This document analyzes PepsiCo using a PESTLE framework. It identifies several political, economic, social, technological, legal, and environmental factors that present both opportunities and threats to PepsiCo's business. These include government initiatives against sugary drinks, the growth of developing economies, changing consumer health preferences, increasing automation, sustainability concerns, and regulations around GMOs and product safety. The conclusion states that PepsiCo should focus on innovation, reformulating products, expanding in high-growth markets, and developing strong dealer relationships to navigate these external factors.
This document analyzes PepsiCo using a PESTLE framework. It identifies several political, economic, social, technological, legal, and environmental factors that present both opportunities and threats to PepsiCo's business. These include government initiatives against sugary drinks, the growth of developing economies, changing consumer health preferences, increasing automation, sustainability concerns, and regulations around GMOs and product safety. The conclusion states that PepsiCo should focus on innovation, reformulating products, expanding in high-growth markets, and developing strong dealer relationships to navigate these external factors.
This document analyzes PepsiCo using a PESTLE framework. It identifies several political, economic, social, technological, legal, and environmental factors that present both opportunities and threats to PepsiCo's business. These include government initiatives against sugary drinks, the growth of developing economies, changing consumer health preferences, increasing automation, sustainability concerns, and regulations around GMOs and product safety. The conclusion states that PepsiCo should focus on innovation, reformulating products, expanding in high-growth markets, and developing strong dealer relationships to navigate these external factors.
PepsiCo, Inc. is an American multinational food, snack,
and beverage corporation headquartered in Purchase, New York. PepsiCo has interests in the manufacturing, marketing, and distribution of grain-based snack foods, beverages, and other products. PepsiCo was formed in 1965 with the merger of the Pepsi-Cola Company and Frito-Lay, Inc. PepsiCo has since expanded from its namesake product Pepsi to a broader range of food and beverage brands, the largest of which included an acquisition of Tropicana Products in 1998 and the Quaker Oats Company in 2001, which added the Gatorade brand to its portfolio. As of January 26, 2012, 22 of PepsiCo's brands generated retail sales of more than $1 billion apiece, and the company's products were distributed across more than 200 countries, resulting in annual net revenues of $43.3 billion. Based on net revenue, PepsiCo is the second largest food and beverage business in the world. Within North America, PepsiCo is the largest food and beverage business by net revenue. Indra Nooyi has been the chief executive of PepsiCo since 2006. The company's beverage distribution and bottling is conducted by PepsiCo as well as by licensed bottlers in certain regions. Approximately 274,000 employees generated $66.415 billion in revenue as of 2013. PESTLE ANALYSIS
Political Factors Affecting PepsiCo’s Business
Governments are external factors that impose requirements on
PepsiCo. This element of the PESTEL/PESTLE analysis considers the effects of governmental action on companies’ remote or macro-environment. PepsiCo must address the following political factors:
1. Political stability in major economies (opportunity)
2. Improved intergovernmental cooperation (opportunity) 3. Government initiatives against carbonated drinks (threat)
Major economies like the United States and Canada are
politically stable, thereby presenting growth opportunities for PepsiCo. In addition, the trend of intergovernmental cooperation improves opportunities for global expansion. However, government initiatives against sweetened carbonated drinks are a threat that could reduce PepsiCo’s revenues from affected segments. In this element of the PESTEL/PESTLE analysis, PepsiCo must consider changing its products to overcome the identified threat about carbonated drinks. Economic Factors Important to PepsiCo
PepsiCo’s performance is directly linked to the economy. The
influence of economic conditions on the remote or macro- environment of businesses is covered in this element of the PESTEL/PESTLE analysis. The political external factors that relate to PepsiCo are as follows:
1. Economic stability of most major markets (opportunity)
2. Rapid growth of developing economies (opportunity) 3. Slowdown of the Chinese economy (threat)
PepsiCo has opportunities for growth and expansion based on
the economic stability of developed countries like the United States, as well as the high growth rates of developing economies, such as those in Asia. However, the current slowdown of the Chinese economy threatens PepsiCo’s potential international growth, considering that China is among the biggest economies in the world. This element of the PESTEL/PESTLE analysis shows that PepsiCo must ensure market diversification to achieve stable international growth. Social Factors Influencing PepsiCo’s Business Environment
Many of PepsiCo’s consumers follow sociocultural trends. This
element of the PESTEL/PESTLE analysis identifies the impact of social conditions and changes on companies’ remote or macro-environment. The following are notable sociocultural external factors relevant to PepsiCo’s business:
1. Higher health consciousness (threat & opportunity)
2. Increasing busy lifestyles (opportunity) 3. More discriminating attitudes about product quality (opportunity) Higher health consciousness is a threat to PepsiCo because of concerns about the sugar, salt, and fat content of its products. However, this external factor also presents the opportunity for the company to improve its products to address such concerns. PepsiCo can also take advantage of the busy lifestyles of consumers, especially in urbanized and industrializing markets around the world. People with these lifestyles are more likely to purchase ready-to-eat food products like those of PepsiCo. The company has the opportunity to continue enhancing product quality to maximize revenues, with regard to consumers’ increasingly discriminating attitudes about product quality. Based on this element of the PESTEL/PESTLE analysis, PepsiCo must align its products and marketing strategies to changes in consumer behaviors. Technological Factors in PepsiCo’s Business
PepsiCo’s business is partly dependent on technologies. The link
between technological change and companies’ remote/macro- environment is examined in this element of the PESTEL/PESTLE analysis. The technological external factors significant to PepsiCo are as follows:
1. Moderate R&D investments in the food and beverage industry
(opportunity) 2. Improving knowledge management systems (opportunity) 3. Increasing automation in business (opportunity) Based on moderate research and development (R&D) investments in the industry, PepsiCo can boost its own R&D investments to improve its competency in this business aspect. Also, PepsiCo can exploit the benefits of knowledge management systems to support its various business processes, such as product innovation and strategic decision-making. In addition, an increase in the number of automated processes in the company can enhance business performance. This element of the PESTEL/PESTLE analysis indicates that PepsiCo must include new technologies as tools to improve business competitiveness. Ecological/Environmental Factors
PepsiCo’s supply chain and brand image are linked to
environmental concerns. This element of the PESTEL/PESTLE analysis considers the ecological trends and issues that affect consumers, employees, and companies’ remote or macro- environment. The following ecological external factors are significant to PepsiCo:
1. High focus on business sustainability (opportunity)
2. More complex expectations and standards on waste disposal (opportunity) 3. Climate change (threat & opportunity) Consumers are now pushing companies like PepsiCo to improve their sustainability standing. In relation, PepsiCo can improve its waste disposal strategies, such as recycling, to gain more support from customers. On the other hand, climate change poses a threat to PepsiCo’s supply chain. However, the company can further diversify its global supply chain to minimize risk exposure to climate change. Based on this element of the PESTEL/PESTLE analysis, PepsiCo must improve its environmental impact to attract and retain customers, and to stabilize its supply chain. Legal Factors in PepsiCo’s Industry
PepsiCo and its competitors are subject to legal requirements.
Such requirements and regulations are evaluated in this element of the PESTEL/PESTLE analysis in terms of their effect on the industry’s remote or macro-environment. The legal external factors relevant to PepsiCo’s business are as follows:
1. Regulation on GMO ingredients (opportunity)
2. Health and product safety regulations (opportunity) 3. Moderate rate of regulatory change (opportunity) Genetically modified organisms (GMOs) are now increasingly regulated worldwide, particularly in Europe. PepsiCo has the opportunity to reduce its use of GMO ingredients to satisfy these regulations. Similarly, the company can improve products to address regulations about product safety and health effects. The moderate rate of regulatory change gives opportunity for PepsiCo to grow with the expectation that its current strategic decisions will satisfy regulatory requirements in the long term. In this element of the PESTEL/PESTLE analysis, it is shown that PepsiCo can focus on product innovation to comply with regulations. CONCLUSION
PEPSICO is always looking into the future, trying to make
the company most profitable and suiting to its share holders. PEPSICO is also reformulating its AQUAFINA ALIVE water with a new sweetener blend that has a fewer calories. PEPSICO focus more on GATORADE. New policy of the company should be introduced before the competitors launch those policies. A healthy relationship should be developed by the company’s executives with the dealers. All the factors involved in PESTLE analysis have a great impact on each and every company they all are interconnected with each other and also leads to a profitable business.