One of the companies with a sustainability report is PEPSICO. It is a parent holding company with several subsidiaries in and outside of the United States. Its head office is in Purchase New York. It mainly deals with beverages, snacks, and other types of food. It is also listed among the leading agencies in Africa that are helping to develop a sustainable environment. The ability to be independent and diverse in its operations has helped the company to maintain a good track record of being self-sustainable in an extremely competitive market. Some of its products are sustainable in the long run. Some of the resources or materials used in the production process are recyclable for example the returnable glass bottles for the Pepsi Cola Drink brand. The concept of ‘cradle to cradle’, helps the company to save on capital and cut the financial expenditure required in future production (Braungart and McDonough, p. 117).
In terms of ecological sustainability, the company has embarked on producing its own inputs in several farms around the world that are ‘green’. The factories that the company runs meet the recommended carbon emission standards thereby helping to contain global warming. From a business perspective, a good competitive edge is kept by providing a balanced diet in its locally manufactured products because of the extraction of ingredients from freshly harvested and chosen fruits supplied by the farmers. With the decision to reduce the amount of added sugar in the beverage brands, the number of fats and oils and increasing the level of whole grains in the main meal categories, fruits and vegetables, incidences of diseases tied to the types of food eaten by an individual like diabetes and cancers are greatly lowered hence improving human health.
This way the company helps to create a healthy nation and at the same time improve sustainability in terms of the productivity among its employees by them being able to work in an eco-friendly environment. Environmentally speaking, the company is sustainable for instance in the utilization of land that it owns, energy and water used in the production processes as well as using recyclable materials for packing the products. These are natural resources with the capability to be used in the long run because at all times they are available and sustainable. The company acquires innovative ideas and information from external stakeholders to generate appropriate decisions in its business (Sand, p. 126).
How PEPSICO might implement a cradle to cradle concept in its products
Cradle to cradle concept entails the human resource generating new technologies and methods in the processes of production. Natural resources are being depleted much faster while the rate of creating new products is increasing. There is so much waste produced daily around the globe which must be utilized because it is putting human life at risk. Furthermore, some of these wastes are recyclable and with this comes an opportunity for the recycling firms to make profits as well as creating employment for some people. Human creativity is also essential in designing products in a way that they can be recycled for future use (El- Haggar, p. 145).
PEPSICO can use cradle to cradle concept in its activities. For instance, the water used in the production processes can be recycled and used to irrigate the farms or for cleaning the factory floors. The fact that they also use most of green inputs like fresh fruits paves way for reusing the wastes as compost manure in the farms. This is far very sustainable about cradle to cradle without the associated costs to purchase artificial fertilizers which, on their own, have been blamed for diseases like diabetes. It can also buy a lot of recycled paper to manufacture the packaging materials like the disposable tetra packs for its beverages and the publication of brochures to be used in advertisements. This will help the company save on production costs. The company can also make use of solar energy in its factories’ lighting systems (Blair and Hitchcock, p. 63).
Works cited
Blair, Alasdair McMillan and Hitchcock, David. Environment and business. London: Routledge, 2001
Braungart, Michael and McDonough William. Cradle to Cradle. New York: Vintage Books, 2009
El- Haggar, Salah. Sustainable industrial design and waste management: cradle-to-cradle for sustainable development. New York: Academic Press, 2007
Sand, Claire. The Packaging Value Chain. New Jersey: DEStech Publications, Inc, 2009
There has been a long standing tradition in how Coca Cola and Pepsi are made. Each one is a unique brand that has its “know how”. There are several differences in the corporate cultures of each organization. Coke is made out to be a tradition of the population. It has its holidays and unification with people’s lives. Pepsi, on the other hand, is made out to be a refreshing treat that is apart from the everyday life. One of the most important features that Coca-Cola Company possesses is the ability to market to the right population and the product must be aligned with the people.
The fact that the drinks have become global is very significant because this means that the company was able to find the unique connection with every nation and the people. The overall opinion of the company is rather positive, as it is professional and makes products that are unique and original. The taste that they were able to manufacture goes back in time and can be seen as one of the gimmicks the company has had (Bodden, 2008).
Benefits of competition
With the current economy changing, especially at a worsening time, the market is becoming different from before. There are certain things that people need, so the business must adjust to the wants and needs of people. Having in mind the demand, Coke has much to offer to the small business entrepreneur. One is competitive rates and conditions that are at the highest level. The work force has proper knowledge of the industry, so employees will be rather helpful in supporting the development at the beginning stages (Boone, 2012).
The security of the industry is another aspect that is needed, both physical, in terms of structures and locations, as well as market and establishment wise. The standard for calculation is taken as the present rates of growth and the same future rate is assumed. The first calculation made is the value of the business while in operation. The generated assets are taken into account, having in mind all the expenses in maintenance and salaries. (Lindgreen, 2009).
Liquidation of Coke and Pepsi products option is also present, in case the business must be terminated. The economic conditions are looked at, as the locality of the business plays an important role in the greater scope of things. The financial analysis of previous years in operation is analyzed in order to determine any trends or weak spots (Laro, 2005).
Future Changes
A game or an in-depth scientific module could be set up, so that people feel involved in the process. A TV commercial or small educational session could be made to tell people what has changed, the benefits, so there is direct interaction with the viewers. TV has several advantages, as the creators of the ad are in full control, being able to easily show the public the necessary and crucial parts of the product.
There could be an interactive program set up that is educational and visually shows the process of how the product is made, filtrated and bottled. It could have different parts of the plant that could be clicked on and viewed in a closer and informative format.
A printed medium could relate to billboards, magazines, newspapers and flyers. People must be able to familiarize themselves with the product very closely, and since some people do not have access to the internet or TV, they will see pictures and read information on the walls and in a subway, so the message gets out (Fifield, 2012).
As the coronavirus pandemic continues and new global and local crises emerge, many commercial entities, especially those of the size of international corporations, face new businesses and supply chain challenges. Among them is PepsiCo, which is also preparing its human and monetary resources and technical and infrastructure capacities for new market difficulties. For example, its analysts argue that there is “higher demand from shoppers as the global economy recovers from … the Covid-19 pandemic” (Sebastian & Maloney, 2021, para. 2). However, they also note “supply-chain disruptions and increased costs for aluminum cans, plastic bottles, labor and trucking” (Sebastian & Maloney, 2021, para. 1). The corporation will offset future associated costs by slightly tightening the pricing policy of its products (Sebastian & Maloney, 2021). However, one should remember that an untimely or incorrect response might lead to the strengthening of PepsiCo’s competitors in the food and beverage market.
Adapting Structurally to Coronavirus Crisis
As one can see, the coronavirus crisis has put significant pressure on PepsiCo’s key marketing sectors. The corporation decided to carry out an internal reorganization as another coping measure. According to Biscotti (2022), it nearly halved the number of operating units. The new division is based on global categorization and looks simplified and generalized (Biscotti, 2022). There are high hopes in PepsiCo’s top ranks that this organizational upgrade will make the core structure of the corporation more nimble, flexible, and less vulnerable to harmful external marketing, infrastructure, and political influences (Biscotti, 2022). Such a measure may also solve the existing financial and logistical problems with the production and transportation of their items. Interestingly, almost all top international market players experience similar corporate hardships and challenges in these days of lockdowns.
References
Biscotti, L. (2022). Pandemic accelerates big food and beverage company strategies. Forbes. Web.
Sebastian, D., & Maloney, J. (2021). PepsiCo juggles strong demand and supply-chain challenges. The Wall Street Journal. Web.
The assessment analyses challenges experienced by Pepsi Cola International in Ukraine. Distribution channels and logistics challenges have affected the business, which is the reason this assessment identifies four challenges and gives possible solutions. While using the available literature, challenges include poor transport and infrastructure.
The ports are congested and delays are common. Burglary is a challenge for transporters. The distribution channels are not effective in distributing the product to all parts of the region it is required to. There is because of competition from other brands. Long distribution channels and economic slowdown make the prices increase.
Warehouses are scarce as well as forklifts. The management can reduce the challenges by engaging in research and use recommendation to make changes that correspond to the environment and developments. Investment and long-term decision can be encouraged.
Introduction
Pepsi Cola International in Ukraine has been operating for over twenty years. The distribution of the soft drink determines the sales and the business development. Unlike other European states, Ukraine is lagging behind in development and this has affected the business. Moreover, Ukraine is a potential target for the company and the senior management of Pepsi Cola International in Ukraine should investigate and make changes that encourage business growth.
This paper will identify four challenges the senior management of Pepsi Cola are facing in relation to distribution Channels and logistics. The paper will also recommend solutions for the four problems.
Key challenges that Pepsi cola senior management is facing
Menachof (2001, p. 2) reveals that distribution of Pepsi is done via arrangement with different franchise and other arrangements. The methods of distribution may require changes that correspond to the transforming economy. The company has conducted business in the Soviet Union for a period that exceeds twenty years.
Pepsi Cola international senior management in Ukraine has exerted efforts to investigate the distribution as well as pricing policies in Ukraine. Ukraine office in Vienna bottles and distributes in Eastern and Central Europe.
Transportation and infrastructure
One of the challenges for Pepsi Cola international is gaining access to the huge markets. The number of users of their soft drinks remains relatively small, when compared to the consumption rates of the large markets.
In 1994, Soviet law made trade arrangements that prohibited Pepsi Cola International from banishing income to United States. Ukraine partnered with shipyard. Consequently, Pepsi became the dominant soft drink. International Directory of Company Histories (2001, p. 1) notes that Ukraine sees Pepsi Cola as their choice. However, Coca cola has opened a bottling plant in Ukraine that has been operational since 1995.
The economic development of Ukraine has been slower than in other parts of Europe. Transportation of goods is slow owing to the slow railway services. There are numerous cases of delay. There is state transport composed of large companies that offer transportation.
Private companies which are small have transportation trucks. Other business men use own vehicles that are not trucks to transport. Any truck can be used for transportation and earn an income for the owner. At the port of Ukraine, imported goods take long owing to payment complications.
Importers have been affected by inflation and have lost purchasing power; hence the price is very high. Accumulation of goods at the port is common and obstructs operations. Space at the port is rare. Banditry and theft are on the rise as some of trucks are forced to offload their goods. Cargo insurance companies have failed to cooperate by withdrawing from insuring cargo for inland beyond the entry of the port.
Private property laws are not fully developed and affects how landlords relate with tenants. Warehouse space is limited. Shipping containers, basements and any available space in the buildings are considered as warehouses. Landlords may breach the contract and the property owner may not be fully protected by the law.
The distribution equipment has been used for more than twenty years. Although the port is being upgraded, the facilities do not match those in the developed part of Europe. While lagging behind at the port, the case is the same for inland facilities. Forklifts are not available and people lift the load by use of hand.
Channels of Distribution
The distribution channels in Ukraine perform poorly compared to other countries. In other countries, there are Pepsi trucks. The drivers of the trucks ensure that they have enough supplies for specific areas. There are also Pepsi machines that provide drinks. The trucks, drivers and machines are absent in Ukraine.
Pepsi Cola international receives concentrate which is sold and delivered to the twelve authorized bottlers. Pepsi cola international use rail or tracks to deliver to the bottlers. During winter, Pepsi cola has to make arrangements with the rail to ensure that it delivers the concentrate. Since roads are impassable, rail is the only means of transport.
Another challenge is preventing the product from freezing by ensuring that the cars are heated. When the concentrate becomes frozen, it cannot be useful anymore. Different distributers obtain Pepsi Cola from the bottlers. The distribution of Pepsi in major towns and city is regular. In small towns, shortages are common. Retailers then sell the product to consumers. Some retailers, like kiosks, do not have the product until they make trips to the city or major towns.
Business environment
Finances and politics have an impact on Ukraine. Investors invest limited capital in their businesses and their plans are often shorter and middle term plans. There is fear and uncertainty about the future. The justification is that unrest may rise up again. Western investors in the Soviet Union have hardships with the law.
They are not protected by the law. Moreover, decision making in business takes a long time and favors shorter plans. Decisions in business last around three months and change of mind can occur at any time before the time is over. Three months is a short time for one to realize quick money as they often wish for.
Business practices are secretive. Business men keep two records for official use and actual transaction. New investors venturing into partnership experience frustration. They have difficulties trusting foreign investors. The locals have been frustrated before and cooperating may take a long time.
Aldin and Stahre (2003, p. 272) mention that the use of distributers eradicates the inconsistencies in the schedules for manufacturers and the pattern of consumption for consumers. Consumers tend to use certain products during a certain season and when the season is ended, the consumption is reduced.
Manufacturers may be required to use wholesalers or retailers to acquire finances. Selling directly to the customers may take a longer period of time to sell. Retailers and whole sales will pay before obtaining the product. The retailers and wholesalers may be in a better position to perform specialization functions than the manufacturer.
Perner (2008, p. 1) adds that the manufacturers are specialists in manufacturing, while the retailers specialize in distributing. Efficiency is obtained if the manufacturers effectively distribute to a wide range of retailers. In turn, the retailers will distribute to the customers.
According to Coughlin et al (2001), for the distribution of same product, a parallel distribution structure may be adopted. The product can be obtained by using a different channel other than the traditional distribution channel. Consumers may prefer to buy from the manufacturer to save on cost and sell for a less costly price. Those using the traditional channel will see this as unfair competition.
Pricing
The prices of Pepsi Cola increase as people move far away from authorized bottlers. The distribution channel is long. From Pepsi cola international, the product is bought by the bottler, then by the distributer, then the local retailer and finally the consumer. The long chain makes the price of Pepsi Cola products costly.
The prices of the drink are also interfered with by the economic slowdown. The cost of fuel has increased and transporting the product has become more costly. The glass bottles are delicate and cumbersome to transport and are expensive, as Ramez (1990, p. 1) mentions.
Larson and Halldorsson (2002, p. 37) state that selling directly to the consumers enables the consumer save. However there may be challenges and inefficiency when it comes to direct distribution from the manufacturer to the consumer. Retailers and the wholesalers make distribution efficient. The customers can get the products at a convenient location.
Carter and Narasimhan (1996, p. 13) indicate that the consumers can buy small quantities of the product as opposed to buying in bulk. Customers can obtain a variety of products from a retailer as opposed to getting a specific product from one store, then move to the other store for another product.
The stores with variety are also located close to the consumer. On the other hand, the customer buying directly from the manufacturer travels a long distance to obtain one product. Intermediaries such as wholesalers make deliveries to retailers with products from different companies. They save on the cost that would have been used in the delivery of individual goods.
Before a product is known by the consumers, the distribution is likely to be slow. Later on as the product is known, the distribution is expected to grow steadily. When the distribution of a particular good is diverted, the market is affected.
Possible solutions for Pepsi Cola International
For economic development to occur, the senior management should consider engaging in research to view possible ways of dealing with the challenges. The senior management policies should be in line with the changes in society as Bruce (1995, p. 230) suggests.
According to Fugate et al (2008, p. 2), understanding the market trends and environment enables the top management to make plans that will enhance distribution of a product. With the understanding of the market trends, it is possible to make strategic plans and implement them.
Transportation and infrastructure
Increasing efficiency while saving on cost is an effective way of solving transport challenges. The company can use own trucks and employ drivers, who would manage the distribution. The drivers will keep record and make necessary arrangements to reach the remote parts and deliver Pepsi products. The driver, as part of the human resource management, can get training on customer relations and increase knowledge. During winter, the concentrate can be kept at the right temperature to prevent cases of freezing.
If the government improves infrastructure, the road network will be efficient and products can be delivered. Development can be encouraged to improve infrastructure in warehouses and storage. The channel can be integrated to reduce the long distribution channels and enhance distribution of the product. The Company can purchase forklifts to assist in loading trucks (Srivastava et al 1999, p. 168).
Rutner and Fawcett (2005, p. 56) argue that distribution of a product is one of the most important processes in a business. Distribution of a product consists of moving a product from the manufacturing company to the ultimate consumer. Consumers determine what retailers will stock. The retailers stock what the consumers ask for.
The retailers give a large shelf space to products that are known to consumers. The retailers fail to stock new or less prominent products to avoid a situation where customers do not buy the product. Retailers have confidence in products that have sold before. Marketing and advertising can be done to encourage more buyers, so that retailers stock Pepsi products.
Channels of distribution
When distributing, the business can adopt a multichannel distribution that will allow for planning using data. The use of catalogues, field sales, trade counters, pricing offers, call centers, mailing lists, websites and trade shows is significant. While distributing, the distributers can use one system to control different channels.
This will reduce the challenges posed by different catalogues for different clients. Creating own ware house will increase efficiency, reduce costs and enable distribution. Customer’s service is important and retailers, as well as distributors, should consider fulfilling the needs of the customer.
Stern (1997, p. 14) notes that the manufacturer has the challenge of ensuring that the product is available all the time. Customers move to another brand when their prefer brand is not available. A number of customers will not move to the next retail shop to obtain their preferred brand and would rather settle for a different. Some manufacturers may be selective and choose their distributer if the product is designed for a classy store.
Business environment
Market research is an important practice that Pepsi Cola International can adopt. The management is involved in conducting research and making changes where necessary. Research will enable the senior management make informed decisions (Mentzer 2001, p. 19).
Gundlach et al (2006, p. 430) suggests that the product should be availed all the time close to the consumer to ensure that the customer gets the product they desire. The competitors pose a threat if their products are available, since consumers go for another product if their preferred product is not available.
Business operators can be encouraged to take risks and invest for long periods. They can also be encouraged to follow standards business protocols. They can make appropriate decision on the new location to venture in and ensure that select the best distributers. Coming up with a strategy on marketing will assist them stay ahead of their competitor. Flexibility in the business plan will enable the business make changes when necessary and avoid delayed decision making.
The channels and structures in distribution are largely dependent on the type of product, demand, location of customers and environmental factors. Manufacturers require the product to be in as many retail shops as possible. They also need the retailer to have the specific products that customers need. In Pepsi Cola, they would require the retailer to have different flavors of the soft drinks so that the customers choose their favorite flavor.
Pricing
Lambert et al (2005, p. 49) adds that pricing of a product positions a product in the market, is a competitive tool and brings revenue to the company. Changes in price may bring resistance and affects sales and thus, companies need to make appropriate decisions.
The prices should remain at reasonable rates. This can be achieved by creating efficiency in the distribution of product. The reduction of the number intermediaries can be reduced so that the prices do not remain high (Perner 2011).
McNamara (2011, p. 1) says that the manufacturing companies can implement price control by recommending the retail price. The prices should be low and should not be below the cost of production. Large discounts should be given to bottling companies, only if the bulk buying enables the manufacturing company to save on cost.
The behavior of customers towards pricing is important to understand consumer behavior on price. Some customers compare prices and when prices change, they buy products at close rate as before. Where there is little difference between competitive products, the consumer has a perception that the product is better and therefore the prices can be increased (Ballo, 2011).
The distribution trends have changed recently. The prices of commodities have increased and sometimes decreased with different pricing as the quality diversifies. The global slowdown has also affected the sales of products. Changes to accommodate change should be adopted as Gerth (2004, p. 1) notes.
Conclusion
Pepsi cola international has operated in Ukraine for two centuries. The challenges are transportation and infrastructure. The port is congested and needs expansion to accommodate cargo. Accumulation of cargo leads to consumption of time before the cargo is released. Concentrate is transported on poor roads and railway.
There is increased burglary on the roads. The cost of fuel is also high. Warehouse and stores are not readily available. There is need for additional forklifts. Distribution of Pepsi products is another challenge. Distribution is done via roads and trains, which are unreliable. Truck drivers are not employed by the Pepsi cola company hence; coordination of demand and supply becomes a challenge.
The channels are long since the manufacturer sells to the bottler, then the wholesaler, then retailers and then the customer. The business environment is challenging. Coca Cola Company has established itself since 1995 and poses competition. There is uncertainty in political and financial processes. Business men keep two records of accounts. Pricing is challenging since there is a long chain in the distribution.
The economic slowdown has also affected businesses. To overcome the challenges, policies that enhance economic development can be adopted. The senior management should also engage in research to discover the market trends and developments, which can be adopted to enhance operation and increase efficiency.
Owning trucks and training staff can increase the sales and distribute to the city and remote areas. Ware houses can be built to increase safe storage. The product should be available all the time. Investment can be encouraged. The price should be able to give revenues and be affordable to the consumer.
Reference List
Aldin, N., & Stahre, F., 2003. Electronic commerce, marketing channels and logistics platform: a whole sale perspective. European Journal of Operational Research, 144 (2): 270-279.
Ballo, R. H., 2011. Logistics, Supply Chain & Transport Management Program. Web.
Bruce, M., 1975. Marketing Channels and Economic Development: A Literature Overview. International Journal of Physical Distribution & Logistics Management, 5 (5): 230 – 237.
Carter, J. R and Narasimhan, R., 1996. Comparison of North American and European Future purchasing trends. International Journal of Purchasing and Materials Management, 32 (2), 12-23.
Coughlin, A. T., Anderson, E., Stern, L. W and El-Ansary, A. I., 2001. Marketing Channels. Prentice-Hall: Upper Saddle River, NJ.
Fugate, B. S., Flint, D. J. & Mentzer, J. T., 2008. The role of logistics in market orientation. Journal of Business Logistics, 1–26,
Gerth, D. 2004. Unit 13: Channels of Distribution, Logistics, and Wholesaling. Web.
Gundlach, G. T. Bolumole, Y. A. Eltantawy R. A., and Frankel, R., 2006. The changing landscape of supply chain management, marketing channels of distribution, logistics and purchasing. Journal of Business and Industrial marketing, 21, (7): 428-438.
International Directory of Company Histories., 2001. The Pepsi Bottling Group, Inc. International Directory of Company Histories, James Press 40. Web.
Lambert, D. M., Garcia-Dastugue, S. J and Croxton, K. L., 2005. An evaluation of process-oriented supply chain management frameworks. Journal of Business Logistics, 26 (1), 25-51.
Larson, P and Halldorsson, A., 2002. What is SCM? And, where is it? Journal of Supply Chain Management, 38 (4), 36-46.
Menachof, D. A., 2001. Pepsi Cola International. Ukraine: Distribution and Pricing Policy in Ukraine.
Mentzer, J. T., DeWitt, W., Keebler, J. S., Min, S., Nix, N. W., Smith, C. D and Zacharia, Z. G., 2001. ‘Defining supply chain management. Journal of Business Logistics, 22 (2), 18-31. Web.
Stern, L. W., 1997. The Concept of Channel Control. Journal of Retailing, 67, 43 (2): 14
Ramez, A., 1990. International report: Pepsi will be bartered for ships and vodka in Deal with soviets. Web.
Rutner, S. M. and Fawcett, S. E., 2005. The state of supply chain education. Supply Chain Management Review, 9 (6), 55-60.
Srivastava, R. K., Shervani, T. A and Fahey, L., 1999. Marketing, business processes, and shareholder value: an organizationally embedded view of marketing activities and the discipline of marketing. Journal of Marketing, 63 (4) 168-179.
The companies demonstrated effective marketing strategies, such as delivering direct store doors (DSD) by Coke and Pepsi bottlers. Route delivery salespeople controlled the CSD brand in shops by reserving shelf space, stocking CSD items, placing the brand’s trademarked label, and erecting point-of-sale or end-of-aisle displays (Kim and Yoffie 2).
Discussion
Another important component of soft drink sales was cooperative merchandising agreements, in which merchants committed to particular promotional activities and discount levels in exchange for payment from a bottler. In the past, Coke dominated sales at fountains, while Pepsi concentrated on sales via retail locations. Bottlers often handled local fountain accounts and were far more profitable than national ones (Kim and Yoffie 4). Coke and Pepsi invested in creating service dispensers and other equipment to support the fountain channel. They also offered point-of-sale advertisements and other in-store promotional materials to fountain consumers.
Another aspect is that cans are made for appealing packaging since they are lightweight, easy to handle and display, sturdy, and recyclable. The concentrate producers’ approach to the can-makers was indicative of how they dealt with their suppliers. Both businesses took over some of their own produce in the 1960s and 1970s, but by 1990 they had mostly left that industry (Kim and Yoffie 5). Coke and Pepsi were among the biggest clients of the metal can sector and bargained on behalf of their bottling networks. Most of Coca-goods Cola’s are not finished or packaged. The business makes money by supplying syrups and concentrates to bottling plants worldwide and completed goods to retailers and other distributors. Additionally, Coca-Cola franchised its bottling operations (high-revenue, low-margin sector), decreasing sales while increasing profitability (Trefis Team). In contrast, Pepsi has been making acquisitions to broaden its customer base.
Conclusion
Although Coke and Pepsi’s rivalry can be detrimental to newcomers to the CSD industry, both businesses have succeeded by recognizing and responding quickly to their customers’ wants. Threats from the other pushed both parties to plan marketing campaigns, create product innovations, and cultivate strong relationships with their bottlers and suppliers to obtain the upper hand. Due to increased rivalry between the two businesses due to external circumstances, more original and creative solutions were required. The two largest beverage companies that negotiated on behalf of their bottling networks were Coca-Cola and Pepsi. Coca-Cola reduced sales while boosting profitability when it franchised its bottling operations.
Works Cited
Kim, Renee and Yoffie, D.B. “Cola Wars Continue: Coke and Pepsi in 2010.” Harvard Business School.
PepsiCo had the mission of increasing the value for investments done by the shareholders. To achieve the mission they reduced the costs and increased the sales as well as controlled the investment resources.
Through the analysis, the company was able to increase the value of the investments through the increased sales in the market, investment of resources that was done wisely and successful management of costs (Helfert, 1996). They therefore need to increase the quality and value of the products by producing safe products to the human health as well as environmental friendly.
Objectives
PepsiCo’s objective is to increase the value of the shares invested by the stakeholders as well improving the quality of the products supplied in the market. They intend to achieve the objective through the integration of finance, operational and investment activities.
They also want to expand the global market to increase the sales and by doing so they have directed their energies in businesses where they expect growth. Their plan for growth therefore has been linked to the issue of exploiting the opportunities and managing the risks associated with the business in the market (Annual Review, 2007).
The company intends to support life of the society through the arrangements of supporting social agencies as well as coordinating projects and programs that support life in the community. The range of support varies from supporting the employees with voluntary activities, offering local program sponsorships as well as contributing to programs that support the nation. By doing all these, the company will have achieved the objective of improving the quality of life in the community (PepsiCo sustainability report, 2007).
Strategies
Revenue, earnings, cash flow and margins
To maintain and expand in the global market the company has moved to the production of alternative drinks with low fat content like dips as a technique of minding the health of consumers as well as attracting more customers to enhance growth.
The strategy of bottling increased the income revenue in the year 2010 to $735 million though it later decreased 2011. The net income increased.by 2% in 2011 as compared to 2010 and the net income per share increased by 3% (Annual Review, 2007).
In the cash flow statement of PepsiCo, the analysis shows that the net cash provided by operating activities increased from $6,796 million in 2009 to $8,448 million in 2010 and later to $8,944 million in 2011.
The operating capital realized was $264M in 2009, $763M in 2010 and $844M in 2011 while the net cash used for investing activities was $2,401 in 2009, which increased to $7,668M in 2010 and later decreased to $5,618M in 2011(PepsiCo sustainability report, 2007).
Between the years 2009 to 2011, PepsiCo had an increased annual earnings growth that is from $5,979 million in 2009 to $6,338 million in 2010 and later to $6,462 million in 2011 and this shows an average of 8% growth annually for 2009 as compared to the previous years and 12% increase between 2020 and 2011. For the years 2010 and 2011, the earning per share increased to 12%, which leads to an increased purchase of shares hence its expansion (PepsiCo sustainability report, 2007).
PepsiCo has maintained a 14% net profit margin for the years 2009-2011 though this is lower as compared to its competitor Coca Cola. In terms of dividends, the company has maintained a steady increase for the past several years with a current yield of over 2.8% (PepsiCo vision and strategy, 2007).
In the analysis of the assets of the company realized an increase in the cash and cash equivalents between the years 2009 $3.9 billion and $5.9billion in 2010 but it decreased in 2011 to $4.06billion. Short term investments increased form $192 million in 2009 to 426 million 2010 but later decreased in 2011 to $358 million.
The accounts and notes receivable, net was $4.6 billion in 2009, $6.9 billion in 2010 and 6.9billion in 2011 and the total assets realized in 2009 was $39.8 billion, $68.1 billion in 2010 and $72.8 billion in 2011 (PepsiCo sustainability report, 2007).
The company experienced the repurchasing of shares by the shareholders and this has facilitated its growth as well as expansion. The company had therefore a repurchase in the years 2010 to 2011, which was equal to a net of $15 billion. PepsiCo’s balance sheet indicates a great growth for company in terms of its assets as well as its total liabilities, which has been increasing steadily between the years 2009 to 2011(Annual Review, 2007).
The company has tried to improve sales through the strategy of exclusiveness with restaurants as a way acquiring an advantage in the channel distribution. The company therefore purchased Taco Bell to create a channel of increasing sales in restaurants. Funds obtained from schools where they have established chains of supply are used to purchase textbooks (PepsiCo sustainability report, 2007).
Policies
The company’s policy is that they have corporate programs to train the employees on management issues and other relevant training for them to deliver services of high quality. In the delivery of services, PepsiCo ensures that the cultures of different nations are catered for as well as treating the customers equally and with respect.
The privacy of the customers is maintained for them to gain confidence especially those who visit the website. Another policy in PepsiCo that has helped it grow is the act of diligently employing qualified staff to work in the company (PepsiCo sustainability report, 2007).
The top management of the company tries to ensure that PepsiCo is in a position to deliver in every quarter of the year. As much as there are challenges in achieving this, the management has engaged in exploring the worldwide market as well as penetrating into the new markets in countries like Russia and India for them to increase sales and realize growth in the market (Annual Review, 2007).
Research and development
The research and development department in PepsiCo carries out various types of researches and development activities to give new insights of what is expected of the company in the market. The activities revolve around the production of new products, improvement of production processes, expanding the products as well as improving the quality of the products in the market and improving the way of serving the clients (PepsiCo vision and strategy, 2007).
Through the research, the company had the objectives of reducing the fat contents in the products they produced, decrease the content of sodium in the products, elimination of sugary soft drinks sold to primary and secondary students and the increased production of health foods by use of healthy ingredients. These changes will therefore enable PepsiCo meet the changing patterns of the consumer demands (Annual Review, 2007).
The use of computerized processes in the manufacturing of products has contributed greatly to the quality bottling of the beverages as well as facilitating an easy and quick way of packing. For a company to win an advantage in the competitive market it should ensure that the mode of distributing the services as well as products to the intended customers is efficient and reliable.
PepsiCo has therefore an invented technology, which helps the company to control inventory and keep in touch with distributing agents for easy communication. The technology helps in carrying out the logistics of the company since the company is able to monitor and know the sales made in various regions, which helps to put more efforts in order to expand the market (PepsiCo sustainability report, 2007).
In the manufacturing of soft drinks, the technology that is involved is readily available and therefore many companies develop interest of engaging in the business. For the company to enter into the market, it should engage in advertisement to inform the public about its products and the necessary details to attract their attention. The company has a challenge in distributing the products especially to the new markets like in China where the means of transport is not good (PepsiCo vision and strategy, 2007).
Due to the changes in the consumer demands competitors take advantage to market their products. The market growth of soft drinks is expected to rise at a slow rate in the four consecutive years. Through the analysis, the company has experienced growth for the three years that is 2009 to 2011 and still the company hopes for a great growth in the coming years. This is because as much as Coca Cola has taken roots in the market the greater opportunity for growth is in the other non-Coca Cola segments (Annual Review, 2007).
Out of all the strategies that PepsiCo intends to follow in realizing the vision, the management settles on the idea of diversification in the production and continuous growth of the company as a way of strengthening their presence in the market. PepsiCo should therefore focus on the issue of diversifying the selection of their beverages as a way of outdoing Cola Company in the market (PepsiCo sustainability report, 2007).
Consumer culture is regarded to be one of the most essential components of the marketing strategy. It is generally shaped all through the history of a brand, and seriously impacts the marketing strategy and advertisement policy. In the case of Pepsi, it has more than a century-long history, and the consumer culture, which had been forming for this period, is unique among all the other similar brands.
Pepsi-Cola is a famous multi-billion dollar brand. The struggle between Pepsi and its rival Coke has been lasting for years, and the struggle of the colas has been expanded into other product spheres. But still, Pepsi cola is a global giant, with worldwide trades of around $15bn.
Brand History
The history of Pepsi started in 1893 when a young pharmacist Caleb Bradham invented a refreshing drink by experimenting with spices, syrups, and juices aiming to create something new.
In 1902, he started the Pepsi-Cola Company in one of the rooms of his drug store and addressed the U.S. Patent Office for a brand name. Originally, he mixed the syrup himself and sold it only out of his soda fountains. Soon, Caleb found out that a greater chance existed to bottle Pepsi so that people could buy and drink it anywhere they wished. Since that moment consumer culture started shaping, as the product had been positioned as a refreshing drink, which may be bought anywhere. Moreover, in 1902 the first commercial advertisement appeared in New Bern Weekly Journal.
The advertising strategy had been changed essentially since that, as Pepsi brand conquered international markets, and the campaign should be planned by the contemporary trends and cultures. Any company can not deal without a website nowadays. Pepsi cola is not an exception, and the official site, which is also a retail one, is regarded to be rather a successful one, as it is colorful, attractive and perfectly created from the point of view of navigation simplicity and data availability.
Theoretical background
From the consumerist point of view, it is necessary to highlight, that the website does not fully correspond to all the requirements of consumerism, as it is oriented only for those, who have access to the global net. These may be the people from the developing countries, who do not have constant access to World Wide Web. The website also does not shape the consumer culture, as it is necessary to dictate the way of life and the manner of behavior.
Surely, there are some options for particular Pepsi activities, but these activities are not advertised broadly, and most of them are mentioned only on the retail website. It may be stated, that the entire campaign is oriented for youth, as it promotes an active way of life, sports, parties, etc, and the Pepsi cola sign is associated with the choice of the new generation. The essential point is that it is weakly oriented for elder generations, but youth only.
Close analysis
As it has been stated above, the Pepsi Cola Company launched and maintained the campaign, which emphasizes, that Pepsi is chosen by the new generation. It is claimed, that the Pepsi brand is present at lots of sports events, especially basketball and baseball in the USA, and football in Europe. As the campaign is regarded to be rather successful, the brand is associated with the choice of the youth, with sports activities and energetic behavior. Pepsi brand has become a part of customer’s buying process and shaped particular consumer culture. It looks especially topical on the background of the national strategy against obesity, as people should realize – life is in motion and activity.
The brand analysis also revealed the fact that the changes of the brand image all through the history was a required action, and it confirmed the marketing rule, that brand should develop and change its image. The changes of the image were not numerous but originated the increased recognizability rate.
The Pepsi brand is identical to the matter where it is bought; thus, price tends to be the main differentiator for customers. On the contrary, fresh products vary considerably in both excellence and appearance. Over the past decade, many grocers progressively more offered high quality, fresh products, and natural foods as a way to distinguish themselves from Wal-Mart and other low-price sellers. And it is the only reason, why such retailers refuse to deal with Coke and Pepsi: originally, Pepsi was a mixture of spices, juices, and syrups, but since the production became fabric, and with the development of technologies, any natural product except sugar is entailed in Pepsi drink: these are stabilizers, preservatives, coloring agents, etc.
Conclusion
Staying within the top of the hugest brands, Pepsi has an interesting and bright history. And despite the arrangement and sponsor’s assistance of lots of sports events, it stays the unnatural product, and it seriously harms the effectiveness of its campaign.
References
Pepsi Cola Co. Web.
Northon, Anne (2005) “signs of shopping” Consuming passions.
Several issues or drivers can be observed to support the rivalry existing between Coke and Pepsi. These two giant companies embrace similar business models to produce the best outcomes. This move has identified powerful strategies that can be imitated by companies in different industries. The needs of different consumers have also been considered by these companies. They have been working hard to produce quality products for different individuals. The rivalry has also led to numerous price reductions. Different suppliers have also benefited from the rivalry.
The competitive dynamics portrayed by Coca Cola and Pepsi show how companies can redefine the nature of an industry. The rivalry has forced these companies to produce superior products that can serve more customers. The “ongoing competitive action sequence between a firm and a competitor affects the performance of both firms” (Hitt, Ireland, & Hoskisson, 2010, p. 138). It is, therefore “important for companies to carefully analyze and understand the competitive rivalry present in the markets they serve to select and implement successful strategies” (Hitt et al., 2010, p. 138).
That being the case, the level of competition has led to new practices to support the health needs of different consumers. These dynamics have played a significant role in improving the level of customer satisfaction. The rivalry has also presented new opportunities for economic development. Business organizations can therefore engage in similar rivalries to promote the best practices.
Reference
Hitt, M., Ireland, R., & Hoskisson, R. (2010). Strategic Management: Concepts and Cases. Boston, MA: Cengage Learning.
This benchmarking table shows different strategies employed by restaurant owners to attract customers. It is necessary to explain that the issue of security is provided by both the local government and arrangements made by hotel owners. Therefore, most restaurants have good security to protect the welfare of clients and none can boast of a superior strategy to enhance the safety of patrons. However, it can be noted that some restaurants have large parking spaces and this is a plus in competing with others. Most of these restaurants were established to accommodate families and other social gatherings. Therefore, the need to have a large parking space is an added advantage to competitors.
However, it is important to understand that these restaurants specialise in different foods. The most popular ones are traditional cuisines (Indian, Bangladesh and Swedish) while only a handful pay attention to modern diets. However, there is a unique twist in the cuisines offered by these restaurants and Chilies seems to beat its competitors by accommodating the interests of vegetarians.
Strategic Grouping Map
The strategic grouping map shown in the diagram above represents how the restaurant industry in the United Kingdom is differentiated. It is necessary to explain that most of these businesses offer services that reflect the cosmopolitan nature of the United Kingdom. Indians and Swedes are amongst the most targeted groups by the local restaurants. In addition, Brick Lane has many restaurants and all of them seem to be making money from their services; therefore, the hotel industry in this region is a good investment. Restaurant owners seem to target people from different regions of the world and that is why most of their hotels specialize in traditional cuisines. However, a new twist is introduced in the market by restaurants that offer healthy foods that attract people from special groups, including vegetarians and those that do not consume genetically modified products (Gibson 2012).
Chilies Restaurant offers unique packages because they realized the need to offer vegetarians menus that accommodate their interests. However, it would be wise to introduce healthy diets to ensure that people have a variety of choices to pick from. It is necessary to include other special interests like nutritional considerations when preparing meals and this should be included in their menus. The need to explore a variety of healthy meals will expand the market base for this restaurant and attract non-Indians too (Chow 2010).
References
Chow, C 2010, Learning from our Global Competitors: A Comparative Analysis of Science, Technology, Engineering and Mathematics (STEM) Education Pipelines in the United States, Mainland China and Taiwan, McGraw-Hill, New York.
Gibson, C 2012, Financial Reporting and Analysis: Using Financial Accounting, Wiley, New York.
PepsiCo, Inc. is one of the largest multinational corporations focused on the manufacturing, distribution, and sale of food and beverages. Founded by Donald Kendall and Herman Lay in 1965, the company is constantly developing and introducing new strategies of marketing in order to stay competitive. Therefore, its success is expressed financially – for the previous fiscal year (2021), PepsiCo’s annual sales were 79.5 billion, and this revenue is almost 13 % higher in comparison with 2020 (PepsiCo Inc. par. 1). The company has a highly diversified range of products, including beverage, food, and daily nutrition lines. The company’s top global product portfolio includes 23 brands that generate approximately $1 billion annually (About the Company par. 1). The most recognizable brands of PepsiCo are Pepsi Cola, Lays, Cheetos, Doritos, Mountain Dew, Gatorade, Tropicana, Lipton, and Aquafina.
The marketing mix of PepsiCo is based on various tactics and strategies the company applies on the basis of its products, sources, and capacities. The 4 Ps of marketing mix include Product, Place, Promotion, and Price, and in relation to the described company they will be the following:
Product. PepsiCo’s products are soft and energy drinks, bottled water, snacks, cereal, breakfast bars, and sports nutrition.
Place. The majority of the company’s products are available at non-online retailers, including grocery stores, supermarkets, and convenience stores. However, consumers may order PepsiCo-licensed merchandise, such as t-shirts or tumblers, through retailers’ websites.
Promotion. In order to attract customers, PepsiCo uses various tactics, including advertising, direct marketing, sales promotion, and public relations. The company advertises its products using online and print media, radio, and TV, invites celebrities for promotion, sponsors public events, and makes agreements with organizations for marketing brands provided at wholesale prices.
Price. The main strategies used by PepsiCo in relation to prices are hybrid everyday value and market-oriented pricing strategies. In general, the corporation aims to make its prices competitive, however, it frequently adapts prices placing them between everyday and holiday prices to stimulate purchases in non-holiday periods.
According to the company’s vision, its unique brand experiences and delicious products create joyful moments for consumers. Its overall image is associated with fun, youthfulness, innovations, creativity, energy, excitement, curiosity, honesty, and smartness. To project it, PepsiCo targets the young population through its advertising and marketing campaigns and sponsors sports events. In general, the corporation’s target customers are young adults aged 13-35 years old, predominantly Gen Z, from lower-middle to upper class, and with a busy modern lifestyle.
The major competitors of PepsiCo, Inc. include The Coca-Cola Company, Mondelez International, Kellogg, Danone, Nestle, Monster Beverage, Dr. Pepper, and Red Bull. The Coca-Cola Company dominates this list being the most recognizable non-alcoholic beverage company all over the world. Other companies focus on either drinks or snacks as well. In this case, PepsiCo remains highly competitive due to its product portfolio that unites various categories and the strategy of cost leadership.
As a company that exists for more than 50 years, PepsiCo may be regarded as highly successful in its adaptation to demographic changes. First of all, it identifies its target audience and monitors its needs and demands that may change with time in order to address them in the most appropriate way. For instance, PepsiCo considers its consumers’ excessive use of social media and concerns related to health and environmental safety. That is why it uses social media for the promotion of its products, reduces the quantity of sugar in its beverages, introduces sustainable methods of manufacturing and distribution, and supports non-profit organizations occupied with ecological issues for their solution. Attention to its consumers’ needs, a wide range of products, and efficient marketing strategies are among PepsiCo’s main competitive advantages.
In general, on the basis of PepsiCo’s annual report, it is possible to trace the company’s progress. Thus, in 2021, its net revenue was $79,474 which is 13% higher in comparison with the revenue of 2020 which was $70,372 (Annual Report 2021 37). The cost of sales in 2021 was $37,075, while in 2020, it was $31,797 (Annual Report 2021 59). In turn, net income attributable to PepsiCo was $7,618 and $7,120 in 2021 and 2020, respectively – the difference is 7% (Annual Report 2021 43). However, the company’s operating expenses are growing as well – in 2020, they were $60.292, while in 2021, they became $68.312 demonstrating a 13.3% increase.
In general, the report demonstrates that PepsiCo’s sales trending up regardless of the risks related to the pandemic that has already affected the company’s expenses. Companies like PepsiCo are particularly vulnerable to the coronavirus as an infection at even one facility leads to reduced output and decreased profits and sales. However, in this challenging period of time, the company has managed to increase its revenue, and the difference of 13% may be regarded as substantial. In general, it may be connected with consumers’ changing behaviors that were affected by the pandemic-related isolation. In other words, due to stay-in-home continuous trends, people bought and consumed more snacks and other products of PepsiCo.
On the basis of PepsiCo’s financial statements, it is possible to conclude that in the present day, the company may be regarded as viable due to the growth of net revenue and net income. However, growing operation expenses put the corporation’s future viability at risk, especially if they exceed profits. In its annual report, the company identifies major risks that should be addressed including the consequences of COVID-19, the reduction of consumers’ demand, damage to its brand image, failure to provide appropriate quality and attract a qualified workforce, water scarcity, and various political and social conditions. In this case, the company should review its strategies on the basis of the current situation to remain competitive and guarantee its stable growth and development.
Figure 1: PepsiCo’s Previous Stock Performance
The current viability of the company is supported by the situation in the stock. In relation to it, PepsiCo ( NASDAQ: PEP) is traded at a price of $173,76 (MarketWatch). The price is smaller in comparison with The Coca-Cola Company, however, it is greater in comparison with other competitors. Moreover, the graph of the company’s stock performance demonstrates the continuous growth of price from a long-lasting perspective. Thus, it may be regarded as a strong company appropriate for investments due to its consumer loyalty, diversified portfolio, and competitiveness. At the same time, as the company’s history has proved that PepsiCo is able to adapt to economic, political, and social changes and withstand unexpected global events, it may be concluded that it is a viable company that may develop and apply all necessary strategy to guarantee its growth and development in the future.
Works Cited
“About the Company” PepsiCo. Web.
“Annual Report 2021.” PepsiCo, Web.
MarketWatch. “PepsiCo Inc.” Web.
PepsiCo Inc. “PepsiCo’s Revenues Top 12% in Q4 and FY 2021.” Vending Market Watch, Web.
