SWOT and PEST analysis of Pepsi Co - World leader in convenient snacks

PepsiCo is a world leader in convenient snacks, foods and beverages with revenues of more than$60 billion and over 285,000 employees. PepsiCo is dedicated to "Performance with Purpose". Simlpy put, this implies running business the right way: working sensibly with integrity and with great moral standards. PepsiCo's beverage manufacturing, sales and distribution operating unit, Pepsi Beverages Company (PCB) is in United States, Mexico and Canada. PBC manages roughly 75 percent of PepsiCo's North America beverage demand. Its diverse profile includes some of the most well known drink manufacturers, such as Pepsi, Aquafina, Mountain Dew, SoBe, Gatorade,Amp Energy and Lipton.

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SWOT Analysis of PepsiCo

Strenghts

  • PepsiCo is the largest beverage company in North America and second largest company worldwide based on net revenue earned.
  • PepsiCo has a highly diversified portfolio with carbonated and noncarbonated beverages and also salty, sweet and cereal based snacks.
  • PepsiCo possess 5 billion-dollar brands and has a strong brand image all over the world.
  • PepsiCo has had acquired numerous brands Pizza Hut, Taco Bell, and Kentucky Fried Chicken (KFC) in order to distribute and market them with its own brand.
  • PepsiCo’s "Banner Sun" potato chip is the world's number one potato chip brand and largest food brand.
  • It has the strongest global snack chip portfolio Frito-Lay by offering five leading snack chip products.
  • PepsiCo has achieved their policy to hire people from all over the world.
  • PepsiCo was the first company which introduces the use of cans and bottles and believes in newer and innovative product packaging.
  • Pepsi's bottling system is one of their biggest qualities which gives them edge over its competitors It permits them to lead business on a worldwide scale while also maintaining a local approach. PepsiCo offers three items through the same distribution channel. For example, producing Pepsi, Gatorade and Tropicana at the same time, is big chance to diminish costs, enhance effectiveness and smooth out the effect of seasonal fluctuations in demand for specific product.
  • PepsiCo mainly fights on high advertising, market share and high product differentiation.
  • PepsiCo brand stands for quality has loyal customers all over the world.
  • PepsiCo has one of the biggest production and distribution facilities in beverage and snack industry.

• PepsiCo engages in many projects to help people and therefore considered as a socially responsible firm

Weakness

  • PepsiCo is too away from its biggest competitors Coca-Cola in international market-the demand for its product is highly elastic.
  • PepsiCo biggest competitor, Coca-Cola has a strong brand image and customers loyalty. It is hard to compete with Coca-Cola.
  • PepsiCo had a vast number of discontinued product lines which badly affected the company’s image.
  • PepsiCo had to done some questionable practices in the past, like using tap water and labeling it as mountain spring water.
  • PepsiCo has high operating costs which results in low net profit margin.
  • Pepsi tends to affects the teeth, which is a health concern for people. Because of sugar in Pepsi, too much drinking of Pepsi may cause health issues. Drinking Pepsi continously is a health issue, since drinking of Pepsi daily affects you body after few years.
  • PepsiCo is highly dependent on the markets of U.S and Walt-Mart. It generates 52%of its sales from U.S market and 12% from Walt-Mart.

Opportunities

  • People are becoming health conscious and there is an increasing trend toward healthy foods. Focus more toward healthy foods could create an advantage opportunity to establish an image of a socially responsible company.
  • PepsiCo could go for mergers and acquisitions to build a strong position all over the world.
  • PepsiCo could go for further expansion in their bolted drinking water line as there is increased bottled drinking water consumption, 11% increase is reported.
  • PepsiCo could also expand in snacks market as the projected growth in snacks market would reached at $560 billion.
  • World population is expected to grow at 8 billion 2025, 99% of this growth will take place in developing countries. PepsiCo has a huge market there.

Threats

  • PepiCo’s biggest threat is its competitor Coke. Coke is world’s largest beverage company, dealing in more than 200 countries with a very strong brand name and loyal customers.
  • Other companies dealing in snack industry like ConAgra food and General Mills can be a big threat to PepsiCo.
  • Local brands like kola Real in central and South America is big threat to PepsiCo.
  • Many substitutes are available in market like tea, coffee, water etc.
  • PepsiCo deals in different countries and every country has its own policies and procedures that PepsiCo has to face.
  • People are becoming health conscious and are going for substitutes as different studies have proved that daily consumption of carbonated drinks can be dangerous for health.
  • Water scarcity is another threat faced by PepsiCo as it can badly affect the production of Aquafina and also water is one of the main ingredients of its other drinks.
  • Disclosing negative information on the labels due to legal requirements

By going through the SWOT Analysis of PepsiCo competitors can clearly know what you are up against. Competitors should use information smartly to recognize their weak point, enhance their own strong points accordingly, comprehend how to deal with the risks and use the possibilities. If the SWOT analysis is efficiently done then the competitors even have the opportunity over come obtain multinationals like PepsiCo.

Also, PEST Analysis is done to understand effect of external effects on your company. It is analytical tool for ideal company planning. It covers Political, Environmental, Social and Technological factors that affect your business.

PEST Analysis of PepsiCo

Political Factors

PepsiCo is non alcoholic beverage and has to follow regulated by FDA with consistency. Also, it deals in different markets and every market has its own policies and procedures that are either stringent or either relaxed. Specially cross border situations are very different and Pepsi has to adapt to these changes accordingly.

PepsiCo’s competitors use competitive pricing strategy and Pepsi has to always keep this in mind.

PepsiCo has to also deal with government’s focus on stricter water pollution norms and land acquisition for new factories in different countries.

Economic Factors

Usually whenever there is an economic downturn faced by the economy, companies sales are badly affected and they have to restructure their strategies.. Also, with falling profits companies sometimes have to undergo downsizing. Economic scenario has a great influence on any business. But the economic in 2008 was in Pepsi’s favor. It resulted in increased sales of its beverages as people were jobless and were sitting at home, spending more time with family and friends.

Also, fuel prices greatly affect PepsiC0’s transport costs as there is a lot of distribution involved.

Availability of labor is another very important economic factor .In some countries the labor is quite expensive and if it’s cheap then sometimes labor is not well trained.

Social Factors

Social factors greatly affects Pepsi, as it’s a non-alcoholic beverage that deals worldwide it has keep in mind stark and strict differences of cultures the world wide. Mostly, the social implications are seen in advertising campaigns like some countries have religious festivals, so Pepsi has to keep in line with all these festivals and design advertising campaign accordingly to cash upon the opportunity to the fullest.

Also the solid waste management program affects the operations at PepsiCo. PepsiCo has to be extra careful when it comes to waste disposable in order to maintain its image of a socially responsible firm.

PepsiCo is one of the few companies that operate almost in every country. PepsiCo has an implementation of SAP software and wind power manufacturing in India .Also, PepsiCo introduced plastic bottles and cans and came up with innovative and newer designs.

With the technologies coming in, companies have changed their strategies and operations accordingly. A recent trend that has been seen and something that almost every company is inclining toward is Social Media.

The social media outburst has led to progressively interactive engagement with the buyers with continuous comes about so Pepsi has to be aware of all the developments that take place with keeping in mind the increased use of technology by youth for their benefit how can PepsiCo use this to maintain and increase its customer’s loyality.

PEST Analysis; by analyzing the political , social, enviromental and technical aspects, the company or its competitors can discover new possibilities and can identify the advanced warning of threats. It shows the possible risks that can be due to change in company environment and allows the company to form accordingly rather than going against it. Furthermore, it gives you purpose perspective of the new industry that the company goes into in and allows you discover new places according to the requirement of the industry.

Lastly, it allows the business to avoid projects that have possibilities to fall short, for reasons beyond control and finally it allows company to discover new markets.

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