EXERCISE 5C What Strategies Should PepsiCo Pursue in 2014? Purpose: In performin

Question

EXERCISE 5C What Strategies Should PepsiCo Pursue in 2014?

Purpose: In performing strategic management case analysis, you can find information about the respective company’s actual and planned strategies. Comparing what is planned versus what you recommend is an important part of case analysis. Do not recommend what the firm actually plans, unless in-depth analysis of the situation reveals those strategies to be best among all feasible alternatives. This exercise gives you experience conducting library and Internet research to determine what PepsiCo is doing in 2013 and should do in 2014. Instructions

Step 1: Go to the www.pepsico.com website and click on Media and then click on Press Releases. Read through the most recent 20 press releases.

Step 2: Determine three new strategies that PepsiCo is actually pursuing. Identify three proposed strategies that you feel would be excellent for PepsiCo to pursue. Give a rationale for each of your proposed strategies.

Explanation / Answer

The strategies for 2014 will be guided by Pepsi's performance in 2013. In the year 2013, Pepsi had reported a 1% increase in its topline (revenues) and a bottomline growth (earnings) of 10%.

In 2013, the growth has been healthy in emerging markets of Asia, Africa and Middle East. Sales of beverages had fallen in America as well as in Europe.

Three new strategies that company is actually pursuing are:

(i) Focus and develop its core brands in the developed economies like the Americas and in Europe. For example in UK, it will continue its invetments in brands like Walkers, Tropicana, Naked, Quaker, and Pepsi.

(ii) Strengthen and build global brands in CIS countries and Russia on one hand, and develop local brands like Agusha and Tchudo. The company is developing local brands in other emerging markets as well. For example, in India it has developed the Kurkure brand in the snacks division.

(iii) Reduce its dependence on cola and introduce more healthier options in colas that have lower calories.

Three proposed strategies that would be ideal for PepsiCo to pursue are:

(a) push sales of healthy snacks and food items. Poeple, world over, have become more health conscious and prefer snacks and beverages that have zero trans fat. Indra Nooyi - Pepsi's CEO - has acknowledged the need to promote healthier lifestyle amongst its consumers and develop more products to cater to this requirement. Developed markets have stagnated and future growth will come from new and innovative products that promote a better lifestyle and a healthier life.

(b) penetrate the market further in emerging and developing economies. Such economies and countries are not saturated like the developed countries and thus presents good potential for future growth. Per capita consumption of colas, juices etc. is still low and Pepsi can develop and penetrate these markets further to improve its topline.

(c) Pepsi should start introducing cost savings initiatives to make its balance sheet and income statement leaner. It should invest more money towards R&D (research and development) in its sustainability initiatives. This will help the company save precious dollars that can be used for innovation purposes and other purposes like developing an aggressive marketing campaign. All these will help the company increase its topline.

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