ASSIGNMENT

PREPARED BY

ZAHID GULZAR (1753299)

SAAD BIN KHALID
TOQUEER TAHIR
ADEEL AHMED
SUBJECT: STRATEGIC MANAGEMENT
TEACHER: SIR MAJID QURESHI
DATE: 16-10-2017
 Company Name: PepsiCo

Strategic management process consists of three stages: strategy formulation, strategy

implementation and strategy evaluation. The scope of the project is to discuss the strategies
adopted and applied by Pepsi Co, Pakistan and also decide which alternative strategy will
benefit the firm most.

History of Pepsi Cola Pakistan

The market in Pakistan is surely dominated by Pepsi. It has proves itself to be the No.1 soft drink
in Pakistan. Now days Pepsi is recognized as Pakistanis National drink. In 1971, first plant of
Pepsi was constructed in Multan, and from their after Pepsi is going higher and higher. Pepsi is
the choice soft drink of every one. It is consumed by all age groups because of its distinctive
taste. Compared with other Cola in the market, it is a bit sweeter and it contributes greatly to its
liking by all. Consumers survey results explain the same outcome and Pepsi has been declared
as the most wanted soft drink of Pakistan.

Alternative strategies will drive from vision, mission, external and internal audit

VISION
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PepsiCos responsibility is to continually improve all aspects of the world in which we operate -
environment, social, economic - creating a better tomorrow than today.
Pepsi cola international 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 STATEMENT

Our mission is to be the worlds 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.

Pepsi Unique Selling Points (UPS)

Strong brand name:

As the PEPSI itself is a strong brand name. Whenever the customers feel thirst he/she always
think about the PEPSI not even the beverage, Which makes the Pepsi brand name as a stronger
brand name this is the reason that Pepsi gets the advantage of Word of mouth advertisement as
well which ultimately raise the sales of Pepsi.

SWOT ANALYSIS OF PEPSICO

STRENGHTS:

Strong Multinational (Brand Equity)

Strong & Vast Distribution Channels
Lack Of Capital Constraints
Record Market Share
Strong Brand Portfolio
Aggressiveness In The Market (Market Leader)
Brand Promotion & Sponsorship

WEAKNESS:
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Targeting Only Young Customers

Political Franchises
Centralized Decision Making
Decline In Taste
Motivational Factor
Not All Products Bear The Company Name

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 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
May Tie Up or Liaison With Major Showrooms, Computer Centers &Restaurant

THREATS:
Non-Carbonated Substitutes (The Mango Season)
Beverage Industry Is Mature
Fake Products (Imitators)
Competitors Schemes
Strong Competition With Coca-Cola Company

Stage 1 (INPUT STAGE)

PORTERS 5 FORCES MODEL:

Bargaining power of customers:

Bargaining power of customer is low because of fixed pricing of beverages of Pepsi cola in
market. Company settled down the prices according to the government polices so customer cant
bargain on it. If the company increases or decreases the prices of their products the customers
have to purchase on that prices without any bargain.

Bargaining power of supplier:

There are two situations in bargaining power of suppliers, company having two major suppliers
and their bargaining power of both suppliers are different like: Their main supplier of concentrate
is US and the bargaining power in this case is higher because the Pepsi Company has to purchas
e the concentrate on the price offered by the supplier.
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In other case bargaining power of supplier is low the company get the plastic and glass bottles
for filling from GHANI glass and the company get the material from the supplier on that price on
which the company wants to purchase.

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 Rivalry among competing firms:

Rivalry among the competing firms is high because their main competitor is Coca-Cola. When
the coca cola launch or introduce new products the Pepsi use the defender and reactor strategies
for strong competition.

Threat of new entrants:

Potential entry of new competitor is easy but threat from new entrant is low because no one can
reached on the competition of Pepsi cola as well as company have strong market share that is
72% ,strong brand name, strong distribution an huge setup in Pakistan and no one can easily
achieve this.

Threat of substitute products:

Pepsi has many substitute products that create the high threat for company like juices, flavored
milk and energy drinks in the market. Now a days people are switching on non carbonated
drinks and that is the big threat for Pepsi cola.

External Factor Evaluation (EFE):

The external Forces are not under control of Strategists but they can analyze external factors and
try influence to minimize the risk and threats and gain maximum benefits from opportunities
available in market
Few of external factors are as under:

Demographic Factors:

Age
PepsiCo. Should target that age group that consumes it the most and make promotional strategies
according to their behavior. So their main target is the young generation.

Inflation
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If the country faces inflationary trend in the market, the price of the Pepsi will ultimately
increase which will lower its demand.

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 Consumption Behavior
Pakistan is a consumption oriented society. Due to demonstration effect the people are more
inclined towards consumption than saving. So the people of Pakistan spent heavily on food
items. Hence Pepsi has a good market share in the present circumstances.
Payment Mod
As the use of plastic money is increasing the consumption pattern of the people are increasing.
Although it will have a low affect on the consumption of Pepsi.
Employment Opportunities
As employment opportunities increase the living standard of the people increase and the people
consume more.
Aggregate Demand
In case of Pepsi, aggregate demand of the product increases in the season of summer as the hot
weather makes the consumers want to drink more.
Aggregate Supply
In summer season to cope up with the increasing demand they have to increase the aggregate
supply of their product.
Economic Policies
Some of the economic policies which can affect the market of Pepsi are discussed below:
Fiscal Policy
It is the policy of taxes. If heavy tax is levied on Pepsi then its price will rise having
negative affect on its consumption.
Monetary Policy
Monetary policy is made to restrict or increase the supply of money in the market. If
policies are made to restrict the flow of money in the market, inflation can be controlled
hence increasing the real income of the people which will ultimately affect the consumption
of Pepsi.
Price Policy
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If price of Pepsi is increased its demand will decrease and vice versa.
Income Policy
If income of the people will increase their purchasing power will increase and hence
increasing the market share of Pepsi.

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 Physical Factor:

Region
Pakistan is divided into different geographical regions. Marketing and sales of Pepsi is different
in different geographical regions. In hot areas its demand is more.
City Size
The cities which are densely populated the consumption of Pepsi is more.
Climate
Pepsi is more suitable for humid or hot weathered countries like Pakistan. It is a source of
refreshment when a person is thirty due to the hot weather.
Infrastructure
Roads are the basic need for transportation of Pepsi from one place to another. Pepsi cannot open
factories in every city of Pakistan so it has to transport it to other cities where Pepsi is demanded.
Electricity is the basic necessity for production of any product. Constant load shedding slows
down the process of production which leads to less production and low market share.

Technological Factors:

Research and Development

Through research and development quality of the product can be improved or better techniques
or machinery can be developed which can increase the production. When technology is advance
the supply of the product increase hence the company experiences growth in their business.

Political And Legal Factors:

POLITICAL STABILITY
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Whenever the government is considered to be stable, the business will flourish. If there is
political stability in the country the policies and strategies made by Pepsi can be consistent to be
implemented. Foreign companies are also keen to invest in those countries which are politically
stable where they have no fear of decline in their market share or shut down due to sudden
change of government.

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 Mixed Economy
In mixed economy government and private sector both plays their role in developing the
economy of the country. Investment by foreign companies like Pepsi is more likely to flourish in
mixed economy.
Laws Formulation
Government has given copy rights to Pepsi so that another company cannot sell their product by
the name of Pepsi. The countries where laws are formulated, the strategies and activities of the
company are different.
Social Responsibility
Pepsis social responsibility is to provide its customers with clean and hygienic product so to do
this they have increased the use of disposable bottles.

Social And Cultural Factors:

Psychographic
It is a combination of demographic and psychological factors. Psychological attributes mean how
you perceive things. The company will focus on the behavior of consumers and make different
changes in their product quantity or quality and in promoting their product so that they can
attract the customers. Keeping in view that the behavior of different consumers is not alike they
have to make their marketing strategies in accordance with their requirements so that they are
convinced to buy the product.
Religious
Religious factors can influence the market sales of Pepsi as it happened in 2003 when the U.S-
led attack on Iraq, wide sections of society in Pakistan have banned American multinationals
Coke and Pepsi.
Social Status
Pepsi is a well renowned brand. People who are brand conscious will not drink beverages of
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lesser known brands such as Amrat cola. They will try to show their status by drinking Pepsi
which is known to all as a quality drink.
Media
It is a very important factor for marketing. Media these days is a very effective way of inspiring
people to buy a specific product. A good promotion can boast up sales to a great extent.

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 External Factor Evaluation (EFE) Matrix

Opportunities Weight Rate Total Score

PepsiCo New Products Can Easily Penetrate In The
Market. 0.09 4 0.36
Noncarbonated Drinks Are The Fastest-Growing Industry 0.11 3 0.33
Demand Of Pepsi Is More Than Of Competitor 0.07 3 0.21
Changing Social Trends (Fast Foods) 0.09 3 0.27
Internet Promotion And Ordering Processes 0.06 1 0.06
May Tie Up or Liaison With Major Computer Centers
&Restaurant 0.07 2 0.14
Threats Weight Rate Total Score
Non-Carbonated Substitutes (The Mango Season) 0.14 3 0.42
Beverage Industry Is Mature 0.12 4 0.48
Fake Products (Imitators) 0.1 2 0.2
Competitors Schemes 0.05 2 0.1
Strong Competition With Coca-Cola Company 0.1 2 0.2
TOTAL SCORE 1 2.77

Scoring Method:

List The Key External Factor

Assign Weight To Each (0 To 1.0)
Weight In Response To Importance Of A Factor For A Particular Industry
Sum Of All Weights = 1.0
Assign 1-4 Rating To Each Factor
Firms Current Strategies Response To The Factor: How Well Firms Response To
These Factors (Effectiveness Of The Firm).
Poor Response 1
Average Response 2
Above Average Response 3
Superior Response 4
Multiply Each Factors Weight By Its Rating
Produces A Weighted Score
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Sum The Weighted Scores For Each

Determines The Total Weighted Score For The Organization
Result:
Above Average Response 2.77 (Aggressive)

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 Internal Factor Evaluation (IFE) Matrix

Strengths Weight Rate Total Score

Strong Multinational (Brand Equity) 0.11 3 0.33
Strong & Vast Distribution Channels 0.09 4 0.36
Lack Of Capital Constraints 0.07 3 0.21
Record Market Share 0.1 4 0.4
Strong Brand Portfolio 0.06 3 0.18
Aggressiveness In The Market (Market Leader) 0.07 3 0.21
Brand Promotion & Sponsorship 0.12 4 0.48
Weakness
Targeting Only Young Customers 0.09 2 0.18
Political Franchises 0.06 2 0.12
Centralized Decision Making 0.05 2 0.1
Decline In Taste 0.09 1 0.09
Motivational Factor 0.05 1 0.05
Not All Products Bear The Company Name 0.04 2 0.08
TOTAL SCORE 1 2.79

Scoring Method:

List Key Internal Factors (Strengths & Weaknesses)

Assign Weight To Each (0 To 1.0)
Weight In Response To Importance Of A Factor For A Particular Industry
Sum Of All Weights = 1.0
Assign 1-4 Rating To Each Factor
Firms Current Strategies Response To The Factor: How Well Firms Response To
These Factors (Effectiveness Of The Firm).
Major Weakness 1
Minor Weakness 2
Minor Strength 3
Major Strength 4
Multiply Each Factors Weight By Its Rating
Produces A Weighted Score
Sum The Weighted Scores For Each
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Determines The Total Weighted Score For The Organization

Result:
Score 2.5 Aggressive
Score 2.5 Defensive
2.79 (Aggressive)

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 Competitive Profile Matrix (CPM):

PEPSICO Coca Cola

Critical Success Factors Weight Rate Total Weight Rate Total
(CSFs) Score Score
Plant Location 0.07 3 0.21 0.07 2 0.14
Strong Brand Image 0.11 4 0.44 0.11 4 0.44
Large Marketing Resource
Budget 0.09 3 0.27 0.09 3 0.27
Market Share 0.12 4 0.48 0.12 2 0.24
Product Taste 0.09 3 0.27 0.09 4 0.36
Production Capacity 0.07 4 0.28 0.07 3 0.21
Innovation 0.11 3 0.33 0.11 3 0.33
Control over Supply Chain 0.06 3 0.18 0.06 3 0.18
Availability 0.11 4 0.44 0.11 3 0.33
Advertising 0.1 3 0.3 0.1 3 0.3
Bottling Investment & Empty
Mgt 0.03 3 0.09 0.03 3 0.09
Personnels 0.04 3 0.12 0.04 3 0.12

Scoring Method:
List Key Internal And External Critical Success Factors
Assign Weight To Each (0 To 1.0)
Weight In Response To Importance Of A Factor For A Particular Industry
Sum Of All Weights = 1.0
Assign 1-4 Rating To Each Factor
Firms Current Strategies Response To The Factor: How Well Firms Response To
These Factors (Effectiveness Of The Firms).
Major Weakness 1
Minor Weakness 2
Minor Strength 3
Major Strength 4
Multiply Each Factors Weight By Its Rating
Produces A Weighted Score
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Sum The Weighted Scores For Each

Determines The Total Weighted Score For The Organization
Result:
PepsiCo. Is More Aggressive Policy As Compare To CocaCola

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 Stage 2: The Matching Stage: SWOT Matrix

There are Four Types of Strategies

Strengths-Opportunities (SO):

Use a firms internal strengths to take advantage of external opportunities

Weaknesses-Opportunities (WO):

Improving internal weaknesses by taking advantage

of external opportunities

Strengths-Threats (ST):

Use a firms strengths to avoid or reduce the impact of external threats.

Weaknesses-Threats (WT):

Defensive tactics aimed at reducing internal weaknesses and avoiding external threats
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 Strengths Weaknesses

1. Brand Promotion & 1. Decline In Taste

Sponsorship 2. Targeting Only Young
2. Strong Multinational Customers
(Brand Equity) 3. Not All Products Bear The
SWOT Matrix
3. Record Market Share Company Name
4. Strong & Vast Distribution 4. Motivational Factor
Channels 5. Political Franchises
5. Lack Of Capital Constraints 6. Centralized Decision
Making
6. Aggressiveness In The
Market (Market Leader)
7. Strong Brand Portfolio
Opportunities S-O Strategies W-O Strategies
1. PepsiCo New Products Can S1,S2,S3,O2,O3,O4
Easily Penetrate In The Company Can Introduce
Market. New Product Or Non- W2,O2
2. Noncarbonated Drinks Are By Introducing Non-
Carbonated Drinks Because
The Fastest-Growing Carbonated Drinks Pepsi
It Have Good Brand Equity, Can Capture Different Age
Industry
3. Changing Social Trends Large Resources Groups.
(Fast Foods) S4,O5,O3
4. Demand Of Pepsi Is More By Having Good
Than Of Competitor
Distribution Channel Co.
5. May Tie Up Or Liaison
With Major Showrooms, Can Focus Easily Fast Food
Computer Centers Restaurants, Clubs.
&Restaurant
6. Internet Promotion And
Ordering Processes
Threats S-T Strategies W-T Strategies
1. Non-Carbonated Substitutes S4,S5,T1,T3 W1,T3
(The Mango Season) Because Co. Has Financial By improving the taste &
2. Fake Products (Imitators) Recourses And Distribution quality company can
3. Beverage Industry Is Channel Therefore It Can reposition its products can
Mature Produce Non-Carbonated take long term position on
4. Strong Competition With Drinks. maturity stage.
Coca-Cola Company
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 BCG Matrix

Pepsi lies in stars (maturity) due to high market share that is 72% in Pakistan and high
industry growth rate. With the passage of time they are capturing more market share by
enhancing their product line.
They are in stars because of one main reason that is PepsiCo is financially strong. Their
brand name is well known all over the world and have the strong positive brand image in the
mind of customer.
Pepsi is convenient product where ever you go you can find each brand of Pepsi cola.
The main advantage of Pepsi cola for lying in star is that they are targeting every type of
customer and these customers are increasing market share for Pepsi cola.

Grand Strategy Matrix

This is also an important matrix of strategy formulation frame work. Grand strategy matrix it is
popular tool for formulating alternative strategies. In this matrix all organization divides into four
quadrants.
Any organization should be placed in any one of four quadrants. Appropriate strategies for an
organization to consider are listed in sequential order of attractiveness in each quadrant of the
matrix.
It is based two major dimensions

1) Market growth
2) Competitive position
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 Quadrant 1
It contains that companys strong having competitive situation and rapid market growth.
Firms located in quadrant 1 of the grand strategy matrix are in an excellent strategic position.
PepsiCo must focus on current market and appropriate to follow market penetration, market
development
And products developments are appropriate strategies.

Market Development
Market Penetration
Product Development
Backward, Forward, Horizontal Integration
Related/Concentric Diversification

RESULTANT STRATEGY
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 STAGE 3 (DECISION STAGE)

The quantitative strategic planning matrix (QSPM)

The last stage of strategy formulation is decision stage. In this stage it is decided that which way
is most appropriate or which alternative strategy should be select. This stage contains QSPM that
is only tool for objective evaluation of alternative strategies. A quantitative method used to
collect data and prepare a matrix for strategic planning. It is based on identified internal and
external crucial success factors. That is only technique designed to determine the relative
attractiveness of feasible alternative action. This technique objectively indicates which
alternative strategies are best.
The QSPM uses
Input from Stage 1
Analyses and matching results from Stage 2
Analyses to decide objectively among alternative strategies.
That is, the EFE Matrix, IFE Matrix, and Competitive Profile Matrix that make up Stage 1,
coupled with the TOWS Matrix, SPACE Analysis, BCG Matrix, IE Matrix, and Grand Strategy
Matrix that make up Stage 2, provide the needed information for setting up the QSPM (Stage 3).

Steps in preparation of QSPM:

List of the firm's key external opportunities/threats and internal strengths/weaknesses in
the left column of the QSPM.
Assign weights to each key external and internal factor
Examine the Stage 2 (matching) matrices and identify alternative strategies that the
organization should consider implementing
Determine the Attractiveness Scores (AS)
Compute the Total Attractiveness Scores
Compute the Sum Total Attractiveness Score

Limitations
Requires intuitive judgments and educated assumptions
Only as good as the prerequisite inputs
Only strategies within a given set are evaluated relative to each other

Advantages
Sets of strategies considered simultaneously or sequentially
Integration of pertinent external and internal factors in the decision making process
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 Conclusion:

From the above matrix it is concluded that PepsiCo. Should adopt the 2nd strategy that is
PepsiCo may tie up Or Liaison with major showrooms, & restaurant and different clubs and
PepsiCo. Should go for market penetration that is to increase its market share through tie up with
different restaurants & clubs as well as continue or go with its already adopted strategies such as
increase its share through huge advertisement and through sponsoring different events such as
PepsiCo. Continuously sponsoring cricket matches at national and international level. From
above the score of both strategies are very close to each other so PepsiCo. It May also take both
of the strategies as well.
We come to the conclusion that the marketing strategy of Pepsi Cola is working for them and the
product is gaining popularity among youth day by day.

Reference:

Online Data Collection

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