Strong brand name is one of the greatest strengths for PepsiCo.

It is one of the largest brands that could

be recognized be the people in the world. In all around the world the company use

the name “ PepsiCo” in every country in the world

. The strong brand presence makes it easier for the company to market its products around the world.
PepsiCo did not provide only the cola product but also provide various numbers of products. All these
brands have rode on the success of the company brand and have found it easy to sell since the company
brand in largely accepted in the market. The popularity of PepsiCo corporate brand has also made it
easier for the company to introduce new products in the market. All PepsiCo has to do in order to make
a new product

success is to attach it with the company’s corporate brand which

has already attained a significant level of brand loyalty in the beverage market.

PepsiCo is a large distribution network; this is the other

strength of PepsiCo. The organization’

s ability to take it product near the consumer is one of the core elements that define the company
success. The firm has managed to do this through creation of a massive distribution system. The
organization runs

15

bottling units in diverse geographical region, which enables the company to produce its products near
the consumers. By doing this, it reduces the transportation cost and storage cost of the company, which
leads to the higher profit as it reduces the expense.

Moreover, the company also has established good connection with small and mega retailers who sell
PepsiCo products to the final customers. Forming partnership with large retailers such as Wall- Mart has
enabled the company to expand its reach to the market. Also, partnership with small retail business has
helps the firm to take it products to even the remotest parts of the world. Apart from retail chains, the
company has also corporate with fast food restaurants around the world such as KFC, which have also
provided the company with a wide network of outlets.

III. b.
COMPETITIVE ADVANTAGES PepsiCo is in the beverage industry and it is one of the most competitive
industries in the world as there are numerous of products competing against one other. In order to
survive in the market, any company needs features that gives it an edge over it competitors. Innovative
line of products is one of the PepsiCo competitor advantage. The organization has been on fore front in
the development of innovative beverage products for different segments of the market. The company
has different groups of target market over 20-different product. The ability of the company to come up
with new and innovative products has

enabled the company to change as consumer’s needs evolve and

thereby remain relevant in the market. PepsiCo capability to respond quickly to market opportunity and
threats is the other competitor advantage. The organization

16

innovativeness provides it the capability to respond quickly to changes in the market. The company
convenient size also gives it the ability to change quickly. The firm structure is neither to small like most
of its competitors neither too large like its main competitor, Coca Cola. The relatively large size of the
company gives the organization access to resources that also make it easier for the company to move
quickly.

PepsiCo’s Strengths (Internal Strategic Factors)

PepsiCo’s continued global growth and prominence reflects the company’s strengths. This aspect of the
SWOT analysis framework outlines internal strategic factors that enable firms to fulfill their business
goals. The following are the most significant strengths of PepsiCo:

Strong brand image

Broad product mix

Extensive global production network

Extensive global distribution network

As a successful global company, PepsiCo has one of the strongest brands in the market. This strength
enables the firm to attract consumers to its new products. In addition, the broad product mix represents
PepsiCo’s increasing ability to reach various markets and segments, such as through Frito-Lay products,
Quaker products, and Pepsi products. PepsiCo’s extensive global production and distribution networks
are strengths that support the company’s international growth and expansion strategies. In this aspect
of the SWOT analysis, PepsiCo’s strengths are sufficient to support its global growth strategy.
Company Strengths

The 'Power of One' retailer alliance strategy meant close collaboration between PepsiCo's marketing
team and retailers, helping PepsiCo to understand consumer needs and reinforcing sales of both Pepsi
and Frito-Lay products.

PepsiCo's management team is responsive and proactive, and willing to restructure the organization to
achieve more profitability internationally.

The CEO, Indra Nooyi, is from India and retains strong ties to her home of Chennai; she is therefore
better able to understand the dynamics of the important Indian market than an outsider might be.

Product innovation is a major company strength.

PepsiCo is responsive to consumer and governmental concerns about health: the company had begun
to reformulate and repackage products to lower salt, fat and sugar content.

The broadness of PepsiCo's portfolio is a major strength, as is the fact that the company has leadership
across many product categories.

PepsiCo has an excellent ability to integrate acquired companies, turning them into profitable business
units quickly.

Dominant in the US salty snack segment with its Frito-Lay brand; also the largest seller of nonalcoholic
beverages in the US, with 26% market share in 2006.

Strengths in the SWOT Analysis of PepsiCo :

 Brand equity: it is one of the most prominent and famous brands in the world
in the food and beverage sector. It is also known as the brand of youth. It has
a high brand recognition and reputation. It has a brand valuation of $19.4
billion and it is ranked 29 in the Forbes most valuable brands list.
 Product portfolio performance: 2015 saw a decrease in the sale of soft
drinks. India as a country is evolving and becoming more health conscious.
 This can be noted from the 2015 analysis of top selling brands (in India) that
the top 5 beverages are only juices and sweet syrups. There is no soft drink
in the top 5.Pepsi has two products in the top 5 beverages sold in the
country.The top 5 beverages are in order:

Brand: Owned by: Market Share:

Real Dabur 8%

Tang Mondelez 6%

Slice PepsiCo 6%

Roohafza Hamdard 6%

Tropicana PepsiCo 6%

 So, even if Pepsi is second to Coca cola in terms of distribution of its Cola,
there are other footprints which Pepsi has because of its product portfolio.
 Strong Leadership: Under the leadership of Indra Nooyi PepsiCo has been
doing really well. It has managed to stay at number two position in the
complete food and beverage sector only behind Nestle in that field.
 Customer Loyalty: PepsiCo has an extremely loyal customer base. In its
beverage category all its soft drinks have an iconic taste and that’s why their
customers do not prefer to shift brands. They have emerged as a very strong
brand when it comes to juices and bottled water category. Frito-Lay has been
 one of the top-selling brands in the world with brands under it such as Doritos,
Lay’s, Funyuns, Uncle Chips, Cheetos, Tostitos and Walkers. They had
managed to grab 6 slots in the top 10 global snack brands with topping the
charts (all 3 spots) as well.
 Strong distribution: Pepsi has a global presence in more than 200 countries
providing them with a very good distribution network.
 Supply Chain: It has one of the best supply chain networks in the world,
making the products available throughout the world. Apart from this they also
have a very efficient reverse logistics associated with it.
 Tie-Ups: They have tie-ups with sports events and music concerts which
keeps them in the lime light and thereby increasing the brand recall. They
have sponsorships to major sports teams thereby standing with what the
brand is known for, youth and energy.
 Clear target audience: Pepsi, unline Coca Cola has always had a clear
target audience – the young crowd. It always targets youngsters through its
ads and generally the youngsters are shown to be smarter then the old ones.
The message is clear – Pepsi is the in thing.

Weaknesses in the SWOT analysis of Pepsi :

  Competition: It has heavy competition from Coca-Cola in their soft drinks
category. They are always neck to neck with each other. This competition
thereby provides a room for not so loyal customer base to switch brands
quickly.
 Products perceived as unhealthy: Most of the soft drinks of the PepsiCo is
perceived as unhealthy.
 Product Dependence: They are only present in the food and beverage
industry which may be harmful in the longer run. They need to diversify their
business to other product segments to become a global leader.
 Failed Products: Many failed products such as ‘Crystal Pepsi’ which hurts
the brand image of the PepsiCo and thereby giving room to the competitors
to grow.
 Brand Ambassadors: Wrong remarks or ill performance by the famous
personalities/celebrities, in turn, might damage the brand image of PepsiCo
as they are the face of the organisation. Over dependence on celebrities for
endorsements is a huge risk.
 Value addition: Pepsi is known to have advertisements which are targeted
towards youngsters. However, it is not known to display Value advertising
which is a characteristic of Coca cola. Coca cola has time and again focused
on the positive values of life, something which Pepsi can learn from them.

Opportunities in the SWOT analysis of Pepsi :

 Healthy Options: It should work more on improving the health implications
of their products and make the customer aware of the same. Diet Pepsi is a
positive move towards that direction.
 Diversification: Business diversification into different market segments is a
huge opportunity. They have the talent, resources and financial backing to do
the same. This can also be done by acquisitions.
 CSR: They can do more CSR activities to tackle the negative remarks that
hurt the brand image of the organisation and benefit the local people.
 R&D: Recently PepsiCo came out with healthier options in a soft drink. To
make 7Up by using the substitute of sugar called Stevia. This can prove to
be a game changer. More such research needs to be done. Focus more on
the diet drinks category. They have recently released a variant of their cola
sweetened with Stevia and sugar called Pepsi Next.
 Flavors: A brand which has risen strongly in the recent years is Paperboat.
Paperboat is known for its various flavors such as watermelon, raw mango
etc. Bringing in such flavors even in carbonated beverage form can help
Pepsi attract a larger market.

Threats in the SWOT analysis of PepsiCo :

  Competitors: PepsiCo’s main competitors are Coca-Cola, Kraft foods,
Nestle, Dr Peppers Snapple Group and Mondelez.
 Health Factor: The unhealthy factor associated with its products can take a
toll on the health conscious customers and might lose them. This can be
clearly seen by the fall of soft drinks sale.
 Economic Slowdown: With the recent reforms in the country PepsiCo might
see a drop in its sales due to a cash crunch in the economy. Other factors
such as recession and inflation may also impact sales of the company.
 Government Norms: Different norms of different countries might prove
difficult to handle and compliance with it as well.

Strengths
 Branding – One of PepsiCo’s top brands is of course Pepsi, one of the most recognized brands of the
world, ranked according to Interbrand. As of 2008 it ranked 26th amongst top 100 global brands.
Pepsi generates more than $15,000 million of annual sales. Pepsi is joined in broad recognition by
such PepsiCo brands as Diet Pepsi, Gatorade Mountain Dew, Thirst Quencher, Lay’s Potato Chips,
Lipton Teas (PepsiCo/Unilever Partnership), Tropicana Beverages, Fritos Corn, Tostitos Tortilla
Chips, Doritos Tortilla Chips, Aquafina Bottled Water, Cheetos Cheese Flavored Snacks, Quaker
Foods and Snacks, Ruffles Potato Chips, Mirinda, Tostitos Tortilla Chips, and Sierra Mist.

Opportunities
 Broadening of Product Base – PepsiCo is seeking to address one of its potential weaknesses;
dependency on US markets by acquiring Russia’s leading Juice Company, Lebedyansky, and V
Wwater in the United Kingdom. It continues to broaden its product base by introducing TrueNorth
Nut Snacks and increasing its Lipton Tea venture with Unilever. These recent initiatives will enable
PepsiCo to adjust to the changing lifestyles of its consumers.
 International Expansion – PepsiCo is in the midst of making a $1, 000 million investment in China,
and a $500 million investment in India. Both initiatives are part of its expansion into international
markets and a lessening of its dependence on US sales. In addition the company plans on major
capital initiatives in Brazil and Mexico.
 Growing Savory Snack and Bottled Water market in US – PepsiCo is positioned well to
capitalize on the growing bottle water market which is projected to be worth over $24 million by
2012. Products such as Aquafina, and Propel are well established products and in a position to ride
the upward crest.PepsiCo products such as, Doritos tortilla chips, Cheetos cheese flavored snacks,
Tostitos tortilla chips, Fritos corn chips, Ruffles potato chips, Sun Chips multigrain snacks, Rold
Gold pretzels, Santitas are also benefiting from a growing savory snack market which is projected to
grow as much as 27% by 2013, representing an increase of $28 million.

Threats
 Decline in Carbonated Drink Sales – Soft drink sales are projected to decline by as much as 2.7%
by 2012, down $ 63,459 million in value. PepsiCo is in the process of diversification, but is likely to
feel the impact of the projected decline.
 Potential Negative Impact of Government Regulations – It is anticipated that government
initiatives related to environmental, health and safety may have the potential to negatively impact
PepsiCo. For example, manufacturing, marketing, and distribution of food products may be altered as
a result of state, federal or local dictates. Preliminary studies on acrylamide seem to suggest that it
may cause cancer in laboratory animals when consumed in significant amounts. If the company has
to comply with a related regulation and add warning labels or place warnings in certain locations
where its products are sold, a negative impact may result for PepsiCo.
 Intense Competition – The Coca-Cola Company is PepsiCo’s primary competitors. But others
include Nestlé, Groupe Danone and Kraft Foods. Intense competition may influence pricing,
advertising, sales promotion initiatives undertaken by PepsiCo. Resently Coca-Cola passed PepsiCo
in Juice sales.
 Potential Disruption Due to Labor Unrest – Based upon recent history, PepsiCo may be vulnerable
to strikes and other labor disputes. In 2008 a strike in India shut down production for nearly an entire
month. This disrupted both manufacturing and distribution.
PepsiCo is a world leader in convenient snacks, foods and beverages with
revenues of more than $43 billion and over 198,000 employees. Take a journey
through our past and see the key milestones that define PepsiCo. Read more…
Disclaimer:
This case study has been compiled from information freely available from public
sources. It is merely intended to be used for educational purposes only.
 The strength of these brands is evident in PepsiCo’s presence in over 200 countries. The company
has the largest market share in the US beverage at 39%, and snack food market at 25%. Such brand
dominance insures loyalty and repetitive sales which contributes to over $15 million in annual sales
for the company
 Diversification – PepsiCo’s diversification is obvious in that the fact that each of its top 18 brands
generates annual sales of over $1,000 million. PepsiCo’s arsenal also includes ready-to-drink teas,
juice drinks, bottled water, as well as breakfast cereals, cakes and cake mixes.This broad product
base plus a multi-channel distribution system serve to help insulate PepsiCo from shifting business
climates.
 Distribution – The company delivers its products directly from manufacturing plants and
warehouses to customer warehouses and retail stores. This is part of a three pronged approach which
also includes employees making direct store deliveries of snacks and beverages and the use of third
party distribution services.

Weaknesses
 Overdependence on Wal-Mart – Sales to Wal-Mart represent approximately 12% of PepsiCo’s
total net revenue. Wal-Mart is PepsiCo’s largest customer. As a result PepsiCo’s fortunes are
influenced by the business strategy of Wal-Mart specifically its emphasis on private-label sales
which produce a higher profit margin than national brands. Wal-Mart’s low price themes put pressure
on PepsiCo to hold down prices.
 Overdependence on US Markets – Despite its international presence, 52% of its revenues originate
in the US. This concentration does leave PepsiCo somewhat vulnerable to the impact of changing
 economic conditions, and labor strikes. Large US customers could exploit PepsiCo’s lack of
bargaining power and negatively impact its revenues.
 Low Productivity – In 2008 PepsiCo had approximately 198,000 employees. Its revenue per
employee was $219,439, which was lower that its competitors. This may indicate comparatively low
productivity on the part of PepsiCo employees.
 Image Damage Due to Product Recall – Recently (2008) salmonella contamination forced PepsiCo
to pull Aunt Jemima pancake and waffle mix from retail shelves. This followed incidents of
exploding Diet Pepsi cans in 2007. Such occurrences damage company image and reduce consumer
confidence in PepsiCo products.