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CORPORATE STRATEGY

BY

ANISH ANTONY ARTHI .T.S BANUMATHI DEVIKA KRISHNA MARK THOMAS

Key Success Factors


3 core success factors Merger Acquisition Franchising

Success Mantra-Consumer habits closely Mirrored in products. -Move to Good-For-You and Better-For-You products
-To raise revenues from GFU of 10$ Billion to 30 Billion by next year.

PepsiCo Strategies

Power Of One
Wanted to give customers a Frito-Lay & Pepsi Beverage Experience. Worked with global suppliers on this strategy.

Shift in Focus
Product Reformulations Related Acquisitions -Flat Earth, Tropicana, Quaker. Universal Advertising Campaign. Portfolio Restructuring.

Value Proposition Change


Applying global knowledge to innovation. Science Based innovation. Widening Scale of Operation.

Eg.Sports Drinks to Sports Nutrition

Mission

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, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity.

Modified Mission
To emerge as leading consumers products company focusing on wholesome food and beverage solutions on a global scale. Engineering our existence on enhanced:financial gains to our Shareholders,Development prospects for employees,solid value for customers,mutual benefit for the society and communities in the course of honest,justifyable operations.

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.

Modified Vision

Performance with a purpose of reaching out to the society at large with the aim of crafting and creating possible value differences in all realms of life, while aiming at sustainability.

Strength
Strong Multinational (Brand Equity)

Strong & Vast Distribution Channels


Aggressiveness In The Market (Market Leader) Brand Promotion & Sponsorship

Lack Of Capital Constraints


Record Market Share Strong Brand Portfolio

Weakness
Targeting Only Young Customers Centralized Decision Making

Decline In Taste
Motivational Factor Not All Products Bear The Company Name

OPPORTUNITY
PepsiCo New Products Can Easily Penetrate In The Market. Noncarbonated Drinks Are The Fastest-Growing Industry Demand Of Pepsi Is More Than Of Competitor Changing Social Trends (Fast Foods) Internet Promotion And Ordering Processes Non-Carbonated Substitutes Beverage Industry Is Mature Fake Products (Imitators) Competitors Schemes

Strong Competition With Coca-Cola Company

S-O Strategies
1. Company Can Introduce New Product Because It Have Good Brand Equity, Large Resources 2. By Having Good Distribution Channel Co. Can Focus Easily Fast Food Restaurants, Clubs.

W-O Strategies
By Introducing new variants in Non-Carbonated Drinks Pepsi Can Capture Different Age Groups.

TOWS MATRIX
S-T Strategies
Because Co. Has Financial Recourses And Distribution Channel Therefore It Can concentrate more on Non-Carbonated Drinks.

W-T Strategies
By improving the taste & quality company can reposition its products can take long term position on maturity stage.

SPACE Matrix
Competitive Advantage Brand Recognition Large Market Share Wide Distribution Channel Customer Loyalty -3 -2 -2 -4 Financial Strength Inventory Turnover Return On Asset Net Income Mean= +4 Industrial Strength Environmental Stability Economic Stability Barrier To Entry Competitive Pressure Mean = -2.33 -2 -2 -3 High Industry Growth Rate Profit Potential Financial Stability Resource Utilization Mean = +3.75 +5 +3 +4 +3 +5 +4 +3

Mean= -2.75

CA + IS = + 1.0 FS+ES = + 1.67

The Quantitative Strategic Planning Matrix (QSPM)


Enter into new segment (tender coconut)

Enter into snack segment

From the above matrix it is concluded that PepsiCo. Should adopt the 2nd strategy that is PepsiCo i.e. to enter into Snack segment.

Grand Strategy Matrix

Market Development Market Penetration Product Development Backward, Forward, Horizontal Integration

Related/Concentric Diversification

EFE MATRIX
OPPORTUNITIES Demand of Pepsi is more than that of the competitor New products can penetrate well in the market Change in trends Non-carbonated drinks- the fastest growing industry Internet Promotion Tie- up with major showrooms, restaurants Weight 0.12 0.11 0.09 0.09 0.06 0.07 Rate 3.00 3.00 3.00 3.00 1.00 2.00 T.S 0.36 0.33 0.27 0.27 0.06 0.14

THREATS Substitute products Competition from other companies Fake products Competitors schemes Beverage industry is mature

Weight 0.11 0.12 0.09 0.06 0.08

Rate 3.00 4.00 2.00 2.00 2.00

T.S 0.33 0.48 0.18 0.12 0.16

1.00

2.7

IFE MATRIX
STRENGTHS Strong Brand Equity Market share Record Strong Brand Portfolio Market Leader Strong Distribution channels Brand Promotion Lack Of Capital Constraints WEAKNESS Target customers are youngsters Centralized decision making Decline in taste Political franchises All products dont bear the Pepsi name Motivating Factor Weight 0.10 0.12 0.08 0.10 0.07 0.06 0.07 Weight 0.08 0.06 0.05 0.09 0.07 0.05 1.00 Rate 3.00 4.00 3.00 4.00 3.00 2.00 2.00 Rate 2.00 2.00 2.00 2.00 2.00 2.00 T.S 0.30 0.48 0.24 0.40 0.21 0.18 0.14 T.S 0.16 0.12 0.10 0.18 0.14 0.10 2.75

The Internal-External (IE) Matrix


IFE score EFE score 2.75 2.7
Strong

The IFE Total Weighted Score


Average 2 Weak 1

High 3

I
Invest

II
Invest

III

Hold

The EFE Total Weighted Score

Medium 2

IV
Invest

V
Hold

VI
Harvest

Low 1

VII
Hold

VIII
Harvest

IX
Divest

Competitive Profile Matrix


CRITICAL SUCCESS FACTORS Plant Location Strong Brand Image Large Marketing Resource Budget Market share Product Taste Production Capacity Innovation Control Over Supply Chain Availability Advertising Bottling investment Personnel Weight 0.09 0.12 0.07 0.11 0.09 0.07 0.07 0.05 0.11 0.09 0.06 0.07 Rate 2.00 4.00 2.00 3.00 3.00 2.00 2.00 3.00 3.00 4.00 2.00 2.00 T.S 0.18 0.48 0.14 0.33 0.27 0.14 0.14 0.15 0.33 0.36 0.12 0.14

1.00

2.78

Competitive Profile Matrix(COKE)


CRITICAL SUCCESS FACTORS Plant Location Strong Brand Image Large Marketing Resource Budget Market share Product Taste Production Capacity Innovation Control Over Supply Chain Availability Advertising Bottling investment Personnel Weight 0.09 0.12 0.07 0.11 0.09 0.07 0.07 0.05 0.11 0.09 0.06 0.07 Rate 2.00 3.00 2.00 2.00 2.00 2.00 1.00 2.00 2.00 3.00 2.00 2.00 T.S 0.18 0.36 0.14 0.22 0.18 0.14 0.07 0.10 0.22 0.27 0.12 0.14

1.00

2.14

Differentiation

Acquisition

Long Term Objectives

Become a leader in Carbonated, Non Carbonated soft drinks and snacks market.

Instead of concentrating more on western snacks, capture the local snacks market either through organic of inorganic growth.

How to Reach there???


Carbonated Soft Drink

Non Carbonated Drinks

Non Carbonated Drinks

Cost
2500 litres of tender coconut water per day

Snacks

Financials
2009 Sales 43.23 2010 57.84 2011e 67.84 2012e 79.57

Sales Growth
COGS+D&A COGS Growth Gross Income

-0.04%
20.16 -0.81% 23.07

33.79
26.69 32.29 31.15

17.29%
30.53 14.39% 35.37

17.29%
34.92 14.39% 40.16

GI Growth
SG&A Expense SG&A Growth Interest Expense

0.64%
14.99 -2.95% 191M

35.01%
22.81 52.19% 1.01

13.54%
26.75 17.29% 1.26

13.54%
31.38 17.29% 1.58

Interest Exp Growth


Pretax Income PI Growth Net Income

-41.95%
7.71 16.05% 5.95

427.23%
7.5 -2.81% 6.32 7.75

25%
8.0 3.31% 6.53

25%
3.31% 6.74

Net Income Growth

15.64%

6.79%

3.25%

3.25%

Ratios
2010 Current P/E Ratio 5 Year Avg P/E Ratio 16.7 18.2

Quick Ratio
Revenue to Asset Return on Assets Debt/Equity Ratio Interest Coverage Ratio

0.7
0.9 8.5% 0.93 9.7

Return on Invested Capital

14.1%

Annual objective
Annual Objective Specific, measurable statements of what an organization is expected to achieve in contributing to the businesss grand strategy. Qualities of effective Annual objective Linkage to Long term annual objective Consistency Measurable Prioritize

Annual Objective
Grand strategy is to become No.1 in beverage and snacks industry Annual strategy for 2012 Market Sierra Mist in India, Introduce their tender coconut water in market. Annual strategy for 2013 Acquire Haldirams

Procedure for strategic review


Three steps in strategic evaluation 1. Examining the base of firms strategy 2. comparing expected and actual results 3. Taking corrective measures Criteria for evaluating a strategy 1. Consistency 2.Consonance 3. Feasibility 4. Advantage

Procedure for strategic review


Strategy evaluation could be done by 1. Reviewing bases of strategy Revised IFE, EFE matrix 2. Comparing the firms performance -> over different time periods -> to competitors -> to industry average