PepsiCo

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PepsiCo’ -2005 Henry H. Beam

Strategic Management

Mrs.Uzma Bashir Ghaus

M. Yasir Habib 5875

Nisar Malik 4507 Faraz Amjad 4769 Malik Munawar Nazia Malik 5173 Ayesha Hassan 5977

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Background

PepsiCo is a world leader in convenient snacks, foods and beverages with sales of $29.3 billion and net income $ 4 billion in 2004,over 153,000 employees and market more than 500 varieties of 200 countries.

The total assets of Pepsi Co are increasing but due to the marginal profit, the return on total asset is also increasing. Net Income also increase 18.1% from 2002 to 2004

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Vision:

PepsiCo's responsibility is to continually improve all aspects of the world in which we operate - environment, social, economic - creating a better tomorrow than today."

Our vision is put into action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholder value by making PepsiCo a truly sustainable company.

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Mission:

Our mission is to be the world's premier consumer products company focused on convenient foods and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees,

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Objective:

Develop a three year business strategic plan for Pepsi Co, that can best ensure this growth.

Pepsi Co, sustain a compound annual growth rate in EPS of 15 % next five year.

At PepsiCo, we're committed to achieving business and financial success while leaving a positive imprint on society -

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Financial Strength

PepsiCo has enjoyed a long history of delivering strong financial growth for shareholders. With some of the world's most powerful brands, our commitment to sustainability and top global talent, PepsiCo is positioned to win in the long term.Total asset increase by 10.4% Net income increase by 18.1% last two yearEPS increase by 2.09 % to 2.5% from 2003 to 2004

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Present Strategy

Pepsi’s present strategy is unrelated diversification; they are focusing on beverages, snacks and non-snacks food industry. Pepsi Co, trying to make Pepsi product the “hip” beverages for the youth market through diversification.

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Scope of Division

Frito-Lay North America (Snacks)

Pepsi Co, Beverages North America (Soft drink)

Pepsi Co International (all products)

Quaker Foods North America (Cereals)

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Revenue and Operating Profit

Net Revenue Net Profit

2004 2003 2002 2004 2003 2002

FLNA 9560 5.2% 9091 6.1% 8565 2389 6.6% 2242 7.7% 2081

PBNA 8313 7.5% 7733 7.4% 7200 1911 13.1% 1690 13.8% 1485

PI 9862 13.6% 8678 12.0% 7749 1323 24.7% 1061 16.6% 910

QFNA 1526 4.0% 1467 0.2% 1464 475 1.1% 470 2.6% 458

Total Division 29261 8.5% 26969 8.0% 24978 6098 11.6% 5463 10.7% 4934

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FLNA’s Revenue and Profit

2002 2003 20040

2000400060008000

1000012000

8565 90919560

2081 2242 2389

RevenueProfit

2002-03 2003-040.0%

2.0%

4.0%

6.0%

8.0%

6.1% 5.2%

7.7%

6.6%

Revenue GrowthProfit Growth

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PBNA’s Revenue and Profit

2002 2003 20040

2000

4000

6000

8000

10000

7200 77338313

1485 1690 1911

RevenueProfit

2002-03 2003-040.0%2.0%4.0%6.0%8.0%

10.0%12.0%14.0%16.0%

7.4%7.5%

13.8%13.1%


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PI’s Revenue and Profit

2002 2003 20040

2000400060008000

1000012000

77498678

9862

910 1061 1323

RevenueProfit

2002-03 2003-040.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

12.0%

13.6%

16.6%24.7%


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QFNA’s Revenue and Profit

2002 2003 20040

500

1000

1500

2000

1464 14671526

458 470 475

RevenueProfit

2002-03 2003-040.0%

1.0%

2.0%

3.0%

4.0%

0.2%

4.0%

2.6%

1.1%


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PepsiCo.’s Revenue and Profit

2002 2003 20040

5000100001500020000250003000035000

24978 2696929261

4934 5463 6098

RevenueProfit

2002-03 2003-040.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

8.0%8.5%

10.7%11.6%


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Competitive Advantage:

The company’s new Gatorade/Tropicana North America business unit would allow the company to combine the production of Gatorade, Tropicana Twister, Dole, Season’s. Pepsi Co, well run financially sound and also market leader

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Key Success Factors

Beverages (Carbonated & Non-Carbonated) Loyalty, Taste and product variety , image

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GAPs

Sales growth on average 16% for 40 years, now it is just 7.4% for 2002-03 and 8.49% in 2003-04.

PepsiCo. Market share is decreased 0.1% to 31.7%.

In soft drinks market Pepsi share is decreased by 0.4%

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Opportunities

Frito-Lay North America– About half of sales is from products

introduced in past 3 years, so FLNA should concentrate on them to increase sales revenue.

PepsiCo Beverages North America– In recent years sales of non-carbonated

beverages have grown steadily.

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Opportunities (cont…)

PepsiCo International– Snack food businesses are growing

fastest in the Asia pacific region so PI should give attention to these market to avail growth opportunity.

– Overall carbonated soft drink market has shown less than 1% growth over the past few years and all that growth is came from diet soft drinks and energy drinks. The opportunity is there to give more attention towards these products.

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Opportunities (cont…)

– Consumer has shown an increasing interest in healthy alternatives to carbonated soft drinks, such as ready-to-drink teas, bottled water, sports drinks and juices.

– In 2004 more than one-third of PepsiCo’s sales came from smart spot(no trans fats) products.

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Thank You

PepsiCo

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