GROUP 5

Pham Quynh Thien HuongVu Truong GiangHuynh Thi Nguyen ThaoTran Hoang Thang

GROUP 5:

Overview of PepsiCo and Competitors

PepsiCo’s business strategies & assessments of competitive strength

Financial analysis

Recommendations

Overview of

And Competitors

Milestones of Pepsico

Established1965

1977-1986Acquired fast

food restaurants:

Pizza Hut, Taco Bell, KFC

Acquiring Walker Crisps & Smith Crisp

1989

1997Spining off

Kentucky Fried Chicken, Pizza Hut and Taco Bell as Tricon

Global Restaurants, Inc

Acquiring major brands

Tropicana, Quaker, Sobe

1998-2001

2006Indra Nooyi

named as CEO

Completing the acquisition of The Pepsi Bottling Group, Inc.

and PepsiAmericas, Inc., its two largest anchor bottlers.

2010

2012Reaching the

portfolio of total to 22 billion-dollar brands

2015Celebrating

PepsiCo’s 50th anniversary as a combined food and beverage

company

History of Pepsico

CEO of PepsiCO:

Mr. Donald M. Kendall (1971-1986)

Mr. Wayne Calloway(1986 – mid 1990s)

Ms. Indra Nooyi(2006 – now)

Global Divisions of Pepsico

North America Beverages (NAB)

Frito-Lay North America (FLNA)

Quaker Foods North America (QFNA)

Latin America (LA)

Europe Sub-Saharan Africa (ESSA)

Asia, Middle East & North Africa (AMENA)

PepsiCo’s portfolio

Fun for you

Better for you

PepsiCo’s portfolio

PepsiCo’s brands

Good for you

PepsiCo’s portfolio

PepsiCo’s brands

22 billion dolar brands owned by PepsiCo

PepsiCo’s competitors

Beverage 2014

Snack 2014

PepsiCo’s competitors

Corporate strategies

Mergers and acquisitions

Corporate strategies

Strategic

alliances

2009

20112012

Corporate strategies

Emerging markets

2006201224%

35%

Corporate strategies

Organisational culture

Performance with Purpose

Real World Leadership

Collaboration

31 GE Title or job number

05/01/2023

Corporate strategy

One PepsiCoIncrease BRANDs association

Sharing supply-chain management & infrastructure

Sharing operational costs

Innovation in marketing initiatives

Corporate strategy

Corporate strategy

Increasing core organic revenue

Business strategy -SWOT

Strengths Weaknesses1.Product diversity2.Extensive distribution channel3.Corporate Social Responsibility (CSR) projects4.Competency in mergers and acquisitions5.22 brands earning more than $1 billion a year6.Successful marketing and advertising campaigns7.Complementary product sales8.Proactive and progressive

1.Over-dependence on Wal-Mart2.Low pricing3.Questionable practices (using tap water but labeling it as mountain spring water)4.Much weaker brand awareness and market share in the world beverage market compared to Coca-Cola5.Too low net profit margin

Business strategy -SWOT

Opportunities Threats

1.Growing beverages and snacks consumption in emerging markets (especially BRIC)2.Increasing demand for healthy food and beverages3.Further expansion through acquisitions4.Bottled water consumption growth5.Savory snacks consumption growth

1.Changes in consumer tastes2.Water scarcity3.Decreasing gross profit margin4.Legal requirements to disclose negative information on product labels5.Strong dollar6.Increased competition from Snyder’s

9-cells matrix

Selective investment Invest and grow Invest and grow

Harvest/ Divest Selective investment

Harvest/ Divest Harvest/ DivestSelective

investmentBusi

ness

Pos

ition

Industry AttractivenessLow Medium High

Low

Med

ium

High

Value-chain match-ups

The Power of 4 Global Brand

Distribution:Combining a spacious warehouse systems and utilities of Quarker and Gatorade to expand distribution capacity. Combined with the distribution system of the Tropicana.Sales:PepsiCo decided to keep Quarker cereal products, related products in the North American grain. This decision helps PepsiCo easier to sell products at a later stage.Technology:Combining the production technology of the Gatorade bottle hot forms -Tropicana => Balance seasonal demand.Marketing:PepsiCo's strong brand in the US but the world market is not strong (Europe), combined with the Tropicana to reduce total costs.

Pepsi Cola

Distribution:Spacious warehouse systems and utilities Quarker and PepsiCo Gatorade combined with the capacity to expand distribution through 3rd party significantly for PepsiCo.Sales:Combined sales force of Tropicana modest larger system of Quarker-Tropicana => Extensive distribution and more efficient.Technology:Combined with technology PepsiCola North America => Balance seasonal demand. Using technology about taste and aromas of FritoLay => Unique flavor.Marketing:Benefit sharing cost / technology transfer opportunities with juice and healthy water.

Tropicana

Distribution:The ability to build a good system of Quarker warehouse and Gatorade has brought new dimensions to PepsiCo's distribution system. Sales:PepsiCo decided to keep Quarker cereal products, related products in the North American grain. Marketing:Technology transfer opportunities for PepsiCo's products, cost-benefit sharing / technology transfer opportunities with Frito Lay

Quaker

Distribution:FritoLay outside the North American market: products are sold in 40 country. The company holds a large position in the market. After the merger FritoLay combined with Quarker-Gatorade system for the purpose of distribution systems make use Gatorade Quarker-saving distribution costs.Sales:FritoLay North American part of the product line Quarker: cereal, food, energy ... and also dealing with a number like Quarker. Therefore, when combined with Quarker to provide a broader product line for retailers Quarker current, thereby increasing overall sales.Technology:FritoLay have specialized knowledge about taste and flavor, FritoLay also research and develop thousands of varieties of potatoes, patent new process flavorings for snacks condensed. => Create unique products.Marketing:Share brand carbonated beverage products. FritoLay namely 1965 was Marketing with PepsiCola, can see PepsiCo's intent is to use these two brands to penetrate each market for both brands are well-known.

Frito Lay

Business Unit

Pepsi Cola

CS with Aquafina

CS/ST with all carbonated beverage

CS with all carbonated beverage/ ST with Frito-Lay snacks

Cross-selling with Frito-Lay products/ST with all convenience product and BS

Potential BS with Frito-Lay

Frito-Lay

Some potential CS with Quaker Snacks

Potential CS/ST with Quaker products

ST with Pepsi Cola and other carbonated beverages, CS with Quaker branded products

Cross-selling with Frito-Lay Product/ ST with all convenience products and BS

Potential BS with carbonated beverages, ST/ CS among all Frito-Lay products

Tropicana

Some CS potential with hot fill beverage

CS among hot fill operations

CS with all convenience beverages/ ST with convenience snacks

Cross-selling among all noncarbonated healthy drinks/ Potential ST with healthy snacks

Potential CS/ST among fruit juices and healthy beverages

Purchasing Operations Distribution Sale & marketing

Advertising/ Promotion

CS-Cost sharing ST-Skill transfer Opportunities BS-Brand sharing

Business Unit

AquafinaCS with Pepsi Cola

CS potential with hot fill

Potential CS with all beverages

CS/ST with Gatorade

None

Gatorade

Some CS potential with hot fill beverage

None Potential CS/ST with other beverages, except Pepsi-Cola

Potential CS with all beverages/ ST with healthy snacks

Potential CS with other beverage

Quaker hot cereals

CS with Quaker Snacks

CS/ST with other Quaker Snacks

ST With other PepsiCo products, CS/ST with Frito-Lay

None ST/CS with Quaker branded products

CS-Cost sharing ST-Skill transfer Opportunities BS-Brand sharing

Purchasing Operations Distribution Sale & marketing

Advertising/ Promotion

Financial Analysis

Total net revenue and Operating profitIn USD$ millions

Source: PepsiCo Inc., Annual Reports

Financial income statement

Source: PepsiCo annual report s

Free cash flow

2014 2013 2012 2011

Net cash provided by operating activities

$10,506 $9.688 $ 8,479 $ 8,944

Capital spending (2,859) (2,795) (2,714) (3,339)

Sales of property, plant, and equipment

115 109 95 84

Free cash flow $ 7,762 $ 7,002 $ 5,860 $ 5,689

Free cash flow

Pepsico Liquidity and Capital Resources

Pepsico believe that cash generating capability and financial condition, together with their revolving credit facilities and other available methods of debt financing, such as commercial paper borrowings and long-term debt financing, will be adequate to meet its operating, investing and financing needs.

Pepsico Stock price and Dividend

Stock price

Pepsico Stock price and Dividend

Dividend

Pepsico Stock price and Dividend

Dividend

Pepsico Stock price and Dividend

Pepsi has both direct purchase and dividend reinvestment plans. Investors interested in participating in either of these plans can find information at Computershare’s Investment Plan site. The minimum initial investment amount for new investors is $500 and $50 for recurring investments through direct debit. The minimum for additional investments is $50.

• Continuing repurchase stocks and increase dividend.

• Spend more investment into snack business.• Invest more into technologies and R&D.• Implement more marketing campaigns that

increase image rating for company.

Recommendation

PepsiCo Reports Fourth Quarter and Full-Year 2015 Results (2016). Retrieved from

http://www.pepsico.com/live/pressrelease/pepsico-reports-fourth-quarter-and full-year-2015-results02112016

PepsiCo 2014 Annual Report (2015). Retrieved from https://www.pepsico.com/.../AnnualReport14/ceo_letter.html

O’Reilly, C. A., Caldwell, D. F., Chatman, J. A., & Doerr, B. (2014). The Promise and Problems of Organizational Culture CEO Personality, Culture, and Firm Performance. Group & Organization Management, 39(6), 595-625.

Lukas, B. A., Whitwell, G. J., & Heide, J. B. (2013). Why do customers get more than they need? How organizational culture shapes product capability decisions. Journal of Marketing, 77(1), 1-12.

United States Securities and Exchange Commission (2012). 10-K Annual report of PepsiCo, Inc. Retrieved from http://www.sec.gov/Archives/edgar/data/77476/000119312512081822/d269581d10k.htm

REFERENCES

Market, C. (2015). PEP's vs. Competition, Data. Retrieved February 2016, from http://csimarket.com/stocks/competitionNO9.php?code=PEP

PepsiCo (2013). Brands. Retrieved from: http://www.pepsico.com/Brands.htmlPepsiCo. (2015). Global Brands. Retrieved February 2016, from:

http://www.pepsico.com/Company/Global-BrandsPepsiCo. (2015). Global Divisions. Retrieved February 2016, from

http://www.pepsico.com/Company/Global-DivisionsPepsiCo. (2015). Our History. Retrieved February 2016, from

http://www.pepsico.com/Company/Our-HistoryPepssiCo. (2015). Our Leadership. Retrieved February 2016, from

http://www.pepsico.com/Company/Leadership

REFERENCES

Hartnell, C. A., Ou, A. Y., & Kinicki, A. (2011). Organizational culture and organizational effectiveness: a meta-analytic investigation of the competing values framework’s theoretical suppositions. Journal of Applied Psychology,96(4), 677.Martin, J., & Frost, P. (2011). The organizational culture war games. Sociology of

organizations: Structures and relationships, 315.Naranjo-Valencia, J. C., Jiménez-Jiménez, D., & Sanz-Valle, R. (2011). Innovation or

imitation? The role of organizational culture. Management Decision, 49(1), 55-72.

Warner, Melanie (2010). Good News! PepsiCo’s Indra Nooyi Solves the Obesity Crisis. Retrieved from http://www.cbsnews.com/8301-505123_162-44040677/good-news-pepsicos-indra-nooyi-solves-the-obesity- crisis/?tag=bnetdomain

REFERENCES

Thank you