Category: Pepsi

Introduction

Pepsi is among the top food and beverage companies in the world. With its headquarters in New York, the company is heavily involved in the manufacturing and selling of different brands of beverages and foods. While expansion into foreign markets has presented the company with a wider customer base, it comes along with a number of challenges.

This paper looks at external factors affecting Pepsi in the Middle East. As noted by Doole and Lowe (7), a major difference between domestic and international business is the multidimensionality and complexity of the environment a company is expected to operate in. It is thus imperative for a multinational company to understand the complexity associated with operating in a foreign market.

External Factors Affecting Pepsi in the Middle East

As discussed in the following subsections, Pepsis operations in the Middle East are affected by a number of external factors. They include social and cultural factors, government and political factors, technological factors, economic factors, and competition. In order to succeed, the company has to be strategic enough to counter challenges posed by these factors.

Social and Cultural Factors

Any company that intends to operate in a foreign country must be aware of how the perception of potential customers can determine its success. Differences in social conditions, religion and material culture all affect customer perception and buying behavior (Doole & Lowe 7). Compared to Coca-cola, Pepsi has been able to survive in the Middle East partly because of religious reasons (Carroll 3). To a large extent, Coca-cola is associated with Israel and this has been of advantage to Pepsi since most countries in the Middle East are not happy with Israel.

Government and Political Factors

The political ideologies in the Middle East have greatly favored Pepsi. According to Carroll (7), countries in the Middle are unhappy with doing business with those they consider to be their enemies. Associating Coca-cola with Israel has therefore given Pepsi a privileged position in the Middle East market. This is despite the fact that Coca-cola has vehemently denied any political bias.

Technological Factors

Continued advancement in technology has pushed companies to a point where they have to largely rely on technology for their operations. Like other companies operating in the Middle East, Pepsi is making every effort to leverage available technology. However, this places a heavy financial responsibility on the company.

Economic Factors

Over the years, the economy of the Middle East has been growing steadily mainly as a result of oil products that are produced by the region. The growth in the economy implies that citizens are able to spend more of their income on other items other than the basic family needs. Consequently, this positively affected the growth of Pepsi in the Middle East.

Competition

As a result of the existence of many players in the food and beverages sector operating in the Middle East, Pepsi is faced with stiff competition. Coca-Cola, for example, has existed longer than Pepsi and controls a wider market in the Middle East. Apart from Coca-Cola, there are many other companies in that are involved in the manufacture of beverages in the Middle East. For this reason, Pepsi is forced to spend heavily on its marketing and advertisement activities in order to survive.

Conclusion

Generally, external factors have not affected the growth of the Pepsi Company negatively. While penetrating the Middle East market is not an easy task, the company has managed to advance as a result of the uniqueness that is presented by the Middle East market.

Works Cited

Doole, Isobel & Robin Lowe. International Marketing Strategy: Analysis, Development, and Implementation, London: Cengage Learning, 2008. Print.

Carroll, Rory. 2005. Cola Wars as Coke Moves on Baghdad. Web.

Executive Summary

The notion of sustainability has been discussed extensively in the context of global business recently, mostly due to the increase in the importance of environmentalism. An array of organizations have transitioned to the sustainable use of resources, shaping their manufacturing, supply chains, and the overall approach to performance management. PepsiCo is one of these organizations, with its innovative outlook on the management of its production processes and, particularly, the use of resources, as well as the disposal of wastes. Due to the emphasis on the stakeholder-based approach, as well as the innovation-driven approach toward the use of water and other finite resources, PepsiCo has been quite efficient in the promotion of sustainability across its organizational environment and especially in its manufacturing framework.

Compared to other companies, such as Coca-Cola and Shell, PepsiCo has established a very effective strategy for developing sustainability. Moreover, the company has turned its approach to sustainable resource management into one of its competitive advantages, integrating it successfully into its core production processes. As a result, PepsiCo has shown impressive resilience toward external factors and the ability to navigate its internal ones, thus creating a powerful and viable framework for maintaining sustainable development. However, even with the high efficiency of the developed approach, PepsiCo could use additional improvements by increasing the range of its scope for appealing to the global community. Thus, the rise in acceptance of sustainable solutions will be observed worldwide.

Development and Value of Sustainability in Business

Sustainability is a relatively recent addition to the set of frameworks used in the business context, yet it has already been given substantial attention needed to warrant legitimacy as a crucial construct in the global economy. Due to the rise in concerns for the environmental changes and the impact that manufacturing, as well as other activities linked to waste production, has on ecosystems, the weight of sustainability in business has grown.

To approach the process of sustainability development, one will need the definition of the subject matter. Svensson et al. (2016) interpret sustainability as a combination of two critical concepts, namely, the promotion of corporate growth without environmental degradation and firm-level sustainability. The latte, in turn, is defined as each discrete sustainability effort carried out by each company contributing to global sustainability (Ferro et al., 2019, p. 1). In turn, the value of sustainability in the organizational context is expected to be substantially high since it allows increasing the organizations competitive advantage in several critical areas (Biloslavo et al., 2018). Namely, by implementing a sustainable approach, a company tends to seek the methods of reducing expenses and improving the current allocation of resources, decreasing the amount of waste and, ultimately, the associated expenses.

However, apart from the opportunity to address the issue of financial leverage within an organization, the adoption of sustainable techniques will also have a tangibly positive effect on a companys position in the global market. Namely, the positive publicity that an organization will receive once choosing the environmentally safe options for its manufacturing process is likely to improve a firms reputation. In addition, the options for collaboration will increase once an organization improves its reputation by adhering o the established standards for sustainable use of resources.

The outlined effects align with the theoretical framework of the Stakeholder Theory, as the examples of companies such as PepsiCo show. Namely, the presence of the mutual sustainability interest, primarily, that one of keeping the available resources replenished and reducing the extent of environmental damage, incentivizes companies to select the pathways that will be mutually beneficial for all stakeholders involved in the long term, specifically, the environmentally positive ones (Raki & Shakur, 2018). From the specified perspective, PepsiCo has been following the charted path quite accurately by choosing the sustainable solutions that would keep its reputation intact in the eyes of the global market participants concerned with the scarcity of resources and the waste levels (Miles, 2017). Due to the integration of the emphasis on the needs of key stakeholders, namely, customers, suppliers, local and global communities, and investors, PepsiCo has managed to introduce the notion of responsibility into its framework.

Likewise, the examples of Coca Cola and Apple indicate that sustainable strategies constitute the basis of modern business decision-making and manufacturing. The elaborate six-tiered approach toward maintaining sustainability that PepsiCo has developed over the past several years has helped it to keep the key stakeholders invested and reduce the negative impact on the environment by updating its entire supply chain (Torkornoo & Dzigbede, 2017). Namely, the company has sharpened its focus on the issues associated with agriculture, the use of water, the approach to packaging, product, climate and people-related concerns (Foo et al., 2018). The described framework has led to a sustainable use of resources, causing the firms expenses to drop and its popularity as an eco-friendly business to skyrocket (Meherishi et al., 2019). Therefore, the case of PepsiCo illustrates the value of sustainability both from the business perspective as a money-saving and competitive-advantage-building technique and the tool for gaining loyalty and attention of primary stakeholders.

Compared to the framework utilized by PepsiCo, other companies following the principles of sustainable development have also added to the understanding of the value of sustainability as a production principle. Coca-Cola 2020 A World without Waste program has contributed to the dialogue by reinforcing the role of a conscious approach to business (Brondoni, 2020). Thus, the value of sustainability as a vehicle for improving the performance of organizations in the long term is extraordinarily high.

Moreover, comparing the cases under analysis, one will realize the challenges of developing a sustainable approach, both currently and in the future. As seen in the cases of PepsiCo and Coca-Cola, the current dilemmas associated with sustainability involve mainly the skill of balancing between the profitability of the selected strategy and its harmlessness to the environment and the well-being of key stakeholders (Iivonen, 2018). Moreover, the cases at hand indicate quite clearly that the described challenge can be addressed by using the latest technological advances, investing in research, and using the strategy based on compromise and searching for cost-efficient solutions.

In turn, the future challenges that a company implementing sustainable practices will have to meet include the need to industrialize biological systems in the way that would allow limiting the waste levels. As the example of Shell shows, it is crucial to find the ways to mimic the solutions that the global ecosystem has already developed. Since the specified options represent the shortest path to achieving balance between consumption and prediction, they need to be taken example of in the context of modern industries. Consequently, it would be reasonable to presume that the future of sustainability will imply integrating the solutions located in the current ecosystem into the production process in an organizational environment.

Consequently, the value of sustainability is only going to grow in the nearest future. The described change aligns with the main tenets of the Corporate Social Responsibility (CSR) principle. Implying that organizations should integrate the idea of responsible action into their decision-making framework, the CSR theory is likely to guide organizations in the future as well, prompting the further progress of sustainable manufacturing, supply chain management, and other processes within the corporate context.

Analysis and Comparison of Companies

Although the notion of sustainability remains homogenous across organizations, strikingly different strategies are used to maintain the notion of sustainability in the corporate context. Nevertheless, similarities can be observed across organizations and industries. The specified intersections in the development and application of sustainable strategies can be explained by the common goal and similar issues in waste management and CO2 emissions.

PepsiCo

PepsiCos approach toward sustainability might seem as mostly generic, yet it has proven to be pliable enough to adjust it to the rapidly changing context of the global market, which has allowed the organization to remain relevant in the present-day era. Attempting at encompassing the needs of all major stakeholders in its sustainability approach, the company has reinvented its supply chain entirely, incorporating new sources of energy and waste management into it. Specifically, the firm has shifted toward the 100% use of renewable energy in the management of its key operations, which is a financially taxing decision in the environment of the global market affected by the COVID-19 (Martin et al., 2020).

In addition, the strategy that the company has been using as its leading approach toward encouraging effective management of the companys resources has been taking the issue of CO2 emissions as the leading problem to be addressed in the target economic setting. Although the problem of CO2 does constitute the list of concerns that organizations currently strive to reduce in the global economic environment, the emphasis on the reduction in CO2 levels can be considered a comparatively recent development (Aishwarya & Thahriani, 2020). Indeed, previously the concept of green production and sustainable use of resources appears to have revolved mostly around the

Coca-Cola

In turn, Coca-Cola adopts slightly different framework for keeping its sustainability standards intact. The strategy that Coca-Cola deploys is notable for its ability to incorporate newly emerging factors into its framework and allow tweaking it in the way that helps the company to avoid new threats. For instance, the sustainability approach designed by Coca-Cola has revealed the opportunities for maintaining ethical use of resources even in the setting of the COVID-19 threat (Annan-Diab & Molinari, 2017). Specifically, opportunities for sustainable sourcing for the companys supply chain have been discovered with the help of the strategy deployed by the company to keep the sustainability of its performance high. Coca-Cola has discovered the opportunity to retain its green policies.

The practise adopted by Coca-Cola offers a range of short- and long-term benefits, the key ones being the chance to keep the costs low in the environment that is rife with challenges and risks. However, the sustainability policy that Coca-Cola upholds also has the problem of being not extensive enough to take into consideration the multitude of factors shaping the availability of resources. For example, the company has admitted to suffering from the shortage of competent workforce. As the company has admitted, There are already reports, for example, of farmers not being able to harvest crops due to labor shortages and packaging waste collectors not being able to collect recycling materials (Coca-Cola, 2020, para. 4). Therefore, the organization would have benefitted from the development of a multilateral approach that could encompass a wider range of factors and affect them accordingly. For instance, the problem with the workforce shortage could have been addressed by reconsidering the present choice of suppliers, as well as using outsourcing and similar techniques (Chua et al., 2020). Overall, Coca Colas sustainability appears to be quite strong, yet it lacks the resilience that PepsiCo has been showing.

Shell

In turn, the framework used by Shell is worth considering as the exemplary case of using the resources at the companys disposal in the manner that allows maximizing the profits and reducing the environmental damage to the minimum. However, there are certain similarities to be found across the companies listed above. For example, each of the organizations deploys the concept of SCR in their organizational settings (Gehani, 2016). The SCR notion keeps the decision-making process focused on the needs of every stakeholder involved, including customers, suppliers, and the global community at large. As a result, the organization retains its ethical stance toward the issues of waste management, use of renewable energy, and the related concerns. Compliance with the set international agreements concerning the application of environmentally sustainable practices is what makes Shell a particularly important agent in promoting change.

Compared to PepsiCo and Coca-Cola, the framework used by Shell could be improved by introducing practices for better waste management. However, it is noteworthy that Shell operates in an entirely different industry, where extraordinarily high rates of pollution and ecological footprint are inherent to the key elements of the production process. Whereas with Coca-Cola and PepsiCo, the use of renewable packaging and the reduction in CO2 omissions represent the main points of concern, Shells case is much more convoluted due to the specifics of the oil and gas industry (Ubini, 2018). Namely, given high toxicity of oil byproducts, as well as the environmental damage caused by crude oil, the ability of Shell to retain its environmentally safe policies is refreshingly impressive.

Overall, comparing the strategies described above, one should mention the fact that PepsiCos present approach toward managing sustainability concerns appears to be the most effective and resilient one. Despite the presence of the evident problem concerning a more general focus on sustainability as opposed to mere reduction in the greenhouse effect and the amount of CO produced by the organization, the current technique appears to be the most efficient one (Aishwarya & Thahriani, 2020). Namely, addressing the issue of sustainability on the supply chain level and revisiting the organizations infrastructure and the framework for producing its goods. As the methods of keeping up with the existing demands for sustainability can be regarded as impressive changes.

One could also make the case for Coca-Cola with its focus on the recent changes to the target environment as the foundational issue to be prioritized in the corporate setting. Indeed, alterations to the existing setting, especially in regard to innovative solutions for managing sustainability, are critical for the effective and sustainable performance. However, PepsiCos strategy is arguably quite resilient to market changes as well since it strives to incorporate external influences into its context as well.

Pepsi Co. Case Study

The fact that PepsiCo has singled out several critical areas that it seeks to address in its sustainability framework, as well as the focus on flexibility that the company has been keeping as the means of remaining resilient in the highly competitive setting of its target market, can be considered the highlights of its sustainable approach. The intention to create a sustainable food system is a doubtless advantage of the approach that PepsiCo has been using in advancing its sustainability agenda and promoting the principles of environmentalism across the food and beverage industry (Torkornoo & Dzigbede, 2017). However, even with the current advances in managing sustainability issues, PepsiCo will still have to consider several recommendations for improving its sustainable approach.

Options for creating stronger partnerships for the enhancement of its supply chain and a more expeditious management of the emergent concerns need to be created so that PepsiCo could improve its current sustainability strategy. In addition, PepsiCo would benefit to a great extent from the focus on cross-cultural collaboration and conflict management strategies. Given the fact that PepsiCo has been prioritizing the idea of empowering people across the globe to contribute to the increase in sustainability, the company needs to create the communication model for speaking to the target stakeholders as convincingly as possible (Sehrawat, 2019). In turn, the described goal will involve the creation of a communication framework for appealing to a wider range of audiences. Specifically, PepsiCo will have to serve as an example for every organization with which it collaborates, no matter its geographical location, to convince it to accept the principles of sustainable development and integrate them into its framework for cooperation with PepsiCo.

Finally, waste reduction and the more effective management thereof should be recognized as a crucial goal for PepsiCo to accomplish in the nearest future. Although the range of waste management options is quite few for the company presently, none of them suggests a perfect solution, especially given the fact that plastic is being used as the main packaging material (Foschi & Bonoli, 2019). Therefore, PepsiCo will have to address the use of plastic and its further disposal accordingly. Presently, the range of actions for PepsiCo to take includes appealing to its customers to convince them to accept the principles of sustainable living and recycle plastic packaging used by PepsiCo appropriately.

Finally, locating options for entirely recyclable or biodegradable packaging should be considered the priority for the company. The latter option is preferable given the increase in the consumption of products that typically sue plastic wrapping (Torkornoo & Dzigbede, 2017). Additionally, the issue of engaging with communities and involving every possible stakeholder in the sustainable management of resources should be regarded as the essential focus of PepsiCos further sustainability policies. Although the organization has been addressing the specified issue already, it needs a better communication model that would appeal to every possible stakeholder, including not only PepsiCos partners in the third-world countries, but also average citizens (Torkornoo & Dzigbede, 2017). Remarkably, when considering the specified setting, one should note that even the task of converting organizations to the path of the sustainable use of resources already implies a massive effort due to the economic challenges and the absence of legal support for the specified change. Therefore, the task of engaging communities of average customers across the globe in a sustainable consumption of resources implies an even greater challenge than currently appears to be impossible to accomplish.

Nevertheless, given PepsiCos massive global presence and the tremendous impact that it has on shaping its customers preferences and attitudes, introducing the specified change in their behaviors remains a possibility. With a well-designed and carefully implemented campaign involving the dialogue with the target audience adjusted to the setting in which it is implemented, PepsiCo will be able to convince its buyers to follow more sustainable principles of using resources, from the importance of recycling to the idea of a more thoughtful management and disposal of resources. Moreover, accomplishing the specified task will help PepsiCo to build global awareness concerning the harmful effects of wasteful use of resources. Overall, the dialogue that PepsiCo will establish with its target audience by appealing to peoples culture and perceptions will help to create the platform for the global transitioning to sustainable production and consumption.

Gibbs Reflective Cycle

Reflecting upon the experience of studying the issue of sustainability, one should consider using Gibbs Reflective Model. Gibbs framework suggests transferring from one of the following stages to another in the described order: Description, Feelings, Evaluation, Analysis, Conclusion, and Action Plan. Thus, the model suggests assessing ones experiences, attitudes, and lessons learned, providing an impetus for change.

Description

In the course of the analysis, key theories and the relevant concepts were applied to assess the performance of PepsiCo, as well as other major companies, in relation to their compliance with sustainability principles. Namely, the frameworks used by the specified organizations in their attempt at pursuing sustainability goals were explored. Furthermore, the described approaches were compared to elicit the further course of action for PepsiCo to consider to improve its sustainability strategy.

Feelings

The work described above allowed me to experience the process of business analysis firsthand, thus allowing me to test my skills and understanding of the critical ideas. I felt very confident when applying the covered theories successfully and observing the results. Moreover, watching theory transforming into practice as the case under analysis showed the multiple facets of adopting sustainable approach toward manufacturing was fascinating.

Evaluation

Overall, the described experience has had a tremendous effect on the development of understanding of sustainability in business. Namely, the factors that shape companies approach toward sustainable manufacturing and overall performance have been identified. Moreover, the strategies that can be used to improve the effects of the sustainable development have become apparent.

Analysis

The main outcomes that the described experience entailed include an improved knowledge of how sustainability functions in the economic setting. Moreover, the assessment of the changes that PepsiCo has experienced during the redesign of its production process and supply chain has helped to shape the idea of how theory transforms into practice. In addition, insights into the concept of sustainability were made.

Conclusion

In the context of the target case, the model has led to the acceptance of innovation-driven framework and the further study of opportunities for its integration for improving sustainability issues.

Action Plan

To continue the development process that the specified project has launched, it will be necessary to examine the notion of sustainability in the context of future opportunities that it entails. Specifically, one may want to connect the learned theories to the analysis of the current situation to make future projections and delineate the outcomes of proposed strategies. Thus, the platform for continuous innovation will be set for PepsiCo, as well as other organizations functioning in this industry.

References

Aishwarya, N., & Thahriani, R. (2020). HR Green Initiatives for Sustainable Development. Management, 7(S1), 37-43. Web.

Aishwarya, N., & Thahriani, R. (2020). HR green initiatives for sustainable development. Management, 7(S1), 37-43. Web.

Annan-Diab, F., & Molinari, C. (2017). Interdisciplinarity: Practical approach to advancing education for sustainability and for the Sustainable Development Goals. The International Journal of Management Education, 15(2), 73-83. Web.

Biloslavo, R., Bagnoli, C., & Edgar, D. (2018). An eco-critical perspective on business models: The value triangle as an approach to closing the sustainability gap. Journal of Cleaner Production, 174, 746-762. Web.

Brondoni, S. M. (2020). Shareowners, stakeholders & the global oversize economy. The Coca-Cola Company case. Symphonya. Emerging Issues in Management, 1(1), 16-27. Web.

Chua, J. Y., Kee, D. M. H., Alhamlan, H. A., Lim, P. Y., Lim, Q. Y., Lim, X. Y., & Singh, N. (2020). Challenges and solutions: A case study of Coca-Cola Company. Journal of the Community Development in Asia, 3(2), 43-54. Web.

Ferro, C., Padin, C., Høgevold, N., Svensson, G., & Varela, J. C. S. (2019). Validating and expanding a framework of a triple bottom line dominant logic for business sustainability through time and across contexts. Journal of Business & Industrial Marketing. Web.

Foo, P. Y., Lee, V. H., Tan, G. W. H., & Ooi, K. B. (2018). A gateway to realising sustainability performance via green supply chain management practices: A PLSANN approach. Expert Systems with Applications, 107, 1-14. Web.

Foschi, E., & Bonoli, A. (2019). The commitment of packaging industry in the framework of the European strategy for plastics in a circular economy. Administrative Sciences, 9(1), 18.

Gehani, R. R. (2016). Corporate brand value shifting from identity to innovation capability: From Coca-Cola to Apple. Journal of Technology Management & Innovation, 11(3), 11-20. Web.

Iivonen, K. (2018). Defensive responses to strategic sustainability paradoxes: Have your coke and drink it too! Journal of Business Ethics, 148(2), 309-327. Web.

Martin, D., Zarro, M., Rahn, M., Gusba, J., & Sherry, C. (2020). Process and method for implementation of automated nutrient profiling reporting for a global food and beverage portfolio. Current Developments in Nutrition, 4(Supplement_2), 1370-1370. Web.

Meherishi, L., Narayana, S. A., & Ranjani, K. S. (2019). Sustainable packaging for supply chain management in the circular economy: A review. Journal of Cleaner Production, 237, 1-11. Web.

Miles, S. (2017). Stakeholder theory classification: A theoretical and empirical evaluation of definitions. Journal of Business Ethics, 142(3), 437-459. Web.

Raki, S., & Shakur, M. M. A. (2018). Brand management in small and medium enterprises (SMEs) from Stakeholder Theory Perspective. International Journal of Academic Research in Business and Social Sciences, 8(7), 392-409. Web.

Sehrawat, S. (2019). Pepsicos sustainable strategies. Journal of Management, 6(2).

Svensson, G., Høgevold, N., Ferro, C., Varela, J. C. S., Padin, C., & Wagner, B. (2016). A triple bottom line dominant logic for business sustainability: Framework and empirical findings. Journal of Business-to-Business Marketing, 23(2), 153-188. Web.

Torkornoo, H., & Dzigbede, K. (2017). Sustainability practices of multinational enterprises in developing countries: A comparative analysis of Coca-Cola and PepsiCo. Full Issue V11N2, 11(2), 19-30. Web.

Torkornoo, H., & Dzigbede, K. (2017). Sustainability practices of multinational enterprises in developing countries: A comparative analysis of Coca-Cola and PepsiCo. Full Issue V11N2, 11(2), 19-30.

Ubini, I. L. (2018). Engaging Appropriate human capital for operational efficiency in mitigating petroleum shortages in the Nigerian deregulated downstream supply industry. Journal of Business, 6(4), 179-186. Web.

Introduction

Strategic management is considered to be one of the basic elements that allow a business company to achieve success in its operations in both domestic and international markets (Thompson, 2001, p. 24; Thompson, Strickland, Gamble, 2009, p. 37). However, even such giants of the global business as Pepsi Co. sometimes face diversification strategy issues in their developmental initiatives, and a comprehensive restructuring and strategy re-formulation become necessary to overcome the emerging consequences.

Pepsi Cos Strategy

SWOT Analysis

Thus, to see the roots of the issues experienced by Pepsi Co. between 2007 and 2008, it is necessary to carry out the SWOT analysis for the company:

Fig.1 Pepsi Co. SWOT Analysis.

Acquisitions and Mergers

Thus, the strategy of Pepsi Co. regarding acquisitions and mergers is one of the strengths of the company according to the SWOT analysis. The examples of successful acquisitions of Pepsi Co. include:

1. 1980s Mug root beer, 7UP International, and Smartfood ready-to-eat popcorn acquisitions;
2. 1990s Walkers and Smiths Crisps, Gamesa, and SunChips acquisitions;
3. 2001 Quaker Oats acquisition;
4. 2000s Sandora Juice, Lucky Juice, Star Foods acquisitions;

Industry Driving Forces and Porters 5 Forces Model

Further on, to better understand Pepsi Co.s industry positions, 5 forces Porters model can be quite helpful (Thompson, 2001, p. 289):

Thus, one can see that the rivalry among existing firms in the industry is the central driving force, and Pepsi Co. faces this rivalry at especially severe rates as far as it tries to catch up and exceed the Coca-Cola market share, while also trying not to stay far behind losing its positions to its other competitors, i. e. Cadbury Schweppes and Nestle. Further on, Pepsi Co. tries to cope with a high power of suppliers by establishing long-term relationships with the latter.

The power of buyers is crucial for the industry with such great competition, and this factor is one of the major threats for Pepsi Co., as well as the threat of substitute products provided by its competitors. At the same time, the threat of new entrants is rather low in the beverage industry as there are quite high operating margins and capital requirements.

Recommendations

So, Pepsi Co. faces major issues in the beverage industry, i. e. the rivalry within the industry and the strong buyer power both conditioned by the fierce industry competition. To cope with these issues, it is recommended that Pepsi Co. should:

1. Continue diversification of products to cope with the competition and threat of substitutes in the market;
2. Monitor buyer satisfaction levels;
3. Implement customer-friendly programs to increase buyer satisfaction levels.

If properly implemented, these steps are expected to strengthen Pepsi Co.s market position and enable the company to develop competitive advantages in the beverage and snack industries.

Works Cited

Thompson, Arthur, A. J. Strickland, and John E. Gamble. Crafting and Executing Strategy: The Quest for Competitive Advantage Concepts and Cases. McGraw-Hill/Irwin, 2009. Print.

Thompson, John. Understanding corporate strategy. Cengage Learning EMEA, 2001. Print.

Product Variety

Pepsi Cola is produced by a pharmacist, Calleb Bradham in 1898. There are many varieties of Pepsi Cola only sold in specific countries. In the consumer market of Malaysia, Pepsi Cola is sold with many varieties which are Pepsi Regular, Pepsi Black, Pepsi Black Ginger, Pepsi Black Vanilla, Pepsi Light currently (Figure 1). Pepsi Black edition serves with bolder taste and zero calorie content (Figure 2). It is approved with healthier choice logo by Malaysia in the sugar free category. Pepsi Light is a no-calorie carbonated cola soft drink and it is free from sugar.

Branding

In 1893, it is called as Brad’s Drink, the name created from Called Bradham. After 5 years, he changed the name to Pepsi. The reasons behind it was to let customers know that it was more than just a refreshment, but in his mind, a “healthy” cola that aided digestion. The word “Pepsi” comes from the word “dyspepsia”, which means indigestion (Dunn 2018). In 1989 to 1940, they are using the logo filled with red colour and the words written out and a long swirly line connecting the P of ‘Pepsi’ with the ‘C’ of Cola. Then, in 1940 the company changed its Pepsi logo. The circle in the design indicates the slogan of Bradham’s original group which is Original Pure Food Drink. The colours of red with white indicates the Second World War. In 1943, Pepsi incorporated the bottle cap to its logo, with the logo tagline ‘Bigger Drink, Better Taste’. In 1991, there was a crucial modify when the company decided that the Pepsi and the circle that had contained it were no longer meant for each other and make them separate. Last, the design in 2008 until today, with the circle resuming its superiority, scrambled up on top of the word, the swirly line sloping upward and also taking on a far more wave-like pattern or a smiley. The design of this logo was finished by the Arnell group, costs one million dollars (Gordon 2017).

Labelling

PepsiCo is providing an easy understanding information on the pack of Pepsi Cola to help the customers to choose what are the needs they want especially. They provide the details about nutrition such as amount of energy, protein, carbohydrate, total sugars, total fat, saturated fat and sodium per 100g/ml or per serving. Besides that, they do provide our products will include information on energy such as calories, kilocalories or kilojoules per 100g/ml or per serving on front-of-pack labeling in all countries. Furthermore, they also provide the percentage of the official Guideline Daily Amounts, Daily Values or equivalents for energy, total fat, saturated fat, sodium or salt and total sugars on either the front, side or back of the pack in countries where such values are available (PepsiCo 2014). For instance, in 240 ml of serving size, the amount per serving of calories per bottle contained 250 kcal, the total fat contained 0g, the sodium contained 50mg, the potassium contained 78mg, the total carbohydrates contained 69g,the total sugars contained 69g and protein contained 0g (Figure 3).

Style and Design

The edition of “Pepsi Generations” which purposes to celebrate the brand’s rich history in pop culture for 120 years have reached Malaysia in 2018. It will be having 4 design editions which are 1940s, 1950s, 1960s and 1980s (Figure 4). The featuring of Pepsi Generation with the 1940s design is exclusively available at Petronas from 1st until 30th of September 2018 (Figure 5). The 1950s design is offering for sale at petrol station (Tan 2018) (Figure 6). In 2016, PepsiCo’s emoji bottles have been launched in Malaysia which is ‘Say it with Pepsi’ campaign (Figure 7). Its price selling is only at RM0.99 per 390ml bottle. One thing that stands out from Malaysia version of the ‘Say it with Pepsi’ campaign is PepsiCo has finally strike back at Coca-Cola (Tan 2016). In 2018, they design a Chinese New Year edition for the can of Pepsi and it is only sold in Malaysia during Chinese New Year festival (Figure 8).

Place

Address of Headquarters

The headquarters of PepsiCo are located in Harrison, New York City, United States (Wikipedia 2019). PepsiCo created operating division that covers Asia, including Malaysia (Wikipedia 2019). The main office of PepsiCo in Malaysia is located in Bandar Sunway, Subang Jaya (JobStreet n.d.). Yeo Hiap Seng Berhad (Yeo’s) announced on 2nd July 2016 that it had lost the exclusive bottling agreements with PepsiCo, ending a link that began in year 1975 (Leong 2016). After that, Malaysian beverage and dairy manufacturer Etika Beverages, formerly known as Permanis, start to be PepsiCo’s new appointed exclusive bottling partner serving Malaysian and Singapore markets (Leong 2016). Starting from 1st November 2016 Pepsi carbonated soft drinks are bottled and distributed from across the causeway Singapore (Figure 9).

Type of Ownership

Etika Group of Companies is the beverage and dairy manufacturer holds an exclusive PepsiCo franchise for Malaysia (Permanis n.d.). The consolidation strengthens Etika’s position in the Malaysian beverage industry as the company will be the only fully integrated Halal beverage company to offer all 12 categories of beverages. Etika Group has exclusive rights to manufacture, distribute and marketing PepsiCo brands such as Pepsi carbonated soft drinks in Malaysia (Ruby 2016). Etika Group is the main producer and distributor of Pepsi soft drinks. These rights along with sales offices and warehouses worldwide and a broad distribution network will also now come under Etika’s wing (Ruby 2016). More recently PepsiCo has awarded Etika its franchise for Singapore to commence from November, 1st 2016 (Figure 9).

Location and Retail Strategy

Pepsi carbonated soft drink are easily find and reach by all the people in Malaysia. Etika Group pays major attention on the distribution channels to make sure that their Pepsi carbonated soft drinks are available at the right places. The distribution strategy in Pepsi marketing mix is focuses through distributor relationships and the broad network of retailers, restaurants, vending machines spread all over Malaysia. Pepsi soft drinks are available nationwide across retailers, such as 7-Eleven convenience stores, Tesco supermarkets, Giant hypermarkets. Convenience stores usually place all kinds of beverages in refrigerators, included Pepsi (Figure 10). Supermarkets and hypermarkets usually sell Pepsi with cartons, bottles and cans. Bottles and cans of Pepsi are arranged in the refrigerator, meanwhile cartons of Pepsi are located at shelf space in beverages categories which place with all kinds of beverages (Figure 11&12). Furthermore, Pepsi carbonated soft drinks can also be found in vending machines (Figure 13). PepsiCo’s places for distributing its products are mostly non-online retailers (Young 2017). Extensive distribution network and easy availability of Pepsi soft drinks has helped it kill regional competition present in different countries and regions.

Marketing System and Distribution Channel

Etika Group of Companies uses a vertical marketing system and acts as a unified organisation. The vertical marketing system integrates stages of production and distribution under single ownership (Touhey 2015). In Malaysia, Etika Group act as full merchant wholesalers in a contractual channel. They provide manufactures, distribution and selling services to PepsiCo (Etika n.d.). Also, they implement PepsiCo’s sales and merchandising plans for the soft drinks that they bottle and distribute (Bailey n.d.). PepsiCo’s products reach the market through the three types of distribution channels: direct store delivery (DSD), third-party distributor networks, and customer warehouse. PepsiCo chooses the relevant distribution channel depends on product characteristics, customer needs, and local trade practices. Under the DSD system, PepsiCo delivers products directly to retail stores. Of the three channels, DSD enables PepsiCo to merchandise with maximum visibility and appeal. DSD is especially well-suited for products that are restocked often and are sensitive to promotions and marketing (Bailey n.d.). Next, PepsiCo also distributes Pepsi through third-party distributors. Etika Company distributes beverage products to restaurants, businesses, schools, and stadiums through third-party food service and vending distributors and operators (Bailey n.d.). In addition, some of the Pepsi soft drinks are delivered from the manufacturing plants and warehouse to customer warehouse. The customer warehouse system is a less expensive distribution channel (Bailey n.d.).

Number of Intermediaries

PepsiCo follows an intensive distribution strategy. Intensive distribution is when a business ignores market segmentation and decides to supply their product to every market available. The idea of intensive distribution is that your product can be found anywhere where a person shops, so that the product will be available for as many customers as possible. PepsiCo has plan that places their soft drinks product in many different locations for distribution (Gkekas 2012). Pepsi carbonated soft drinks are a kind of convenience product, the purpose of this type of strategy is to make sure the products available in anytime anywhere. The ideal market exposure for Pepsi soft drinks is to distribute the product through as many places as possible (Chlachma 2016).

Price

Competition-Based Pricing

Competition-based pricing is one of PepsiCo’s pricing strategies. Before PepsiCo entered the market, Coca-Cola was the only non-alcoholic drink industry in the market and conducting the price of cola beverages. It formed the competition between Pepsi and Coca-Cola after Pepsi entered the market (Abhijeet Pratap 2018). Their competition is fierce, especially in terms of pricing. The reasonable price given by PepsiCo allows middle-class families and even low-income families can afford to buy their products..The price of Pepsi shows a flexible attitude compared with the price of Coca Cola. For example, a bottle of 500 ml Pepsi is RM2.21, and a bottle of 500ml Coca-Cola is RM2.43 (Figure 14). In this regard, PepsiCo is slightly better at a small gap of RM0.22. Sometimes, the lower price is available to attract customers to buy its products (UKEssay 2017). PepsiCo believes that the strategy can bring greater benefits to the company and brings maximum satisfaction to its customers. For instance, Pepsico annual revenue for 2017 was 63.53 billion dollars, 1.16% increase from 2016. Then, Pepsico annual revenue for 2018 was 64.66 billion dollars, 1.78% increase from 2017 (Figure 15).

Product Form Pricing

Product form pricing is a pricing strategy that is implemented by PepsiCo. The major purpose of PepsiCo’s pricing strategy is to improve customer fidelity by keeping the average price of the product, without the impression of inferior quality products. Even, PepsiCo serves a larger customer base without affecting the company’s profits. PepsiCo has designed products of different bottle sizes according to the needs of consumers such as Pepsi has 320ml, 500ml and 1.5L bottle sizes (Figure 16). The larger the bottle size that the consumer buys, the lower the price (Heartofcodes 2018). For example, a bottle of 320ml Pepsi is priced at RM1.65, a bottle of 500ml Pepsi is priced at RM2.21, and a bottle of 1.5L Pepsi is priced at RM1.69 (Figure 17).

Discounts and Allowances

Discounts and allowances are a pricing strategy which is implemented by PepsiCo. The main promotional discount offered by PepsiCo is a seasonal discount (Bhasin 2019). PepsiCo will carry out this program through specific festivals, and the promotional discounts offered at specific festivals will be cheaper than usual, more attracting customers to purchase its products in large quantities. For example, major supermarkets will make promotion discounts during Chinese New Year. Price of Tesco of 24 bottles of 320ml Pepsi is RM20.88 and the original price is RM32.20. (Figure 18&19).

Odd/Even Pricing

The pricing strategy used by PepsiCo is odd/even pricing in psychological pricing. Psychological pricing is setting the price to a bit lower than rounding because they believe that customers will not raise these prices and then consider the price to be lower than the actual price (Bragg 2018). Based on this belief, consumers think that they have saved a lot of money. For example, the original price of 24 bottles of 500ml Pepsi is RM54.00, and the current discount price is RM47.59, saving a total of RM6.41 (Figure 20).

Promotion

Direct Marketing Tools

Direct marketing tool had implemented by PepsiCo through agreements to provide products to organizations at wholesale prices. One of the direct marketing tools that have been used by PepsiCo is website. Towards launching their product, Pepsi worked with Etika (Etika n.d.) (Admin 2018). The purpose to create website is to show the detail information of the product, marketing campaigns and conduct business online (Chirkova 2011). Through the website, customers can find the contact number, email address and location of PepsiCo, for them to ask their questions and also feedback. Next, PepsiCo create their own social profile like Facebook, Instagram, Google, Youtube and Twitter (PepsiCo Malaysia 2018). Nowadays people are using social media frequently, this is why PepsiCo can use this benefit to promote their product (Customer Service Numbers n.d.).

Advertising

Advertising is a way to promote Pepsi beverage. By the Star newspaper, customers can know that Pepsi has offered a new flavour in April 2018 which is Pepsi Black Ginger (Figure 21). Therefore, many people have been attracted by this product because it produced boler taste with no calories soft drink which healthy to having it (The Star 2019). Furthermore, GrabAds with online-to-offline. There are four types of GrabAds, which are car wraps, in-car branding, in-car retail and in-car tablets (Grab n.d.). In August 2018, Grab announced the launch of GrabAds, PepsiCo used this opportunity to promote their products (Digital News Asia 2018). In addition, PepsiCo used billboard advertising by the roadside (Figure 22). They bought billboard advertising from Big Tree and placed at the LRT station, LRT KLCC station as one of the examples (Figure 23). It can survive in the long term and it does not higher cost than electronic media (UKEssay 2016). Pepsi advertisement also displays in the cinema, such as TGV cinema and GSC cinema. It is because the cinema ads processed are more awareness and boosting your brand recall.

Sale Promotion

The promotion strategy that used by PepsiCo is sale promotion. Through the Etika Sdn.Bhd., PepsiCo had the chance to cooperate with TGV Cinema, which selling their product in the cinema. Consumers can enjoy Pepsi Black alongside with the TGV Cinema’s combo set or ala-carte (Lynd 2018). PepsiCo also worked with PizzaHut and KFC. In PizzaHut, there is only RM16.50 to get a set, which included 1 personal pizza, 1 cream of mushroom soup, and 1 Pepsi Black (320ml) (Figure 24); In KFC, Pepsi drink is included in their combo set like Bucket B Combo RM46.50 and Bucket C Combo RM69.90 comes with 6 pieces of nuggets, 1 whipped potato (L) and 1 Pepsi (1.5L) (Figure 25). Next, in May 2018, they organized a sampling event at Deen Maju Nasi Kandar in Jalan Gurdwara, Penang. The customers only pay RM1 to get a can of Pepsi. In the event, there were a lot of customers have good response for Pepsi Black beverage (Tan 2018). In otherwise, PepsiCo worked with Shell Select for a “Futuristic Monobike” contest in April 2018. Throughout the month, consumers can head to the nearest Shell Select store and buy two bottles of Pepsi Black PET 400ml in a single receipt, answer a simple question and send it to the number provided via WhatsApp, together with a clear photo of the receipt as proof of purchase. Prizes up for grabs include the Pepsi Monobike for two grand-prize winners, Macbook Air 128GB for five first-prize winners and iPhone 8 64GB for five second-prize winners. Cash vouchers worth RM100 will be given away to 100 consolation winners (The Star 2018). Another sales promotion is product bundle pricing. If customers buy Pepsi in bulk, they will get a bigger discount (Abhijeet Pratap 2018). For example, a bottle of 320ml Pepsi is priced at RM1.65, 4 bottles of 320ml Pepsi is priced at RM5.85, and 24 bottles of 320ml Pepsi is priced at RM32.20 (Figure 26). This means that if the consumer buys more Pepsi, the price will be cheaper.

Public Relation

Lastly, public relation is also the promotion strategy that implemented by PepsiCo. For example, in Ramadan 2016, PepsiCo Malaysia would donate RM 0.10 for each 1.5L PET bottle of Pepsi, Revive, Mountain Dew, Mirinda and 7UP for the “Liter of Light” (PepsiCo Malaysia 2016). The project purposes to eliminate the 1% of energy poverty in Malaysia (Tan 2016).

Recommendations

There are many things that PepsiCo have to improve for the future. First and foremost, Pepsi should organize charity as much as possible like American Beverage Foundation. American Beverage Foundation’s mission is to make a large contribution to the health of local communities by providing grants to support charitable programs at community organizations. For example, they sponsor their healthy beverage to the programs or physical activities and they also organized their own charity event like Boys And Girls Club (American Beverage Foundation n.d.). Thus, PepsiCo should organize more charity event to promote their products and to build up their image. In addition, PepsiCo should emphasize on corporate social responsibility (CSR). For instance, provide free drinks for public like Milo. In Merdeka Day on 31 August 2017, there were about 35 Milo vans giving out free drinks in 35 different locations and selected Petronas station (Tara Thiagarajan 2017). Otherwise, they should make more donations to orphanages or low-income families like ‘Liter of Light’, which the project that PepsiCo organized before (Figure 27). As a result, CSR is important for PepsiCo to engage more customers and attract more shareholders to invest.

In addition, the recommendation that I would like to make to PepsiCo is that they should pay more effort on creating products that can be considered healthy alternatives to their customers. It is because people nowadays are looking for ways to eat better and stay healthy. PepsiCo can go about this by creating a new brands that provide healthy beverages such as vitamin water. Vitamin Water is very popular among young people these days. Therefore, it would be good when people get another healthier options to purchase. Next, PepsiCo can also make their existing products more healthy. PepsiCo can reformulating their existing drinks or introduce less sugar, low calorie drinks and more natural drinks (Geller 2016). When people see that Pepsi is more involved with the epidemic of obesity, more people will be loyal to Pepsi. Overall, this focus will give PepsiCo an edge in an environment where unhealthy snacks and beverages are starting to become less and less profitable every day.

Furthermore, PepsiCo has been working to improve product packaging into biodegradable, compostable, recyclable plastic bottles in recent years (PepsiCo n.d). However, traditional packaging design cannot provide consumers with quality visual enjoyment (Figure 28). However, competitor Coca-Cola’s design packaging is more diverse, innovative and creative. The Coca-Cola Company will launch a limited-edition copyright based on current trends. For example, after the 2018 FIFA World Cup boom (Tan 2018), Coca-Cola launched a series of products (Figure 29). On the occasion of the 60th anniversary of Malaysia’s independence (Bates 2017), Coca-Cola launched a packaging design with a Malaysia unique style (Figure 30). Pepsi is clearly at a disadvantage in packaging design, so Pepsi should learn from Coca-Cola how to improve the packaging design of its products. For example, after the Avengers 4: Endgame (Figure 31), PepsiCo should use the film’s craze to launch a limited edition of Avengers series’ packaging design, so those consumers who like the Avengers’s movie is attracted to buy and collect this series of product.

Last but not least, everybody knows that the greatest rival of Pepsi is Coca-cola. Both of these companies has spent a large investment on promotion and marketing. In 2017, the marketing budget of Pepsi was 4.1 billion dollars and Coca Cola was 3.9 Billion dollars. From the research, Pepsi has spent 2.4 billion dollars on advertising merely (Abhijeet Pratap 2018). Nowadays, the marketing strategy has changed a lot when the digital technology era has come. Therefore, the company can use the strength of social media such as Facebook, YouTube, Twitter and Instagram to promote Pepsi in a convenient way. It also can earn some revenues from the views of YouTube video therefore it can be a money to do further promotion videos. Not only that, nowadays artists has the influence power on social media account. The company can invite some famous artists to take a selfie with the Pepsi then upload to Instagram to attract their followers to buy the products and then they will follow the artists to do so. Therefore, the product will be a trendy on the social media and gain more purchasers. Before, they invite the famous artist such as Jay Chou become spokesperson for Asia area (Figure 32). Recently, the K-pop culture is becoming more influencing day by day. Pepsi can use it as an advantage to promote their product which is inviting the famous K-pop artist to shoot a commercial video.

Introduction

International trade allows countries to expand their markets for goods and services that may not have been available locally. As a result of international trade, the market has greater competition and hence more competitive prices, making the product cheaper home for the consumer. Global trade allows rich countries to use their resources – be they labor, technology or capital – more efficiently. Because countries have different natural assets and resources, some countries may produce the same commodity more efficiently and therefore sell it at a cheaper price than other countries (Gunaratne, 2018). If a country cannot produce an item efficiently, it can obtain it by trading with another country that can.

Pepsi is one of the largest food and beverage industries. Pepsi was founded in 1898 in the United States by Caleb Bradham. Pepsi now generates more than $ 60 billion in revenue with one million employees globally working in the industry. The company that looks to be the world’s largest consumer producer is working to improve the standard day by day. Pepsi cola has always focused on product innovation, helping the company maintain stability and value throughout the industry (Monica, 2017).

Despite being the leading brand in the beverage industry, Pepsi is not immune to various political, social or economic fluctuations. Political or economic changes can adversely affect their profits. There are laws and regulations that vary from country to country and directly affect them. At the same time, cultural factors are important. Pepsi operates in more than 200 countries. Social and cultural factors are particularly important in this case (Barry, 2016). Pepsi’s PESTLE analysis will identify all these factors that can affect its business in the global environment.

Political factors

Political factors include external factors such as government factors. Effects of government policies and regulations that directly affect the company. These policies are derived from the government. These policies may sometimes have tax reforms that directly affect the company. Political stability in the region where the company operates will certainly be an opportunity for the company. Similarly, good intergovernmental relations are a source of global companies such as Pepsi. Threat factors include many of the government’s soft drink and population health policies are one of the main threats to Pepsi (MEYER, 2017). For example, good economies like the USA and Canada are businesses for Pepsi the best, whereas in third world regions the opportunity process is indirectly stopped.

Economic factors

The performance of a company like Pepsi is directly proportional to the economic stability of the country in which the company operates. Similarly, in regions where countries are more developed, there are more ways to company opportunities (Haseeb, 2017). The potential threat in this perspective is a slowdown in the Chinese economy, as the Chinese economy is now one of the largest in the world.

Social factors

Social factors include people’s beliefs and lifestyle, and most importantly the culture of the region (Dudovskiy, 2016 ). For example, people in the modern state are more likely to fast food and soft drinks, and this culture becomes an opportunity for beverage companies like Pepsi. In countries where the population is more aware of their health, such statements can sometimes be a threat and sometimes an opportunity for the world. The frenzy of life and the habits of soft drinks after a few hours and with every meal is Pepsi’s main opportunity.

Technological factors

Moderate R&D in the food and beverage industry has always been a great opportunity for companies like Pepsi. Improving the knowledge management system with the help of technological advances is an opportunity. The growing trend of automation in business strategies certainly represents a great opportunity to expand business to recognized international companies such as Pepsi (Newhart, 2018). Other technological factors include the trend of Internet marketing and many of the latest technological tricks. Therefore, this technological renaissance has explored many new ways as opportunities for modern contemporary brands such as Pepsi.

Legal factors

Legal elements are always present to connect competitors and Pepsi. For example, various regulations such as health safety regulations are great opportunities for the Pepsi industry. Many other legal aspects of government reforms have had a direct impact on companies such as Pepsi. Sometimes laws act as bonds that are an obstacle to the expansion of a company (FERGUSON, 2017 ). However, there are potential benefits to these legal issues, as they have provided because they provide more organized work environments for related companies such as Pepsi.

Environmental factors

These factors include high standards and policy expectations for waste disposal. There must be a focus on business sustainability. One of the world’s concerns about climate change is the threat and sometimes an opportunity for global companies like PepsiCo. PepsiCo was one of the greatest companies. The bottom line in the discussion above is that there is a whole lot of opportunities for PepsiCo. If the right strategies and the right future plan are developed, the company can keep the name in the market (Kiran, 2012). Careful planning and taking the company in the right direction will always provide a new space for opportunities. On the other hand, there are also many potential threats in terms of competitors and change in the global scenario of new business laws and practices.

Pepsi’s Five Forces Analysis

Pepsi and Coca Cola are leading brands in the soft drink industry. However, the soda industry has felt cold during the past few years. Apart from comprehensive health awareness, other factors also affect their profitability. Pepsi had a bad 2015, and it seems that things don’t take a big turn. There are economic and social factors that affect business in the industry. The following is an analysis of the five forces analyzing the state of competition in the soft drink industry and how Pepsi controls it. The five forces model was developed by Michael E Porter (Karanis, 2013). These five forces are part of every industry and market and have an important impact on profitability.

Bargaining power of the suppliers:

Suppliers form a strong group and exert little pressure or pressure in the case of Pepsi. The reason is that they are fragmented and there is a high number as well. Therefore, Pepsi has many options and low conversion costs. Pepsi has more control and suppliers want to keep their business with the soda giant. These individual suppliers are not very large in size, and their chances of integrating forward and competing with Pepsi are very low. All of these factors work for Pepsi and give it a higher bargaining power than its suppliers (Gunaratne, 2018).

Bargaining power of buyers:

Individual buyers do not exert significant influence and do not exert any significant pressure on Pepsi business. Except for large corporations / retailers or distributors, small businesses and individual buyers have no significant bargaining power. No matter how big the bargaining power of big buyers, they buy in large quantities. Retailers like Costco have some negotiating power and influence because they buy in bulk. Moreover, the Pepsi market is not concentrated in a particular region but is spread all over the world. Given all these factors, the bargaining power of clients is weak (Jurevicius, 2018).

Threat of new entrants:

Global brands such as Pepsi cannot be established overnight. It takes both investment and great efforts. From operations to marketing, all regions require huge investments and highly skilled staff. Not only this, to build a brand image and gain customer loyalty, it is a difficulty. Small brands are still competitive in local markets. However, these brands are still generally confined to small areas. Pepsi has very few direct competitors and with the exception of Coca Cola, no one has the ability to look at it in the eye. Therefore, the threat of new entrants to a brand like Pepsi is reduced with a strong brand image. Becoming a key player in the soft drink industry is not easy. Apart from product quality and brand image, there are many other challenges that discourage new players (Monica, 2017).

Threat of substitutes:

There are many alternatives to Pepsi products in the market. Switching costs for customers are also low. Apart from Coca Cola products, fruit juices, energy drinks and many hot and cold drinks are alternatives. This threat is mitigated to some extent by Pepsi commercial image and global presence. The brand also invests a lot in marketing to keep the threat from alternatives under control (Gunaratne, 2018). Moreover, alternative products are generally good in quality. Pepsi focuses heavily on customer engagement for this purpose. In general, the threat of alternatives is a powerful force that Pepsi must constantly confront.

Competitive rivalry among the existing players:

Without the competition between Pepsi and Coca Cola, the soda giants would have invested less in marketing and advertising. These two brands remain preoccupied with intense competition and people also believe that the cola wars continue. Dr. Pepper Snapple is also a competitive threat to the soda giant. The competitive threat from other brands is lower, but among the major players is a very strong force (Haseeb, 2017). Therefore, overall competitive competition in the industry is the strength of the chain. The competition between Coca Cola and Pepsi has always attracted a lot of publicity and interest.

Product Life Cycle Theory

The International Product Life Cycle Theory was written by Raymond Vernon in the 1960s to explain the product cycle when it is exposed to an international market. Cycle describes how the product matures and declines as a result of the internationalization. It contains four stages; research and development, introduction, growth, maturity and decline (Newhart, 2018).

Research and development:

This is when the product is developed. Market research and analysis is conducted to find out the four points of marketing – product, price, location and promotion. Pre-release of the product may also be performed at this stage – this is done by advertising harassment of the product either through electronic media printing (Kush, 2017). Keep in mind that there is no profit or sale as the product is still under development at this stage.

In 1898, Bradham developed ‘Brads drink,’ a formula designed to aid digestion. After receiving a strong positive response from consumers in the pharmacy, Brad renamed the drink as ‘Pepsi-Cola’ and bought the brand ‘Pep-Cola’ for $ 100. Although $ 100 does not appear much, after adjusting for inflation, this amount of money in the 19th century is equivalent to $ 2,516.34 at present (Murphy, 2018). This indicates the difficulties faced by companies in the pre-launch phase with continuing periods of negative cash flow, significant research costs and development expenses. Within PepsiCo R&D, they knew they needed to shape their business environment rather than just respond to it. So, starting in 2007, they decided to help transform their company and food and beverage portfolio by expanding it. Commit to evolve from the Go-do function that simply implements product line extensions to the global R&D “Go-to” function that delivers innovative precision with new products and new categories; Contains less sugar, salt and fat; the ‘go to’ function is recognized by shareholders as contributing to the growth of their company’s highest level, as a result of the accuracy of their R&D strategy (Jurevicius, 2018).

Introduction:

New products are introduced to meet local (i.e. national) needs, and new products are first exported to similar countries, countries with similar needs, preferences and incomes. Initial sales are made for innovators, retailers and consumers looking to try new products, yet the profits received are still insufficient to recover development costs (FERGUSON, 2017 ). Brad started selling Pepsi-Cola and achieved sales of 7,968 gallons of syrup in the first year. His first goal, or in terms of marketing, was only to generate initial awareness and experience of his product. Thus, to begin, only a basic product – Pepsi-Cola, which was initially sold by soda fountains found in Brad Pharmacies, was launched instead of bottles (Monica, 2017). Therefore, a simple cost and price strategy was used. Pepsi-Cola can be applied in a smart and safe way, by starting a skimming strategy, so that you quickly withdraw from start-up costs. When it comes to Place, a highly selective distribution is initially recommended, and this is only offered with the launch of Pepsi-Cola in Brad’s pharmacies. To generate awareness, for example, to advertise the product, celebrity endorsement was used with race car driver Barney Oldfield (above). Pepsi-Cola has not been launched with any promotions (Barry, 2016).

Growth:

A copy product is produced elsewhere and is introduced in the home country (and elsewhere) to attract growth in the local market. This transports production to other countries, usually based on the cost of production. At this stage, sales begin to increase rapidly as the product gains popularity among the early majority, and this leads to the first generation of profits (Murphy, 2018). After bankruptcy and after becoming Loft Inc. Having acquired it, Pepsi-Cola’s sales increased dramatically in the Great Depression. Consumers were fascinated by the competitive position of value for money: 5 cents would buy consumers 12 ounces of PepsiCo, while only 6 ounces of Coca-Cola. During growth, market share acquisition is critical. Thus, PepsiCo was aggressively marketed against Coca-Cola to encourage consumers to imbalance and build a larger consumer base (Newhart, 2018). To support the goal of gaining market share, the low price penetration strategy was one of the main reasons for the brand to grow significantly in this time period. A wide distribution network is needed to support rapid sales growth; therefore, the exclusivity in pharmacies has ended and the product has become the mainstream consumer commodity. It is necessary to capture the early majority stage, and so, the ads are designed to effectively reach a large audience. For example, the radio was chosen as an intermediary because of the low cost of access. PepsiCo continues to invest in expanding its business in developing and emerging markets. For example, PepsiCo plans to invest nearly $ 5.5 billion by 2020 in India, one of the company’s main global markets (Newhart, 2018). PepsiCo also enters into key alliances and develops products that meet local tastes and preferences. For example, in 2012, the company entered into a strategic alliance with Tingyi Holding, a leading food and beverage company in China. Under this alliance, PepsiCo has made Tingyi Beverage Company a subsidiary of China Beverage Bottling Company. Tingyi’s strong network has helped PepsiCo strengthen its business in China (Murphy, 2018).

Maturity:

This is the longest phase and generates the majority of product sales and profits from the late majority. In order to ensure the product to achieve the greatest possible profit, extension strategies are often implemented for maturity (Harshill, 2014). Industry contracts and concentrates – the least expensive product wins here. Since the 1980s, Pepsi has been maturing in the product life cycle, helping the parent company earn nearly $ 20 billion in annual revenue. At this point, the products are more profitable, which is why PepsiCo is likely to consider Pepsi as a cash cow and aim to maximize profits from the brand (Harshill, 2014). Now that the product is firm, full ranges can be introduced that serve as extension strategies to extend the most profitable phase of product life. These include the highly successful Pepsi Max, to the Pepsi Raw disaster. It is clear that PepsiCo and Coca-Cola do not want to engage in a price war, which is very dangerous during this very competitive phase. As a result, the price rarely fluctuates away from the market average. Also, the product now has a global distribution to penetrate emerging economies. The main focus of Pepsi ads during maturity is the distinction between brands. This was mainly achieved by using celebrity endorsements – such as Beyoncé and Michael Jackson – to position the product as a smaller, richer alternative to Coca-Cola (Barry, 2016). To maintain consistency with brand value determination, Pepsi often offers to increase value and added value. An example of the first offers larger bottle sizes – to this day – of Coca-Cola; the latter can be seen in competitions advertised on Pepsi bottles.

Conclusion

Pepsi enjoys a worldwide reputation as a key player in the soft drink market as well as a leader in the snack industry. This has been done by creating a healthy environment for its customers all the time while maintaining its integrity. They are currently facing stiff competition from Coca-Cola, but with their various marketing projects, Pepsi is preparing to give Coke a definite battle in the future over what Cola consumers want. PepsiCo’s success is a product of superior products, high levels of performance, distinctive competitive strategies, and high integrity for its people. Their main objective is to increase the value of shareholders’ investments through integrated operating, investment and financing activities. Their strategy is to focus their resources on growing their business, through internal growth and carefully selected acquisitions. Their strategy is constantly adjusted to address opportunities and risks in the global market. The company’s success reflects their continued commitment to growth and focus on those companies where they can lead their growth and create opportunities.

References

1. Barry, P., 2016. INTERNATIONAL TRADE, s.l.: D . B . C O O K E & C O .
2. Dudovskiy, J., 2016 . PepsiCo Business Strategy and Competitive Advantage, s.l.: research-methodology.net.
3. FERGUSON, E., 2017 . PepsiCo’s Generic and Intensive Growth Strategies, s.l.: Panmore Institute.
4. Gunaratne, H., 2018. International Trade and Supply Chain Analysis of PepsiCo: Global Business Practice, s.l.: Tallinn University of Technology.
5. Harshill, H., 2014. Product Life Cycle of Pepsi, s.l.: MARKETING STUFF.
6. Haseeb, O., 2017. Pestle Analysis of PEPSI, s.l.: marketingdawn Inc.
7. Jurevicius, O., 2018. Pepsico, Inc. Porter Five Forces Analysis. s.l.:Fern Fort University.
8. Karanis, M., 2013. Pepsi Co. Business-Level Strategy. [Online]
9. Available at: http://www.manufacturing.net/news/2009/10/pepsico-pursues-low-price-strategy [Accessed 2019].
10. Kiran, J., 2012. PepsiCo Global Company Strategy, s.l.: University of Pennsylvania.
11. Kush, J., 2017. PESTLE AND SWOT ANALYSIS OF PEPSICO, s.l.: Research Global Ltd.
12. MEYER, P., 2017. PepsiCo PESTEL/PESTLE Analysis & Recommendations, s.l.: http://panmore.com.
13. Monica, P. R. L., 2017. Pepsi: We’re an American AND global company. [Online]
14. Available at: https://money.cnn.com/2017/02/15/investing/pepsi-earnings-cfo-trump/index.html [Accessed 2019].
15. Murphy, F., 2018. Pepsico Inc PESTEL Analysis & Environment Analysis, s.l.: creativecommons.org.
16. Newhart, B., 2018. PepsiCo: ‘Strong innovation across the beverage portfolio is contributing to improving performance’, s.l.: beveragedaily Inc.

Executive Summary

This study is done to examine the market environment of PepsiCo Inc. PepsiCo is one of the world’s leading food and beverage brand. It’s a renowned brand and a very well organized multinational Company operating in more than 200 countries. PepsiCo Inc. was formed in 1965 as a result of the merger of two established companies including Pepsi Cola Company and Frito Lay, Inc. The multinational giant has a great interest in manufacturing, distributing and marketing of beverages, grain-based snack foods and many other products. In 1941 the brand was rebranded and from that to onward Pepsi Cola has successfully expanded its areas of production via mergers and acquisitions with other companies. In 1905 Caleb purchased two bottling franchises and just after the short period of five years, there were 250 bottling franchises spanning around 40 states. From that to up until now different bottling groups are acquired by the organization including Pepsi Bottling group, Pepsi Americas Inc. Pepsi Bottling Group Inc. and Pepsi Americas.

Currently, the company is comprised of six main division including North America Beverages, Frito Lay North America, Quaker Foods North America, Latin America, Europe, and Sub-Saharan Africa, Asia Middle East and North Africa.

The report provides analysis and evaluation of PepsiCo’s market segmentation as well as the marketing mix of the organization. SWOT analysis and BCG Matrix analysis is done in the reporting providing different PepsiCo products current performances and their market share.

2. Introduction

PepsiCo Inc. headquartered in Purchase, Harrison of New York is American multinational food, snack, and beverages giant formed in 1965 with as a result of merger of two established companies including Pepsi Cola Company and Frito Lay, Inc. the multinational giant has a great interest in manufacturing, distributing and marketing of beverages, grain-based snack foods, and many other products. The snack and soda company now has transformed into a collection of global brands including Pepsi, Quaker Oats, Tropicana, Gatorade, and Frito Lay. This transformation has made the organization of the world’s most respectable organization serving more than 200 countries and territories with twenty-two billion dollars brands. The company is comprised of six main division including North America Beverages, Frito Lay North America, Quaker Foods North America, Latin America, Europe, and Sub-Saharan Africa, Asia Middle East and North Africa (PepsiCo, 2019).

A pharmacist and industrialist, Caleb Bradham, for the very first time developed the recipe for Pepsi in the 1880s in New Bern, North Carolina. Later in 1898, it was renamed to Pepsi Cola. With the development and popularity in the Cola industry, Caleb founded the Pepsi Cola Company in 1902 and the first patent for the recipe was registered in 1903. In 1905 Caleb purchased two bottling franchises and just after the short period of five years, there were 250 bottling franchises spanning around 40 states. However, in 1931, Pepsi Cola Company went bankrupt and Charles Guft acquired the trademark and recipe to the Loft Inc. Pepsi was formally acquired to Loft, and Loft Inc. and was rebranded to its original name the Pepsi Cola Company in 1941. From that to up until today Pepsi Cola has successfully expanded its areas of production via mergers and acquisitions with other companies mentioned above.

For the sake of improving, financial returns and restaurant operations company took up aggressive re-franchising. In 1990, with total revenue of $17.8 billion, the organization was ranked at 25th among the fortune 500 companies. By the end of 1995, the organization sales touched $30.40 billion with 480000 employees working at different places. This made the organization the world’s 3rd largest employer after Wal-Mart and General Motors. PepsiCo’s market share lags behind the Coca Cola share with maximum margins. This happened once when the Coca Cola’s Sprite left behind the Diet Pepsi which dropped from the world’s 6th largest selling product to 7th (ICMR Centre for Management Research, 2014).

2.1. Vision and Mission Statements

2.1.1. Vision Statement

Performance with Purpose via integrating sustainability into a business strategy for delivering top tier financial performance for the long term, leaving a positive impact over society and environment.

2.1.2. Mission Statement

To provide customers around the globe with convenient, affordable and delicious beverages and foods from wholesome breakfasts to healthy and fun daytime snacks and beverages to evening treats.

Pepsi is committed to the company, with the people and communities where the business is conducted in order to stay in the business for the long term with sustainable growth. (PepsiCo, 2019).

3. Current Market Analysis:

Competition is getting intense day by day in the carbonated beverage industry. In order to stay in the business companies face intense competition against global, regional and local manufacturers on the basis of several factors including quantity, distribution, variety, and the most important price. In the beverage industry, PepsiCo major competitor is the Coca Cola Company and this competition negatively impact PepsiCo sales. Coca Cola enjoys larger market shares not only in the U.S but also in the other markets such as Asia and Africa. Coca Cola has been listed at number 1 in the Interbrand’s Best Global Brands (UK Essays, 2016). From many years Coca Cola has actively dominated the world soft drink market and this dominance has always been considered an important factor for PepsiCo Management.

Figure 1 (BrandWatch, 2016)

3.1. SWOT Analysis

3.1.1. Strengths

• Strong Leadership. With a strong leadership of Indra Nooyi Pepsi has been doing well and managed to stay at the number two position in the complete food and beverage industry.
• Loyal Customers: Pepsi through its ads and advertising campaigns actively targets youth with its products providing it with the more loyal customers.
• Brand Equity: Pepsi is a worldwide established brand with its presence in more than 200 nations enjoying a high brand recognition and reputation comprised of a large product portfolio.
• Strong Distribution: the company holds a strong distribution channel with an effective distribution strategy that helps it with on-time delivery to its customers.
• More motivated employees
• Attractive price.

3.1.2. Weaknesses

• Intense competition from its biggest rival Coca Cola.
• Pepsi suffers from its dependence over the U.S markets for its revenue. Any impact at U.S market directly affects Pepsi sales.
• Pepsi does not provide any incentive or discounts to its retailers.
• The tin pack is not available in most rural areas.
• Pepsi lacks the innovation and popularity of its most brands.
• Health issues related to carbonated drinks.
• Pepsi advertisements only target youngsters that do not display value advertising.

3.1.3. Opportunities

• Presence in more than one industry including the fastest growing industry (noncarbonated drinks).
• Media promotions
• Innovations
• Partnerships with well-established brands including Starbucks.
• New product penetration in markets.
• More CSR activities.
• Focusing more on the R&D sector

3.1.4. Threats

• Changes in consumer taste.
• Strong competition from rivals including Coca Cola and Dr. Pepper.
• Entry of new Rivals.
• Entry to barriers.
• Water scarcity.
• Strong U.S Dollar.
• Changes in consumer taste.

3.2. BCG Matrix

For multi-category/multi-product companies Boston Consulting Group (BCG) matrix is used. BCG matrix helps in understanding different products performance. It helps in determining which product in the organization is profitable and which one needs more investment and attraction and which one can provide competitive advantages (Hitesh Bhasin, 2019).

3.2.1. Cash Cows:

Cash cows are products that enjoy a higher market share in low-growth markets. Cash cows yield maximum revenues because of their higher market share and therefore provide with maximum advantages. In PepsiCo’s case, Pepsi Cola falls in Cash Cows category because among all of PepsiCo products Pepsi Cola generates higher market shares.

3.2.2. Question Marks:

Question marks are the products that provide higher returns but at the same time there are risks associated with question marks and they can be taken out of the market if they don’t get the attention of the organization. However, if a substantial investment is made on question marks they have the chances to grow rapidly in the market and to become a Star that results in producing higher outputs. Diet Pepsi and 7up Nimbooz and Mirinda are the question marks for PepsiCo.

3.2.3. Stars:

Stars are the products that generate higher market shares in high-growth markets. Products that are expected to grow and hold higher market shares fall into the star category. Because of stars strong relative market shares, they produce a large amount of cash and if special attention is paid to stars they have the potential to become cash cows in long run. In case of PepsiCo, Aquafina, Pepsi, and Mountain Dew can be placed into the star category.

3.2.4. Dogs:

Dogs are the cash traps and even in mature industries they produce smaller market shares and because of their smaller market share dogs don’t need enough cash. Dogs are more likely to be taken out of the markets. Pepsi Max is considered as the dog product of PepsiCo.

Cash Cows

Pepsi Cola, Frito Lay

Question Marks

Diet Pepsi, 7up Nimbooz, Mirinda

Stars

Pepsi, Mountain Dew, Aquafina

Dog

Pepsi Max

Table 1

4. Marketing objectives for PepsiCo

PepsiCo currently holds at least 50% market share in the snacks and beverage industry because of Frito Lay and Pepsi-Cola, therefore, the company’s first and foremost marketing objective should be to lower the product prices Frito Lay and Pepsi Cola as because they are the cash cows for the company and can yield more even higher market share for the company. In order to achieve this, the price marketing objective should be focused with a help of cost reduction strategy that will help in keeping the product’s prices lower as compared to its biggest rivals Coca Cola and Dr. Pepper.

In this intensely competitive environment, customers need and want very rapidly. They want change and innovation in products. As innovation is one of PepsiCo’s opportunities its marketing objective should be to introduce innovative and new products for its customer to keep them attached with their brand and to satisfy their varying needs and wants.

Customers are becoming more conscious about their health and they consider carbonated drinks unhealthy for themselves so there is some health issue related to PepsiCo carbonated drinks. Therefore the company should set an objective of refining its carbonated drinks by reducing the amount of sugar added that will result in a reduction of calorie intake.

5. Segmentation:

Segmentation is the process of dividing the broad potential customers’ markets into smaller groups or segments that exhibit the same or different characteristics. Segmentation helps in understanding customers’ need and want more accurately and make it easier for marketers to personalize their offerings and marketing campaigns (TrackMaven, 2019). The primary target groups of PepsiCo are those people with an age limit of between18-40. With a huge product portfolio, PepsiCo targets different cultural and regional aspects of different countries (UK Essays, 2016).

• As PepsiCo has a large product portfolio it, targets more than one customer segments with its products and services at the same time. Pepsi Cola is positioned as the soft drink and actively target the young consumer. However, Pepsi Cola has a high amount of sugar in it and most customers because of their health consciousness they don’t consider it good for their health. PepsiCo targets such customers with its Diet Pepsi that has less amount of sugar and therefore fewer calories intake as compared to Pepsi Cola.
• Another main important market segment of PepsiCo are that customer who are athletic and adventurous. For such customer, PepsiCo has its Mountain Dew. All of Mountain Dew ads are designed in such a way that they actively target the customers seeking for adventures. Mountain Dew further has more flavor under it such as Mountain Dew Voltage, Mountain Dew Baja Blast etc. actively targeting different specific groups of customers. However, in most countries, these products are banned but there PepsiCo targets its customer with it Sting Energy drink to keep its customer attached with its brand.
• In India and Pakistan PepsiCo targets a broad market segment with its 7Up Lemonade targeting those who like traditional lemon drinks.

5.1. Segmentation at a Glance

Graph 1

6. Marketing Mix of PepsiCo

Marketing mix or 4Ps are strategy and tactics combinations used by the organization to implement their marketing plan. The marketing mix is a dynamic process and keeps changing with respect to market variations (The Marketing Mix, 2018).

Figure 2 (The Marketing Mix, 2018)

PepsiCo marketing mix addresses a wide range of products. In this regard, PepsiCo adopts various strategies and tactics based on its products and different brands.

6.1. Product

A product is any tangible item that can be offered to a market for satisfying customer needs and wants.

PepsiCo product mix includes the following product:

• Beverages
• Pepsi-Cola, Mirinda, Mountain Dew, 7 up, Slice, Tropicana, Aquafina
• Food Products
• Snacks-Cheetos, Kurkury, Lays, Uncle Chips, Breakfast Quaker Oats.

Most of these products were added into its product mix after various acquisitions. For example, after the acquisition of PepsiCo with Frito Lay, snacks products were added into its product mix.

6.2. Place

With a wide distribution network, PepsiCo products are easily accessible everywhere. A global distribution network is used by the organization to make sure that its all products are reached to its target customers. Products are places at both retailer’s shops and online merchandisers. Most products are available at retailer shops, supermarkets, grocery shops.

6.3. Promotion

Because of the intense competition with Coca-Cola, a huge annual budget is spent on promotional activities to attract and retain the target customers. The following tactics are used for the promotional mix by PepsiCo.

• Advertising
• Sponsorships
• Sales Promotions
• Public Relations
• Direct Marketing

All of these major expenditures are done at Advertising. The advertising is done using different media including T.Vs, Radio, Print Media and especially the most effective social media while endorsing famous celebrities. Different sports and adventurous events are sponsored by Mountain Dew because a huge target audience is available there.

6.4. Price

The amount of money that customer pay for a specific product or service. Price is a very important element of the marketing mix and considers a lot for any organization for its success.

Following pricing strategies are adopted from PepsiCo:

• Market-Oriented Pricing Strategy
• Hybrid Everyday Value Pricing Strategy

Most products are priced based on the market-oriented pricing strategy. The main reason for using this strategy is to make sure that the prices are competitive based on prevailing market conditions. The latter strategy is used especially for the soft drink products to close the gap between the regular prices and discounted holidays prices (Justin Young, 2017).

7. Conclusion

After carefully examining the areas the positive and negative aspect of PepsiCo’s market situation is visible. PepsiCo does not hold a strong market position because of the intense competition from the Coca-Cola company and because most of its products are considered unhealthy from customers which greatly affects its sales volume. However, there are products that are widely used by the customers as compared to competitor’s products such as Aquafina as compared to Coca Cola’s Dasani. Another major factor that affects PepsiCo is its dependency over the U.S, half of PepsiCo sales are observed only in the U.S. There is a great need for PepsiCo to take steps to cope up with this dependency. Any impact over the U.S economy directly affects Pepsi sales. There are investment and innovation opportunities available for PepsiCo. PepsiCo needs to invest more in its products especially in BRIC countries because these markets are rapidly growing in the beverage and foods industries. This step will help the organization to take advantage and increase market share as well as to lower its dependency over the U.S market. As the major target audience of PepsiCo is the youngsters. There are several opportunities associated with youngsters. PepsiCo should know the importance of advertising targeting youngsters and should increase its advertising budget a bit more than before.

References

1. Anon., n.d. a-marketing-research-project-on-pepsi-business-essay. [Online] Available at: http://www.ukessays.com/essays/business/a-marketing-research-project-on-pepsi-business-essay.php
2. BrandWatch, 2016. Coke Vs Pepsi Market Share. [Online] Available at: https://www.brandwatch.com/blog/the-coke-vs-pepsi-social-presence-showdown/ [Accessed 21 Feb 2018].
3. Hitesh Bhasin, 2019. BCG Matrix. [Online] Available at: https://www.marketing91.com/bcg-matrix/ [Accessed 23 Feb 2019].
4. ICMR Centre for Management Research, 2014. PepsiCo’s Focus Strategy. [Online] Available at: http://www.icmrindia.org/casestudies/catalogue/Business%20Strategy2/Pepsico%20Strategy.htm [Accessed 22 Feb 2019].
5. Justin Young, 2017. PepsiCo Marketing Mix. [Online] Available at: http://panmore.com/pepsico-marketing-mix-4ps-analysis [Accessed 23 Feb 2019].
6. Lamb, H. K. B., 2014. Principle of Marketing. In: s.l.: Nelson Education, p. 131.
7. PepsiCo, 2019. About the Company. [Online] Available at: https://www.pepsico.com/about/about-the-company [Accessed 21 Feb 2019].
8. The Marketing Mix, 2018. The Marketing Mix 4P’s and 7P’s Explained. [Online] Available at: https://marketingmix.co.uk/ [Accessed 23 Feb 2019].
9. TrackMaven, 2019. Market Segmentation. [Online] Available at: https://trackmaven.com/marketing-dictionary/market-segmentation/ [Accessed 23 Feb 2019].
10. UK Essays, 2016. Company Overview and market Analysis of PepsiCo. [Online] Available at: https://www.ukessays.com/essays/marketing/company-overview-and-market-analysis-for-pepsico-marketing-essay.php [Accessed 21 Feb 2018].

Introduction

A contract is generally a legal accord between two or many people, fastening them together. Sir William Salmond, a scholar, defines it as “a conformity, which makes and recognizes duties between two or more parties.” The availability of a contract, people, as well as laws governing the agreement forms the foundation of today’s economy. This overview looks into details the elements of a valid contract, the objective theory of contracts and its applications, and briefly expounds on the difference between a contract and a reward.

What are the four elements of a valid contract?

There exist quite a several elements of a convincing contract, but four of them namely, offer, acceptance, consideration, and intention of the contract, are the major ones. Unless stated by the law, an offer can be either verbal or written, depending on what the parties agree. According to Tirole (2006), when the offer has been given, the contract will be clearly defined if the concerned people accept it, and this happens just once. What forces the contract? This question is answered by the third element of consideration. Either it can be money, right, or a responsibility handed to another person. The fourth element is the intention of the parties to enter into the contract. The concerned people must be willing to agree, failure to which the contract will be termed void.

What is the objective theory of contracts?

Written by Fried, Contract as Promise is a book that expounds much on the Objective Theory of Contracts. It is the body, which tackles some crucial questions and answers concerning contracts. One basic question addressed here is the reason for the enforcement of the agreement whose suitable answer is wealth gains of enforcing bargains. According to Simpson (1975), this theory describes the steps behind the arrangement of a contract by the relevant people. It shares a lot between the agents and the inducements, making it fit well in the area of law and economics.

How does the objective theory of contracts apply to the case Leonard v. Pepsico, Inc.?

From the given case, the company producing soft drinks serves as the economic actor, whereas the Harrier jet serves as the incentive. The parties involved are the company and the Seattle man. Laffont and Martimort (2002) show how there should be asymmetric information between the participating bodies. It stands out clearly that the company has entered into a contract by offering the jet as a prize to any, who will purchase up to certain points as determined by the company. Here, any person is a part of the contract provided he/she has the points. From what results as the man gets the points, it is clear that the objective theory of contracts is not well applied because there lack of arrangements and asymmetric information, a situation that makes him lose the jet.

Why do you think the court held that there was not a valid agreement here?

Following the ruling of the court to the above case, it is termed as lacking a valid agreement. According to Ewan (2005), an agreement of each of the parties entering the contract shows the promises each makes to the other. This is not the case here. The company does not consult the other party either, does the party consult the company to strike an agreement of entering into a contract. Therefore, the court’s ruling is just.

Are advertisements generally considered offers? How does this case differ from a reward situation in which a unilateral contract is formed upon completion of the requested act?

The jet is just a mere advertisement for the company, and as Scott (2009) puts it, advertisements are not the same as offers. An offer is normally directed to a specific person or people while, an advertisement is no more than a way employed to welcome customers into considering a good or service is worth buying. On rare occasions, some advertisements stand out as offers if they are accompanied by some binding terms like ‘first come, first served.’ Again, the above case differs from a reward situation in that a reward case does not necessarily call for agreement between people neither does it involve any court action if it is not given out as pictured above.

In conclusion, it calls for a detailed plan between people intending to enter into a contract. A relevant body should also be alerted to take the necessary actions against any of those involved in the contract if he/she fails to adhere to the terms and conditions. Otherwise, one or all will suffer disappointed from the deal when they all lose it.

Reference List

Ewan, M. (2005). Contract Law – Text, Cases, and Materials. Oxford University Press.

Laffont, J., & Martimort, D. (2002). The Theory of Incentives. Princeton University Press.

Martimort, D. (2008). Contract Theory: The New Pal grave Dictionary of Economics. W.Va, 2nd Ed, p.231.

Scott, F. (2009). Reciprocal Altruism as the Basis for Contract. University of Louisville Law Review, p. 489.

Tirole, J. (2006). The Theory of Corporate Finance. Princeton University Press.

Four elements of a valid contract

A contract is a legally enforceable agreement where one party agrees to undertake some actions to the other party for a consideration; for a contract to be valid, there are four elements it has to have they are;

• Legal capacity, a contracting party must have the legal capacity to contract; this means that he must of the age of majority and of sound mind.
• There must be mutual consent of the parties to a contract; there should be not external influence that can influence the decision of one or both parties to enter in the contract.
• Lawful objective; a contract cannot be enforceable if its nature and elements contract laws governing it, it must thus be in accordance to be laws of a country.
• For a contract to be valid there must be some consideration; a consideration is anything of value promised by a party in a contract (Gillies,2004).

Objective theory of contract

The theory of objectivity in a contract implies that for an offer and acceptance to take place, the reasonableness of the offer and acceptance should be considered, thus other than the mutual consent of the parties involved, the offer and acceptance should be reasonable to a rational man. If either party to a contract does not act rational, objective and reasonably, then a contract will not exist.

How the theory apply in Pepsi for Harrier-jet prize

In the case, John D. R. Leonard did not act rationally and reasonably to think that he can enforce a contract that offered Harrier jet for $700,000; the jet cost about $23 million. He is thought to have ignored objectivity when enforcing the contract.

Why the court held that there was not a valid agreement

The court looked into the facts of the case and considered whether there was an offer and an acceptance. Although John D. R. Leonard accepted the offer, he did not act logically and did not consider the external environment. If he had considered the normal cost of the jet and assuming that he is rational, he would have termed the offer as too good to be true.

Advertisement and offers

Advertisements are not offers, but are mere invitation to treat. Advertisement falls short of an offer since the offeree has not taken a step to express of willingness to contract on certain terms set in the advertisement. It thus remains as an invitation to bargain (McKendrick, 2005). .

How does Pepsi for Harrier-jet prize differ from a reward contract

In the case of reward contracts, some compensation is offered by the offeror to the public or specific class of people after the completion of a certain act.

The contract is like any other contract but with a condition set by the offeror; it only becomes consummated contract after the fulfilment of the set conditions and terms. It must be supported by a something of value that is a consideration after performance of a certain act.

It differs with Pepsi for Harrier-jet prize, in the nature of the prevailing conditions of the two cases. Pepsi had the perceived promise in course of its duty but made in such a way that every rational person could realize the contract could not be enforced. In the case of reward contracts, it is expressing lays clear teams of a case. The expressing nature makes it enforceable (McKendrick, 2005).

References

Gillies, P. (2004). Business law. Sydney: Federation Press.

McKendrick, E.(2005). Contract Law – Text, Cases and Materials. Oxford: New Delhi: Oxford University Press.

Introduction

According to the circumstances of this case, the plaintiff, Leonard, saw a Pepsi advertisement that said that points could be gained by purchasing Pepsi goods and exchanging them for Pepsi items. After the ad, a child was shown landing a Harrier Plane at school, with a caption suggesting that the plane cost 7,000,000 points (Cooper & Kirk, 2021). The regulations of the offer allow for the purchase of additional points for ten cents. With the support of various friends, the plaintiff was able to raise enough money to buy the Harrier Plane and mailed a form to the respondent demanding the plane. The defendant refused, writing the plaintiff a letter emphasizing that the aircraft was not meant for sale and pointing him to the marketing brochure’s rules. The plaintiff filed a breach of contract claim (Pivateau, 2020). The defendant filed a petition for summary judgment. The court approved the motion, noting that advertisements are invitations to bargain rather than contracts or offers to sell.

Issues

The question, in this case, is whether the advertisement represented an offer for a Harrier Jet. The Restatement (Second) of Contracts states that advertisements for commodities made through handbills, newspapers, display signs, radio, and television are not often intended or interpreted as offers to sell stands out as a troublesome fact that conflicts with the whole case. This case demonstrated when an advertisement is not a solicitation. The advertisement referred to the catalog, which contained a genuine deal. Second, the idea itself was absurd.

Rule

An advert cannot be regarded as an offer if it would not taken seriously by a reasonable person. An invite to give specifies one party’s readiness to consent to an offer. It may also be comprehended as a call to discuss, but it is not an agreement since no legally binding agreement is imminent (Cooper & Kirk, 2021). Offers must be prepared and delivered in such a manner that a sensible man would envision it to effect a binding contract if it is accepted

Analysis

According to the Restatement (Second) of Contracts, the advert portrayed the aircraft never established an offer. Even when the advert had been an offer, the court, in its decision, stated that no rational being could have thought the company was serious about moving an aircraft valued at approximately 23 million US dollars for $ 700,000, meaning that this was all exaggeration (Cooper & Kirk, 2021). The price of the purported contract rendered it subject to the requirements of the New York Statute of Frauds, but the statute’s need for a written covenant between the parties was not contented, and so no agreement was created (Aaron & Caterina, 2018). Leonard appealed the ruling to the United States Court of Appeals for the Second Circuit, but the court upheld the initial ruling. This was the same case in the case of Pepsi, and thus no offer would have amounted to binding agreements.

Conclusion

An advert in the newspaper, a handbill, a brochure or magazine, or a sign in a shop window may all be used to make a compelling offer to purchase or sell items. Unless the circumstances are unique and the language used is highly apparent and unambiguous, such advertisements are recognized to be only pleas to gauge, scrutinize, and discuss. No individual can rationally perceive them as anything other. The commercial was only a public service announcement, not a one-time offer, because the commercial set aside the contents of the agreement to a particular publication; the Ccatue, the commercial, cannot be considered sufficiently clear in and of itself.

References

Aaron, S. D., & Caterina, J. (2018). Inadvertent Contract Formation Under New York Law: An Update. Syracuse L. Rev, 68(4), 777-784.

Cooper, T., & Kirk, E. (2021). Contract Llaw. Routledge.

Pivateau, G. (2020). Preserving Hhuman Ccapital: Using the Nnon-compete Aagreement to Aachieve Ccompetitive Aadvantage.SSRN Electronic Journal, 4(2), 3-10

Introduction

People at various levels are waking up to the reality of the impact of carbon emission. It was in this context that PepsiCo undertook a study to find out how green its orange juice was. This paper gives a summary of the study and the significant resolutions that were made as was reported by Bryan Walsh.

Article Summary

Walsh gave a brief report of the findings of a study carried out by Columbia University’s Earth Institute and a firm called Carbon Trust. The study was carried out on behalf of PepsiCo, and it was aimed at assessing the carbon footprint of its orange juice. The study showed that the complete process of juice production to the point of customer acquisition, for a 64-oz carton, led to an emission of 3.75 Ib. of greenhouse gases. Against the majority expectation, the study pointed out the single most significant contributor to the emission of greenhouse gases as the fertilizers used in the farming of the orange trees used for the production of the juice; fertilizers contributed approximately a third (35 percent) of the total emission. The fertilizers used were inorganic, and consequently, they were very carbon intensive. Manufacturing of inorganic fertilizers required natural gas, and this made them very expensive. It was reported that nitrogen fertilizers were extremely used in the U.S. farms and therefore, if alternative fertilizers could be developed then the war on the carbon footprint could enjoy a significant victory. This study, therefore, evidently showed that there was a need for a change in the farming technique used especially the fertilizers used if at all PepsiCo was committed to producing green juice. This led to PepsiCo undertaking tests on two low-carbon fertilizers. One of the fertilizers was calcium-nitrate based and was manufactured by Yara International. This fertilizer was said to emit less nitrous oxide, and fortunately, it had a powerful greenhouse effect than that of carbon dioxide. It was reported that the production of the new fertilizer could cut the emission in the production process of fertilizers by up to ninety percent. The other fertilizer under PepsiCo’s test was an organic product fertilizer. This organic fertilizer was manufactured by Outlook Resources, which was based in Toronto. The company aimed at avoiding the use of natural gas as a raw material and substituted it for locally available resources that have less carbon emission. Instead of using natural gas, Outlook Resources used food waste, and bio fuels among other renewable materials to manufacture the organic fertilizers. It was reported that the fertilizer made by Outlook Resources was efficient as compared to the conventional fertilizers and thus less of its volume was used in farming. The test on the two fertilizers ran by PepsiCo was to last for five years after which the company was to assess the impact on the orange production and carbon footprint.

Conclusion

The need to find ways of reducing greenhouse gases emission is urgent. All the stakeholders need to engage each other in a collaborative manner towards seeking a solution to emission of rare gases. If the two fertilizers tested by PepsiCo will give positive results then it would be a huge victory for PepsiCo but more significantly for the whole world as the same will be emulated all over the world to eventually reducing, by a significant factor, the emission of greenhouse gases and making the world a better place to live.