Question

PepsiCo wants to further penetrate Africa. What two strategies do you recommend they consider following.

Explain your reasoning for these suggestions and why they would work

Answer 1

As we know that the population in Africa is growing very fast and there are vast marketing opportunities for business expansion for PepsiCo in Africa. The PepsiCo will use greater innovation and vast investments to meet the rising demand.

PepsiCo used different business strategies in Africa. The most widely used business strategy used by PepsiCo is cost leadership strategy as it's primary generic competitive strategy. Another important strategy used by PepsiCo is the cost minimisation to improve PepsiCo's financial performance and over all competitiveness. For example in order to complete with Coca-Cola in Africa , PepsiCo offers PepsiCo offers low prices based on low operating costs.

The PepsiCo uses the cost minimisation strategy to gain market power and develop a sound customer base. The consumer always likes the low priced goods , when the good has the close substitutes available. Like Coca-Cola is the substitute of PepsiCo drinks. If PepsiCo will set a high price in the market than cola cola will capture the more customers towards it. So, PepsiCo definitely will choose the cost minimisation strategy , this strategy will definitely bring the price of PepsiCo to the level, where customer base is not declining. The cost leadership strategy is also used by PepsiCo to develop a sound customer base. The PepsiCo has to keep in mind that when there is continuous decrease in the cost of the production than and only it will have profits in the long run.