Discuss about the Business Management Environmental Analysis.
Description of the company and relevant information
PepsiCo is known as world’s second largest soft drink company and the world’s largest potato chips selling brand. This report is based on analysis of PepsiCo Inc marketing strategies in order to achieve significant place. The report imbibes all practical efforts undertaken by PepsiCo in order to achieve relevant market growth. PepsiCo was formed due to the joint efforts of the Pepsi-Cola Company, Frito-Lay Inc. in the year 1965 to become PepsiCo Inc. Pepsi is known across the world as flagship product and signature drink of PepsiCo Inc.’s. Tropicana was acquired by the company in the year 1998 and it merged with The Quaker Oats Company in 2001. PepsiCo international is available across the globe in 200 countries and territories generating revenue of nearly $ 92 billion. The mission of PepsiCo is to become world’s leader in consumer product and to focus on becoming a convenient food and beverage. It wants to become market leader by acquiring a significant share through producing health drinks (Pepsico, 2017). The motive of PepsiCo is to produce healthy profits for the investors and to create ample of market opportunities for attaining growth and enrichment (West, Ford & Ibrahim, 2015). There motive is to act with honesty, fairness and integrity while obeying the law and regulations of the countries they are working in.
The company is known to manufacture and known to sell variety of salty and sweet grain based products, carbonated and non-carbonated drinks and other beverages. The company has attained long term sustainable growth through its operational activities by creating a competitive advantage through innovation (Rothaermel, 2015). The company is planning to acquire a huge market share by expanding business functions; it grew at the rate of 5.5 percent in year 2006.
Pestle analysis is an effective model used to analyze the macro environmental situation in a country. It is used by major country to understand the local situation. Business can only grow if the company is already aware about the situation in the country it is working. PepsiCo is a multinational organization with its function in more than 200 countries. It is necessary for a marketer to analyze the marketing situation in order to attain desired outcomes.
The porter five forces model is an important tool that is used for understanding the power of the business. It is a powerful tool used by companies in order to understand both the strength and weakness. Moreover the tool helps in analyzing the completive position it is considering (Banks, Vera, Pathak & Ballard, 2016). Five forces analysis help in assuming the five more important aspect of the company in order to determine the competitive power of the organization (Tanwar, 2013).
The various powers involved in the Porter’s five forces model is as follows:
Supplier Power
This help in analyzing the supplier’s power to increase the price related to the commodity. This particular factor is affected by various factors which directly depend upon the uniqueness of the product and services. The fewer supplier choices available in market the more powerful supplier are a t (Gopaldas, 2015).
The price of the product is bought down which is affected by number of factors like buyers power. It depends on the strength of every individual buyer and their choice in relation with the product. The factors affecting the cost of product depend upon customer’s choice. In case of few powerful buyers the seller has to work according to them.
There are number of factors affecting the buoying power of the customer. It is necessary to keep in account the capability of the competitor. This will help in equally attracting new services and products otherwise suppliers and buyers will switch to some other product. Selling a product which has monopoly in the market will help in attaining significant strength (Lawton, Doh & Rajwani, 2014).
There are constant threat from the substitute products available in t he market. The customer can switch to some other product in case if the product doesn’t satisfy the consumer. People might switch to another product either by doing it manually or through outsourcing (Aggarwal & Sharma, 2015).
The power of buyer is affected by a new entry. It is due to the ability of new competitor that can affect overall market conditions. The competitors can quickly enter into the market if there are fewer economies of scale, little protection for key technology. A person at a strong position than he can control the market position (Felin & Powell, 2016).
It is due to the global nature of the business that PepsiCo might face various external factors in its industry.
The coca cola is one of the fastest growing soft drink companies that can pose threat to the revenue of PepsiCo. Most of the firms in the food and beverages sectors are aggressive and follows an innovative marketing approach. PepsiCo is currently competing with international and local organizations. This component showcases that PepsiCo is facing a high level of competition from its rival s (David, David & David, 2014).
Customers are there top priority as per their mission statement. The consumers can easily shift to some new product as there are many companies providing similar products. The level of substitutes is very high causing a high level of bargaining power with the company… it is necessary for them to keep low prices in order to compete against others (Hill, Jones & Schilling, 2014).
It is recommended that PepsiCo should try to establish profitable relationship with the suppliers. The high overall power of PepsiCo option in acquiring raw material will help in reducing the bargaining power of the suppliers.
There are many companies in the market selling similar products. Hence it is necessary to examine the industry well in advance as this will help in giving satisfactory results. The consumers can easily shift to other products if they are not satisfied with it. The external factors are posing a great threat on PepsiCo where there are many chances that an individual can switch to some other product ((Luo, 2016).
PepsiCo should remain strong no matter there is possibility of new firms entering into the market. There is a moderate threat from the new firms as consumer can easily shift from one company to another. However there are loyal consumers who want Pepsi over the other local product due to its promising taste (Keegan & Campus, 2016).
Firstly PepsiCo should strive hard to expand human sustainability. It needs to focus on developing more healthy and innovative products by choosing an appropriate demography. This will not only create more opportunities but is one of the essential tools against its rivals. This will provide generous profits to PepsiCo.
Secondly, PepsiCo need to expand its beneficiary programs in underdeveloped countries. This will help in securing a better position against its major rival Coca Cola. CSR is one of the significant tools used by the business organization to create a sustainable position in the market.
Thirdly, it is suggested that PepsiCo should strive for the populate marker (Maruffi, Petri, & Malindretos, 2013). They need to focus on developing the Asian market due to possible growth. It needs to focus on a particular segment in the market which will help in attainment of desired results (Madadipouya, 2015).
Lastly, there is a necessity to implement a strong promotional technique which will help in securing a better position against its rival. In a modern age social media has become one of the most common manners to create awareness among people. They need to implement the strategies in a significant manner which will help in attainment of significant results.
Conclusion
The report is based on the success story of the world famous brand PepsiCo. It describes various strategies used by the brand in order to create success story against its competitors Coca Cola. The report provides a brief introducing into the history of the organization. The company has merged with various other organizations across the globe in order to achieve sustainable growth.
PESTEL analysis helps in understanding the macro environmental factors that can affect the growth of the organization on a long run. It is one of the most important tools that help in determining the strength while entering an international market. The porter five forces model is an important tool that is used for understanding the power of the business. It is a powerful tool used by companies in order to understand both the strength and weakness. Every business is suggested to understand the competition in the market in order to grow significantly. The report includes the porter 5 forces model describing the nature of buyer, consumer etc. this analysis will help in understanding the market strength of it. Lastly there are four recommendations related to the company in order to attain a competitive edge against Coca Cola. It is recommended that the company need to focus on upgrading promotional techniques in order to grow.
References
Aggarwal, M. S., & Sharma, B. (2015). Green HRM: Need of the hour ‘. International Journal of Management and Social Science Research Review, 1(8), 69.
Banks, M. A., Vera, D., Pathak, S., & Ballard, K. (2016). Stakeholder management as a source of competitive advantage. Organizational Dynamics, 1(45), 18-27.
David, M. E., David, F. R., & David, F. R. (2014). Mission statement theory and practice: A content analysis and new direction. International Journal of Business, Marketing & Decision Science, 7(1), 95-110.
Felin, T., & Powell, T. C. (2016). Designing Organizations for Dynamic Capabilities. California Management Review, 58(4), 78-96.
Gopaldas, A. (2015). Creating firm, customer, and societal value: Toward a theory of positive marketing. Journal of Business Research, 68(12), 2446-2451.
Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an integrated approach. Cengage Learning.
Hoffman, A. J., Corbett, C. J., Joglekar, N., & Wells, P. (2014). Industrial ecology as a source of competitive advantage. Journal of Industrial Ecology, 18(5), 597-602.
Keegan, T., & Campus, U. H. (2016). Strategic Management in an International Context.
Lawton, T. C., Doh, J. P., & Rajwani, T. (2014). Aligning for advantage.
Luo, Y. (2016). adaptation view in cross-cultural management. Management, 23(1).
Madadipouya, K. (2015). A review on the strategic use of it applications in achieving and sustaining competitive advantage.
Maruffi, B. L., Petri, W. R., & Malindretos, J. (2013). Corporate Social Responsibility and the Competitive Advantage of Multinational Corporations: What is the right Balance?. Journal of Global Business Issues, 7(2), 69.
Pepsico,(2017).(Online). Retrieved from: https://www.pepsico.com/ Accessed on: 3 February 2017
Rothaermel, F. T. (2015). Strategic management. New York, NY: McGraw-Hill.
Tanwar, R. (2013). Porter’s generic competitive strategies. Journal of Business and Management, 15(1), 11-17.
West, D., Ford, J., & Ibrahim, E. (2015). Strategic marketing: creating competitive advantage. Oxford University Press.
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