PepsiCo: Strategies For Growth And Competitive Advantage

Nature of Business and Present Situation

Generic strategies are the specific strategies of an organization through which it try to achieve competitive advantage over its rivals (Salavou and Sergaki 2013). The organization chosen for this study is PepsiCo. It is an American multinational food and beverage company, which operates on global basis (Pepsico.com 2017). The study will introduce the nature and present scenario of the organization. The study will evaluate the inside-out and outside-in approach of the organization towards analyzing its business environment. Moreover, the study will also evaluate the product, market and competitive strategies of the organization. Furthermore, the study will also provide recommendation and future strategies for the organization.

PepsiCo is a popular American multinational beverage corporation offering food, drinks and snacks all over the world (Wu, Huang and Chou 2014). Moreover, the organization operates under beverage industry and mostly popular for its carbonated soft drinks under the namesake of Pepsi. It is the leading food and beverage company, which manufactures and distributes products all around the world and operates in more than 200 countries. The food products of the organization include flavored snacks, rice, chips, pasta, cereals and dairy-based products (Pepsico.com 2017). On other hand, the beverage products of the organization include carbonated soft drinks, sport drinks, ready-to-ready to drink tea and coffee, juices and bottled water (Jolink and Niesten 2015). 

Table 1: Nature of PepsiCo Business

(Source: Hafiz 2015)

PepsiCo is mostly popular for its carbonated soft drinks like Pepsi-Cola, Diet Pepsi and Mountain Dew, Mirinda, Tropicana and many more. The organization has strength of talented people towards making uniqueness all the products it manufactures. It believes in acting ethically and responsibly towards getting success in the business. Moreover, the organization has reduced the sugar level, saturated fat and salt in all of its product categories. Furthermore, the increasing demand of nutritional foods and beverages increases the growth potential of the organization.

PepsiCo is facing huge competition from the top brands like Coca-Cola, Campbell Soup and Kellogg. PepsiCo is quite capable of beating this competitive through providing uniqueness in all their product range. The share of the organization has hit an all-time earlier in this year and has gained 12% rise in the market share (Hossain, Kumar and Rahman 2016). With the popular snacks and beverage products, the organization has become the leading contributor to the retail growth of US in 2014. Moreover, the organization has contributed almost $1 billion in US sales growth (Sethuraman and Gielens 2014). The stable high profitable brands of the organization are mainly Pepsi, Doritos, Quaker and Gatorade, which make majority of its revenue. Last year, the organization has invested more than $718 million to its product innovation (Hafiz 2015). As per Pepsi, its innovative has been accounted for 9% of its total revenue in 2014. As per the company survey of 2016, PepsiCo has revenue of over US$ 62.799 billion (Xie and Wang 2014). However, while considering the market share, the PepsiCo is lagging behind the Coca-Cola in US (Katsoulacos et al. 2014).

Factors

The outside-in approach indicates the fact that long-term shareholder value can be obtained through listening and providing value to the customers. Moreover, this value should always be better than the other competitors. PepsiCo always looks at its business from customer’s perspectives and then only design its business process and products (Farazuddin, Ahmed and Maddali 2016). The organization always incorporates the changing needs of the customers in all their product categories. In this way, the organization has identified the health importance of the customers. Therefore, the organization reduced the sugar level and saturated the salt and fat level in all their snacks and beverage products. Moreover, the organization maintains high level of interaction with the customers and provides value their preference throughout their business model (Block, Fisch and Sandner 2014).

The organization has turned on crowd-sourcing in their business model in which organization ask for suggestion to the customers regarding any changes or additions in their product feature (Radulescu and Tîrla 2014). In this way, the organization gets new ideas towards their product development. This approach of the organization also minimizes the customer complaints through increasing customer interaction. The organization offers true benefits to the customers through offering three global categories namely beverages, snacks and nutrition (Simanis and Duke 2014). Moreover, the organization is also highly capable of managing customer engagement through interacting with them over the social media channels.

Table 2: General Environment Analysis

(Source: Wu and Huang and Chou 2014)

Inside out approach believes on the facts that internal strength and weakness of the organization prevails the success of the organization. PepsiCo has got the largest brand recognition within the world. The strong brand recognition of the organization has made it capable of positioning its products all around the world (Lopez, Liu and Zhu 2015). Furthermore, the diversified product portfolio of the organization has increased its customer volume. The success of the organization is also highly dependent on its strong distribution network. Strong relationship with the small and mega retailers has made the organization to reach their products nearby the customers (Banterle et al. 2014). Moreover, partnership with the small retailers has enabled the organization to take its products to remotest parts of the world. Furthermore, the organization has employee strength of over 264,000 and all the employees are highly dedicated to the organizational success (Pepsico.com 2017).

Table 3: Competitor Environment Analysis

(Source: Hafiz 2015)

Present Scenario

Table 4: Product Strategy of PepsiCo

(Source: Chong and Hashim 2016)

Table 5: Market Strategy of PepsiCo

(Source: Busco et al. 2014)

Table 6: Competitive Strategy of PepsiCo

(Source: CharlEBoiS et al. 2015)

From the above, it can be identified that PepsiCo falls in the differentiation source of competitive advantage as it has extremely penetrated into food segments, which none of its rival have achieved yet. Product differentiation has resulted in making PepsiCo ahead of competition in USA.

PepsiCo can diversify their product portfolio for minimizing the risk factor of its business. Until now, the organization is only limited within food and beverage products. Therefore, the organization is to depend only on food and drink lover people. This dependency can bring risk for the organization. Therefore, the organization should diversify its product portfolio in some other categories. This diversification can be anything including cloths or some other grocery products.

The people of US are now extremely health conscious and they are now highly concerned about the ingredients within the foods and drinks they consume. Therefore, PepsiCo should concentrate more on manufacturing healthy foods and drinks for the customers in this market. However, the organization has already launched some healthy foods and health drinks, but the promotion for these products is not strong. The customers are not highly aware of such healthy products. Therefore, the organization should adopt aggressive promotional tools towards promoting such healthy products.

The organization has strong presence in US market and has huge customer bases that lead to high sales volume. Obviously, they have presence beyond US market, but the organization is not much focused on these foreign markets towards promoting their products. It is ultimately weakening their competitive position in those markets. Therefore, PepsiCo should give more focus on these markets and attract the foreign customers towards increasing the overall sales of the organization. It is needs strong promotional activities in those foreign markets. Moreover, it would make PepsiCo a stronger company and give it much more of an edge overall.

Conclusion

While concluding the study, it can be said that PepsiCo is a highly popular American multinational food and beverage company. The organization offers wide range of carbonated soft drinks, health drinks, sports drinks, foods, breakfast and snacks. It operates on almost 200 countries and has made strong global network. As per the survey of 2016, the organization has overall revenue of US$ 62.799 billion. However, the organization is lagging behind Coca-Cola in terms of its market share. The organization has created high customer value for gaining more customer attention. Moreover, the dedication level of the employees has brought the success of the organization. The organization has wide range of product portfolio and it sells its products as affordable price for gaining competitive advantage over the competitors. On the other hand, the organization has started to launch various soft drinks for gaining competitive advantage. Moreover, the organization maintains high level of interaction with the customers through social media channels. However, the organization should enhance their promotional activities for promoting the healthier products.

Outside-In and Inside-Out view of strategic planning

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