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PepsiCo

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by

Jan Wilken

on 17 June 2014

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Transcript of PepsiCo

History (1)
1890s:
Pepsi-Cola was created in the early 1890s by pharmacist
Caleb Bradham

1965:
PepsiCo Inc. was established through the merger of Pepsi-Cola and Frito-Lay

1973:
"Foods International" is established to market snack foods around the world

1977-78:
PepsiCo acquires Pizza Hut and Taco Bell
(Kentucky Fried Chicken follows 1986)

1985:
PepsiCo is now the largest company in the beverage industry and its products are available in nearly 150 countries

1989:
PepsiCo acquires Walkers Crisps and Smith Crisps, two of UK's leading snack food companies






1997:
PepsiCo spins off KFC, Pizza Hut and Taco Bell

1997 - 2007:
Reshaping the company through acquisitions
History (2)
The Quaker Oats Acquisition
at 13,9 billion, PepsiCo's largest acquisition

number 1 brand of oatmeals in US (above 60 % market share)

Gatorade, leader in isotonic drinks category, was part of Quaker with sales of $ 2 billion in 1983 and annually increasing sales of 10 % in the 1990s

PepsiCo became successful bidder in 2001 prevailing against Coca-Cola, Danone and Nestlé

Acquisitions after 2001
"tuck-in" acquisitions of small, fast growing food and beverage companies in international and US market

expand their portfolio of brands throughout the world

Total acqusition 2005: $ 1,1 billion
" " 2006: $ 522 million
" " 2007: $ 1,3 billion

increase of revenues from $20 billion in 2000 to more than $39,5 billion in 2007
2006:
Indra Nooyi named as CEO of PepsiCo

2008:
Pepsi announces plans to invest $1 billion in China over the next 4 years as part of the strategy to expand in emerging markets

2010:
Pepsi acquired its two largest bottlers "Pepsi Bottling Group" and "PepsiAmericas"





History
Mission
Stock Price Development
The Company
1 of 3 leading food and beverage
providers worldwide
CEO Indra Nooyi
2013 net revenue: $66 billion
250.000 employees worldwide
#1 competitor of Coca-Cola
Home Market: North America -
51% of worldwide revenue
distributes products for brands without distribution channels
Porter's Five Forces
Threat of New Market Entrants
Government encourages foreign
investors to invest in the US-market

Easy access to distribution channels

but

well-established (own bottling group)
loyal costumers
Bargaining Power of Suppliers
many raw-material suppliers in the US

low switching costs

high power due to brand image and reputation

Pepsi Bottling Group

cooperation with farmers ensuring quality


Low Threat
Low Threat
Intra-Industry Rivalry
Coca-Cola
Nestlé
Mondélez

still behind Coca-Cola in beverage market

still behind Nestlé and Mondelez in food market
High Threat
Bargaining Power of Buyers

already at a very low price

easily affordable and accessible

most buyers buy more than one product

majority prefers softdrinks

own vending machines
Low Threat
Threat of Substitute
Consumer preference is more the taste than the price
Pepsi tastes are very significant

Loyal costumers

Energy-Drinks
Upswing of Redbull
Low to Moderate Threat
Portfolio
157 brands
63% Food, 37% beverages
22 brands with revenue higher than $1 billion
Pepsi-Cola around $21 billion
"Our mission is to be the world's premier consumer products company focused on convenient foods and beverages"
Vision
"Our vision is put into action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholder value by making PepsiCo a truly sustainable company.
Case Analysis
by
Jan Wilken & Tim Fugmann
Strategic Management
17.06.14

Strategies for Growth
SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats
2nd in the world in the carbonated drinks industry
present in more than 200 countries with a workforce of almost 250000 workers

strong top management with Indra Nooyi as strong and innovative CEO strong corporate strategies

Human Sustainability - promise to encourage people to live a healthier life

large, yet focused product variety

high level of customer loyalty for most of its brands

extensive experience in mergers & acquisitions
rising revenues through increasing the share of healthy food

increasing presence in emerging markets such as China & India bigger opportunity for growth

further research in innovations to make better-for-you-snacks, and to produce sweeteners that would lower the calories content in drinks
declining interest for carbonated products

competition constantly release new products that offer same benefits but at a lower price; esp. in the far East

constant competition with Coca Cola pose a threat to PepsiCo's sales and market share
overdependence of the domestic US market

large dependence of large supermarkets such as Wal-Mart

expansion to new areas was slow
Pest Analysis
Political Factors
lots of different markets

each market has its own policies or procedures

adaption to cross border situations

different restrictions in different countries
e.g. against water pollution
Economic Factors
sales increased when the economy
struggled

oil / fuel prices

availability of labor
- well-trained
- cheap

unemployment / inflation in the US

rising prices of raw materials
Social Factors
differences in culture

changes in consumer behavior

healthy lifestyle

consciousness about the nature
e.g. green packaging, product origin
Health Approach
Overweight and Obesity are huge
problems worldwide
Fast-Food chains grow in developing
countries
2008: decision to transform "fun-filled"
products into "good-filled" products
creates growth opportunities
public / business interest
"Good-For-You"
16 brands
e.g. Müller Yogurt, Aquafina
"Better-For-You"
12 brands
e.g. Lay's baked original
"Fun-For-You"
14 brands
Pepsi-Cola, Cheetos, Doritos
Structure
Overview of the company
Mission / Vision
Portfolio
History
Strategies for Growth
Health Approach
Porter's Five Forces
Pest Analysis
SWOT Analysis
Recommodations

1. Building and expanding the company's
global macrosnack portfolio


2. Profitably growing of the company's beverage business worldwide

3. Health Approach

4. Leveraging the company's
"Power of One" selling model across
foods and beverages


5. Delivering on environmental sustainability commitments

Recommodations
stay focused on the core values of the company

keep creating healthy alternatives to their normal products

international expanditure to strengthen the brand across the borders

sports / school cooperations outside the US

2000 01 02 03 04 05 06 07 08 09 10
Full transcript