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Pricipal of management full report about pepsico
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Faculty of Business Administration
American International University-Bangladesh
(AIUB)
Report on PepsiCo
Summited to
Afdalin Bin Haque
Lecturer at AIUB
Department of Management
Summited by
Group name: lotus
SL Name ID
1. ENAMUL HAQUE 15-30070-2
2. ARIF RAIHAN 15-28267-1
3. SUDIPTA SAHA 13-24730-2
4. MASRUR RAHMAN 15-29081-1
5. AREFIN BILLAH MRIDUL 15-29568-2
Subject: principles of management
Section: L
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Acknowledgement
First of all, we wish to express our gratitude to the almighty ALLAH for giving us the strength to
perform us responsibilities complete the report within the stipulated time.
We are deeply indebted to our Faculty Mr. Afdalin bin haque, for his kind help.
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Table of Content
content Page
number
Executive Summary
Introduction: 4
literature review 5-6
What isSWOT? Why SWOT analysisisimportant,andhow itaffectsstrategicdecision
making………………………………………………………………………………………………………………………………………
What isBCG Matrix?.......................................................................................................................
ExplainPorter’scompetitive five forcesmodel.Analyseyourchosencompany’scompetitive
environment…………………………………………………………………………………………………………………………………
5
5
6
Findings& Analysis 7-11
Strength:Explainthe strengthsof the company………………………………………………………………………..
Weaknesses:Discussthe weaknessesof the company…………………………………………………………………
Opportunities:Findthe opportunitiesof the business. ……………………………………………………………….
Threats:What are the threatsfor the businessinthe external environment?................................
Plotthe companyproductsin the BCG Matrix withproperexplanation……………………………………….
Analyse yourchosencompany’scompetitive environmentintermsof the Porter’scompetitive
five forcesmodel………………………………………………………………………………………………………………………….
What strategiesare theyusingtomarkettheirproducts?(Corporate levelstrategy, business
level strategiesandothers……………………………………………………………………………………………………………
7
7
7
8
9
11
Recommendations 12
Match organizational strengthstoenvironmental opportunities (how thesecanhelpthe
businesstogainprofit) ……………………………………………………………………………………………………………
Correct weaknesses (how theyovercome thoseweaknesses) andguardagainstthreats (how the
businesscanprotectitself fromthose threats) ………………………………………………………………………
What strategiesdoyourecommend?...............................................................................................
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13
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Executive Summary
In 1893 Caleb Bradham, a young pharmacist from New Bern, North Carolina, begins
experimenting with many different soft drinks. In 1898, one of Caleb's formulations, known as
"Brad's Drink" a combination of carbonated water, sugar, vanilla, rare oils and cola nuts, is
renamed "Pepsi-Cola". On August 28, 1898, Pepsi-Cola received its first logo.
Their main strength is High level of customer loyalty for most of the brands within product
portfolio and Extensive experiences in mergers and acquisitions.
Their main strength is high level of customer loyalty for most of the brands within product portfolio
And extensive experiences in mergers and acquisitions. Their main weakness is high level of
dependence on large supermarkets such as wal-mart And overdependence on domestic market in
the usa. Increasing presence in emerging markets such as China and India. Their main threat is
new competitors from emerging economies from the east.
Star product of PepsiCo: Pepsi, mountain dew, lay’ potato chips, Gatorade, Diet Pepsi, Tropicana
beverages, 7 up (outside us), are star product because they grapes 70 % of market share of each
product industry. growth rate also increasing day by day. Here net cash flow is 15 billion dollars.
The main recommendation for PepsiCo is Continue to expand with their “Human sustainability”.
The healthy eating market is a great fact that will continue to grow in the future and will provide
gigantic profits if PEPSICO is able to obtain a large market share.
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IINTRODUCTION
COMPANY BACKGROUND
Back in 1880’s, the recipe for Pepsi was developed by Caleb Bradham in New Bern, North
Carolina who had renamed it “Pepsi-Cola “in 1898. As the cola industry develops in popularity,
Caleb created Pepsi-Cola Company in 1902 and registered a patent for his recipe in 1903.
As Pepsi-Cola Company went bankrupt in 1931, Charles Guft who owned a syrup manufacturing
in Baltimore Maryland acquires the trademark and recipe to Loft Inc. In the year 1941, Pepsi was
formally absorbed to Loft, and Loft Inc. rebrands its company name to Pepsi Cola Company.
Up until today, Pepsi Cola Company– further will be mentioned as PepsiCo– has successfully
expanded it area of products through mergers and acquisition of other companies, such as Frito-
Lay Company, Quaker Oat Company and other companies.
PepsiCo has developed its divisions into 5, PepsiCo Americas Foods (PAF), PepsiCo Americas
Beverages (PAB), PepsiCo Europe, and PepsiCo Asia, Middle East and Africa (AMEA). Each of
the division has their own R&D team to match local needs of the customers. That explains the
broad product line aside from PepsiCo’s massive acquisitions.
Organ gram:
Chairman
Directors
Assistant
Director
General
Manager
Directors
Assistant
Directors
General
Manager
Directors
Asistant
Director
General
Manager
Managing
Director
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1: Literature review:
1.1 SWOT: A study undertaken by an organization to identify its internal strengths and
weaknesses, as well as its external opportunities and threats.
1.2 Why SWOT analysis is important:A SWOT analysis is a structured planning method used to
evaluate the strengths, weaknesses, opportunities and threats involved in a project or in
a business venture. A SWOT analysis can be carried out for a product, place, industry or person.
It involves specifying the objective of the business venture or project and identifying the internal
and external factors that are favorable and unfavorable to achieve that objective.. The degree to
which the internal environment of the firm matches with the external environment is expressed
by the concept of strategic.
Strengths: characteristics of the business or project that give it an advantage over others.
Weaknesses: characteristics that place the business or project at a disadvantage relative to others.
Opportunities: elements that the project could exploit to its advantage.
Threats: elements in the environment that could cause trouble for the business or project.
Identification of SWOTs is important because they can inform later steps in planning to achieve
the objective.
First, the decision makers should consider whether the objective is attainable, given the SWOTs.
If the objective is not attainable a different objective must be selected and the process repeated.
Users of SWOT analysis need to ask and answer questions that generate meaningful information
for each category (strengths, weaknesses, opportunities, and threats) to make the analysis useful
and find their competitive advantage.
1.3 BCG MATRIX: Was develop by the boston consulting growth and introduced the idea that
an organization`s various businesses could be evaluated and plotted using a 2 X 2 matrix to
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identify which is offered high potential and which were a drain on organization resource. The
horizontal axis represents market shear and the vertical axis indicates anticipated market growth.
A business unit is evaluated using a SWOT analysis and placed is one of the four categories.
1.4. Five forces model:
Threat of new entrants: how likely is it that new competitor will come into the industry?
Threat or substitutes: How likely is it that other industries product can be substitutes for our
industry`s products?
Bargaining power of buyer: How much bargaining power do buyers have?
Bargaining power of suppliers: How much bargaining power do suppliers have?
Current rivalry: How intense is the rivalry among current industry competitors?
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Findings & Analysis:
Strength:
Strong leadership from CEO Indra Nooyi
Large, yet focused brand portfolio
High level ofcustomer loyalty for most ofthe brands within product portfolio
Extensive experiences in mergers and acquisitions
Integrated supply-chain and distribution practices across PepsiCo brands
Weaknesses:
High level ofdependence on large supermarkets such asWal-Mart
Overdependence ondomestic market in the USA
“Aquanfina” tap water scandal
Tropicana Kids orange juice product recall.
Opportunities:
Increasing presence in emerging markets such asChina and India
Engagement in product differentiation strategy
Rising revenues through increasing the share ofhealthy food and beverages in product portfolio
Threats:
Newcompetitors from emerging economies from the East
High amounts of sugar or salt in products being criticized bygovernment and non-government health
organizations
Rapid decline in the sales ofcarbonated drinks
Newproduct recalls due toquality scandals
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PEPSICO BCG MATRIX ANALYSIS
Stars: Pepsi, mountain dew, lay’ potato chips, Gatorade, Diet Pepsi, Tropicana beverages, 7up (outside
us), are star product because they grapes 70% ofmarket share of each product industry. growth rate
also increasing dayby day. Here net cash flow is 15billion dollars.
Cash cows: Doritos tortilla chips, Lipton teas, Quaker foods and snacks, Quaker foods and snacks,
Cheetos, mirinda, are cash cow of PepsiCo. Because they have low growth rate, high market share.
Here net cash flow is about 10 billion dollars.
Question marks: Ruffles potato chips, Aquafina bottled water, Pepsi MaxTostitos tortilla chips, this
kind of product of PepsiCo we can put in question marks site because they have high growth rate, low
market share. Here net cash flow is 5billion dollars.
Dogs: Sierra Mist, Fritos corn chips, Walkers potato crisps, this kind of products we can put ondog
side because they have low growth rate, low market share. From those product PepsiCo net cash flow
is 0billion that means they earn few million from those products.
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Explain Porter’s competitive five forces model.
Analyze your chosen company’s competitive
environment.
The Porter’s Five Forces tool is simple but powerful tool for understanding where power lies in a
business situation. This is useful, because it helps you understand both the strength of your current
competitive position and the strength of a position you’re considering moving into.
Five Forces Analysis assumes that there are five important forces that determine competitive power in a
business situation. These are :
1.. Bargaining Power of Suppliers : Here you access how easy it is for suppliers to drive up price. This
is driven bythe number of suppliers of each keyinput, the uniqueness of their product or service, their
strength and control over you, the cost of switching from one to another.
2.Bargaining Power ofCustomers (Buyers) : Here you ask yourself how easy it is for buyers to drive
price down. Again, this is driven bythe number of buyers, the importance of each individual buyer to
your business, the cost to them ofswitching from your products and services tothose of someone else,
and soon.
3.Current Competitive Rivalry : If you have many competitors, and they offer equally attractive
products and services, then you will most likely have little power in the situation, because suppliers and
buyers will go elsewhere if they don’t get agood deal from you.
4.Threat of Substitute Products orServices: This is affected by the ability ofyour customers to find a
different way ofdoing what you do.
5.Threat of New Entrants: Power is also affected bythe ability of people toenter your market. If it
costs little in time or money to enter your market and complete effectively, if there are few economies
of scale in place, or if you have little protection for your key technologies, then new competitors can
quickly enter your market and weaken you position.
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In every business there are competitors, monopoly market is rare cause with now day’s people always
come out with some twist with the old concept. Same as our company “Pepsi Co.” they have their
competitors which are :
Coca-Cola
Lipton
Sprite
7up
Mirinda
Fanta
Mountain Dew
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What strategies are they using to market their products?
(Corporate level strategy, business level strategies and
others.
PepsiCo adopted business level strategy byengage in alow cost differentiation strategy
bytaking advantage ofeconomies ofscale through mass productionofits productsandby
differing their productthrough tasteand marketing.
Apricing strategy in which a PepsiCooffers arelatively low price to stimulate demand and
gain market share. it is oneofthe generic marketing strategies that can beadoptedbyany
company. And is usually employed where the producthas few orno competitive advantage
orwhere economies ofscale are achievable with higher productionvolumes also called low
price strategy.
In year 2009, even when the recessionends PepsiCoInc. made anannouncement about
creating new productsatlow prices to continue offering discounts in its Frito-Lay and
beverage business.
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Recommendations:
Business environment is the sum total of all external and internal factors that influence a
business. You should keep in mind that external factors and internal factors can influence each
other and work together to affect a business.
External Factor
Political factors are governmental activities and political conditions that may affect your
business. PepsiCo is a biggest company it is top in the market. But is a major factor but PepsiCo
made it
Macroeconomic factors are factors that affect the entire economy, not just your business.
Examples include things like interest rates, unemployment rates, currency exchange rates,
consumer confidence, consumer discretionary income, consumer savings rates, recessions, and
depressions. PepsiCo is so much micro economical
Social factors are basically sociological factors related to general society and social relations
that affect your business. Social factors include social movements. PepsiCo made it very
carefully but every time social factors not remain under control
Technological factors are technological innovations that can either benefit or hurt your
business. Some technological innovations can increase company’s productivity PepsiCo has
solved this factor.
Internal factors
Value system:
The value system of the founders and those at the helm of the affairs has important bearing on
the choice of business, the mission and objectives of the organization, business policies and
practices. It is a widely accepted fact that the extent to which the value system is shared by all in
the organization is an important factor contributing to success.
Missionand Objectives:
The business domain of the company, priorities, directions of development, business
philosophy, business policy etc.
Management structure and Nature:
The organizational structure, the composition of the Board of
Directors, professionalization of management etc., are important factors influencing business
decisions. Some management structures and styles delay decision making while some
others facilitate quick decision-making.
Human resources:
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The characteristics of the human resource like skill, quality, morale, commitment, attitude etc. It
is a strong or weak point of a company
Company image and Brand equity:
The image of the company matters while raising finance, forming joint ventures or
the other alliances, soliciting marketing intermediaries, entering purchase or sale
contracts, launching new products etc.
Miscellaneous Factors:
There are a number of other internal factors which contribute to the business
success/failures or influence the decision-making.
Strength of PepsiCo
Strong leadership from CEO Indra Nooyi
leadership is a great power of acompany PepsiCo has strong enough
Large, yetfocusedbrand
they have thousands of product in the market and they are a famous brand & people trust their product
High levelof customer loyalty for most of the brands within product
people like PepsiCo’s product very much for their loyalty and their services. They trust PepsiCo aswell its will
make a huge profitable and safe business
supply-chain and distribution practices across PepsiCo brands
it’s avery good strength supply chain is needed strongly. PepsiCo has it if the product is not available in the e
market how people take it.
How does PepsiCo strength & environment make
it profitable?
Noquestion about PepsiCo’s inter factors of environment. It is ok not only okits good.
External factors is more profitable. Like they have good chain supply. Its means their management structure is
well going.
Customer loyalty is very need in business and PepsiCo have it. Sothat its means social factors is also well going
as well political factors is also in it. Soits look like that every external factors of environment becomes astrength
of PepsiCo.
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Weakness & way toovercome
High levelof dependence onlarge supermarkets such as Wal-Mart:
PepsiCo canmake over this weakness by taking some steps like they can depends onretailer shop or open
their own PepsiCo shop where only PepsiCo’s product will besold
Overdependence ondomestic market in the USA:
USA is abiggest and most challenging market ofthe world PepsiCo can make over this weakness by opening
business in the other country
“Aquafina” tapwater scandal
they can make over this problem aswell. They can built new source of water and built water purifier and restart
the water business
Tropicana Kids orange juice product recall: everybody learn from the past so why not PepsiCo. They can
remake kids orange juice and catch the market again but make sure that’s qualities.
Correct weaknesses (how they overcome those
weaknesses) and guard against threats (how the
business can protect itself from those threats
Threats & way to overcame
Newcompetitors from emerging economies from the East: Inbusiness sight competitors are always gives pain
from your back orfront. They should bereadyfor that. They canmake some different offers. Like combo offers
buy 3get one free orreduce value
High amounts ofsugarorsaltin products being criticized bygovernment and non-government health
organizations: PepsiCo canbuilt verities ofsame product torecover this threats. Like low sugar low salt low fat of
this same product. Ex diet cokediet Pepsi
Rapid decline inthe salesofcarbonated drinks: for this threats they canmake various thing. Like combo offers,
reduce value, make value in to 10152025like this amount.
Newproduct recalls due toquality: PepsiCo needs to recheck that’s product and make sure it’s better quality
and remarketed that product
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Strategic Recommendation for PEPSICO.
PEPSICO is currently a strong worldwide leader in the food and beverage industry. Throughout its growth, it
has stayed true to its mission and objectives, while becoming a dominant force within the U.S.A as well as
abroad. PEPSICO known throughout the world for their quality products and customer care. PEPSICO should
make no major changes toits plan. However, like in any business situation there are areas that PEPSI Cocan
improve upon. Some of the recommendations are as follows:
• Continue to expand with their “Human sustainability”. The healthy eating market is a great fact that
will continue to grow in the future and will provide gigantic profits if PEPSICO is able to obtain alarge market
share.
• Expand more social benefits, especially for those developing nations. Pepsi’s main competitor Coca-
Cola has implemented awater purification program for African villages which provides avaluable need and at
the same time introducing their brand name where it was before unknown. If Pepsi followed this strategy with
food products and water purification it too would significantly increase brand recognition.
• Capture more of the aging population’s market share.
• PEPSICO should improve their employee relations in order tocreate employees all over the world that
will promote the product both during workday and in their personal life in order to create “word of mouth
watering”.
• PEPSICO should look to cut some of their expenses as they currently has 10billion dollar more in
revenue than the competition but they have a similar Net income of 5.5billion dollar.
• PEPSICO needs to continue toexpand their market share in the markets where they currently have a
strong presence in order tomaintain their market share and their footprint in the marketplace.
PEPSICO should become more proactive in the health food/product marketplace rather than being reactive to
the market trends. They need to improve their responsiveness and future projections to market trends.
Conclusion:
PepsiCo is avery large company offering low-cost products in several industries. It remains to beeasily
understandable due tothe similarity of its complement products. Due to the current high demand and popularity
in PepsiCo products along with the company actions to adapt to ahealthier preference market, the long-term
prospects for the company appear to be good. The company should continue to grow at astandard rate. The
management of PepsiCo is currently filled with honest and experienced employees. They have plans in place to
reduce costs and expand their snack segment along with expanding the amount ofhealthy products offered.
While PepsiCo’s management appears strong currently, retirements could cause it to change soon. PepsiCo also
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is not currently available at an attractive price. While the company is low risk and will likely continue to be
profitable, there is alow possibility for ahigh return oninvestment.
References
Company’s official website (www.pepsico.com )
Wikipedia ( www.wikipedia.com )