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PepsiCo SWOT Case Study


PepsiCo was founded in 1965 as a result of a merger between Frito-Lay and Pepsi-Cola which were the major salty snack and soft drinks giants respectively. During the first five years after its establishment, the company introduced more other products in the market. In addition, the company augmented its sales by engaging into international markets.

It extended its international sales to other areas outside North America such as Eastern Europe and Japan. These changes enabled the company to enhance its growth considerably and after three years it had been successful to double its revenues and had accumulated enough revenue to expand its operations through acquisitions (Gamble, 2008).

In 2007 the company had been very successful in commanding greater international market shares for its beverages and salty snacks, but unfortunately the company had not been successful in establishing a good international market for its Quaker branded products. Moreover, it was noted that the company’s international operations were not as profitable as the local operations.

For instance, during the period between 2004 -2007, the operating profits margins for its local operations ranged between 21.3%-25% while its international operating profits margins ranged between 13.4%-15.6% during the same time period.

Therefore despite the good performance of the PepsiCo Company, the company has still more opportunity to enhance its revenues by improving its international markets. The company should devise strategies that will make the global market for its Quaker branded products successful. In addition, the company should look for better strategies that they can employ to ensure that their international operations are as profitable as the local operations (Gamble, 2008).

SWOT analysis

Strength
  • The company has a strong capital base that it can use to conduct a market research, develop new products or expand through acquisitions.
  • The company has a well established local market and their products are always ranked the first or second position in quality and sales
  • The company has diverse products that are tailored to address the needs of different consumers.
  • The company has been successful in establishing a strong distribution channels and have close alliances with their retailers that they collaborate with while developing new products
Weakness
  • The company international sales are not as profitable as the local operations.
  • The company has not been able to establish a strong international market and especially global market for its Quaker brand products.
  • There is considerable decrease in the sales of the company’s carbonated drinks.
Opportunities
  • PepsiCo has an opportunity to increase its sales greatly by increasing their international markets and particularly making the sales of Quaker brand products successful outside North America.
  • The company has a good opportunity to augment its international performances by adapting better strategies that will make the company international profits margins as profitable as the local ones.
Threats
  • The company faces a stiff competition from rival beverage brands such as Coca Cola.

The PepsiCo Company should look for a very strategic move to improve its international markets and particularly a strategy that will boost the global performances of the Quaker brand products that are performing poorly in the global market. One of the strategies it can use is to merge will foreign companies that are specializing with similar products and are performing very well.

A better option is acquisitions of such companies to help it increase its market share in the global markets. Similarly, the company should adapt better strategies while venturing in international markets to help it make more profits. It should avoid direct financial investment in areas where the costs of productions are very high. Instead it should look for alternative means of venturing such as franchise

Reference List

Gamble, J. (2008). PepsiCo Diversification Strategy 2008. Alabama: University of South Alabama.

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IvyPanda. "PepsiCo SWOT." July 2, 2020. https://ivypanda.com/essays/case-study-review-pepsico-swot/.

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IvyPanda. 2020. "PepsiCo SWOT." July 2, 2020. https://ivypanda.com/essays/case-study-review-pepsico-swot/.

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IvyPanda. (2020) 'PepsiCo SWOT'. 2 July.

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