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Case study no 6- The Pepsi machine
Executive Summary:
Case Introduction & Organization
PepsiCo, Inc. is one of the most successful consumer products companies in the world, with 2000 revenues of over $20 billion and 125,000 employees.
We have always known Pepsi and Coca Cola to be fighting the so-called cola-wars, where the quickest, sharpest and the best always won in whichever market they were competing in.
This case study shows us how Pepsi overcame their competitor by completely focusing their control on other aspects of the company rather than just the beverage divisions.
Instead of fighting Coke heads on, they decided to enter more upcoming markets of health-based drinks and foods, which could enable them to increase their market share.
Their food-division seemed to be the first stop because they never gave it the attention that it deserved since they were always involved in battles with Coke in its soda beverage division.
Pepsi owns many brands under its wings such as Frito-Lay, Quaker Oats Aquafina, Gatorade, and a strategic alliance with Starbucks where they manufacture bottled coffee.
Through these brands, they have been able to diversify their products into the market and have been able to beat Coke in terms of global sales, operating profit and net profit.
PepsiCo brands are among the best known and most respected in the world and are available in about 190 countries and territories.
Annexure: Additional research.
Top Management:
The top one of fifty most talented executives of the company, Roger A. Enrico, demonstrates his excellent ability of leadership as representing the company to show the Wall Street that PepsiCo can deliver superior performance quarter after quarter.
One of Enricos top priorities is to attract more investors into the stock.
In international markets, Enrico still faces several obstacles in building Pepsis soda business; however, he builds up his strategy to place his biggest bets on developing markets, such as India, China, and Russia. The key thing is not to merely plant flags, says Peter M. Thompson, CEO of Pepsi-Cola International. Its to make sure you build a business, customer by customer, block by block, day by day. In India, where per capita soft drink consumption is seven servings a year, vs. more than 700 in the U.S., and where deliveries are often done on three-wheel bicycles, Pepsi finds the most prominent businessman in each town and gives them exclusive distribution rights, tapping their connections to drive growth.
Over the past five years, volume has risen at a 26% annual clip. Pepsi has stolen 19 points of market share from Coca-Cola, bringing Pepsis share to 47%, close to Cokes 52%.
Corporate Culture
PepsiCo, Inc. has been systematically changed over the past two decades from passivity to aggressiveness in order to avoid stagnation and to adapt to changing competitive threats and the changing economic or social environments.
Once the company was content in its number two spot, offering Pepsi as a cheaper alternative to Coca-Cola. But today, a new employee at PepsiCo quickly learns that beating the competition, whether outside or inside the company is the surest path to success. In its soft-drink operation, for example, Pepsis marketers now take on Coke directly, asking consumers to compare the taste of the two colas. The culture of the company now is based on the goal of becoming the number one of soft drinks.
Managers are pitted against each other to grab more market share, to work harder and to wring more profits out of their businesses. Because winning is the key value at Pepsi, losing has its penalties. Severe pressure was put on managers to show continual improvement in market share, product volume, and profits. All Employees know they must win merely to stay in place– and must devastate the competition to get ahead.
To keep everyone on their toes, “creative tension” is continually encouraged among departments at Pepsi. The staff is kept lean and managers are moved to new jobs constantly, which results in people working longs hours and engaging in political maneuvering just to keep their jobs from being reorganized out from under them.
Strategic Focus:
1. Their Mission:
PepsiCos overall mission is to increase the value of shareholders investment.
They do this through sales growth, cost controls and wise investment of resources.
They believe their commercial success depends upon offering quality and value to their consumers and customers; providing products that are safe, wholesome, economically efficient and environmentally sound; and providing a fair return to their investors while adhering to the highest standards of integrity.
2. Their Objectives:
PepsiCos overriding objective is to increase the value of our shareholders investment from 25 billion to approximately 40 billion in the year 2010 through integrated operating, investing and financing activities.
Their strategy is to concentrate their resources on growing their businesses, both through internal growth and carefully selected acquisitions.
Their strategy is continually fine-tuned to address the opportunities and risks of the global marketplace.
The corporations success reflects their continuing commitment to growth and a focus on those businesses where they can drive their own growth and create opportunities.
3. Their Goals
Treating all customers with respect, sensitivity and fairness, while providing some of the greatest products on earth.
We respect individual differences in culture, ethnicity and color. PepsiCo is committed to equal opportunity for all employees and applicants.
Corporate program for training employees how to work and manage in an inclusive environment.
Industry