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A Study of Business Process: Case Study Approach to PepsiCo

Article  in  SSRN Electronic Journal · January 2014

DOI: 10.2139/ssrn.2392611

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 A Study of Business Process: Case Study Approach to PepsiCo
Prathamesh Muzumdar, The University of Texas at Arlington

Abstract

The case study narrates different phases of the business that occur in a diverse product
portfolio. PepsiCo being a conglomerate tries to balance its business and channelize different
routes to balance the effectiveness and efficiency in their operations. This case study uses multiple
methodologies like SWOT analysis and Balance scorecard approach to analyze PepsiCo’s business
approach.

Executive Summary

PepsiCo Inc. is an American multinational food, snack, and beverage corporation that
divided its products into five categories: Pepsi-Cola, Frito-Lay, Tropicana, Quaker, and Gatorade,
and each category have plenty of brands. In fact, according to PepsiCo’s official website, PepsiCo
leads food and beverage leader portfolio that includes 22 brands.
The company employed approximately 297,000 people worldwide as of 2011.
(Wiki/PepsiCo) In fact, PepsiCo is now the second largest food & beverage business in the world.
(Wiki/PepsiCo) Furthermore, Within North America, PepsiCo is ranked as number 1 for food,
snack, and beverage business. (Wiki/PepsiCo)

Analysis of target Market

The most famous slogan of Pepsi is “The choice of a new generation”. Because of this
slogan, people can easily find out that PepsiCo definitely pay attention to young generation. In
fact, since 1960s, PepsiCo has been eagerly attracting young customers. Pepsi’s American slogan
from 1961-1964:”Now it's Pepsi for those who think young”. Also in 2006 – 2007, the slogan of
Pepsi was “Taste the one that's forever young”. This slogan focuses on word “young” and “new
generation” points out that teenagers and young adults are PepsiCo’s target consumers.
How does PepsiCo attract young consumers? First, every year the company invites
numerous celebrity endorsers who are really famous and popular in young generation. For
example, Michael Jackson was one of the most popular star and young people were really crazy
about him. Moreover, in recent years, many popular stars such as Britney Spears, Shaquille O'Neal,
and Mariah Carey also play roles as celebrity endorsers of PepsiCo to promote PepsiCo’s products.
(Wiki/Pepsi/Sponsors)
Second, PepsiCo connects its brand with music to attract young customers. On the website
of Pepsi, there is a slogan” Where there’s Pepsi, there’s music! ”. In fact, every year PepsiCo holds
some popular pop music concerts in the United States and other countries to attract young people.
How does this strategy work? Because nowadays young people love music very much, if PepsiCo
successfully building the connections between PepsiCo and music, young people will desire to buy
products of PepsiCo because young people may think having food and drinks of PepsiCo is fashion
and cool.
Third, although PepsiCo is mainly sell food, snacks, and beverages to consumers to gain
revenue, it also offer a Pepsi shop that sells some fashion and young products such as apparel,
accessories, collectibles, cool stuff, and throwback to attract young consumers. That is, PepsiCo

Electronic copy available at: http://ssrn.com/abstract=2392611

want to make people think that the brand “Pepsi” is fashion so that young consumers are willing
to buy products of PepsiCo.
In conclusion, people can easily find out that PepsiCo’s target market is young generation
for three reasons, among them inviting popular stars as its celebrity endorsers, connecting its brand
with music, and selling some fashion and young products other than food and beverages.

Who are the competitors?

PepsiCo sells many kinds of food, snacks, and beverages, and Pepsi is the most popular
beverage of PepsiCo. Besides, PepsiCo also sell many famous beverages such as Mug Root Beer,
Mountain Dew, and G2. From Yahoo! Finance(2012), We can find out that the main competitors
of PepsiCo are The Coca-Cola Company (KO), Dr Pepper Snapple Group, Inc. (DPS), and
Mondelez International, Inc.

Direct Competitor Comparison

PEP KO DPS MDLZ Industry

Market Cap: 108.57B 170.12B 9.33B 45.53B 3.20B

Employees: 297,000 146,200 19,000 126,000 3.94K

Qtrly Rev Growth (yoy): -0.05 0.01 -0.00 -0.02 0.14

Revenue (ttm): 65.70B 47.60B 5.97B 53.98B 2.00B

Gross Margin (ttm): 0.52 0.60 0.58 0.35 0.41

EBITDA (ttm): 12.59B 13.01B 1.31B 9.00B 201.40M

Operating Margin (ttm): 0.15 0.23 0.18 0.14 0.11

Net Income (ttm): 5.92B 8.80B 625.00M 3.32B N/A

EPS (ttm): 3.76 1.91 2.92 1.87 0.52

P/E (ttm): 18.69 19.83 15.33 13.70 21.65

PEG (5 yr expected): 4.02 2.28 2.04 1.48 2.01

P/S (ttm): 1.63 3.52 1.53 0.84 1.46

(Yahoo! Finance)

Electronic copy available at: http://ssrn.com/abstract=2392611

 In fact, PepsiCo’s most famous competitor is Coca-Cola. That is, Pepsi (the most popular
and famous product of PepsiCo) and Coke (The main product of Coca-Cola) are really similar
drinks. In addition, both PepsiCo’s and Coca-Cola’s target market is young generation.
Consequently, Pepsi and Coke have been competed for decades. People call this competition
“Cola-wars”. PepsiCo and Coca-Cola use several strategies to attract target consumers and want
to beat each other.
Besides, companies such as Nestlé, Red Bull GmbH, and Groupe Danone Water Division
are also big competitors with PepsiCo because these companies sell products that are similar with
products of PepsiCo.

What benefits are delivered by the products?

PepsiCo offers numerous kinds of food and drinks such as carbonated soft drinks, energy
drinks, sports drinks, water, and coffees. That is, all kinds of target consumers are served and feel
convenient because there are several kinds of drinks can choose and the consumers can choose
products that they really desire. For example, a family can buy many kinds of products from
PepsiCo and every family member can choose their favorite beverages and feel happy. Moreover,
each kind of drinks also has many different choices. For example, Pepsi has many different flavors
such as original, vanilla, lime, cherry, or mango. Hence, consumers can enjoy Pepsi with different
flavor. What is more, PepsiCo also offers caffeine free Pepsi and diet Pepsi so that people who
cannot have caffeine and who want to lose weight also can enjoy Pepsi. That is, PepsiCo bring
consumers benefits as letting consumers feel convenient and served well.

Types of products

PepsiCo is a company that sells food, snack, and beverage. The products of PepsiCo are
categorized into five main brands, and each brand has several products. Furthermore, Pepsi is the
most famous product of PepsiCo. According to PepsiCo official website, popular and famous
products of PepsiCo are presented as followed.

Pepsi-Cola Brands
Product: Pepsi, Sierra Mist, Citrus Blast, Tropicana Twister Soda, IZZE Soda, Ocean Spray Juice,
Mountain Dew, AMP Energy, Mug Root Beer, Mug Cream Soda, No Fear, Tazo, SoBe, Aquafina
Flavor Splash, Frappuccino, Double Shot Energy, Brisk, Lipton Iced Tea, Lipton Pure Leaf ,
Propel Zero

Frito-Lay Brands
Product: Lay's potato chips, Ruffles potato chips, Baked Tostitos tortilla chips, Cracker Jack
candy coated popcorn, Chester's popcorn, Grandma's cookies

Tropicana Brands
Product: Tropicana Pure Premium juices, Trop50, Dole juices

Quaker Brands
Product Quaker Oats, Quaker Whole Hearts cereal, Quaker Chewy bars

3
Gatorade Brands
Product: G Series, G Series Fit, G Series Pro, Gatorade G, G2

Some information on pricing

Because transportation, ingredients and labor cost more than before, and Shannon (2011)
stated that as PepsiCo Chairman and CEO, Indra Nooyi(2011) said, ” The economy has improved
this year than it was last year. In PepsiCo official website, we can find that PepsiCo continued
increasing its product’s price in recent years. PepsiCo using the pricing strategy to offset its
commodity cost. According to IndraNooyi (2012), “Effective pricing and packaging initiatives
drove 5 percent constant currency net revenue growth, allowing us to substantially offset
approximately $300 million in commodity cost inflation.”
PepsiCo’s pricing strategy may be influenced by Coca-Cola, PepsiCo’s largest competitor.
In fact, Coca-Cola also increased price of coke in recent years. Because the price of Pepsi and the
price of coke are usually similar in stores, people can find out that Pepsi and Coca-Cola usually
use the same pricing strategy. Furthermore, each company sometimes tried using different pricing
strategy to compete with one another. For example, in 2003, Coca-Cola decreased its products’
price and wanted to beat PepsiCo. However, PepsiCo also decreased its products’price soon so
that Coca-Cola did not get a lot of benefits from this price war. Finally, both companies stopped
competing with one another because both of them cannot earn money. (Sharma 2012).
PepsiCo’s pricing strategy also influenced by some wholesalers such as Wal-Mart. Wal-
Mart is definitely a large consumer of PepsiCo. Marketingteacher.com indicated that because Wal-
Mart’s pricing strategy is offering products with low prices to customers, PepsiCo should not sell
their products to Wal-Mart in high price.
Another important pricing strategy of PepsiCo is segment pricing. That is, PepsiCo sets
different prices for different customers. To be more specific, Pepsi sells its products to luxury
hotels at higher prices than prices of other stores. (“Pricing Strategy of Pepsi”). In other words,
this is the reason why people have to pay more to buy a bottle of Pepsi in luxury stores than in
pharmacy stores.
In addition, because PepsiCo spent a lot of money on promotions and advertisements, it
cannot set the price of products at really low prices. Some cola producers such as Sam's Choice
Cola and Big K Cola sell products that are much cheaper than Pepsi. However, a lot of consumers
also prefer Pepsi more because Pepsi is much more famous than Sam's Choice Cola and Big K
Cola.

Porter’s Five Force Analysis

Porter’s five force analysis evaluates weaknesses and strengths of PepsiCo in the
competitive beverage industry. Strong and weak positions of PepsiCo in the industry are assessed
with a detailed analysis of customers and suppliers bargaining power, a possible threat of new
entrants and substitutes, as well as an analysis of a competitive rivalry within the industry. After a
thorough analysis, the necessary steps are usually taken to improve a weak position of the
company, when identified, or to benefit from a strong position in the industry.

Bargaining power of suppliers

In order to comply with customer’s needs and wants, PepsiCo works with a diversified
base of suppliers from different places around the world. The company imposes quality
4
requirements for all its suppliers and builds strong relationships with many of them through a
variety of training programs. For example, a huge emphasis is placed on the agriculture supply
chain. Many farmers undergo a special training, aimed to enhance efficiency in operations and to
reduce the number of resources used. (PepsiCo.com. AnnualReport, 2011). Through
diversification of the supply chain and establishing strong ties with many suppliers, PepsiCo
undermines the likelihood of high bargaining power from suppliers. There are numerous suppliers
for the beverage industry and this competition also undermines the suppliers’ bargaining power.
For example, the major inputs for producing a carbonated soft drink are sugar and water which are
easily obtained from many sources. Also, artificial sweeteners can substitute for sugar, which is
another way PepsiCo enhances the high competition amongst its suppliers. In summation, the
bargaining power of PepsiCo's suppliers is weak.

Bargaining power of buyers

PepsiCo distributes its final products to different retail stores, such as Wal-Mart and Target,
and convenience stores and gas stations. Also, PepsiCo generates a profit through fountain sales
and vending machine sales. (PepsiCo.com. Annual Report, 2011). Bigger retail stores have a
higher bargaining power with PepsiCo by acquiring beverages and snacks in bulk, and by offering
PepsiCo better display shelves in their stores, and by advertising for them. Although, these retail
stores have leverage to influence the sales of PepsiCo products by providing favorable or
unfavorable display positions, no retail store can affect preferences of the brand from loyal
customers. Moreover, through the high popularity of Pepsi Co products, many of the retail stores
can attract additional customers to their stores and thus, enjoy their own higher profits. The
presence of brand loyal customers actually helps PepsiCo to reduce the bargaining power of big
retail stores. Thus, the bargaining power of buyers is only medium.

Substitutes

In recent years, the focus is increasingly on a healthy lifestyle. More people are showing
concern toward consumption of carbonated soft drinks and the possibility of a negative impact of
these drinks on health. Therefore, many people prefer to drink water and juices, or coffee and tea,
which are all substitutes for carbonated soft drinks. As a consequence of these changes in
consumers’ tastes and preferences, PepsiCo spends a substantial amount of money for constant
improvements of its products by investing in R&D. Anticipating the threat from substitute
beverages, such a s tea, coffee, and juices, PepsiCo makes an effort to diversify its portfolio by
producing not only carbonated soft drinks but also high quality nutrition brands like Tropicana,
Gatorade and many more. (PepsiCo.com. Annual Report, 2011). In addition to that, PepsiCo does
its best to adhere to local tastes in foreign markets and adjust its existing products in accordance
with local demand. (PepsiCo.com. Annual Report, 2011). That being said, different substitutes in
beverage industries do not expose much of a threat to PepsiCo’s sustainability in the beverage
industry.

Competitive rivalry within the beverage industry

PepsiCo faces a strong competitive rivalry from Dr. Pepper Snapple Group and Coca Cola
Company. The Coca Cola Company enjoys the highest market share from selling carbonated soft
drinks to customers in American and global markets. Compared to Coca Cola Company, PepsiCo
obtains the highest market share from sales of liquid refreshment beverages and snacks. In order
5
to compete in the beverage and snack industry, PepsiCo emphasizes efficiency in operations,
invests in research and development projects and in marketing campaigns. PepsiCo persistently
works on improvements in existing products and creation of the new products. (PepsiCo.com.
Annual Report, 2011). With the help of innovation and strong marketing campaigns, PepsiCo is
ready to hold its own in the competition from Coca-Cola and Dr. Pepper Snapple, but price
competition between these giants’ benefits consumers.

Threat of new entrants

The major market for soft drinks is overpowered by PepsiCo and Coca-Cola Company.
The small number of other private labels is insignificant for PepsiCo’s successful operation in the
industry. To compete with PepsiCo and Coca Cola is not easy. Both companies have established
a strong presence in the soft beverage market; they have built their brand loyal customer base, and
they advertise aggressively. PepsiCo has invested in marketing campaigns to increase its market
share and to keep their loyal customers happy. It has also strengthened its position by forming
close relationship with the supply chain, retail stores and distributors. (PepsiCo.com. Annual
Report, 2011). The company has advantages of the economies of scale and can capitalize on the
experience curve. A new entrant would struggle to establish a loyal customer base and to compete
with PepsiCo on the low production cost. Thus, if PepsiCo were to compete with a new entrant by
reducing its prices to the customers, a new entrant, at best, would most likely find it relegated to a
small niche market, or out of business. Overall, the threat of the new entrants is considered to be
low.

SWOT ANALYSIS

Introduction:
SWOT analysis is used to evaluate the Strengths, Weaknesses, Opportunities and Threats
involved in a project or a business venture (Swot). A SWOT analysis is usually done for a product
or company (Swot). It is used to identify the internal and external factors (Swot). Internal factors
include Strengths and Weaknesses (Swot). External factors include Opportunities and Threats
(Swot).

Albert Humphrey is credited to the technique of SWOT analysis (Swot). He used data from fortune
500 companies (Swot).

 Strength: Characteristics of the business that give it an advantage over others

(Swot).
 Weaknesses: Characteristics that puts the business at a disadvantage relative to
others (Swot).
 Opportunities: External chances to improve performance (e.g. make greater profits)
in the environment (Swot).
 Threats: External elements in the environment that may be detrimental for the
business (Swot).

6
 SWOT ANALYSIS OF PEPSI CO

Beneficial Harmful

Strengths Weaknesses

 Second largest F&B business  Huge competition with coca-cola

 Global presence  Dependence on large retailers
 Brand image  Strong workers union
 Good operational efficiency  Image damage caused by product
 Wide and innovative product recall
Internal

line

Opportunities Threats

 Expansion of product lines  Imitation

 Entry into more developing  Unfavorable economic condition
countries  Trade consolidation
 Acquire more bottling  Changes in legal and regulatory
companies environment.
 Damage to reputation
External

Strengths:

 Second largest food & beverage business in the world based on net revenue:
Diversified portfolio of soft drinks, juices, chips and other snacks has enabled Pepsi Co to
capture 52% of global beverages sales and 48% of global snacks sales (Pepsi Annual
Financial report, 2011).
 Global presence: The products are sold in more than two hundred countries, and this results
in annual net revenues of forty three billion dollars (Pepsi Annual Financial report, 2011).

7
  Brand awareness: Pepsi Co has established itself as a strong brand in the food and
beverages industry and through aggressive marketing has captured a loyal customer base.
 Good Operational efficiency and distribution capability: Best in class distribution systems
adopted in each country, meeting the unique requirements.
 Wide and innovative product line: Wide range of product lines, mainly beverages, snacks
and nutrition. Able to innovate globally and introduce products catered for each region has
enabled Pepsi to capture a huge share of global snacks and beverages sales. For example,
bario, a non alcoholic malt drink created for markets in the Middle East, delivered double
digit volume growth (Pepsi Annual Financial report, 2011).

Weaknesses:

 Coca cola has a larger share of carbonated soft drinks consumption in US.
 Dependence on large retailers: Large retailers such as Walmart, make up a huge percentage
of Pepsi sales. Maintaining good relations with these large retailers is very important (Pepsi
Annual Financial report, 2011).
 Dependence: Pepsi Co, unlike Coca-Cola does not own most of the bottling companies.
Therefore, Pepsi has limited control over the bottling compan
 Strong workers union: Workers unions are strong and can disrupt normal operations, if
they are not in good terms with the company (Pepsi Annual Financial report, 2011).
 Image damage caused by product recall: On second September 2011, Quaker Oats
Company, a division of PepsiCo issued a voluntary recall of 8-count Quaker Chewy smash
bar Graham Pretzel snack bars due to an undeclared milk allergen that is not noted on the
label (Co).

Opportunities:

 Expansion of product lines: Pepsi Co can introduce more products in order to increase
market share.
 Entry into more developing countries: Pepsi Co can cash in on the growing economy in
certain developing countries by entering those markets and expanding the Pepsi Co supply
chain.
 Acquire more bottling companies: Pepsi can acquire bottling companies in order to gain
greater control over bottling.
Threats:

 Imitation: Pepsi products can be imitated by reengineering. Such imitation of Pepsi

products and their subsequent introduction into the market can make the demand of Pepsi
products more elastic.
 Unfavorable economic condition: Changes in interest rates, tax rates and inflation can
affect the business (Pepsi Annual Financial report, 2011).
 Trade consolidation: Concentration of retailers can affect the business of Pepsi Co, as buyer
power increases and the large retailers can exert more pressure on Pepsi co to reduce costs,
which in turn may degrade profit.

8
  Changes in legal and regulatory environment: Changes in food and drug laws, laws
regarding the import and export of ingredients can change the environment in which Pepsi
Co does business and may impact the results and increase the cost and liabilities.
 Damage to reputation: Production contamination, failure to comply with safety regulations
and product recalls can cause damage to reputation and cause decrease in demand or
unavailability of the product (Pepsi Annual Financial report, 2011)

Balance Scorecard

Introduction
Balanced scorecard is a design of an integrated set of performance measures that are
obtained from the company’s strategy, which is developed throughout the organization
(BalanceScorecard). The balance scorecard was designed by Dr. Kaplan and Dr. Norton. It is
designed mainly to help communicate and coordinate objective and goals that are required to be
achieved by an organization (BalanceScorecard). It is also used to measure performance and goals
of an individual organization (BalanceScorecard). Balance scorecard approach is mainly used by
top management where it is used to translate the strategy designed and formulated by the top
management; this translated strategy is used as a performance measure that employees can
understand and influence (PepsiCo Web/ Values&Phil). Two basic concepts are required to be
known to understand the balance scorecard one is mission of an organization and the other are the
vision statement (PepsiCo Web/ Values&Phil). The balanced scorecard displays performance
measures throughout the organization. The main purpose of balance scorecard is for continual
improvement.

PepsiCo
Company’s goal for the present and the future is to become a consumer Products Company
focusing on the aim of convenient foods and beverages (PepsiCo Web/ Values&Phil). Company
also aims to strive for honesty, fairness and integrity in their business. PepsiCo always strives to
take standard performance measures and always converts them to represent their vision of healthier
future and this has been there main motto from many years (PepsiCo Web/ Values&Phil).

PepsiCo commits to delivering sustained growth through organized business and

empowered employees who act responsibly to build trust among consumers and investors. PepsiCo
strongly believes in sustained growth, which they believe is fundamental to motivating and
measuring their success (PepsiCo Web/ Values&Phil). PepsiCo believes in employing brilliant
people this means that a person has the freedom to think, act, and proceed in ways that make the
project successful to processes which will ensure proper governance and at the same time being
mindful of company needs beyond our own (PepsiCo Web/ Values&Phil).

PepsiCo also believes that responsibility and trust are the basics for prosperous growth.
They hold themselves responsible for their actions, which effect environment both personally and
corporately. PepsiCo follows six guiding principles (PepsiCo Web/ Values&Phil).
1. PepsiCo’s plans to sell only products can be proud of (PepsiCo Web/ Values&Phil).

2. Speak with truth and candor (PepsiCo Web/ Values&Phil).

3. Balance short term and long term (PepsiCo Web/ Values&Phil).
9
4. Win with diversity and inclusion (PepsiCo Web/ Values&Phil).

5. Respect others and succeed together (PepsiCo Web/ Values&Phil).

Financial

PepsiCo is one of the world’s leading producers of different commodities which include
chips (snacks), foods, and soda (beverages), with revenues of $60 billion and employee strength
of more than 285000 employees (PepsiCo Web/ CorpProf). PepsiCo owns multiple brands
including Pepsi- cola, Mountain Dew, Diet Pepsi, Doritos, Tropicana, Gatorade, and Quaker
(PepsiCo Web/ CorpProf). PepsiCo brands are available worldwide through a variety of retail
shops, which include brick and mortar shop to direct store delivery, distributor warehouse, and
automatic food service and wending subsidized by particular institutes (PepsiCo Web/ CorpProf).
PepsiCo has multiple divisions throughout the world and mainly are divided into (PepsiCo
Web/ CorpProf)
 PepsiCo Americas Beverages (PAB) (PepsiCo Web/ CorpProf)

 Frito-Lay North America (FLNA) (PepsiCo Web/ CorpProf)

 Quaker Foods North America (QFNA) (PepsiCo Web/ CorpProf)

 Latin America Foods (LAF) (PepsiCo Web/ CorpProf)

 Europe (PepsiCo Web/ CorpProf)

 Asia, Middle East & Africa (PepsiCo Web/ CorpProf)

The division is as follows: This picture has been extracted from PepsiCo Web/ CorpProf.

(http://www.pepsico.com/Investors/Corporate-Profile.html)

PepsiCo plans to continue to increase its earnings over the next 5 to 10 years, recognizing
the need to make changes in how to operate to address the challenges they identified in their review

10
process (PepsiCo Web/ StgyInveGrow). PepsiCo considers 2012 to be a transition year. PepsiCo
plans to take appropriate steps to build a stronger, more successful strategy to increase their market
growth (PepsiCo Web/ StgyInveGrow).

PepsiCo has made key initiatives for future growth. These key initiatives include (PepsiCo Web/
StgyInveGrow02) These key initiatives are extracted from PepsiCo Web/ StgyInveGrow02.
1. PepsiCo plans to increase investments in its strong brands and plans to bring innovation to
market. It plans to increase advertising and marketing expense by $500-$600 million in 2012 as
sourced on their website, the majority in North America (PepsiCo Web/ StgyInveGrow02).
2. It plans to implement a three-year productivity program. This plan will generate over $500
million in the form of cost savings in 2012 (PepsiCo Web/ StgyInveGrow02)., also will reduce the
cost base of about $500 million in 2013 will take place, and an additional $500 million in 2014
will be also spend keeping in mind the same perspective (PepsiCo Web/ StgyInveGrow02).
3. As sourced on its website PepsiCo plans to improve the net return on capital it invests by at least
50 points with respect to a reference annually beginning in 2013 which will happen by focusing
on capital spending and working capital management, as both of them make integral parts. In 2012
PepsiCo plans to reduce capital expenditures by 10% versus 2011 (PepsiCo Web/
StgyInveGrow02).

4. It plans to increase returns to shareholders in 2012 by 4% in its annual dividend, which will
begin in the June 2012 dividend payment (PepsiCo Web/ StgyInveGrow02), and also plans to
execute share repurchase program planned to begin in 2013 of at least $3 billion in expectation
this is one of first initiatives of PepsiCo strategy (PepsiCo Web/ StgyInveGrow02).

Customer
Human sustainability means committing to provide more food and beverage choice, which
are made with wholesome ingredients that contribute to healthier eating and drinking (PepsiCo
Web/ HumanSus). Healthier eating and drinking further leads to good health and trust among
consumers. Such strategy leads to growth in market share on consumer level. Also this leads to
increasing the amount of the fruits, veggies, seeds, pulses, and whole grains. Also low-fat dairy in
our global product portfolio also increases (PepsiCo Web/ HumanSus).

PepsiCo believes in doing responsible marketing with collaboration from International

Food & Beverage Alliance, which consists of multinational food and beverage manufacturers, will
help them to start the worldwide voluntary commitment and to continue to advertise to children
under the age of twelve those products that meet specific nutrition criteria and are healthy from
their perspectives (PepsiCo Web/ RespMark). This step is mainly taken to advertise their products
to children and to help increase sales in schools. PepsiCo also has taken a global company plan
that is consistent with rules of IFBA’s policy (PepsiCo Web/ RespMark).

PepsiCo is affiliated with required nutrition labeling. PepsiCo policies of food safety cover
sanitation, recalls, and allergens, and require that all the products are covered with labels that are
coded, labeled, identifiable and traceable (PepsiCo Web/ NutriLabel). Nutrition labeling has
become a part of mandatory food safety compliance systems and it includes website training,
monitoring, preventive measures and readiness for right action to be taken in accordance of law
(PepsiCo Web/ NutriLabel).
11
 PepsiCo does a lot by partnering with companies from other sector to make impact on
health and nutritional challenges that people face in global society. PepsiCo has initiated many
programs in community to promote healthy food and reduce malnutrition. Some of the programs
that were initiated by PepsiCo are (PepsiCo Web/ Part&Commu.)

1. Reducing obesity in US. (PepsiCo Web/ Part&Commu.)

2. Food for Good. (PepsiCo Web/ Part&Commu.)

3. Reducing malnutrition in emerging countries. (PepsiCo Web/ Part&Commu.)

4. Nutritionally advantaged products. (PepsiCo Web/ Part&Commu.)

5. Developing nutritious chickpea crop in Ethiopia. (PepsiCo Web/ Part&Commu.)

6. Promoting physical activity. (PepsiCo Web/ Part&Commu.)

Learning and Growth
Within the performance measure of environmental sustain PepsiCo plans to learn and grow
from conserving the environment around it. PepsPepsiCo tries to maintain the highest quality
standards for consumer means using the best water possible. It tries to treat the water by innovative
processes and new technologies (PepsiCo Web/ EnvirSusta). PepsiCo plans to improve the water
use efficiency by 20 percent per unit of production by 2015.

Water Consumption

Water Consumption
(MM Cubic Meters) FY 2010 FY 2009 FY 2008 FY 2007 FY 2006

Legacy Food 34.0 34.8 38.2 38.2 38.0

Legacy Beverage 27.5 25.7 26.9 26.3 25.9

Total Legacy 61.5 60.5 65.0 64.5 63.9

Acquisitions 44.5 3.4 N/A N/A N/A

Total 106.0 63.9 65.0 64.5 63.9

(http://www.pepsico.com/Purpose/Environmental-Sustainability/Water.html)

PepsiCo has implemented multiple plans in which water conservation in operation has
stood out to be an important plan. PepsiCo states by saying that water use can be improved by
conserving water in our plants (PepsiCo Web/ EnvirSusta). To implement such a plan PepsiCo
has designed “Resource conservation” (ReCon) tool.

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PepsiCo has implemented multiple plans to save water. Some of those plans are (PepsiCo Web/
EnvirSusta)
1. Technological Improvements That Save Water (PepsiCo Web/ EnvirSusta)

2. Water Conservation Ingenuity in South America (PepsiCo Web/ EnvirSusta)

3. PepsiCo China Honored for Water Conservation. (PepsiCo Web/ EnvirSusta)

PepsiCo tries to find new ways to package and deliver products to minimize the impact of
waste on the environment. PepsiCo uses “5 Rs” to reduce, recycle, and also uses renewable sources
to achieve maximum efficiency, also removes environmentally sensitive materials and promotes
the reuse of packaging used previously for packages (PepsiCo Web/ EnvirSusta). In 2010, PepsiCo
launched “Abascus II” program, which was a companywide analysis of our 2009 global packaging
footprint (PepsiCo Web/ EnvirSusta).

Internal Business Growth

Internal process is defined as the identifying a measure that answers the question "What
we should excel in?" (PepsiCo Web/ BSCR.). For PepsiCo internal business process deals with
“Talent sustainability” (PepsiCo Web/ BSCR.). PepsiCo invests a lot in talent and leadership
programs to develop skill sets in their employees who help PepsiCo to increase their business and
grow innovatively in the market. PepsiCo uses multiple programs for talent sustainability. Some
of those programs are (PepsiCo Web/ BSCR, PepsiCo Web/ TalSust). These programs are
extracted from PepsiCo Web/ BSCR.

1. PepsiCo University- PepsiCo University is an perspective and interactive classroom and online
coursework training used to develop managerial and leadership coursework, these programs help
PepsiCo to grow and sustain employees ,which further nourish talent in the industry (PepsiCo
Web/ BSCR, PepsiCo Web/ TalSust).

2. Finance University- Finance University is a specialized finance program. It is a course

organized under a number of colleges, which participate in a joint program. Investor
Relations/External Reporting, Audit/Risk Management, Control, Tax, Treasury, Operations are
the foundation courses while as Supply Chain Finance, Sales Finance, Strategy/M&A, Business
Planning, Systems and IT are considered as elective courses (under development) (PepsiCo
Web/ BSCR, PepsiCo Web/ TalSust).
3. Customer Management University- It is a training initiative which is taken to support something
that has commercialization competencies and customer management curriculum has been
designed especially for this program (PepsiCo Web/ BSCR, PepsiCo Web/ TalSust).
4. Global R&D University- This program is created for all R&D associates worldwide (PepsiCo
Web/ BSCR, PepsiCo Web/ TalSust).

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PepsiCo- Balance Scorecard

Financial Internal Business Process

Objective- To increase compound annual growth
in net revenues.
Measures- Organize and apply key initiatives for
future growth.
Targets- Production growth and acquisition of
market share.
Initiatives- Increase investment in strong brands,
increase return on invested capital, apply three
year productivity plan.
Objective- To increase talent sustainability.
Measures- Production growth and number of
employees retained.
Targets- Increase skill sets and leadership
ability.
Initiatives- Training, learning sessions, PepsiCo
Universities.

Vision
and
Strategy

Customer Learning and Growth

Objective- To increase human sustainability.
Measures- Market share and consumer
feedback.
Targets- Growth in nutritional food sector.
Initiatives- Reduction in use of sodium in
foods, reduction in use of preservatives.
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Objective- To increase environmental
sustainability.
Measures- Reduction in water consumption &
environmental friendly packaging.
Targets- Improving efficiency by 20% of the
production process.
Initiatives- “Abascuss II” & “3Rs” for packaging
and water saving plan implementation.
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Strategy-of-Pepsi

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