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PepsiCo Case Study
Transcript of PepsiCo Case Study
1. What is PepsiCo’s corporate strategy? Briefly identify the business strategies that PepsiCo is using in each of its consumer business segments in 2008.
Focus: sustaining performance.
Close relationships with distributor allies
2. What is your assessment of the long-term attractiveness of the industries represented in PepsiCo’s business portfolio?
The continue growth of the company's Frito-Lay brand.
The Strength of the company's beverage deviation
The 'Power of One'
3. What is your assessment of the competitive strength of PepsiCo’s different business units?
5. Does PepsiCo’s portfolio exhibit good strategic fit? What value-chain match-ups do you see? What opportunities for skills transfer, cost sharing, or brand sharing do you see?
7. Based on the preceding analysis, what is your overall evaluation of PepsiCo’s business portfolio in 2008? Does the portfolio provide the company’s shareholders with an opportunity for above-average market returns?
8. What strategic actions should Indra Nooyi take to sustain the corporation’s impressive financial and market performance? Should its free cash flows be used to fund additional share repurchase plans, pay higher dividends, make acquisitions, expand internationally, or for other purposes? What other strategic actions should be pursued by corporate level management?
6. Does PepsiCo's portfolio exhibit good resource fit? what are the cash flow characteristics of each of PepsiCo's four segments? Which businesses are the strongest contributors to PepsiCo's free cash flows?
4. What does a 9-cell industry attractiveness.business strength matrix displaying Pepsi Co's business units look like?
Businesses are ranked mid-high level of industry attractiveness.
long run: Pepsi cola sales may suffer due to alternatives such as Aquafina, Teas, juices.
Holds competitive strength in Frito Lay, Gatorade, Aquafina, Pepsi Cola
Due to:brand name recognition, promotion, innovation
The co. does show a good strategic fit.
Matchups: cost sharing benefits among hot fill operations of Tropicana, Dole, SoBe.
Distribution:cost sharing/skill transfer with Gatorade & other beverages.( Aquafina, SoBe)
Sales and Marketing: focus on cross- marketing Frito Lay products with convenience beverages.
PepsiCo is a large corporation
encompasses many brands: Quaker Oats, Aunt Jemima, Lipton, Tropicana, Aquafina, Gatorade, SoBe, Propel, Rice-A-Roni
Have four Main sectors
North America Beverages
The management team is attempting to maintain the high levels of sales and organizational efficiency that they previously enjoyed
Making an effort to go "green"
healthier snack foods
healthier foods in general
Trying to increase international presence
Net Revenue Contribution
International sector: dramatically increasing
Quaker Oats: dramatically decreasing
Frito-Lay: slightly decreasing
North America Beverages: slightly decreasing
International sector growing the most
Quaker Oats growing the least
reduce promotional costs
increase in sales for both business units
based on differentiation instead of cost leadership
has to highly invest in new flavors, formulas, and packaging to compete
PepsiCo has a flexible distribution network
products are brought to the market through vending distribution networks, direct store delivery, and broker-warehouse.
resources stretched to the limit
Too much diversification causes internal problems
Cash Flow Growth Rate:
International Sector- 19% between 2006 and 2007
Frito-Lay: 9% between 2006 and 2007
North America Beverages- (1%) between 2006 and 2007
Quaker Oats- (10%) between 2006 and 2007
Strengths: Frito-Lay and PepsiCo International
Weakness- Quaker Oats
PepsiCo profitable as a whole= good returns for invstors
Improve international portion
Cash Flows help grow the company
Let go of Quaker Oats
New ideas= new revenue