2.3 billionfrom 2007 to 2008

0.06 2 0.1

4. Decline in carbonated beverages from 2006 to

2008

0.05 1 0.0

5. Recent acquisition of companies could cost the

company additional acquisition cost along withsome internal negative synergies

0.07 1 0.0

Total 1.00 2.9

F.

SWOT Strategies


18/30

Strengths Weaknesses

1. Name recognition bothdomestically and

internationally2. Stronger than industry

average in price to cashflow ratio

3. Strong marketing andpromotion advertisingcampaigns

4.

Reliable and established

distribution channelmanagement

5. Has diverse business

units which reducesoverall business risks

6. Recent reorganization7. Owns more bottling

companies than 10 yearsago

8.

Sales increased by

approximately US$3.5billion from 2007 to 2008

9. Increase in net profit forthe last consecutive

years

1. Short term liability ofUS$369 due in 2009

2. Increasing long term debtby US$3.6 billion from2007 to 2008

3. Increase in other

liabilities by US$2.3billion from 2007 to 2008

4. Decline in carbonatedbeverages from 2006 to

20085. Recent acquisition of

companies could cost the

company additionalacquisition cost along

with some internalnegative synergies

Opportunities S-O Strategies W-O Strategies

1.

Increase in international

market demand for colas,

chips and breakfastfoods.2.

In 2013, the UnitedStates savory snacks

market is forecast tohave a value of US$28billion, an increase of27.8 percent since 2008

and the compoundannual growth rate of themarket in the period2008-2013 is predicted to

be 5 percent3. Purchase smaller,

successful developers ofcompeting products

4. Healthy food snack is on

the rise as consumers areshifting to healthy food

5.

Teens are less conscious

1.

Continue international

expansion (S1, S3, S7,

O1)2.

Purchase smallercompanies offeringhealthy products (S2, S4,

S5, O3, O4)3. Consolidate bottling

operations (S4, S6, O3)

1. Promote healthy snacksand drinks (W4, O4)

1. Increase in internationalmarket demand for colas

1. Continue internationalexpansion (S1 S3 S7

1. Promote healthy snacksd d i k (W4 O4)


19/30

market demand for colas,chips and breakfastfoods.

2. In 2013, the UnitedStates savory snacksmarket is forecast tohave a value of US$28billion, an increase of27.8 percent since 2008and the compoundannual growth rate of themarket in the period2008-2013 is predicted tobe 5 percent

3. Purchase smaller,

successful developers ofcompeting products

4. Healthy food snack is onthe rise as consumers areshifting to healthy food

5. Teens are less consciousof health issues and stilllike sweet drinks

expansion (S1, S3, S7,O1)

2. Purchase smallercompanies offeringhealthy products (S2, S4,S5, O3, O4)

3. Consolidate bottlingoperations (S4, S6, O3)

and drinks (W4, O4)

Threats S-T Strategies W-T Strategies

1. Regulation FDA, CleanWater Act, etc.

2. Foreign exchange rates incurrent economy

3. Raw materials supplies clean water

4.

Changes in consumertaste

5. Health issues moreconsumers are shifting tohealthy food

6. Consumers switching tolower cost house brands

for both snacks andbeverages

7. Substitute products other snacks, water, tapwater, ready-to-drink,sports drinks, etc.

8. Decrease in U.S. colamarket

9. Reduction in buyingpower of large retailers

10.

Strong direct (Coke) andindirect (Kraft)competition

1. Sponsor programs toteens and youngergeneration to throughvirtual Facebook, Twitter,and such (S1, S2, S3,O5)

1. Sell off non-producingproduct lines and thenpay off the long termdebt (W1, W2, W3, T8,T9)

2. Reorganize further and

use the excess cash tobuy companies withhealthier products (W4,W5, T5, T6, T7)

SPACE Matrix


20/30

Financial Stability (FS) Environmental Stability (ES)

Return on Investment 5 Unemployment -4Leverage 5 Technological Changes -3

Liquidity 5 Price Elasticity of Demand -4

Working Capital 5 Competitive Pressure -5

Cash Flow 4 Barriers to Entry -4

Financial Stability (FS) Average 4.8 Environmental Stability (ES) Average -4

Competitive Stability (CS) Industry Stability (IS)

Market Share -2 Growth Potential 5Product Quality -2 Financial Stability 4

Customer Loyalty -2 Ease of Market Entry 3

Competitions Capacity Utilization -1 Resource Utilization 3

Technological Know-How -3 Profit Potential 3

Competitive Stability (CS) Average -2 Industry Stability (IS) Average 3.6

FS

CS

ES

IS654321

Conservative Aggressive

CompetitiveDefensive

1

2

4

5

7-2-3-4-5-7 -1-6

7

-7

-6

-

-4

-3

-

-1


21/30

Suggested Strategies

After analyzing the SPACE Matrix, we can clearly see that

PepsiCo exists in the aggressive quadrant. This means that it is

in an excellent position to use its internal strengths, to take

advantage of external opportunities, to overcome internal

weaknesses and avoid external threats.

Different strategies can be conducted upon this analysis, such as

market penetration, market development, product development,

diversification and backward, forward, horizontal integration.

In this case we are going to suggest two intensive strategies,

product development and market penetration.

Grand Strategy Matrix


22/30

gy

1. Market development

2. Market penetration3. Product development4. Forward integration5. Backward integration

6. Horizontal integration7. Related diversification

WeakCompetitive

Position

Quadrant II

Quadrant I

Quadrant IVQuadrant III

StrongCompetitive

Position

Rapid Market Growth

Slow Market Growth

The Internal-External (IE) Matrix


23/30

( )

The IFE Total Weighted Score

Strong3.0 to 4.0

Average2.0 to 2.99

Weak1.0 to 1.99

High

3.0 to3.99

I II

PepsiCo Beverages

III

Medium2.0 to

2.99

IV

PepsiCo International

IV

PepsiCo

VI

Low1.0 to1.99

VII VIII IX

The EFETotal

WeightedScore

QSPM

Purchase


24/30

Continueinternationalexpansion

Purchasesmallercompaniesofferinghealthyproducts

Key Factors Weight AS TAS AS TAS

Opportunities1.

Increase in international market demandfor colas, chips and breakfast foods

0.08 4 0.32 1 0.08

2.

In 2013, the United States savory snacksmarket is forecast to have a value ofUS$28 billion, an increase of 27.8 percentsince 2008 and the compound annualgrowth rate of the market in the period2008-2013 is predicted to be 5 percent

0.08 4 0.32 2 0.16

3. Purchase smaller, successful developersof competing products

0.06 1 0.06 3 0.18

4.

Healthy food snack is on the rise asconsumers are shifting to healthy food

0.08 1 0.08 4 0.32

5. Teens are less conscious of health issuesand still like sweet drinks

0.08 1 0.08 3 0.24

Threats

1. Regulation FDA, Clean Water Act, etc. 0.06 --- --- --- ---

2. Foreign exchange rates in currenteconomy

0.05 3 0.15 1 0.05

3.

Raw materials supplies clean water 0.07 1 0.07 3 0.21

4. Changes in consumer taste 0.09 1 0.09 3 0.27

5.

Health issues more consumers areshifting to healthy food

0.08 1 0.08 3 0.24

6.

Consumers switching to lower cost housebrands for both snacks and beverages

0.04 --- --- --- ---

7.

Substitute products other snacks,water, tap water, ready-to-drink, sportsdrinks, etc.

0.07 1 0.07 4 0.28

8. Decrease in U.S. cola market 0.06 4 0.24 2 0.12

9.

Reduction in buying power of largeretailers

0.04 --- --- --- ---

10.

Strong direct (Coke) and indirect (Kraft)

competition

0.06 1 0.06 4 0.24

TOTAL 1.00 1.62 2.39

Strengths


25/30

g

1. Name recognition both domestically andinternationally

0.09 4 0.36 1 0.09

2. Stronger than industry average in price tocash flow ratio

0.06 --- --- --- ---

3. Strong marketing and promotionadvertising campaigns

0.08 --- --- --- ---

4.

Reliable and established distributionchannel management

0.07 2 0.14 4 0.28

5.

Has diverse business units which reduces

overall business risks

0.08 --- --- --- ---

6.

Recent reorganization 0.08 --- --- --- ---

7.

Owns more bottling companies than 10years ago

0.07 1 0.07 3 0.21

8.

Sales increased by approximately US$3.5billion from 2007 to 2008

0.07 --- --- --- ---

9. Increase in net profit for the lastconsecutive years

0.06 1 0.06 3 0.18

Weaknesses

1. Short term liability of US$369 due in 2009 0.07 --- --- --- ---

2.

Increasing long term debt by US$3.6billion from 2007 to 2008

0.09 --- --- --- ---

3.

Increase in other liabilities by US$2.3

billion from 2007 to 2008

0.06 3 0.18 1 0.06

4. Decline in carbonated beverages from2006 to 2008

0.05 1 0.05 3 0.15

5. Recent acquisition of companies couldcost the company additional acquisitioncost along with some internal negative

synergies

0.07 --- --- --- ---

SUBTOTAL 1.00 0.86 0.97

SUM TOTAL ATTRACTIVENESS SCORE 2.48 3.36


26/30


27/30

BCG Matrix

Net revenues, profits and percentages by Divisions (2008)

Pepsico total

Division

1.Frito-Lay North Amrica(FLNA)

2.Quaker Foods North America

(QFNA)

3.Latin American Foods (LAF)

4.Pepsico Americas Beverages (PAB)

5.United Kingdom & Europe (UKEU)6.Middle East, Africa, & Asia (MEAA)

Net Revenue& Percent:

$43,251 100%

$12,507 28.9

$ 1,902 4.3

$5,895 13.6

$10,937 25.2

$6,435 14.8$5,575 12.8

Operating Profit an

$7,942

$2,959

$582

$897

$2,026

$811 $667


28/30

Relative Market Share

High Medium Low

1.0 0.5 0.0

High

+20 STARS (quadrant II) QUESTION MARK (quadrantI)

2

Industry 1 4 3

Sales Growth 5 6

Rate

Medium 0

CASH COWS(quadrant III)

DOGS(quadrant IV)

Low -20


29/30

Intensive Strategies:

1-Product development

2-Market Penetration


30/30

final ppt stm

Documents