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NAME: JAGRUTI SHETE

171220

MMS-1

SPECIALIZATION: MARKETING

COMPANY: PEPSICO
TITLE

PESTLE ANALYSIS OF PEPSICO


INTRODUCTION

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.

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