Pepsi Case Study

Published: 2021-06-20 16:55:05
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Category: Business case studies

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PepsiCo has created a new corporate strategy under new leadership. Roger Enrico plans to turn the fortunes of PepsiCo around. His efforts have been eventful and changed the way business is done at PepsiCo. It began with the 1996 letter to the shareholders when the company was reeling from a disastrous financial year where the net income had fallen by 28%. Enrico acknowledged the tough times but vowed to return the company to double-digit earnings growth. To accomplish that, he undertook several aspects that the company has a track record of doing well with. He outlined in the letter that his strategies will get the company to do even better in those areas. It further described how to avoid business opportunities that PepsiCo didn’t do well with, regardless of the pressure and the temptation. Enrico’s comeback plan focused on completing a few big initiatives that counted.
In a nutshell, the plan called for focusing on strengths, strong cash flow and advantageous opportunities that present themselves. Enrico put in place a new management team that started to overhaul the company across all processes. The new team discovered that less bureaucracy and frantic efforts to roll out new products had contributed to the company’s undoing. Enrico also found that the company was too complicated and decided to focus on two things; beverages and snacks.There are significant implications associated with the new ‘world view’ of PepsiCo. The changes introduced by Enrico had good results for the company that led to a greater global footprint. With more than 700 manufacturing plants spread all over the world this was a beneficial strategy. The company increased its presence in Europe, South America and in the emerging markets such as China and India. The increased global presence also resulted in growth of sales. For instance, PepsiCo controls more than 45% of the Indian subcontinental market in carbonated drinks.
PepsiCo with a collection of global brands has built a platform for growth. The company stocked a total of 15 internationally known brands with a total income of 1 billion dollars in annual retail sales. The portfolio also had a range of products for different needs that cater to every age and demographic group. The reshaping and refocusing of the company gave it a stronger competitive edge to meet the needs of people. The new strategy also meant getting PepsiCo out there instead of fighting Coca-Cola. This meant defending the market where PepsiCo had a strong presence and fighting for more space where it was neck-to-neck with Coca-Cola such as India.
The acquisitions of Tropicana and Quaker Oats make sense under the new strategy for several reasons. PepsiCo management couldn’t pass up Tropicana when it came up for sale. The company saw PepsiCo as a good company to acquire because they didn’t have any products for people during the part of the day before 11.00 AM. It was also an entry ticket into the growing healthy and refrigerated drinks market. Moreover, PepsiCo had no beverages to which the mineral and vitamins could be added. Tropicana could help them to enter that category, Tropicana was the world’s leading orange juice. PepsiCo also announced a merger with Quakers in 2000 to increase the company’s earnings per share and improve the return on the invested capital. It would also help to increase the sales and profit margins of the company going forward. The benefit of the partnership added more globally recognizable brands in the healthy food category. The Quaker snacks could be distributed though Frito Lay’s vast network.
In conclusion there are variegated themes in PepsiCo’s recent progress and leadership. The specific innovations that were selected by the corporation have helped to expand operations and improve the quality of performance in new markets. The promise of growth is further fulfilled based on new products, placement and strategies to reach target audiences. Further research would document the beneficial advancement of PepsiCo in new product lines as well as in business management and leadership decisions.

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