PepsiCo is a multinational beverage and a food company based in the United States of America. There are three divisions of the company which makes it a diversified business. The PepsiCo Americas Beverages, PepsiCo international and third named PepsiCo America's food. It ells concentrate beverages of soft drinks to licensed distributors across the globe. It has brands such as Pepsi, mountain dew, Aquafina, and several other soft drinks. The International strategy placed by the company is geared towards expansion into the global market. According to news sources. Pepsi is having significant problems penetrating south Arabia(Venkataraman & Summers, 2017). It's the goal of hiking prices to manage running costs is facing rejection. The ministry of economy in UAE declined the request of the company saying that it will refer the case to a commmitte, which is in charge of the protection of the consumer for the request to be endorsed.There are several reasons why Pepsi co is urgently looking for a breakthrough in the world market.It faces a stiff competition from Coca-cola company which is firm and stable in the industry.The good news is that Coca -cola is banned in the UAE ,making Pepsi the best option available.It has made profit from the supply of drinks in the country. The country is hot and dry ,this makes it the most favourable The modes that Pepsi is uding to make a move includes the franchise method. This involves the obtaining of the permit from the government.
Pepsi has used the franchise method of expansion into the global markets Pepsi co is a great player in the industry and the growth of its business is dependent on the sound strategies.It has generic competitive strategies to address the needs of an international market and satuisfy the needs of consumers. The generic strategy addresses competition with several comepetitors such as cocacola. The strategies are a response to the changing world of foods and beverages which is under constant evolution. Pepsi co is a successful firm all over the world. This is an indicator that the strategy is appropriate and working.
The first international generic strategy employed by Pepsi is simplified model known as porter's model. It covers the cost leadership and broad differentiation. The strategy focuses on minimizing the administration costs. Cost minimization strategy gives it a competitive advantage against other global firms that are investing heavily on the marketing and leadership. The company has invested in offering promotions that discounts the prices(Venkataraman & Summers ,2017). A times lowering prices in the fields of operations. Pepsi uses differentiation as another generic strategy. Broad differentiation attracts customers to have a taste of the unique features the company offers. The broad differentiation includes the Lay's potato chips marketed as the most health snack because of absence of a saturated fat. An objective for the cost leadership strategy is to make the production an automatic process and minimize all the company operation costs. The objective of the product differentiation is to innovate products that are addressing the health concerns of the 21st century. PepsiCo intensive strategy that has a global outlook is the growth strategies.
Penetration of the market is the initial strategy. The goal of this plan is to increase sales and make the market grow and make customers. Product development is another growth strategy of Pepsi co. This entails the creation and innovation of products constantly. Pepsi continues to innovate products that are of high quality to win itself customers and curve a portion of the market shares. An objective of products development is the boosting of the Rand D investment. Finally in the intensive growth is the market development. This is the capturing of new markets in a progressive manner. Acquiring new markets is critical for growth and development of new business territories.
Cultural and Economic trends
Pepsi addresses several; cultural and economic trends in the economic world. The needs of a supplier of healthy food in the current social context is critical. The world needs a supplier that has the health concerns of the consumer Pepsi addresses the health concern by providing bites that are free from harmful fats. It has different drinks for diverse customers. Despite several negative critics ,It has continued to address the social needs of a company. It has maintained a reputation by being responsible. It is committed to a sustained growth and has always included the community around it in the growth. The focus on healthy returns as giving back to the society is a great achievement. Pepsi addresses the cultural need by giving back to the vulnerable I n the society. On the economical side, Pepsi meets the demands of the customer. This is done by innovation of products that are convenient and safe. It has incorporated healthier options and contributed to the research in the field of innovation. The contribution in the field of research has led to more diversified and safer innovations. Its supports diverse corporate relationship between the employees and the entire stakeholders. It encourages creativity and sees diversity as a benefit. Through its code of conduct it cultivates the aspect of collaborative culture.
FDI (Foreign direct Investment)
FDI is an abbreviation of foreign direct investment is an investment move where a company or a firm takes ownership and full control of business in another country. It is an investment which takes many aspects into consideration. The law in the country in which the investment is done must be allowing such investment to take place. The firms entering into business must also agree in the amount of money and the years of contract. Pepsi Company has done a lot of foreign direct investment in several countries. One of the most successful foreign direct investment is between Pepsi and India, Pepsi agreed to set up a fruit and vegetable processing plant in India with a share of about 36.9% in Pepsi foods private limited company. Before the foreign direct investment was preceded, there had to be a lot of parliamentary debates and negotiations which lasted for almost half a decade. Countertrade is the agreement of more than one company whereby the exporting company delivers the supply of products from importing company after settling the agreement either totally or partially. Import and export is one of the major trades that Pepsi co does. Pepsi does both import and export at in a countertrade. The import and export counter trade have a lot of benefits to a company; first, the importing country will get a chance to learn from the technology of exporting country, the technology will help the country to grow its products as well. When two countries engage in trades, there will be identification of markets which help to grow the companies in terms of sales and profits. The importing country will also ease itself with payment difficulties by entering into agreement with the seller country. On the other hand, the exporting country will access too many sources of supply; the country will also be in a position to agree on prices of products.
There are several types of counter trading. There is the barter trade. Barter trade involves direct exchange of goods and services between two companies. There is also the switch trading whereby the traders exchange goods with hard currency. The company or country trading will get some fee for delivery of goods through discount. Finally, there is the clearing of arrangements; in this case, two parties agree to deliver goods of one party or services over a long period of time and in agreed volumes. In one way or another Pepsi co has involved itself in the types of trades mentioned above.
Supply Chain management
Pepsi Company entered into a contract of barter trade with Soviet Union. Pepsi agreed to take the soft drink syrup to Russia in exchange of Stolichnaya Russian vodka. This happened after Pepsi Company realized that its product has market in Russia and the vodka had market in the US. Therefore, Pepsi sold vodka in the US while Soviet Union sold Pepsi in Russia. Barter trade is one of the Pepsi approaches in import and export countertrade.
Pepsi Company has also engaged itself in many other counter trades; it has entered mutual agreement with many small and large traders across the world. Suppliers across the world get Pepsi products without paying the entire amount; dealers get products from Pepsi and pay later as a strategy of supply chain management(Eades & Thornhill ,2017). This strategy is commonly known as clearing of arrangements. Apart from various forms of trading that Pepsi involved itself in, there are also the issue supply chain and production in its global business model. Supply chain management can be stated as the art and science of finding a way of improving how the company is getting the raw materials and the need to create a service or a product in order to satisfy the customer (Uyan,2017). For the raw material to be acquired processed and finally sold to the consumer, there must be several aspects which should be considered to achieve the whole process. There must be planning, implementing and controlling the operations of the supply chain with the purpose of satisfying the consumer. Pepsi addresses the supply chain and production in different ways.
Pepsi Company links the supplier with the distributer of raw materials. The link is to ensure that the customer gets the best customer service at an affordable price. The link seek to boost performance of the company through competition that will build up by integrating the internal functions of the company with the function of the suppliers .Through the competition from the integration there will strive for better quality goods leading to high consumer satisfaction.
Pepsi will always try to increase the shareholder investment. It will make sure that it gives a good share to their investors. They know that they can only increase the share to their investors by growing their sales and investing wise. Pepsi believes also that the success will be achieved by satisfying their customer's. It values their customer and so they provide products that are safe, convenient and affordable. It also has a variety of products for consumer selection.
The company has increased its knowledge in the markets. It understands that in most cases there will be changes in demand and supply and by so doing has enabled to integrate the understanding into its critical supply chain activities. The company can respond to the wide range of unplanned fluctuation of demand and supply in the market and balance the operations of supply chain chains.
Pepsi Company has achieved a lot in global strategy; it understands the trends that are related to all aspects of trade (Uyan, 2017). The company has been able to approach import and export countertrade brilliantly. The Company is happy to have on the game of supply and chain management and is now among the leading company of beverages. At a glance Pepsi is proud to be producing wide range products with great taste. Pepsi intends to continue focusing on the strategies that has provided it with a winning statistical edge in the market. The company is also willing to explore and partner with more companies and extend its lines even further.
Venkataraman, S., & Summers, M. (2017). PepsiCo: The challenge of growth through innovation. Darden Business Publishing Cases.
Eades, K. M., & Thornhill, D. (2017). PepsiCo, Inc.: Cost Of Capital. Darden Business Publishing Cases.
Uyan, O. (2017). BARTER AS AN ALTERNATIVE TRADING AND FINANCING TOOL AND ITS IMPORTANCE FOR BUSINESSES IN TIMES OF ECONOMIC CRISIS. Journal of Economics Finance and Accountin...
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