Pepsi_Project

I>BUSINESS –LEVEL STRATEGY: HOW TO COMPETE FOR ADVANTAGE Answering the “who-what-why-and how” question. Who will Pepsi serve' According to industry estimates, approximately 58% of processed food is consumed by developing countries, owing to factors like a rapid increase in population in these countries. Furthermore, by 2050, it is expected that nearly 72% of the food consumption will happen in the developing countries supported by the fact that 37% of the world’s population currently lives in emerging countries like China and India. Counting on these huge markets being created, companies like PepsiCo are increasing their investments in emerging countries and looking at expanding their businesses. Over 2008–09, PepsiCo invested nearly $700 million in India and the company announced plans to invest another $500 million over 2010–12. The company also plans to invest nearly $3 billion in Mexico over 2011–16 to accelerate the growth of its beverage and snack brands including Sabritas and Gamesa. What customer needs, wished, and desires will Pepsi satisfy' While consumers across the world are increasingly favoring healthy foods, there is an equally rising importance of locally-sourced and locally-grown foods. Government bodies like the US Department of Agriculture (USDA) are also promoting local farmers and local produce through programs like "Know Your Farmer, Know Your Food" that helps create new opportunities for farmers, ranchers, consumers and rural communities, and expand access to healthy food throughout the country. On the other hand, consumers are also demanding more of local flavors than global ones. Growing concerns over lifestyle-related health issues like obesity, diabetes, hypertension and chronic heart disease are encouraging consumers to make a shift in their food preferences. In the recent past, consumers have consciously made a preference shift towards healthy, fat-free and no-sugar options in processed foods. Why does Pepsi want to satisfy them' The economic climate prevailing in the country did not have any major impact on PepsiCo’s overall revenue growth. This was possible due to the company’s increasing revenues from other parts of the world like Russia, Latin America, Europe and AMEA. More than a half of Pepsi FY 2011 revenue (50.3%) is generated from outside the U.S. For instance: Mexico accounted for 7.2% of the total revenues in FY2011. Other countries accounted for 43.1% of the total revenues in FY2011. How will Pepsi satisfy its customers’ needs' In the Chinese markets, a green tea flavor is more preferred by consumers, while the Brazilians and Mexicans would prefer tropical fruit flavors in their drinks. PepsiCo is responding to this trend by focusing on catering to the consumer’s taste preferences. For instance, in 2011, PepsiCo introduced brands geared to local tastes like Tropicana Pulp Sacs in China and Hrusteam crisp breads in Russia. PepsiCo sources many foods like fruits and potatoes every year. Specifically, PepsiCo sources more than four million tons of potatoes each year for its products. Recently, the company also adopted practices that allow it to work with local farmers and understand every aspect of the growing process. In 2010, the company has affirmed its plans to build and expand its nutrition business to further grow its Good-for-You portfolio of products. In line with this strategy, the company acquired Wimm-Bill-Dann, one of Europe’s largest dairy products company, in 2010. Additionally, the company is also focused on expanding its portfolio of products made with all-natural ingredients, increasing the amount of whole grains, fruits, vegetables, nuts, seeds and low-fat dairy in several of its products, while taking steps to reduce the amount of sodium, saturated fat and added sugar per serving to strengthen its nutritional offerings. II> GENERIC BUSINESS STRATEGY: Cost Leader Strategy: In 2011, Pepsi laid the groundwork for a new operating model to simplify its processes, make decisions faster, reduce costs, minimize duplication of effort, increase our speed to market and better match its innovations with market needs. And in early 2012, Pepsi announced a plan aimed to double our productivity over the next three years. Differentiation Strategy: PepsiCo’s combined portfolio of food, snacks, and beverage products spans across the value chain of the processed food industry. Pepsi is dedicated to delivering Performance with Purpose. In 2011, we worked proactively with other stakeholders to create a positive business environment while investing in sustainability as a catalyst for growth. Frito-Lay rolled out North America's largest commercial fleet of all-electric trucks. In Ethiopia, we partnered with the World Food Programme and the U.S. Agency for International Development to improve chickpea production, while supporting the development of a nutritious chickpea-based food to address malnutrition. Build and extend our macrosnacks portfolio globally. PepsiCo is the undisputed leader in macrosnacks around the world.We will work to build our much-loved global snack brands — Lay's, Doritos, Cheetos and SunChips — while expanding our successful grain-based snacks platform globally. Pepsi will continue to create new flavors in tune with local tastes and leverage our go-to-market expertise to ensure that our brands are always available wherever our consumers shop. Intergration Strategy: Combining cost leadership and differentiation: Datamonitor’s latest consumer survey conducted in 2011 revealed that nearly half (48.5%) of the respondents indicated that they are buying cheaper food and beverage products because of rising prices. PepsiCo could be prompted to adopt more cost-focused strategies (cost leader strategy – our text book) like discounts and promotions than differentiation strategies like innovations in flavors to push their products into the market, especially targeting the price-conscious consumers. In other words, Pepsi is using intergration strategy: combing cost leadership and differentiation but it is focusing more on cost leadership strategy next years relying on Datamonitor’s latest consumer survey. Reference List PepsiCo, Inc. [serial online]. n.d.;Available from: MarketLine/Life Science Analytics Company Profiles, Ipswich, MA. Accessed October 10, 2012.