Problem Statement
Even if PepsiCo is a market leader and has a competitive edge, there are still issues with the caliber of its goods and services. PepsiCo is regarded as one of the biggest brands in the world in terms of the quality and flavor of its goods. Unfortunately, the company experienced numerous quality issues that significantly damaged the brand’s reputation.
Even though Pepsi is one of the most prominent and well-respected brands in use today and has a solid reputation for quality, its sub-brands sometimes struggle with product management challenges. One of the key concerns is the strategic challenges PepsiCo faces in its global business environment. Another significant issue that makes it challenging to do business abroad and adjust to local conditions in various countries is the company’s reliance on the local markets.
As a large international food and beverage company, PepsiCo faces intense competition in many markets and product categories. Customers’ expectations are evolving, placing a higher priority on the health, safety, usability, and origin of materials, as well as the production’s impact on the environment (García-Sánchez et al., 2020). Even though PepsiCo devotes a significant amount of resources to its products, there is no guarantee that it will be able to develop, launch, and sustain profitable new items or versions of existing products, as well as effectively conduct consumer-targeted advertising and marketing campaigns. The demand for existing products may decline if they cannot successfully introduce new items or versions of existing products, or if they fail to make the necessary strategic investments to encourage innovation.
Alternative Solutions
PepsiCo has been a competitor of Coca-Cola in the food and beverage markets since the start of the twenty-first century. Over time, their strategic ideas have proven to be dependable and fruitful. However, there is no doubt that the PepsiCo management team has what it takes to advance the business to a new level. The performance of Pepsi’s retail partners is correlated with their own. They continue to collaborate with their retail partners to sell their goods more efficiently, generate higher revenue, and attract customers (PepsiCo, 2021).
Additionally, businesses must intend to continue investing in developing the new skills they will need to compete in the digital market. This includes navigating the changing e-commerce environment and focusing on establishing and maintaining strong connections with its retail partners (Anderson, 2019). The research suggests an additional approach, in addition to the ones already accessible; however, the group does not see a need to alter its strategic plans.
The first suggested action is to amp up marketing initiatives to boost sales of nutritious food and snack items. People worldwide are increasingly gravitating toward healthier food and beverages. In addition to stalling, established markets like carbonated beverages do not appear to have promising short- or long-term benefits. Future growth at PepsiCo will be fueled by expanded initiatives to create and market healthier goods. Secondly, PepsiCo should concentrate on increasing its market share in developing and emerging markets. Since these markets are less crowded than those in the US, PepsiCo has room to develop in the future. Despite having a presence abroad, PepsiCo has not fully utilized the advantages of establishing a global network as much as its primary rival, Coca-Cola.
Thirdly, to make PepsiCo leaner and more appealing to investors, the corporation should be encouraged to initiate new cost-cutting initiatives. PepsiCo needs to explore ways to reduce operational expenses, lower prices, and offer promotional marketing offers to increase its overall competitiveness in the food and beverage sector (Ciura, 2020). The organization’s internal cost-cutting measures also help balance the business’s balance sheet and income statement.
Fourthly, PepsiCo’s supply chain should be optimized to ensure sustainability and effective operations management in different regions. Cost hikes, supply interruptions, or shortages of raw materials, energy, water, or other essential supplies could negatively impact PepsiCo’s operations, financial situation, or business operations. The majority of the components, raw materials, and commodities used by the company are bought on the open market. They utilize purchase orders, pricing agreements, derivatives, and fixed-price contracts to mitigate the risk associated with fluctuating prices for these items (Sodhi & Tang, 2021). Supply networks will be better able to respond to major supply disruptions if they are expanded and diversified. Additionally, pursuing social and economic sustainability over time can benefit a company’s supply networks.
Analysis and Evaluation
To be a successful endeavor, stepping up marketing strategies to increase sales of wholesome food and snack items would require many measures for research and evaluation. Examining already available healthy goods is crucial to see if any ingredients or formulations need to be altered to better support healthy eating objectives. This will establish a reliable pool of data and provide a starting point for further development.
The analysis will require a multi-disciplined approach and the involvement of both local and international partners to provide the company with the latest available data. The company should also consider including calorie and energy labels on every food item to encourage transparency. Customers benefit from transparency because it fosters trust and confidence in doing business with a trustworthy organization (Jackson et al., 2020).
Leaders can hold their organizations accountable and ensure that every firm’s actions are in its best interest by making data readily available to employees and the general public. In general, these short-term objectives will benefit the company in appeasing the population and gaining their confidence in the future of the company’s production (Iglesias et al., 2020). Advertising beverage and snack alternatives is vital, as customers increasingly adopt a health-conscious approach in line with the latest global trends.
The evaluations and benefits of this initiative will manifest in the long-term objectives of the alternative. The key consideration of these efforts is to shift consumers’ perceptions of PepsiCo from a corporation that sells harmful drinks to one that values the well-being of its customers. This brand repositioning can theoretically lead to consistent market share and revenue growth for the healthy beverages and snacks market (Naalchi Kashi et al., 2019). The suggested course of action, thus, aims to combine long- and short-term steps to ensure the brand’s increased recognition on different societal levels.
Several variables should be considered when analyzing and implementing the recommendations to ensure PepsiCo increases its market share in developing and emerging economies. Firstly, emerging markets in Africa, Asia, and other less developed countries should be prioritized for expanding the company’s operations (Štofová & Kopčáková, 2020). Launching marketing efforts in these regions should be analyzed and weighted to achieve long-term benefits. Distribution procedures should be strengthened in the nations above to enhance product availability and reduce costs.
To achieve long-term benefits in these markets, PepsiCo must establish research facilities in specific areas to develop snacks and drinks tailored to the local population. This strategy aimed to boost local sales, improve client retention, and enhance brand recognition (Zhang, 2019). If a dependable staff is effectively trained, these markets will see quicker economic growth and relative managerial simplicity, which will be beneficial in the long run.
PepsiCo must find alternatives to reduce operating costs, lower prices, and offer special marketing deals. This is crucial to support efforts to save costs and boost productivity at all manufacturing facilities, distribution hubs, buying, and sales (Quan, 2020). Within these settings, it is essential to establish a lean culture throughout the entire organization, which will enhance capabilities in the short term and serve as a foundation for the long term. This short-term analysis will lead to positive changes in the company’s environment and facilitate further development steps.
The key evaluation should be PepsiCo’s readiness to invest in R&D as a component of its sustainability strategies. Initiatives focused on sustainability not only promote social and environmental change but also an organization’s performance. Firm objectives are not diminished by sustainability, and giving the organization a purpose may help attract a talented team that contributes to the business’s financial success (Sharma et al., 2020). This is especially valuable in the local environment and emerging markets, which require adaptation but ultimately lead to profits in business operations and brand image.
Raw materials and energy, including the fuels used to produce and distribute PepsiCo products, are commodities subject to price volatility and fluctuations in availability brought on by various factors. This includes shifts in global supply and demand, as well as environmental changes. The business, financial position, and operational outcomes may be negatively impacted by shortages of certain raw materials and other commodities, frequent disruptions in their supply, or increases in cost (Brandao & Godinho-Filho, 2022). PepsiCo may be hesitant or unable to raise the price of its products or implement an effective hedging strategy if changes in commodity prices cause unexpected or large increases in the cost of materials.
Final Recommendation
Because PepsiCo’s goods cannot be purchased alongside those of other brands in the same store, it does not leverage growth synergies to cross-market its products. The same holds for their fast-food restaurants, which do not serve PepsiCo beverages or snacks. This suggests that they need to strengthen their decision-making procedure. Due to the bureaucracy in its organizational structure and decision-making procedures, PepsiCo’s tardy entry into emerging countries reveals a lack of understanding of these regions. To boost their local sales, they might also provide additional special goods to the area.
Additionally, the business might benefit from cross-branding and a more successful advertising and marketing plan. In many local and developing economies, there is currently little to no marketing or promotion for PepsiCo drinks. This might bring PepsiCo items like beverages and snacks to market to complement the fast-food chain. Furthermore, PepsiCo lacks a young market strategy despite the high proportion of youth in several growing regions in Asia and Africa. By placing their beverage dispensers at places like universities, colleges, and other big institutions, they could market their goods to the youth market.
Implementation Plan
In today’s extremely competitive environment, PepsiCo is having difficulties in several areas of operations.A business needs to constantly do research and create cutting-edge goods if it wants to succeed.In the case of PepsiCo, its aim has been and will remain to increase the product’s value.The advantages of adhering to these suggestions include enhanced variety, which enhances the company’s visibility and its capacity to satisfy constantly shifting client demands by developing cutting-edge items that set it apart from conventional beverages. In areas where sales and consumption of carbonated beverages have decreased, it also aids in long-term growth (Zhang, 2019).
First, PepsiCo should enter new markets using these suggested strategies, establish a presence there, gain market share, and then innovate and launch new products there. The business may also boost revenues, lower costs through economies of scale, and attract more customers with competitive pricing.
Secondly, the company has to introduce cost-cutting measures, which have drawbacks, even if they suit a company’s growth.Sometimes, when focusing on cost-cutting, businesses might lose sight of how this impacts product quality, which impacts the company’s brand value and long-term goals (Quan, 2020). As a result, when implementing, a business must exercise caution to avoid getting blinkered and being preoccupied with pursuing new markets at the expense of its current market (Morales-Sanchez et al., 2020). The brand name and reputation may suffer as a result of this predicament. PepsiCo must continuously uphold IT standards for customer service, organizational culture, and external partners in existing and new markets.
Thirdly, supply chain optimization should be implemented, considering the complexities existing in today’s market. A corporation must consider the COVID-19 pandemic’s long-term effects and what it means for the supply chain’s resilience (Sodhi & Tang, 2021). The COVID-19 pandemic has harmed resilience and raised the possibility of long-term sustainability efforts failing. It thus has a significant impact on business and corporate directors in particular. The company has the chance to capitalize on the rising need for a monitoring system to track the long-term impacts of systemic shocks on the supply chain’s capacity to maintain its social and environmental sustainability and financial performance. During the implementation phase, a major concern for PepsiCo will be the interaction between supply chain resilience and systemic risk.
Summary
Despite PepsiCo investing substantial resources in its products, there is no guarantee that it can successfully create, introduce, and maintain profitable new products or updated versions of existing ones, or efficiently execute marketing and advertising campaigns aimed at consumers. As a result, the suggested actions below can help guarantee the company’s growth in various ways. The efforts presented and any challenges they could face in being put into action will lay a strong foundation for the corporation’s long-term financial success.Alternative ideas must be considered to strengthen the company’s brand and worldwide competitiveness due to its rivalry with Coca-Cola and strategic mismanagement. Most crucially, if valued and utilized appropriately, emerging countries in Asia and Africa might provide PepsiCo with considerable long-term sales growth.
References
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