ASSIGNMENT

To write about the Value Chain Analysis, Strategic

Planning, and Decision Areas of PEPSI Co.

Submitted By,

SK TAUFIQ ALLI
Regd No. 1806258146
MBA 2018-20
 Introduction
PepsiCo Inc is a publicly traded company that operates in the beverage industry. Established in the
1890s by Caleb Bradham, who was a pharmacist, the company became publicly traded in 1903.
Initially, the company operated under the name Pepsi-cola. In the year 1965, the Pepsi-cola merged
with Frito-lay to form the current company. At the merging time, Pepsi-cola Company produced
products such as Pepsi-Cola, Mountain Dew and Diet Pepsi. Frito-lays on the other hand produced
products such as Lay’s potato chips, Fritos corn chips, Ruffles potato chips; Cheetos cheese
flavored snacks and Rold Gold pretzels (Young, 2015). PepsiCo Inc Company has strengths,
weaknesses, opportunities and threats. However, the company manages to exploit the strengths
and opportunities presented to it in ensuring it remain competitive in the market.

With the acquisition of Tropicana in the year 1998 and merger with Quaker Oats, the company grew
bigger. As such, the company was provided with an excellent opportunity to operate within the larger
United States of America market, and this set the beginning for the globally recognized company.
Currently, PepsiCo operates in more than 200 countries around the world. Some of the company’s
main products include Pepsi Max, Pepsi Samba, Mirinda, Pepsi Twist, Crystal Pepsi, Pepsi Jazz,
and Pepsi One (Young, 2015). However, three brands perform best in the U.S, which includes Diet
Pepsi, Mountain Dew, and Pepsi-Cola. Apart from beverages, the company also holds a market
share of 56% through production and distribution of salty.

1. PepsiCo Value Chain Analysis

Value chain analysis is an analytical tool used to identify the ways in which businesses create value
for customers.

Figure 1. PepsiCo Value chain analysis

Primary Activities

Inbound logistics
PepsiCo portfolio comprises 22 brands including Pepsi-Cola, Tropicana, Gatorade, Mountain Dew
and Diet Pepsi and each brand belonging to PepsiCo generated at least one billion USD in retail
sales in 2015. Inbound logistics practices of each brand within PepsiCo portfolio reflect the nature
and quantity of raw materials used, the proximity between the location of suppliers and
manufacturing plant and other set of factors.
The economies of scale can be specified as the main source of value for PepsiCo derived from
inbound logistics primary activity. PepsiCo also benefits from locating its production sites within
close geographical proximity to the main sources of raw materials in order to save on transportation
costs.
 Technology is another driver of innovation that provides advantage to PepsiCo’s supply chain. One
of the innovations that PepsiCo is exploring is 3D printing. For example, RUFFLES® Deep Ridged
used 3-D printing technology to create optimal potato chip prototypes.

Operations
PepsiCo operations are divided into the following the following six operational segments:
1. Frito-Lay North America (FLNA). This segment engages in manufacturing, marketing, distributing
and selling branded snack foods.
2. Quaker Foods North America (QFNA). This segment is assigned with producing, marketing,
distributing and selling cereals, rice, pasta and other branded products.
3. Latin America segment produces markets, distributes and sells a several snack food brands for
Latin American market. These brands include Doritos, Cheetos, Marias Gamesa, Ruffles,
Emperador, Saladitas,Sabritas, Lay’s, Rosquinhas Mabel and Tostitos.
4. Asia, Middle East & North America (AMENA). AMENA segment makes, markets, distributes and
sells a number of leading snack food brands including Lay’s, Kurkure, Chipsy, Doritos, Cheetos
and Crunchy through consolidated businesses, as well as through non-controlled affiliates.
5. Europe & Sub-Saharian Africa (ESSA). This segment engages in manufacturing, marketing,
distributing and selling a number of snack food brands either independently or in conjunction with
third parties.
6. North America Beverages (NAB). Operations in NAB segment revolve around producing,
marketing, distributing and selling concentrates, fountain syrups and finished goods under various
beverage brands including Pepsi, Gatorade, Mountain Dew, Diet Pepsi, Aquafina, Diet Mountain
Dew, Tropicana Pure Premium, Sierra Mist and Mug.

PepsiCo conducts its productions operations with use of sophisticated operational systems and
advanced technologies. A particular focus on sustainability issues as an integral part of its CSR
strategy is an important feature of PepsiCo operations and a solid source of value addition.
Moreover, PepsiCo adjusts its products to local tastes and preferences and this is reflected on
operations. For example, PepsiCo has tailored its products to suit the Chinese palette and
introduced various local flavors to the Lay’s brand. The current flavors available in the market are
fresh cucumber, baked lobster, peking duck, hot and sour fish soup, fried prawn and little tomato.

Outbound logistics
PepsiCo distribution costs amounted to USD9.4 billion in 2015, USD9.7 billion in 2014 and USD9.4
billion in 2013. PepsiCo creates value in outbound logistics via using multiple product distribution
formats. Specifically, PepsiCo outbound logistics integrate the following three formats of product
distribution:
1. Direct-Store-Delivery. This distribution format is especially popular with product categories that
are re-stocked very often. Direct-Store-Delivery provides PepsiCo the advantages of
merchandizing with maximum visibility and appeal within stores.
2. Deliveries to customer warehouses. Mainly less fragile and perishable products are distributed
in this format and this is the most cost-effective distribution format.
3. Using distributor networks. Third-party distributors are needed in order to facilitate the
distribution to locations far from PepsiCo manufacturing plants and warehouses.
4. Marketing and sales
PepsiCo has a solid advertising budget of about USD 2.4 billion[4] and PepsiCo marketing strategy
makes an extensive use of print and media advertising, social media marketing, celebrity
endorsement and product placement. The marketing message attempts to associate the
consumption of PepsiCo products with the perceptions of enjoying life to the full extent, staying
active and spending quality time together with friends and loved ones.

Service
PepsiCo sells its products to final consumers only via re-sellers and intermediaries such as
supermarkets, grocery stores of various formats, restaurants, fast-food chains and other catering
business. Therefore, PepsiCo does not provide customer services to the final consumer directly at
the point of purchase. Nevertheless, PepsiCo deals with customer service inquires and questions
related to its brands and specific products via customer service phone numbers and online contact
forms available on its official website.

2. Strategic Planning of Pepsi Co.

PepsiCo Inc operates in an oligopoly market. An oligopoly market has a small number of firms
dominating the market. The actions of any of the dominant firms affect the other companies. The
major players in the beverage industry include PepsiCo, Coca Cola, Rebbull, Living Energy and
Hansen Natural Corporation. These firms dominate the beverage market and usually buy out other
small companies that enter the market. All these firms sell identical and differentiated products.

The beverage industry has entry barriers. Although it is possible for new entrants to enter the
beverage market in the US, as the legalities are favorable, the threat of entrant is high (Gamble and
Thompson, 2013). It is difficult for a new beverage company to maneuver in the industry in the
presence of the well-established companies, which have been in the industry for a long time. The
reason behind this argument is that the industry is very competitive. Any new entrant in this industry
must be financially stable and have well-formulated strategies to help expand the market share and
enhance competitiveness.

This kind of situation is hard especially in the U.S. market, which is very unpredictable due to the
high number of well-informed customers. The already existing companies have established brand
loyalty and this makes it hard for new entrants to establish and enjoy competitive advantage since
the customers in this market are very sensitive and they would rather buy a product that they know
the manufacturer at a high price, rather than a new cheap product from a new manufacturer. A small
number of dominant companies, differentiated goods and barriers to market industry are
characteristics of an oligopoly market snacks.

The company’s major competitors include Coca-Cola Company, Monster Beverage Corporation,
DPSG, Mondelēz International, Hansen Natural Corporation, Kraft Foods Group, National Beverage
Corp, The Kellogg Company, Nestlé S.A., ConAgra Foods., Snyder’s-Lance and other beverage,
food and snack companies. The success and growth of the company is due to its increasing market
share, brand loyalty, competitive advantage, as well as enhancement of customer confidence and
loyalty (Gamble & Thompson, 2013). In addition, the company has a variety of products that are
available all over the world a clear indication that it is a success and growth oriented Beverage
Company.

Currently, PepsiCo Inc distributes its products to over 200 countries worldwide. The food products
produced by the company include flavored snacks, chips, rice, cereals, dairy-based product and
pasta. Currently the company’s portfolios of beverages include carbonated soft drinks, ready-to-
drink tea and coffee, bottled water, sports drinks and juices. By the end of the year 2014, the
company had approximately 274000 employees. The company has maintained its mission of being
the market leader especially in the US. As of the year 2015, the company commanded a market
share of 20.5% worldwide in the beverage industry (The Statistics Portal, 2015). The company
seeks to continue producing quality products to its customers. At the same time, the company
endeavors in providing success and growth opportunities for its employees, investors and all its
business partners.

Strengths
The strengths of the company are internal. First, the company has been in existence for many years
and has managed to build a brand of its own. By use of celebrities, PepsiCo has managed to build
a brand for those who care for their health. PepsiCo Inc operates in over 200 countries. This enables
the company to access a large base revenue sources. Successful penetration in multiple national
markets has provided a much broader customer base from which it generates revenue while
minimizing costs and increasing profits (Young, 2015). With its globalization, the company has a
larger market base and development meaning the company risk is spread across a larger customer
base.

If issues of supply, regulation or environment arise in one country, the company still operates in the
other countries. Globally the company has a larger human resource pool creating access to a larger
talent access. The company has approximately 274000 employees. Having diverse employees who
can interact with different populations and different business partners is also an advantage. This
has also given the company an ability to move people around to different locations and roles, and
that’s an advantage to the company.

The company has a diversified product portfolio. The company has a wide range of `products in the
market ranging from carbonated drinks to snacks. That ensures that the risks in the market are
spread along a wide variety of products. The company also has popular subsidiary brands. Through
the years, the company has acquired other companies such as Frito-Lays, Tropicana, Quaker Oats
Company, Quaker Foods North America and Gatorade. These subsidiaries have been very
influential in the growth of the company. PepsiCo Inc has an efficient and strong supply chain
(Young, 2015). The company has regional stores where the products are stored and supplied to
different areas. This has enabled the company to reach the remote areas where other companies
have not managed to reach. Combined with the global advertising done by the company by use of
celebrities, the brand awareness in all regions is high.

Another strength the company has is the Pepsi Refresh project which is involved in funding new
ventures and idea aimed at benefiting the society. This is part of the corporate social responsibility.
Other corporate social responsibility activities include the PepsiCo Foundation. The foundation
works in the sectors of health, education, water conservation, and others.

Weaknesses
The major weakness faced by the company is competition, especially in the drinks segment. Coca-
Cola is the leading brand in this segment and this force PepsiCo to highly switch brands (Young,
2015). Competing against such a strong brand as Coca-Cola is hard and requires switching brands
from now and then which is very risky.

Another weakness is that PepsiCo Inc has a low penetration outside America. Most of the revenue
generated by the company comes from the North and South America. This shows that the company
has not yet maximized on its potential regarding reaching other markets. Though the company is
present in more than 200 countries, the market share in these countries is very low (Young, 2015).
Additionally, the company concentrates in the food and beverage industry. The company has not
diversified its products, and it is vulnerable to risks in the food and beverage market.

In recent years, the consumers are becoming very health conscious. With the high increase in
diseases such as obesity, people are very considerate of what they eat and drink. PepsiCo Inc has
yet not managed to market its products to the health conscious consumers (Young, 2015). The
marketing endeavors are mostly directed to the non-conscious consumers.

Opportunities
PepsiCo Inc has opportunities for growth globally. A major opportunity is product diversification.
There are many other industries that the company can venture in. By acquiring complementary firms
not in the beverage industry, the company can be able to diversify its business. Another opportunity
is that PepsiCo Inc should increase its efforts in the developing countries. The developing countries
are an emerging market that the company can tap into. By penetrating into such countries the
company will be able to increase its revenues outside America.

The company has an opportunity to form alliances with complementary businesses. This will enable
the company to increase its market presence (Young, 2015). Again, just like the company has been
able to acquire other brands, the endeavors should be increased and many more brands acquired
in different regions. In addition, the company has an opportunity to improve its brand image by
getting involved in more corporate social responsibility activities in the communities where it
operates.

Threats
PepsiCo Inc operates in the food and beverage industry which is faced with some threats. A major
threat to PepsiCo Inc is the aggressive competition in the industry. In this industry, the decision of
one company affects the other companies. The influence of the Coca-Cola brand is the major threat
to PepsiCo Inc (Young, 2015). Through the years; Coca-Cola has managed to create the best brand
in the industry. This is a threat to other players in the industry including PepsiCo Inc.

Most of the PepsiCo Inc products are seen by people as unhealthy because of their salt, sugar, and
fat content. The healthy lifestyle adopted by consumers in this century is against the products of
PepsiCo Inc. in addition; environmentalism poses a threat to the company. Consumers respond
negatively to the waste and lifecycle issue raised about the company.

PepsiCo has been accused in the past of being unethical. The products manufactured by PepsiCo
Inc have caused health problems in the past. People these days are considering food rich in low
calories, natural items and low fat as opposed to processed salty and sugary foods. PepsiCo Inc
fought back by producing drinks that are low in sugar content and calories. PepsiCo Inc is making
big strides in addressing the heath issue with its products.

Conclusion
The analysis of the strengths of a company is essential in the strategic planning in that it allows the
company to have a look at its competitive advantage in the market. The strengths are the vocal point
in the operation s and planning of the company. The way a company markets itself depends with its
strengths. The company’s strengths are the advantages a company has over the other competitors
in the market. It is essential for any company to identify its advantages to remain competitive in the
market. In addition, the strengths allow the company to identify the strong areas that can be relied
on in times of threats. The strengths reveal the internal capabilities of a company.

It is important for a company to realize that it cannot be good at all things. Strengths of a company
run hand in hand with the weakness of the company. Both the strengths and weaknesses are
internal to the company. By understanding the weaknesses of a company, it becomes easy to deal
with them. The company cannot deal with things which are not known. Weaknesses can be
approached in different ways, they can be improved to enable the company achieves its objective
or they can be termed as part of the overall business of the company (Cole, 2003). The weaknesses
can be downplayed or worked on depending with the level of influence. Understanding the possible
threats enables the company to come up with effective solutions.

Opportunities are an important part of the strategic plan. Any company grows by identify any
opportunities that are available for manipulation. By identifying the opportunities available to a
company, a company is able to dram a road map into the future. In any market, competition depends
on the available opportunities. Without taking advantage of the available opportunities, the company
cannot be competitive I the market. It can also not plan for the future. Growth requires exploitation
of any available opportunities. Any strategic plan is meant to enable the company to grow (Cole,
2003). Opportunities allow a company to gain new markets, capital or gain new businesses. In
addition, to attain a higher market share, a company needs to be vigilant in exploiting any available
opportunities.

Every strategic plan has objectives and goals to be achieved. To measure the success of this
strategic plan, it will require the measuring of the achievement of the objectives and goals. This is
a measure of whether the services meet the proposed results as per the plan. It demonstrates the
impacts and benefits of the activities undertaken. Another method is quality measures. This is a
measure of the effectiveness and improvement in accuracy, courtesy, reliability, responsiveness
and competency (Cole, 2003). For PepsiCo Inc the strategic plan is meant to increase productivity
and efficiency. The best measure of the success of this strategic plan is outcome measures. This
will measures the achievements of the desired outcomes as described in the objectives part of the
plan.

As discussed above, PepsiCo Inc has its own strengths, weaknesses, threats and opportunities. By
using the strengths to overcome the weaknesses and the opportunities to avert the threats, the
company can be able to gain a higher market share in the beverage industry. Both the strengths
and weaknesses are internal to the company. The opportunities and threats are however external
to the company.

When Caleb Bradham started the company, he had a vision that the company will grow o bigger
heights. Though it is agreeable that the company has grown, there is still room for improvement. By
applying several tactics such as product diversification, the company can gain a higher market share
and increase competitive advantage. However, to achieve this, the strategic plan needs to be
reviewed regularly to enable the incorporation of any changes. With the threats such as accusations
of unethical behavior, the company needs to utilize its strengths. The company has been in
existence for many years and has a wide pool of employees with diverse experiences. Though its
competitors including Coca Cola, Rebbull, Living Energy and Hansen Natural Corporation are also
working to be more productive, PepsiCo Inc has its opportunities as guided by its strengths.

3. Decision Areas
Operations Management at PepsiCo

Operations management is defined as the planning, scheduling and controlling of all the activities
that can transform organizational inputs into finished goods and services. Operations management
focuses on effective planning in an organization and the control of manufacturing through the
application of such concepts as engineering, quality management, production management,
accounting and management system.

Operational management entails the making use of all the resources available to produce finished
products or services and to meet customers’ needs in a cost-effective manner. Operations
management places a lot of focus on the management of the processes involved in production and
distribution of the products. The processes involved in operations management are the creation and
distribution of products (Heizer, & Render, 2011).

Other activities that are related to operations management are the management of purchases,
controlling of inventory, quality control, storage and overall logistics. All these can be realized
through efficient and effective processes (Heizer, & Render, 2011). Conclusively, it can be said that
operations management is the set of all the activities which enhance the creation of goods and
services by transforming inputs into outputs (Scribd, 2011).

Supply Chain

The supply chain in a company is aimed at maximizing the value of products generated. Supply
value chain is considered as the difference between the value final products and the costs incurred
at the time of filing the customer’s request.

The supply chain at PepsiCo is determined by the location and capacity of production, warehousing
facilities and the products to be manufactured, storage and transportation. A good supply chain
should be well planned and a firm supply chain strategy should be implemented. In PepsiCo, an
important decision is where the production plant should be situated. PepsiCo has ensured that the
production process is automated for efficiency.

The company also manages the transportation for the delivery of their products and they also have
arrangement for third party for product procurement. The shipping department of the company is
responsible for orders while the transport department decides matters of delivery to ensure that
goods reach safely. In the company, material sourcing and planning is also an important stage of
supply chain.

Regarding the source and the supply of raw materials, PepsiCo has identified both local and foreign
suppliers who can supply raw materials at negotiated prices. At the stage of raw material supply,
capacity building is necessary since the forecasting of sales and the planning of production depends
on the capacity of this stage. All supplies to the company are audited by the quality control section.
Distribution rests with the company’s decision and it depends on the past performance of the
distributor.

The alignment between the supply chain strategy and PepsiCo’s business strategy is achieved
through proper utilization and the deployment of supply chain drivers. Managing the supply chain
process involves overseeing the relationship between suppliers and customers, controlling
inventories and forecasting demand as well as getting feedback concerning what is happening in
whichever link of the chain (Scribd, 2011).

Competitive Strategy

PepsiCo operates in a competitive and a challenging environment and it achieves its competitive
edge by providing customized products and services that meet the tastes and preferences of its
consumers. Competitive strategy examines how a company strives to achieve competitive
advantage; competitive advantage is that extra edge that a firm has over other industry peers. The
company’s capability to manage its operations can only be transformed into their competitive
advantage if they identify and tap their resources.

There are three main aspects that give PepsiCo a competitive advantage in order to favorably
compete at the international market, these are: muscular brands, proven ability for innovation and
their powerful market systems. The company has a mission to increase the value of the investment
of its shareholders and it tries to achieve this through sales growth, control of costs and investment
of resources wisely.

The company believes that its commercial successes and competitiveness rest with provision of
quality and value for its customers. It provides products that are safe, economically efficient and
healthy. PepsiCo strives to maintain its competitive strategy by ensuring sufficient production of their
goods, selling of their goods at reasonable prices and also ensures that the products are much
available in the market (Bachmeier, 2009).

With the boom experienced in the food and beverage market, PepsiCo has developed a strategic
plan which will enable them to at the top of their competitors by selling their goods at affordable and
friendly prices, providing more healthy meals options and great and quality services for their
customers. Health and safe foods are necessary especially in this era where people are increasingly
becoming health conscious. This will give PepsiCo an upper hand over its competitors.

PepsiCo operates in a competitive and a challenging environment; it achieves its competitive edge
by providing customized products and services. Without strategies, a company can not withstand
the competition at the market. To maintain its competitiveness, PepsiCo employs competitive
strategies that enable it to compete with seasoned players in the market like Coca-Cola.

It can only achieve this through ensuring that its marketing strategy is effective, its pricing is fair and
that there is efficiency and quality in its production. The company’s competitive and supply chain
characteristics are demonstrated below.
Marketing and Distribution Strategies

The central reason as to why companies do not perform well is due to the strategy that they apply.
Marketing strategy is one of organizational characteristic and it is instrumental to the performance
of the company. For a company to respond effectively to market competition, good marketing
strategies are a necessity.

PepsiCo has a well designed and developed local and international programs for marketing,
promotion and advertising programs which have the potential to support its various brands and to
enhance their brand image. The company also has an effective quality control department which is
responsible for ensuring that quality of the products is maintained.

The promotion of programs is also charged with the responsibility of packaging and coordination of
selling efforts. PepsiCo’s competitive strategy exists to provide a lot of products quickly and
consequently, their supply chain materializes the availability of these products. The company
employs various marketing and promotional strategies so as to enhance its volume of sales. The
company, for example, contracted Tiger Woods to run a promotion on a Gatorade brand called
Gatorade tiger.

Other notable promotional strategies are: the Pepsi throwback campaign which involves offering a
drink with a sugar content of the original product. They also run a promotion with the NFL and super
Bowl particularly to market Pepsi and Doritos. One mega promotion by the PepsiCo was the running
of a promotion dubbed Pepsi stuff promotion which involved accumulation of points by the customers
upon the purchase of any Pepsi product (Scribd, 2011).

Distribution Strategies

Concerning distribution, PepsiCo utilizes two main distribution strategies: direct and indirect
distribution channels.

Direct distribution: this concerns the handling of important accounts; these important accounts are
the different wholesalers, the restaurants and hotels, for example, Pizza hut, metro and KFC which
are critical points of sale. These accounts are fundamental in terms of competition. Direct distribution
also involves export parties.

Indirect distribution: this is achieved though several base market distributors as well as outstation
distributors. Before settling for a distributor, there are guiding principles which are adhered to in
assessing the capability of any distributor. These criteria include the fleet of vehicles which are run
by the distributor, the number of cases of empty bottles and cash deposit to be used as a security.
In product distribution and manufacturing, the company utilizes distribution channels from the
bottling plants up to the truck lines. PepsiCo has attempted to develop a system of product
differentiation so as to distinguish their products from that of coke. Its main target market was the
American teenage market.

It has focused its efforts on developing campaigns that enhance the culture of soft drinks in schools.
It has sought to achieve this by developing and building contracts with America schools. The
company distributes its products by use of vending machines (Bachmeier, 2009).

Inventory Methodology

Inventory management is a critical operation in any organization. This is because it involves

identifying and selecting the best method of inventory control. Before selecting an organization’s
method of controlling inventory, it is imperative to factor in mind the product demand.

There are different modes that companies consider in selecting their inventory methods but the
common denominator is that companies should ensure their mix of inventory types can satisfy the
demands of the customer and that it should deliver the needed profit and cash flow (Bachmeier,
2009).

Since PepsiCo operates in the food industry, inventory controls can be quite challenging due to the
perishable nature of the goods; improper handling may lead to food-borne disease, this makes it
necessary to have food-services inventory controls that can tract the movement of the goods, raw
materials and products.

The inventory should be in position to tract several products at a go and particularly an entire quantity
of stock from their destination, the inventories can also be tracked in batches, this is necessary since
batches can be assigned codes or numbers that will facilitate the keeping of relevant data regarding
the production process.

Operational Policies

Managing PepsiCo is a heavy task and being in charge of its daily operations is enormous duty and
quite challenging. To achieve and to manage PepsiCo successfully, it is imperative that there should
be adequate infrastructure and up to date information and communication technology. Fruits
availability is at the centre of PepsiCo company policies since it is its primary product. The company
communicates its policies to all those in the supply chain including their animal welfare policy.

PepsiCo has very strict corporate standards which guide their operations and accountability of its
employees. PepsiCo polices take care of areas like corporate governance, human, environmental
and talent sustainability. Human sustainability policies, for example, are programs like food and
safety, responsible marketing and healthcare reforms. The company has tight environmental policy
that guides its agriculture and packaging programs (PepsiCo, 2011).

Technology and Operations at PepsiCo

PepsiCo Company also utilizes technology in its operations. The launch of Social Vending System
which is an interactive vending technology has facilitated the company’s connection with the
customers at the purchase terminus. This technology enables the customers of PepsiCo to make
gifts to their friends through the internet connection.

The use of telemetry has reaped a lot of benefits for the company’s operation. It facilitates close
management of levels of inventory by the customers which can enable them to deliver schedule via
a remote station without having to travel (PepsiCo, 2011). The company also signed a three year
contract with Combine Net to use its Truckload manager so as to advance its truckload
transportation network and to enhance efficiency in transportation (CombineNet, 2007).

Organizational Structure

PepsiCo is considered the pioneer and the king in the production of beverages. It is well known all
over the globe for its trademark drink Pepsi and other Quaker products. In the year 2007, the
company changed its organizational structure from two to three units. The company before 2007
had two units PepsiCo North America and PepsiCo international. After the restructuring, the
company added one unit and the three units were “Pepsi America Foods, PepsiCo America
beverages and PepsiCo international” (Scribd, 2011, p. 1).

PepsiCo is considered an organization fit for adaptation. The company is in continuous exercise of
improvement and innovation so as to ensure their products fit the demand of the customers and
furthermore maintain relevance in the market.

The organizational structure of the company is a decentralized one and decisions regarding
operations are executed by different business units but are guided by the company policies and
corporate ethics. The company is headed by a Chief Executive Officer (CEO). Under the CEO are
Vice presidents who are in charge of various departments and all are answerable to the chairman
and the board. The expansion from two to three units was as result of its rapid growth.

The company also has Scientific Advisory Board which report on the company’s corporate social
responsibility and undertakes research relating to the challenges facing the company. The company
also has regional advisory boards in its operations outside US who guide the company’s health,
safety, compliance and innovation. The overall Chief Executive Officer (CEO) also doubles as the
chairman of the company (PepsiCo, 2011).

Conclusion

Operations management is an important function in an organization since it concerns the

relationship with the organization’s strategy. Operations management plays a key role in the
development of a company strategy hence enhancing competitive advantage of the company. An
example is the planning process which assists the organization in minimizing costs while gaining
advantage in competitiveness and cost.

It is therefore necessary for an organization to manage its operations as a measure of boosting its
organizational strategy. From the analysis of PepsiCo operation strategy, it is evident that
consistency in production, innovative products and the quality of products are order winners
whereas speed, cost, efficiency and innovation are the order qualifiers. This has resulted in an
enhanced market share and massive consumer buying power.

PepsiCo is a market leader and a household name in the food and beverage industry. It has strong
marketing strategy covering all its subsidiaries which are placed under the supervision of the mother
company. Its prices, quality of the products and marketing brand enhance its competitiveness. Due
to the strong nature of competition in the industry and shrinking market, there is need for a firm to
have well designed strategies so as to maintain its market position.