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Pepsi is an international brand in the field of soft drinks. This company is familiar to every country as the international marketing is highly developed. To consider the external opportunities and threats of this company, the general environment, industry environment, and the firm’s strategic group should be considered along with SWOT analysis to determine this information.
The company is influenced by a number of different issues which may be divided into the general (or macro) environment and competitive (or industrial) environment.
According to Amason (2010), the general (or macro) environment includes demographic information, social and economic forces, technology, and political context. Competitive (or industrial) environment covers competitors, customers, suppliers, regulators and financiers. These both environments are considered to be the organizational one which establishes the conditions each company should work in.
The general environment of Pepsi Company may be considered as supportive. The demographic increase of the population is a positive factor for the company development as more and more people are going to consume its products. The company should create more and more innovative products “to improve the quality of life of a broad community – local, national and international” (Amason, 2010, p. 41).
Pepsi tries to follow this principle and invents more and more opportunities to met social needs of different societies. The economic forces which influence the company development include the purchase power, the rate of unemployed and the interest rates in the organization. Recent increased number of mergers and acquisitions is one more economic force which influences the company development.
Increase of the use of innovative technologies influence the company; the more innovative ways in manufacturing are aimed at reducing the costs of production and the profit increase.
Legal regulations on the state, local and federal levels are aimed at creating supportive environmental in business. The USA laws do not overregulate business in the country that creates positive conditions for business development (Daft & Marcic, 2008).
Turning to the industrial environment, it should be mentioned that the company has a lot of competitors, both on the national and international levels, which create both threats and opportunities for the company. The competition encourages the company for better performance and higher quality.
Customers have an opportunity to influence the company production as they state the demand and consume the products. Suppliers provide the company with the raw materials that may create a number of problems if the delivery of some goods is stopped. Regulators and financiers also add to the industrial environmental of the company (Daft & Marcic, 2008).
Dwelling upon Pepsi’s strategic group, it should be mentioned that this concept has been considered by Porter who defines it as “companies that emphasize the same strategy” (Kelly & Booth, 2004, p. 153). The Coca Cola and Pepsi are the companies which form a strategic group.
It may be explained by the fact that they have very similar advertising strategies and broad line of products. To see the difference between the nice players and the strategic group, it is possible to mention Cadbury Schweppes which is not the member of the strategic group but just a niche player (Kelly & Booth, 2004).
The external opportunities and threats of the company may be considered with the help of five forces analysis. The competition within the industry is too high and it is influenced by other forces in the model, like the threat of the new entrants in the industry of soft drinks, bargaining power of suppliers and customers who may change their preferable relation to Pepsi is too high as well.
The final power which influenced the industry is the high possibility of the substitute products (Jelassi & Enders, 2008). The technologies are developing and no one knows what new and interesting is going to be invented in the nearest time. So, the Porter’s five forces model may be se in such a way.
The rating of the threats on the basis of the Porter’s five forces for the Pepsi Company has the following look, the company’s possibility for competition is influenced by the emergence of the subsidiary products, then by the bargaining power of customers, bargaining power of customers and the final and the less influential force is the possibility of the new entrants in the industry which may reach the company level of development.
On the basis of the information considered above, it is possible to state that Pepsi Company has a number of opportunities and threats. The technological development, acquisitions and joint ventures, low possibility of new entrants create a number of opportunities for the company.
At the same time, there are a number of threats which should be considered and the measures should be taken to overcome those on the basis of the company strengths.
Being a powerful international company, Pepsi has much strength which helped it reach high success in the industry of soft drinks. At the same time, the company also has some weaknesses which should be reduced to minimum by means of the company opportunities. The company strengths and weaknesses may be considered from the financial statement of the company.
Fleets glance at the financial statement where the comparative analysis of the financial activities of the company in 2008, 2009 and 2010 are presented allows us to consider the increase in the company income and assets. At the same time, attention should be paid to the fact that the company liabilities and debt have increased as well.
The percentage increase is similar, so, the company has tried to increase its revenue by means of the debt capabilities. The company revenue has increased by 34% in 2010 in the comparison with 2009 that says about the correct choice of the strategy.
Dwelling upon the strengths and weaknesses of the company, the resource-based view (RBV) should be considered as the “influential framework to understand the strategic management” (Brüggemann, 2007, p. 6). The main idea of RBV is to consider the unique resources the company uses to create competitive advantages ().
Being a link between the company characteristics and performance, RBV of Pepsi may be considered a specific recipe of the product which is difficult to copy. There are a number of strengths the company possesses, like high turnover, the variety of products and healthy direction, in spite of the fact that people have some concerns about soft drinks.
Thus, it may be completed that Pepsi Company has a number of opportunities and threats along with strengths and weaknesses which interact with each other and provide mutual impact on each other creating some strategies which may help the further development of the company.
Reference List
Amason, A.C. (2010). Strategic management: From theory to practice. New York: Taylor & Francis.
Brüggemann, N. (2007). Competence analysis: An approach to a firm ́s competence domain. München: GRIN Verlag.
Cho, Y.K. (2009). Service alignment and performance in electronic service operations. Ann Arbor: ProQuest,
Daft, R.L. & Marcic, D. (2008). Understanding Management. Stamford: Cengage Learning.
Jelassi, T. & Enders, A. (2008). Strategies for e-business: creating value through electronic and mobile commerce: concepts and cases. London: Pearson Education.
Kelly, L. & Booth, C.A. (2004). Dictionary of strategy: strategic management A-Z. New York: SAGE.
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