PepsiCo Inc. External Analysis<\/p>\n
Student\u2019s name<\/p>\n
Institutional Affiliation<\/p>\n
Contents<\/p>\n
TOC o “1-3” h z u Introduction PAGEREF _Toc68613591 h 3Internal Evaluation Matrix PAGEREF _Toc68613592 h 4STWOT Matrix PAGEREF _Toc68613593 h 5PepsiCo TOWS Matrix PAGEREF _Toc68613594 h 6PepsiCo Porter Model (Force Analysis) PAGEREF _Toc68613595 h 7Financial Ratios PAGEREF _Toc68613596 h 8Conclusion and Recommendations PAGEREF _Toc68613597 h 9<\/p>\n
IntroductionPepsiCo Inc. is an American-based multinational beverage, food, and snack company with headquarters in Harrison, New York. Incorporated on August 28th, 1998, the company also has interests in marketing, manufacturing, and distribution of grain-based beverages, foods among other products. PepsiCo has over 200 locations worldwide. In 2017, PepsiCo recorded 63, 525 billion in revenue an increase from 62, 799 billion in 2016 (Beba & Church, 2020). PepsiCo’s main competitors include the Coca-Cola Company, Kellogg Company, Hansen Natural Corporation, Monster Beverage Corporation, National Beverage Corporation among other snack and food companies.<\/p>\n
Internal and External Factor Evaluation Matrix<\/p>\n
External Factor Evaluation (IFE) Matrix<\/p>\n
Key External Factors Weight Rating Score<\/p>\n
Opportunities<\/p>\n
Growing snacks and beverage consumption in emerging markets 0.18 4 0.72<\/p>\n
Potential to increase company profits 0.10 2 0.20<\/p>\n
Promoting products through sponsoring 0.15 3 0.45<\/p>\n
Market for less costly products and lower price than competitors 0.15 3 0.45<\/p>\n
Total 0.58 1.82<\/p>\n
Threats<\/p>\n
Change in customer pattern and lifestyle 0.15 4 0.60<\/p>\n
Fierce competition from Coca-Cola change in customer pattern and lifestyle 0.08 2 0.16<\/p>\n
Changes in consumer rates 0.11 3 0.33<\/p>\n
Water scarcity 0.08 2 0.16<\/p>\n
Total 0.42 1.25<\/p>\n
Grand Total 1.00 3.07<\/p>\n
The overall score of PepsiCo from the evaluation matrix is 3.07. This shows that its evaluation values are above average and it takes into consideration high values instead of average values. The company is responding by overcoming threats and seizing new opportunities.<\/p>\n
Internal Evaluation MatrixStrengths Weight Rating Weighted Score<\/p>\n
Strong brand 0.09 4 0.36<\/p>\n
Strong marketing and advertising of products worldwide 0.07 3 0.28<\/p>\n
Products availability 0.08 3 0.24<\/p>\n
Revenue and profits 0.08 3 0.24<\/p>\n
Market Share 0.07 3 0.21<\/p>\n
Competent workforce 0.05 3 0.15<\/p>\n
Wide variety of products 0.05 3 0.15<\/p>\n
Earnings per share 0.02 4 0.08<\/p>\n
Weaknesses<\/p>\n
High debts 0.07 2 0.14<\/p>\n
Health Issues 0.08 1 0.08<\/p>\n
Low sales of some products 0.09 2 0.18<\/p>\n
Product recall causing negative brand impact 0.10 1 0.1<\/p>\n
Taste differentiation 0.05 1 0.05<\/p>\n
High Operating Expense 0.10 1 0.1<\/p>\n
Total Weighted Score 1.0 1 2.36<\/p>\n
Pepsi Co. The total weighted score stands at 2.36 which is well above average. However, there is a need to find a way to cope with competition<\/p>\n
STWOT MatrixStrengths Weaknesses Opportunities Threats<\/p>\n
Best global brand Products perceived as unhealthy Product diversification Stiff competition<\/p>\n
Power of one strategy Overdependence on food and beverages Expand E-commerce Recession<\/p>\n
High diversity portfolio Failed products Enhancing partnerships and alliances Competitors taking up technology more effectively<\/p>\n
Strong global presence Controversial advertisements Increase consumer-driven R&D Demographical changes<\/p>\n
Direct-store-delivery Expanding Operations in Emerging markets Increased trade tensions<\/p>\n
Market dominance Increasing healthy food options Government Laws and Regulations<\/p>\n
Effective marketing strategy Enhancing Corporate Social Responsibility Increased health consciousness.<\/p>\n
PepsiCo TOWS MatrixS0- ST- WO- WT<\/p>\n
Strong image and marketing skills Minimizing competitive threats Innovation in distribution networks Reducing dependence on US markets mainly<\/p>\n
Finding international growth Partnerships Ecommerce, partnerships, and acquisitions International commerce will help reduce losses affiliated with economic fluctuations<\/p>\n
SPACE Matrix<\/p>\n
Rapid Market Growth<\/p>\n
Market Development<\/p>\n
Market Penetration<\/p>\n
Product development<\/p>\n
Horizontal integration<\/p>\n
Divestiture<\/p>\n
Liquidation Market Development<\/p>\n
Market Penetration<\/p>\n
Product Development<\/p>\n
Integration, any direction<\/p>\n
Related discrimination<\/p>\n
Retrenchment<\/p>\n
Related Diversification<\/p>\n
Unrelated diversification<\/p>\n
Horizontal integration<\/p>\n
Divestiture<\/p>\n
Liquidation Joint Ventures<\/p>\n
Strategic alliances<\/p>\n
Merger Acquisition<\/p>\n
Related diversification<\/p>\n
Unrelated Diversification<\/p>\n
Weak competition positionStrong Competitive Position<\/p>\n
PepsiCo Porter Model (Force Analysis)Competition Customers bargaining power Suppliers bargaining power Threats\/Substitution Threats of New Entrants<\/p>\n
High aggressiveness displayed by firms Low switching costs High overall supply High performance of substitutes Reduced switching costs<\/p>\n
Reduced switching costs Increased access to product information Reduced forward interaction with suppliers Low switching costs Average customer loyalty<\/p>\n
A high number of firms Increased availability of substitutes Average size of individual suppliers High availability of substitutes Increased cost of brand development<\/p>\n
Financial RatiosAnnual Data 2020<\/p>\n
Current ratio 0.9841<\/p>\n
Long-term Debt\/Capital 0.7487<\/p>\n
Equity ratio 3.2578<\/p>\n
Gross margin 54.8158<\/p>\n
Operating margin 14.3239<\/p>\n
EBIT margin 14.3239<\/p>\n
EBITDA margin 17.9446<\/p>\n
Pre-Tax Profit Margin 12.8872<\/p>\n
Net Profit margin 10.1177<\/p>\n
Asset turnover 0.7574<\/p>\n
Inventory Turnover Ratio 7.6215<\/p>\n
Receivable turnover 8.3736<\/p>\n
Day sales in receivables 43.5892<\/p>\n
Return on equity 52.9442<\/p>\n
Return On Tangible Equity -29.2618<\/p>\n
Return on Assets 7.7219<\/p>\n
Return on Investments 13.3063<\/p>\n
Book value per share 9.8203<\/p>\n
Operating Cash Flow per share 0.7664<\/p>\n
Free Cash flow per share 0.6469<\/p>\n
Conclusion and RecommendationsDespite facing numerous challenges ranging from increased competition from competitors, low sales due to inflation, market tensions, and government-related regulations, PepsiCo Inc. has the advantage of the best global brand. It is also renowned for high diversity in brands, market dominance, and strong global dominance. The beverage and food industry faces many hurdles that have to do with changing trends in lifestyles, environmentalism, and aggressive competition. PepsiCo should employ its strengths in dealing with its weaknesses. It can take real action to improve its growth by adopting recycling efforts that favor the environment, penetrating developing markets, minimizing risk to exposure, and building product health to attract more diverse consumers. <\/p>\n
References<\/p>\n
Beba, U., & Church, A. H. (2020). Changing the game for women leaders at PepsiCo: From local action to enterprise accountability.\u00a0Consulting Psychology Journal: Practice and Research,\u00a072(4), 288.<\/p>\n","protected":false},"excerpt":{"rendered":"
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