Pepsi Case Study Essay
1 - Pepsi Case Study Essay introduction. Select a specific company of your choice. Read about this company and its current position. Based on your study, identify some of the important macro environmental opportunities and threats for this company. Solution: Pepsi Co: Revenuue- $ 60 Billion No. of employees:2,85,000approx 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.
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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 Nestle, 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.