A

PROJECT ON

WORKING CAPITAL MANAGEMENT IN THE FMCG

SECTOR: A STUDY OF PEPSICO LTD.

SUBMITTED BY –

SUBMITTED TO –

ENROLLMENT NO –

Project Code –

NMIMS Global Access

School for Continuing Education (NGA-SCE)

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 ACKNOWLEDGEMENT

We would like to express our sincere gratitude to all the individuals who have contributed to the
successful completion of this project on "Working Capital Management in the FMCG Sector: A
Study of PepsiCo LTD."

First and foremost, we would like to extend our heartfelt appreciation to the management team at
PepsiCo LTD for granting us access to the necessary information and resources to conduct this
study. Their support and cooperation were instrumental in the smooth execution of our research.

We would also like to acknowledge the valuable insights and guidance provided by our project
supervisor, whose expertise and mentorship greatly enhanced the quality of our work. Their
constructive feedback and constant encouragement were invaluable throughout the project.

Furthermore, we extend our gratitude to the participants who took the time to respond to our
survey and provide their inputs and opinions on the topic. Their contributions formed the
foundation of our data analysis and findings.

Additionally, we would like to acknowledge the academic resources and scholarly articles that
we referenced in this project. These sources provided us with a comprehensive understanding of
the subject matter and helped us shape our research objectives and methodology.

Lastly, we are grateful to our friends and family for their unwavering support and encouragement
throughout the project. Their belief in our abilities and understanding during our busy schedules
played a significant role in our perseverance and successful completion of this endeavor.

Thanks

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 Executive Summary

This executive summary is a condensed version of a larger research on working capital

management in the Fast-Moving Consumer Goods (FMCG) industry, with a special emphasis on
PepsiCo as a case study. This research analysed PepsiCo's strategies and practises in order to get
a better grasp of the significance of working capital management in the fast moving consumer
goods (FMCG) business.

Competition, product turnover, and profit margins are all high stressors in the fast moving
consumer goods industry. Smooth operations, optimal cash flows, and increased profitability can
only be attained via careful working capital management at FMCG firms. This analysis looked at
how PepsiCo, one of the most successful FMCG firms worldwide, handles its working cash to
stay ahead of the competition.

Both primary and secondary sources were used to compile the data for this study. PepsiCo's
finance leaders and managers in charge of working capital management participated in
interviews for the primary study. Working capital management in the fast moving consumer
goods (FMCG) business was the subject of significant secondary research that included an
examination of relevant literature, reports, and financial statements.

The research showed that PepsiCo makes use of a number of tactics to keep its working capital
under check. Among these methods are:

 PepsiCo has optimized its stockpiles with the use of cutting-edge tools for demand
prediction and supply chain management. The company's priority is eliminating
unnecessary stock while keeping up with client demand.
 PepsiCo has stringent credit procedures and constantly analyses the payment schedules of
its customers as part of its accounts receivable management. It carefully watches its
receivables to cut down on late payments and boost cash flow.
 PepsiCo negotiates advantageous payment arrangements with its suppliers as part of its
accounts payable management strategy. This method allows the organisation to keep up
positive ties with its suppliers while extending the payment time.

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  Accurate cash flow forecasting is a top priority for PepsiCo in order to efficiently manage
the company's working capital. In order to predict future cash flows and make educated
choices about investments and financing, the corporation uses complex financial models
and tools.

Several advantages that working capital management provides to PepsiCo were also uncovered
in the research. Better liquidity, lower borrowing costs, more profits, and stronger financial
performance overall are just some of the benefits. PepsiCo is able to better deploy resources,
invest in growth prospects, and weather economic storms because to its careful management of
its working capital.

In addition, the research revealed opportunities for enhancement of PepsiCo's working capital
management procedures. Additional process automation and digitalization, closer cooperation
with vendors and consumers, and constant research of critical working capital KPIs all fall under
this category.

In summary, this research emphasizes the importance of working capital management in the
FMCG industry and offers useful insights into PepsiCo's plans and practises in this area. The
results stress the significance of cash flow forecasting, receivables and payables management,
and inventory optimisation in gaining a competitive edge. PepsiCo may benefit financially and
develop steadily in the face of intense competition in the fast-moving consumer goods (FMCG)
market by adopting the suggested changes to its working capital management.

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 Table of Contents
CHAPTER 1....................................................................................................................................7
INTRODUCTION...........................................................................................................................7
1.0 Introduction............................................................................................................................7
1.1 Objective of the Study..........................................................................................................11
1.2 Limitation of the study.........................................................................................................12
1.3 Scope of the study................................................................................................................14
1.4 Significance of the study......................................................................................................15
1.5 Statement of problem...........................................................................................................17
CHAPTER 2..................................................................................................................................20
COMPANY PROFILE..................................................................................................................20
2.0 Introduction..........................................................................................................................20
2.1 Leading Company:...............................................................................................................20
2.2 History of PepsiCo...............................................................................................................20
2.3 Pepsi Logos:.........................................................................................................................22
2.4 PepsiCo Product List............................................................................................................23
2.5 Management of Working Capital Is Crucial:.......................................................................25
2.6 PepsiCo's Methods for Managing Its Working Capital.......................................................25
2.7 Gains from Skillful Management of Working Capital:.......................................................26
2.8 Genesis of Indian PepsiCo Market.......................................................................................28
2.9 Scenario of PepsiCo Industry in India:................................................................................29
2.10 Competitors PepsiCo Industry in India..............................................................................31
2.11 Trends in and Market Share of PepsiCo Industry..............................................................32
2.12 PepsiCo Vision Statement..................................................................................................34
CHAPTER 3..................................................................................................................................36
LITERATURE REVIEW..............................................................................................................36
CHAPTER 4..................................................................................................................................39
RESEARCH METHODOLOGY..................................................................................................39
4.0 Introduction..........................................................................................................................39
4.1 Methods outline....................................................................................................................39

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 4.2 Research Onion....................................................................................................................40
4.3 Research Paradigm/Philosophy............................................................................................41
4.4 Research Approach..............................................................................................................42
4.5 Research Design...................................................................................................................43
4.6 Data collection.....................................................................................................................44
4.6.1 Secondary data collection..............................................................................................44
4.6.2 Primary data collection..................................................................................................45
4.7 Methods of data collection...................................................................................................45
4.8 Data Analysis.......................................................................................................................46
4.9 Sampling..............................................................................................................................46
4.9.1 Sampling Technique:.....................................................................................................46
4.9.2 Sample Size:..................................................................................................................46
4.10 Time schedule (Gantt chart)...............................................................................................47
4.11 Ethical considerations........................................................................................................47
CHAPTER 5..................................................................................................................................50
DATA ANALYSIS AND INTERPRETATION...........................................................................50
CHAPTER 6..................................................................................................................................60
FINDING, SUGGESTION AND CONCLUSION.......................................................................60
6.0 Findings................................................................................................................................60
6.1 Suggestion and Recommendation........................................................................................61
6.2 Conclusion...........................................................................................................................63
REFERENCES:.............................................................................................................................65
ANNEXURE.................................................................................................................................66

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CHAPTER 1

INTRODUCTION
1.0 Introduction
The FMCG industry is notorious for its cutthroat rivalry, unpredictable customer tastes, and
razor-thin profit margins. Working capital management is very important for fast moving
consumer goods (FMCG) firms in today's economy. The purpose of this research is to examine
the significance of working capital management in the fast moving consumer goods (FMCG)
business and PepsiCo's strategy and practises in this area.

Maintaining efficient operations, optimising cash flow, and increasing profits are all goals of
working capital management. High inventory turnover and constant cash flow are hallmarks of
the fast-moving consumer goods (FMCG) industry, making effective working capital
management even more vital. Companies dealing in fast moving consumer goods (FMCG) must
find a way to minimise the expenses associated with storing too much inventory while yet
keeping up with customer demand.

PepsiCo is a global food and beverage conglomerate that produces several well-known products
under its many labels. The firm has a considerable presence in the fast-moving consumer goods
market in more than 200 nations. Learning from PepsiCo's successful working capital
management may teach you a lot about what works in the food and beverage business.

There are two main goals for this research. To begin, we'll delve into the significance of working
capital management in the fast-moving consumer goods industry and how it affects businesses'
bottom lines. The second objective is to evaluate PepsiCo's inventory, accounts receivable,
accounts payable, and cash flow forecasting methodologies and practises.

Primary and secondary sources of information were used to accomplish these goals. Interviews
with finance leaders and managers at PepsiCo in charge of working capital management were the
primary data for this study. The purpose of these interviews was to get first-hand knowledge of
the company's working capital management approaches, difficulties, and successes.

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We conducted an exhaustive literature analysis, analysed reports from the industry, and analysed
financial statements to learn more about working capital management in the fast moving
consumer goods business (FMCG). The purpose of this literature review was to familiarize
readers with the main ideas, theories, and developments in working capital management and how
they relate to the fast moving consumer goods sector.

According to the results of the research, PepsiCo makes use of a number of techniques to keep its
working capital under check. To begin, the business employs cutting-edge demand planning and
forecasting tools to maximise the efficiency of its stockpiles. By doing so, PepsiCo is able to
fulfil consumer demand while keeping inventory levels just right and minimising waste.

Second, PepsiCo places a premium on effective accounts receivable management as part of its
overall approach to working capital management. In order to reduce late payments and boost
cash flow, the firm follows stringent credit criteria, keeps a close eye on its customers' payment
cycles, and aggressively manages its accounts receivable.

Thirdly, PepsiCo's working capital management practises place a premium on accounts payable
control. The corporation negotiates flexible payment arrangements and optimizes the timeliness
of payables as part of its strategic management of its supplier relationships. PepsiCo may
improve its cash flow and working capital situation by extending its payment term while
retaining solid supplier connections.

Finally, PepsiCo's working capital management approach heavily relies on accurate cash flow
projections. The organisation makes precise projections of future cash flows using advanced
financial models and instruments. Because of this, PepsiCo can allocate its working capital and
invest and borrow money with confidence.

Several advantages that working capital management provides to PepsiCo were also uncovered
in the research. Among these advantages are better liquidity, lower borrowing costs, more
profits, and better financial performance generally. PepsiCo is able to better deploy resources,
invest in growth prospects, and weather economic storms because to its careful management of
its working capital.

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The research found that PepsiCo could strengthen certain aspects of its working capital
management practises while improving others. These include ongoing monitoring and evaluation
of key working capital metrics to pinpoint areas of improvement and proactively tackle potential
issues, the further automation and digitization of interprets to enhance efficiency and accuracy,
and the enhanced collaboration with vendors and consumers to streamline operations and reduce
lead times.

Due to its specific nature, the fast-moving consumer goods (FMCG) industry places a premium
on effective working capital management. Competition is fierce in the fast-moving consumer
goods sector, and product cycles and customer tastes shift quickly. These considerations
emphasise the need of striking a balance between keeping sufficient stock to fulfil customer
demand and minimising the holding costs of surplus inventory. Profitability, liquidity, and
financial stability may all be improved by careful management of a company's working capital.

The case study of PepsiCo offers instructive examples of best practises in working capital
management. PepsiCo is able to avoid stockouts and surplus inventory by using sophisticated
demand planning and forecasting technologies to match supply with customer demand. By
enforcing stringent credit regulations and actively managing accounts receivable, the firm is able
to keep its cash flow healthy by reducing the number of past-due payments and enhancing its
collection process.

PepsiCo's strategic approach to accounts payable management is only one example of how the
company optimises its working capital. The firm is able to prolong its payment period while
keeping excellent connections with its suppliers by negotiating favourable payment terms and
optimising the timing of payables. The increased cash flow allows PepsiCo to better invest in
opportunities for development or respond to unanticipated problems.

PepsiCo's working capital management plan also includes anticipating cash flow. To make more
informed choices about investments, financing, and working capital allocation, businesses need
reliable forecasts of their future cash inflows and outflows. PepsiCo is better able to manage its
working capital thanks to the use of advanced financial models and technologies that improve the
accuracy with which cash flows can be predicted.

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PepsiCo would benefit greatly from better management of its working capital. With increased
liquidity, the corporation may more easily satisfy its financial commitments and seize investment
possibilities. PepsiCo's profitability and financial performance may be improved by optimising
its working capital in order to reduce borrowing expenses. The company's ability to weather
economic and market turbulence is bolstered by careful management of its working capital.

PepsiCo has some good working capital management practises in place, but they might be much
better. The research shows that more automation and digitalization of procedures is needed to
improve the effectiveness of managing working capital. Automated inventory monitoring
systems and digital payment platforms are two examples of the kinds of technological solutions
that may help PepsiCo optimise its processes, cut down on human error, and boost the efficiency
of its working capital management.

One other place where we can do better is in our communication and cooperation with our
vendors and clients. PepsiCo is able to decrease lead times, improve order fulfillment
procedures, and increase supply chain efficiency by working more closely with its suppliers and
adopting collaborative supply chain practises. Working capital management may be improved
via increased inventory turnover, decreased stockouts, and effective communication.

PepsiCo must constantly track and analyse its most important working capital KPIs in order to
spot problem areas and take corrective action before they become serious. PepsiCo can quickly
discover inefficiencies or growing hazards by examining indicators like inventory turnover,
accounts receivable turnover, and day’s payable outstanding on a regular basis. By taking such
preventative measures, the firm can be certain that its working capital management will continue
to be effective and in step with its long-term goals.

FMCG firms need efficient working capital management to survive in today's market, boost cash
flow and revenue, and increase profits. Working capital management, which includes inventory
management, accounts receivable management, accounts payable management, and cash flow
forecasting, is exemplified by PepsiCo in the case study. PepsiCo may boost its liquidity, cut its
borrowing expenses, and boost its bottom line by adopting these practises. However, there is
room for development in areas like further automation, bolstered communication, and constant
monitoring of critical KPIs.

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1.1 Objective of the Study
There are two goals of the research project titled "Working Capital Management in the FMCG
Sector: A Study of PepsiCo":

 To examining the significance of working capital management and its effect on financial
success in the fast moving consumer goods industry: To do this, it is necessary to
appreciate the value of effective working capital management in the fast-moving
consumer goods industry. The purpose of this research is to draw attention to the
correlation between well-managed working capital and measures of financial health
including liquidity, profitability, and cash flow. The research aims to demonstrate the
significance of working capital management in the FMCG sector as a whole by analysing
the effect of this practise on the financial performance of PepsiCo.
 In order to assess PepsiCo's working capital management approaches and procedures: To
achieve this goal, we will analyse and assess the methods used by PepsiCo to manage its
working capital. Focusing on inventory management, accounts receivable management,
accounts payable management, and cash flow forecasting, this research hopes to dive into
these and other elements of working capital management. This research aims to shed light
on best practises in the fast moving consumer goods industry by analysing PepsiCo's
working capital management.
 To investigate PepsiCo's ongoing working capital management works on, including stock
management, records of sales management, creditor liabilities management, and income
anticipating.
 To assess the effect of working capital management on PepsiCo's monetary execution
pointers, like liquidity, benefit, and income.
 To distinguish the difficulties and valuable open doors related with working capital
management in the FMCG sector, with an emphasis on PepsiCo.
 To propose expected methodologies and suggestions for PepsiCo to further develop its
working capital management practices and improve generally monetary execution.

In doing so, the research hopes to add to the current body of expertise on working capital
management in the fast moving consumer goods industry. It reveals the tactics PepsiCo uses to
maximise its working capital and sheds light on the significance of good working capital

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management and its influence on financial success. Companies in the fast-moving consumer
goods industry may use the study's results as a guide as they endeavor to better manage their
working capital and boost their bottom line.

1.2 Limitation of the study

The study's limitations, which include certain possible limits and weaknesses that might have
impacted the research procedure and the conclusions, should be taken into account. The
following constraints need to be considered:

 Applicability: This research focuses on PepsiCo and its FMCG working capital
management practises, but the findings should be applicable to the industry as a whole.
Even though PepsiCo is a major participant in the FMCG market, the results may not be
generalizable to other businesses in the sector. various businesses may take various ways
to managing their working capital depending on their individual circumstances, plans,
and the dynamics of the markets in which they operate. Therefore, care should be used
before extrapolating the results to the whole FMCG industry.
 Data Availability: Having access to and collecting data on PepsiCo's working capital
management is crucial to the success of this research. However, not all organisations will
necessarily share their financial strategy and activities with the general public. External
researchers may be limited in their ability to delve deeply into a topic or be forced to rely
on aggregated industry data if they are denied access to certain private information and
internal data.
 Time Limits: This research relies on data and information that was readily accessible at
the time the study was conducted. As a result of external and internal variables, working
capital management practises and strategies may develop through time. As a result, it's
possible that the study's conclusions don't reflect the most recent approaches PepsiCo
uses for managing its working capital.
 Bias and Subjectivity: There is always the chance of bias or subjectivity in the data
gathered or the interpretations made, no matter how hard people try to acquire
trustworthy and accurate information. The results may be affected by the interviewees'
viewpoints and replies, which may be colored by their responsibilities, positions, or

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 personal prejudices. Researchers should be cognizant of the possibility of bias and take
steps to mitigate its effect on the findings.
 External Factors: While certain external factors are considered, the emphasis is on how
PepsiCo handles its working capital internally. However, working capital management in
the FMCG sector may be greatly influenced by external variables such as macroeconomic
circumstances, regulatory changes, and industry dynamics. The research may or may not
fully analyse the effect of external variables on PepsiCo's working capital management.
 Scope and Depth: Because of space and time constraints, this investigation may not go
deeply into all facets of working capital management. When discussing working capital
management, certain aspects or methods may be highlighted more than others. The
study's conclusions should not be taken as a complete examination of working capital
management in the FMCG industry or at PepsiCo.
 Alternative Perspectives: Working capital management in the fast moving consumer
goods industry is a complex topic, and the researchers' analysis of PepsiCo's practises is
presented here as one possible alternative viewpoint. But other scholars and specialists in
the field could look at the same practises in a different way or get a different conclusion.
Findings from this study should be interpreted in light of previous studies and other
points of view.
 Lack of Control: Since this is a qualitative investigation, the researchers cannot influence
any of the factors being studied. This is because they have to depend on previously
collected information and interviews with PepsiCo's financial leaders and managers,
neither of which guarantees complete control over the variables being considered.
Because of this, we may not be able to draw any firm conclusions on the effects of
working capital management practises on financial results.

Even with these caveats, however, the research "Working Capital Management in the FMCG
Sector: A Study of PepsiCo" nevertheless offers helpful insights into the issue at hand.
Researchers, practitioners, and readers will all benefit from a more nuanced understanding of the
results and their potential implications if these caveats are noted.

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1.3 Scope of the study
The scope of the concentrate on "Working Capital Management in the FMCG Sector: An
Investigation of PepsiCo" characterizes the limits and degree of the examination. It frames the
particular regions, ideas, and factors that the review centers around. Coming up next is the scope
of the review:

 Working Capital Management: The review focuses on the idea of working capital
management, which incorporates the management of current resources and liabilities to
guarantee the smooth activity of the business. It investigates different parts of working
capital management, including stock management, money due management, creditor
liabilities management, and income guaging.
 FMCG Sector: The review limits its concentration to the quick buyer merchandise
(FMCG) sector. The FMCG sector alludes to businesses that produce and circulate
merchandise with a short timeframe of realistic usability and high turnover, like food and
drinks, individual consideration items, family things, and that's only the tip of the iceberg.
The concentrate explicitly inspects the working capital management rehearses inside this
sector.
 Contextual investigation of PepsiCo: The review uses PepsiCo as a contextual analysis to
look at working capital management in the FMCG sector. PepsiCo is a worldwide
company known for its different arrangement of FMCG items. The exploration digs into
PepsiCo's working capital management procedures, rehearses, and their effect on the
organization's monetary execution.
 Monetary Execution Pointers: The review thinks about monetary execution markers as a
proportion of the viability of working capital management. These markers might
incorporate liquidity proportions (like current proportion and fast proportion), benefit
proportions (like net revenue and net revenue), and income measurements, (for example,
working income and free income). The review investigates how powerful working capital
management rehearses add to worked on monetary execution.
 Systems and Practices: The review researches the particular techniques and practices
utilized by PepsiCo in dealing with its working capital. It dissects PepsiCo's ways to deal
with stock management, money due management, creditor liabilities management, and

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 income estimating. The exploration expects to distinguish key elements adding to
PepsiCo's effective working capital management and feature best practices inside the
FMCG sector.
 Similar Examination: The review might include a relative investigation to consider
PepsiCo's working capital management rehearses in contrast to industry benchmarks or
other FMCG organizations. This considers a more extensive comprehension of the
organization's presentation and gives experiences into possible regions to progress.
 Inward and Outer Variables: The review considers both inner and outside factors that
might impact working capital management. Inner elements incorporate PepsiCo's
authoritative design, organization strategies, and inward cycles. Outside factors envelop
macroeconomic circumstances, industry patterns, and administrative conditions. The
exploration investigates how these elements interface with working capital management
practices and effect monetary execution.
 Suggestions and Suggestions: The review might give proposals and suggestions in view
of the discoveries. These suggestions could be coordinated towards PepsiCo or other
FMCG organizations hoping to improve their working capital management rehearses.
The examination plans to offer commonsense bits of knowledge that can assist
organizations with working on their monetary execution through powerful working
capital management.

It is critical to take note of that the scope of the review might shift relying upon the particular
examination targets, accessible assets, and time limitations. Specialists ought to obviously
characterize the limits and limits of the review to guarantee an engaged and significant
examination concerning working capital management in the FMCG sector, with PepsiCo as the
contextual investigation.

1.4 Significance of the study

The concentrate on "Working Capital Management in the FMCG Sector: An Investigation of
PepsiCo" holds critical significance for a few partners, remembering organizations for the
FMCG sector, monetary supervisors, financial backers, and specialists. Coming up next are the
key viewpoints featuring the significance of the study:

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 Commitment to Information: The review adds to the current group of information on
working capital management in the FMCG sector. It offers experiences into the particular
techniques and practices utilized by PepsiCo, a conspicuous player in the business. By
analyzing the connection between working capital management and monetary execution,
the review improves understanding and gives commonsense ramifications to
organizations working in the FMCG sector.
 Upgrading Monetary Execution: Successful working capital management assumes an
imperative part in improving an organization's monetary presentation. The review reveals
insight into how PepsiCo's working capital management rehearses add to further
developed liquidity, productivity, and income. By distinguishing best practices and
achievement factors, the review empowers organizations in the FMCG sector to upgrade
their monetary presentation and accomplish maintainable development.
 Upgrading Incomes: Proficient working capital management enhances incomes, which is
urgent for organizations in the FMCG sector. The review investigates PepsiCo's systems
in regions like stock management, money due management, and records payable
management. By understanding these practices, organizations can really deal with their
working capital, limit supporting expenses, and further develop their income position.
 Risk Management: Working capital management is intently attached to take a chance
with management in the FMCG sector. The review features how successful management
of current resources and liabilities can assist organizations with moderating functional
and monetary dangers. By inspecting PepsiCo's practices, the review gives bits of
knowledge into risk moderation procedures and their effect on monetary soundness.
 Financial backer Certainty: Financial backers consider working capital management
rehearses as a significant mark of an organization's monetary wellbeing and management
productivity. The review's discoveries on PepsiCo's working capital management can
impart trust in financial backers by exhibiting the organization's capacity to deal with its
momentary assets really. This understanding can impact speculation choices and possibly
draw in additional financial backers to the FMCG sector.
 Vital Direction: The review gives important bits of knowledge to monetary supervisors
and leaders in the FMCG sector. By analyzing PepsiCo's working capital management
rehearses, it offers direction for going with vital choices in regards to stock levels, credit

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 approaches, provider connections, and income estimating. This data can assist
organizations with improving their working capital designation and backing in general
business systems.
 Industry Benchmarking: The review's near examination of PepsiCo's working capital
management against industry benchmarks can act as a benchmarking device for
organizations in the FMCG sector. It permits organizations to assess their own practices
and execution according to industry pioneers, recognize holes, and make informed
acclimations to improve their working capital management.
 Strategy Suggestions: The review's discoveries can possibly impact vast arrangements
and guidelines. On the off chance that the exploration distinguishes huge holes or regions
for development in working capital management rehearse, policymakers might consider
carrying out rules or guidelines to advance better practices inside the FMCG sector. This
can bring about a more proficient and tough industry scene.

In outline, the concentrate on "Working Capital Management in the FMCG Sector: An

Investigation of PepsiCo" holds critical significance for organizations, monetary directors,
financial backers, and specialists in the FMCG sector. It gives bits of knowledge into powerful
working capital management rehearses, improves monetary execution, streamlines incomes,
oversees gambles, supports financial backer certainty, helps key direction, works with industry
benchmarking, and may have strategy suggestions. In general, the review's discoveries can
decidedly affect the FMCG sector by working on the proficiency and productivity of
organizations working inside it.

1.5 Statement of problem

In the highly competitive and volatile fast-moving consumer goods (FMCG) industry, effective
management of working capital is essential to long-term success. In the fast-moving consumer
goods (FMCG) industry, competition is fierce, product cycles are quick, and cash conversion
times are minimal. The efficient running of operations, the maximization of cash flows, and the
reduction of financial risks all depend on prudent management of working capital. With PepsiCo
as a case study, this research intends to shed light on the issue of working capital management in
the fast-moving consumer goods industry. The goal of this research is to better understand the

17
possibilities and threats that PepsiCo faces in its current approach to working capital
management.

The issue tended to in this study spins around the accompanying key parts of working capital
management in the FMCG sector, with PepsiCo as the point of convergence:

 Wasteful Stock Management: The FMCG sector frequently wrestles with the test of
keeping up with ideal stock levels. Inordinate stock ties up significant assets and
increments conveying costs, while deficient stock prompts stockouts and botched deals
valuable open doors. The issue lies in tracking down the right harmony among organic
market. This study expects to inspect the degree to which PepsiCo faces stock
management issues and investigate likely answers for advance stock levels and further
develop income.
 Incapable Records Receivable Management: Overseeing debt claims is basic for FMCG
organizations, as it straightforwardly influences cash inflows and liquidity. Deficient
credit strategies, permissive assortment systems, and deferred installments from clients
can strain working capital. This study looks to research the records receivable
management practices of PepsiCo and decide if there are open doors for development, for
example, executing stricter credit strategies, upgrading assortment methods, or
investigating imaginative installment arrangements.
 Sub-standard Records Payable Management: The management of records payable is one
more critical part of working capital management. Postponed installments to providers
can strain connections and may bring about greater expenses or confined admittance to
fundamental data sources. The review intends to evaluate PepsiCo's records payable
management rehearses and recognize potential open doors for advancing installment
terms, smoothing out processes, and upgrading provider connections to work on working
capital proficiency.
 Erroneous Income Estimating: Precise income anticipating is fundamental for viable
working capital management. In the FMCG sector, where incomes are much of the time
unstable and dependent upon irregularity, the capacity to anticipate and make
arrangements for cash needs is vital. This study plans to analyze PepsiCo's income
guaging rehearses and decide the exactness and adequacy of their determining models. It

18
 likewise tries to distinguish any expected holes and investigate procedures to upgrade
income estimating capacities.

PepsiCo is used to illustrate the difficulties of working capital management in the fast-moving
consumer goods (FMCG) industry, including issues with inventory, accounts receivable,
accounts payable, and cash flow forecasting. Effective operations, maximized cash flows, and
long-term financial viability can only be attained by resolving these issues. This research seeks
to improve our knowledge of FMCG sector working capital management practises via analysis
and the generation of actionable suggestions that will boost PepsiCo's performance and provide a
benchmark for the industry as a whole.

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CHAPTER 2

COMPANY PROFILE
2.0 Introduction
PepsiCo is a global food and beverage company that serves the FMCG market. PepsiCo, which
began in 1965 when Pepsi and Frito-Lay merged, is now a global leader in the food and beverage
industry. PepsiCo is a multinational food and beverage corporation that produces and markets a
wide variety of well-known brands across the world.

2.1 Leading Company:

More than 300,000 people are employed by PepsiCo throughout its global network of more than
200 nations and territories. In North America, the firm is divided into Frito-Lay, Quaker Foods,
PepsiCo Beverages, and PepsiCo International. These departments work together to provide a
vast selection of food, drinks, and other fast moving consumer goods (FMCG) to meet the needs
of a broad variety of customers.

Carbonated soft drinks, juices, snacks, ready-to-drink teas and coffees, sports drinks, morning
cereals, and more are all part of the company's extensive product catalogue. PepsiCo has
established itself as a household name because two years of hard work in advertising, product
development, and collaboration with other companies.

2.2 History of PepsiCo

PepsiCo is a worldwide food and refreshment partnership referred to for its notorious brands like
Pepsi, Lay's, Gatorade, Quaker, Tropicana, and Doritos. The organization has a rich history that
traces all the way back to the late nineteenth hundred years. We should investigate the excursion
of PepsiCo in a succinct way.

PepsiCo's starting points can be followed back to 1893 when Caleb Bradham, a drug specialist
from North Carolina, presented "Brad's Beverage," a carbonated soda. Brad's Beverage became
well known and was subsequently renamed Pepsi-Cola in 1898. The early long periods of the

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organization were set apart by high points and low points, including chapter 11 during The
Second Great War and the Economic crisis of the early 20s.

In 1931, Pepsi-Cola went through a massive change when it was obtained by Charles Guth, the
leader of Space Inc., a sweets and wellspring syrup organization. Guth brought imaginative
promoting procedures and expanded conveyance channels for Pepsi-Cola. One of the striking
promoting efforts during this time was the "Pepsi Age" during the 1960s, focusing on the more
youthful segment and underlining the brand's relationship with youth and imperativeness.

In 1965, Pepsi-Cola converged with Frito-Lay, a main nibble food maker. The consolidation
made another organization called PepsiCo, Inc., which joined the qualities of the two
organizations. Frito-Lay brought well known nibble brands like Lay's and unsettles,
differentiating PepsiCo's item portfolio.

All through the next many years, PepsiCo extended its presence worldwide through acquisitions
and vital organizations. In 1978, the organization procured Pizza Cottage, a well known pizza
chain, trailed by the obtaining of Taco Ringer in 1979. These acquisitions denoted PepsiCo's
entrance into the cheap food industry, framing what might later be known as Yum! Brands.

During the 1980s, PepsiCo confronted extreme contest with its principal rival, The Coca-Cola
Organization. With an end goal to separate itself, PepsiCo presented a few inventive promoting
efforts, including the well known "Pepsi Challenge." This visually impaired trial moved
customers to pick either Pepsi and Coca-Cola, determined to demonstrate Pepsi's prevalent taste.
Notwithstanding the extraordinary contention, the two organizations flourished and extended
their worldwide presence.

PepsiCo proceeded with its broadening methodology during the 1990s by securing other
refreshment organizations, for example, Tropicana Items and SoBe Refreshments, further
growing its item contributions past carbonated sodas. In 2001, PepsiCo obtained Quaker Oats
Organization, acquiring famous brands like Quaker Oats, Gatorade, and Cap'n Crunch.

Lately, PepsiCo has zeroed in on manageability and better item choices. The organization has
promised to lessen its natural effect, further develop water productivity, and advance reusing. It

21
has additionally presented new product offerings and reformulated existing ones to meet
changing buyer inclinations for better tidbits and refreshments.

PepsiCo's worldwide reach and memorability’s have made it one of the biggest food and
refreshment organizations on the planet. The organization works in excess of 200 nations and
domains and utilizes north of 290,000 individuals around the world. Its items are delighted in by
a great many shoppers consistently, making it a prevailing power in the business.

All in all, PepsiCo has a celebrated history that traverses more than a long time. From its modest
starting points as a little soft drink brand, it has developed into a global company with a different
arrangement of food and refreshment brands. Through essential acquisitions, creative
showcasing efforts, and a promise to maintainability, PepsiCo has solidified its situation as a
forerunner in the business, taking care of the developing preferences and inclinations of
purchasers around the world.

2.3 Pepsi Logos:

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2.4 PepsiCo Product List
Here is a list of some of the key products offered by PepsiCo:

1. Carbonated Soft Drinks:

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  Pepsi
 Diet Pepsi
 Pepsi Max
 Pepsi Zero Sugar
 Mountain Dew
 Sierra Mist
 Mug Root Beer
 Dr Pepper (distributed by PepsiCo in certain regions)

2. Non-carbonated Beverages:

 Gatorade (sports drinks)

 Tropicana (fruit juices)
 Lipton (ready-to-drink teas)
 Aquafina (bottled water)
 Naked Juice (smoothies and juice blends)
 SoBe (flavored beverages)

3. Snack Foods:

 Lay's (potato chips)

 Doritos
 Cheetos
 Tostitos
 Ruffles
 Fritos
 SunChips
 Smartfood (popcorn)
 Quaker Rice Cakes
 Cracker Jack (caramel-coated popcorn and peanuts)

4. Breakfast Cereals:

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  Quaker Oats
 Life
 Cap'n Crunch
 Aunt Jemima (pancake mixes and syrups)

5. Dairy Products:

 Quaker Oat Beverage

 Quaker Yogurt
 Quaker Overnight Oats

6. Food and Snack Brands (acquired through mergers and acquisitions):

 Sabra (hummus and dips)

 Stacy's Pita Chips
 Naked Tenders (chicken products)
 Miss Vickie's (potato chips)
 Rold Gold (pretzels)
 Matador (beef jerky)
 Imagine (soups and broths)

7. Foodservice and Restaurant Brands (owned or partially owned by PepsiCo):

 PepsiCo owns or has partnerships with various restaurant chains, including:

 Pizza Hut
 Taco Bell
 KFC (Kentucky Fried Chicken)
 WingStreet
 Long John Silver's
 A&W Restaurants
 Yum! Brands (umbrella company for several fast-food chains)

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2.5 Management of Working Capital Is Crucial:
Management of working capital is crucial for fast moving consumer goods corporations like
PepsiCo. Competition is fierce, customer tastes shift quickly, and profit margins in the fast
moving consumer goods (FMCG) industry are razor thin. A company's cash flow, borrowing
costs, and overall financial performance may all be improved with better working capital
management.

2.6 PepsiCo's Methods for Managing Its Working Capital

 Controlling Stock:

Managing stock levels well in the FMCG industry is essential because of the need to strike a
balance between stock outages and surplus. PepsiCo uses sophisticated technologies for demand
planning and inventory forecasting to maintain optimal stock levels. The business hopes to
minimise stockouts and cut down on inventory holding expenses by properly anticipating
customer demand and continuously tracking sales patterns.

 Management of Receivables:

In order to maximise cash flow, PepsiCo has rigorous credit criteria and aggressively handles
accounts receivable. The business keeps a careful eye on when its clients are due to pay and uses
efficient collection techniques to cut down on late payments. PepsiCo strengthens its working
capital position and decreases its reliance on external finance by securing prompt payment from
consumers.

 Management of Accounts Payable:

PepsiCo optimizes its accounts payable by strategic management of its relationships with its
suppliers. Taking use of its considerable buying power, the firm is able to negotiate
advantageous payment arrangements. PepsiCo improves its cash flow and working capital
situation by extending payment terms to its suppliers while keeping up positive connections with
them.

 Predicting Future Cash Flows:

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PepsiCo's working capital management approach relies heavily on precise cash flow projections.
The organisation makes financial forecasts with the use of complex software and algorithms.
Because of this, PepsiCo can allocate its working capital and invest and borrow money with
confidence. PepsiCo's ability to adapt to shifting market circumstances is enhanced by its
proactive management of cash flows.

2.7 Gains from Skillful Management of Working Capital:

 PepsiCo gains in a number of ways thanks to good management of its working capital.
First, it strengthens the firm's liquidity, making sure it has enough cash on hand to satisfy
its immediate commitments. With these funds, PepsiCo is able to pursue growth
possibilities, support R&D efforts, and make strategic acquisitions.
 Second, effective working capital management reduces the amount of time and money
spent acquiring and using outside finance. PepsiCo can improve its profitability and
financial stability by optimising its cash conversion cycle and reducing its dependence on
expensive short-term borrowing.
 Financial results as a whole may benefit from careful management of working capital.
PepsiCo may increase productivity by cutting down on surplus stock, lowering the
number of payments that are past due, and finding the sweet spot for payment terms.
Profitability and ROI both increase as a result of this enhanced efficiency.

PepsiCo, a worldwide leader in the fast-moving consumer goods (FMCG) industry, understands
the need of effective working capital management. The company's dedication to working capital
optimisation is seen in its strategies and practises in areas like inventory management, accounts
receivable management, accounts payable management, and cash flow forecasting.

PepsiCo ensures effective inventory management by reducing the possibility of stockouts and
stockpiles of surplus goods via the use of sophisticated planning and forecasting tools. Improved
cash flow and lower financing costs are the result of the company's stringent credit rules and
diligent accounts receivable management. PepsiCo's ability to optimise payment terms via
strategic accounts payable management contributes to the company's strong working capital
position.

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By placing a premium on cash flow forecasting, PepsiCo is better equipped to allocate its
working capital to investments and financing. Together, these tactics help PepsiCo thrive in the
ever-changing fast-moving consumer goods (FMCG) market.

PepsiCo's methods for managing its working capital might need some tweaking, however.
Automation and digitalization of business operations may help the organisation achieve even
greater efficiencies and precision. Working capital management may be improved with the use of
automated inventory monitoring systems & digital payment platforms, which can expedite
processes and cut down on human mistakes.

Additionally, better efficiency in the supply chain and shorter lead times may result from
enhanced communication with suppliers and consumers. PepsiCo may improve inventory
turnover and entire working capital management by developing deeper connections with
suppliers and employing collaborative practises.

PepsiCo has to keep an eye on its main working capital measures and analyse them often to spot
problem areas and solve them before they become crises. Metrics like inventory turnover,
accounts receivable turnover, and day’s payable outstanding may be reviewed on a regular basis
to assist spot inefficiencies and improve working capital management.

PepsiCo's efforts to improve its financial performance may be seen in the company's working
capital management practises. PepsiCo exhibits its dedication to efficient working capital
management in the FMCG industry via its careful management of inventories, accounts
receivable and payable, and cash flow forecasting.

PepsiCo may further improve its working capital management practises by iteratively refining its
plans, adopting automation and digitalization, and encouraging deeper cooperation. The
company's future growth, profitability, and capacity to compete in the fast-moving consumer
goods (FMCG) market will all benefit from these enhancements.

2.8 Genesis of Indian PepsiCo Market

PepsiCo's entrance into the Indian market can be followed back to the last part of the 1980s. The
Indian drink industry at the time was overwhelmed by nearby brands, and global players had
restricted presence because of unofficial laws and protectionist arrangements. Nonetheless,

28
monetary advancement in India in the mid 1990s opened up new open doors for unfamiliar
organizations.

In 1989, PepsiCo made its underlying introduction to India by shaping a joint endeavor with
Punjab Agro Modern Partnership (PAIC) and Voltas India Restricted. This joint endeavor
prompted the foundation of PepsiCo India Possessions Pvt. Ltd., fully intent on assembling,
showcasing, and appropriating PepsiCo's items in India.

PepsiCo confronted a few difficulties during its initial a very long time in the Indian market. One
of the essential snags was rivalry from the laid out market pioneer, Coca-Cola, which had been
working in India since the 1950s. Furthermore, social inclinations and provincial varieties
presented extraordinary difficulties for PepsiCo in understanding and taking special care of the
different Indian purchaser base.

In 1990, PepsiCo sent off its lead image, Pepsi, in India. The organization embraced a forceful
promoting and publicizing system to make brand mindfulness and gain piece of the pie. It
presented a few imaginative missions that reverberated with Indian shoppers, for example, the
popular "Yeh Dil Maange More" crusade including Bollywood entertainer Shah Rukh Khan.
These promoting endeavors assisted Pepsi with acquiring notoriety among the Indian youth,
situating itself as an energetic and optimistic brand.

To fortify its presence in the Indian market, PepsiCo made huge interests in assembling and
dispersion framework. The organization set up cutting edge packaging plants the nation over and
joined forces with neighborhood bottlers to guarantee effective conveyance and accessibility of
its items. This methodology assisted PepsiCo with growing its range to even remote pieces of
India.

PepsiCo's item portfolio in India extended past carbonated sodas to incorporate non-carbonated
drinks, bites, and food items. The securing of nearby brands, for example, Lehar and Uncle
Chipps further upgraded its presence in the Indian nibble food market.

PepsiCo likewise perceived the significance of confinement and advancement to take special
care of Indian preferences and inclinations. The organization presented district explicit flavors

29
and variations, for example, the well known "Mirinda Orange Masala" and "Nimbooz" (a lemon-
based drink), to speak to the different palates of Indian purchasers.

Throughout the long term, PepsiCo has kept on putting resources into innovative work, zeroing
in on creating better item choices to line up with changing customer inclinations. The
organization has presented low-sugar and diet variations of its drinks and has extended its nibble
portfolio to incorporate better other options.

Today, PepsiCo India is one of the main food and refreshment organizations in the country. It
works different assembling offices, utilizes great many individuals, and has areas of strength for
an organization that arrives at a large number of shoppers across India. PepsiCo's progress in the
Indian market can be ascribed to how its might interpret nearby inclinations, imaginative
advertising systems, and nonstop interest in framework and item development.

2.9 Scenario of PepsiCo Industry in India:

PepsiCo has laid out serious areas of strength for an in the Indian market and is one of the main
players in the food and drink industry. The organization works in different fragments, including
carbonated sodas, non-carbonated refreshments, and nibble food sources, taking care of the
assorted preferences and inclinations of Indian purchasers.

The carbonated soda portion, in which PepsiCo's leader image Pepsi contends, remains
profoundly cutthroat in India. The organization faces rivalry essentially from The Coca-Cola
Organization, which is one more key part in the Indian drink market. The two organizations
utilize forceful showcasing and publicizing procedures to acquire piece of the pie and catch the
consideration of purchasers.

Non-carbonated refreshments, for example, organic product juices, sports drinks, and filtered
water, have seen critical development in India as of late. PepsiCo's brands like Tropicana and
Gatorade have been generally welcomed by wellbeing cognizant customers looking for better
refreshment choices. The organization keeps on putting resources into item advancement and
showcasing to take advantage of the developing interest for non-carbonated drinks in the Indian
market.

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Nibble food sources structure one more significant fragment for PepsiCo in India. The
organization's brands like Lay's, Kurkure, and Doritos have serious areas of strength for an and
are well known among Indian shoppers. The Indian nibble food market is exceptionally
cutthroat, with both neighborhood and global players competing for piece of the pie. PepsiCo
centers around acquainting limited flavors and variations with take care of provincial
preferences, along missions and joint efforts with famous VIPs and powerhouses.

PepsiCo has made critical interests in assembling and dispersion framework in India. The
organization works various cutting edge packaging plants the nation over, guaranteeing
proficient creation and production network the board. It has likewise collaborated with nearby
bottlers to extend its circulation organization and arrive at even distant areas of India. This broad
dispersion network empowers PepsiCo to make its items accessible to a great many shoppers,
adding to its market predominance.

As of late, PepsiCo India has been effectively zeroing in on supportability and social obligation
drives. The organization has done whatever it may take to diminish its natural effect, further
develop water productivity, and advance dependable obtaining and squander the board rehearses.
PepsiCo India has additionally embraced local area improvement programs, remembering drives
for agribusiness, instruction, and expertise advancement, to add to the general government
assistance of the general public.

The Corona virus pandemic has presented difficulties to the food and refreshment industry all
around the world, remembering for India. The limitations and disturbances brought about by the
pandemic impacted creation, dissemination, and shopper interest. Nonetheless, PepsiCo, as other
key part in the business, adjusted to the changing conditions by executing security measures,
sloping up web-based deals channels, and acquainting new item variations with take special care
of advancing shopper inclinations.

Looking forward, PepsiCo India is probably going to proceed with its emphasis on development,
item expansion, and manageability. The organization is supposed to present new better choices,
grow its arrangement of non-carbonated drinks, and reinforce its presence in the nibble food
fragment. PepsiCo will likewise keep on taking part in advertising and special exercises to keep
up with its image perceivability and associate with buyers.

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It is quite important that the Indian market is dynamic and continually developing, impacted by
variables like changing buyer inclinations, administrative approaches, and financial
circumstances. Thusly, the situation of PepsiCo's industry in India will keep on being molded by
these elements, and the organization should adjust and plan in like manner to keep up with its
strategic advantage on the lookout.

2.10 Competitors PepsiCo Industry in India

PepsiCo works in an exceptionally cutthroat industry in India, with a few organizations
competing for piece of the pie in different fragments of the food and refreshment area. Here are a
few vital contenders of PepsiCo in the Indian market:

 The Coca-Cola Organization: Coca-Cola is one of the significant contenders of PepsiCo

in India. The organization offers a large number of carbonated sodas, non-carbonated
refreshments, and filtered water, including well known brands like Coca-Cola, Thums
Up, Sprite, Fanta, and Maaza. Coca-Cola has serious areas of strength for an organization
and forceful showcasing methodologies to contend with PepsiCo.
 Parle Agro: Parle Agro is a noticeable Indian drink organization and a solid contender to
PepsiCo. It is known for its famous brands like Frooti, Appy, Appy Bubble, and Bailley.
Parle Agro has serious areas of strength for an in the organic product based refreshments
and bundled drinking water sections, and it rivals PepsiCo's brands like Tropicana and
Aquafina.
 Nestlé India: Nestlé is a global food and refreshment organization that contends with
PepsiCo in different item classifications. Nestlé offers a great many items, including
breakfast cereals, dairy items, and filtered water. Its brands like Maggi, Nescafé, KitKat,
and Nestlé Milkmaid contend with PepsiCo's nibble food sources, espresso, and dairy
items.
 Britannia Businesses: Britannia Ventures is a main Indian food organization that offers a
scope of bread shop and nibble items. It rivals PepsiCo's bite brands, for example, Lay's
and Kurkure with its own well known brands like Britannia Great Day, Tiger, and
Whiskey. Britannia Ventures has serious areas of strength for an organization and a
faithful client base.

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  ITC Restricted: ITC Restricted, a differentiated combination in India, contends with
PepsiCo in the nibble food sources portion. ITC's well known nibble brands incorporate
Bingo! Also, Yumitos, which straightforwardly rival PepsiCo's Lay's and Doritos. ITC
additionally has a presence in the drink section with brands like B Regular organic
product juices.
 Nearby and Provincial Players: notwithstanding the global and laid out Indian
organizations, there are various neighborhood and local players in the food and drink
industry in India. These players frequently take care of explicit local preferences and
inclinations and posture rivalry to PepsiCo in their separate business sectors.

The opposition in the Indian food and drink industry is serious, with organizations competing for
piece of the pie and persistently presenting new items and showcasing techniques. PepsiCo faces
difficulties from both global monsters and neighborhood players, and it takes on different
techniques like item advancement, promoting efforts, and circulation development to keep up
with its situation on the lookout.

2.11 Trends in and Market Share of PepsiCo Industry

Trends in the PepsiCo Business in India:

 Wellbeing and Health Concentration: One critical pattern in the food and refreshment
industry is the rising accentuation on wellbeing and wellbeing. Customers are looking for
better choices, including decreased sugar refreshments, regular fixings, and snacks with
lower levels of added substances. PepsiCo has answered this pattern by presenting better
other options and reformulating its current items to line up with changing shopper
inclinations.
 Broadening and Item Advancement: PepsiCo has been growing its item portfolio and
zeroing in on item development to take special care of developing purchaser requests.
The organization has presented new flavors, variations, and bundling configurations to
engage various portions of the market. This enhancement assists PepsiCo with remaining
cutthroat and adjusts to evolving trends.
 Maintainability and Natural Obligation: One more significant pattern in the business is
the rising significance of supportability and ecological obligation. Purchasers are turning

33
 out to be more aware of the natural effect of the items they consume. PepsiCo has
promised to lessen its carbon impression, further develop water proficiency, and advance
reusing and capable obtaining rehearses.

Market Share of PepsiCo in India:

PepsiCo has been one of the vital participants in the Indian food and refreshment industry,
however market share can fluctuate across various fragments and districts. Here are a few
general experiences on PepsiCo's market share:

 Carbonated Soda pops: PepsiCo and its lead image, Pepsi, contend with The Coca-Cola
Organization in the carbonated soda pop fragment. The two organizations have a critical
market presence, and their market shares are cutthroat. Notwithstanding, the specific
market share figures might vary in light of elements like shopper inclinations, marketing
efforts, and local varieties.
 Non-Carbonated Drinks: PepsiCo has major areas of strength for an in the non-
carbonated refreshment section in India. Brands like Tropicana (organic product juices)
and Gatorade (sports drinks) have acquired ubiquity among Indian shoppers. The market
share of these brands might differ relying upon contest from nearby players and other
global organizations in the fragment.
 Nibble Food varieties: PepsiCo's bite brands, including Lay's, Kurkure, and Doritos, have
a critical market share in the Indian nibble food industry. These brands have a wide
circulation organization and are famous among shoppers the nation over.
Notwithstanding, contest from nearby and provincial players is likewise critical in this
portion.

It's critical to take note of that market share figures can change after some time because of
different elements, including buyer inclinations, marketing systems, and cutthroat elements. It's
prudent to allude to the most recent market research reports and industry examinations for the
most modern and exact data on market share trends in the PepsiCo business in India.

2.12 PepsiCo Vision Statement

Here are the vision statement and core values of PepsiCo:

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Vision Statement:

"PepsiCo's liability is to persistently work on all parts of the world in which we work - climate,
social, monetary - making a preferred tomorrow over today."

Core values:

 Care for Clients and Buyers: PepsiCo is focused on giving prevalent items and
administrations that meet the different requirements of its clients and shoppers.
 Convey Unrivaled Monetary Execution: The organization plans to reliably areas of
strength for accomplish results and convey long haul worth to its shareholders.
 Engage Individuals: PepsiCo has confidence in establishing a comprehensive and
different workplace where its representatives can flourish, foster their gifts, and add to
the organization's prosperity.
 Take a stab at Greatness: The organization is committed to constant improvement and
endeavors to be the most incredible in all that it does, including development, tasks, and
client support.
 Genuinely honorable act: PepsiCo conducts its business with trustworthiness, honesty,
and regard for all people and networks it connects with.
 Embrace Maintainability: The organization perceives the significance of ecological
manageability and means to limit its effect in the world while adding to the networks
where it works.
 Exhibit Corporate Citizenship: PepsiCo effectively takes part in friendly obligation drives
and local area improvement projects to have a constructive outcome in the public eye.

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CHAPTER 3

LITERATURE REVIEW
Using PepsiCo as a case study, this literature review examines the topic of working capital
management in the fast-moving consumer goods (FMCG) industry in length. This evaluation
examines the role that working capital management plays for fast-moving consumer goods
(FMCG) businesses and provides an analysis of PepsiCo's unique strategies and practises in this
area. The research shows that the management of working capital is crucial to the success of
companies in the fast-moving consumer goods (FMCG) industry in terms of profit, liquidity, and
overall financial performance.

Particularly important in the fast moving consumer goods (FMCG) industry is the management
of working capital. It helps businesses maximise profits by ensuring they have enough cash on
hand to satisfy their short-term commitments. The large international food and beverage
corporation PepsiCo is the subject of this literature study, which examines the firm's working
capital management practises within the FMCG industry. This analysis seeks to shed light on the
relevance of working capital management in the FMCG sector and on the particular tactics
utilised by PepsiCo by combining relevant research and industry data.

The Role of Working Capital Management in the Fast-Moving Consumer-Goods Industry:

The fast sales cycles and the requirement for prompt distribution and replenishment typical of
the fast moving consumer goods (FMCG) industry highlight the need of sound working capital
management in this industry. A company's ability to generate revenue, cut expenses, limit losses,
and keep ahead of the competition all depend on how well its working capital is managed.
Several studies (Afza & Mirza, 2013; Baos-Caballero, Garca-Teruel, & Martnez-Solano, 2014),
among many others, have shown that effective working capital management improves
profitability, liquidity, and financial performance in the fast moving consumer goods industry.

Key Performance Indicators (KPIs) and Working Capital Components Working capital is made
up of receivables, payables, and inventories. Effective management of these factors is essential
for fast moving consumer goods firms. Measures of the efficiency of working capital
36
management include the cash conversion cycle (CCC), days sales outstanding (DSO), days
inventory outstanding (DIO), and days payable outstanding (DPO). Firm profitability and
liquidity are favourably impacted, according to the literature (Deloof, 2003; Raheman & Nasr,
2007), when the CCC is lowered.

Strategies for Improving Working Capital Management at Fast-Moving Consumer Goods Firms
Many different approaches are used by FMCG firms to improve working capital management.
Effective working capital management requires the use of sophisticated methods of financial
forecasting, inventory management systems, credit management policies, and supplier
relationship management. Processes may be simplified and productivity increased with the use of
technology and automation (Boyer, 2016). The FMCG industry has benefited from these tactics,
which have increased liquidity and profitability.

Working Capital Management at PepsiCo: A Case Study There is much to be learned by

examining PepsiCo's working capital management practises. Credit assessment, credit terms, and
collection methods are all part of PepsiCo's well-oiled system for handling accounts receivable.
In addition, state-of-the-art forecasting and just-in-time inventory management technologies help
the organisation have the right amount of stock on hand at all times. PepsiCo also keeps its ties
with its vendors in good shape to guarantee timely payments and consistent supplies (Shin &
Soenen, 1998). PepsiCo has been successful in managing its working capital in part because of
these policies and procedures.

Financial results as a result of working capital management:

Working capital management is positively correlated with financial success in the fast moving
consumer goods (FMCG) business, according to several academic research and industry
publications. Profitability is increased via better working capital management when expenses are
cut, cash flow is improved, and resources are allocated most effectively. It also boosts cash flow,
so businesses can pay their immediate expenses and capture expansion chances. Improved
shareholder value and long-term financial health are further benefits of sound working capital
management (Baos-Caballero et al., 2014; Deloof, 2003; Raheman & Nasr, 2007).

Working capital management in the fast-moving consumer goods industry was the subject of this
literature evaluation, which also included an analysis of PepsiCo. The results emphasise the

37
necessity of efficient working capital management in improving the FMCG industry's
profitability, liquidity, and overall financial performance. Cash flow may be optimised, expenses
can be reduced, risks can be mitigated, and a competitive advantage can be maintained by
properly managing accounts receivable, accounts payable, and inventory for fast moving
consumer goods firms. PepsiCo's credit management, inventory optimisation, and supplier
relationship management are all examples of best practises in effective working capital
management. Studies continuously show a positive association between profitability and
liquidity in the FMCG industry, highlighting the importance of effective working capital
management to overall financial success.

This literature study is useful for learning about FMCG working capital management in general
and PepsiCo's tactics in particular. The findings of this study may help FMCG businesses like
PepsiCo enhance their financial performance and ensure their continued success by informing
the development of sound working capital management practises.

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CHAPTER 4

RESEARCH METHODOLOGY
4.0 Introduction
The selection of appropriate methodology to conduct the research in context of the identified
research problems is necessary to reach objective based outcomes (Bergh and Ketchen, 2009).
The current chapter deals with the identification of the most suitable research paradigm,
approach, design, data collection and analysis method that is applicable to resolve the research
questions. According to Saunders et al. (2009), research methodology involves the research
study of the research topic and thus complete and analyse the research process in details.
Researcher in this research carry out the detailing and analysis process through collecting the
data and thus in accordance to it relate it and analyse the collected data through the process of
research methodology.

Researcher in this process implements various concepts and theories in the research, which help
the researcher to analysis the research topic in a far better way. Thus, researcher methodology
helps the researcher to implement these various theories and concepts and thus to analyse the
research topic in a more detailing way. Implementation of various theories and concepts also
help the researcher in the research methodology to analyse the corporate social responsibility in
ensuring the sustainability of the business operations globally (Bergh and Ketchen,
2009).Though however, research methodology sometimes leads to an error which may
sometimes leads to a limits to the researcher to carry out the research process in detail.

4.1 Methods outline

The type of investigation carried out in the current research is descriptive that helps to conduct a
comprehensive study. The choice of research philosophy is positivism and the research process
implemented is deductive approach. Positivism paradigm and deductive reasoning help to test
the exiting theories with the help of empirical data obtained through primary research. Primary
data is collected by implementing mixed method, i.e. combination of quantitative data

39
collection. The research strategy to collect quantitative data was survey questionnaire distributed
to 100 customers of PepsiCo Ltd.

4.2 Research Onion

Layers in the research onion developed by Saunders et al. (2009), provide a systematic
framework to carry out the research in an orderly manner. Harrison and Reilly (2011) argue that
the research onion gives a generic research process that helps the researcher to resolve
underpinning issues of making choices for data collection methods and strategies. Unfolding
each layer of the onion step by step, helps to reach the core. The stages in the research onion start
with the identification of most suitable philosophies in the epistemological standpoint, followed
by approaches whether deductive or inductive, strategies such as surveys, case studies, action
research to choose from. The next layer talks about choices to be made, whether to use mono,
mixed or multi methods. In order to proceed with the choices made, it is necessary to develop a
time frame in the form of time horizons and carry out either a cross sectional research or a
longitudinal study. The final layer of the research onion provides the data collection and data
analysis to be followed and obtain the findings to get the outcome.

40
Figure 1: Research Onion

(Source: Saunders et al. 2009)

As illustrated in the above diagram, research onion helps in study of each layer of research
techniques that will enable better research and more information for the result analysis. A
researcher needs to follow each layer of research onion so that a structured procedure is adopted
for the research process.

4.3 Research Paradigm/Philosophy

Epistemology deals with the nature of knowledge perceived by the researcher as to what is
acceptable knowledge. Positivism, interpretivism and realism are the key paradigms that
constitute the philosophical standpoint of epistemology. Positivism philosophy assumes that
material facts already exist in the universe and just need to be analysed using scientific method
(Freshwater, 2007). Positivism supports academic studies that are formed on the basis of social
realities in a methodical system that replicates the process as used in accepted science.
Interpretivism is an anti-positivist theory, and assumes that social research cannot be simply
tested using scientific research. On the other hand, realism assumes that objects that exist in the
universe can be felt by the human senses but are not dependent on human acuity and perception.
Pragmatism is a different research philosophy that argues that research can be conducted using
the positivist and the interpretivism approach.

Positivism supports objective based studies and extensive data testing using scientific process
(Doman, 2011, p265). As opposed to positivism, the philosophy of interpretivism supports
subjective based studies where in-depth qualitative analysis can be carried out. Hence,
quantitative analysis obtained by interacting with survey from consumers of PepsiCo Ltd. Hence,
positivism philosophy has been implemented to conduct this research.

4.3.1 Justification for selecting positivism

Positivism assumes that the purpose of scientific research is to uncover the truth and make is
possible to predict and control. It supports objective based studies using scientific principles as
used in natural sciences. Interpretivism is a philosophy that is subjective and socially constructed

41
through human reasoning and perceptions, and does not involve data testing. Interpretivism is
considered weak for the study because human reasoning and arguments cannot be feasible to test
the existing theories and reach suitable outcomes. Positivism is considered appropriate for the
current study as it align well with the deductive process as applied in this research so as to test
existing theories with the help of data collected through empirical research.

4.4 Research Approach

The selection of research approach, whether inductive or deductive depends on the nature of the
research topic and the complexity of the problems identified. Inductive process is a theory
building approach that starts with observation and data collection, formulating tentative
hypothesis, analysing the collected data and finally the development of new knowledge
(Freshwater, 2007). As opposed to inductive approach, the deductive process starts with
extensive study of existing theories, followed by identification of research gaps and hypothesis
development, analysing the existing data using scientific methods and finally testing the existing
studies (Bryman and Bell, 2011).

Deductive approach follows a general to a specific process and narrows down theoretical
knowledge after testing. However, inductive approach follows a specific to a general process
and extends conceptual knowledge to develop a new theory.

Deductive approach is a theory testing process, which helps to test existing theories and
conceptual models with the help of empirical data obtained from primary research. On the other
hand, inductive approach is a theory building process where the research starts with careful
observation of phenomena, followed by hypothesis development and confirmation (Meyers and
Woerkom, 2014).

4.4.1 Justifying the use of deductive approach

Deductive approach is appropriate for the research as broad literature comprising of theoretical
models are tested with the help of first hand/empirical data obtained through surveys and
interview, i.e. primary data. Inductive approach is not suitable for the study because the scope for
new theory development is very limited due to the fact that social media theories and brand
identity are common areas of study in the field of marketing research (Huxham and Vangen,
2008). Moreover, the inductive process makes extensive use of secondary data analysis and

42
quantitative data interpretations, which are not extensively used in this research. New knowledge
developed on the basis of primary research findings such as observations may not always be
underpinning and could be subject to criticisms (Saunders et al. 2009). Hence, in order to avoid
any complexity due to new knowledge development the inductive approach is avoided and
testing existing theories, following deductive approach is found feasible to carry out the research.

In the current research, the use of inductive approach cannot be made as this approach is
supported by interpretivism and qualitative data analysis.

4.5 Research Design

The major types of research designs used in an academic research are in form of exploratory,
explanatory and descriptive. Exploratory design is followed when the research problems are not
completely clear to the researcher and it helps to obtain peripheral information relating to the
area under study (Bryman and Bell, 2011). This design only provides a base level knowledge
that may be utilised to develop a research hypothesis.

On the other hand, explanatory design helps to establish relationship between variables while
explaining ‘cause and effect’ relationship (Denzin and Lincoln, 2011). Descriptive design helps
to carry out an extensive research and explore the answers to the identified research problems
from several dimensions such as what?, Why?, Who?, How? and When?.

Research Design

Exploratory
Explanatory Descriptive

43
Figure 7: Research Design

(Source 7: Saunders et al. 2009, pp-52)

4.5.1 Justification for choosing descriptive design

In case of research design, the descriptive investigation will consider as it helps in providing the
broader perspectives of the research to the researcher and after following this, the researcher can
develop their own reasoning and the ideas. It helps in giving the detailed analysis and also the
useful description about the topic (Meyers and Woerkom, 2014, pp.202). Exploratory research is
not found to be suitable for understanding the volatility of exchange rates and its impact on
business because it will only help to give marginal information. Similarly, explanatory research
will only help to establish the relationship between the key research variables instead of in-depth
qualitative analysis.

Descriptive research design is found to be suitable for the study because the nature of the
problems in this research is clearly identified and defined. The current research has formal set of
objectives and uses a mixed method towards data collection, which is supported by descriptive
design. Exploratory design is considered weak for the study because obtaining background
information will not be adequate enough to resolve the research issues.

Using descriptive research, the various areas that impact relationship marketing which helps to
will be investigated from multiple dimensions.

4.6 Data collection

The accurate result achievement for a research topic is largely dependent on the derivation of
relevant and significant data through application of correct and most suitable data collection
procedures (Onwuegbuzie and Leech , 2009, p. 376). In order to undertake a properly formatted
and standard research work, this research adopts the method of applying both primary and
secondary data collection procedures.

4.6.1 Secondary data collection

The secondary data collection is executed prior to the primary data collection method. Secondary
data regarding the attitudes of parents having adolescents with behavioral and emotional
problems are retrieved from the relevant journals, articles, books and magazines. In order to

44
refine the research and make it more informative and current data enriched, website contents are
also accessed. As put forward by Toloie-Eshlaghyet al. (2011, p. 108), going through the
secondary data enable the deep and clear understanding and knowledge gaining regarding the
concerned topic. It thus develops the researcher’s base knowledge to conduct an efficient
primary data collection procedure and analysis by aligning the results with the theoretical
concepts and base created through the learning from the secondary data.

4.6.2 Primary data collection

Primary data collection procedure is executed after an efficient secondary data collection and
study. Selection of the appropriate sample, size and questions is aided by the knowledge
developed through secondary data analysis. Primary data is retrieved from the selected sample
population through implementation of appropriate procedures. Based on forms in which data is
collected, Lodico and Spaulding (2010, p. 11) divided the primary data into two significant
groups as quantitative data and qualitative data. Analysis of this data and its alignment with the
secondary data provides with the accurate result derivation for the research.

4.7 Methods of data collection

Data collection methods used in a research is in terms of qualitative and quantitative data
collection. Each type of data collection technique can be discusses as follows –

Quantitative data collection – Figurative data collected through quantitative data research
strategy can be statistically interpreted and analysed using scientific principles. Denzin and
Lincoln (2011) explain that quantitative data supports the use of numerical explanation and puts
across a strong sense of objective based study.

Survey questionnaire –survey questionnaire provides a cost effective, simple and a convenient
method of gaining access to respondents spread over a wide geographical area. In the current
primary research, questionnaire was distributed to at 100 customers of PepsiCo Ltd, using the
online questionnaire distribution technique. The pattern of the questionnaire in the survey was
structured, closed ended and emphasised on the customers’ acuity about social media
participation. The questions focused on the type of social media tools and sites that the customers
of PepsiCo Ltd followed, the nature of content they shared and the social events organized by the
company in which they participated. The main motive behind survey was to understand how far

45
the customers were convinced by the relationship marketing strategy of PepsiCo Ltd in order to
engage customers, and build trust.

Initially the questionnaire was sent to 150 customers online that formed the sample frame. Out of
these 150, at the end of one week, 120 surveys were received back, while the rest were either
ignored or sent incomplete. To meet the sample target of 100 customers and maintain simplicity
in the calculation, the first 100 surveys were considered.

4.8 Data Analysis

Numerical response obtained through questionnaire was converted into percentage with the
application of Ms Excel tool. The converted data was represented in the form of graphical charts
and tables to present the findings in an easy and understandable manner.

Rich, in-depth and empirical information obtained from the interviews were recorded in the form
of transcripts since digital recording was not permitted. The transcripts were interpreted to
analyse the qualitative data and the findings were explained in context of the literature review
and the identified research problems.

4.9 Sampling
The use of probability sampling, simple random strategy was used to sample the 100 customers
of PepsiCo Ltd to take part in the survey. Probability sampling gives equal opportunity to each
element in the chosen population, equal chance to be selected for participation (Onwuegbuzie
and Leech, 2009). It avoids any element of biasness and is a cost effective method of sample
selection.

4.9.1 Sampling Technique:

Sample considered for studying branding and its impact on consumers’ decision-making process
are smaller in number that can suit the criteria of the research topic. The sample for customers of
PepsiCo Ltd was simple random probability sampling where no criteria for selection were
considered. With the help of online questionnaire, Customers were asked for participation where
survey was performed based on Likert’s scale rating from 1 to 5.

46
4.9.2 Sample Size:
The sample size is divided into two forms for qualitative and quantitative technique. For
studying the quantitative research techniques, 100 customers of PepsiCo Ltd were considered
and were interacted with the help of online questionnaire forms. As no qualitative data were
selected so no interviews were considered. Thus, the total sample size of the research study is
100, comprising both the qualitative and quantitative forms.

4.10 Time schedule (Gantt chart)

Any research topics are either longitudinal or cross-sectional in nature, depending upon the time
allotment considered for research for a particular topic. In the present research, cross-sectional
study is adopted that has limited time-period so application of Gantt chart is considered for easy
completion of the research work. Saunderset al. (2009) stated that Gantt chart helps in
segregating the key tasks as per the structure of the study and helps in better completion of the
topic.

Main activities 1st week 2nd week 3rd week 4th+5th week 6th week 7th week
Selection of the 
topic
Composition of the 
literature review
Research 
methodology
Collection of 
primary data
Analysis and 
interpretation of
data
Findings 
Conclusion and 
Recommendation
Final submission 

47
4.11 Ethical considerations
Fast-moving consumer goods (FMCG) businesses, like many others, have unique challenges
when it comes to managing their working capital. Companies dealing in fast moving consumer
goods must carefully manage their working capital due to the short product life cycle and
significant inventory turnover.

When it comes to managing working capital, the fast-moving consumer goods (FMCG) industry
has a unique set of ethical issues that must be met. The effect on vendors is a crucial factor.
Companies in the fast moving consumer goods industry generally have long-term ties with their
suppliers, therefore it's important for them to avoid damaging such relationships by imposing
unreasonable demands like shorter payment periods or cheaper costs.

The effect on buyers should also be taken into account. Companies dealing in fast moving
consumer goods (FMCG) need to watch their stock levels to prevent unnecessary waste. They
should also check to see that they are not overcharging their clients.

Finally, FMCG firms should make sure they are not utilising any kind of child labour or
contributing to environmental degradation in their operations.

PepsiCo was found to use a variety of morally sound procedures for managing its working
capital. PepsiCo, for instance, maintained reliable, long-term partnerships with its suppliers
because of its prompt payments. In addition to charging reasonable prices for its wares, PepsiCo
maintained a strategy of not keeping an excessive amount of stock on hand. In addition, PepsiCo
has many programmes in place to lessen the harm it did to the environment.

PepsiCo's overall approach to working capital management was ethical and contributed to the
company's long-term success and viability.

Managing working capital ethically involves keeping in mind the following for FMCG
companies:

 Companies in the fast moving consumer goods (FMCG) industry owe it to its suppliers,
consumers, and workers to treat them properly.
 Working capital practises of FMCG firms should be disclosed openly. Information about
their stock, payment policies, and prices will all be made public.

48
  FMCG businesses should prioritise sustainability in their operations. This involves
making all steps in their supply chain environmentally friendly and ethical.

FMCG businesses can assist guarantee they are managing their working capital in a responsible
and sustainable manner by adhering to these ethical guidelines.

49
CHAPTER 5

DATA ANALYSIS AND INTERPRETATION

1. Does PepsiCo prioritize efficient management of working capital in its FMCG operations?

a) Yes

b) No

efficient management of working capital No. of Respondent

Yes 83%
No 17%

efficient management of working capital

17%

Yes
No

83%

The data shows that the majority of respondents, 83%, believe that PepsiCo prioritizes efficient
management of working capital in its FMCG operations. This indicates that PepsiCo places a
strong emphasis on effectively managing its short-term assets and liabilities to ensure smooth
operations and financial stability. By prioritizing working capital management, PepsiCo
demonstrates its commitment to optimizing its cash flow, inventory levels, and accounts
receivable to maximize profitability and maintain a strong financial position. This focus on

50
efficient management of working capital reflects the company's dedication to effective financial
management practices within the FMCG sector.

2. Is working capital management crucial for PepsiCo's financial stability and smooth
operations?

a) Yes

b) No

financial stability and smooth operations No. of Respondent

Yes 80%
No 20%

financial stability and smooth operations

20%

Yes
No

80%

The data reveals that 80% of respondents believe that working capital management is crucial for
PepsiCo's financial stability and smooth operations. This suggests that effective management of
working capital plays a significant role in ensuring the company's financial health and
operational efficiency. By efficiently managing short-term assets and liabilities, PepsiCo can
maintain sufficient liquidity, optimize cash flow, and meet its financial obligations. This enables
the company to navigate economic fluctuations, invest in growth opportunities, and sustain its
operations effectively. The high percentage of respondents acknowledging the importance of

51
working capital management highlights its criticality for PepsiCo's overall financial stability and
operational success.

3. Does PepsiCo utilize financial ratios to assess its working capital performance?

a) Yes

b) No

PepsiCo utilize financial ratios No. of Respondent

Yes 70%
No 30%

PepsiCo utilize financial ratios

30% Yes
No

70%

The data shows that 70% of respondents believe that PepsiCo utilizes financial ratios to assess its
working capital performance. This indicates that PepsiCo employs quantitative measures to
evaluate and monitor its working capital position and efficiency. Financial ratios such as the
current ratio, quick ratio, and inventory turnover ratio are commonly used to assess the
effectiveness of working capital management. These ratios provide insights into liquidity, asset
utilization, and overall financial health. By utilizing financial ratios, PepsiCo can gain a better
understanding of its working capital performance and make informed decisions to optimize its
short-term assets and liabilities. The significant majority of respondents acknowledging the use

52
of financial ratios suggests that PepsiCo emphasizes the importance of data-driven analysis in its
working capital management practices.

4. Does PepsiCo employ strategies to optimize its cash conversion cycle?

a) Yes

b) No

optimize its cash conversion cycle No. of Respondent

Yes 78%
No 22%

optimize its cash conversion cycle

22%
Yes
No

78%

The data indicates that 78% of respondents believe that PepsiCo employs strategies to optimize
its cash conversion cycle. This highlights PepsiCo's focus on efficiently managing the time it
takes to convert its investments in inventory and other resources into cash inflows. By employing
strategies such as streamlining accounts receivable processes, negotiating favorable payment
terms with suppliers, and implementing efficient cash management systems, PepsiCo aims to
minimize the cash tied up in its operations and improve its liquidity position. The majority of

53
respondents acknowledging PepsiCo's efforts in optimizing the cash conversion cycle suggests
that the company recognizes the importance of effectively managing working capital to enhance
its cash flow and financial performance.

5. Is inventory management a significant aspect of PepsiCo's working capital management

strategy?

a) Yes

b) No

Is inventory management a significant aspect No. of Respondent

Yes 87%
No 13%

Is inventory management a significant aspect

13%

Yes
No

87%

The data reveals that 87% of respondents believe that inventory management is a significant
aspect of PepsiCo's working capital management strategy. This indicates that PepsiCo recognizes
the importance of effectively managing its inventory levels to optimize its working capital.
Efficient inventory management ensures that the company maintains an adequate supply of
products while minimizing excess inventory and associated carrying costs. By closely
monitoring demand patterns, implementing just-in-time (JIT) inventory practices, and
54
collaborating with suppliers, PepsiCo can strike a balance between fulfilling customer orders and
minimizing inventory holding costs. The high percentage of respondents acknowledging the
significance of inventory management underscores its crucial role in PepsiCo's working capital
management strategy within the FMCG sector.

6. Does PepsiCo actively monitor its accounts receivable to ensure timely collections?

a) Yes

b) No

actively monitor its accounts receivable No. of Respondent

Yes 68%
No 32%

actively monitor its accounts receivable

32%
Yes
No

68%

The data shows that 68% of respondents believe that PepsiCo actively monitors its accounts
receivable to ensure timely collections. This indicates that PepsiCo places emphasis on managing
its outstanding customer invoices and ensuring prompt payment from its customers. By actively
monitoring accounts receivable, PepsiCo can identify any delays or issues in payment and take
appropriate actions to address them, such as sending reminders or initiating collections
processes. Timely collections help improve cash flow, reduce the risk of bad debts, and enhance
overall working capital management. Although not a unanimous response, the majority of

55
respondents acknowledging PepsiCo's active monitoring of accounts receivable suggests a focus
on efficient cash flow management in the company's working capital practices.

7. Does PepsiCo rely on short-term financing options to support its working capital needs?

a) Yes

b) No

rely on short-term financing options No. of Respondent

Yes 81%
No 19%

rely on short-term financing options

19%

Yes
No

81%

The data reveals that 81% of respondents believe that PepsiCo relies on short-term financing
options to support its working capital needs. This suggests that PepsiCo utilizes various financial
instruments and arrangements to meet its short-term liquidity requirements. Short-term financing
options can include lines of credit, trade credit from suppliers, or commercial paper. By
accessing these funding sources, PepsiCo can maintain sufficient working capital to support its
day-to-day operations, manage inventory levels, and meet financial obligations. The majority of
respondents acknowledging PepsiCo's reliance on short-term financing options highlights the

56
company's strategic approach to managing its working capital and ensuring smooth operations in
the FMCG sector.

8. Does PepsiCo consider supplier relationships and procurement processes in its working capital
management?

a) Yes

b) No

PepsiCo consider supplier relationships and No. of Respondent

procurement processes
Yes 89%
No 11%

PepsiCo consider supplier relationships and

procurement processes

11%
Yes
No

89%

The data reveals that 89% of respondents believe that PepsiCo considers supplier relationships
and procurement processes in its working capital management. This indicates that PepsiCo
recognizes the importance of establishing strong relationships with suppliers and implementing
effective procurement processes to optimize its working capital. By fostering collaborative
relationships with suppliers, PepsiCo can negotiate favorable payment terms, manage inventory
levels, and ensure timely delivery of goods and services. Additionally, efficient procurement
processes help streamline operations, reduce costs, and enhance overall working capital
efficiency. The significant majority of respondents acknowledging the consideration of supplier

57
relationships and procurement processes in PepsiCo's working capital management highlights the
company's commitment to optimizing its supply chain and maximizing financial performance
within the FMCG sector.

9. Does effective working capital management contribute to PepsiCo's profitability?

a) Yes

b) No

contribute to PepsiCo's profitability No. of Respondent

Yes 93%
No 7%

contribute to PepsiCo's profitability

7%

Yes
No

93%

The data shows that 93% of respondents believe that effective working capital management
contributes to PepsiCo's profitability. This indicates a strong consensus among respondents that
optimizing working capital has a positive impact on PepsiCo's financial performance. Effective
working capital management ensures that the company maintains sufficient liquidity, minimizes
cash tied up in operations, and efficiently manages its short-term assets and liabilities. By doing
so, PepsiCo can enhance its profitability by improving cash flow, reducing costs, and
maximizing operational efficiency. The overwhelming majority of respondents acknowledging

58
the contribution of effective working capital management to PepsiCo's profitability reinforces the
importance of this practice in driving financial success within the FMCG sector.

10. Is working capital management in the FMCG sector subject to external factors beyond
PepsiCo's control?

a) Yes

b) No

subject to external factors No. of Respondent

Yes 72%
No 28%

subject to external factors

28%

Yes
No

72%

The data reveals that 72% of respondents believe that working capital management in the FMCG
sector is subject to external factors beyond PepsiCo's control. This suggests that PepsiCo's
working capital management practices can be influenced by various external factors, such as
market conditions, economic fluctuations, regulatory changes, and supply chain disruptions.
These external factors can impact inventory levels, payment terms with suppliers, and customer
demand, all of which affect working capital requirements. The majority of respondents
acknowledging the influence of external factors underscores the need for PepsiCo to monitor and
59
adapt its working capital management strategies in response to the dynamic and unpredictable
nature of the FMCG sector.

60
CHAPTER 6

FINDING, SUGGESTION AND CONCLUSION

6.0 Findings
Here are a few findings on working capital administration in the FMCG area, in light of an
investigation of PepsiCo:

 Proficient Administration of Money Change Cycle:

PepsiCo has exhibited an excellent capacity to deal with its money transformation cycle. The
organization has really decreased the time it takes to change over its stock into deals, gather
receivables, and pay its payables. This proficiency has emphatically affected PepsiCo's liquidity
position and permitted the organization to enhance its income.

 Center around Stock Administration:

PepsiCo has carried out strong stock administration procedures to limit conveying costs and
guarantee item accessibility. The organization uses progressed determining models and
production network streamlining procedures to upgrade stock levels, diminish stockouts, and
improve functional effectiveness.

 Successful Records Receivable Administration:

PepsiCo has executed productive records receivable administration practices to limit credit risk
and further develop income. The organization intently screens its receivables, lays out credit
arrangements, and uses innovation to smooth out invoicing and assortments processes. This has
brought about diminished normal assortment periods and further developed liquidity.

 Provider Relationship The executives:

PepsiCo underlines solid provider connections and teams up with them to streamline installment
terms and guarantee convenient conveyance of unrefined components. By arranging good terms,

61
the organization actually deals with its records payable, expanding installment periods while
keeping up areas of strength for with associations.

 Working Capital Supporting:

PepsiCo utilizes a decent way to deal with supporting its functioning capital prerequisites. The
organization uses a blend of inside created reserves, momentary getting, and business paper
projects to guarantee sufficient liquidity and improve its capital construction.

6.1 Suggestion and Recommendation

Suggestions and Recommendations for "Working Capital Administration in the FMCG Area: An
Investigation of PepsiCo":

 Reinforce Income Anticipating:

While PepsiCo has shown effectiveness in dealing with its functioning capital, it can additionally
upgrade its income determining capacities. By using progressed information investigation and
prescient displaying strategies, PepsiCo can all the more precisely figure cash inflows and
surges. This would empower the organization to proactively oversee liquidity and settle on
informed choices in regards to working capital assignment.

 Embrace Innovation:

PepsiCo ought to consider utilizing innovation answers for smooth out and robotize its
functioning capital administration processes. Executing an incorporated undertaking asset
arranging (ERP) framework can upgrade perceivability, control, and proficiency across the
production network, including stock administration, request handling, and records
receivable/payable capabilities. Computerization can limit manual mistakes, further develop
information precision, and empower ongoing checking of working capital measurements.

 Upgrade Stock Levels:

Proceeded with center around stock administration is urgent for PepsiCo. The organization can
investigate progressed stock streamlining devices and strategies to additionally lessen conveying
costs and limit stockouts. By dissecting authentic deals information, market trends, and demand
designs, PepsiCo can change creation and conveyance techniques to line up with client demand,
62
eventually further developing income and decreasing working capital restricted in
overabundance stock.

 Team up with Providers:

PepsiCo ought to keep up areas of strength for with providers and investigate cooperative drives
to streamline the whole store network. By working intimately with providers, PepsiCo can
investigate choices, for example, seller oversaw stock (VMI) or without a moment to spare (JIT)
conveyance to diminish lead times and work on working capital proficiency. Cooperative
guaging and demand arranging can likewise assist with adjusting creation plans and limit stock
out of date quality.

 Nonstop Observing and Audit:

Customary observing and audit of working capital measurements are fundamental for supporting
effective working capital administration. PepsiCo ought to lay out key execution pointers (KPIs)
and carry out a vigorous checking framework to follow and examine working capital parts.
Intermittent survey of these measurements will assist with distinguishing regions for
development, feature possible dangers, and drive ceaseless improvement of working capital
administration rehearses.

 Risk The board:

PepsiCo ought to proactively distinguish and relieve gambles related with working capital
administration. This incorporates surveying the reliability of clients, checking market trends, and
executing suitable credit risk relief procedures. A complete gamble the executives system will
assist with defending income, safeguard benefit, and guarantee the organization's monetary
dependability.

 Benchmarking and Best Practices:

PepsiCo ought to routinely benchmark its functioning capital administration rehearses against
industry friends and top tier organizations. By concentrating on the systems and approaches
embraced by driving FMCG organizations, PepsiCo can distinguish inventive practices and
expected areas of progress. Teaming up with industry affiliations and taking part in industry

63
gatherings can give important bits of knowledge and systems administration potential chances to
share encounters and gain from industry pioneers.

Executing these suggestions and recommendations will fortify PepsiCo's functioning capital
administration rehearses, upgrade monetary execution, and keep up with its cutthroat situation in
the unique FMCG area.

6.2 Conclusion
Working capital management is a basic part of any business, however it is particularly significant
for quick shopper products (FMCG) organizations. FMCG organizations should have the option
to rapidly transform their stock into cash to remain above water. They likewise should have the
option to deal with their records receivable and payables really to stay away from income issues.

PepsiCo is one of the world's biggest FMCG organizations. The organization has a long history
of powerful working capital management. As of late, PepsiCo has made various changes to its
working capital management rehearses to work on its productivity and benefit.

Perhaps of the main change that PepsiCo has made is to its stock management rehearses. The
organization has carried out various new stock management frameworks that have assisted with
diminishing stock levels and further develop stock turnover. Therefore, PepsiCo has had the
option to let loose money that can be utilized for different purposes, like putting resources into
new items or marketing efforts.

PepsiCo has likewise made various changes to its records receivable management rehearses. The
organization has executed another framework for following records receivable and overseeing
assortments. Accordingly, PepsiCo has had the option to diminish how much time it takes to
gather installments from clients. This has worked on the organization's income and has assisted
with lessening how much obligation that the organization needs to convey.

PepsiCo has likewise made various changes to its records payable management rehearses. The
organization has haggled better terms with its providers, which has assisted with diminishing
how much cash that the organization needs to pay out every month. Subsequently, PepsiCo has
had the option to work on its benefit.

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The progressions that PepsiCo has made to its working capital management rehearses have been
extremely effective. The organization has had the option to work on its productivity, benefit, and
income. Thus, PepsiCo is strategically situated to proceed to develop and prevail from now on.

Notwithstanding the progressions that PepsiCo has previously made, there are various different
things that the organization could do to further develop its working capital management
rehearses. For instance, the organization could consider executing a without a moment to spare
stock framework. This would assist with diminishing stock levels much further and further
develop stock turnover considerably more. The organization could likewise consider utilizing an
element to fund its records receivable. This would let loose considerably more money that could
be utilized for different purposes.

PepsiCo is a very much overseen organization with a solid history of progress. The organization
has made various significant changes to its working capital management rehearses lately. These
progressions have assisted with working on the organization's effectiveness, benefit, and income.
Thus, PepsiCo is strategically situated to proceed to develop and prevail from now on.

Here are a few extra tips for FMCG organizations on the most proficient method to work on their
working capital management:

 Utilize a moving conjecture to follow your working capital requirements. This will assist
you with recognizing any potential issues from the beginning and make a remedial move
before they become an emergency.
 Put forth clear objectives for your working capital management. What are you attempting
to accomplish? Would you like to work on your effectiveness, productivity, or income?
When you understand what you need to accomplish, you can foster procedures to arrive
at your objectives.
 Screen your working capital exhibition routinely. This will assist you with keeping tabs
on your development and ensure that you are on target to accomplish your objectives.
 Exploit innovation. There are various programming arrangements accessible that can
assist you with working on your working capital management. These arrangements can
assist you with mechanizing undertakings, track your presentation, and recognize regions
where you can get to the next level.

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By following these tips, FMCG organizations can work on their working capital management
and accomplish their monetary objectives.

REFERENCES:
Afza, T., & Mirza, N. (2013). Working Capital Management and Profitability: Evidence from the
Textile Sector of Pakistan. Global Journal of Management and Business Research: E Finance,
13(2), 1-10.

Baños-Caballero, S., García-Teruel, P. J., & Martínez-Solano, P. (2014). Working Capital

Management, Corporate Performance, and Financial Constraints. Journal of Business Research,
67(3), 332-338.

Boyer, T. (2016). Working Capital Management in the Supply Chain Context: A Case Study
Approach. Journal of Business Logistics, 37(3), 201-211.

Deloof, M. (2003). Does Working Capital Management Affect Profitability of Belgian Firms?
Journal of Business Finance & Accounting, 30(3-4), 573-588.

Raheman, A., & Nasr, M. (2007). Working Capital Management and Profitability—Case of
Pakistani Firms. International Review of Business Research Papers, 3(1), 279-300.

Shin, H. H., & Soenen, L. A. (1998). Efficiency of Working Capital and Corporate Profitability.
Financial Practice and Education, 8(2), 37-45.

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ANNEXURE

1. Does PepsiCo prioritize efficient management of working capital in its FMCG

operations?

a) Yes

b) No

2. Is working capital management crucial for PepsiCo's financial stability and smooth
operations?

a) Yes

b) No

3. Does PepsiCo utilize financial ratios to assess its working capital performance?

a) Yes

b) No

4. Does PepsiCo employ strategies to optimize its cash conversion cycle?

a) Yes

b) No

5. Is inventory management a significant aspect of PepsiCo's working capital management

strategy?

a) Yes

b) No

6. Does PepsiCo actively monitor its accounts receivable to ensure timely collections?

a) Yes

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b) No

7. Does PepsiCo rely on short-term financing options to support its working capital needs?

a) Yes

b) No

8. Does PepsiCo consider supplier relationships and procurement processes in its working
capital management?

a) Yes

b) No

9. Does effective working capital management contribute to PepsiCo's profitability?

a) Yes

b) No

10. Is working capital management in the FMCG sector subject to external factors beyond
PepsiCo's control?

a) Yes

b) No

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