Strategic Policies Of PepsiCo: SWOT Analysis And Marketing Strategies

SWOT Analysis of PepsiCo

This report will discuss strategic policies of PepsiCo. It is a multinational American company which basically deals in the beverages, food products, etc. It was found in 1965 with the merger with Cola Company and it was named as Pepsi-Cola Company. They have set up their brand image in almost all countries across the globe. With these achievements they also have an achieved a big competitor Coca-Cola which is also an American based multinational company. They both are very big competitors for each other and then local brands come for competition in their way depends upon the country. Under this report, PepsiCo company’s strategic policies will be discussed for their success in coming future. PepsiCo company’s strengths, weaknesses, opportunities and threats i.e. SWOT analysis would be done. With this analysis, company’s current strategic policies will be evaluated and as per the dynamic environment and changing customer’s demands, adaptation of new strategic policies will be determined. As per the current conditions of the market, alternative policies will also be building up for removing glitch conditions in the working procedure of the PepsiCo (Freeman, 2010). PepsiCo should also develop their policies in relation for the fulfillment of the social responsibility.

Strategic Capability of PepsiCo

PepsiCo is a multinational brand which is situated in almost all parts of the world and for maintaining the same image in those parts; they continuously try to improve their methods of working, quality of their beverages, maintaining the same taste in their cold drinks, etc. Strategic Capability determines the ability to perform their business activities for achieving appropriate success. This capability also includes the adaptation of set of effective competitive strategies that helps the organization to perform well in the competitive environment (Lin, et. al., 2012).

• Value: This aspect of the strategic capability of the organization determines to perform in such a manner so that it can beat its competitors’ strategies. Another alternative way states to overcome from own weaknesses so that positive results could be obtained.
• Rare: This aspect defines the relation of the price of the product with the strategic capabilities of the PepsiCo. Under this approach, as per the price of the product value should be delivered to the customers for keeping the company’s products unique and separate from competitors.
• Inimitability: This term defines the secret formulas of the PepsiCo for manufacturing their famous product such as beverages, food products, snacks, etc. These formulas helps the PepsiCo for building their separate image in the competitive market till the time their competitors cannot find a way to produce matching quality products. For prevention of this, company can use various cure measures for keeping their secret formulas in safe.
• Non-substitutability: Under this aspect of the VRIN approach of measuring the strategic capability of the PepsiCo, if competitors gets success in producing the substitute of the primary product produced by PepsiCo then they need to adopt some strategies related to the price of the products in terms of providing exciting offers such as discount on price, tour packages for lucky winners, etc. to beat its competitors’ policies.  

Strengths of PepsiCo

• It is the second largest firm across the globe in their industry. They are big seller and manufacture of beverage, food products, etc. PepsiCo has the secret formulas for producing their drinks and food product that makes them unique from its competitors.
• Pepsi has the very good brand image in various parts of the world. Due to this image in the market they have occupied a great place in the competitive markets. This also includes their pricing strategy which helps the organization to build strong competition for the market (Muzumdar, 2014).
• They have large choices of products such as they deliver varieties of beverages, food products. Competitors’ non-ability to produce substitute for PepsiCo’s products also results in the strength of the organization.
• Pepsi Co has production house in almost every part of the world where they delivers their unique product which becomes the strongest point for the organization and greatest harm to its competitors.
• PepsiCo has the great distribution network through which they have served their beverages and food products in rare places also. From cities to the villages, their products are distributed.
• Most important strength of the PepsiCo is that they believe in delivering the goods as per the spending of the consumers. For instance, if a consumer is paying $2 for a cold drink then he/she will get the drink for the same amount, it means their profit margins are limited and they believe in consumer satisfaction (Gandhi & Jain, 2011).

• Coca-Cola is the primary competitor and it also becomes weakness for PepsiCo due to less demand of their products in the market. Coca-Cola has developed the substitute with great improvement to beat their potion in the market.
• Brand promotion becomes the biggest weakness of the product because for promotion of the brand a huge is being invested due to which product’s price raises. This burden lays down on the consumer hence, consumer decreases consumption due to its high prices and switch on the other brands. Brand promotion and huge investment made in the promotion decreases the productivity of the organization.
• PepsiCo uses artificial preservatives and color which are very harmful for the human being’ body and other ingredients used for the manufacturing of beverages products are also not suitable for human body. In various places, PepsiCo products are banned as thee are not adequate for human’s body (Basu & Basu, 2010). To recover from this they should adopt producing healthier drinks which could help the consumer to gain some nutrients or minerals.
• PepsiCo is not able to set up its adequate image in the rest parts of the world except North America as their 80% revenues comes from there only.

In a marketing environment, numbers of competitive factors are present that can act as the threat for the PepsiCo. Such factors are entrance of the new brands in the beverage manufacturing industry, substitutes produced by its primary competitor i.e. Coca-Cola, consumer’s tastes and preferences, etc. All these are the opportunities as well as threats on the other side for PepsiCo because with these factors, macro environment factors also presents as PepsiCo is a multinational brand hence, they needs to deal with the factors like political, economic, social, etc. factors of the macro environment to overcome from its threats and opportunities as well as to consume some benefits of competitive market (Huang, 2011).

• Pepsi Company has the opportunity of entering into new markets of the world. Before entering into new market, its political, social and other relevant factors should be analyzed adequately to avoid glitches in setting up factory places.
• Through promotion of giving employment opportunities to the local public, PepsiCo could set up its effective image in the competitive market. Producing user friendly and environment friendly products also increases chances for PepsiCo to gain adequate position (Khan, et. al., 2013).

• The most important and biggest threat for PepsiCo is the entry of the new brands in the beverage producing industry. As PepsiCo is not enjoying its place in the market due to aggressive competition from the Coca-Cola Company and up to this more companies’ entrance could reduce PepsiCo’s importance in the cold drink and food product industry.
• Coca-Cola has produced substitute of the PepsiCo’s famous and most consumed product i.e. Pepsi cold drink, which is being the threat for the PepsiCo because companies are also working on producing their own formula rather copying of PepsiCo’s products (Ozimek & Stone, 2011).
• Another big threats for the PepsiCo could be in the form of industry rivalry, consumer’ tastes and preferences, etc. Industry rivalry includes the aggressive completion in terms of making advertisement and promotional activities by determining the competitor’s weaknesses and bad qualities of their products.   

After evaluation of SWOT analysis of the organization, management has asked the marketing team along with the other concerned teams of the organization to develop strategy or a set of strategies for performing well in the competitive environment of the beverage industry. Strategic capability of the organization is also reviewed for the purpose of making marketing strategies more effective (Teece, 2010).

Merging with Local Brands 

Evaluation of Current Strategic Policies

PepsiCo has adapted the option of merger with other small and effective local brands of the particular country to set up its good image or goodwill in front of the public of the particular country. Merger will also help the PepsiCo in terms of financially, in terms of competitor’s risks, etc. Strategic partnerships for a period of time or for a completion of certain projects, PepsiCo takes initiative for the merger in many big parts of the world. Such as Tingyi in China which is a great and emerging distributor and manufacturer of beverages in China. PepsiCo merges with this organization to set up its goodwill in the states of China and the same was adopted by the PepsiCo in India through Tata group in delivering the drinking water. With the merger, PepsiCo should concentrate on its strategic capability of maintaining and developing value based products (Varadarajan, 2012).

PepsiCo’s marketing strategy along with its managerial strategies focuses on developing its good image in the markets of the developing countries of Asia continent and in other continents as well. In these continents, most of the countries are emerging rapidly towards the development and for development these countries requires financial help as well as good effective technologies. To take advantage of this situation, PepsiCo set up its production places along with maintaining its strategic capabilities to beat the local competition (Hoskisson, et. al., 2013).

PepsiCo needs to evaluate its capabilities like value; rare selection of strategies, inimitability and non-substitutability to remove to maintain its product’s quality and this will also help the organization to build an effective position in the market. Not any other brand has earned this kind of goodwill as they Coca-Cola and PepsiCo have earned in almost every part of the world.  For maintain the number of consumers in every part of the world as well as for increasing the number of the consumers for their rapid growth, PepsiCo should maintain its quality of their cold drinks, potato chips and of other products also. This helps the company to introduce Coca-Cola in strong competition of maintaining quality of the product (Sun, 2010).

PepsiCo is blessed with strongest resource which is secret formula of producing cold drinks and potato chips. Through these resources, their products results in the great taste which are generally accepted by almost all age group people. Apart from this, they also have advanced technologies through which they can produce number of cold drink bottles in a day to satisfy its consumer demand and the most important, they needs to work keeping in mind the environmental, social and political factors of the particular country so that their performance could not get ruined in between due to these factors  (Demil & Lecocq, 2010).

Alternative Strategic Policies

PepsiCo should adopt some of the effective marketing strategies to setup a great image in the competitive environment of the business industry. Marketing mix, PESTLE analysis, market segmentation, target marketing, etc. could also be involved in the marketing plan for the PepsiCo (Ryan, 2016).

Apart from these strategies to be included in the current business strategy for the PepsiCo, management should concentrate on adaptation of the 5Cs technique which is also forms a part of the organizational framework of the strategic management. 5Cs stands for Commercial schedule, capabilities, reducing cost of production, focus on collaboration, and capital returns. As per these techniques, organization should concentrate on performing these into their daily lifecycle.

All these strategies which are used by the PepsiCo in its current marketing plan are in relevance to their strategic capabilities discussed above as per the VRIN technique.  While developing these strategies, environmental issues should be taken care. Every manufacturing company is liable to take adequate license of the particular country before commencing the production activities.

Generic Strategy

• PepsiCo should adequately use its resources for reducing the cost of the product and for developing effective image in the global market. PepsiCo has some unique and exclusive secret formulas through which they manufacture their cold drinks and food products.  
• Quality of their products such as cold drinks i.e. Pepsi, Mirinda, and Lay’s potato chips, diet Pepsi, etc. These all should be provided with consistent taste and flavor. Changes in the quality of the product may be beneficial for the organization and vice versa.
• Reduction in the quality of the products could create negative situation for the organization. Company should research by conducting some surveys for making some innovations because without conducting research programs, success guaranty may result in against the company (Turker, 2013).

• This strategy includes the procedures and methods for beating strategies made by the competitors. Product’s prices could be reduced to beat the competitor in terms of prices and consumer will purchase the product in which he/she saves certain amount.
• Various offers such as meeting with celebrities, cash backs, holiday packages, etc. could be introduced for the promotion of the product. In these strategies, consumers are informed to send the codes given in the packaging of the product and then randomly one or certain number of consumers is chosen for the selected prizes.
• Change in the packaging of the product i.e. making attractive bottle of the cold drink could also increase the sales volume of the PepsiCo (McWilliams & Siegel, 2011).

	Generic	Competitive
Suitability	This strategy helps the PepsiCo in long run as well as it also relate to the strategic capabilities of the organization.	With this strategy organization’s survival is difficult as it is dependent on making policies and procedures to deal with the competitors.
Acceptability	This strategy is based on the frameworks and policies made by the organization for achieving objectives.	This strategy could be accepted by the organization as a whole as they are struggling with the main issue of competition.
Feasibility	This is a strategy which survives in the practical life as well as it has also obtained adequate results for many organizations of the same industry.	This strategy is also accepted and executed by lot of organizations of the same industry to beat their competitor’s policies and measures.

As per the above discussion about the alternative strategies for PepsiCo, both the strategies are necessary for their survival because generic staregy will concentrate on the basic activities for fulfilling the requirements of the consumers as well as to adopt unique and advanced techniques for adequate results. And competitive strategy will help the PepsiCo to build its effective image in the competitive world of beverage industry. Hence both should be adopted by the PepsiCo for achieving its set targets and objectives.

Features adopted by PepsiCo in relation to Ethical and Social Responsibility   

PepsiCo which is a cold drink, snacks and food products manufacturing, distributing multinational company whose base location is America and rapidly they have set up their goodwill in almost every emerging part of the world (Carroll & Shabana, 2010). For maintaining and developing good image in the rest of the world is a big opportunity for PepsiCo and for the same they have adopted a set of unique techniques which are as follows:

Quality of Cold drinks: Cold drink manufacturing company always being in controversies for their product quality and this is the major issue for their survival in the dynamic environment of the business. PepsiCo and its primary and main competitor Coca-Cola, they both are involve1d in production of cold drinks. For producing one liter cold drink, lot of liters of pure water is consumed and which is not good symptom from the point of view of society and it is also not adequate as per the ethical considerations of the country. Every organization that is involved in producing, manufacturing, distributing, etc. in the market should consider the relevant factors of social responsibility and ethical, legal consideration to avoid any kind of glitch in the performance of the company. As per these considerations, PepsiCo should concentrate on inventing some unique techniques to produce cold drinks which consume less water and their factories could produce less pollution to save the environment as well as to obey their social and ethical responsibilities (Lindgreen & Swaen, 2010).

Marketing Strategies for PepsiCo

Employment Opportunities: As per this feature, every organization needs to evaluate requirement of manpower within the organization to perform and achieve adequate targets for the organization. PepsiCo has also adopted this feature and they have focused on employment of people from the local area in which production place is situated. This helps the company to save the migration cost incurred to import the employees from native place and this is also helpful in reducing unemployment for the place in which company has set up their factory place (Connolly, et. al., 2016).

PepsiCo has developed various ethical and social responsibility codes of conducts and every employee of the organization is bound to follow all those conducts. Some of the codes are:

• Adequate/professional behavior in workplace;
• Work with integrity;
• Business activities should be performed as per the policies set up by the management;
• Employees should understand their accountability (Werther & Chandler, 2010).

PepsiCo’s management and market research team analyzes that these codes of conducts which are built for the benefit of the organization are not followed by the employees in fair manner. Employees are working according to their comfort zones and their work performance is getting declined rapidly.

Due to these issues, PepsiCo is also facing some issues in regards to the conflict amongst the team members because team leaders are not much effective in handling the whole team. Social responsibility towards the society, business environment and towards the legal and other aspects of the organization is also not followed.

Management has decided to amend these policies and a group of certain members will be appointed in that group along with the head member from the management who could directly analyze the issues of the organization and those who are not performing as per the organization’s policies should be treated in strict manner (Vogel, 2010).

Conclusion

This report concluded the strategic capabilities of the Pepsi Company in various terms such as in terms of financial, physical and in terms of the manpower. All these terms are necessary for an organization to perform in adequate manner in the business environment. PepsiCo’s competitive strategies were also evaluated to make certain changes in those strategies because PepsiCo is not able to perform well in the other parts of the globe except some American cities. Approximate 70% revenues of the PepsiCo are generated from the North America and other parts of the America. Its primary competitor i.e. Coca-Cola has set up its great brand image in the rest parts of the world and this is the main reason PepsiCo is not able to set up its brand image in those areas (Carroll & Shabana, 2010). Some ethical, legal and social responsibilities of the organization were also discussed so that company could not face any other challenges except the competition from the Coca-Cola Company.

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