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com/docs/76278792/pepsi-STRATEGICMANAGEMNT-REPORT#
http://www.marketwatch.com/story/pepsico-reports-fourth-quarter-and-full-year-2011-results-201202-09 http://www.slideshare.net/purishruti/pepsi-4 http://www.pepsico.com/PressRelease/PepsiCo-Announces-Strategic-Investments-to-DriveGrowth02092012.html http://www.bevnet.com/news/2012/pepsico-reports-q4-and-full-year-2011-results-announcesstrategic-initiatives-for-2012
About PepsiCo PepsiCo is a global food and beverage leader with net revenues of more than $65 billion and a product portfolio that includes 22 brands that generate more than $1 billion each in annual retail sales. Our main businesses Quaker, Tropicana, Gatorade, Frito-Lay and Pepsi-Cola make hundreds of enjoyable foods and beverages that are loved throughout the world. PepsiCo's people are united by our unique commitment to sustainable growth by investing in a healthier future for people and our planet, which we believe also means a more successful future for PepsiCo. We call this commitment Performance with Purpose: PepsiCo's promise to provide a wide range of foods and beverages for local tastes; to find innovative ways to minimize our impact on the environment by conserving energy and water and reducing packaging volume; to provide a great workplace for our associates; and to respect, support and invest in the local communities where we operate. For more information, please visit www.pepsico.com. PepsiCo Cautionary Statement Statements in this communication that are "forward-looking statements" are based on currently available information, operating plans and projections about future events and trends. Terminology such as "believe," "expect," "intend," "estimate," "project," "anticipate," "will" or similar statements or variations of such terms are intended to identify forward-looking statements, although not all forward-looking statements contain such terms. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in such forward-looking statements. Such risks and uncertainties include, but are not limited to: changes in demand for PepsiCo's products, as a result of changes in consumer preferences and tastes or otherwise; PepsiCo's ability to compete effectively; unfavorable economic conditions in the countries in which PepsiCo operates; damage to PepsiCo's reputation; PepsiCo's ability to grow its business in developing and emerging markets or unstable political conditions, civil unrest or other developments and risks in the countries where PepsiCo operates; trade consolidation or the loss of any key customer; changes in the legal and regulatory environment; PepsiCo's ability to

build and sustain proper information technology infrastructure, successfully implement its ongoing business transformation initiative or outsource certain functions effectively; fluctuations in foreign exchange rates; increased costs, disruption of supply or shortages of raw materials and other supplies; disruption of PepsiCo's supply chain; climate change, or legal, regulatory or market measures to address climate change; PepsiCo's ability to hire or retain key employees or a highly skilled and diverse workforce; PepsiCo's failure to successfully renew collective bargaining agreements or strikes or work stoppages; failure to successfully complete or integrate acquisitions and joint ventures into PepsiCo's existing operations; failure to successfully implement PepsiCo's global operating model; failure to realize anticipated benefits from PepsiCo's productivity plan; any downgrade of PepsiCo's credit ratings; and any infringement of or challenge to PepsiCo's intellectual property rights. For additional information on these and other factors that could cause PepsiCo's actual results to materially differ from those set forth herein, please see PepsiCo's filings with the SEC, including its most recent annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. PepsiCo undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

SWOT Analysis PepsiCo

Strengths
Branding - One of PepsiCos top brands is of course Pepsi, one of the most recognized brands of the world, ranked according to Interbrand. As of 2008 it ranked 26th amongst top 100 global brands. Pepsi generates more than $15,000 million of annual sales. Pepsi is joined in broad recognition by such PepsiCo brands as Diet Pepsi, Gatorade Mountain Dew, Thirst Quencher, Lays Potato Chips, Lipton Teas (PepsiCo/Unilever Partnership), Tropicana Beverages, Fritos Corn, Tostitos Tortilla Chips, Doritos Tortilla Chips, Aquafina Bottled Water, Cheetos Cheese Flavored Snacks, Quaker Foods and Snacks, Ruffles Potato Chips, Mirinda, Tostitos Tortilla Chips, and Sierra Mist.

The strength of these brands is evident in PepsiCos presence in over 200 countries. The company has the largest market share in the US beverage at 39%, and snack food market at 25%. Such brand dominance insures loyalty and repetitive sales which contributes to over $15 million in annual sales for the company Diversification - PepsiCos diversification is obvious in that the fact that each of its top 18 brands generates annual sales of over $1,000 million. PepsiCos arsenal 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. Distribution - 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.

Weaknesses

Overdependence on Wal-Mart - Sales to Wal-Mart represent approximately 12% of PepsiCos total net revenue. Wal-Mart is PepsiCos largest customer. As a result PepsiCos fortunes are influenced by the business strategy of Wal-Mart specifically its emphasis on private-label sales which produce a higher profit margin than national brands. Wal-Marts low price themes put pressure on PepsiCo to hold down prices. Overdependence on US Markets - Despite its international presence, 52% of its revenues originate in the US. This concentration does leave PepsiCo somewhat vulnerable to the impact of changing economic conditions, and labor strikes. Large US customers could exploit PepsiCos lack of bargaining power and negatively impact its revenues. Low Productivity - In 2008 PepsiCo had approximately 198,000 employees. Its revenue per employee was $219,439, which was lower that its competitors. This may indicate comparatively low productivity on the part of PepsiCo employees. Image Damage Due to Product Recall - Recently (2008) salmonella contamination forced PepsiCo to pull Aunt Jemima pancake and waffle mix from retail shelves. This followed incidents of exploding Diet Pepsi cans in 2007. Such occurrences damage company image and reduce consumer confidence in PepsiCo products.

Opportunities
Broadening of Product Base - PepsiCo is seeking to address one of its potential weaknesses; dependency on US markets by acquiring Russias leading Juice Company, Lebedyansky, and V Wwater in the United Kingdom. It continues to broaden its product base by introducing TrueNorth Nut Snacks and increasing its Lipton Tea venture with Unilever. These recent initiatives will enable PepsiCo to adjust to the changing lifestyles of its consumers. International Expansion - PepsiCo is in the midst of making a $1, 000 million investment 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. Growing Savory Snack and Bottled Water market in US - PepsiCo is positioned well to capitalize on the growing bottle water market which is projected to be worth over $24 million by 2012. Products such as Aquafina, and Propel are well established products and in a position to ride the upward crest.PepsiCo products such as, Doritos tortilla chips, Cheetos cheese flavored snacks, Tostitos tortilla chips, Fritos corn chips, Ruffles potato chips, Sun Chips multigrain snacks, Rold Gold pretzels, Santitas are also benefiting from a growing savory snack market which is projected to grow as much as 27% by 2013, representing an increase of $28 million.

Threats
Decline in Carbonated Drink Sales - Soft drink sales are projected to decline by as much as 2.7% by 2012, down $ 63,459 million in value. PepsiCo is in the process of diversification, but is likely to feel the impact of the projected decline. Potential Negative Impact of Government Regulations - It is anticipated that government initiatives related to environmental, health and safety may have the potential to negatively impact PepsiCo. For example, manufacturing, marketing, and distribution of food products may be altered as a result of state, federal or local dictates. Preliminary studies on acrylamide seem to suggest that it may cause cancer in laboratory animals when consumed in significant amounts. If the company has to comply with a related regulation and add warning labels or place warnings in certain locations where its products are sold, a negative impact may result for PepsiCo. Intense Competition - The Coca-Cola Company is PepsiCos primary competitors. But others include Nestl, Groupe Danone and Kraft Foods. Intense competition may influence pricing,

advertising, sales promotion initiatives undertaken by PepsiCo. Resently Coca-Cola passed PepsiCo in Juice sales. Potential Disruption Due to Labor Unrest - Based upon recent history, PepsiCo may be vulnerable to strikes and other labor disputes. In 2008 a strike in India shut down production for nearly an entire month. This disrupted both manufacturing and distribution.

PepsiCo is a world leader in convenient snacks, foods and beverages with revenues of more than $43 billion and over 198,000 employees. Take a journey through our past and see the key milestones that define PepsiCo.

Chief Executive Indra Nooyi has pushed PepsiCo Inc. PEP +0.50% to expand its portfolio beyond soda and potato chips ever since arriving at the company as a corporate strategist in 1994. But that doesn't mean she doesn't love Pepsi-Cola, Mrs. Nooyi said in an interview. "I'm the only person who drinks blue-can Pepsi on this floor," she said of regular Pepsi-Cola, gesturing to the company's executive offices. "I drink bluecan Pepsi exclusively." She dismissed suggestions she has played down the name on the door. "It's rubbish," she said. Born in India, Mrs. Nooyi, 55 years old, is one of the highestprofile chief executives in the U.S. and praised as a visionary. After helping lead PepsiCo's acquisition of Tropicana Products Inc. in 1998 and Quaker Oats Co., maker of Gatorade products, in 2001, she moved on to buy several more juice and other beverage companies since becoming CEO in late 2006. PepsiCo has been diversifying its portfolio for almost 20 years, she said, adding healthier brands and products that can be consumed morning, noon and night. "People questioned this strategy, but over the years, the strategy was proved right," she said.

She said last year's move to acquire Russian dairy WimmBill-Dann helps PepsiCo delve into yogurts and grainenriched dairy products that many people are consuming as meals. "I will make a prediction, that anybody who's in the [beverage business] today will get into dairy, without a doubt," she said. Mrs. Nooyi said she decided several years ago to stop what she calls the "scorched earth policy" of scrapping for a point or two of market share in the shrinking cola market. "What's been happening in this category forever: we, Pepsi, would push like hell to get a program with the [retailer], we'd spend everything, and get a tenth of a point of market share," she said. "The next period, Coke would come along, push like hell, and gain a tenth. This was a zero-sum game. The cola category was profitable, but didn't grow profits." PepsiCo is pursuing a dual strategy for cola, Ms. Nooyi said. The company is spending money to maintain its base business but also is searching for a breakthrough in sweeteners that will yield a naturally sweetened, zerocalorie cola, what Mrs. Nooyi calls "the ultimate nirvana." The company raised its research and development budget to $488 million last year from $388 million in 2008. "We are confident that we will reinvent the cola business the right way," she said. Mrs. Nooyi said her company has performed well compared with Coca-Cola Co., KO +0.27% which unlike PepsiCo sells only beverages. She is proud, she said, that PepsiCo didn't deliver "boom-splat" results like its rival, which took several write-downs during strategy changes in the early 2000s. A Coke spokesman declined to comment.

Mrs. Nooyi has been trying to reassure Wall Street that soda and potato chips aren't taking a backseat to nutrition. She says the company's nutrition-related business would receive only $50 million in direct corporate funding this year. Most of the 9% annual growth needed to reach the company's target of $30 billion in sales would come organically, she says, not through major acquisitions.