sm, pepsico, group assignment final
TRANSCRIPT
MRC 3013 – Coca-cola Case Analysis
STRATEGIC MANAGEMENT
GROUP ASSIGNMENT GROUP 4PepsiCo-2009
For:
DR. MAS BAMBANG BAROTO
By:
D. PazookiMR091234
Ding Jie (Marya)MR091189
Wu Jing (Sofia)MR091187
TABLE OF CONTENTS
1.0 VISION AND MISSION
1.1 VISION EVALUATION
1.2 MISSION EVALUATION
2.0 EXTERNAL ANALYSIS..............................................................................6
2.1 PEST ANALYSIS................................................................................................7
2.2 COMPETITIVE FORCES........................................................................................8
2.3 PORTER’S FIVE FORCES...................................................................................11
2.4 LIST OF OPPORTUNITIES AND THREATS BEFORE ELIMINATING OVERLAPPED ITEMS
...............................................................................................................14
2.5 LIST OF OPPORTUNITIES AND THREATS AFTER ELIMINATING OF OVERLAPPED ITEMS
...............................................................................................................16
2.6 EFE MATRIX..................................................................................................18
2.7 KEY SUCCESS FACTOR..............................................................................20
2.8 CPM MATRIX.................................................................................................21
Pepsi Co Analysis Page 3
1.0 VISION AND MISSION
1.1 VISION EVALUATION
Vision Statement
“Our 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.”
“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.”
AnalysisPepsiCo’s vision statement is concise and comprehensive. It is easily to understand and make the customers feel friendly and accessible. And this company play a important role in environment-protect and social benefits. It gives a strong believes of the company can make the profits for stakeholders. It also set up a well-known brand that related to the stakeholder value.PepsiCo have the brand concept is "ask for more". It can encourage young people to living with proactive attitude. It means PepsiCo have the meaning for young people, for example, PepsiCo means opportunities and infinitely room for ideal and they can enjoy their imagination and pursuit.PepsiCo Vision Statement:PepsiCo is aim to improve the environment of the world for population. Give the people and planet a healthier environment, the company will become more successful in the future.
1.2 MISSION EVALUATION
“Our 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.”
AnalysisThe mission statement meets the requirements about the characteristics of a mission statement as followed: Broad in scope Inspiring Less than 250 words Identify the utility of a firm’s products
√ √
√ √
Pepsi co. Analysis Page 4
Reveal that the firm is socially responsible
Reveal that the firm is environmentally responsible
Includes most of the 9 components in mission statement
Reconciliatory Enduring
EXTERNAL ANALYSIS
2.1 PEST ANALYSIS
2.1.1 Economie Forces
Variables Case Issues FindingsOpportunities Threats
Downturn in the economy, U.S.
The downturn in the economy has also affected the sale of colas and water as some consumers have switched to store brands and tab water as cheaper alternatives to the national brands.
ü
World Demand World demand for carbonated soft drink has continued a slow. ü
International markets
PepsiCo investing $1billion in Russia over the next three years.
PepsiCo investing over $1billion in china over the next 4 years.
ü
drink market The carbonated soft drink market has shown a decline of 0.4% in 2007 in United State. ü
Steady overall growth for the last five years of around 9% with sports drinks, bottled water, and energy drinks.
ü
√ √
√ √√
Pepsi co. Analysis Page 5
2.1.2 Social, Culture, Demographic Environnent Forces
Variables Case Issues FindingsOpportunities Threats
Lifestyle As consumer tastes have changed. Pepsi Co has developed liquid refreshment products that are light, calorie free, sugar free, caffeine free, sports and energy directed. Snacks also now have less salt and less fat.
ü
Consumers shifted from soft drinks to bottled water and sports drinks. ü
News of contamination
News of contamination (either real or perceived) can quickly destroy consumers’ confidence in a company’s ability to provide a safe, healthy product.
ü
Non for profit projects
PepsiCo has undertaken numerous projects and alliance around the world, working with such groups as the Earth institute at Columbia University, The Energy and Resources Institute, Keep America Beautiful, Exnora, and UNICEF.
ü
Recycled materials and reduce materials used
PepsiCo have initiated projects to increase use of recycled materials and reduce materials used in packaging.
ü
2.1.3 Political, Gouvernent and legal Forces
Variables Case Issues FindingsOpportunities Threats
Environmental campaign
Recent environmental campaign against plastic containers has impacted the sale of bottled water and forced manufacturers to develop more environmentally friendly containers.
ü
Many stats now ban the selling of some soft drink brands in public schools due to obesity issues among youth.
ü
2.1.4 Technological Forces
Pepsi co. Analysis Page 6
Variables Case Issues FindingsOpportunities Threats
Changing the technology to
reduce the costs
Pepsi Co opened one new factory in china and plans to open five more new plants over next two years, the new Pepsi Co plants uses 22% less water and 23% less energy than the average Pepsi plant in china.
ü
2.2 COMPETITIVE FORCES
2.2.1 Competitive Forces
Forces Case Issues Opportun
ities
Threats
Major
competitors
Coca-Cola, the brand known around the world, is the largest
producer and distributor of dark colas in the world and as such
is PepsiCo’s major competitor.
√
As Kraft continues to improve in the coming years, it should
become a stronger competitor in all divisions.
√
Competitors’
Strength
As the demand for dark colas has diminished, Coca-cola has
continued to strengthen their juice, ready-to-drink tea and
coffee products, water and sport drinks along with the
introduction of Truvia as a sweetener.
√
Pepsi co. Analysis Page 7
Coke generates most of its operating revenue outside the
United States with international concentrate sales
accounting for 77 percent and U.S. sales 23 percent.
√
The changes about restructuring the organization are
designed to strengthen the position of Kraft in the highly
competitive and dynamic markets in which it currently
operates.
√
The North American snacks and Cereals division produced
$5.025 billion in revenues in 2008, an increase of 3 percent
over 2007 revenue of $4.879 billion.
√
Competitors’
Weaknesses
In the North American market volume growth was down 1
percent.
√
Coca-Cola Company continues to expand even in the current
monetary crises.
√
With long-term debt of $18.5 billion (LTD to common equity of
83.73 percent), debt coverage could slow its progress.
√
Competitors’
Strategies
Coca-Cola’s strategy is enhanced by extensive advertising
through the bottling and distribution network and toward the
ultimate consumer.
√
Pepsi co. Analysis Page 8
Coca-Cola seems to be following a very concentrated
strategy by focusing almost exclusively on nonalcoholic
beverages with little, if any, tendency to diversify.
√
Kraft’s new strategies seem to be paying off in increased
revenue and possible future growth.
√
The nature of
Suppliers and
distributors
relationship of
the
Competitors
Coca-Cola has also invested in purchasing bottlers and
streamlining its operations.
√
2.3 PORTER’S FIVE FORCES
2.3.1 Competitive pressure among Rivalry
No Key Variables Case Issues Opportunities Threats Competitive Force
Strong Moderate Weak
Coca-Cola Brand identity Coca-Cola, the brand known around the world, is the largest producer and distributor of dark colas in the world and as such is PepsiCo’s major competitor.
√ √
Pepsi co. Analysis Page 9
Financial management
The financial for Coca-Cola show a strong cash position of $4.979 billion and long-term debt of only $2.781 billion.
√ √
Supplier power Coca-Cola’s strategy is enhanced by extensive advertising through the bottling and distribution network and toward the ultimate consumer.
√ √
Buyer power As the demand for dark colas has diminished, Coca-cola has continued to strengthen their juice, ready-to-drink tea and coffee products, water and sport drinks along with the introduction of Truvia as a sweetener.
√ √
Financial management
Coke generates most of it’s operating revenue outside the United States with international concentrate sales accounting for 77 percent and U.S. sales 23 percent.
√ √
Industry concentration
The global trends of a mature and declining market in North America with growth in other parts of the world.
√
√
Marketing method
Advertising for Coca-Cola is similar to Pepsi in that they also rely
√ √
Pepsi co. Analysis Page 10
heavily on short catchy slogans, songs, and celebrity endorsements.
Substitutes Coca-Cola will continue to concentrate on its cola business but expand its water and juice sales and continue growth in international markets.
√ √
Market share Coca-Cola holds the largest share of the U.S. cola market at 41% with Pepsi second at 36.7%.
√ √
Kraft Restructuring Kraft Foods is currently in the process of reinventing itself by restructuring the organization into two major divisions, North America and International. They have brought in new top management and six new independent board directors. These changes are design to strengthen the position of Kraft in the highly competitive and dynamic markets in which it currently operates.
√ √
Financial management
The Kraft financials for 2008 show a 13.32 percent increase in net revenues over 2007 to $42.201 billion.
√ √
Pepsi co. Analysis Page 11
Financial management
The North American snacks and Cereals division produced $5.025 billion in revenues in 2008, an increase of 3 percent over 2007 revenue of $4.879 billion.
√ √
Industry growth As Kraft continues to improve in the coming years, it should become a stronger competitor in all divisions.
√ √
Financial management
With long-term debt of $18.5 billion (LTD to common equity of 83.73 percent), debt coverage could slow its progress.
√ √
2.3.2 Competitive Pressure associated with New Entrant
No Key Variables Case Issues Opportunities
Threats
Competitive Force
Strong Moderate Weak
1 Promotion and advertising
This amount of spending on promotion and advertising has led to volume growth in Eurasia of 7 percent, Europe of 3 percent, Latin American of 8 percent, and the Pacific of 8 percent.
√ √
2 Package Coca-Cola has also invested in purchasing bottlers and streamlining its operations.
√ √
Pepsi co. Analysis Page 12
3 advertising Coca-Cola’s strategy is enhanced by extensive advertising through the bottling and distribution network and toward the ultimate consumer.
√ √
4 Industry growth As Kraft continues to improve in the coming years, it should become a stronger competitor in all divisions.
√ √
2.3.3 Competitive Pressure from the Substitute Products
No Key Variables Case Issues Opportunities
Threats
Competitive ForceStrong Moderate Weak
1 Substitutes As the demand for dark colas has diminished, Coca-cola has continued to strengthen their juice, ready-to-drink tea and coffee products, water and sport drinks along with the introduction of Truvia as a sweetener.
√ √
2 International market
Coca-Cola will continue to concentrate on its cola business but expand its water and juice sales and continue growth in international markets.
√ √
3 Restructuring Kraft Foods is currently in the process of reinventing itself by restructuring the organization into two major divisions, North America and International. The North American division is composed of
√ √
Pepsi co. Analysis Page 13
Beverages, Cheese &Foodservice, Convenient Meats, Grocery, and Snacks & Cereals. The International division consists of European Union and Developing markets.
4 Trend of consumer
Non-carbonated products are today about 40 percent of Pepsi-Cola volume, versus less than 15 percent 10 years ago.
√ √
5 Supplier Pepsi’s desire to own its own bottlers is to spur its non-carbonated health and wellness products, which are often smaller-volume, slower-moving products.
√ √
2.3.4 Competitive Pressure from the Suppliers’ Bargaining Power
No Key variables Case Issues Opportunities
Threats
Competitive ForceStrong Moderate Weak
1 Suppliers Pepsi’s desire to own its own bottlers is to spur its non-carbonated health and wellness products, which are often smaller-volume, slower-moving products.
√ √
2 Market share PBG and PAS distribute nearly 75 percent of Pepsi drinks in the United States, excluding Galorate.
√ √
3 Resource Pepsi highly dependent on supplies of clean water.
√ √
2.3.5 Competitive Pressure from Buyers’ Bargaining Position
No Key variables Case Issues Opportunitie Threat Competitive Force
Pepsi co. Analysis Page 14
s s Strong Moderate Weak
1 Economic troubles
PepsiCo may need to further adjust costs to reflect continuing economic troubles as consumers shift to less costly drinks and snacks.
√ √
2 Package There is also a shift away from bottled water and back to the tap.
√ √
3 Healthy In recent years we have seen the introduction of diet, free, and zero colas as well as flavored water sports and energy drinks.
√ √
2.3.6 Result the Industry Analysis
No Key Variables Competitive ForceStrong Moderate Weak
1 Competitive pressure among rivalry 7 4 3
2 Competitive pressure associated with new entrant 3 1 -
3 Competitive pressure from the substitute products 3 1 1
4 Competitive pressure from supplier’s bargaining power 2 - 1
5 Competitive pressure from buyer’s bargaining power 3 - -
Total Sum 18 6 5
PepsiCo is a global company operating in the non-alcoholic beverage industry, the salty or savory snack food industry, and the
breakfast food industry.
Pepsi co. Analysis Page 15
2.3.7 Nonalcoholic beverage
The global nonalcoholic beverage industry is composed of carbonated soft drinks, fruit and vegetable juices, bottled water, sports and energy drinks, concentrates, and ready-to-drink coffee and teas.
World demand kept a slow but steady overall growth for last five years. However, in the United States, the carbonated soft drink market has shown a decline and consumers purchased bottled water and sports drinks.
Coca-Cola holds the largest share of the U.S. cola market at 41% with Pepsi second at 36.7%. Both Pepsi and Coke manufacture the concentrates and syrups, which are sold to bottlers, and then bottlers distribute the finished product to
grocery stores, convenience stores, restaurants, vending machines and so on. Pepsi and Coke spend heavily on national advertising and provide large promotional incentives to the bottlers. The market for these products depends on the changing taste of consumers and requires manufactures to develop new products to meet those
changing demands. These companies are highly dependent on supplies of clean water. The downturn in the economy has affected the sale of colas and water. The environmental campaign against plastic containers has impacted the sale of bottled water and forced manufactures to develop more
environmentally friendly containers.
2.3.8 Savory Snack
The U.S. savory snack market is composed of over 400 companies with combined annual revenues of $23 billion. It is concentrated with the top 50 companies controlling 75% of the market.
The largest competitors in this industry include PepsiCo’s Frito-Lay, Kraft’s Nabisco and Kellogg’s Retail Snacks division. The largest product segment of this market is potato chips (30% of industry revenues) followed by tortilla chips (20%) and bulk nuts (10%). Companies in this industry must compete against each other through extensive advertising, product promotions, and product innovation. Some of the new products are designed to compete on taste; others are designed to reflect a particular consumer concern such as obesity or
hypertension.
3.3.9 Breakfast Cereals The global breakfast foods market is composed of more than just cereals, it also includes bread, pastries, breakfast bars, and spreads. Break is by far largest segment of this market followed by pastries and then cereals. The greatest growth for breakfast foods appears to be in breakfast bars, and the fastest regional growth is the Asian-Pacific market. The largest
markets continue to be Europe and America, but both are mature with low growth rates. PepsiCo is primarily in the U.S. breakfast cereal market with the Quaker division generating approximately 4% of total revenues, down from 5% in
2007 and 2006.
Pepsi co. Analysis Page 16
This market is highly concentrated; the major competitors are Kellogg and General Mills. Demand is driven by consumer demographics (age and lifestyle) and health considerations.
2.4 Competitive Forces of Industry
No. Opportunities
1 PepsiCo is a global company operating in the non-alcoholic beverage industry, the salty or savory snack food industry, and the breakfast food industry.
2 World demand has continued a slow but steady overall growth for the last five years of around 9 percent with sports drinks, bottled water, and energy drinks showing the largest growth.
3 Growth in the carbonated drink market was largest in Asia and Europe.
4 The market for these products depends on the changing taste of consumers and requires manufactures to constantly develop new products to meet those changing demands.
5 The global chip market is over $32 billion, with an annual growth rate of approximately 6.35 percent.
6 It is estimated that 99 percent of all American households have salty snacks and the average household spends approximately $80 yearly on 32 pounds of these products.
7 Some of the new products are designed to compete on taste; others are designed to reflect a particular consumer concern such as obesity or hypertension.
8 The global breakfast foods market is composed of more than just cereals: it also includes bread, pastries, breakfast bars, and spreads.
9 The greatest growth for breakfast food appears to be in breakfast bars, and the fastest regional growth is the Asian-Pacific market.
10 Ready-to-eat cereals comprise about 90 percent of total industry revenue.
Pepsi co. Analysis Page 17
No. Threats
1 In the United States, the carbonated soft drink market has shown a decline of 0.4 percent in 2007 as consumers shifted from soft drinks to bottled water and sports drinks.
2 Coca-Cola holds the largest share of the U.S. cola market at 41% with Pepsi second at 36.7%.
3 The company are highly dependent on supplies of clean water.
4 The downturn in the economic has also affected the sale of colas and water as some consumers have switched to store brands and tap water as cheaper alternatives to the national brands.
5 A recent environmental campaign against plastic containers has impacted the sale of bottled water.
6 Companies in this industry must compete against each other through extensive advertising, product promotions, and product innovation.
7The largest markets continue to be Europe and America, but both are mature with low growth rates.
8 PepsiCo is primarily in the U.S. breakfast cereal market with the Quaker division generating approximately 4 percent of total revenues, down from 5 percent in 2007 and 2006.
9 The major competitors in this market are Kellogg and General Mills.
10 This industry is also highly concentrated with the top 50 companies controlling 75 percent of the market.
11 The largest competitors in this industry include PepsiCo’s Frito-Lay(with 39 percent), Kraft’s Nabisco(with 11 percent), and Kellogg’s Retail Snacks division.
2.5 LIST OF OPPORTUNITIES AND THREATS BEFORE ELIMINATING OVERLAPPED ITEMS
Opportunities
Pepsi co. Analysis Page 18
1. The Coca-cola’ volume growth was down 1% in the North America market.
2. Kraft has long-term debt of $18.5 billion (LTD to common equity of 83.73 percent); debt coverage could slow its progress that become a
stronger competitor in all divisions.
3. In the nonalcoholic beverage industry, world demand has continued a slow but steady overall growth for the last five years.
4. In the savory snack industry, 99% of all American households have salty snacks and the average household spends approximately &80
yearly on 32 pounds of these products.
5. In the breakfast cereals industry, the demand is driven by consumer demographics (age and lifestyle) and health considerations because a
fast-paced life and health concerns shape our perceptions of the first meal of the day.
Threats
1. Coca-Cola, the brand known around the world, is the largest producer and distributor of dark colas in the world and as such is PepsiCo’s
major competitor.
2. Coca-Cola holds the largest share of the U.S. cola market at 41% with Pepsi second at 36.7%.
3. The financial for Coca-Cola show a strong cash position of $4.979 billion and long-term debt of only $2.781 billion.
4. Coca-Cola’s strategy is enhanced by extensive advertising through the bottling and distribution network and toward the ultimate
consumer.
Pepsi co. Analysis Page 19
5. As the demand for dark colas has diminished, Coca-cola has continued to strengthen their juice, ready-to-drink tea and coffee products,
water and sport drinks along with the introduction of Truvia as a sweetener.
6. Coke generates most of its operating revenue outside the United States with international concentrate sales accounting for 77 percent and
U.S. sales 23 percent.
7. The global trends of a mature and declining market in North America with growth in other parts of the world.
8. Advertising for Coca-Cola is similar to Pepsi in that they also rely heavily on short catchy slogans, songs, and celebrity endorsements.
9. Coca-Cola will continue to concentrate on its cola business but expand its water and juice sales and continue growth in international
markets.
10. Kraft Foods is currently in the process of reinventing itself by restructuring the organization into two major divisions, North America and
International.
11. They have brought in new top management and six new independent board directors.
12. These changes are design to strengthen the position of Kraft in the highly competitive and dynamic markets in which it currently operates.
13. The Kraft financials for 2008 show a 13.32 percent increase in net revenues over 2007 to $42.201 billion.
14. The North American snacks and Cereals division produced $5.025 billion in revenues in 2008, an increase of 3 percent over 2007 revenue
of $4.879 billion.
15. As Kraft continues to improve in the coming years, it should become a stronger competitor in all divisions.
16. In the United States, the carbonated soft drink market has shown a decline of 0.4% in 2007 as consumers shifted to bottled water and
sports drinks.
Pepsi co. Analysis Page 20
17. The company are highly dependent on supplies of clean water
18. The downturn in the economic has also affected the sale of colas and water as some consumers have switched to store brands and tap
water as cheaper alternatives to the national brands.
19. A recent environmental campaign against plastic containers has impacted the sale of bottled water.
2.5.2 LIST OF OPPORTUNITIES AND THREATS AFTER ELIMINATING OF OVERLAPPED ITEMS
Opportunities
1. The Coca-cola’ volume growth was down 1% in the North America market.
2. Kraft has long-term debt of $18.5 billion (LTD to common equity of 83.73 percent); debt coverage could slow its progress that become a
stronger competitor in all divisions.
3. In the nonalcoholic beverage industry, world demand has continued a slow but steady overall growth for the last five years.
4. In the savory snack industry, 99% of all American households have salty snacks and the average household spends approximately &80
yearly on 32 pounds of these products.
5. In the breakfast cereals industry, the demand is driven by consumer demographics (age and lifestyle) and health considerations because a
fast-paced life and health concerns shape our perceptions of the first meal of the day.
Threats
Pepsi co. Analysis Page 21
1. Coca-Cola, the brand known around the world, is the largest producer and distributor of dark colas in the world and as such is PepsiCo’s
major competitor.
2. The financial for Coca-Cola show a strong cash position of $4.979 billion and long-term debt of only $2.781 billion.
3. As the demand for dark colas has diminished, Coca-cola has continued to strengthen their juice, ready-to-drink tea and coffee products,
water and sport drinks along with the introduction of Truvia as a sweetener.
4. Coke generates most of its operating revenue outside the United States with international concentrate sales accounting for 77 percent and
U.S. sales 23 percent.
5. The global trends of a mature and declining market in North America with growth in other parts of the world.
6. Coca-Cola will continue to concentrate on its cola business but expand its water and juice sales and continue growth in international
markets.
7. Kraft Foods is currently in the process of reinventing itself by restructuring the organization into two major divisions, North America and
International.
8. As Kraft continues to improve in the coming years, it should become a stronger competitor in all divisions.
9. In the United States, the carbonated soft drink market has shown a decline of 0.4% in 2007 as consumers shifted to bottled water and
sports drinks.
10. The company is highly dependent on supplies of clean water.
11. The downturn in the economic has also affected the sale of colas and water as some consumers have switched to store brands and tap
water as cheaper alternatives to the national brands.
Pepsi co. Analysis Page 22
2.6 EFE MATRIX
Opportunities Weight Rating WeightedScore
O1) The Coca-cola’ volume growth was down 1% in the North America market.
.0.06 2 0.12
O2) Kraft has long-term debt of $18.5 billion (LTD to common equity of 83.73 percent); debt coverage could slow its
progress that become a stronger competitor in all divisions.
coverage could slow its progress that become a stronger competitor in all divisions.
0.09 4 0.36
O3) In the nonalcoholic beverage industry, world demand has continued a slow but steady overall growth for the last
five years.0.07 3 0.21
O4) In the savory snack industry, 99% of all American households have salty snacks and the average household spends
approximately &80 yearly on 32 pounds of these products. 0.08 3 0.24
O5) In the breakfast cereals industry, the demand is driven by consumer demographics (age and lifestyle) and health
considerations because a fast-paced life and health concerns shape our perceptions of the first meal of the day. 0.06 2 0.12
THREAT
Pepsi co. Analysis Page 23
T1) Coca-Cola, the brand known around the world, is the largest producer and distributor of dark colas in the world and
as such is PepsiCo’s major competitor.0.07 4 0.28
T2) The financial for Coca-Cola show a strong cash position of $4.979 billion and long-term debt of only $2.781 billion.0.04 2 0.08
T3) As the demand for dark colas has diminished, Coca-cola has continued to strengthen their juice, ready-to-drink tea
and coffee products, water and sport drinks along with the introduction of Truvia as a sweetener.0.06 3 0.18
T4) Coke generates most of its operating revenue outside the United States with international concentrate sales
accounting for 77 percent and U.S. sales 23 percent.0.07 3 0.21
T5) The global trends of a mature and declining market in North America with growth in other parts of the world. 0.04 1 0.04
T6) Coca-Cola will continue to concentrate on its cola business but expand its water and juice sales and continue
growth in international markets.0.08 3 0.24
T7) Kraft Foods is currently in the process of reinventing itself by restructuring the organization into two major
divisions, North America and International. 0.04 1 0.04
T8) As Kraft continues to improve in the coming years; it should become a stronger competitor in all divisions. 0.03 1 0.03
T9) In the United States, the carbonated soft drink market has shown a decline of 0.4% in 2007 as consumers shifted to
bottled water and sports drinks.0.07 3 0.21
T10) The company is highly dependent on supplies of clean water 0.08 4 0.32
Pepsi co. Analysis Page 24
T11) The downturn in the economic has also affected the sale of colas and water as some consumers have switched to
store brands and tap water as cheaper alternatives to the national brands.0.06 2 0.12
Ability to Respond [Poor(1), Below average(2), Above average(3), Superior(4)]
TOTAL 1.00 2.80
Since the total weighted Score is higher than 2.5 (average), the 2.80 represents the strong ability of firm to respond to the existing opportunities and threats.
Pepsi co. Analysis Page 25
2.7 KEY SUCCESS FACTOR
Factors References (Case Fact / Guideline)
Customer Loyalty
PepsiCo must appeal to the ultimate consumer through extensive advertising and promotional activities.
Quality (Healthy- drinks)
As consumer tastes have changed, PepsiCo has developed liquid refreshment products that are light, calorie free, sugar free, caffeine free, sports and energy directed, and flavored.
Snacks now have less salt and less fat and baked, kettled, and made with vegetables.
Branding PepsiCo is indeed a large company and is defined in the 10K as “a leading global beverage, snack and food company”.
Marketing
Globally, PepsiCo operates in Canada, Latin America, Europe, Middle East, Asia, Northern Asia, Australia, and the Asian Pacific. PepsiCo continues to expand its markets in both the beverage and snack food industries through market penetration, mergers, and acquisitions.
Pepsi co. Analysis Page 26
Innovation
As consumer tastes have changed, PepsiCo has developed liquid refreshment products that are light, calorie free, sugar free, caffeine free, sports and energy directed, and flavored.
Snacks now have less salt, sea salt, baked, zero trans fat, made of vegetables, low carb, organic, hot, sweet, black, green, and with chili or cheese added.
Market share
PepsiCo’s strategy in China is to overtake Coke, which has a 47.3% market share in the country’s cola market versus Pepsi’ 44.5%.
Coca-Cola and PepsiCo hold the largest share of the U.S. cola market at 23% and 25%.
In the snack industry, the PepsiCo’s Frito-Lay has 39% market share.
2.8 CPM MATRIX
2.8.1 Nonalcoholic Beverage Industry
CRITICAL SUCCESS FACTORS
WeightPepsiCo Coca-Cola
Rating Score Rating Score
Customer Loyalty 0.20 4 0.80 4 0.80
Quality (Healthy- drinks) 0.25 3 0.75 3 0.75
Pepsi co. Analysis Page 27
Branding 0.15 4 0.60 3 0.45
Marketing 0.15 3 0.45 4 0.60
Innovation 0.10 4 0.40 3 0.30
Market share 0.15 4 0.60 4 0.60
TOTAL 1.00 3.60 3.50
According the evaluation in CPM matrix, it shown that the PepsiCo has the greatest weighted score (3.60) representing strongest competitive position close to Coca-Cola (3.50).
2.8.2 Snack and Food Industry
CRITICAL SUCCESS FACTORS
WeightPepsiCo Kraft Kellogg
Rating Score Rating Score Rating Score
Customer Loyalty 0.20 4 0.80 4 0.80 3 0.60
Quality (Healthy- foods) 0.25 4 1.00 4 1.00 3 0.75
Branding 0.13 4 0.52 3 0.39 4 0.52
Marketing 0.15 3 0.45 2 0.30 3 0.45
Innovation 0.12 2 0.24 3 0.36 3 0.36
Market share 0.15 3 0.45 3 0.45 3 0.45
TOTAL 1.00 3.46 3.30 3.13
Pepsi co. Analysis Page 28
According the evaluation in CPM matrix, it shown that the PepsiCo has the greatest weighted score (3.46) representing strongest competitive position close to Kraft (3.30). And the Kellogg is the third one (3.13).