Question

What is PepsiCo's corporate strategy? Briefly identify the business strategies that Pepsico us using in each of its customer business segments in 2014.

What is your assessment of the long-term attractiveness of the industries represented in Pesico's business portfolio?

What is your assessment of the competitive strength of PepsiCo's different business units?

Does Pepsico's portfolio exhibit good strategic fit? What value chain match-ups do you see? What opportunities for skills transfer, cost sharing, or brand sharing do you see?

What is your overall evaluation of PepsiCo's business portfolio in 2014? Does the portfolio provide the company's shareholders with an opportunity for above-average market returns? Which businesses are the strongest contributors to PepsiCo's free cash flows?

What strategic actions should Indra Nooyi take to sustain the corporation's impressive financial and market performance? Should its free cash flows be used to fund additional share repurchase plans, pay higher dividends, make acquisitions, expand internationally, or for other purposes? What other strategic actions should be pursued by corporate level management?

Answer 1

What is PepsiCo's corporate strategy? Briefly identify the business strategies that Pepsico us using in each of its customer business segments in 2014.

PepsiCo products are highly complementary since many of them can be consumed together in one sitting. To continue to capitalize on this, PepsiCo’s management focused on strengthening its market performance by concentrating on product innovations that listened to buyers’ health and wellness concerns, building close connections to distributors, and international expansion. Better-for-you (BFY) and good-for-you (GFY) products became pivotal elements of PepsiCo’s new product development. Furthermore, PepsiCo’s Performance with Purpose plan not only drove efficiency, but it also kept a focus on environmentally friendly production methods, safe and inclusive workplace for employees, and investment in local communities. PepsiCo is organized into six business divisions: Frito-Lay North America, Latin American Foods, PepsiCo Americas Beverages, Quaker Foods North America, PepsiCo Europe, and Asia, Middle East, and Africa. Below are the business strategies of each division. Frito-Lay North America ‘s (FLNA) strategy is affected by three key trends: convenience, awareness of nutrition, and indulgent snacking. Many consumers want snacks that are great-tasting and gourmet flavored. To appeal to this trend and attract indulgent snackers, FLNA introduced new chips to the market such as jalapeno and cheddar tortilla chips, and pepper jack potato chips. To address nutritional concerns and as part of its BFY campaign, FLNA began using healthier oils, eliminated trans fats, and introduced gluten-free and baked chips. FLNA also began packaging some snacks in smaller bags to appeal to convenience and portion control desires. GFY snacks also have emerged, like fruit and vegetable treats, that entice those consumers who are looking to fill their diet deficiencies. Latin American Foods division concentrates on expanding the company’s products internationally. This division understands that the tastes of foreign buyers are different than those of U.S. consumers, and to entice them, PepsiCo needs to introduce flavors that are distinct to their regions. Luckily, taste preferences for salty snacks are similar across countries, allowing PepsiCo to only make slight modifications to its product offerings.

What is your assessment of the long-term attractiveness of the industries represented in Pesico's business portfolio?

What is your assessment of the competitive strength of PepsiCo's different business units?

Does Pepsico's portfolio exhibit good strategic fit? What value chain match-ups do you see? What opportunities for skills transfer, cost sharing, or brand sharing do you see?

Yes,they had a noteworthy successes with $160 million cost saving from product ingredients and packing material, $40 million cost saving form joint venture. PepsiCo’s management team wasdedicated to capturing the strategic fit benefits within the business line up throughout the valuechain. The company’s procurement activities were coordinated globally to achieve the greatest possible economies of scale, best practices. They also share marketed research information to better enable each division to develop new produce I believe that PepsiCo have the all 3 opportunities. For skill transfer, since PepsiCo include muchof business units and divisions, they can have skill transferring within the own corporate and theglobe. The best practices were routinely transferred between its 230 plants, 3600 distributionsystems, and 120,000 service routes around the world. For cost sharing, since PepsiCo can capturethe strategic fit and resources fit benefits, they also prove to have cos-saving over time. Like, theyachieve $160 million in cost-saving resulting from corporate-wide procurement of productingredients and packaging material. And for Brand Sharing, we have to mention one of the mostsuccessful strategies was “Power of One”, they allow PepsiCo to obtain the synergistic benefit of combining Pepsi-Cola and Frito-Lay. For instance, in Chile, Frito-Lay has over 90% of the market

What is your overall evaluation of PepsiCo's business portfolio in 2014? Does the portfolio provide the company's shareholders with an opportunity for above-average market returns? Which businesses are the strongest contributors to PepsiCo's free cash flows?

The last segment of PepsiCo is Quaker Foods North America. This division is responsible for many popular cereals, pancake mixes, and pasta sides. Focusing on cereal they have 14% of the market share and face tough competition against Kellogg’s who has 30% (Jennings 82). This part of the company has found success in “better-for-you” and “good-for-you” products. Together these four departments have made PepsiCo into the profitable company it is today

What strategic actions should Indra Nooyi take to sustain the corporation's impressive financial and market performance? Should its free cash flows be used to fund additional share repurchase plans, pay higher dividends, make acquisitions, expand internationally, or for other purposes? What other strategic actions should be pursued by corporate level management?

PepsiCo has used very successfully the related diversification corporate strategy as their basic approach. PepsiCo should remain their related activities within the value chain between the various beverage and snack food brands to utilize the strategic fit and resources fit in order to reduce costs and increase profits. Some of the elements of the value chain should be considered is marketing, processing, research and development. An importance noting here is that, PepsiCo should define clearly their priority in order to have a proper decision making and resources allocation. Beside form what is mentioned above, if the company cash flow is enough to pursuing more, then Pepsi Co should go after some other option like fund additional share repurchase plans, pay higher dividend sand buying security, investing in mutual fund… to strengthen their financial performance and secure its profit again rival