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Module 1: PepsiCo

Module 1: PepsiCo. Beverage Industry: Soft Drinks. Consist of corporations that produce and sell soft drinks Some of these companies also sell food items Global soft drinks’ total revenue over $600 billion. Major Soft Drink Corporations. Coca-Cola PepsiCo Dr. Pepper Snapple

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Module 1: PepsiCo

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  1. Module 1: PepsiCo

  2. Beverage Industry: Soft Drinks • Consist of corporations that produce and sell soft drinks • Some of these companies also sell food items • Global soft drinks’ total revenue over $600 billion

  3. Major Soft Drink Corporations • Coca-Cola • PepsiCo • Dr. Pepper Snapple • Monster Beverage Co.

  4. Porter’s Five Forces • These forces determine competitive intensity and profitability of firms in an industry • Industry Competition, Buyer Power, Supplier Power, Product Substitutes, Threat of Entry

  5. Soft Drink Industry Competition • Many competitive companies and varieties of soft drinks • Endless areas for possible expansion, i.e. other products • Large, established corporations in industry

  6. Soft Drink Buyer Power • Demand for soft drinks is elastic • Individual purchases are relatively insignificant • Difficult for consumers to reproduce • Buyers can be brand loyal

  7. Soft Drink Supplier Power • Firms can easily switch between suppliers • Entry to supplier market is easy, and a supplier can sway with lower price • Many companies partly own their own suppliers

  8. Soft Drink Threat of Substitutes • Consumers may prefer substitutes including, water, tea, and sports drinks • Price does not make a difference in switching to substitutes • Many companies have their own substitutes

  9. Soft Drink Threat of Entry • Barriers to entry due to established brands • Significant costs and qualifications to enter the market • Industry leaders can force tough obstacles on new comers

  10. PepsiCo • Food/beverage corporation headquartered in New York • Product Pepsi-Cola and Frito-Lay merger in 1965 • $65.49 billion in net revenue in 2012

  11. PepsiCo Growth Strategy • Research and development activities • Drive innovation globally • Develop new products • Improve quality of existing products • Enhance production processes • Implement new, useful technologies

  12. PepsiCo Business Units • PepsiCo Americas Foods • PepsiCo Americas Beverages • PepsiCo Europe • PepsiCo Asia, Middle East and Africa

  13. PepsiCo Product Markets • Carbonated drinks • Non-carbonated drinks • Snack foods

  14. PepsiCo Carbonated Drinks • Pepsi • Mountain Dew • 7 Up • Mirinda • Pepsi Max • Sierra Mist

  15. PepsiCo Non-Carbonated Drinks • Tropicana • Gatorade • Lipton Teas • Aquafina

  16. Snack Foods • Lay’s • Doritos • Quaker Foods • Cheetos • Ruffles • Tostitos • Fritos • Walkers

  17. PepsiCo Primary Competitors • Coca-Cola • Nestle S. A. • Danone • DPSG • Kellogg Company • General Mills • Mondelez International • Kraft

  18. PepsiCo Risk Factors • Demand could be affected if no innovation • Legal/regulatory environment limitations • Bottom line contingent on ability to compete • Need to grow business in emerging markets • Unfavorable economic conditions • Increasing costs or supply problems • Failure to realize anticipated benefits • Failure to complete successful acquisitions

  19. PepsiCo SWOT: Strengths • Diverse products • Successful M & A • Strong distribution channel • Great brand loyalty

  20. PepsiCo SWOT: Weaknesses • Coca-Cola has large market share • Heavy reliance on Wal-Mart as a customer • Small profit margin

  21. PepsiCo SWOT: Opportunities • Push for healthy food and drinks • Emerging/developing foreign markets • Many available companies for M & A activity

  22. PepsiCo SWOT: Threats • Negative effects of legal issues • Fluctuating tastes in food and beverage • Many strong competitors in same industry

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