Reference no: EM133093262

Reword the text to help me better understand the concept. What is/are the current problem(S) that PepsiCo faces?

Competition in the Market

One of the indications that were distinguished was decreased incomes at the firm. One of the potential reasons for such an issue is the expanding contest on the lookout. Lobby (2015) says that in spite of the fact that PepsiCo and Coca Cola Company stays the prevailing players in the worldwide drink market, various opponent organizations have arisen with interesting items, which lessens the business volume made by these two driving organizations.

PepsiCo is winding up in a position where it needs to contend with new participants offering substitutes, which are becoming famous on the lookout. A portion of these substitute items are propositioned as more sound choices than the cola items. Other than these arising organizations in the worldwide market, PepsiCo needs to manage firm contest from Coca Cola Company both locally and universally. Coca Cola Company has effectively made a solid brand on the lookout, and it powers PepsiCo to observe methods of managing the developing prominence of this opponent brand on the lookout.

Failure to Tackle Environmental Concerns

PepsiCo is on the way up with inventive methods of tending to various ecological worries both locally and in the worldwide market. In India, the United States, and United Kingdom, the organization has been reprimanded for its unreasonable utilization of water to the detriment of local people who need similar ware for their fundamental necessities. The organization has neglected to concoct inventive methods of fostering their items that can empower them decrease their water utilization.

As shortage of water keeps on turning into a difficult issue in a portion of these locales, this organization might confront genuine difficulties in the creation of the drink items. The plastic containers utilized in bundling of the drinks additionally present genuine danger to the climate both ashore and adrift (Thompson, 2015). PepsiCo is on the way up with elective bundling materials, which are harmless to the ecosystem.

Failure to Tackle Health Concerns

Take a gander at the wellbeing worries that have been raised by the clinical specialists in regards to a portion of the results of this organization. As per Lambert (2012), in spite of the fact that cola items are to a great extent innocuous when devoured by human, their unreasonable utilization is related with some medical conditions. One is relied upon to take huge measures of water subsequent to taking these cola items to kill their effect on the body. Nonetheless, note that cola drinks actually structure the main fragment of the items that this organization offers on the lookout. Albeit the organization has thought of better items like filtered water, its weighty dependence on cola items means that it is yet to manage the developing business sector drifts viably.

What is your evaluation of PepsiCo's lineup of business?

PepsiCo has an impressive lineup of the products in packaged foods and beverages category.  In each category they have their foot print in manufacturing and supplying some of the best brands in almost all world countries.  PepsiCo traditionally was in business competition with the other large carbonated brand Coca Cola, but from 2009 onwards PepsiCo has surpassed Coca Cola as it no longer deals in only the carbonated drinks and also deals in a big way in non-carbonated drink like Gatorade, a sports drink and juices. In addition, it also deals in milk and dairy products, Quaker brand of products, Lays snacks and many of the energy bars.  In a way PepsiCo has most impressive line of products and brands in its stable but as the business economics keep changing, PepsiCo should continue with mergers and acquisition not only to take over some new regional brands like it did while buying the majority stake in Wimm-Bill-Dann foods a Russian Milk and fruit juice Company in 2011.  It shall keep the options open for such large chains in individual countries and also it can look for acquisition some supply chain companies to keep it efficient and effective in its business.

PepsiCo also has a great arrangement of the items in bundled food sources and drinks classification. In every classification they have their impression in assembling and providing probably the best brands.

The organization saw the setup as profoundly correlative since the majority of its items could be burned-through together. PepsiCo is related with Consumer Goods Sector and Beverages Industry. Shopper Goods area is contained the accompanying enterprises: Beverages; Personal Goods; Food Products; Diversified Food; Household Goods and Home Construction; Food Distribution; Toys and Games.

Has the company diversified into attractive industries?

Yes, PepsiCo is diversified into attractive industries as explained below:

• PepsiCo is an organization known for an exceptionally differentiated item portfolio, both inside the refreshment business and in different enterprises, for example, the shopper bundled merchandise industry.
• Starting at 2019, PepsiCo flaunted 22 billion dollar brands, with its portfolio including a different blend of organizations like Quaker Oats, Tropicana, Bare chips, Pure Leaf chilled teas, to give some examples. The organization's approach of broadening had proceeded in 2018 with the acquisition of SodaStream for USD3.2 billion. PepsiCo had reacted proficiently to the changing business sector elements and moving shopper requests by zeroing in on different roads of development, for example, prepared to-drink teas and espressos, packaged and shimmering water and so forth Notwithstanding, experts had additionally asserted that regardless of the rising interest for bundled water and better beverages the market for carbonated beverages was producing more incomes. Against this background it still needed to be worked out assuming PepsiCo's expansion endeavours would yield the ideal outcomes.

What is the competitive strength of its business units?

To ensure the business competition strength and position of domination, PepsiCo shall have to continue monitoring the strategic position of some of the vulnerable brands like Lays, Cheetos, Gatorade, Fritos corn chips etc. in the countries where these are not the popular brands. All these brands have their unique customers and their marketing strategy shall have to carefully target each segment, product wise. The advertisement budgets shall have to increase to capture more market.  It shall not be a bad policy to introduce the PepsiCo brand name in bold as the promoters of these relatively small brands. This shall give customers the psychological confidence to buy and try these brands as these are manufactured by PepsiCo.

The Competitive strength of PepsiCo business units:

• Comprehensive item portfolio with 100 brands serving virtually every specialty in the refreshment, food and nibble businesses.
• PepsiCo's image portfolio is exceptionally differentiated. No contender has as many high acquiring brands as PepsiCo.
• It has been worked with favourable to dynamic and moderate person.
• PepsiCo possesses and showcases probably the most unmistakable worldwide brands, including Pepsi, Tropicana, Gatorade, Mountain Dew, Aquafina, Lay's, Doritos, Cheetos and numerous other well-known brands.
• According to IRI information, which estimated the most well-known U.S. nibble brands in the main portion of 2017, 8 of the 10 most well-known titbit brands were claimed by PepsiCo
• They centre around their utilization of scale, reach and dominance to assist with assembling a logically viable food structure; one that can resolve human issues for sustenance and satisfaction, and continue to drive monetary and social new development, without outperforming the normal furthest reaches of the planet.
• PepsiCo's supervisory group is responsive and proactive, and able to rebuild the association to accomplish greater benefit universally. 

Do they have adequate strategic and resource fit to contribute to increases in shareholder value?

Based on my evaluation, PepsiCo is an attractive company.  Food and beverage sales are active, and PepsiCo should be able to maintain success in the long-run because of strong market competition.  PepsiCo's biggest market player, Pepsi-Cola, alone, alone, should serve to hold the markets attention.

PepsiCo's portfolio provides opportunities for shareholders to receive above average market returns.  PepsiCo's strong market share, high product profitability, and diverse portfolio provide an advantage to stockholders in that, even if some products are selling at lower-than-anticipated rates, there will be other products able to compensate.

How should PepsiCo management best allocate management operating cash flow?

The cash flow allocations can be strategically decided every year for each brand and in each country. This is to ensure the less popular brands also gain in sale volumes making the overall operation of PepsiCo more efficient and ensure pick up of all the brands.  There is a lot of scope for capturing higher market segments for the less popular brands as the bigger market section for each of these products are now captured by other brands. More cash flow to these brands shall help them manage their markets, operation and supply chains more efficiently. Some tough sales and market share targets through acquisitions and larger distribution networks can be attempted.

Should the company consider new acquisitions?

I shall strongly recommend continuing investment growth in more acquisition and merger targets. Small regional or country specific competition brands with good strength of loyalty customers, distribution and packaging networks, good human resources and enjoying good brand values can be targeted.  In addition, bottlers, packagers, logistical companies should also be viewed and considered as possible targets for M&A.  In every country there are some very popular mineral and packaged drinking water companies that can be merged to improve the sale of Mountain Dew and Aquafina.  Similarly some tea companies can be targeted to improve the business of Lipton Teas.

Do some of the Quaker brands need to be divested?

A relook into the management of Quaker food brand products is immediately required. It is a strong brand which is respected as the best brand in the field of oats as a healthy food substitute. Thus, brand is being marketed and advertised much less than it deserves. Its marketing strategies also need to be reviewed. Recently the new Quaker oats in some local recipe forms had been introduced in some countries and they picked up in sales also. But the advertisements were withdrawn abruptly after a short period. The popularity also dipped subsequently.  Need is to prepare a strategy for long horizon for this brand, under a constant review to effect any revisions if required. I am sure a new marketing strategy can lift its market share and sales revenues drastically.

What other corporate strategies would you recommend to PepsiCo management?

• PepsiCo can review its policy of doing business in so many countries, if found a good alternative then it should focus on lesser number of countries with scope of higher growth of revenues and business.
• It may also look into the possibility of introduction of country specific readymade packaged foods which many local companies are introducing very successfully, targeting larger sections of customers used to these recipes.
• It may look into possible change in its advertising strategy with sponsoring more musical shows, sports tournaments and may attach its name to some popular adventure sports also.

Recommendation

In order to keep PepsiCo innovative and relevant for consumers, Indra Nooyi must continue to satisfy their customers' wants with new products and exciting marketing tactics.  PepsiCo must continue to deliver products with affordable, but competitive prices, along with variety.  PepsiCo saw how going into untapped markets turned into a great return on investment for them, so continuing to go into international markets comes with worldwide plants, international retailers, service routes, and distribution channels will only cause PepsiCo to grow exponentially.  There is still such an emphasis on eating healthy in the United States which is an area PepsiCo needs to grow more in.  PepsiCo could expand upon appealing to their customers by introducing lines of natural/organic ingredients to make their products, while maintaining the brand's goal of delivering good tasting drinks and snacks to their loyal customers.

In 2007, PepsiCo had $15 billion dollars of free cash flows to be projected from 2007 through 2009.  This amount of free cash flows could be used to penetrate into international markets for long term company growth.  PepsiCo has a huge opportunity in China's market where they only retained 36% of China's soft drink share and 16% of salty snacks share.  With China's government becoming less and less regulated, PepsiCo needs to move fast and get their products at the top of consumers' minds in China.  PepsiCo has 75% market share in Mexico, but they should not stop there.  They could promote their products to drive up sales. Same goes for Russia and Brazil, where extensive promotions will help them drastically.  As for the United States, PepsiCo needs to continue to bundle their products for consumers.  By consulting with extensive marketing research, improving retailer, customer and distributor relations, and strong logistical systems are all crucial aspects of PepsiCo continuing to thrive as a company.

• PepsiCo can review its policy of doing business in so many countries, if found a good alternative then it should focus on lesser number of countries with scope of higher growth of revenues and business.
• It may also look into the possibility of introduction of country specific readymade packaged foods which many local companies are introducing very successfully, targeting larger sections of customers used to these recipes.
• It may look into possible change in its advertising strategy with sponsoring more musical shows, sports tournaments and may attach its name to some popular adventure sports also.