Strategic Management: A case study on Pepsi

Introduction

Strategic management is an effective process of planning for the organisations to meet the strategic goals through developing proper strategy of production, distribution and marketing, so that it is possible for the companies to secure future sustainable development by retaining more loyal customers and delivering them quality products and efficient services (Lasserre, 2017). The aim of the paper is to analyse strategic option of the company Pepsi and recommend some suitable suggestions for utilising available strategic option to meet the strategic goals and objectives of Pepsi.

Background of the company

The company, Pepsi is a carbonated soft drink manufacturing company, which is renowned brand across the globe. The company is efficient in manufacturing carbonated and non-carbonated drinks and achieve high growth rate in the food and beverage industry across the international markets. The vision of the company is to be the world’s best beverage company and to increase the value of their stakeholder’s investment through sales growth, cost minimisation and resource utilisation (Pepsi, 2019).

The mission of the company is to be the world’s one of the largest companies, focusing on convenient food and beverages. Financial rewards and quality of the products of the company are the major strengths for gaining highly competitive advantage in the international food and beverage industry, where the company is efficient to meet the requirements of all their stakeholders and crate values for them. In the recent era of globalisation and high competition, the company faces the issue of low rate of consumption of Pepsi among the customers across the international food and beverage industries (Pepsi, 2019).

Analysing current position of the organisation

In order to develop effective strategic planning for the company Pepsi, it is necessary to analyse current market position of the organisation and in this regard, Porter’s five forces model is effective for analysing and evaluating the current market position of the organisation, Pepsi. According to the porter’s five forces theory, there are five forces which are competitive rivalry, bargaining power of the suppliers, bargaining power of the suppliers, threats of substitute products and threats of new entrants (Zhao et al., 2016; Mathooko, and Ogutu, 2015).

1. Competitive rivalry:

   The Coca-Cola is one of Pepsi’s biggest competitors, and the competitive rivalry among the firms in the food and beverage industry is strong, where Pepsi faces high threats of competition across the international markets. High number of firms manufacturing carbonated drinks and aggressive firms as well as low switching cost raise the internal competitive rivalry among the companies in the food and beverage industry.

2. Threats of substitute products:

   The products of Pepsi could be substituted in the market, based on the consumer’s preferences and alternative variables. There is high availability of the substitute products in the market as well as low switching cost and high performance of the substitute brands raise the threats of substitute products and hereby, the company Pepsi has moderate threats of substitutive products in the market, where for example, Coca-Cola provides huge variety of soft drinks such as orange juices, diet Coke etc (Pepsi, 2019).

3. Threats of new entrants:

   The threats of new entrants are low as the brand is already established with their product quality and the customers are loyalty to the brand. Brand reputation and customer loyalty deteriorates the threats of new entrants for the company Pepsi (Crawford, 2017).

4. Bargaining power of the suppliers:

   The bargaining power of the suppliers for the company Pepsi is low, as it is an established brand and it has strong supply chain and distribution network with satisfied suppliers and distributors, since the company is efficient in creating values for the suppliers and distributors. Moderate size of individual suppliers and satisfied distributors are interested to work with the company, and it deteriorates the bargaining power of the suppliers (Fortune 500, 2019).

5. Bargaining power of the buyers:

   The bargaining power of the buyers is moderate as the consumption of Pepsi is high among the young generations as they have other alternative products to consume as a carbonated drink. Low stitching cost of Pepsi, high access of product information and high availability of substitute products in the market further increase the bargaining power of the buyers (Crawford, 2017).

As per the figure above, the company PepsiCo face competitive threats from its competitors such as Private Label and Coca cola, where the company needs to improve its sales volume by selling more diversified products to the customers worldwide. PepsiCo has 7.1% market share as compared to the Coca cola having 14.7% and Private Label with 30.8% (Statista, 2019). Pepsi is a reputed organisation in the food and beverage industry, where the quality products and efficient services are helpful to retain long run the customers and strengthen the position of the company in the international markets (Statista, 2019). It is a renowned company worldwide in terms of market value, and leading consumer’s packaged goods, where the company generated sales volume over 27 billion US Dollar in the last years which is one of the major strengths of the company to expand their business and serve the customers across the globe (Fortune 500, 2019).

Evaluating strategic option through Ansoff matrix

In order to identify the strategic option for the company Pepsi, it is important to evaluate Ansoff matrix which includes the aspects such as market development, market penetration, diversification and product development, which in turn provide an opportunity to acknowledge the future market scope and develop strategic option for the organisation Pepsi to enhance brand performance (Gurcaylilar-Yenidogan, and Aksoy, 2018; Schawel, and Billing, 2018).

Through market development, product diversification, product development and market penetration, it is possible to evaluate the strategic options for the company in near future. Pepsi focuses on new product development and diversification as well as market development for utilising future market opportunities (Crawford, 2017). For market development, the company focuses on introducing new products as well as developing marketing strategy for resolving the issue of low rate of consumption of carbonated drinks of Pepsi. The product diversification of Pepsi as well as marketing mix strategic planning of the company can be effective for securing future sustainable development by increasing the competition of Pepsi in the international food and beverage industry and strengthening the customer’s base of the organisation (Fortune 500, 2019).

Recommendations for corporate strategy

The recommendations for the company Pepsi,

• The company needs to focus on product development through producing Pepsi max so that new product development will attract more audiences across the globe and strengthen their customer’s base by delivering quality carbonated drinks, where the main competitor of Pepsi, Coca-Cola focuses on diversification through producing low calorie drinks, energy drink as well as the company offer broad range of soft drinks from orange to diet coke.
• The company needs to develop marketing mix strategy for promoting the organisational products and in this regard social media marketing strategy through uploading short videos, clipart and photos of the products of Pepsi on Facebook, YouTube, Instagram and twitter will be effective for enhancing two-way communication with the consumers and improve loyalty and trust among the customers around the globe, where Coca-Cola also focuses on online marketing through using interactive technologies.
• The company should focus on social campaigning which is one of the best ways in the recent years to motivate the customers and retain them for long run and in this regard social campaign with different programs, investment in society and providing gift vouchers, discounts and coupons to the customers will be effective for the organisation to utilise future strategic option of market development and secure sustainable development. for example, Coca-Cola expands their marketing strategy through offline campaigning in schools, cinemas, theme parks and restaurants where they are successful in retaining more buyers in the market.

Conclusion

It can be concluded that, the strategic option for the company Pepsi are such as market development, strengthening customer base and new products development, where the company needs to focus on delivering high quality diversified products at affordable price to the customers as well as developing marketing strategies throughs social media marketing and social campaign for strengthening their customers base and run the business sustainably by satisfying all the stakeholders.

Reference List

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