Market Analysis of PepsiCo

Question: Discuss about theMarket Analysis of PepsiCo. Answer: Introduction This report is the analysis of a famous company PepsiCo. For the analysis, marketing tools such as PESTEL analysis and five forces analysis has been used. Along with this, at the end of the report, recommendations also have been provided for the success and growth of the company in the world. In the introduction of the company, PepsiCo is the second largest brand of soft drink in the world. Along with this, this is also worlds largest manufacturer of potato chips. In this report, the efforts and strategies done by PepsiCo in the international market also has been analyzed. Pepsi is the famous soft drink among the people across the world. This is the best carbonated beverage in whole world. PepsiCo is the leading food and beverage company which makes and distributes the beverage products in more than 200 countries. In the food products made by PepsiCo, there are rice, pasta, dairy products, snacks, chips and cereals. The beverage product portfolio of the company includes juice, carbonated soft drinks, sports drinks, ready-to-drink tea and coffee and bottled water. Headquarter of the company is in Purchase, New York and there are around 274,000 employees in the company across the world. According to the Information Resources Inc. the company has owned various brands including Pepsi, Lays and Gatorade and is generating around $1 billion each in revenue (PepsiCo, 2017). The mission and vision of the company are as follows: Mission: The mission of the PepsiCo is to be premier consumer Products Company in the world by focusing on the convenient beverage and food products. The company always seeks to produce financial rewards as it provides many opportunities to its employees in terms of growth and success. The aim of the company is to do business in the market with the honesty, fairness and integrity. Vision: The vision of PepsiCo is to focus on the environmental stewardship, and such activities which provide benefits to the society and community. The vision of the company is to build shareholder value by making the company sustainable in the market (PepsiCo., 2017). PESTEL Analysis of the Company PepsiCo is the second biggest company in the world in terms of food and beverage products. To maintain this position, it is important for the company to outline the issues in the market by PESTEL analysis. In the case of PepsiCo, there are various external factors in the growth path of the company. So, the PESTEL analysis of the PepsiCo will be helpful for the company to boot up the long term growth (Gillespie, 2007). Political Factor The actions of government affect the actions of the company. The PepsiCo must address the political factors for the future growth and success. The major economies country such as United States and Canada are the politically stable countries so, there can be the growth opportunities for the PepsiCo. Along with this, the trend of intergovernmental corporation can bring the opportunities for the company for international expansion. But, there is one more point which can be the threat for the company. The actions of government against carbonated soft drink can be a major threat for the company. It can reduce the revenue of the PepsiCo from the affected segments. So, PepsiCo must focus on the change of its product to overcome from the recognized threats related to carbonated drink (Housing Industry Association, 2011). Economic Factors The performance of PepsiCo is directly connected with the economy of the countries. The impact of the economic conditions on the company has been covered in this part. PepsiCo has the opportunity to expand the business on the basis of the economic stability of the developed countries such as United States. Along with this, there are many developing countries which have high growth rates such as countries in Asia. In those countries, company can also expand its business. But there is current slowdown in the economy of the China which is threatening the international growth of the PepsiCo. By the analysis, it can be said that PepsiCo has to make sure that to achieve the stable international growth; the market diversification is the best option (Kumar, 2014). Social or Socio-Cultural Factors There are many consumers of PepsiCo who follow the trend of socio-cultural factor. The social factor identifies the impact of social conditions on the performance of the company in the international market. For the PepsiCo, higher health consciousness is the threat as due to sugar, fat content and salt in the products, the consumer are very conscious for their health. But this can be the opportunity for the company as company can improve its products to address such concerns. Along with this, PepsiCo can take benefit of the busy lifestyles of the customers such as in industrializing and urban market in the world. Due to busy lifestyle, people mostly purchase ready-to-eat food products. Further, to maximize the revenue of the company, PepsiCo can improve the quality of the products based on the attitude of the consumers. Based on this analysis, it can be said that PepsiCo must change the marketing strategies on the basis of the consumers behavior (West, 2015). Technological Factor The business of PepsiCo is hardly dependent on the technologies. This factor identifies the link between the company and technological change. On the basis of research and development in the industry, PepsiCo can improve the RD investment for own company. It will be helpful for the company to improve the competency in the market. Along with this, the company can also develop the knowledge management systems for supporting the different business purposes such as strategic decision making and product innovation. Further, to improve the business performance company can increase the automated process in the business. It can be said that PepsiCo should use and include new technologies to improve the competitiveness of the business. Environmental Factors The supply chain and the brand image of the PepsiCo are directly connected with the environment concern. This factor identifies the environmental trends and issues that always affect the employees, customers, and the company. Due to the customers, the PepsiCo is focusing on improving its sustainability. For this objective, the company can adopt waste disposal strategy such as recycling. By adopting this strategy, the company will be able gain more support from the customers. Further, climate change can be a major threat for the supply chain of PepsiCo. To minimize the risk of climate change, the company can diversify its global supply chain. So, to attract and retain the customers and stabilize the supply chain, the PepsiCo must improve its positive impact on the environment (Roper, 2012). Legal Factors There are the legal requirements for doing the business in the international market. PepsiCo has the opportunity to satisfy the legal regulations by providing best quality products. Along with this, the company can improve by focusing on the product safety and health effect concerns. The fair regulatory changes are giving opportunities to the PepsiCo to grow in the market. The company has the expectations that the current strategic decision will satisfy the requirements in terms of law for long term. So, PepsiCo can focus on the innovation and development of the products to satisfy and regulations (Yuksel, 2012). From the above analysis it can be said that the PepsiCo must focus some areas i.e. business sustainability, product innovation and development by focusing on quality and health effects, diversification of supply chain and expansion of business in developing countries. Porters Five Forces Analysis The success of the PepsiCo is connected to its capabilities in the business. The company capable enough to overcome from challenges which company has faced in the global market. The five forces analysis model is developed by the Michael Porter to identify the external factors that affect the companies. There is the need of effective strategies in PepsiCo to give response to the external factors. Due to the global nature of the business, PepsiCo has to face many external factors. The impact of external factors can be analyzed by the Porters five forces (Burke, van Stel Thurik, 2010). Competitive Rivalry or Competitors (Strong Force) The Coca-Cola Company is the biggest factor of the PepsiCo. There are many food and beverage companies in the industry and most of the companies are aggressive. In terms of product innovation and development, they are applying strong force on PepsiCo. Competitive rivalry is the strong force for the PepsiCo as consumers can easily switch to another company when they will get new and innovative products. Along with this, PepsiCo is facing competition from many other companies such as Coca-Cola and many other small and medium companies. So, PepsiCo is facing strong competitive rivalry which is one of the most pressing concerns. Bargaining Power of Buyers or Customer (Strong Force) It is clear that consumers can easily move towards other products. So, this strengthens the ability of the consumers to influence the PepsiCo. Along with this, now consumers have all the information by which they can differentiate the product of PepsiCo and other companies. Further, there are many substitutes available in the market which is capable enough for the customers to stay away from the products of PepsiCo. So, PepsiCo has to make sure about the satisfaction of the customers to maximize the profit and revenue. Bargaining Power of Suppliers (Weak Force) PepsiCo should maintain good relationships with the suppliers. The supply of products and raw material increases the business of the PepsiCo. It reduces the bargaining power of suppliers in the company. The bargaining power is weak in the company because there is low forward integration which reduces the control of the suppliers on the supply chain of the PepsiCo. So, low bargaining power of the suppliers is good for the companies (Dobbs, 2014). Threat of Substitutes (Strong Force) Based on the preferences and the choice of the customers, there can be substitutes of the PepsiCos products. The substitutes of the products of PepsiCo are very satisfactory. For instance, the customers enjoy the real fruit juice and coffee products rather than drinking Pepsi and soft drinks. So, customers can easily shift towards these substitutes. The substitutes are very affordable for the customers. Based on this analysis, this can be said that there are the strong threats of substitutes which are faced by PepsiCo (Grundy, 2006). Threats of New Entrants (Moderate Force) The PepsiCo has to be competitive as there are many new firms are entering in the market. The new entrants are threatening the PepsiCo as consumers can easily change their decisions related to consumption of the product. But, there are some customers who are loyal for one brand. In this way, PepsiCo has a level to protect from new entrants. Along with this, it is very difficult for the new companies to develop high cost brand to compete with the PepsiCo. So, new entrants are the secondary concern for PepsiCo (Roy, 2011). Recommendations There are some recommendations for PepsiCo to stay competitive in the market. The recommendations are as follows: Based on the five forces analysis, there is the strong competition in the market so; PepsiCo should improve its competitiveness through aggressive marketing. PepsiCo should consider current marketing trends, such as healthy lifestyles and environmental safety. PepsiCo should keep innovations and investments in the healthy food products. Company should launch healthier products of carbonate beverages. This will help to reduce the issues related safety of health. PepsiCo should revise its marketing strategy and monitor its current and potential customers to get the success in the global market. PepsiCo should keep investing in green resources for the financial benefits on the long terms basis and to increase its image as Green Company. Conclusion This report is the analysis of a famous company PepsiCo. For the analysis, marketing tools such as PESTEL analysis and five forces analysis has been done. The international market always presents the challenges and issues which threaten the market opportunities for the PepsiCo. It has been analyzed that For PepsiCo, it is important to maintain its strong position in the market as it has second position in the world in terms of food and beverage products. For this, the company must address the potential problems in the market. References Burke, A., van Stel, A., Thurik, R. (2010). Blue ocean vs. five forces. Harvard Business Review. 88(5). 28-29 Dobbs, M. (2014). Guidelines for applying Porters five forces framework: a set of industry analysis templates: Competitiveness Review. 24(1). 32-45 Gillespie, A. (2007). PESTEL analysis of the macro-environment: Foundations of Economics. USA: Oxford University Press Grundy, T. (2006). Rethinking and reinventing Michael Porters five forces model: Strategic Change. 15(5). 213-229 Housing Industry Association. (2011). An Introduction to PESTLE Analysis. HIA Ltd Kumar, A., (2014). Finding weakness in the competitor strength. Retrieved on 16th February 2017 from https://business.articlesarchive.net/finding-weakness-in-the-competitor-strength.html PepsiCo, (2017). Overview: Company History. Retrieved on 16th February 2017 from https://www.pepsico.com/PEP_Company/Overview/index.cfm PepsiCo., (2017). Performance with Purpose. Retrieved on 16th February 2017 from https://www.pepsico.com/Purpose/Performance-with-Purpose Roper, K., (2012). BIM Implementation: PESTEL Drivers Barriers (Cross-national Analysis). In World Workplace 2012. IFMA Roy, D. (2011). Strategic Foresight and Porters Five Forces. GRIN Verlag West, L., (2015). What is the Problem with Soft Drinks. Retrieved on 16th February 2017 from https://environment.about.com/od/health/a/soft_drinks.htm Yuksel, I., (2012). Developing a multi-criteria decision making model for PESTEL analysis: International Journal of Business and Management. 7(24). 52