The company I worked for is Pepsi Beverages Company. PepsiCo is a world leader in convenient snacks, foods and beverages.

The company I worked for is Pepsi Beverages Company. PepsiCo is a world leader in convenient snacks, foods and beverages. Total Returns Industry/Company PepsiCo Coca cola 1 year -0.95% 23.23% 3 year -7.38% 10.38%

The table above depicts that Coca Cola is doing better than PepsiCo even though on the Morningstar website PepsiCo has 4stars and coca cola has 3stars. The Morningstar analysts assigned a wide economic moat to PepsiCo because of its economies of scale, dominance in the snack category, and effective distribution network. The direct store delivery system allows the firm to leverage its impressive portfolio of brands and should ensure that PepsiCo maintains its strong returns on invested capital over the long run. PepsiCo believe that by taking competitive strengths, and investing in them creates longer-term value. The company has three competitive advantage strategies that they use within the competitive environment.

PepsiCo has three key advantages:

1. Big, muscular brands- PepsiCo constantly differentiate its brands in the marketplace with unique ingredients and nutrition science, product packaging and processing. The company creates points of difference with marketplace solutions in their retail environment, exciting the consumers who ultimately purchase our products. PepsiCo has icon brands than any other food and beverage company in the world, and continue to add new products to the portfolio through

internal innovations combined with smaller, tuck-in acquisitions in our international businesses. The strong brand backbone gives the company a competitive advantage over its competitors.

2. Innovation and create differentiated products- Innovation has been one of the key successful tools that the company uses to sustain growth and to maintain and capture market share. PepsiCos innovations goes beyond traditional brand ideas and has a strong patent right over its products. For example, PepsiCo looks at health and wellness as an opportunity to be an active part of the solution. The company is constantly improving the healthfulness of their existing products by taking new consumer-friendly packaging, and enjoyed great success with highimpact advertising and music and sports marketing.

3. Powerful go-to-market systems- PepsiCo debatably has the most varied set of distribution systems of any consumer product company, including direct store delivery (DSD) at Frito-Lay and our bottling partners, warehouse delivery for Quaker products, and warehouse delivery and chilled DSD at Tropicana. The DSD systems provide considerable cost efficiency and system effectiveness in driving value. Our systems deliver product freshness and quality for the consumer, generate cash flow for our retail customers, and provide economic value for PepsiCo.

PepsiCo takes theses competitive advantages, and invest in them with funds generated from topline growth and cost initiatives, and sustain a value cycle for its shareholders. In a nutshell, investing in innovation increases the building of our brands; this in turn drives top-line growth. Funds from the top-line growth are strategically reinvested back into new products and other innovation, along with cost savings projects, and thus the cycle continues. One of PepsiCos top brands is of course Pepsi, one of the most recognized brands of the world, ranked 23th in 2010 according to Inter brand. PepsiCo has presence in over 200 countries and the

largest market share in the US beverage at 39%. Such brand supremacy assures loyalty and repetitive sales which contributes to a brand value of $14,061million

PepsiCos diversification is obvious in that the fact that each of its top 18 brands generates annual sales of over $1,000 million. PepsiCos collection also includes ready-to-drink teas, juice drinks, bottled water, as well as breakfast cereals, cakes and cake mixes. This broad product base plus a multi-channel distribution system serve to help insulate PepsiCo from shifting business climates. Example in 2009 PepsiCo introduces the Throw Back Pepsi and mountain dew to generate market for old folks who used to consume such product. This innovation generated funds for the company to cater for the decline in sales of soft drinks.

The Company delivers its products directly from manufacturing plants and warehouses to customer warehouses and retail stores. This is part of a three pronged approach which also includes employees making direct store deliveries of snacks and beverages and the use of third party distribution services.

Sales of Carbonated Drink are projected to decline by 2.7% by 2012, down $ 63,459 million in value. PepsiCo is in the process of diversification and expanding their brand by introducing new mountain dew drinks. The company later organizes a contest for consumer to choose their favorite drink. In addition to this, intense competition may influence pricing, advertising, sales promotion initiatives undertaken by PepsiCo. This keen competition has influence PepsiCo to intensify its international project by investing about $1, 000 million in China, and a $500 million investment in India. Both initiatives are part of its expansion into international markets and a lessening of its dependence on US sales. In addition the company plans on major capital initiatives in Brazil and Mexico.

Like many other big companies, Pepsi-Cola faces an interesting puzzle: How can it take a physical product and translate that brand to the virtual world? But PepsiCo believe that by combining online and off-line marketing program with search engine will solve the puzzle. The Pepsi Stuff.com program will let consumers earn digital awards and discounts online from promotional partners through an under-the-cap promotion scheduled to appear on over 1.5 billion bottles of Pepsi-owned colas.

Through Yahoo, the Pepsi Stuff promotion will become interactive by letting consumers collect points under the caps of Pepsi products and then redeem their points online for prizes and discounts. Pepsi Stuff.com also will feature auctions of rare items from Pepsi and the program's promotional partners. Pepsi and Mountain Dew product bottles will have a "Pepsi Stuff.com, Powered by Yahoo" logo on the front of the label.

The website also allows consumers to go and vote for their favorite products. Example Mountain Dew Democracy flavors that has been released every year for consumers to vote and redeem prizes. PepsiCo has presence in over 200 countries including the BRIC countries . PepsiCo is aiming to become the largest beverage company in Russia and its recent acquisition of a majority stake in Lebedyansky represents a major statement of intent in achieving this aim.

In Brazil, PepsiCo announced it has agreed to acquire AmacocoNordeste Ltda. and AmacocoSudeste Ltda. (Amacoco), Brazil's largest coconut water company. The agreement is the most recent step in PepsiCo's strategic transformation of its beverage portfolio and marks the company's entry into the fast-growing market for coconut water, a source of natural hydration popular in Brazil and dozens of other countries. Amacoco makes and sells Brazil's top-selling coconut water brands, Kero Coco and Trop Coco, which are highly regarded by consumers as

healthy, refreshing hydration drinks. Together they account for the bulk of packaged coconut water sales in the country, making PepsiCo the category leader.

In India, PepsiCo had to struggle hard to enter the highly regulated Indian economy. The company had to go through serious negotiations to sell itself to the Indian government. PepsiCo promised to work towards elevating the rural economy of the terrorism affected north Indian state of Punjab by getting involved in agricultural activities. In addition, it made a host of other promises that made its proposal very attractive to the regulatory authorities. This strategy gave PepsiCo a strong ground to invest and expand their market base in India.

PepsiCo plans to invest $2.5 billion in China over the next three years, on top of $1 billion invested since 2008, highlighting growing competition with Coca Cola Co. and local snack makers for the Chinese consumer. Pepsi-Cola, Lay's potato chips and other snacks and drinks said it will use the money to build about a dozen new food and beverage plants, focusing on the interior of China. PepsiCo also propose to continue developing products tailored for the Chinese market, like its Lay's line of cool-cucumber-flavored potato chips and the Cao Ben Le line of drinks based on traditional medicine, such as Yin and Yang, or cooling and warming.

PepsiCo's continued success depends on its ability to broaden and strengthen its presence in emerging markets namely Brazil, Russia, India and China. On February 3rd, 2011, PepsiCo Inc, one of the world's largest food-and- beverage companies, and Wimm-Bill-Dann Foods OJSC, Russia's leading branded food-and-beverage company, announced that PepsiCo has agreed to acquire 66% of Wimm-Bill-Dann for $3.8 billion. In correlation with this acquisition, PepsiCo will offer to acquire the remaining shares of WimmBill-Dann through an offer following completion of that acquisition at such time and on terms as are mandated by Russian law and PepsiCo may acquire additional shares in other transactions in

the near future. The acquisition increased PepsiCos total ownership of Wimm-Bill-Danns ordinary shares to approximately 77%. This acquisition is horizontal since the acquired is in the same food and beverage industry as PepsiCo.

Wimm-Bill-Dann is a leader in both traditional and value-added dairy products, with a solid position in juice. The transaction will ascertain PepsiCo as the largest food-and-beverage business in Russia, make it a leader in the country's fast-growing dairy category and build its presence in key markets in Eastern Europe and Central Asia. It also will raise PepsiCo's annual global revenues from nutritious and functional foods from approximately $10 billion today to nearly $13 billion. This moves PepsiCo closer to its strategic goal of building a $30 billion nutrition business by 2020.

Adding Wimm-Bill-Dann to PepsiCo's portfolio is financially attractive and gives PepsiCo a strong, high-growth platform in the dairy category. The acquisition gives PepsiCo a clear leadership in the food-and-beverage industry in Russia, a fast-growing, strategically important market offering abundant opportunity. At the same time, Wimm-Bill-Dann's strong, value-added dairy business immediately advances PepsiCos global nutrition strategy to provide consumers around the world nutritious foods and beverages that are accessible, affordable and advantaged by science. Dairy has a huge, untapped potential to bridge snacks and beverages. PepsiCo sees the emerging opportunity as the next frontier in food and beverage convenience. Innovation is one of the key management strategies that PepsiCo uses in their business establishment. One potential bright spot for the company is its Pepsi Refresh project, a social responsibility campaign intended to foster good relationships between bottlers and their local communities.

PepsiCo, Purchase, N.Y., announced plans to overhaul its Gatorade line and increase innovation of natural zero-calorie sweeteners and their use across its beverage portfolio. The company also outlined its Power of One strategy following completion of the merger with its two largest bottlers.

Pepsis innovation strategy going forward is grounded to capitalize on consumer research, and the impending Gatorade re-launch aims to attract all types of athletes from pro athletes to the casual gym visitors through a new approach covering pre-workout, during workout and post-workout formulas. The brand also plans to re-engage serious athletes with the introduction of G Series Pro, which will be available exclusively at GNC stores nationwide

Pepsi also outlined its innovation strategies across its entire beverage portfolio. In its core carbonated soft drink market, the company outlined the success of its non-traditional marketing campaigns for the Pepsi Refresh Project and Mountain Dew Dewmocracy promotion. Following the success of its Throwback options sweetened with real sugar instead of high fructose corn syrup, Pepsi is working on creating a zero-calorie natural sweetener for CSD applications.

Another major innovation growth strategy is in the tea category. A new1liter brisk lineup prepriced at $0.99 has increased business in convenience and gas outlets since it was introduced. In addition, the companys partnerships with Unilevers Lipton brand and Starbucks Tazo portfolio have performed well. The company also has innovation in the pipeline with Unilever to be able to harness health benefits specific to tea.

The Pepsi-Cola company is strongly committed to delivering sustained growth through empowered people acting responsibly and building trust. PepsiCo aims to be an environmentally and socially liable company and advocates their commitment with six guiding principles: Taking care of the customers and consumers; sell high quality products; always speak the truth; equally balance both short-term and long-term goals; win with both inclusion and diversity, and always respect others and succeed as a team.

PepsiCos compliance committee is responsible for managing compliance program, using issue resolution strategies and making recommendations to support them. W. Scott Nehs, who is the Chief Compliance Official and Vice President, lead the companys compliance program, and chairs the compliance committee. The compliance is broken down into four sub-committees.

Firstly, the Anti- trust focuses on the entire sales of the company.

Secondly, the safety and environment focuses on operations, fleet, plants, and the personnel that staff them.

Thirdly, human resources focus on employment, labour issues and employee welfare.

Finally, finance committee covers all financial integrity, recent overlay of Sarbanes-Oxley, and the requirements that have been placed on the company.

PepsiCo is committed to strict corporate standards to ensure accountability for the company actions. This is manifest by the many corporate governance standards in place. The processes and

policies that are in place include the Amended and Restated Articles of Incorporation, Audit Committee Charter, By-Laws, Compensation Committee Charter, Corporate Governance Guidelines, Disclosure Committee Charter, Nominating and Corporate Governance Committee Charter, and the Policy for Audit, Audit-Related and Non-Audit Services. PepsiCo employs compliance committees and guidelines to help them establish the highest ethical standards to ensure that the company is being run effectively.

References:

Inter brand home page, Retrieved April 24, 2011 at www.interbrand.com PepsiCo Home Page, retrieved on April 18, 2011 from www.pepsico.com Morningstar (2011) Industrial Returns. Retrieved April 11, 2011, from http://quote.morningstar.com/stock/s.aspx?t=PEP